Evaluation of Prevented Planting Program 

Contract Number D13PD001146 

A Report for 

Acquisition Services Directorate 

and 

Risk Management Agency 

Evaluation of Prevented Planting Program 

Contract Number D13PD001146 

A report for 

Acquisition Services Directorate 

And 

Risk Management Agency 

TABLE OF CONTENTS 

EXECUTIVE SUMMARY ..............................................................................1
 

Recommendations ..........................................................................1
 

Adequacy of RMA’s prevented planting payments ....................................3
 

Other approaches considered ............................................................5
 

Impact of recommendations on indemnities ...........................................6
 

Updating of prevented planting factors ................................................9
 

1. INTRODUCTION ........................................................................... 10
 

1.1. Objectives of this study ........................................................ 10
 

1.2. History of the prevented planting program ................................. 12
 

1.3. Current rules on prevented planting ......................................... 12
 

1.4. Philosophy underlying current methodology ................................ 14
 

1.5. Recent history of prevented planting indemnities ......................... 15
 

2. METHODOLOGY .......................................................................... 18
 

2.1. Cost of production concepts ................................................... 18
 

2.2. Sources of production cost information ..................................... 20
 

2.2.1. USDA production cost estimates .................................... 20
 

2.2.2. Extension service crop budgets ..................................... 21
 

2.3. Complicating factors ............................................................ 22
 

2.3.1. Nature of the guarantee ............................................. 22
 

2.3.2. The production cost metric .......................................... 24
 

2.4. USDA studies of prevented planting costs ................................... 25
 

2.5. Alternative methodologies ..................................................... 26
 

2.5.1. Payment equal to average pre-planting costs .................... 27
 

2.5.2. Capping payments ..................................................... 27
 

2.6. Agralytica’s methodology ...................................................... 28
 

i 
2.6.1. Determining total costs............................................... 29
 

2.6.2. Determining costs incurred prior to planting ..................... 30
 

2.7. Our initial expectations ........................................................ 33
 

3. ANALYSIS AND CONCLUSIONS ......................................................... 35
 

3.1. Analysis of production cost data .............................................. 35
 

3.2. Adequacy of prevented planting payment amounts ....................... 42
 

3.3. The case for differentiation ................................................... 45
 

3.4. Appropriateness of additional 5% or 10% coverage......................... 45
 

3.5. Impact analysis .................................................................. 48
 

3.5.1. Methodology ............................................................ 49
 

3.5.2. Estimated change in PP payments by crop ........................ 49
 

3.5.3. Estimated change in PP payments by region...................... 51
 

3.6. Pros and cons of recommendations........................................... 53
 

3.7. Updating of prevented planting factors ..................................... 55
 

4. REVIEW OF CORN, WHEAT, SOYBEANS AND COTTON............................. 56
 

4.1. Corn................................................................................ 57
 

4.2. Wheat ............................................................................. 74
 

4.3. Soybeans .......................................................................... 96
 

4.4. Cotton ............................................................................ 115
 

4.5. ELS cotton ....................................................................... 132
 

4.6. Cottonseed ...................................................................... 139
 

5. ADDITIONAL CROPS COVERED BY THE ARMS SURVEYS ......................... 154
 

5.1. Barley............................................................................. 156
 

5.2. Grain sorghum .................................................................. 170
 

5.3. Oats ............................................................................... 182
 

5.4. Peanuts........................................................................... 194
 

5.5. Rice ............................................................................... 204
 

5.6. Popcorn .......................................................................... 216
 

5.7. Silage sorghum .................................................................. 222
 

5.8. Hybrid corn seed ................................................................ 228
 

5.9. Hybrid sorghum seed........................................................... 237
 

6. CROPS FOR WHICH ANALYSIS IS BUDGET BASED ................................. 243
 

6.1. Buckwheat ....................................................................... 247
 

6.2. Canola ............................................................................ 253
 

6.3. Dry beans ........................................................................ 259
 

6.4. Dry peas.......................................................................... 269
 

6.5. Flaxseed.......................................................................... 281
 

6.6. Green peas ...................................................................... 287
 

6.7. Millet ............................................................................. 296
 

6.8. Mustard........................................................................... 302
 

ii 
 

 

 

 

 

6.9. Onions ............................................................................ 308
 

6.10. Potatoes....................................................................... 319
 

6.11. Processing beans............................................................. 329
 

6.12. Processing sweet corn ...................................................... 338
 

6.13. Rye............................................................................. 344
 

6.14. Safflower...................................................................... 356
 

6.15. Sugar beets ................................................................... 365
 

6.16. Sunflower seed............................................................... 377
 

6.17. Tobacco ....................................................................... 387
 

APPENDIX A: RATIOS OF RMA PREVENTED PLANTING PAYMENTS TO ESTIMATED PP 

PRODUCTION COSTS BY CROP AND REGION ............................................... 396
 

Appendices B, C and D are contained in the pdf version only
 

Appendix B: 2007 Economic Research Service Analysis 417
 

Appendix C: 2013 Economic Research Service Analysis 436
 

Appendix D: Section 508c Data 451 

iii 
This page left intentionally blank 

iv
 
 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

EXECUTIVE SUMMARY 

For this project the assignment has been to develop recommendations that improve, and simplify if possible, 

the prevented planting coverage in current crop insurance plans. We have analyzed the current prevented 

planting methodology and were not able to identify an alternative methodology that is both preferable and 

administratively feasible. We concluded that RMA’s existing methodology for dealing with prevented 

planting is generally appropriate. 

The initial research for this study examined the production costs for all crops eligible for prevented planting 

coverage and estimated the share of those costs that is actually incurred in a prevented planting (PP) 

situation. To the degree that those shares differed from the current PP coverage levels in RMA insurance 

plans, this indicated a need to make changes in the coverage levels. However, given the shortcomings of 

some of the production cost data, we also analyzed the adequacy of the PP indemnities actually paid by 

crop and region during the 2003-2012 period, comparing the indemnity to our estimate of preplanting costs. 

Recommendations 

We have three main recommendations: continue to use the same methodology for prevented planting 

coverage, adjust the coverage factors as shown in Table 1, and differentiate the coverage levels 

geographically only for onions. The proposed adjustments in Table 1 are based on estimates of the actual 

share of production costs incurred prior to planting. 

Table 1: Recommended changes in prevented planting payment factors 

Recommended Current New Change in 

Change Crops factor factor payment 

% points % % % 

+15 Potatoes – northern and southern 25 40 60.0% 

+10 Green peas 40 50 25.0% 

+5 Oats 60 65 8.3% 

0 Wheat, soybeans, grain sorghum, 

barley, rye, safflower 60 

0 Peanuts 50 

0 Rice, sugar beets 45 

0 Processing beans and sweet corn 40 

0 Onions – northern (storage) 35 

-5 Silage sorghum, hybrid sorghum seed 60 55 -8.3% 

-5 Tobacco 35 30 -14.3% 

-10 Corn, buckwheat, millet, popcorn 60 50 -16.7% 

-10 Hybrid corn seed 50 40 -20.0% 

-15 Canola, flax, mustard, sunflower seed 60 45 -25.0% 

-15 Cotton with cottonseed endorsement 50 35 -30.0% 

-20 Dry beans, dry peas 60 40 -33.3% 

-20 Cotton and ELS cotton 50 30 -40.0% 

-20 Onions – southern (fresh) 35 15 -57.1% 

1 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Corn, soybeans, wheat and cotton accounted for 80% of PP indemnities between 1994 and 2013. We 

determined that the 60% coverage level for wheat and soybeans is still appropriate, but that the level for 

corn should be reduced to 50%. For cotton we recommend a reduction from 50% to 30%, or to 35% if the 

producer elects the cottonseed coverage option. For oats, green peas and potatoes we recommend higher 

coverage levels. For ten other crops we recommend no change, and for the remainder, reductions in the 

PP factor of 5% to 20% that would reduce indemnity payments by mostly 8% to 33%. 

For onions there are significant differences in the costs for those going into storage and those going more 

directly to the fresh market. The former tend to be produced in northern states and the latter in southern 

states. Coverage levels should be lower in the southern states. 

Applying the PP factor to the policy guarantee 

There are three principles underlying RMA’s historic practice of defining prevented planting indemnities as 

a percentage of the guarantee (or liability) under each policy. First, RMA’s insurance plans try to rely on a 

farmer’s individual situation and historical experience as much as possible in specifying an insurance 

guarantee. This is most easily accomplished when there are good records of a farmer’s historical yields 

and/or revenues. However, there is necessarily a great deal of reliance on average measures of yield and 

price. This is evident in the use of transitional yields (based on county average yields) and the use of 

average cash or futures market prices. There is inevitably substantial variation around any measurement 

of an average related to crop production, whether it refers to yield, price received, or production cost. 

A second principle that is at the heart of most RMA plans is that the guarantee should be based on that 

season’s expected revenue. For crops with futures markets, this is comparatively easy to accomplish 

because there is a very immediate public indicator of what market participants think the price will be at 

harvest time. But RMA also adjusts plan prices for many other crops each year in response to the changing 

market outlook. 

A third principle applicable to situations in which the farmer is not able to plant the crop is that the 

guarantee and indemnity should be adjusted to reflect the fact that farmers do not incur some portion of 

their normal production costs if they cannot plant. This is different from how the insurance treats damage 

to a planted crop. In that case the indemnity is the same regardless of whether the damage occurs the 

week after emergence of the crop or the week before harvest. 

The portion of costs actually incurred before planting can be highly variable, however, depending on what 

conditions prevented planting and when they occurred. This can affect whether various pre-planting 

operations were ever undertaken. Consequently the insurance plans have to assume some sort of average 

outcome. 

RMA’s current methodology appears to assume that all normal pre-planting expenses, plus various fixed 

overhead costs, have been incurred and that this figure should be the basis of the prevented planting 

coverage. We agree with that methodology. Indemnities are also affected by the main coverage level that 

a farmer has chosen. If the farmer has a plan with 75% coverage and a prevented planting factor of 60%, 

he will receive an indemnity of 45% of expected revenue if he is prevented from planting by an acceptable 

cause of loss. If the farmer only has CAT coverage, he will receive 60% of the 27.5% of expected revenue 

that such policies provide as an indemnity, i.e. 16.5% of expected revenue. 

Options for additional coverage 

Our assignment also required us to assess the appropriateness of allowing an additional 5% or 10% coverage. 

In theory, the prevented planting coverage should aim to cover the average costs incurred by all producers 

2 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

of the crop in a prevented planting situation. There will inevitably be some variability among farmers, 

among regions, and over time in the success of achieving that, but this is true of the underlying insurance 

plans as well. Those plans use average county yields, average prices, and other components that are 

averages for all producers. If a farmer wants higher prevented planting coverage, he or she can also select 

a higher coverage level in the underlying plan. 

Over the last 20 years, 46% of the PP indemnities have been associated with policies for which the additional 

10% coverage was elected. Almost no producers elect the additional 5% coverage. The logic behind offering 

this additional coverage was originally to allow growers with higher than average PP costs to have 

appropriate insurance coverage. 

Some argue that these buy-up options should be eliminated and only the average pre-planting costs should 

be covered in a prevented planting situation. However, as the insurance plans evolved and experience data 

accumulated, selection of the buy-up options has proven to be an indicator of greater risk, and the rating 

system collects added premium in proportion to that risk. This keeps rates lower for the farmers who are 

less likely to file a prevented planting claim. The buy-up options could certainly be eliminated, but this 

would probably result in an increase in the prevented planting component of the rate for the basic coverage. 

For now, we recommend that prevented planting rating be periodically reviewed to insure that there is an 

appropriate balance in premium collected for the basic PP coverage and for the optional additional 5% or 

10% coverage. 

Adequacy of RMA’s prevented planting payments 

In addition to forming a judgment on the adequacy of the RMA methodology, we used RMA Summary of 

Business data to determine how the resulting PP payments compare to our estimates of PP costs. 

If the ratio of PP payments to costs is above 1, this may indicate that farmers are being overcompensated 

(PP payments > estimated PP costs). If, on the other hand, the ratio is below 1 (estimated PP costs > PP 

payments), then farmers may be undercompensated. Ideally, the ratio of PP payments to costs would be 

1.0, i.e. farmers would be precisely compensated for costs they have incurred prior to a prevented planting 

claim. 

For each coverage level, including CAT coverage, RMA’s Summary of Business data provides total liabilities 

and acres insured. For the years 2003-2012, we divided the liabilities at each Buy-up coverage level by the 

coverage level to estimate the guarantee at 100% of expected revenue. This assumes that all growers take 

100% of the price. For CAT we also adjusted for the lower price coverage of 55%. We then multiplied that 

total liability by the RMA PP factor and divided the result by the total acres in each region for that crop. 

