Earlier in June, several large rain events caused significant flooding and ponding in fields throughout South Dakota. In some areas, flood waters uprooted crops and washed away topsoil. In fields where ponds remained after rains ended, soils were likely water-saturated and largely devoid of oxygen. Although at this point the extent of the damage to crops is still being determined, some fields have been compromised and yield loss will likely occur. As a result, producers with crop damage are now considering whether to replant, plant a different crop, or do nothing. Additionally, they are considering the ramifications those decisions have on crop insurance.
Crop insurance is an important risk management tool utilized by producers in many parts of the U.S., including South Dakota. In South Dakota, crop insurance protected $5.6 billion in liability on growing crops in 2013 and 17 million acres were insured (about 97% of acres planted to major crops).
Multiple Peril Crop Insurance (MPCI) covers crop yield loss caused by different types of natural disasters such as drought, freeze, and flooding. Newer insurance options combine price and yield protection to protect against loss of revenue. MPCI, under the Federal Crop Insurance Program (FCIP), is one of two types of crop insurance available to farmers in the U.S. (Crop hail insurance policies do not fall under FCIP and must be purchased separately.) Like hail insurance, MPCI is provided by private companies, however, MPCI policies offered by these private insurers are supervised and regulated by USDA’s Risk Management Agency.
For producers who have insured crops that have been affected by flooding, they should first contact their insurance provider. Crop agents must be notified within 72 hours following an eligible loss.
At this time of year, several options exist for insured producers who have crop losses caused by natural disasters such as flooding. These are:
- Leave damaged crop as is and receive insurance indemnity.
- Replant the same crop.
- Plant a different crop.
When it is practical to replant the insured crop, the producer must replant that crop, on those acres, for coverage to continue on those acres. Should the grower choose not to replant, although it is practical to replant, no coverage for the first insured crop will be provided. Practical to replant is determined by the producer’s approved insurance provider (AIP). To do this the AIP will consider various factors in deciding whether replanting allows sufficient time for crop to reach maturity.