Steve Johnson, Iowa State: Discussion on prevent plant rules and regulations, do's and don'ts

Shay

Foulk: Hello, we're back with another podcast here today with the Ag View Solutions and the Ag View Pitch. And today we want to have another conversation on the prevent-plant information, and we got a special guest with us here today, Steve Johnson from Iowa State University. And Steve, go ahead and introduce yourself and tell us a little bit about yourself, and we'll kind of get the conversation rolling here.

Steve

Johnson: Sure, I serve as the Farm and Ag Business Management Specialist for ISU Extension in Central Iowa, and this is about my fourth wet spring over the last 20 years, and we learned a lot in 2013 that Iowa's in pretty good shape as far as education regarding delayed and prevented planting.

Shay

Foulk: Awesome, well, we'll go ahead and kind of get the conversation started. Tell me a little bit about kind of what you're dealing with in your area to start with. Where, where are the growers at that you're working with as far as decision-making goes, and kind of what are you seeing to this point?

Steve

Johnson: Well, fortunately we're really blessed here in Central Iowa. We're about 90% of our corn's planted, about 30% of our soybeans, so we're not doing any prevented planting meeting. We've been involved with about 9 of those. Most of those have been in Southeast. South Central, North Central, and Northwest Iowa, so I'm very much aware of my colleagues and prevented planting meetings, and we've recorded a live webinar, but we're really blessed right here because our corn's about 2 to 3 inches tall, about 1% of it got covered up a little bit with water, so probably replant might be as big of an issue right now as is delayed or prevented planting.

Shay

Foulk: Sure, that sounds good. A couple of specific questions I kind of want to start out with, you know. You, you had said, you know, I've been dealing with this enough, I've got the dates memorized. You were telling me offline, and, and we can talk about that in a minute. But as guys consider prevent plant versus planting, what are some of the challenges that that you have seen in the past? You know, you said you've had several other years of experience with this. When we're making this decision, whether it's agronomic or economic, what, you know, couple of things are things that we probably should be thinking about and maybe are thinking about, but what, you know, what can you tell us from your experience?

'Cause some of these decisions are pretty emotional, but yet, the economics kind of need to drive it, but at the same time, you know, you've made comments or you will make some comments here, I think, on documentation and that kind of stuff. So talk to us a little bit about some of those issues.

Steve

Johnson: Great communications is the key, especially when you're talking to your crop insurance agent and the adjuster. The adjuster is going to have to come out and release these acres for prevented planting. For farmers to be patient, but document everything. Right now you should have a record of any crops that you've planted already. You've got a record of what that crop was, uh, what field, farm, uh, and the date that you planted the crop. And, and now this is even more important because you're likely going to be planting into the delayed planting period, or after this final planting date It tends to be depending on where you're at in the Corn Belt, May 25th, May 31st, or June 5th. Communications is really the key right now. So working with that crop insurance agent and that adjuster and keeping good records. But when that adjuster comes out, do not lose focus.

What acres have they released for preventive planting? And let me give you an example, Chris, because you set me up early. I've got 100 acres here, it's eligible acres, it's insured, it's in a 50/50 rotation. I'd like to take prevent planting on all that, and I'd prefer to take prevented planting on corn. No, is the crop insurance agent's going to look back at the last 4 years you planted a crop, and any of those 4 years you never planted more than 52 acres of corn. That's the maximum prevented planting you're going to be allowed to take. So you can't pick and choose and say, well, I want corn prevented planting, it pays more if your historical record using the FSA 578 or the FSA Form EZ-156. So I'm going to encourage your, your audience here to make sure they're in tune with the crop insurance industry, has the same information that the FSA office does.

Do you know the planted acreage history on these farms that you are considering taking prevented planting.

Shay

Foulk: Okay, that's good information. Can I throw you a question here? Um, specifically, let's say that the grower has the adjuster out, they kind of make a decision on, uh, on something, and they're in the midst of that late planting period. So it's probably better— and you can correct me on this later— but it's probably better to have, have the adjuster out there sooner rather than later if you know, if this is a concern or a probability. But let's say that, you know, you have the adjuster out there, you look at everything, it's approved, and then the farmer decides, well, you know, I think I can square half of this farm off and I can get out there and I can maybe plant half of this that I wasn't going to do, but now maybe I can do this. What's the process there? What, you know, is that, is that reasonable? Or what's your thought process there?

