Texas Cotton: One Eye on the Weather; Other Eye on Crop Ins. Deadline

    The pendulum has swung the opposite way following four years of drought on the Texas High Plains and cotton producers throughout the region are facing an unusual situation in 2015: fields too wet to plant. Discussion of that possibility would have been considered almost impossible just a few weeks ago, but waves of widespread, plentiful rainfall have May 2015 in the record book as the second wettest May ever recorded at Lubbock, Texas with a week left to go. Weather forecasts indicate more precipitation could be added to that total before month’s end.

    For now, producers are scrambling to try to get into acres that are dry enough to plant while also working out their options should they not be able to get all of their crop planted before crop insurance deadlines. As seems to happen more often than not, the High Plains is entering another critical Memorial Day weekend with producers eyeing forecasts for potentially unfavorable weather. Rain chances diminish early next week, which could boost planting prospects, but the immediate concern is the chance that an additional 1-3 inches could fall on much of the region over the weekend.

    That much additional rainfall could keep them out of the field until the May 31 crop insurance Final Planting Date (FPD) in northern High Plains counties and also make it hard to resume fieldwork before the June 5 FPD in several central counties. Producers in the southernmost counties of the High Plains have the potential to be least impacted since they have a June 10 FPD and generally sandier soils.

    Insurance Provides Multiple Options

    Federal crop insurance provisions provide producers multiple ways to deal with the issues they face due to the recent weather pattern. Growers who want to plant cotton and fully insure it have until the Final Planting Dates mentioned above to get seed planted. Should they be delayed due to weather, but still want to stick with insured cotton in 2015, growers have an opportunity to continue to plant cotton during a 7-day Late Planting Period as well.

    Cotton acres planted during the Late Planting Period will still be insured, but will have the insurance coverage amount reduced by one percent for each day of the Late Planting Period that passes before planting occurs. Timely and late-planted acreage guarantees would be combined to determine the overall coverage level for the applicable insurance unit.

    Acres planted after the end of the Late Planting Period have two options. First, the planted crop will be considered to be uninsured with no impact on a producer’s insurance history. The second option would allow the grower to insure acreage planted after the end of the Late Planting Period, but at a significantly reduced level equal to the amount of coverage provided by policy’s Prevented Planting provisions.

    Growers choosing to insure the late-planted acreage would receive the reduced coverage, but also incur the full premium cost on those acres. For most cotton producers, the Prevented Planting coverage amount is 50% of the insurance guarantee that was elected at Sales Closing unless they opted to buy additional PP coverage (+5% or +10%) at that time. Regardless, any acreage insured under this provision would then have the reduced guarantee level blended together with timely or late planted acreage guarantees to arrive at the final coverage amount.

    Prevented Planting (PP) Provision Offers Additional Options

    The final option that many growers have begun to consider utilizing is the Prevented Planting (PP) provisions of their policy to provide an indemnity that will cover at least some of the production costs they incurred up to the time they were prevented from planting.

    For cotton, a prevented planting indemnity can be provided to a producer who is prevented from planting acreage by the Final Planting Date. It should be noted that filing a Prevented Planting claim brings with it several important requirements that the producer must meet in order to qualify for the PP payment.

    In order to file a PP claim, the producer must:

    1. Have the capability (equipment, inputs, etc.) to plant the acreage that is prevented from being planted.
    2. Be prevented from planting the lesser of 20 acres or 20 percent of the acres in the insured unit.
    3. Notify the Approved Insurance Provider (AIP) of the PP claim within 72 hours of the applicable Final Planting Date for each crop that will have a PP claim filed.

    Once filed, the amount of the Prevented Planting payment will be based on the number of acres prevented from being planted (up to the maximum number allowed under the PP provisions), the base price used to establish the insurance guarantee for the insured acreage (the harvest price will not be considered), and be equal to the PP coverage percentage provided for under the policy multiplied by the amount of the coverage amount provided by the policy.

    The premium amount owed on the acres included on the PP claim will equal the amount of the initial premium amount owed for the insured acres under the terms of the underlying insurance policy.

    For example, a cotton producer who elected a 60 percent coverage level Revenue policy, and subsequently files a claim for Prevented Planting based on the base cotton PP coverage percentage level of 50 percent, would be eligible to receive a PP payment equal to 50 percent of their 60 percent coverage level policy.

    In order to receive the PP payment outlined in the above calculation, the producer filing the PP claim must certify that a subsequent crop will not be planted for harvest on the PP acres claimed. A cover crop may be planted on PP acres with no reduction in the PP payment amount so long as the cover crop will not be hayed, grazed or otherwise considered harvested before November 1.

    Subsequent crops planted on PP acreage will trigger a reduction of the PP payment amount if harvested.

    Reductions based on the planting of a second crop, including a cover crop, that is determined to be intended for harvest or is ultimately considered to have been harvested prior to November 1, will follow the established 1st-crop/2nd-crop policy provisions. In this instance the PP payment would be reduced to 35 percent of the calculated PP payment and the producer would be required to pay a premium equal to 35 percent of the initial policy premium due for the PP acres.

    Lastly, if no second crop is planted or harvested from the PP acres those acres are not considered in the calculation of a producers APH database yield for the crop year. Only acres that are planted and insured will be used to calculate the producers APH database yield for that year.

    If a second crop is planted and found to have been harvested from the PP acres triggering a reduction in the amount of the PP payment, the grower will be assigned a yield for the PP acres equal to 60 percent of the county T-yield for the crop and the PP acres (with the assigned yield) will be included with the acreage and production from insured acreage in the insurance unit to determine the yield inserted into the APH database for the crop year.

    As is evident from this summary, Prevented Planting rules and procedures are complex and include a number of possible outcomes depending on the decisions made by the producer.

    Any producers considering the option of filing a Prevented Planting claim are advised to contact their Approved Insurance Provider or servicing agent to confirm both their eligibility and receive a thorough explanation of the requirements that must be met in order to receive the PP payment.

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