On July 21, 2020, the Risk Management Agency (RMA) issued Frequently Asked Questions for drought damaged crops. https://www.rma.usda.gov/en/News-Room/Frequently-Asked-Questions/Crop-Insurance-and-Drought-Damaged-Crops. Questions involved issues such as what producers should do when crops are drought damaged (RMA states producers should contact their agent with a notice of loss within 72 hours of discovery of damage or not later than 15 days after the end of the insurance period) to allow the approved insurance provider (AIP) to appraise the crop before the producer abandons or puts the acreage to any other use). Another question is whether producers can cut their corn insured as grain for silage (RMA states that for grain insurance only counties cutting for silage is considered as put to another use and the crop must be appraised before the corn is cut). A question raised is whether producers must continue to care for the crop (RMA states it the crop is being taken to harvest then the producer must continue care and maintenance in accordance with good farming practices but if not harvesting the producer must get an appraisal, which may require continued care of representative strips).
Another question is whether irrigation water can be diverted (RMA states that under certain conditions it may be advisable to divert water from some acres to adequately provide water to the remaining crop but it is important for the producer to notify the AIP before diverting the water). A follow up question is whether the producer must wait to divert the water until instructed by the AIP (RMA states states it is preferred but not required but advance notification allows the AIP to consider the diversion plan to determine whether the plan is appropriate so the producer does not get assessed production to count for uninsured causes).
A further question is whether prevented planting coverage is payable on crops that could not be planted due to severe drought conditions (RMA states that prevented planting coverage is provided for drought, failure of the irrigation water supply, failure or breakdown of irrigation equipment or facilities, or the inability to prepare the land for irrigation using the policyholders established irrigation method, due to an insured cause of loss, as provided by the policy. RMA states that prevented planting will be provided only if, by the final planting date (or within the late planted period if the insured elected to plant the crop) the producer provides verifiable documentation demonstrating the drought conditions that is acceptable to the AIP in accordance with the policy).
The last question is what happens when due to an insured cause of loss the producer is unable to prepare the land for the established irrigation method (RMA states that in some areas it is a normal and recognized practice to prepare furrows for irrigation after the crop is planted and that a severe drought may preclude the furrows to be made without damage or destruction of the crop or it may cause the furrows to collapse for some soil types. RMA states that if it is determined that drought is the sole cause for the furrows not being prepared then the loss would be insurable).
ANALYSIS – Most of the advice provided is consistent with the policy and procedures that have been in place for a good number of years. The questions that are not addressed by the policy is related to the diversion of water. There is nothing in the policy that addresses diversion of water at all, much less as an insurable cause of loss, but RMA is correct that it can be used as a loss mitigation tool to prevent losses to the entire crop. Requiring AIPs to consider the diversion of water to determine whether it is truly mitigating and assigning production to count as uninsured causes when it is not is consistent with the policy. However, what is not addressed is situations where a producer may divert crop from one to another. There is not loss mitigation for the crop from which the water is diverted. It is unclear what RMA’s position on this would be.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.