The result of those calculations is an estimate of the base level PP payment for each crop and region over 

the ten-year period. 

We then divided those PP payments by the estimated PP costs reviewed in the Evaluation Report. Overall, 

we found results mostly consistent with the findings from the analysis of PP costs. Figure 1 presents a 

scatterplot of the recommended changes in coverage levels from Table 1, versus the ratio of 2012 RMA 

payment rates to production costs incurred in a prevented planting situation. 

As one would expect, the recommended increases in coverage levels are for crops where the ratio is less 

than or close to one. And the recommended decreases generally get progressively larger as the ratios get 

larger. 

3 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 1: Scatterplot of payment ratio versus recommended coverage change 

4 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Other approaches considered 

In the course of our research and analysis, we were not able to identify a practical alternative method of 

dealing with prevented planting, nor did we find any studies that explored other approaches. In our view, 

adjusting the crop payment factors and assigning a yield to the crop that was not planted would address 

most of the issues with this insurance coverage. (The assigned yield issue was raised in an Office of Inspector 

General audit report discussed below but is not further addressed in this study.) 

We did investigate two alternative approaches: basing the indemnity on actual preplanting costs, or capping 

the indemnity at some percentage of actual preplanting costs. 

In one sense, using the actual average of pre-planting costs for farmers in a specific region as the basis for 

an indemnity would be an appealing method of dealing with situations in which a farmer is not able to plant 

the crop. However, it is not a practical solution to the problem for three reasons. 

First, the research undertaken for this project confirms that suitable production cost information for most 

of the crops eligible for prevented planting coverage is simply not widely available. We had great difficulty 

identifying acceptable extension budgets for use in the current study. Moreover, the extension budgets 

that are available may not be statistically representative of average grower costs even though the 

percentage of costs identified as preplanting may be representative. 

Second, even when production cost data are available, updating them each year would be administratively 

very burdensome. 

Third, this would be a departure from RMA’s general approach of basing the guarantee on expected revenue. 

When market prices are high, a prevented planting indemnity based on actual costs would probably be seen 

by growers as undercompensation and a marked departure from past RMA practice. When prices are low, 

there would be a stronger incentive to claim prevented planting rather than to try to produce a crop that 

would yield low returns. 

Capping the indemnity is a second way of preventing overcompensation of producers when market prices 

are high. One could include a restriction in the actuarial documents that says the payment per acre cannot 

exceed a certain figure derived from production cost data. The mechanics of doing this would be influenced 

by a number of considerations: 

 Is there a single national PP factor or is it differentiated by state or region? Currently all factors 

are national, and we do not recommend departing from that approach. 

 How frequently will the production cost data per acre be updated? This can be done annually using 

price indexes in between more thorough periodic reviews of actual cost data. 

 Does one set the dollar amount at the actual PP costs, or apply the coverage level to that figure? 

 If the buy-up options remain in effect, does one set the figure at 117% of PP costs when the PP 

factor is 60% since that is the coverage that RMA has permitted? 

 Does one pick some dollar amount above the average in order to reflect the costs of more than 

half of the producers? 

Given that there are regional production costs for the major crops, the simplest and most restrictive 

procedure might be to set a national cap equal, for example, to 117% of the highest PP costs of any region 

and apply the coverage level to that figure. However, this may not significantly constrain PP indemnities. 

An example in Section 2.5.2 illustrates the challenge in establishing parameters for a cap that are perceived 

as reasonable by farmers, but still keep PP indemnity payments from significantly exceeding actual 

preplanting costs. One would probably have to regionalize the caps to make them actually have an impact. 

5 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

If one is going to do that, one might as well just use regional cost of production as the basis for the 

indemnity. But the objections to that are discussed above. 

Impact of recommendations on indemnities 

We analyzed the impact of our recommendations on indemnities under two scenarios: implementation of 

our recommended changes in PP coverage factors, and elimination of the options for additional coverage 

in addition to adopting our recommended changes. This analysis assumes “all else equal”, i.e., it assumes 

that farmer selection of coverage and behavior would remain the same, both under changed factors and 

under changed factors with no additional coverage options. Although these assumptions cannot be 

accurate, we expect the marginal effect of these policy changes on behavior would be limited, and would 

if anything result in additional reductions in indemnities beyond what we estimate. Since in most 

circumstances the PP rate is too high, the net effect of these two changes would likely be more planting 

and fewer claims - in addition to lower indemnity payments per policy. 

From 2008 to 2012, total prevented planting indemnities were over $4.82 billion – just over $960 million 

per year, on average. Total indemnities over this five year period, by crop, are shown in the second column 

of Table 2. Note that this figure includes “all other crops”. That data actually covers the same individual 

crops listed but is presented in this line for confidentiality purposes. We assumed an average reduction of 

5% in the coverage level for the policies included in this category. Crops for which we recommend increased 

coverage levels (green peas, oats and potatoes) have increased costs, shown in brackets in the table. 

If the PP factors we propose had been in effect for the period 2008-2012, then PP indemnity payments 

under Scenario #1 would have been $4.36 billion. This is shown in column 3 of Table 2. This would have 

represented a $465 million reduction in PP payments ($93 million less per year). A little more than 60% of 

the reduction on the individual crops listed would have been on corn claims. 

If the PP factors we propose had been in effect, and no buy-up options had been available, PP indemnity 

payments would have been $4.01 billion, as shown in column 4. This would have represented an $813 

million reduction in PP payments ($162 million less per year). The share of the reduction attributable to 

corn would have been about 54%. 

The final column of Table 2 shows the share of Scenario #2 indemnity reductions attributable to elimination 

of the buy-up options by crop. This is 100% for the crops for which we recommended no change in the basic 

coverage level. 

Table 3 shows PP indemnities by region for each of the five years. The Northern Plains region accounted 

for $2.85 billion (59.1%) of the total, and the Corn Belt for an additional $940 million (19.5%). Table 4 and 

Table 5 show our estimates of indemnities under Scenario #1 and Scenario #2 by region. With revised 

coverage levels and with the ability to continue to purchase an additional 10% coverage, reductions in 

indemnities over the five years would again have been $465 million, with 59% of that occurring in the 

Northern Plains region. If the buy-up options are eliminated, the reductions rise to $813 million, with about 

$500 million of that in the Northern Plains. Reductions in the Corn Belt would be $152 million, and these 

two regions together would account for 80% of the total, about the same proportion as their share of historic 

indemnities in Table 3. 

6 
 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 2: Potential change in indemnities by crop 

Total 

Actual 

Total 

Scenario 

#1 

Total 

Scenario 

#2 

Indemnity 

Reduction 

#1 

Indemnity 

Reduction 

#2 

10% buy-up 

percent 

----------------------------------$1,000-------------------------------- % 

All Other Crops 784,742 723,217 676,774 61,525 107,969 43% 

Barley 88,973 88,973 82,369 0 6,603 100% 

Buckwheat 88 73 72 14 15 6% 

Burley Tobacco 467 400 400 67 67 0% 

Canola 147,709 113,939 101,309 33,770 46,400 27% 

Corn 1,608,981 1,363,075 1,229,531 245,906 379,450 35% 

Cotton 37,018 23,429 20,383 13,589 16,635 18% 

ELS cotton 82,563 52,514 45,074 30,049 37,490 20% 

Dry beans 56,870 39,683 34,375 17,187 22,495 24% 

Dry peas 36,284 24,553 23,461 11,731 12,823 9% 

Flax 17,193 13,192 12,005 4,002 5,189 23% 

Flue cured tobacco 186 159 159 27 27 0% 

Grain sorghum 29,031 29,031 28,207 0 824 100% 

Green peas 316 395 395 (79) (79) 0% 

Hybrid corn seed 666 555 555 111 111 0% 

Hybrid sorghum seed 41 34 34 7 7 0% 

Millet 2,573 2,147 2,132 426 441 3% 

Mustard 799 613 558 186 241 23% 

Oats 3,482 3,764 3,663 (282) (181) -55% 

Onions 12,975 9,268 9,268 3,707 3,707 0% 

Peanuts 1,611 1,611 1,604 0 6 100% 

Popcorn 1,376 1,154 1,109 222 267 17% 

Potatoes 7,785 11,034 9,680 (3,249) (1,896) -71% 

Processing beans 645 645 611 0 34 100% 

Rice 87,316 87,316 78,741 0 8,575 100% 

Rye 23 23 23 0 0 0% 

Safflower 1,582 1,582 1,573 0 9 100% 

Silage sorghum 356 326 326 30 30 0% 

Soybeans 664,888 664,888 617,107 0 47,781 100% 

Sugar beets 2,292 2,292 2,120 0 172 100% 

Sunflower seed 199,879 153,660 138,657 46,219 61,222 25% 

Sweet corn 271 271 256 0 14 100% 

Wheat 944,535 944,535 888,430 0 56,105 100% 

Total 4,823,514 4,358,351 4,010,963 465,163 812,551 43% 

7 
 

 

 

 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Premium revenue would also be reduced in Scenario #2 where the 5% and 10% buy-up options are eliminated, 

unless fixed rates are adjusted upward for all growers to offset the loss of the option premiums. However, 

the study did not include a full review or the rating for prevented planting and we did not have the five 

years of policy records and rate factors necessary to calculate the premium reduction and any net savings. 

Table 3: PP indemnities by region 

Actual 2008 2009 2010 2011 2012 Total 

--------------------$1,000,000---------------------

Appalachian 6 17 53 37 4 117
 

Corn Belt 193 162 270 292 23
 940
 

Delta 10 37 41 78 10
 176
 

Mountain 11 14 15 128 49
 219
 

Northeast 1 4 6 21 4 36
 

Northern Plains 136 437 734 1,485 63
 2,854 

Pacific 5 57 33 13 14
 123
 

Southeast 1 5 9 3 1 18
 

Southern Plains 7 14 36 13 52
 122
 

Upper Midwest 12 48 32 123 4 218
 

Total 382 795 1,229 2,192 225
 4,824 

Table 4: Potential indemnity reduction by region under Scenario #1 

Indemnity % of 

Scenario #1 2008 2009 2010 2011 2012 Total Reduction total 

---------------------------$1,000,000---------------------------- % 

Appalachian 5 15 51 34 4 108 9 2% 

Corn Belt 174 146 250 262 22 855 86 18% 

Delta 9 35 39 71 9 164 12 3% 

Mountain 10 13 14 122 44 203 15 3% 

Northeast 1 4 6 19 4 33 3 1% 

Northern Plains 123 388 657 1,355 57 2,581 274 59% 

Pacific 4 37 24 12 10 87 36 8% 

Southeast 1 5 9 2 1 17 1 0% 

Southern Plains 6 12 33 12 50 114 8 2% 

Upper Midwest 11 44 29 109 4 196 22 5% 

Total 344 699 1,112 1,998 206 4,358 465 100% 

8 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 5: Potential indemnity reduction by region under Scenario #2 

Indemnity % of 

Scenario #2 2008 2009 2010 2011 2012 Total Reduction total 

---------------------------$1,000,000---------------------------- % 

Appalachian 5 14 48 32 3 103 15 2% 

Corn Belt 161 135 229 243 21 788 152 19% 

Delta 9 33 36 67 9 155 21 3% 

Mountain 10 12 13 119 42 196 23 3% 

Northeast 1 3 5 18 4 31 5 1% 

Northern Plains 114 347 592 1,251 52 2,355 499 61% 

Pacific 3 33 20 11 9 77 46 6% 

Southeast 1 5 9 2 1 17 2 0% 

Southern Plains 6 11 30 12 44 103 18 2% 

Upper Midwest 10 40 27 105 4 186 32 4% 

Total 318 634 1,010 1,861 188 4,011 813 100% 

Updating of prevented planting factors 

The production cost analysis in this report was based on data up through the 2012 crop year. While costs 

for individual inputs can change significantly over the course of a few years, the share of costs that occurs 

before planting changes more slowly and to a lesser degree. 

We recommend periodic monitoring of developments every two to three years. RMA should apply the 

percentage cost allocations we developed to the production cost estimates and forecasts for major crops 

published by ERS to see if the preplanting share of costs is changing. For the ARMS crops, ERS publishes 

forecasts two years into the future twice a year. For the crops not covered by statistically representative 

ARMS surveys, RMA should use the procedure we describe to update the cost estimates using price indexes 

published by USDA’s National Agricultural Statistics Service. 