Steve

Johnson: That's fine. Let's say that 100 acres and you could only plant, let's say 52 acres prevent plant corn, and you say, well, you know, I, I don't need— I think I'm going to go ahead and, and, you know, plant, you know, 60 acres of corn. That's fine, but remember there's a second step and that involves the FSA office. Everybody's going to the FSA office by July 15th. When you go to the FSA office, you're going to file a report and you know what it is. It's the FSA Form 578, Acreage Certification. That is going to be the final indication that not only FSA but your crop insurance agent has, and so you're going to complete a 578 for the acres you planted. Keep good records. Now here comes the second form. It's the CCC 576. Anybody taking preventive planting is going to sign another form.

So you're going to designate on the 578 and the 576 by FSA farm number what acres were planted to what crops on what dates and what acres am I going to take prevent planting on. So there's going to be paperwork coming at you. So you can change your mind from what the adjuster had said, but document what the adjuster said. And if you want to square up that field and plant a few more acres and not have to take prevent plant, but you've got to document this information that you're going to provide your crop insurance agent eventually. There's going to be an adjuster right in the middle of this, and, and it'll be in advance before you sign and file that 578 and 576. That is what we learned in 2013.

Farmers didn't do a good job of keeping records and didn't always do a good job of listening to the adjuster, and some of them didn't get paid for prevented planting because they didn't listen to what the adjuster had said about what acres actually qualified for prevented planting. So I'm saying good records and great communication is really the key in this whole idea of delayed and/or prevented planting.

Shay

Foulk: Sounds good. So, um, any other challenges? I mean, you're talking about, um, the communication, the documentation, and the record keeping. Have you seen any other Any other things yet this year that are new or different, or is that, you know, anything else you can think of that, that can help these guys?

Steve

Johnson: I think the thing that's different this year is some of these acres still have cover crops on them, and that might not be all bad. Um, so I think there's this cover crop issue that still might be playing out on a few acres. And the biggest stumbling block in 2013 was the seed industry got involved. And decided they wanted to get rid of their old seed corn and their old seed beans. So they convinced the Risk Management Agency that farmers could plant as cover crops old seed corn and old seed beans. That is a train wreck, folks. How does that adjuster know that you planted old seed corn as a cover crop? They don't. They think you went ahead and planted corn. You didn't do a very good job of planting it because you thought it was a cover crop. There's where I think a farmer's got to pay a lot of attention, is you've got time to plant a cover crop.

It's not something that you've got to do right away. You weren't able to plant corn or plant soybeans, so I think making sure you understand this implication. I, I I hope they don't allow seed corn or seed beans, in my opinion, because it added confusion, especially to the adjuster. And the other thing that we learned in 2013, August is a great time to put in new tile. So if you've got a wet field, and you always wanted to put tile in, but you could never get enough time, and the timely planting and timely harvest We saw a lot of tile go in, in the late summer on these prevented planting acres, but you might want to go ahead and call your tiler because I bet they get real busy late summer, um, trying to make drainage improvements on some of this land.

So it's not a slam dunk, and I'm concerned some farmers are not going to be good communicators And they're going to end up leaving parcels of land that they thought they were going to get paid prevented planting, and they're not going to get paid prevented planting. I think we're going to see most of the prevented planting acres here in Iowa on two types of ground: A, corn, and B, owned ground. Hard to make the cash flow work on cash-rented ground because when you're taking 55% of the revenue guarantee for corn prevented planting and 60% for soybeans, the cash rent landlord is going to get most of your payment. So I think likely prevented planting corn on own ground will be the predominant prevented planting, at least here in Iowa.

Shay

Foulk: Yeah, and, and, um, too, Steve, we do have a, um, a side-by-side prevent plant tool that we've got out. Some of our Growers have asked for it, and I'll just throw that out there again here in the, in the Ag View Pitch too, that if anybody wants that side-by-side tool, just to email us and we'll get that to, to you guys. But what we're seeing, Steve, is as you go east, the challenge is, is the yield reduction possibility because the soils are so saturated. And even though, you know, the forecast has gotten a little better and we get some heat, that'll dry things out probably faster than people might realize.

