Released June 19, 2008
FARGO, N.D. - If a crop fails early in the growing season, producers may follow with a second crop if enough of the growing season remains. However, if the failed crop was covered by multiperil crop insurance, the decision to replant is not as clear.
“In addition to the extra input expenses, planting a second crop may affect the indemnity payment for the first crop and possibly the yield history,” says Dwight Aakre, North Dakota State University Extension Service farm management specialist.
Producers have three options:
- Not plant a second crop on the same acreage and receive 100 percent of the indemnity due for the first crop.
- Plant, but not insure a second crop. The insured must elect and provide written notice to not insure the second crop at the time the first crop is released and will collect 100 percent of indemnity due for the first crop.
- Plant and insure the second crop. If there is an insurable loss on the second crop, the insured will receive 100 percent of the indemnity. The producer will owe the 100 percent premium on the second crop and will receive an indemnity payment that is 35 percent of the insurable loss for the first crop and owe 35 percent of the premium. If there is no insurable loss on the second crop, the producer will receive the remaining 65 percent of the indemnity payment for the first crop and will owe 100 percent of the premium for the first crop.
Many livestock producers are looking for additional hay production after the slow start to hay and pasture land this spring. However, at the same time, the yield potential of some small-grain crops has been reduced because of the lack of early moisture.
“In the past, a small-grain crop with an expected yield of half of normal may have been more valuable harvested as hay rather than grain,” Aakre says. “However, this year the crop insurance price is high enough that a crop will need to have near zero production to justify an early appraisal in order to convert the crop to an unintended use.”
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Contacts: Dwight Aakre, (701) 231-7378, dwight.aakre@ndsu.edu
Rich Mattern, (701) 231-6136, richard.mattern@ndsu.edu
