With dry conditions continuing to persist throughout the High Plains, many of the region’s winter wheat acres have either been lost or are doing poorly enough that growers are considering switching to an alternative spring-seeded second crop, either cotton or grain sorghum, for harvest in 2011.
Dryland producers wanting to plant and insure cotton or another spring-seeded crop this year need to contact their insurance providers immediately to begin the process of getting acreage appraised and released prior to the wheat reaching the headed stage of development. Failure to have non-irrigated wheat acres released before heading occurs could prevent a non-irrigated second crop from being insurable in 2011.
Also, since at least 2002, the USDA Risk Management Agency has had a zero tolerance policy regarding the insurability of non-irrigated cotton or other crops behind non-irrigated wheat that has reached the headed stage of development, regardless of the number of the heads present.
Despite that caveat, a review of the rules for both cotton and grain sorghum shows that growers do have two options available to allow planting and insuring these crops on both irrigated and non-irrigated acreage following winter wheat.
Today, growers who want to plant cotton on winter wheat acreage will be bound by the terms of the policy they have in place. To initiate a crop change in irrigated or non-irrigated wheat acres now, growers need to contact their insurance provider and request an APH appraisal of the wheat acreage.
Once the appraisal is completed a grower has two options.
First, he can file a claim for a loss based on the appraised production amount if it is less than the grower’s minimum-coverage yield guarantee.
Second, if the appraised production level is equal to or above the minimum -coverage yield guarantee, the grower can accept the appraisal and have that amount of production entered into his Actual Production History database.
Once again, timing is critical for producers interested in planting cotton on non-irrigated wheat acreage in 2011. The only option for growers to plant an insured, non-irrigated second crop behind non-irrigated wheat in the same insurance year is for the initial crop of wheat to be appraised, released and destroyed before it reaches the headed stage.
Irrigated wheat acreage does not have to meet the percent headed requirement and can be appraised and released at any point prior to the end of the planting period for whichever second crop the grower wants to plant.
Destruction of irrigated wheat acreage can also be accomplished by haying the wheat in advance of planting the second crop if the wheat crop is certified for grain, without affecting the insurance appraisal or harming eligibility for other USDA disaster assistance programs such as the Supplemental Revenue Assistance Program (SURE).
Regardless of which route a grower takes, the acreage would then be released for another use, allowing the grower to destroy the wheat crop in preparation for planting a second insured crop on the acreage.
Once the wheat acreage is appraised and dealt with, the USDA Risk Management Agency’s “First crop/Second crop” rules will apply to that acreage.
In the event of a loss, a grower has the option to plant a second insured crop on the acreage, but only if he elects to receive only 35 percent of the first crop (wheat) indemnity amount. For growers exercising this option the second crop would be 100 percent insurable.
Under the “First crop/Second crop” provisions, an insurable loss on the second crop would be paid at 100 percent. The grower would then owe just 35 percent of the insurance premium due on the initial wheat crop for which they received the reduced indemnity payment. If there were no loss on the second crop the grower would receive the unpaid portion (65 percent) of the initial loss on the first crop and pay the full insurance premium on both insured crops.
For future reference, the easiest way to switch out of winter wheat and into a spring-seeded crop is prior to March 15, when the wheat acreage can be “short-rated.” By short-rating wheat acreage, the grower cancels the insurance policy in exchange for payment of only 40 percent of the wheat insurance premium owed.
At that time irrigated wheat acreage would be free to be planted to a second crop without limitations on its ability to be insured. Non-irrigated wheat acreage “short-rated” would still have to have had any grazing activity halted before March 15 and growers would have to ensure that none of the wheat previously planted reached the headed stage of development.
A spring crop planted on wheat acreage that is short-rated is considered the second crop planted on the acreage for insurance purposes and application of the “First crop/Second crop” coverage rule.