On September 26, 2019, USDA announced that producers that received prevented planting payments in 2019 would receive a “top-up” payment equal to an additional 10 percent for producers with Yield Protection and Revenue Protection with Harvest Price Exclusion and 15 percent for producers with the Revenue Protection Harvest Price Option. No signup is necessary and receiving a prevented planting payment automatically enrolls the producer. Payments are authorized under the Additional Supplemental Appropriations for Disaster Relief Act of 2019. The approved insurance providers have agreed to deliver the payments to their eligible insured.
On October 17, 2019, the Risk Management Agency (RMA) issued FAQ’s on Prevented Planting Disaster Payments. In the FAQ’s, RMA states that the payments will be an additional 10 or 15 percent of the prevented planting payment. RMA also stated that since the prevented planting disaster payment is based on the prevented planting payment, if the original prevented planting payment is reduced due to planting a second crop and the double cropping provisions not being met, the prevented planting disaster payment would also be reduced. RMA also included FAQ’s regarding the need to buy or maintain crop insurance for the next two crop years after receiving the prevented planting disaster payment. There are numerous other FAQ’s found at https://www.rma.usda.gov/en/News-Room/Frequently-Asked-Questions/Prevented-Planting-Disaster-Payments.
ANALYSIS – The prevented planting disaster payment are authorized by a separate appropriation and are implemented by RMA. By statute, they are not directly associated with previously prevented planting payments. It was an administrative decision by RMA to base the payments on the original prevented planting payment. The only limitation in the Additional Supplemental Appropriations for Disaster Relief Act of 2019 is that total payments to producers could not exceed 90 percent of the loss. That being said, RMA has wide discretion in the implementation of the Additional Supplemental Appropriations for Disaster Relief Act of 2019.
The only concern found was with respect to the FAQs regarding the reduction in the prevented planting disaster payment if the producer plants a second crop and does not meet the double crop provisions. The manner in which the answer is drafted could suggest that the 10-15 percent prevented planting disaster payment is also reduced by 65 percent because of the second crop planted. While in terms of dollars the prevented planting disaster payment may be reduced, the producer is still receiving 10 or 15 percent, as applicable, or the original prevented planting payment. For example, if a producer has a guarantee of $1000 and has 50 percent prevented planting coverage. If the producer is prevented from planting, the producer would receive $500 if no second crop was planted. If a second crop is planted, and the producer does not qualify for double cropping, the producer would receive $175 (500 x .35) in prevented planting. If that same producer is receiving a prevented planting disaster payment of 15 percent, the producer would receive an additional payment of $26.25 (175 x .15).
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.