In late June, USDA’s Risk Management Agency (RMA) announced changes to the Common Crop Insurance Policy to clarify “practicability to replant” and clarify recordkeeping issues with indemnity payments in a double-cropping system. RMA is also seeking public comment on these changes. The public will have until August 22, 2016 to submit comments.
Practicability to Replant
Crop insurance policies can require the insured producer to replant an insured crop under certain conditions. Under the prior rule, “practical to replant” meant the crop insurance company determined that status, based on factors such as:
moisture availability;
marketing window;
condition of the field; and
time to crop maturity.
The replanted crop also needs to attain maturity prior to the end of the crop insurance period (date the policy ends). Finally, requiring a producer to replant is not based on the availability of seed, plants, or input costs necessary to produce the insured crops (7 C.F.R. § 457.8). For example, if field conditions have improved and we are still early in the growing season, then the crop insurance company could require the insured producerto replant, even though seed may be hard to come by late in the planting season.
This “practical to replant” definition has led to crop insurance companies applying the rules inconsistently. To provide better consistency, RMA’s revised definition requires the crop insurance companies to still consider the conditions listed above. But now, the crop insurance companies are allowed to consider if replanting the crop is physically possible, or whether there is no chance of seed germination, emergence, and formation of a healthy plant. For example, if the area is experience higher levels of rainfall and physical replanting would be impossible, then the crop insurance company would not require the insured producer to replant.
Double-Cropping Changes
Double-cropping is when a producer plants a second crop right after harvesting a first crop. For example, many producers may harvest wheat and follow up with soybeans, all within the same crop year. Participating in the crop insurance program and then double-cropping often creates recordkeeping issues, particularly when the producer adds additional acres to the operation. For example, farmer has two fields in the same crop insurance unit but only double-crops one field. The farmer would need to keep records to show one field was double-cropped and the other field was not. Separate records can be a problem because if the farmer grows the same crop on both fields, it might be impractical to keep separate records when the fields are harvested at the same time.
RMA’s changes will allow insured producers to base eligible double-crop acres off either 1) the highest number of acres double-cropped in two of the past four crop years, or 2) the percentage of double-cropped acreage the insured producer has traditionally planted. For example, a farmer has a 1,000-acre farm planted each year to wheat and then plants 200 acres of soybeans. This would be a historical double-cropped 20 percent of the acreage. If farmer brings an additional 1,000 acres into the operation, then the farmer would have 400 acres eligible for double-cropping based on this historical double-cropped percentage. This change will allow producers to expand operations and grow double-cropped eligible acres since producers are assumed to continue using existing double-crop percentages.
The changes to double-cropping will require the insured producer to keep good records. Check with your crop insurance agent to determine if your records will work to determine your historical double-crop production over the past four years.
Conclusion
Public comments are welcomed on the changes through August 22. Although the regulations are released as final regulation as opposed to proposed changes, changes may potentially still be needed to the final regulations based on the comments received. You can comment online at https://www.regulations.gov/document?D=FCIC-16-0002-0001.
References
7 C.F.R. § 457.8 (2015).
7 C.F.R. § 457.8 (2016).
81 F.R. 40,477 (June 22, 2016) https://www.gpo.gov/fdsys/pkg/FR-2016-06-22/pdf/2016-14735.pdf.
U.S. Department of Agriculture. Crop Insurance Gives Farmers More Planting Flexibility. Washington, DC: U.S. Department of Agriculture, Risk Management Agency, News Release No. 0151.16, 2016.