But one of the things that I've heard from some of the, let's for political purposes, let's call them more mature growers that have planted, you know, 30 or 40 crops and seen this before, the caution that I've been hearing, and this is an agronomic comment I guess, but that, you know, when you're planting on the really late end, don't get in a rush. I've been told by 3 growers just today that when they planted a little too soon in June, they had much more of a penalty in a compaction or with the rows opening back up again or whatever, because you turn hot and dry late like that. And so, you know, I think there's some inherent risks out there that are hard to calculate from a financial standpoint, but there's a lot of subjective decision-making that has to go on.

That's where I You know, it occurs to me, and correct me if I'm wrong, that it might be prudent for some of those growers that are pretty sure once they're in that planting window that, or have any kind of inclination that they might not be able to get that field planted and may need to opt for prevent plant. To what you were telling me earlier, we need to have the adjuster out there on the front end of this scenario rather than waiting to kind of see if we can get planted, maybe get that approval, for that, that selection of the prevent plant. And then if something changes, you can always go the other way. Is that, is that advisable?

Steve

Johnson: I would agree. I think we're going to back a lot of these adjusters up and they're going to have to scramble to parts of the Corn Belt where we've got the request. I'd rather have that adjuster out next week and start analyzing what would be those best decisions. Don't forget the APH issue because, you know, those people that try to mud this corn crop in and ding their APH. If you plant the crop, you've got to count that production, that yield, along with the most recent 9 years. If you take prevented planting, you get a mulligan for yield on your APH. For some of those that are out there and they're saying, well, the last thing I need is 100 bushel an acre corn that I'm going to throw into my APH for the next 10 years, there's some advantages of prevented planting where you don't have to use this year's yield on those acres.

So I don't think we're going to see the first crop, second crop because of we're using the projected price. You don't get the harvest price when you're taking prevented planting. But I think a farmer might be real astute of contacting their crop insurance agent, getting an adjuster out, using maps. That's what I'd want. I'd want a map. I'd really want to identify what part of that field, and then when I pull in with that planter, whether it's next week or 2 weeks from now, I've got a pretty good idea what parts of that field I am going to plant. And then I know the other portion of that field, I'm going to take prevented planting on corn, or I'm going to take prevented planting on soybeans. But we're still real early on prevented planting soybeans. So I agree, Chris, with your analogy.

I'm also concerned about the maturity of these corn hybrids because this could come back and bite us in the fall, especially with these drying costs, uh, these full, you know, maturities that we go ahead and plant first two weeks of June and we're still waiting and it's Thanksgiving and we're waiting for them to dry down. So I think there's more agronomic issues and it's not just when and how we plant that crop.

Shay

Foulk: Yeah, and that's one of the things in the Prevent Plant tool that we've, we've considered, you know, that really impact the decision one way or the other. And those are scenarios that each individual has to look at based on, you know, north to south and what hybrid maturities they're going with and how that might impact drying. And if you start changing the drying cost on a per acre basis, it's pretty shocking on how fast dollars per acre add up, you know, when you start adding 5, 6, 7 points of moisture to that. And then, and then yet at the same time, statistically, you know, we're getting to the point where, you know, a lot of the data indicates, you know, maybe a 20 to 25% statistical yield reduction at this date versus, you know, the optimal planting window. And so that, that becomes a pretty big concern too, but Hey, Steve, Shay is here with me too.

He has a question he wants to ask you, and then I'm going to come back and hit you with an MFP question too that relates to this. Go ahead, Shay.

Chris

Barron: Yeah, Steve, so I apologize if I missed this earlier. I'm going to use your 100-acre scenario here. If historically the producer has planted 50 acres of corn, 50 acres of bean, and that's what they harvested in 2018, But in fall of 2018, they said, hey, next year I want to make this 75 acres of corn. They went ahead, put on nitrogen, did any additional inputs that they needed to. If they can prove to that adjuster that their intentions were to plant corn, right, because you put on 170, 200 units of nitrogen, what does that look like? Does that play into the equation at all, or is that hard and fast with that 4-year rule?