Every five years we recommend a more formal review for all crops. This evaluation began in 2013 using 

data up through 2012. A five-year review could be undertaken in 2018 using production cost data for the 

year 2013-1017. For the ARMS crops, we recommend that USDA contract with ERS to do the same cost 

analysis as in their 2007 and 2013 studies cited later in this report. The analysis should cover any crops for 

which survey data was published in the interim. This will include 2012 crop soybeans and 2013 crop peanuts 

and rice. Surveys are also scheduled for 2015 crop cotton and oats, and 2016 crop corn. This is the most 

important component of any updating because the crops covered by ARMS surveys account for 88 percent 

of prevented planting claims. For the other crops, the formal review should involve collection of current 

state-level crop budgets and a fresh analysis of the portion of operating costs incurred prior to planting. 

9 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

1. INTRODUCTION 

Farmers plant annual crops in full knowledge that those crops may be subject to a variety of perils that will 

reduce actual production. The Federal Crop Insurance Corporation makes available insurance plans that 

protect the farmer’s income to varying degrees should his or her crops experience those perils. The 

conventional list of perils included in many of those plans includes adverse weather, fire, insects, disease, 

wildlife, earthquake, volcanic eruption, or failure of the irrigation water supply due to one of the preceding 

perils. 

While any of these perils can affect a growing or maturing crop, some of them can result in the crop not 

being planted in the first case. Excessive soil moisture is the most common cause of a crop not getting 

planted, but certainly other perils such as irrigation failure or drought can also prevent planting. To deal 

with situations of prevented planting, RMA developed rules that try to adjust the guarantee and indemnity 

to reflect the fact that farmers do not incur some portion of their normal production costs if they cannot 

plant. This can vary significantly from crop to crop. 

1.1. Objectives of this study 

The solicitation for this study noted that it has been more than a decade since the last review of prevented 

planting (PP) payments, and during that period there have been changes in technology, production 

practices, and input costs. It also stated the following: “Some industry representatives suggest payments 

may be excessive and are not reflective of the costs the payments are designed to cover.” The specific 

requirements for the program evaluation report were identified in the solicitation as follows: 

“A program evaluation shall be performed to ensure that relevant provisions of the Act are met as 

effectively and efficiently as possible while providing risk management tools that meet the needs of 

agricultural producers. The contractor shall review RMA’s current policy and procedures for PP. The 

review shall include a determination of whether RMA’s current policy adequately addresses producers’ 

needs for PP coverage for all PP eligible crops. PP is available for all states and counties for which the 

following crops have insurance available: barley, buckwheat, canola/rapeseed, corn, cotton, 

cottonseed, extra-long staple cotton, dry beans, dry peas, flax, grain sorghum, green peas, hybrid 

sorghum seed, hybrid seed corn, millet, mustard, oats, popcorn, onions, peanuts, southern potatoes, 

northern potatoes, processing sweet corn, processing beans, rice, rye, safflowers, silage sorghum, 

soybeans, sugar beets, sunflower seeds, tobacco, and wheat. Keeping in mind that PP payments should 

compensate producers adequately but not excessively, the contractor must: 

1. Analyze and document, by eligible crop, segregated by growing region, all costs producers incur 

when prevented from planting a crop. 

2. Determine what costs should be included in determining PP payments and explain why. 

3. Determine, by eligible crop, segregated by growing region, the degree to which current PP 

payments (without an additional 5 or 10 percent of coverage) are adequate as determined in item 

2. 

4. Given the results of item 3, determine the appropriateness of allowing an additional 5 or 10 

percent PP coverage under existing policy in general, and also by eligible crop, segregated by 

growing region. 

5. Given the results of items 1-4, document the pros and cons of any recommended changes to 

existing PP payment amounts for eligible crops, segregated by growing region. 

6. List the components that are appropriate to consider when establishing PP payment amounts, 

as it relates to how adequately the policy covers costs by eligible crop, segregated by growing 

region, and document why each component is appropriate or inadequate to cover those applicable 

costs.” 

10
 
 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

This report presents the results of our review of policy and procedures for prevented planting, the costs 

incurred by producers in a PP situation, the degree to which PP indemnities cover those costs, and 

alternative approaches to providing prevented planting coverage. Section 2 of the report describes our 

methodology. Section 3 summarizes the results of our research and analysis. Sections 4 to 6 present a crop 

by crop review of production costs. Appendices A and B provide the 2007 and 2013 ERS studies that serve 

as part of the basis for our analysis. 

This study is also responsive to some of the recommendations in a recent report on prevented planting by 

USDA’s Office of Inspector General (OIG).1 In early 2013 the OIG audited the management controls, policies, 

and procedures related to the prevented planting provisions of the Federal Crop Insurance Program. RMA 

responded to OIG’s recommendations on August 12, 2013. The final report, including OIG’s findings, RMA 

responses, and OIG’s position on each response, was published on September 3, 2013. 

OIG’s first finding is the one that relates directly to the evaluation at hand. OIG found that prevented 

planting policy results in payments significantly in excess of producers’ costs. It found that RMA set 

indemnity levels too high, in order to adequately compensate most producers, rather than “average” 

producers. OIG also found the policy to be inequitable because it overcompensates some crops relative to 

others. We note, however, that much of the OIG analysis relied on an outdated 1996 USDA study and did 

not explicitly address which cost elements should be covered in a prevented planting situation. 

OIG made two recommendations in relation to this finding. 

(1)	 Obtain updated pre-planting cost information and use it to reevaluate the current coverage 

levels provided for prevented planting. Make any necessary changes to reduce program costs, 

where possible, and bring the coverage levels consistently in line with preplanting costs for 

each crop. 

This Prevented Planting Evaluation addresses this recommendation directly, by calculating 

historical and up-to-date estimates of prevented planting costs for each crop. 

(2)	 Establish a schedule by which prevented planting coverage levels will periodically be 

reevaluated to ensure that the levels remain in an appropriate and consistent relationship 

with preplanting costs. 

This evaluation does provide input that will be useful in future reevaluations of costs. In 

separate documents and spreadsheets we do the following: 

- We identify the source and frequency of published information that is relevant to 

determining prevented planting costs for each crop 

- We provide contact information for individuals that can provide unpublished information. 

- We document how production budgets were built for each crop, indicating the procedure 

used for determining prevented planting costs. 

The budgets are built so that RMA can use published USDA price indices to calculate an updated 

estimate of prevented planting costs each year, without the need for an annual (re)evaluation. 

1

 Office of Inspector General, “RMA: Controls Over Prevented Planting”, Audit Report 05601-0001-31, U.S. Department 

of Agriculture, September 2013. 

11
 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

In Section 3.7 we recommend an updating schedule. However, RMA will have to make the 

final determination of an update schedule, based on the resources (time and effort) it gauges 

will be needed to update the information. 

The OIG report had other findings and recommendations, but they are not germane to this evaluation. 

1.2. History of the prevented planting program 

The early history of the treatment of prevented planting (PP) payments was summarized in a 1996 study by 

USDA’s Economic Research Service (ERS).2 They were first introduced in the 1973 farm bill, the Agriculture 

and Consumer Protection Act of 1973, as part of the disaster assistance provisions. Payments were linked 

to other program provisions such as the farmer’s program yield and the target price. A few modifications 

were made in the 1977 farm bill. 

The Federal Crop Insurance Act of 1980 expanded coverage to more crops and more production areas and 

introduced premium subsidies. It also took prevented planting out of the disaster assistance realm and into 

the crop insurance realm. But the coverage was offered at additional cost in a limited geographic area, 

and only for wheat, feed grains, cotton and rice. In 1986, FCIC expanded the geographic coverage and set 

the payment rate at 35 percent of the guarantee, but there was not a lot of use of this option. The Congress 

was repeatedly passing ad hoc disaster assistance programs that diluted interest in crop insurance. 

The Federal Crop Insurance Reform Act of 1994 required participation in crop insurance for producers to be 

eligible for deficiency payments and other programs. This stimulated greater interest in crop insurance 

products. In 1995, FCIC incorporated prevented planting into the basic multi-peril insurance plans, with 

payment rates differentiated by crop based on an assessment of the relative importance of pre-planting 

costs. Coverage mostly ranged from 25 to 75 percent of the guarantee. 

The 1996 farm bill, the Federal Agriculture Improvement and Reform Act of 1996, eliminated required 

participation in crop insurance as a condition for other commodity program benefits, but without crop 

insurance a farmer was not eligible for disaster payments. 

In the last half of the 1990s, prevented planting payment rates settled closer to where they are today. RMA 

reviewed them in 2002 and commissioned another study3 by ERS in mid-decade as another check on the 

rates, which have been largely unchanged since then. It is attached as Appendix A. RMA asked ERS to do 

another update in 2013 to reflect the most recent surveys of production costs and practices.4 This is 

attached as Appendix B. 

1.3. Current rules on prevented planting 

Table 6 reproduces the 2014 Crop Insurance Handbook’s summary of prevented planting coverages. (For 

onions, coverage was 45% up through 2012.) Both CAT and Buy-up policies include a prevented planting 

2

 ERS Risk Analysis Team, “Report Estimating Crop- and Region-Specific Prevented Planting Payment Rates”, Economic
 

Research Service, USDA, December 12, 1996, pages 5-6. 

3

 Linda Foreman et al, “Estimation of the Preplanting and Planting Costs by Crop”, Economic Research Service, May 29, 

2007. 

4

 Linda Foreman and Mir Ali, “Estimation of the Preplanting and Planting Costs by Crop”, ERS Staff Analysis #13-468, 

December 2013. 

12
 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

benefit for these crops. For all but onions and tobacco, farmers with buy-up policies also have the option 

of paying an additional premium to increase the coverage level by either 5% or 10%. This permits farmers 

with higher than average production costs to have prevented planting coverage that is more in line with 

their individual costs. However, it also generates useful information for setting rates at the county level. 

As discussed below, the 5% additional coverage level is seldom elected. Of the $10 billion of prevented 

planting indemnities paid over the last 20 years, 44.8% have been for policies that selected the additional 

10% PP coverage while only 0.3% selected the additional 5% PP coverage. Using only the RMA Cause of Loss 

data we cannot actually test whether adverse selection is taking place because we do not have information 

on farmers who select the additional coverage and do not have a PP indemnity. 

Table 6: Prevented planting coverage for 2014 

Prevented Planting Guidelines 

The insured crop is... The coverage elected is ... Available prevented planting 

coverage is ... 

Canola/Rapeseed, Coarse Grains 

(Corn, Grain Sorghum, and 

Soybeans), Dry Beans, Dry Peas, 

Hybrid Sorghum Seed, Millet, 

Mustard, Popcorn, Safflower, 

Silage Sorghum, Small Grains 

(Barley, Buckwheat, Flax, Oats, 

Rye, Wheat), or Sunflower Seed 

Additional 60, *65, or *70% 

CAT 60% 

Green Peas, Processing Sweet 

Corn or Processing Beans 

Additional 40, *45, or *50% 

CAT 40% 

Rice, or Sugar Beets5 Additional 45, *50, or *55% of6 

CAT 45% of6 

Cotton, ELS Cotton, Cottonseed, 

Hybrid Seed Corn, or Peanuts 

Additional 50, *55, or *60%7 

CAT 50% 

Potatoes 

Additional 25, *30, or *35% 

CAT 25% 

Onions or Tobacco Additional 35% 

CAT 35% 

* If additional levels of coverage are available and elected. Refer to actuarial documents 

5 PP is not available in California counties with an April 30 contract change date and a July 15 cancellation 

date. 

6 For Onions and Sugar Beets, the percentage listed is multiplied times the final stage production guarantee. 

7 For Cotton and ELS Cotton and other crops with skip-row planting, PP production guarantees are based on 

solid planted approved APH yields (for Cotton and ELS cotton, do not apply the skip-row yield conversion 

factor). 

The conditions for making a prevented planting claim are straightforward in theory but not in practice. The 

farmer must have been unable to plant before the final planting date specified in the policy due to an 

insured cause of loss. In addition, other farmers in the area generally must also have been unable to plant 

using good farming practices. There is an exception for certain drought situations, e.g., when farmers may 

or may not choose to plant, gambling on the chance of timely rain. 

Farmers experiencing bad weather at planting time have a number of options if they have crop insurance. 

They can plant after the final planting date with an insurance guarantee that declines progressively the 

later they plant. They can plant a different insured crop with a later final planting date, like soybeans 

instead of corn. They can file a claim for prevented planting and not grow a marketable crop, leaving the 

13
 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

land fallow or with a subsequently planted cover crop. Or they can claim prevented planting and then plant 

a second insured crop. In that case they initially receive 35% of the PP indemnity. If there is no claim on 

the second crop, they then receive the other 65% of the indemnity. If there is a loss claim on the second 

crop, they can choose between that claim and taking the other 65% of the PP indemnity on the first crop. 

