IRRIGATION ISSUES AND PREVENTED PLANTING By Dennis A. Kaan Agriculture and Business Management Specialist

Extension’s Role in Prevented Planting Issues Basic provisions define good farming practices as: 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 Final Sign-up Date (Sales Closing) March 15, 2003 Final Acreage Reporting Date July 15, 2003 Report prevented planting acres on this date.

Final Planting Date BarleyApril 30 OatsApril 30 Sugar BeetsMay 20 CornMay 25 PotatoesMay 31 SunflowersJune 15 Dry BeansJune 20 MilletJune 20

Environmental Diversions 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 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? 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 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 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 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 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 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 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 For ALL or PART of the Acreage – at the time insurance attaches: 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 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 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 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. 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 Average Snow pack/Precipitation during IP would allow for irrigation on all acres Example: Normal irrigated acres = acres were PP in 2002 Water allocation for 2003 = 40 acres 60 acres would be eligible for PP in 2003

Insurance Period Example 2 Average Snow pack/Precipitation during IP would not allow for irrigation on all acres Example: 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 100,000 Acre Feet for 2002 Crop 50,000 Acre Feet March 15, 2001 Normal Replenishment and Usage If 100,000 Acre Feet would supply 100 percent of needed water, producer would have full prevented planting coverage.

Irrigated Prevented Planting Coverage 60,000 Acre Feet for 2003 Crop 10,000 Acre Feet March 15, 2002 Normal Replenishment and Usage 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. I

Insurance Period Example 3 Drought continues from 2002 IP and information not available to separate occurrence in 2002 IP from occurrence in 2003 IP Example: Normal irrigated acres = 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 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. 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 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  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  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