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New rule changes insurance
Changes affect double-cropping provisions
Des Moines (DTN)--Because of higher soybean prices this year, more U.S. farmers may decide to make wheatlage out of their soft-red winter Wheat crop and come back with a double crop of soybeans, even though new rules disallow insurance coverage on the second soybean crop.
Until this year, federal crop insurance covered second soybean crops, but according to a new rule, farmers aren't allowed to collect from two crops in one season on the same acre.
According to 2004 double-cropping insurance provisions, farmers have several options. If they don't plant a second crop, they can receive 100 percent of the indemnity on the first crop.
Another option allows farmers to plant a second crop that wouldn't be insured, but then receive 100 percent of the indemnity from the first crop.
The third option allows farmers to plant and insure a second crop and receive a reduced indemnity of 35 percent from the first crop. Under that option, farmers could conceivably collect on the first crop, then turn around and plant another crop that was destined for failure just to collect crop insurance again.
"There was some foul play on this a few years ago in Texas or somewhere in those high-loss areas, so the government put this new rule into place," said Steve Sims, a north-central Indiana crop insurance agent.
Because of a few bad apples, he said, the government's new ruling has increased the risk for farmers such as Kevin Kremer of Delphy, Ind.
"We've double-cropped this way for 10 to 15 years," Kremer said. "We would like to not be able to insure the Wheat but instead the second crop beans.
"I wasn't aware of it until the crop adjuster and then the agent told me. I'm sure they (government officials) sent me some fine print I didn't see. I'm going to put beans out there anyway, I don't have a choice."
Because of rain, the north-central Indiana farmer has yet to take out his SRW Wheat crop.
Sims said though this new double-cropping rule would normally not affect many farmers, this year could be different.
"We don't have a lot of farmers doing this on a regular basis, however, with the higher soybean market we might find in two or three months in a harvested acreage report that more farmers made wheatlage and put in a second crop of soybeans," he said.
While it might seem proper second-crop planting was the motive behind the new rule, Sims said it's his belief foul play caused the government to act.
Along with farmers who hope to take advantage of higher soybean prices, the majority of double-cropping farmers trying to make wheatlage are those with cattle.
"The biggest beef I have," Kremer said, is "the USDA is trying to encourage farmers to participate in federal crop insurance, which is a good thing. But one hand says they want us to participate and then they make rules that make it tough to participate."
Date: 6/24/04
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