An important consideration in a PP situation is how the farmer’s Actual Production History (APH) will be 

affected. If a second crop is planted, a yield for the first crop for that year is recorded as 60% of the APH, 

which reduces the farmer’s guarantee for subsequent years by approximately four percent. If no second 

crop is planted, no yield is recorded. Consequently, almost no farmers plant a second crop if they file for 

prevented planting. 

In practice, the rules on prevented planting are much more complicated than the brief summary above, 

covering 5 pages in the Basic Provisions, 15 pages in the Crop Insurance Handbook, and almost 100 pages in 

the Prevented Planting Loss Adjustment Standards Handbook. These materials cover the factors that 

determine eligibility, the amount of land covered, treatment of double cropping, inspection requirements, 

and claim procedures. 

1.4. Philosophy underlying current methodology 

RMA’s insurance plans try to rely on a farmer’s individual situation and historical experience as much as 

possible in specifying an insurance guarantee. This is most easily accomplished when there are good records 

of a farmer’s historical yields and/or revenues. However, there is necessarily a great deal of reliance on 

average measures of yield and price. This is evident in the use of transitional yields (based on county 

average yields) by farmers without their own yield history, and in the use of average cash or futures market 

prices. There is substantial variation around any measurement of an average related to crop production, 

whether it refers to yield, price received, or production cost. 

A second principle that is at the heart of most RMA plans is that the guarantee should be based on that 

season’s expected revenue. For crops with futures markets, this is comparatively easy to accomplish 

because there is a very immediate public indicator of what market participants think the price will be at 

harvest time. But RMA also adjusts plan prices for many other crops each year in response to the changing 

market outlook. 

A third principle applicable to situations in which the farmer is not able to plant the crop is that the 

guarantee and indemnity should be adjusted to reflect the fact that farmers do not incur some portion of 

their normal production costs if they cannot plant. This is different from how the insurance treats damage 

to a planted crop. In that case the indemnity is the same regardless of whether the damage occurs the 

week after emergence of the crop or the week before harvest. 

The portion of costs actually incurred before planting can be highly variable, however, depending on what 

conditions prevented planting and when they occurred. This can affect whether various pre-planting 

operations were ever undertaken. Consequently the insurance plans have to assume a particular average 

outcome. 

RMA’s current methodology appears to assume that all normal pre-planting expenses, plus various fixed 

overhead costs, have been incurred and that this figure should be the basis of the prevented planting 

coverage. We agree with that methodology. Indemnities are also affected by the main coverage level that 

a farmer has chosen. If the farmer has a plan with 75% coverage and a prevented planting factor of 60%, 

he will receive an indemnity of 45% of expected revenue if he is prevented from planting by an acceptable 

14
 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

cause of loss. If the farmer only has CAT coverage, he will receive 60% of the 27.5% of expected revenue 

that such policies provide as an indemnity, i.e. 16.5% of expected revenue. 

1.5. Recent history of prevented planting indemnities 

We downloaded the Cause of Loss data on December 31, 2013 from the RMA website in order to assess the 

relative amount of prevented planting indemnities compared to total indemnities. Figure 2 shows the PP 

indemnities as a percentage of total indemnities by year for the last 20 years. Since 1994, PP indemnities 

have comprised 11.6% of total indemnities. This amount varies greatly by year with a high of almost 30% in 

2010 and 2013. The ratio for 2013 may decrease since not all claims had been paid as of December 31, 

2013 but the majority of PP claims should have been paid. If we exclude crops that do not have prevented 

planting coverage, the prevented planting indemnities were 12.2% of all indemnities. 

Figure 2: PP indemnities as a percentage of total indemnities 

Table 7 displays PP indemnities by crop for the major crops (in $Million). For some crops, the prevented 

planting indemnities are greater than all other indemnities (e.g. canola, ELS cotton and rice) and for some 

other crops they are simply very large dollar amounts (corn, soybeans and wheat). Some policies are listed 

as “All Other Crops” in the Cause of Loss data from RMA due to confidentiality concerns. We believe that 

the distribution of crops in that category is close to the distribution of crops separately identified. 

Table 8 summarizes the prevented planting indemnities by state. There are large differences in PP 

indemnities among states, with the Dakotas having significantly higher absolute and relative PP indemnities 

compared to other states. Together, North and South Dakota accounted for over 50% of all PP indemnities 

paid in the 1994-2013 period. 

Table 9 summarizes the prevented planting indemnities by cause of loss. Prevented planting coverage 

protects against excess moisture, cold wet weather, floods, 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 your established irrigation method. For non-irrigated acreage, this may mean that the affected area 

has had insufficient soil moisture due to a prolonged period of dry weather. For irrigated acreage it means 

that adequate water is unavailable to carry out an irrigated practice, the policy holder is unable to prepare 

15
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

the land for irrigation using the established irrigation method, or irrigation equipment or facilities have 

failed or broken down due to an insured cause of loss. 

Additional causes of loss may be found in the Crop Provisions. These causes of loss are generally only valid 

if other insureds in the area are prevented from planting as well. 

Excess moisture is by far the greatest cause of loss. The low amount of PP indemnities due to drought may 

be attributable to the lower level of PP guarantee for some crops (e.g. cotton) in the more drought exposed 

regions (e.g. Southern Plains). Also, in excess moisture situations a farmer may be unable to physically 

plant a crop, whereas in a drought a farmer could usually plant in order to receive the full insurance 

guarantee (in case of a total loss) rather than the smaller PP amount. 

Table 7: PP indemnities by crop – 1994-2013 

Prevented PP as 

Planting 

Indemnities 

Total 

Indemnities 

percentage 

of Total 

Crop ($1,000,000) ($1,000,000) Indemnities 

Barley 194 632 30.7% 

Canola 322 574 56.0% 

Corn 3,478 26,424 13.2% 

Cotton 192 8,554 2.2% 

Cotton Ex Long Staple 152 185 82.0% 

Dry Beans 206 661 31.2% 

Dry Peas 47 195 24.0% 

Flax 35 89 39.0% 

Grain Sorghum 74 2,055 3.6% 

Oats 15 96 15.3% 

Onions 55 251 22.0% 

Peanuts 6 677 0.8% 

Potatoes 55 451 12.1% 

Rice 240 429 55.8% 

Rye 0 3 1.5% 

Soybeans 1,419 10,887 13.0% 

Sugar Beets 37 437 8.6% 

Sunflowers 479 1,016 47.1% 

Wheat 1,826 12,808 14.3% 

All Other 1,242 20,071 6.2% 

Grand Total 10,072 86,497 11.6% 

16
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 8: PP indemnities by state – 1994-2013 

Prevented PP as 

Planting 

Indemnities 

Total 

Indemnities 

percentage 

of Total 

State ($1,000,000) ($1,000,000) Indemnities 

Arkansas 230 924 24.9% 

California 254 1,895 13.4% 

Illinois 447 6,286 7.1% 

Indiana 260 3,352 7.8% 

Iowa 542 5,702 9.5% 

Kansas 106 6,603 1.6% 

Minnesota 695 3,933 17.7% 

Missouri 439 3,152 13.9% 

Montana 114 1,578 7.2% 

Nebraska 103 4,377 2.4% 

North Dakota 3,502 7,763 45.1% 

Ohio 234 1,831 12.8% 

Oklahoma 51 2,237 2.3% 

South Dakota 1,565 5,186 30.2% 

Texas 326 12,097 2.7% 

Wisconsin 175 1,749 10.0% 

All Other 1,028 17,832 5.8% 

Grand Total 10,072 86,497 11.6% 

Table 9: PP indemnities by cause of loss 

Cause of Loss 

Prevented 

Planting 

Indemnities 

($1,000,000) 

Percentage 

of Total 

Cold Wet Weather 

Drought 

Excess Moisture/Precipitation/Rain

Failure of Irrigation Supply 

Flood

All Other

Grand Total 

229 

140 

8,874 

586 

160 

82 

10,072 

2% 

1% 

88% 

6% 

2% 

1% 

100% 

17
 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

2. METHODOLOGY 

2.1. Cost of production concepts 

Production cost can be a challenging concept and can differ according to the perspective from which it is 

approached. A farmer may think of it solely in terms of the checks he has to write over the course of a 

season. If he owns his own land, a rental payment will not figure into his thinking about costs. His 

accountant will be factoring in depreciation and state and federal tax treatment. And the economist 

watching from a distance will be thinking about the opportunity cost of some of the factors of production. 

Generally there are two broad classes of costs. Farmers incur actual out-of-pocket operating expenses 

when they buy inputs or hire people to assist with the production process for a specific crop. They also 

have other costs associated with the total farming operation that can be allocated among the various farm 

enterprises. In some cases these are out of pocket costs for things like taxes and insurance, and in other 

cases they are opportunity or capital recovery costs rather than actual expenditures. Historically 

agricultural economists at USDA and land grant universities have used the opportunity cost concept to 

estimate the implicit costs of farmers using assets they own, whether land, capital, or their own 

management and labor. 

It is important to remember that production costs can be highly variable from farmer to farmer, and from 

year to year for any individual farmer. There is clearly a lot of variation around the mean or median. 

Moreover, an individual farmer can be in different parts of the distribution in different years, depending on 

weather or other factors. 

One can see the degree of variation in a recent study by USDA’s Economic Research Service based on survey 

data covering the 2009 wheat crop.5 Figure 3 is reproduced from page 15 of that report and shows the 

range of production costs per bushel across the whole wheat farm population. 

Figure 3: Wheat production cost distribution 

5

 Gary Vocke and Mir Ali, “U.S. Wheat Production Practices, Costs, and Yields: Variations Across Regions”, Economic 

Information Bulletin Number 116, Economic Research Service, USDA, August 2013. 

18
 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

The cumulative distribution across wheat production is similar to that for wheat farms, and costs per acre 

are skewed in much the same manner. Earlier studies for wheat and other crops show similarly wide 

distributions of costs. The main implication for purposes of the present study is that any estimate of average 

costs incurred in a prevented planting situation will disguise a great deal of inherent variability among 

growers. 

In this particular ERS study, the expected yields for 2009 at the actual season average price would have 

covered “operating costs” for most farms, but only 75% would have had “ownership costs” also covered, 

and only about 30% would have covered total enterprise costs. Here are the definitions from that report 

that ERS uses in categorizing different types of cost: 

“Enterprise costs are the value of resources used in the production of wheat, classified into three 

categories for this analysis: 

Operating costs are the short-run costs incurred in planting, growing, and harvesting the wheat 

crop. They include items such as seed, fertilizer, and chemicals, custom operations, fuel, 

electricity, purchased water, baling straw, and hired labor. The farmer expects that the returns 

from the crop will at least cover these expenses, or else it would not be worthwhile to plant the 

crop. 

Ownership costs include repairs, the annualized cost of maintaining the capital investment 

(depreciation and interest) in farm machinery, equipment, and facilities, and property taxes and 

insurance. Ownership costs do not need to be covered in one crop cycle but will have to be covered 

in the medium-term for the farm to remain profitable. 

Opportunity costs reflect the loss of potential gains from alternative opportunities when one 

alternative is chosen. They can include unpaid labor for the time spent by a farmer in the 

production of a commodity, the rental rate of the land (should the farmer have chosen to rent the 

land to another producer), and the enterprise share of general farm overhead. General farm 

overhead includes the expenses for items such as farm supplies, marketing containers, hand tools, 

power equipment, maintenance and repair of farm buildings, farm utilities, and general business 

expenses that cannot be directly attributed to a single farm enterprise. Costs of general farm 

overhead items are allocated to each commodity produced on the farm based on its relative 

contribution to total farm operating margin (i.e., value of production less operating costs). In the 

long run, if the opportunity cost for these resources, such as labor and land, is not covered, then 

those resources will be moved to other activities that provide a higher return.”6 

In its ongoing tracking of production costs, ERS combines the last two categories into a grouping called 

“allocated overhead”. All of USDA’s work on production cost has a strong theoretical underpinning as a 

result of earlier work by agricultural economists. In the 1990s, the American Agricultural Economics 

Association decided to form a task force “to recommend standardized practices for generating costs and 

returns estimates for agricultural commodities after a careful examination of the relevant economic theory 

and the merits of alternative methods.” The result was publication of a 566-page handbook on estimating 

commodity costs and returns.7 

6

 Ibid, page 13.
 

7

 AAEA Task Force on Commodity Costs and Returns, “Commodity Costs and Returns Estimation Handbook”, Ames Iowa, 

February 1, 2000. 

19
 
 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

2.2. Sources of production cost information 

USDA has collected production cost data for the major program crops for decades in connection with price 

support programs, and these data were at times used by the Congress to establish loan rates and target 

prices for the main program crops. Cost data for the less important crops is generally compiled or estimated 

by state cooperative extension staff, but these have some shortcomings as discussed below. 

