Transcript IRRIGATION ISSUES AND PREVENTED PLANTING

IRRIGATION ISSUES AND
PREVENTED PLANTING
By Dennis A. Kaan
Agriculture and Business
Management Specialist
Extension’s Role in
Prevented Planting Issues
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Basic provisions define good farming
practices as:
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The cultural practices generally in use in
the county for the crop to make normal
progress toward maturity and produce at
least the yield used to determine the
production guarantee or amount of
insurance, and are those recognized by
CSREES as compatible with agronomic and
weather conditions in the county.
Prevented Planting Definition
Basic Provisions 17(d)
 Drought or failure of the irrigation water
supply will be considered to be an
insurable cause of loss for the purposes
of prevented planting only if, on the
final planting date (or within the late
planting period if you elect to try to
plant)
Prevented Planting Definition
Basic Provisions 17(d)(1)
 For non-irrigated acreage, the area that is
prevented from being planted has
insufficient soil moisture for germination of
seed and progress toward crop maturity
due to a prolonged period of dry weather.
Prolonged precipitation deficiencies must
be verifiable using information collected by
sources whose business it is to record and
study the weather, including, …
Prevented Planting Definition
Basic Provision 17(d)(1) continued
 but not limited to, local weather reporting
stations of the National Weather Service;
or
Basic Provision 17(d)(2)
 For irrigated acreage, there is not a
reasonable probability of having adequate
water to carry out an irrigated practice.
Important Dates
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Final Sign-up Date (Sales Closing)
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March 15, 2003
Final Acreage Reporting Date
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July 15, 2003
Report prevented planting acres on this
date.
Final Planting Date
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Barley
Oats
Sugar Beets
Corn
Potatoes
Sunflowers
Dry Beans
Millet
April 30
April 30
May 20
May 25
May 31
June 15
June 20
June 20
Environmental Diversions
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Decreased water allocation resulting
from the diversion of water for
environmental or other reasons is NOT
an insurable cause of loss unless the
diversion is directly related to an
insured cause of loss.
Irrigation Issues
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Policy States: Only that acreage for
which there exists adequate facilities
and water at the time insurance
attaches, or the reasonable expectation
of receiving adequate water at the time
coverage begins to carry out a good
irrigation practice, is insurable under an
irrigated practice.
What Can Insured’s Do
Without Adequate Water?
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Plant fewer acres
Plant and insure acreage for which
adequate water is not available under a
non-irrigated practice (if available), or
Report acreage as prevented planting
(if available), provided all prevented
planting policy provisions are met.
Failure of the Irrigation Water
Supply
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Covered only to the extent that the
failure was due to an insured cause of
loss that occurs within the insurance
period.
Insured’s Burden
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To show that any prevented planting
or loss on planted (or perennial
acreage such as forage production)
acreage is caused by an insured
cause of loss.
Insurance Providers Must
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Determine that any failure of the
irrigation water supply is due to an
insured cause of loss before making
prevented planting payments or paying
a loss on planted acreage.
Reasonable Expectation is
the Key
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Producers who know prior to the time
insurance attaches that the water supply
may be reduced before coverage begins,
or will be reduced or cut off during the
irrigation season, have no reasonable
expectation of adequate irrigation water.
Good Irrigation Practice
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Application, in an acceptable manner, of
adequate water, at the proper times
necessary to produce at least the yield
used to establish the irrigated
production guarantee
Adequacy of Water
Based on:
 The water available at the time insurance
attaches from the irrigation water supply, soil
moisture levels, and snow pack storage
levels; and
 Supplementary precipitation which would
normally be received, after insurance
attaches, during the period that a good
irrigation practice is normally carried out.
Adequacy of Irrigation
Facilities
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Facilities include the physical resources, other
than water, used to regulate the flow of water
from a water source to the acreage
Adequate, means that at the time insurance
attaches, facilities will be available and usable
at the times needed to have the capacity to
timely deliver water in sufficient quantities to
carry out a good irrigation practice.
