On August 17, 2020, the Risk Management Agency (RMA) announced that farmers who planted cover crops on prevented planted acres in select counties in North and South Dakota will be permitted to hay, graze or chop those fields beginning Sept. 1 rather than Nov. 1. https://www.rma.usda.gov/News-Room/Press/Press-Releases/2020-News/USDA-Allows-Some-Farmers-to-Hay-Graze-or-Chop-Cover-Crops-Early-This-Year. RMA stated that the change is being made because of excessive moisture and flooding in 42 counties in the two states. RMA states that the change still will allow farmers to maintain eligibility for their full 2020 prevented planting indemnity. RMA states the qualifying counties include:
North Dakota: Barnes, Benson, Bottineau, Cass, Dickey, Eddy, Foster, Grand Forks, Griggs, Kidder, La Moure, Mcintosh, Nelson, Ramsey, Ransom, Rolette, Sargent, Sheridan, Steele, Stutsman, Towner, Traill, and Wells
South Dakota: Beadle, Brown, Brule, Campbell, Clark, Codington, Day, Edmunds, Faulk, Hand, Hanson, Hyde, McPherson, Marshall, Potter, Roberts, Sanborn, Spink, and Walworth
RMA states that flooding and excessive rainfall in parts of the country have resulted in a significant amount of prevented planting claims under Federal crop insurance. RMA states that given these extraordinary weather events and the need for animal feed, flexibility around the use of a cover crop planted on prevented planted acreage for haying, grazing and cutting for silage, haylage and baleage has become necessary.
ANALYSIS – RMA did this on a wider scale in June 2019. RMA is moving the date by which cover crops could be hayed, grazed, chopped, etc. without affecting the prevented planting payment from November 1 to September 1. RMA is also treating cutting for silage, baylage, and haylage the same as haying and grazing even though they involve harvesting the crop is defined by the Crop Provisions. RMA does not explain its authority or rational basis to make this change. With respect to the applicable law, section 508A(c)(1) of the Federal Crop Insurance Act (FCIA) states:
(1) Except as provided in subsections (d) and (e), if a first crop insured under this subtitle in a crop year is prevented from being planted, the producer of the first crop may elect one of the following options:
(A) The producer may (i) elect to not plant a second crop on the same acreage for harvest in the same crop year; and (ii) subject to paragraph (4), collect an indemnity payment that is equal to 100 percent of the prevented planting guarantee for the acreage for the first crop.
(B) The producer may (i) plant a second crop on the same acreage for harvest in the same crop year; and (ii) subject to paragraphs (4) and (5), collect an indemnity payment established by the Corporation for the first crop, but not to exceed 35 percent of the prevented planting guarantee for the acreage for the first crop.
Cover crops are not referenced in section 508A(c)(1) of the FCIA. RMA introduced cover crops in the definition of “second crop” in the policy, which, for the 2020 crop year, states in part “A cover crop, planted after a first insured crop and planted for the purpose of haying, grazing or otherwise harvesting in any manner or that is hayed or grazed during the crop year, or that is otherwise harvested is considered to be a second crop. A cover crop that is covered by FSA’s noninsured crop disaster assistance program (NAP) or receives other USDA benefits associated with forage crops will be considered as planted for the purpose of haying, grazing or otherwise harvesting. A crop meeting the conditions stated herein will be considered to be a second crop regardless of whether or not it is insured.”
In the definition of “second crop,” RMA is defining “harvest” as haying, grazing or otherwise harvesting in any manner and stating that cover crops who meet these conditions are second crops. This is important when looking at section 508A(c)(1) and whether there is “harvest on the same acreage in the same crop year.” RMA has always allowed haying and grazing after November 1 without affecting the prevented planting payment because it was determined by RMA that in normal conditions harvest would be completed and the insurance period would have ended. Since the insurance period had ended, any haying, grazing, etc. after November 1 would be considered the next crop year. Therefore, producers who grazed, hayed, etc. after November 1 could keep their full prevented planting payment because the crop was not harvested in the same crop year.
In this press release, RMA is moving the date to allow haying, grazing, cutting for silage, haylage, bailage, etc. to September 1 but most applicable crops will only be beginning or in the middle of harvest so this haying, grazing, cutting for silage, haylage, bailage, etc. will occur in the same crop year. Under the FCIA and the regulations, if crop is harvested on the same acreage in the same crop year, the prevented planting payment must be reduced. However, it appears that RMA is disregarding the statute and regulations and is allowing a full prevented planting payment when a second crop is planted for harvest on the same acreage in the same crop year. They may have some new authority to disregard the law but if so, it should have been stated in the bulletin.
The fact that RMA is limiting the number of counties does not change the fact that the law requires that a prevented planting payment be reduced if a second crop is harvested in the same crop year and cover crops that are hayed, grazed or chopped are considered second crops and haying, grazing, chopping and cutting for silage, haylage or bailage is considered harvest.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.