The Risk Management Agency (RMA) issued Manager’s Bulletin MGR-19-017 and a Fact Sheet regarding added flexibility for when cover crops must be terminated while remaining eligible for crop insurance. The Farm Service Agency (FSA), Natural Resources Conservation Services (NRCS), and RMA developed new NRCS Cover Crop Termination Guidelines (Guidelines) that maximize conservation benefits and increase management flexibility, while minimizing yield reduction risks. USDA wanted to ensure that cover cropping management decisions were considered a good farming practice. Now insurance automatically attaches at the time the crop is planted and if there are issues with a cover crop it will be handled as any other good farming practice. The summer fallow statement has been revised to include standard exceptions to the Guidelines, allowing more flexibility to address failed crops and dates for terminating any regrowth of the failed crop. The summer fallow statement has been revised to allow cover crops to be planted on land during the summer fallow period, as specified in the Special Provisions and the Guidelines. Cover crops may be planted on summer fallow acres in Oregon and Washington counties, as specified in the Special Provisions, affected by 2018 fires as a soil conservation practice.
According to the fact sheet, the Guidelines allow producers to follow the generalized zonal guidance provided in the Guidelines, utilize already available published materials from agricultural experts that are applicable for the crop and area, or request an exception to the Guidelines by receiving agricultural expert support in writing according to the Good Farming Practice Handbook.
ANALYSIS – These changes clearly benefit producers. Under the current policy provisions, a crop is not insurable unless the cover crop was terminated by a certain date or event, such termination before the cover crop heads. Now insurance attaches unless the Guidelines are not followed. This is a definite change because the burden was initially on the producer because they did not have insurance unless they could show they complied with the termination requirements. Now that insurance automatically attaches when the crop is planted the burden is on the approved insurance provider and RMA to show the producer did not comply with the Guidelines. This may increase the burden on RMA because cover crops now fall under the category of good farming practices. While the approved insurance providers make the initial determination of good farming practices, all final decisions must be made by RMA in order to receive the heightened standard of review found in section 508(a)(3) of the Federal Crop Insurance Act.
RMA has also made changes to the summer fallow practices to allow cover crops to be planted during the fallow year provided the cover crop is not hayed or grazed or otherwise harvested and it is terminated in accordance with the Guidelines. Checking the actuarial documents, it appears that cover crop and summer fallow provisions have been added to the Special Provisions to the changes go into effect by the June 30, 2019 contract change date. The cover crop practice on summer fallow acreage applies to all crop years and counties with the Special Provision statements.
What is not clear is what, if any, effect these changes would have on premium rates for summer fallow practices when a cover crop has been planted. The actuarial documents do not appear to contain any special rate for this practice and maybe one is not necessary if planting a cover crop would have no greater effect on the productivity of the acreage than leaving it fallow. If this is the case, inclusion of this information would be helpful because, on its face, depending on the cover crop planted, logic suggests that it could affect the productivity of the acreage and impact premium rates.
The fact sheet provides little information. There is a minimal reference to terminating a cover crop. There is not even a cross reference to the Guidelines to make them more easily accessible. The fact sheet provides more discussion regarding planting a cover crop into an insured crop, interplanting, and planting a cover crop after an insured crop is harvested. With respect to the latter, the heading is misleading because it actually discusses the consequences if a cover crop planted after an insured crop and its consideration as a second crop. The problem is that if a cover crop is planted after the insured crop has been harvested then it cannot be a second crop because the crop year ends at harvest so the planting of the cover crop is in the next crop year. The second crop provision only apply if the first insured crop fails or it is prevented from planting and the cover crop is planted for harvest in the same crop year. In addition, the fact sheet makes no reference to planting cover crops on summer fallow acreage. It would be helpful if all related documents were consistent.
Looking at the actual Guidelines themselves they set zone maps and within those zones times and events are established by which the crop must be terminated. For example in zone 3 the cover crop must be terminated before planting the crop. Other zones are divided by late spring seeded and fall seeded crops and early spring planted crops with some additional zonal guidance provided. At the end, the Guidelines contain a number of definitions but do not use those terms anywhere else in the Guidelines. It is not clear what their purpose is but they may be important because other documents refer to compliance with the termination requirements in the Guidelines but producers must also comply with the requirements regarding haying, grazing, or otherwise harvesting the acreage, which are only found in the definition of “summer fallow” in the Guidance. To these extent these definition are different than those in the policy, the policy definition control. For this reason, other documents usually contain cross references to the policy definitions to avoid the possibility of inconsistent definitions. However, a search of the Common Crop Insurance Policy Basic Provisions, the Small Grains Crop Provisions, the wheat Special Provisions, and the Crop Insurance Handbook do not contain a definition of “summer fallow.” Therefore, it is unclear how “summer fallow” is defined but it should be noted that these Guidelines are not part of the policy.
All statements made are opinions of the author and are not intended to provide legal opinions or legal advice.