No Reasonable Expectation
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For ALL or PART of the Acreage – at the
time insurance attaches:
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The amount of planted irrigated acreage
reported on the acreage report must be
reduced to the amount for which there was
a reasonable expectation of an adequate
irrigation water supply.
Acreage That Has No
Reasonable Expectation
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Of adequate water at time of planting
(or on the calendar date for the
beginning of the insurance period for
perennial crops) must be reported as
non-irrigated acreage, or uninsurable
acreage if a “non-irrigated practice” is
not available.
Carryover Policyholders
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With no reasonable expectation of
adequate water on the final planting
date (including late planting period if
applicable) DUE to an insurable cause
of loss that occurred within the
insurance period, may report such
acreage as prevented from planting,
provided all requirements for prevented
planting have been met.
Carryover Policyholders
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Are eligible for prevented planting payments
if the insured cause of loss that caused the
failure of the irrigation water supply occurred
after the sales closing date for the previous
crop year and all other requirements for
prevented planting have been met.
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For example, corn sales closing date on March 15
– cause of loss occurs on or after March 15, 2002,
could be eligible for a prevented planting
guarantee for the 2003 crop year.
Insurance Period Example 1
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Average Snow pack/Precipitation during IP
would allow for irrigation on all acres
Example:
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Normal irrigated acres = 100
60 acres were PP in 2002
Water allocation for 2003 = 40 acres
60 acres would be eligible for PP in 2003
Insurance Period Example 2
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Average Snow pack/Precipitation during IP
would not allow for irrigation on all acres
Example:
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Normal irrigated acres = 100
Ave. snow pack/precip. during IP would
provide for irrigation on 75 acres
Water allocation for 2003 = 35 acres
40 acres would be eligible for PP in 2003
Irrigated Prevented Planting Coverage
Normal Replenishment
and Usage
100,000 Acre Feet
for 2002 Crop
50,000 Acre Feet
March 15, 2001
If 100,000 Acre Feet would supply 100 percent of needed
water, producer would have full prevented planting coverage.
Irrigated Prevented Planting Coverage
Normal Replenishment
and Usage
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60,000 Acre Feet
for 2003 Crop
10,000 Acre Feet
March 15, 2002
If 60,000 Acre Feet would supply 60 percent of needed
water and allow the producer to plant 200 acres, then
prevented planting coverage would be provided if the water
supply is reduced so less than 200 acres can be planted.
Insurance Period Example 3
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Drought continues from 2002 IP and
information not available to separate occurrence
in 2002 IP from occurrence in 2003 IP
Example:
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Normal irrigated acres = 100
60 acres paid on PP 2002
Water allocation for 2003 = 25 acres
15 acres would be eligible for PP in 2003
(acres in excess of 60 acres paid in 2002)
New Policyholders
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Are eligible for prevented planting payments if
the insured cause of loss that caused the
failure of the irrigation water supply occurred
after the sales closing date for the current crop
year and all other requirements for prevented
planting have been met.
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For example, corn sales closing date on March 15 –
cause of loss occurs on or after March 15, 2003,
could be eligible for a prevented planting guarantee
for the 2003 crop year.
Prevented Planting
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Acreage historically grown under an irrigated
practice for which the insured had no
reasonable expectation of adequate irrigation
water on the final planting date (or within the
late planting period, if applicable) may be
eligible for an irrigated prevented planting
payment even if the acreage could have been
planted to a non-irrigated practice and the
producer elected not to plant.
Prevented Planting
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Recent droughts have identified
weaknesses in current prevented planting
coverage
RMA will be evaluating its current
prevented planting rules
Crop insurance industry and commodity
groups will participate
First meeting held January 14, 2003
Prevented Planting Insurance
Development Guidelines
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Must provide meaningful coverage
to insured’s
Must provide certainty for both
companies and insured’s
Must be simple to administer
Must be actuarially sound
Risk Management Agency
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http://www.rma.usda.gov/