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Corn, soybean and rice producers in regions prone to spring flooding are criticizing an Agriculture Department decision to eliminate buy-up coverage for prevented planting insurance.
Prevented planting coverage compensates farmers who are unable to plant for certain reasons, like floods, hurricanes, or excess precipitation that oc
Francis Tsiboe (NDSU photo)cur within a certain window of the planting season. Indemnities are based on a producer’s insurance guarantee. Prior to the rule change, producers could choose to pay a slightly higher premium to qualify for an indemnity payment 5% higher than the basic coverage, according to a USDA summary.
“What the rule takes away is producers’ ability to increase that coverage by five percentage points on top of whatever their basic prevent plant would be,” said Francis Tsiboe, a senior research economist at North Dakota State University.
The rule change was announced in a final rule in November as part of a broader federal slate of crop insurance changes, though the agency allowed comments on the action through most of January. The notice, signed by USDA Undersecretary for Farm Production and Conservation Richard Fordyce, said the buy-up coverage option “is mainly benefitting farmers in the Dakotas seeking to plant in the Prairie Pothole Region, where the majority of prevented planting crop insurance payments are made.”
Fordyce cited Congress's historical support for "addressing widespread flooding through ad hoc disaster assistance,” pointing to 2019 legislation that provided another 10 to 15% in top-off payments to producers who had already received prevented planting indemnities.
An analysis by Tsiboe and other researchers at NDSU’s Agricultural Risk Policy Center found that between 2010 and 2024, corn represented the largest share of prevented planting indemnities associated with buy-up coverage, followed by rice, soybeans and wheat. North Dakota and South Dakota saw the largest share of indemnities, followed by California, Arkansas and Missouri.
Payments in the Dakotas mostly went to corn and soybean producers, while those in California and Arkansas went to rice growers.
Seth Meyer, director of the University of Missouri's Food and Agricultural Policy Research Institute, said the Office of Management and Budget may have influenced the policy change. OMB has historically taken a hawkish view on buy-up coverage in prevent plant, generally over concerns about misuse by some actors, he said, but added that USDA’s decision may also have been shaped by budgetary factors, as well as the presence of ad hoc disaster assistance.
Meyer said the language used by USDA seemed “a bit spicy” for a government notice, which he said makes it feel a bit like a statement. “It’s a little bit more than ‘we’re just not doing this this year,’” he said.
This is not the first time the buy-up option has been modified. In 2017, USDA lowered buy-up coverage from 10% to 5%.
Report finds buy-up loss reduces protection without clear substitute
NDSU’s analysis of premiums and indemnities from 2011 to 2024 found “no evidence of actuarial imbalance” in buy-up coverage. It said “the buy-up component generated a loss ratio of 0.82, compared to 0.87 for base-only coverage.” It also found the “near-identical loss ratios demonstrate that buy-up coverage was priced to reflect actual risk and did not systematically underperform relative to base policies.”
“While regional disparities may exist, the aggregate national evidence contradicts concerns about overall actuarial soundness,” the report says.
However, Meyers noted that while the program is actuarily sound, there are some who are concerned that "if not tuned correctly," prevent plant policies may incentivize farmers not to get their crops in. He noted that federal crop insurance is heavily subsidized, which creates concern for some about misuse of the program.
The report also estimates that for an indemnified prevented planting acre, removing the 5% buy-up would create net losses of $18 to $26 per corn acre and $14 to $21 per soybean acre. It said “ad hoc disaster programs provide only partial and uncertain offset, leaving residual net losses of $4-24 per acre,” and that “historical prevented planting events” in 2020 and 2021 “would have resulted in substantial uncompensated losses under the new rule.
The report says if producers want to replace the lost prevented planting protection through higher overall coverage, they will face insurance premium increases of 14% to 29%, or around $2 to $5 per acre annually.
The change has drawn criticism, particularly from farmers in the Dakotas and Arkansas.
“The frustrating thing is, this came out of the blue,” said Carl Schwab, an insurance agent and co-owner of Groton Ag Partners in South Dakota. “Nobody talked about it. Nobody knew it was coming down the line. So I don't really know ... what was driving this decision.”
Last month, Senate Ag Committee Chair John Boozman, R-Ark., and ranking member Amy Klobuchar, D-Minn., and a group of senators from other rural states wrote USDA seeking a reversal of its decision. They noted that the action would impact over 67 million acres and all covered commodities in 2025 alone.
North Dakota Soybean Association President Justin Sherlock said farmers pay an increased cost for the extra endorsement needed to access buy-up coverage, which means they “have skin in the game.” He said regulations and easements limit what North Dakota producers can do to address risks related to water retention and flooding, and prevent plant and the buy-up coverage were historically “seen as kind of a compromise to help offset some of that.”
Jeffrey Hall, a crop insurance agent in Arkansas, said the buy-up coverage is often used by rice farmers in the state due to the ease with which fields used for growing the crop can be flooded. That can cause problems in the spring if rain comes before planting season.
“A wet spring negatively impacts us in Arkansas, a lot more so than a dry summer,” Hall said, adding that, “prevent plant is the one aspect to the federal crop insurance system that's really benefited the rice growers here in our state, and now they're just taking away one of the endorsements that we've been utilizing.”
Mike Stranz, vice president of advocacy for the National Farmers Union, called the decision "an unfortunate direction" for USDA to take crop insurance.
"We've been seeing more and more acres being covered by crop insurance," he said. "We're seeing higher levels of crop insurance over years and decades. And then for this to start heading the other direction ... just runs counter to what we've seen over the last several years and decades."
Groups from impacted areas seek reversal
More than 300 comments were submitted to USDA in response to the final rule, many from corn and soybean farmers in the Prairie Pothole region, and rice growers from Arkansas.
In one comment, USA Rice Federation Vice President of Government Affairs Jake Westlin wrote that eliminating the buy-up option harms rice farmers, “the vast majority of whom use this coverage.” He pointed to data indicating that in 2024 prevented planting buy-up coverage offered producers $278 million in coverage on over 334,000 acres of rice. He said that if this coverage had not been available, “$10 million in producer losses would not have been covered.”
A joint comment submitted by the North Dakota Corn Growers Association, North Dakota Grain Growers Association, and U.S. Durum Growers Association said the change “disproportionately harms growers in North Dakota, where prevented planting is a frequent and unavoidable risk due to weather patterns, soil conditions, and short growing seasons.”
Editor's note: This article was updated with additional perspective on the discussion over actuarial soundness.
