Prevented Planting Provision Influence on Cotton Producers' Late Planting Decision

Starting with the Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994, producers that purchased certain crop insurance policies were eligible for an indemnity if natural causes prevented them from planting their crop by the final planting date. Increases in prevented planting indemnity payments over the last two decades has triggered investigations into prevented planting claims and recommendations were made to reduce the payment structure of prevented planting in the future. We determined the prevented planting option a cotton producer would maximize net returns at different insurance coverage levels, prevented planting coverage factors, and planting windows. Data were used from a Tennessee cotton and soybean planting date experiment conducted. A quadratic response function was used to estimate the yield response to planting date. Net return equations were calculated and compared for planting during the late planting period, taking the full prevented planting payment, and planting soybeans as a second crop. Preliminary results suggest that a cotton producer would maximize profits by accepting the full prevented planting payment and forgo the options of planting cotton late or switching to growing soybeans. These results will help policy makers improve the prevented planting provision to encourage efficient land use.