2.2.1. USDA production cost estimates 

Currently the USDA data collection is accomplished through the Agricultural Resource Management Survey 

(ARMS) which currently deals with 9 of the 32 crops covered by this study (or 30 if one lumps together 

upland and ELS cotton and cottonseed). This annual survey is conducted jointly by ERS and NASS, and 

covers production practices, input use, costs, returns, and financial status of the enterprise.8 

Each year these agencies typically collect more detailed information on production practices and costs for 

one or two crops in order to update cost and return (CAR) models. The most recent surveys covered wheat 

in 2009, corn in 2010, barley and oats in 2011, and soybeans in 2012. Data on peanuts and rice for 2013 

will be collected this year. The survey history since 2000 is shown in Table 10. The survey design aims to 

cover 90 percent of production. For wheat, corn and soybeans the survey covers 15-20 states. Sample sizes 

are only 1,500 to 4,000, so at the regional level many of the data elements are not statistically significant. 

Table 10: Crop Years Covered by ARMS Data 

Rice 2013, 2006, 2000 

Peanuts 2013, 2004 

Soybeans 2012, 2006, 2002 

Barley 2011, 2003 

Sorghum 2011, 2003 

Corn 2010, 2005, 2001 

Wheat 2009, 2004 

Cotton 2007, 2003 

Oats 2005 

Using that data, ERS publishes annual estimates of production cost by region for those crops using price 

indexes and other information to update the estimates. Tobacco was also covered through 2004 and sugar 

beets through 2007. The regions used are the ERS Farm Resource Regions – Heartland, Northern Crescent, 

Northern Great Plains, Prairie Gateway, Eastern Uplands, Southern Seaboard, Mississippi Portal, Basin and 

Range, and Fruitful Rim. These are shown in Figure 4. 

Some of the detailed ARMS data on production practices is available online. For the more recent surveys, 

this includes the seasonal timing of fertilizer application, weed control practices, tillage practices, and 

number of treatments for pests or disease. However, at the regional level much of the information is not 

statistically significant. Nevertheless the underlying survey information does contain a great deal of useful 

information for allocating cost elements to different phases of the production process: preplanting, 

8

 Cost and return estimates for crops covered by ARMS surveys are available at http://www.ers.usda.gov/dataproducts/commodity-costs-and-returns.aspx 

20
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

planting, growing, and harvest. This includes information on number of field operations, and use of labor, 

machinery and other inputs at each stage. 

Figure 4: Regions used for ARMS survey 

2.2.2. Extension service crop budgets 

In contrast to the major crops, most cost estimation for minor crops has historically been done on a 

somewhat ad hoc basis by extension staff at the various land grant universities. The crop coverage and 

frequency of such studies has been highly variable. Over the last decade, budget pressures have led many 

states to reduce or eliminate financing for this activity. In some cases, however, grower or industry groups 

have stepped up to provide funding for continuation of cost estimation programs. 

One positive attribute of these state crop budgets is that they should be fairly up to date with respect to 

production methods and unit costs. A few also show the timing of field operations, which facilitates 

identification of some of the preplanting costs. 

However, there are five main problems with these estimates. First, their availability is very limited for 

crops other than the major field crops. Many states do not produce such estimates, and those that do may 

do it only every few years. 

Second, they are not statistically representative examples of actual production costs. They are mostly 

prospective budgets that are prepared as a planning tool for farmers in the state or region. They are 

typically based on interviews of representative commercial farmers, and sometimes on data collected 

through farm management services in which farmers may voluntarily participate. So they tend to represent 

costs of the larger scale, better managed, commercial farming operations. 

Third, some states produce crop budgets for different regions within the state rather than an average for 

the state. The budgets may or may not take into account different practices, such as irrigated versus non21
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

irrigated, GMO versus conventional, different tillage systems, etc. In these cases there is no way to easily 

determine an average for the state that takes into account all the various combinations. 

Fourth, the methodologies used around the country are highly variable. Many omit overhead costs or treat 

returns to land and management as a residual. Some budgets aggregate costs in the same format as is used 

by the Economic Research Service. Some are partly disaggregated, showing each type of input used and its 

costs. Some are completely disaggregated with quantities of inputs and prices for each field operation. 

And some are a blend of the three approaches. 

Finally, while many are in Excel format, which allows farmers to plug in their own numbers and facilitates 

updating, many are available only in Adobe format and show only the results of calculations and would not 

be updatable without reconstructing a spreadsheet. 

Given these limitations, we concluded that there is limited benefit in providing elaborate detail on 

production costs in our tables for each crop. It would not be something that RMA could reliably and 

economically update in the future because the sources for actual input costs at the state or county levels 

are seldom provided. Moreover, there is no assurance that the crop budgets we used for this project will 

be updated in the future (or in the same format if they are updated). Where possible we have instead 

usually presented cost data in a format similar to that used by ERS and indicated how it can be updated 

using price indices if extension budgets or ERS estimates are unavailable. 

2.3. Complicating factors 

2.3.1. Nature of the guarantee 

RMA’s crop insurance products offer a guarantee of a certain amount of revenue that is based on expected 

revenue. Expected revenue is a function of expected yields and expected prices. For some crops, futures 

markets tell us what the expected market price is. For others, one has to make an educated guess by 

drawing on industry experts or simply basing the projected price on the historical price data. RMA insurance 

plans use all these methods. Then the producer’s historic average yields can be used to calculate the 

expected revenue. Alternatively, some revenue insurance plans use an average of the producer’s historic 

revenues as the basis for the guarantee. 

Risk sharing is an important concept in setting the actual guarantee to the producer. All recognize that in 

agriculture there is year-to-year variability in weather, in yields, in prices, and in crop quality. Risk is a 

normal part of the business, and a farmer must be able to survive the occasional bad year to be successful 

over time. The insurance products therefore require that in a bad year the producer must absorb some of 

the loss before the insurance kicks in. Thus most of RMA’s plans do not guarantee 100 percent of expected 

revenue. Rather, they offer choices ranging between 50 and 90 percent of expected revenue. (The CAT 

endorsement only guarantees 27.5 percent of expected revenue.) 

The lower the percentage guarantee is, the lower the cost to the farmer per dollar of guarantee because 

the probability of hitting that threshold of loss declines. 

In a prevented planting situation, current RMA methodology applies the same risk-sharing theory. The 

producer is paid a fixed percentage of his individual guarantee, typically 60%, that reflects the estimated 

share of total production costs incurred in a prevented planting situation. Thus if the producer took out 

coverage at the 50% level, the PP payment would only cover half his incurred production costs. If the 

producer takes 85% coverage and elects an additional 10% PP payment, almost all of the incurred production 

22
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

costs would be covered. This is an important point to keep in mind because it has implications for producer 

decision making in a prevented planting situation. 

One problem is that today’s federal insurance guarantees are for the most part not related to production 

costs. For the major field crops the guarantee is based on expected market prices and revenues, and those 

may be well above or well below actual production costs. 

However, some crops, like dry beans or hybrid seed, have a guarantee based on a processor contract, and 

that typically is more reflective of production costs. Other minor crops may have plans that are implicitly 

based on production costs. These base the price component on some moving average of historic prices or 

revenues that presumably approximates the return to all factors of production that is necessary if farmers 

are to keep producing the crop. 

For the major crops, the relationship between the PP payment and total production costs will vary 

depending on the coverage level chosen by the producer, whether expected revenue is above or below 

production costs, and whether the producer buys higher PP coverage. Table 11 illustrates the potential 

range of variation. At selected coverage levels, and for revenue per acre that is either 33 percent higher 

or 20% lower than production costs of $600 per acre, the first two data columns show the basic 60 percent 

PP payment per acre and the share of production costs that it represents. The last two columns show the 

results when the producer has paid for the additional 10 percent PP payment. 

Table 11: Comparison of PP payment’s production cost coverage 

Basic PP Coverage PP +10% Coverage 

Prevented planting factor 

Expected revenue/acre 

Production cost/acre 

Guarantee 

PP payment/acre 

PP as % of production cost 

% 

85

75

65

50

85

75

65

50

85

75

65

50 

60 60 

$800 $480 

$600 $600 

$680 $408 

$600 $360 

$520 $312 

$400 $240 

$408 $245 

$360 $216 

$312 $187 

$240 $144 

68% 41% 

60% 36% 

52% 31% 

40% 24% 

70 70 

$800 $480 

$600 $600 

$680 $408 

$600 $360 

$520 $312 

$400 $240 

$476 $286 

$420 $252 

$364 $218 

$280 $168 

79% 48% 

70% 42% 

61% 36% 

47% 28% 

For example, if expected revenue is 80 percent of total production cost, the coverage level is 50 percent, 

and prevented planting is 60 percent, then the indemnity will be 24% of production cost. But if expected 

23 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

revenue is 133 percent of costs, coverage is at 85 percent, and the producer bought the additional 10 

percent PP coverage, then the PP indemnity will be 79 percent of total production costs. 

With the de facto “deductibles” built into the permitted coverage levels, and a multiplicative factor for 

prevented planting, this variation in cost coverage is inevitable. But similar variability of guarantee in 

relation to costs exists when a crop is successfully planted. If it is hailed out or frozen a week after the 

crop is up, the farmer will avoid incurring costs for cultivation, chemical applications and harvesting, yet 

the indemnity will be 100 percent of his guarantee. In another year with lighter damage, the farmer will 

incur all his production and harvesting costs, have some production to count, and get a smaller or perhaps 

no indemnity. And in both cases, the relationship between the indemnity and production costs will also 

hinge on the factors discussed above. 

In theory the size of the prevented planting payment in and of itself should not affect behavior. If you are 

able to plant using good farming practices by the final planting date, you are generally required to plant. 

If you cannot plant, you get the payment. However, in practice it can be difficult to definitively determine 

whether it was possible to plant. 

Growers may also have the option of planting a different crop with a later final planting date, e.g. soybeans 

after corn, or using the late planting option for the original crop, under which the guarantee is reduced one 

or two percent for each day beyond the final planting date. Current rules then give the grower a percentage 

of the prevented planting payment on the first crop that depends on whether there is a loss claim on the 

second crop. As discussed above, willingness to take a chance on the second crop or late planting can be 

affected not only by the amount of the prevented planting payment on the first crop, but by rules on the 

yield to be recorded in the farmer’s APH database. In practice, virtually no growers who claim prevented 

planting use the option of planting a second crop due to the adverse impact on the APH yield of the first 

crop. 

2.3.2. The production cost metric 

There are different definitions of what a farmer needs to survive a poor crop and come back to farm the 

following year. This is inherent in the alternative timeframes over which various costs are incurred, as 

discussed in Section 2.1. 

One recent example of the various ways in which farm sector observers think about crop insurance is an 

analysis by Ohio State professor Carl Zulauf that was published via the University of Illinois’ online 

“Farmdocdaily” report.9 It calculated the ratio of insurance coverage at the 85% level to the sum of cash 

expenses and land rent since 1980 for corn and soybeans. The rationale for including just cash expenses 

and land rent was that these expenses are mostly prior to harvest and are often financed by banks and 

other credit providers like input suppliers. There were a number of simplifying assumptions made in order 

to model purchase of the harvest price option over the period, and the national average cash basis was 

subtracted from the futures price to get to a farm level value. 

Zulauf’s Figure 1 for corn is reproduced below as Figure 5. From 1980 to 2006, insurance at the 85% level 

covered an average of 95% of cash expenses and a land charge. In the more recent higher priced years of 

2007 to 2012, it covered an average of 130% of those costs. The story was similar for soybeans except that 

the coverage of costs during those two time periods was 106% and 151%, respectively. 

9

 Carl Zulauf, “Insurance Coverage of Corn and Soybean Production Cost since 1980”, farmdocdaily, Department of 

Agricultural and Consumer Economics, University of Illinois Urbana-Champaign, November 27, 2013 

24
 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

If covering variable operating costs and land rent is the key to surviving another year, one could argue that 

the same standard should be applied in the case of prevented planting. As the review of ERS studies in 

Section 2.4 will reveal, even USDA has been of mixed minds over time about what costs to include as the 

benchmark. 

Figure 5: Comparison of PP payment’s production cost coverage 

Source: Carl Zulauf 

2.4. USDA studies of prevented planting costs 

The 1996 and 2007 ERS studies referred to earlier provided much of the support for the prevented planting 

factors that RMA has included in insurance plans.10 Both studies divided the year into four periods: preplanting, planting, growing, and harvesting. But the studies took somewhat different approaches on costs 

to include in the pre-planting period. The 1996 study had three scenarios defined by the percentage of 

pre-planting costs actually completed – 100%, 60% and 25%. It examined costs on a national and regional 

basis for corn, wheat, barley, cotton and grain sorghum using survey data from 1990-1994. It included 

variable cash costs, and the year’s fixed cash costs for general farm overhead, taxes and insurance. It also 

included costs for capital replacement, operating capital, and non-land capital for the pre-planting period 

only. Land costs and returns to operator labor were not included. 

