 |
|
|
|||||
|
|
July 1, 2004 Emergency Hay Crop on Prevented Planted Acres Does it pay to plant an emergency hay crop on acreage eligible for prevented planting coverage? “In addition to the costs of establishing and harvesting the hay crop, the reduction in the prevented planting indemnity payment must also be factored in,” says Dwight Aakre, Extension farm management specialist at North Dakota State University. “If an emergency hay crop is planted, it is considered a second crop and therefore results in a reduction in the prevented planting indemnity. The payment is reduced to 35 percent of the normal prevented planted payment.” As an example, a producer with a 30-bushel actual production history (APH) of hard red spring wheat, who purchased coverage at the 65 percent level, would have a minimum guarantee of 19.5 bushels at a price of $3.35 per bushel, for a minimum coverage of $65.33 per acre if the crop is planted before the final planting date. If prevented from planting, the indemnity is 60 percent of the guarantee or $39.20. If a second crop such as emergency hay is planted, the prevented planting indemnity is further reduced by 65 percent. The indemnity payment would be reduced to $13.72 per acre. The premium the producer pays is also reduced to 35 percent in this situation. If the regular premium is $3.50 per acre, the premium savings would be $2.27. The net cost of the reduction in insurance payout is $27.75 per acre. “This cost must be added to the cost of land preparation, planting, harvesting and transporting an emergency hay crop to determine the cost of production for the hay crop,” Aakre says. Production costs per acre for a crop of forage millet would be expected to be: seed - $15.00; tillage - $4.62; planting - $5.41; cutting/conditioning - $6.27; baling - $8.68; and hauling - $7.50 for a total of $47.48. To this amount must be added the $27.75 reduction in insurance payout. The net cost per acre of producing an emergency hay crop would be $75.23. If the yield is 2.25 tons per acre, the cost of this hay would be $33.44 per ton. This compares with a five-year average price of $35.30 per ton for other hay in North Dakota as reported by North Dakota Agricultural Statistics Service. ### Source: Dwight
Aakre, (701) 231-7378, dwight.aakre@ndsu.nodak.edu |
Market Advisor: |
|
North Dakota State University |