Steve

Johnson: It's a hard and fast 4-year rule. The adjuster doesn't care what you thought you were going to do. The adjuster is going to look at the planted acreage for the last 4 years. And again, that's on 2 different places. That's on the 578 or the EZ-156. And for the farm program, make sure you know there's a 156 out there with a 10-year history that I can see that information. No, you haven't planted over 50 acres in the last 4 years. You can only claim up to 50 acres prevented planting on that particular tract. And so I'm sorry that you put fertilizer and you already, you know, had bought the seed. The crop insurance adjuster has that access to the same information you provided to the crop insurance agent and the FSA office. You'll only qualify for up to 50 acres because that was the most corn that you planted over the last 4 years. Now that is a hard and fast rule.

And I don't think there's going to be very much variance. And that's exactly why I say you've got to listen to what the adjuster say. The adjuster told you, I can only pay prevented planting on those 50 acres. You might as well plan on what you're going to do with the other 50 acres, and whether you're going to go ahead and plant corn, whether you're going to go ahead and possibly plant soybeans on some of those acres. But they're not going to tell you that you got to plant corn on, you know, the upland and not on the bottomland. So you've got some decisions to make, but I think it's very important. There's the documentation, there's the map, there's where you're writing down, that's exactly what the adjuster told me. I can only get paid for 50 acres of prevented planting corn.

Chris

Barron: Absolutely, very important, especially for our growers to the east. You know, they're still a little ways out from their date on the decision there. Thanks for answering that question.

Shay

Foulk: Steve, Chris here again. Another question, well, let me first make a comment though. You let me back up before I do the MFP question. We, you talked about the seeding of corn and soybeans on the PP acres and stuff. We've got some growers that have commented, well, I've got soybeans that are treated that I can't return. I've paid for them and they're in my shed. If I can't, you know, basically if I can't plant, you know, can I use these soybeans for those acres as a cover crop? As of right now, the answer, the answer I suspect what you're going to say is no. Is that correct then?

Steve

Johnson: I would not plant those soybeans as a cover crop unless that crop insurance adjuster had already approved that particular field for prevented planting, and they informed me that I could use those old seed beans as a cover crop. I'd be concerned that I didn't communicate with the adjuster. I went ahead and threw— I just went ahead and broadcast those beans out there. They're laying on top of the ground. No, you planted beans. How would the adjuster know what your intent was? And along the same vein, I heard this out of Illinois— sorry to your listeners— yesterday was the farmer said, well, I'm going to go ahead and plant my beans. I'm just going to fly them on and I'm not going to spray them. Then you don't have crop insurance coverage because you've got to use good farming practices. That is a crop insurance term.

And if you violate the good farming practice, then you don't necessarily have crop insurance coverage on that field or on that farm. So I think producers have got to pay attention to what the rules and regulations are, or they might have bigger troubles than just trying to determine delayed or prevented planting. They might not have planted acres that they thought they were going to get paid for. So there's the importance of recognizing How crop insurance works, it hasn't changed over the last 19 years, so don't think this just changed this year. Crop insurance is pretty mature. Let's do a good job of that communication with the crop insurance agent, that adjuster, documenting what the adjuster said, what acres I do take preventive planting on, and then don't forget those records that I'm going to use for both crop insurance as well as FSA purposes.

Shay

Foulk: Can I throw another question at you here then with regard to that scenario of best practices? So talking to quite a few of the growers to the east, they're sitting there with basically nothing planted. They needed 5 days to dry off. Let's say that God blesses us and gives us those 5 days, but then they need 7 8, 10 days to plant everything. If they start planting and get halfway through and haven't yet gotten approval on some prevent plant on some of those fields, is it best practice that they couldn't get there? I mean, you know, because you got so many, so many acres per planter row, and a lot of these guys are going to struggle getting across all of their acres, the field might be fit, but you logistically can only plant so fast.

And now, and that really probably isn't an acceptable, or is that an acceptable, maybe is a better question, excuse for, you know, not getting there because it's a logistical issue. So is that, is that permittable, or how is that handled, or is that something where, you know, the adjuster and the farmer need to be really communicating, to your point of good communication.

Steve

Johnson: I think, I think the adjusters are going to understand that once you started planting, you got as much done. Again, you're using good farming practices, but the definition of prevented planting is that there was loss caused because in the general area the producer could not plant the acreage. So I don't think that's in question. I couldn't get across, you know, 2,000 acres, I could only get across 700 of those. But the fact is, is that here's what you're doing in advance. Now you're making sure you know how many acres do qualify for prevented planting. And is that prevented planting corn? Or is that prevented planting soybeans? The things you do in the next 5 days could be critical. Because once the planter rolls, you're not going to have time to probably communicate and figure out what acres do qualify for prevent plant corn, prevented planting soybeans.

So Chris, I think as long as you're using those good farming practices, that's not going to be what's in question. What's going to happen is once we get 25 days after these final planting dates, that is when you need to make sure you filed prevented planting with your crop insurance agent. We're all in 25-day windows after the final planting date, whether that's this magic May 25th, May 31st, June 5th for corn, June 10th, June 15th, June 20th for soybeans. You have to make sure that if you are taking prevented planting that you do file the paperwork within 72 hours. So you basically get 72 hours beyond that 25-day period but let's figure out the logistics now. What acres might qualify for prevented planting corn? Stop. What acres in that particular tract or that section might qualify for prevented planting soybeans?

I think that preliminary work is critical because the emotions are going to be even higher in 3 weeks from now, right?

Shay

Foulk: So basically, to conclude, or in a nutshell, and I'm still going to ask the MFP question real quick here in a second, but to, to wrap that portion of the discussion up, be early with the communication, have them out, get the approval, and then if you can plant, great. If you can't, you're covered. I actually—

Steve

Johnson: absolutely, I don't think some of you are gonna see adjusters for 3 weeks. I'm sorry, there's not enough adjusters in the country to be out here at all these farms. But the communications that you're having with your crop insurance agent of how many acres would qualify for prevent planting in that particular section I think that's the discussions that you should have been having over the last 2 weeks. Move beyond the dates. Everybody knows the dates. Everybody knows you're going to lose 1% of your revenue guarantee. Focus on the agronomic issues on these fields and these farms, and then let's make sure you know, if I do take prevented planting, then how many acres in each of these sections would qualify for prevented planting corn and prevented planting soybeans? That is what I think is critical on the 31st day of May.

Shay

Foulk: Gotcha. Last question, uh, MFP payment on prevented planted acres. Are you hearing anything there, yes or no, still don't know, what's your thought?

Steve

Johnson: I don't think anybody does. I mean, I see the rumors that are coming out, you know, of Secretary Perdue. I think the reason that they're was that there's a magic reason there's a July-August possible payment on MFP. They want to see your acreage certifications. And so I am not going to speculate, but the reason that they're going to wait till late July or August is because they want to see what you turned into FSA. And so I'm not going to speculate that I know what they're going to do with these prevented planting acres. I'm reading the same thing that you read, you know, from that release last week, but USDA has not shown their hand in this. And I, I just do not like USDA, how they positioned. They're not in a good spot. And so I don't think I want to plant for the MFP payment. And hopefully we'll have more by the time we plant.

But I think that this payment that they're going to make on a per acre basis and a county payment is pretty confusing, really confusing. But that MFP payment, in my opinion, will be larger than any sort of ARC PLC payment you might get over the next 5 years. So I think we've got to pay attention, but I, I think the attention that we're paying to right now is primarily delayed and prevented planting and making the best decisions both agronomically and economically for our farming operation.

Shay

Foulk: Great. Hey, this is really great, Steve. I, we, you know, Shay and I really appreciate you taking the time to share your wisdom and information and things, and you always do a great job. Worked with you in the past, and we really appreciate that. How would our clients, if they want to get a hold of you or check out any of your stuff, what's the best way to reach you or to look up some of your stuff?

Steve

Johnson: Yeah, we've compiled all the information at Iowa State on delayed and prevented planting on one webpage blog. So I would just Google Iowa State University delayed and prevented planting, and you'll see we've got about 10 or 12 things there. We've got our own state calculator that also uses the agronomic concerns that we expressed today about planting corn and soybeans late. So I think there's similar types of information at FarmDoc, that's probably where the best information is. University of Illinois FarmDoc, look at the May 12th FarmDoc article with a FAST tool, or just search Iowa State University delayed and prevented planting, and you'll see all the information that we put out there on the same topic we discussed today.

Shay

Foulk: Awesome, Steve, we really appreciate it. Really great conversation. Thanks for being here, and thanks everybody for listening to the Ag View Pitch, and we'll see you on the next one. Thanks a lot.