The 2007 ERS study added soybeans and rice to the five crops covered in 1996 but only tabulated national 

average costs. It included the following costs in the pre-planting period: variable cash costs, and the 

interest, capital recovery, and operator labor costs relevant to activities undertaken in the pre-planting 

period. General farm overhead, taxes, insurance and land costs were allocated in proportion to the number 

of months in the pre-planting period. The estimates were based on ARMS surveys for the 1998-2003 crop 

years and were updated to a 2005 basis using price indexes. 

Since both of these studies are rather dated, in 2013 RMA contracted with ERS to update estimates for corn, 

winter wheat, spring wheat, soybeans and cotton using the same methodology as in 2007 so that ERS’ 

10 ERS Analysis Team, op cit, and Linda Foreman et al, op cit. 

25
 
 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

existing data compilation models could be applied.11 Those five crops accounted for 80% of prevented 

planting indemnity payments between 1994 and 2013. While cotton has not had a lot of PP payments, it 

was included to get a fix on timing of field operations in the more southern production areas. The number 

of crops analyzed was limited to permit timely completion of the work. The analysis was based on ARMS 

surveys covering the 2006 soybean crop, 2007 cotton crop, 2009 wheat crop, and 2010 corn crop. While a 

survey was conducted for the 2012 soybean crop that data had not yet been compiled in a form amenable 

to analysis. 

The 1996 ERS study was a serious effort to get a better understanding of the actual costs incurred before 

planting for some of the major crops. It divided the PP costs for the relevant year for that crop by the 

average 1991-94 guarantee at the 65% coverage level to get a PP factor. However, in retrospect it seems 

inconsistent to pay 100% of preplanting costs when the crop insurance plans have a co-insurance component, 

or deductible, that requires the farmer to shoulder part of the risk. Moreover, RMA’s PP factor at the time 

was explicitly applicable to the farmer’s guarantee, regardless of the coverage level chosen. 

RMA does not appear to have based its PP factors directly on any of the ERS studies. The second column of 

Table 12 shows the percentage of a 65% guarantee reported in the 1996 study. In columns 3-5 it shows the 

PP percentage of total production costs from all three studies. Those percentages are all in a relatively 

narrow range of 16-34 percent. If one sets aside cotton, the range is 25-34 percent, and there is no general 

trend upward or downward over the 17-year period. Current PP factors for these crops range from 45% to 

60%, roughly double the preplanting costs identified in the ERS studies. 

Table 12: ERS share of costs before planting 

1996 1996 2007 2013 

% of 65% % of total production cost 

guarantee 

Barley 57 26 29 

Corn 46 27 30 34 

Cotton 35 22 21 16 

Grain sorghum 58 28 32 

Rice 26 

Soybeans 32 31 

Wheat 57 26 35 

Winter wheat 26 

Spring wheat 25 

RMA did not provide a discussion of how current PP factors were determined, nor were we able to find one 

in our research. Two things are clear, however. First, in current RMA practice, factors are applied to the 

insurance guarantee and therefore the indemnity is subject to the deductible implied by the coverage level. 

Second, and as a result, the only way the factors can be as high as they are is if a significant portion of the 

fixed costs are included as preplanting costs. We agree with that methodology. 

2.5. Alternative methodologies 

In the course of our research and analysis, we were not able to identify a practical alternative method of 

dealing with prevented planting, nor did we find any studies that explored other approaches. In our view, 

11 Linda Foreman and Mir Ali, op cit. 

26
 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

adjusting some of the crop payment factors and assigning a yield to the crop that was not planted would 

address most of the issues with this insurance coverage. (The assigned yield issue was raised in an Office 

of Inspector General audit report but is not further addressed in this study.)12 

We did investigate two alternative approaches: basing the indemnity on actual preplanting costs, or capping 

the indemnity as some percentage of actual preplanting costs. 

2.5.1. Payment equal to average pre-planting costs 

In one sense, using the actual average of pre-planting costs for farmers in a specific region as the basis for 

an indemnity would be an appealing method of dealing with situations in which a farmer is not able to plant 

the crop. However, it is not a practical solution to the problem for three reasons. 

First, the research undertaken for this project confirms that suitable production cost information for most 

of the crops eligible for prevented planting coverage is simply not widely available. We had great difficulty 

identifying acceptable extension budgets for use in the current study. Moreover, the extension budgets 

that are available are often not statistically representative of average grower costs, even when the 

percentage of costs identified as preplanting may be representative. 

Second, even when production cost data are available, updating them each year would be administratively 

very burdensome. 

Third, this would be a departure from RMA’s general approach of basing insurance guarantees on expected 

revenue. When market prices are high, a prevented planting indemnity based on actual costs would 

probably be seen by growers as undercompensation. When prices are low, there would be a stronger 

incentive to claim prevented planting rather than to try to produce a crop that would yield low returns. 

2.5.2. Capping payments 

Capping the indemnity is a second way of preventing overcompensation of producers when market prices 

are high. One could include a restriction in the actuarial documents that says the payment per acre cannot 

exceed a certain figure derived from production cost data. The mechanics of doing this would be influenced 

by a number of considerations: 

 Is there a single national PP factor or is it differentiated by state or region? Currently all factors 

are national, and we do not recommend departing from that approach. 

 How frequently will the production cost data per acre be updated? This can be done annually using 

price indexes in between more thorough periodic reviews of actual cost data. 

 Does one set the dollar amount at the actual PP costs, or apply the coverage level to that figure? 

 If the buy-up options remain in effect, does one set the figure at 117% of PP costs when the PP 

factor is 60% since that is the coverage that one has permitted? 

 Does one pick some dollar amount above the average in order to reflect the costs of more than 

half of the producers? 

Given that there are regional production costs for the major crops, the simplest and most restrictive 

procedure might be to set a national cap equal to some amount more than 100% of the highest PP costs of 

12 Office of Inspector General, “RMA: Controls Over Prevented Planting”, Audit Report 05601-0001-31, U.S. Department 

of Agriculture, September 2013. 

27
 
 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

any region and apply the coverage level to that figure. However, this may not significantly constrain PP 

indemnities. 

One can look at corn in 2012 as an example, assuming our recommended 50% factor for corn is implemented. 

The highest estimated PP costs were $326 per acre in the Prairie Gateway region, and 110% of that figure 

is $359. (If farmers argue that RMA has to allow for 10% buy-up, one would have to use 120% of actual 

costs, or $391.) 

The estimated PP indemnity at the 50% and 60% levels in 2012 is shown in Table 13, along with what a 60% 

PP factor would result in at coverage levels of 65% and 85%. This type of cap would indeed have limited 

indemnities in some cases (highlighted in the table) as long as the grower took the 10% buy-up option. 

However with the 50% base PP factor, only Heartland growers with high coverage levels would have been 

affected in this high price year (calculation not shown). 

Table 13: Prevented Planting Indemnity for Corn in 2012 ($/acre) 

PP factor Coverage Level x 0.6

50% 60% 65% 85% 

Eastern Uplands 344 413 269 351 

Heartland 485 583 379 495 

Northern Crescent 419 503 327 427 

Northern Great Plains 348 418 271 355 

Prairie Gateway 399 479 312 407 

Southern Seaboard 337 405 263 344 

This illustrates the challenge in establishing parameters for a cap that are perceived as reasonable by 

farmers, but that still keep PP indemnity payments from significantly exceeding actual preplanting costs. 

One would probably have to regionalize the caps to make them actually have an impact. If one is going to 

do that, one might as well just use regional cost of production as the basis for the indemnity. But the 

objections to that are discussed above. 

2.6. Agralytica’s methodology 

In most cases we have structured the cost tables in accordance with the Economic Research Service’s normal 

aggregated cost framework used in the agency’s ongoing work on commodity costs and returns. In some 

cases this required us to estimate overhead costs that were not explicitly identified in state extension 

service production cost budgets. We have also separately included part of the cost of crop insurance to the 

farmer under operating costs since this is not included in the ERS cost tables. We included that portion of 

the farmer-paid premium per acre from RMA’s Summary of Business data that one can attribute to prevented 

planting protection. 

For each crop the cost data for the 2003-2012 crops is assembled in an Excel file. The first sheet shows 

total production costs. The second sheet contains factors that represent the percentage of each cost line 

item that is estimated to be incurred in a prevented planting situation. The third sheet contains the product 

of the total costs in the first sheet and the percentage factors in the second sheet. It also calculates the 

percentage of total costs that is incurred in a PP situation, which can then be compared to the current RMA 

coverage levels for prevented planting. 

28
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

     

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

2.6.1. Determining total costs 

For the nine crops covered by ARMS surveys, the production costs by farm resource region for the ten-year 

time period are available on the ERS website. Our only modification was to add part of the cost of crop 

insurance. For these crops the regions for which there are production cost estimates are shown in Table 

14. (For rice, ERS has California, Gulf Coast, Arkansas Non-Delta, and Mississippi River Delta, which more 

or less align with the regions shown in the table.) We also used farm resource regions for similar or related 

crops that have costs based on extension budgets, or in the case of cottonseed, costs based on joint 

production with a covered crop. Those crops are included at the bottom of Table 14. 

Table 14: Production cost budgets by farm resource region 

Northern Northern Eastern Southern Mississippi Prairie Fruitful Basin & Great Heartland Crescent Uplands Seaboard Portal Gateway Rim Range Plains 

Barley 

Corn 

Cotton 

ELS cotton 

Grain sorghum 

Oats 

Peanuts 

Rice 

Soybeans 

Wheat 

Cottonseed 

Hy. corn seed 

Popcorn 

Silage sorghum 

Hy. Sorg. seed 

For the other crops (including hybrid corn and sorghum seed, popcorn, and silage sorghum) we first 

researched where they are grown and then searched for budgets for those states covering the ten-year 

timeframe. A few state extension services regularly produce budgets for multiple crops each year that are 

archived online. More commonly only the current year is available or a budget is published every few years. 

And for some states and crops there are no budgets available. For years for which no budget was available, 

we used price indexes from USDA’s National Agricultural Statistics Service and other sources to derive the 

missing data from the years for which data was found. 

The available budgets dictated the degree to which we could differentiate costs by region. Regions had to 

be defined in order to eventually compare the calculated PP costs to the indemnities paid as indicated by 

Summary of Business data. 

Table 15 shows the states included in various regions for which we judged the available budgets to be 

representative. 

Table 15: Region definitions on a state basis 

Crop States in Region

29
 
     

     

       

   

           

           

     

       

   

     

         

     

         

             

           

     

     

     

     

   

           

           

         

   

     

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Buckwheat MN, ND, SD

Canola ND

Dry beans ND, MN

Dry beans NE

Dry peas ID, MT, ND, WA

Flax ND

Green peas IA, IL, MN, WI

Hybrid sorghum seed TX

Millet CO, KS, ND, SD

Mustard ND, MT

Onions ID, OR, WA

Onions CA, GA, NM, NV, TX

Potatoes ID, OR, WA

Potatoes AL, AZ, FL, GA, TX

Processing beans DE, MD, NJ, NY, PA

Processing sweet corn WA, OR, ID

Rye ND, SD, MN

Rye KS, OK, TX

Rye WI, MI, IL

Safflower CA

Safflower MT, ND, SD

Sugar beets MI

Sugar beets CO, MN, ND, NE

Sugar beets ID, MT, OR, WY

Sunflower seed MN, ND, SD

Tobacco KY, TN

Tobacco NC, SC, VA

2.6.2. Determining costs incurred prior to planting 

Our methodology for this step differed slightly for operating costs and overhead costs. For operating costs 

we either used the percentages that the ERS studies have developed as allocable to the pre-planting period, 

or we developed our own estimates based on extension service crop budgets and interviews with those who 

prepared them or with other experts. 

For several of the cost elements, the estimates were based on the percentage of field operations that occur 

prior to planting. Unfortunately there is not a clear dividing line. When fields are too wet to plant, farmers 

may also have been unable to complete the seed bed preparation, weed control and/or fertilization 

operations they would normally undertake just prior to planting. The 1996 ERS study recognized this 

possibility and looked at three scenarios that differed in the degree of completion of these steps. In our 

analysis we have generally given producers the benefit of the doubt and assumed all steps are completed. 

