Does The Disaster Aid Bill Increase Prevent Plant Payments?
By Anna-Lisa Laca, Farm Journal's Milk, Online and Business Editor
via AgWeb - June 5, 2019
This week a long awaited $19 billion disaster aid bill left Congress and is waiting on President Donald Trump’s desk for a signature. There is a lot of confusion about how the bill’s language impacts prevent plant payments and coverage. Long story short, some farmers will receive higher prevent plant payments from the bill, but it’s not likely to be widespread unless Agriculture Secretary Sonny Perdue broadens the language.
According to USDA's Risk Management Agency (RMA), “The amount of prevented planting coverage is calculated as a percent of the insurance guarantee the insured would have had for a timely planted crop. For example, suppose a producer’s insurance guarantee is $100 an acre. If the producer insures a crop with a 60% prevented planting coverage factor, the prevented planting payment would be $60 (or 60% of the guarantee). The prevented planting factor varies by crop, based on an estimate of pre-planting costs.”
The prevented planting coverage factor for corn is 55% and the factor for soybeans is 60%. The portion of the disaster aid bill that has farmers and economists mudding up the waters over prevented plant is increased funding for USDA’s Wildfires and Hurricanes Indemnity Program (WHIP). Through WHIP, eligible acres include both planted and prevented planting acreage (subject to certain restrictions) are eligible for a payment. According to Pro Farmer’s Jim Wiesemeyer, WHIP nets out any crop insurance indemnities. So, any indemnities from prevented planting are netted out too.
“Importantly, the WHIP expected revenue is also reduced using the factors above,” he explains. “In other words, WHIP is not going to create a windfall that covers the gap between the total value of a farmer's crop and the prevented planting payment/indemnity. Further, there are VERY specific rules that a producer must follow in planting a second crop (which will directly impact the prevented planting payment/indemnity).”
This week rumors swirled throughout farm country that Secretary Perdue would either use the disaster aid bill to help farmers sidelined by Mother Nature or would make prevent plant acres eligible for a Market Facilitation Program (MFP) payment.
Pro Farmer asked a congressional contact about the matter and this is the response: