March 04, 2003

LINCOLN, Neb. — This year's drought will make choosing the right crop insurance coverage difficult. In this extremely dry year, farmers need to visit with their insurance agent soon. The deadline to buy crop insurance for 2003 spring-planted crops is March 15.

Anticipating another potential drought year, many farmers are evaluating traditional and alternative crops because they face limited water supplies this season, said Paul Burgener, agricultural economics research analyst at the University of Nebraska's Panhandle Research and Extension Center at Scottsbluff.

"Crop insurance issues are more difficult to evaluate this year," Burgener said, especially for surface water irrigators who will receive reduced or no water from their irrigation district.

"Irrigated crop producers are facing limited water supplies and uncertainty in the notification dates on these water sources. This uncertainty will have numerous implications as producers make planting decisions and attempt to insure the crops that are planted."

The most important thing producers can do is to remain informed about available options, he said.

The prevented planting option in the crop insurance program, initially developed to cover fields that are too wet for spring planting, is available in all insurance contracts with drought included as one of the perils.

However, the prevented planting coverage is difficult to understand, Burgener said.

Lack of moisture and failed water supply should qualify producers for prevented planting, but the condition must be prevalent throughout the area, meaning a number of farmers must be applying for the same peril.

For irrigation districts that may not have water, this will mean proving the water is not available for a significant portion of the acres in the irrigation district, he said.

Growers who take the prevented planting option can leave the land idle, plant a cover crop or plant a crop for grazing. However, crops planted and harvested for sale are not allowed on prevented planting acres.

Another concern with prevented planting is the number of times it may be claimed. If drought would persist into 2004, prevented planting acres claimed in 2003 would not be eligible in 2004.

Producers also need to be aware that lack of rainfall for irrigated producers is not an insurable peril with multiple peril crop insurance policies, Burgener said.

"Crops without irrigation water on traditionally irrigated land will be insurable, but only as dryland crops," he said. "This is a double-edged sword for producers looking to plant dryland crops on previously irrigated acres that will not have a water supply in 2003."

For producers expecting some water, the percentage of the land expected to have adequate irrigation to produce a crop will be insurable as irrigated production. The remainder will need to be insured as dryland production.

Timeliness of information from the U.S. Bureau of Reclamation and irrigation districts about the amount of water available for irrigation will influence the actual insurability of the crops at planting time this spring, Burgener said.

As information on water availability becomes available, insurance providers will need to determine whether crops are going to be insurable and whether all of the acreage is insurable as an irrigated practice.

"If the intention is either dryland, irrigated, or prevented planting on irrigated land, the crop must be enrolled in the crop insurance program by the deadline," he said.

Farmers also should be aware that multiple peril crop insurance prices for corn and soybeans increased to $2.20 and $5.30, respectively. Farmers in western Nebraska planting dry edible beans for the first time this spring will be able to insure as any other crop grown for the first time.

3/4/03-SA

Paul A. Burgener
Agricultural Economics
Research Analyst
(308)632-1241

Sandi Alswager Karstens
IANR News and Photography
(402) 472-3030

Department: Agricultural Economics