For overhead costs we include 100% of all except labor. Farmers have to pay taxes, insurance, and general 

farm overhead costs even if they are unable to plant a particular crop. Land rent must also be paid, or 

funds tied up in owned land could have generated a return elsewhere. Similarly, machinery replacement 

costs are typically accrued each year for tax purposes via depreciation schedules and are not likely to be 

30
 
 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

affected much by inability to plant a particular crop. Most farmers diversify their crop production and will 

still be using equipment on the acreage that is unaffected. 

In the case of labor, we concluded that farm operators and their hired labor typically have plenty of other 

ways to profitably use their time over the course of a season and we count only the labor input prior to 

planting. ERS includes hired labor under overhead costs, while many state extension budgets list it under 

variable operating costs. We treat it the same way in both cases. 

One cost that farmers can incur in a PP situation that may not be part of the normal cost structure is the 

cost of weed control on the unplanted land. There are three options – tillage, chemical control, or planting 

a cover crop. The typical cost per acre for tillage or chemical control is about $15. Planting a cover crop 

like annual ryegrass, radishes, or oats depends on the cost of the seed but costs were variously reported as 

between $20 and $35 per acre (but only 1.5-2.0 million acres are planted to cover crops annually). However, 

a farmer may have weed control expenses or plant a cover crop after a spring-planted crop in any case. 

And cover crops add value in terms of soil fertility and structure. One recent study found that corn and 

soybean yields are 10% higher when following a cover crop.13 Since our decisions on treatment of overhead 

costs are overwhelmingly in favor of farmers, and since cover crops provide a benefit, we chose not to 

include incremental cover crop costs in our calculation of costs farmers incur in a PP situation. 

Below we provide additional comments on our treatment of each cost category. 

Seed 

If the crop was not planted, the seed was not used. In general we found that most farmers are able to 

either carry the seed over for a year or return it for credit or a refund. However, there are some crops, 

like potatoes or tobacco, where the seed is usually a total loss if not planted. The ERS studies cited earlier 

do not include seed as a preplanting cost. 

Fertilizer 

Most fertilizer for the major field crops is applied prior to planting. There are reasonably good data from 

the ARMS surveys and extension budgets about timing of fertilizer application, and the latter provide the 

total costs per acre of the different types. Our simplifying assumption for a prevented planting situation is 

that all nitrogen applied before planting is degraded before it can be used and is therefore a sunk cost, 

while all phosphorous, potassium and other soil amendments remain in the soil and can be used by 

subsequent crops. 

Chemicals 

Crop protection chemicals are mostly applied after planting, but soil fumigants and glyphosate “burndown” 

are the exceptions. We adopted whatever percentage factors for pre-planting expenses were available in 

the various source materials. 

Custom operations 

The ERS studies cited earlier provide the factors for selected crops. Extension budgets varied in the degree 

to which they revealed timing of custom operations. In the absence of information, we used the percentage 

of all field operations occurring before planting. 

13 January 23, 2013 webinar on cover crops and crop insurance hosted by the National Center for Appropriate 

Technology and the National Sustainable Agriculture Coalition 

31
 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Fuel, lube and electricity 

For dryland production, the allocation to the pre-planting period was based on the percentage of field 

operations in that period. For irrigated production, energy inputs were allocated primarily to the postplanting period. 

Repairs 

Repair costs were allocated in proportion to the percentage of field operations in the pre-planting period. 

Crop insurance 

The ERS production costs do not include crop insurance because the revenue side of their cost and returns 

tables includes only market returns from the sale of the crop at average yields. State extension budgets 

sometimes do include the cost of crop insurance. We concluded that the appropriate method for this study 

was to include that portion of the average farmer-paid premium per acre from RMA’s Summary of Business 

data that one can attribute to prevented planting protection. For this purpose we used the ratio of 

prevented planting indemnities to total indemnities for the 1994-2013 period. That factor ranged from 1% 

for a few crops to more than 50% for canola, ELS cotton, burley tobacco, and rice. 

Interest on operating costs 

ERS included interest only on those costs incurred prior to planting. The simple average of the shares for 

the eight crops covered in the 2007 and 2013 ERS studies is 25% and we have used that percentage for all 

other crops. 

Other variable costs 

Depending on the crop, these may be separately identified as purchased irrigation water, ginning (for 

cotton), straw baling (oats), transload (potatoes), etc. Some extension budgets also just have a 

“miscellaneous” category. For the most part these are costs that come only after a crop is planted, so a 

zero factor is applied for calculating the PP portion. 

Labor 

As discussed above, whether for hired labor or the opportunity cost of unpaid operator labor, we only 

include the labor costs associated with activities prior to planting. 

Opportunity cost of land 

Some farmers own all the land they farm, some own part and rent part, and some are just renters. The 

2007 Census of Agriculture reported that 20% of the harvested cropland was on farms that are fully owned, 

12% was on farms that fully rented, and 68% was on a mix of owned and rented land. If one owns the land, 

there is no rental payment that has to be covered when a crop is not planted. And even rental contracts 

may have provisions that adjust the payment in a prevented planting situation. Nevertheless, if a farmer 

or landowner did not have money tied up in land, it could be earning something elsewhere, so we have 

followed the ERS model of using land rental rates as the opportunity cost of the land resource. We include 

100% of that rental rate as a pre-planting cost. 

32
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Capital recovery of machinery and equipment 

This is part of the ownership costs described in Section 2.1. In this case it is the annualized cost of 

maintaining the capital investment (depreciation and interest) in farm machinery, equipment, and 

facilities. Since it is a cost that does not actually have to be covered in any particular year, there is a 

stronger argument than for land costs for not including it at all as a pre-planting cost. However, we chose 

to include 100% as a pre-planting cost because the guarantee in RMA insurance plans is generally based on 

some concept of full cost of production over time. 

Taxes and insurance, and general farm overhead 

These are all cash outlays that must be paid on a timely basis. In cost of production budgeting, these costs 

are allocated among the various farm enterprises on the basis of the contribution of each enterprise to net 

returns. We include 100% of these costs as pre-planting costs. 

2.7. Our initial expectations 

As a prelude to the individual crop analysis we thought it would be useful to look at some basic data on 

whether the relative importance of different cost elements had changed over the past decade, using the 

USDA cost data for wheat, corn, soybeans, cotton and rice. For each crop and region we calculated the 

shares of total cost for 2002, 2003 and 2004 and then averaged those shares. We did the same for 2010, 

2011 and 2012 and then calculated the change in the share of each cost component between the two periods 

and graphed it. Figure 6 shows the results for corn in the Heartland region as an example. 

Figure 6: Change in share of costs 2002-04 to 2010-12 

Our main conclusion was that since fixed overhead costs were generally down as a percentage of total costs 

while the variable operating cost share was up by several percentage points on average, it suggested that 

33
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

prevented planting payments could be reduced (on average) by several percentage points. Here are our 

other observations at the beginning of the study on the changing structure of costs: 

Cost changes overall 

	 Operating costs as a share of overall costs had increased for all commodities, on average by 5 

percentage points. 

	 The figure was higher for corn (8 points) and wheat (6), and less for cotton (4), rice (4), and 

soybeans (2.5). 

	 Cost changes by region: 

- Changes in costs were pretty consistent across regions for corn and cotton; 

- For wheat, soybeans, and rice, there were slight variations in cost changes across regions. 

Operating cost changes 

	 Fertilizer and seed were each up 3 points, and fuel is up 2 points. 

	 Chemicals were down 2-3 points. 

Overhead cost changes 

	 Opportunity cost of both hired and unpaid labor was down 2-3 points across most commodities. 

	 Opportunity cost of machinery had varied, up in most regions but not all. 

	 Interestingly, land rental rates declined in importance between the two periods, except for 

rice. 

In Section 3 we summarize the results of our analysis of production costs for the various crops. In the three 

sections that follow, we discuss the individual crops. Some follow this general pattern but others do not. 

Each crop discussion begins with a general overview and a map of production areas. This is followed by 

descriptions of sources of production cost information, production practices, and prevented planting 

experience. An analysis section summarizes the prevented planting cost estimates for the regions covered, 

and presents the results graphically. Following the production cost analysis, we show how RMA prevented 

planting payments per acre compared to our estimates of PP costs over the decade, and we recommend 

whether RMA’s PP factor for that crop should be increased, decreased, or left unchanged. Then we provide 

the tables showing regional production costs, the PP percentage factors, and the regional estimates of costs 

incurred in a prevented planting situation. 

34
 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

3. ANALYSIS AND CONCLUSIONS 

For this study, the contract required the following results: 

 Determine the degree to which current base level PP payments are adequate; 

 Determine the appropriateness of allowing an additional 5 or 10 percent PP coverage under existing 

policy; 

 Compare our estimates of costs incurred per acre in a PP situation to what RMA’s insurance plans 

have actually paid out. 

 Document the pros and cons of any recommended changes to existing PP payment amounts for 

eligible crops. 

 Explore and discuss alternative approaches 

3.1. Analysis of production cost data 

Our overall conclusion is that current base level PP payments are more than adequate, and for most crops 

are in fact excessive. By base level we mean without the additional 5 or 10 percent coverage available for 

all of the crops except onions and tobacco. 

As intimated in the solicitation, and evident in our initial analysis, the share of production costs that is 

incurred by farmers in a prevented planting situation has declined for most crops over the past decade. 

Figure 7 shows the changes that occurred between 2003 and 2012 in the prevented planting share of total 

production cost, using the simple average for the regions analyzed for each crop. For most crops the PP 

share fell by several percentage points. For example, for wheat it fell by five percentage points. 

Our research also indicates that the percentages of guarantee that RMA pays for prevented planting were 

mostly too high to begin with in 2003. Figure 8 shows the combined effect of this and of the decline in PP 

share over the subsequent decade by plotting the difference between the percentages in the insurance 

plans and our estimates of the appropriate percentages in 2012. Again using wheat as an example, the 

difference between RMA’s 60% and the 2012 average of 58% for the six wheat regions is 2 percentage points. 

The dashed lines in the two figures divide the crops into three groups. The first includes those crops for 

which ERS recently updated its estimates of how costs are allocated across the production cycle. The 

second includes those crops for which there are earlier ERS estimates of those allocations (barley, sorghum, 

oats, peanuts and rice) and crops for which we relied heavily on ERS estimates (popcorn, silage sorghum, 

and hybrid corn seed). The third group includes all the remaining crops, for which we relied primarily on 

state extension service crop budgets for the analysis. 

Table 16 and Table 17 provide our estimates of the share of total costs that farmers incur in a prevented 

planting situation, by crop, region, and year. These are reproduced from the detailed tables in each crop 

discussion in Sections 4-6. The tables include averages of the regions for each year and for the ten-year 

period as a whole. The final columns show the current percentages in the insurance plans, and the 

differences between those percentages and our 2012 estimates. 

The recommended changes in individual crop discussions assume that a single percentage applies to each 

crop, except for onions. We discuss this issue below in Section 3.3. Table 16 includes the crops with ERSrelated estimates. Table 17 includes the crops for which we relied on extension budgets. 

35
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 7: Change in PP share of total cost from 2003 to 2012 

Figure 8: Difference between what RMA allows and actual PP costs 

36
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 16: Summary of preplanting cost ratios for crops using ERS data 

Crop ERS Region 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Average RMA 

2012-

RMA 

Corn Corn Corn Corn Corn Corn 

Heartland 

Northern Crescent 

Northern Great Plains 

Prairie Gateway Eastern Uplands Southern Seaboard 

Average 

58%

54%

54%

54%

50%52%

54%

 58%

 54%

 53%

 53%

 50% 53%

 53%

 58% 

54% 

54% 

53% 

51% 

54% 

54% 

56%

53%

53%

52%

50%

53%

53%

 55%

 52%

 52%

 51%

 49%

 52%

 52%

 52% 

49% 

49% 

49% 

47% 

50% 

49% 

54%50%

50%

51%

47%

50%

50%

 55%

 49%

 51%

 53%

 51%

 50%

 52%

 54% 

48% 

50% 52% 

49% 

49% 

50% 

55% 

48% 

50% 53% 

49% 

49% 

51% 

56% 

51% 52% 

52% 

49% 

51% 

52% 

60% 

60% 

60% 

60% 

60% 

60% 

60% 

-5% 

-12% 

-10% 

-7% 

-11% 

-11% 

-9% 

Soybeans Soybeans Soybeans Soybeans Soybeans Soybeans Soybeans 

Heartland 

Northern Crescent 

Northern Great Plains 

Prairie Gateway 

Eastern Uplands Southern Seaboard 

Mississippi Portal 

Average 

68%

62%

60%

60%

59%

54%

62%61%

 67%

 61%

 59%

 60%

 58%

 52%

 62% 60%

 67% 

60% 

59% 

59% 

57% 

52% 

60% 59% 

67%

61%

62%

61%

59%

52%

59%60%

 66%

 59%

 60%

 60%

 57%

 50%

 57%

 58%

 63% 

55% 57% 

57% 

53% 

46% 

55% 

55% 

65%

57%

59%

60%

55%

47%

57%

57%

 67%

 60%

 60% 61%

 57%

 50%

 58%

 59%

 67% 

59% 

60% 60% 

57% 

49% 

58% 

59% 

66% 

59% 

60% 

60% 

56% 

49% 

58% 

58% 

66% 

59% 

60% 

60% 

57% 

50% 

59% 

59% 

60% 

60% 

60% 

60% 

60% 

60% 

60% 

60% 

6% 

-1% 

0% 

0% 

-4% 

-11% 

-2% 

-2% 

Wheat Wheat Wheat Wheat Wheat Wheat 

Heartland 

Northern Crescent Northern Great Plains 

Prairie Gateway Fruitful Rim Basin and Range 

Average 

63%

62%

65%

63%

62%

64%

63%

 62%

 60%

 61%

 60%

 63%

 62%

 61%

 62% 

59% 

62% 

59% 

63% 

62% 

61% 

61%

59%

61%59%

62%

61%

60%

 59% 58%

 60% 58%

 61%

 60%

 59%

 53% 

52% 

56% 

54% 

58% 

55% 

55% 

55%55%58%

58%

61%

59%

58%

 60%

 60% 61%

 61%

 64%

 63%

 62%

 57% 

57% 

59% 

59% 

62% 

61% 

59% 

56% 

55% 

59% 

58% 

61% 

60% 

58% 

59% 

58% 

60% 

59% 

62% 

61% 

60% 

60% 

60% 

60% 

60% 

60% 

60% 

60% 

-4% 

-5% 

-1% 

-2% 

1% 

0% 

-2% 

37
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Crop ERS Region 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Average RMA 

2012-

RMA 

Cotton Cotton Cotton Cotton Cotton Cotton 

Heartland Prairie Gateway Eastern Uplands Southern Seaboard Fruitful Rim Mississippi Portal 

Average 

32%

34%

28%

30%31%

30%

31%

 30%

 30%

 28%

 30%

 29%

 30%

 29%

 30% 

29% 

27% 

29% 

29% 

30% 

29% 

29%31%

28%

29%

28%

29%

29%

 32% 29%

 27%

 31%

 28%

 32%

 30%

 30% 

31% 

25% 

29% 

28% 

30% 

29% 

32%32%

26%

30%

29%

32%

30%

 32% 30%

 26%

 31%

 28%

 31%

 30%

 31% 

33% 

26% 

30% 

30% 

31% 

30% 

31% 

32% 

26% 

29% 

29% 

30% 

30% 

31% 

31% 

27% 

30% 

29% 

30% 

30% 

50% 

50% 

50% 

50% 

50% 

50% 

50% 

-19% 

-18% 

-24% 

-21% 

-21% 

-20% 

-20% 

Cotton + cottonseed Cotton + cottonseed Cotton + cottonseed Cotton + cottonseed Cotton + cottonseed Cotton + cottonseed 

Heartland 

Prairie Gateway 

Eastern Uplands 

Southern Seaboard 

Fruitful Rim 

Mississippi Portal Average 

37%

40%

33%

35%37%

35%

36%

 35%

 36%

 34%

 35% 34%

 35%

 35%

 36% 

34% 

32% 

34% 35% 

35% 

34% 

34%

36%

33%

34%32%

34%

34%

 38%

 34%

 33%

 37% 33%

 37%

 35%

 37% 

38% 

31% 

36% 

34% 

38% 

36% 

40%

40%

33%

37%

36%

39%

37%

 39%

 37%

 33%

 38%

 35%

 39%

 37%

 39% 

41% 

33% 

37% 

37% 

38% 

37% 

39% 

40% 

33% 

36% 

36% 

37% 

37% 

37% 

38% 

33% 

36% 

35% 

37% 

36% 

50% 

50% 

50% 

50% 

50% 50% 

50% 

-11% 

-10% 

-17% 

-14% 

-14% -13% 

-13% 

Cotton Ex Long Staple Fruitful Rim 29% 29% 29% 29% 29% 27% 29% 30% 30% 30% 29% 50% -20% 

Cotton ELS + cottonseed Fruitful Rim 34% 34% 34% 34% 34% 34% 36% 37% 37% 37% 35% 50% -13% 

Rice Rice Rice Rice 

Eastern Uplands Southern Seaboard Fruitful Rim 

Mississippi Portal 

Average 

52%

48%

50%

50%

50%

 52%

 48%

 49%

 50%

 50%

 49% 

45% 

50% 

48% 

48% 

50%

45%

52%

48%

49%

 50%

 45%

 52%

 48%

 49%

 49% 

43% 

52% 

47% 

48% 

52%

47%

54%

49%

50%

 52%

 46%

 54%

 49%

 50%

 50% 

45% 

54% 

48% 

49% 

50% 

45% 

54% 48% 

49% 

51% 

46% 

52% 

49% 

49% 

45% 

45% 

45% 

45% 

45% 

5% 

0% 

9% 

3% 

4% 

Grain Sorghum Grain Sorghum Grain Sorghum Grain Sorghum 

Heartland 

Northern Great Plains 

Prairie Gateway 

Fruitful Rim 

Average 

68%

73%

65%

59%

66%

 67%

 74%

 64%

 59%

 66%

 66% 

73% 

64% 

58% 

65% 

65%

75%

63%

58%

65%

 64%

 76%

 62%

 56%

 65%

 62% 

77% 

60% 

55% 

63% 

64%

79%63%

58%66%

 65%

 78%

 64% 58%

 66%

 64% 

77% 

62% 57% 

65% 

63% 79% 

62% 

56% 

65% 

65% 76% 

63% 

57% 

65% 

60% 

60% 

60% 

60% 

60% 

3% 

19% 

2% 

-4% 

5% 

38
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Crop ERS Region 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Average RMA 

2012-

RMA 

Silage Sorghum Prairie Gateway 59% 59% 55% 55% 54% 53% 56% 55% 55% 55% 56% 60% -5% Barley Barley Barley Barley Barley 

Heartland 

Northern Crescent 

Northern Great Plains 

Fruitful Rim 

Basin and Range 

Average 

64%

60%

65%

63%

65%

63%

 63%

 60%

 65%

 63%

 64%

 63%

 63% 

59% 

65% 

62% 

63% 

62% 

62%

58%

64%

61%

63%

62%

 63%

 59%

 65%

 62%

 64%

 63%

 60% 

57% 

62% 

60% 

61% 

60% 

64%

60%

65%

64%

64%

63%

 66%

 62%

 67%

 65%

 66%

 65%

 64% 

60% 

65% 

63% 

64% 

63% 

63% 

59% 

65% 

63% 

64% 

63% 

63% 

59% 65% 

63% 

64% 

63% 

60% 

60% 

60% 

60% 

60% 60% 

3% 

-1% 

5% 

3% 

4% 3% 

Oats Oats Oats Oats 

Heartland 

Northern Crescent 

Northern Great Plains 

Prairie Gateway 

Average 

67%

60%

69%

60%

64%

 68%

 61%

 70%

 61%

 65%

 67% 

60% 

69% 

59% 64% 

66%

60%

69%

59%64%

 66%

 59%

 68%

 58%

 63%

 64% 

56% 

65% 

54% 

60% 

68%

60%69%

57%

64%

 69%

 62% 70%

 60%

 65%

 68% 

60% 

69% 

58% 

64% 

67% 

60% 

68% 58% 

63% 

67% 

60% 

69% 58% 

63% 

60% 

60% 

60% 

60% 

60% 

7% 

0% 

8% 

-2% 

3% 

Peanuts Peanuts Peanuts 

Prairie Gateway 

Southern Seaboard Fruitful Rim Average 

47%

48%

46%

47%

 47%

 48%

 46%

 47%

 46% 

47% 

45% 46% 

46%

47%

45%

46%

 46%

 47%

 45%

 46%

 43% 

43% 

41% 

42% 

47%

46%

44%

46%

 47%

 48%

 45%

 47%

 46% 

46% 

44% 

45% 

45% 

45% 

43% 

45% 

46% 

47% 

44% 

46% 

50% 

50% 

50% 

50% 

-5% -5% 

-7% 

-5% 

Hybrid Corn Seed Heartland 

Northern Crescent Average 

38%

35%

37%

 38%

 36%

 37%

 38% 

36% 37% 

38%

35%37%

 38%

 35%

 37%

 39% 

36% 

37% 

40%

37%

39%

 42%

 35%

 38%

 42% 

35% 

39% 

43% 36% 

39% 

40% 36% 

38% 

50% 50% 

50% 

-7% 

-14% 

-11% 

Popcorn Heartland 53% 53% 53% 52% 52% 50% 54% 54% 53% 53% 53% 60% -7% 

39
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 17: Summary of preplanting cost ratios for crops using extension budget data 

Crop States 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Average RMA 

2012-

RMA 

Buckwheat ND SD MN 56% 56% 54% 54% 50% 48% 46% 48% 45% 47% 50% 60% -13% 

Canola ND 48% 48% 47% 46% 46% 45% 43% 46% 44% 43% 46% 60% -17% 

Dry Beans Dry Beans 

ND MN 

NE 

Total 

48%

43%

45%

 49%

 42%

 46%

 45% 

45% 

45% 

46%

46%

46%

 46%

 45%

 45%

 46% 

40% 

43% 

42%

42%

42%

 43%

 40%

 41%

 42% 

40% 

41% 

41% 40% 

40% 

45% 42% 

44% 

60% 60% 

60% 

-19% -20% 

-20% 

Dry Peas - Field Dry Peas - Lentils Dry Peas - Chickpeas 

ND MT 

ND MT 

ND MT 

Total 

ID WA 50%

ID WA 42%

ID WA 27%

40%

 49%

 42%

 27%

 39%

 51% 

42% 

25% 

39% 

50%

42%

26%

39%

 48%

 41%

 26%

 38%

 43% 

39% 

26% 

36% 

45%

38%26%

36%

 47% 39% 31%

 39%

 47% 

39% 32% 

39% 

45% 

39% 30% 

38% 

47% 

40% 28% 

38% 

60% 

60% 60% 

60% 

-15% 

-21% 

-30% -22% 

Flax ND 53% 53% 50% 50% 49% 44% 47% 49% 46% 45% 49% 60% -15% Green Peas MN WI IA IL 68% 64% 67% 66% 65% 63% 67% 65% 65% 64% 65% 40% 24% 

Hybrid Sorghum Seed TX 53% 53% 53% 52% 53% 53% 54% 54% 54% 54% 53% 60% -11% Millet CO KS NE SD 49% 50% 51% 50% 50% 48% 53% 54% 51% 49% 51% 60% -11% 

Mustard ND MT 48% 49% 46% 47% 46% 45% 45% 46% 45% 44% 46% 60% -16% 

Onions Onions 

ID OR TX GA 

Total 

WA 38%

CA NV NM 10%

24%

 38%

 10%

 24%

 38% 

10% 

24% 

38%

11%

25%

 38%

 10%

 24%

 39% 

10% 

25% 

39%

10% 

25%

 39%

9% 

24%

 39% 

9% 

24% 

38% 

9% 

24% 

38% 

10% 

24% 

35% 

35% 

35% 

3% 

-26% 

-12% 

Potatoes Potatoes 

ID OR 

AL AZ 

Total 

WA 46%

FL GA TX 30%

38%

 46%

 30%

 38%

 46% 

30% 38% 

46%

30%

38%

 47%

 31%

 39%

 43% 

31% 

37% 

48%

31%

40%

 46%

 31%

 39%

 46% 

31% 

39% 

44% 

31% 

38% 

46% 

31% 

38% 

25% 

25% 

25% 

19% 

6% 

13% 

Processing Beans Processing Beans 

NY PA WA OR 

Total 

DE MD NJ 41%

ID 40%

41%

 41%

 41%

 41%

 42% 

41% 

42% 

42%

41%

42%

 41%

 41%

 41%

 38% 

40% 

39% 

39%

41%

40%

 41%

 42%

 42%

 41% 

42% 

42% 

41% 

42% 

42% 

41% 

41% 

41% 

40% 

40% 

40% 

1% 

2% 

2% 

Processing Sweet Corn WA OR ID 38% 38% 37% 37% 37% 34% 38% 39% 38% 38% 40% -2% 

40
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Crop States 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Average RMA 

2012-

RMA 

Rye Rye Rye 

WI MI 

ND SD 

KS OK 

Total 

IL 51%

MN 59%

TX 45%

52%

 51%

 58%

 43%

 51%

 50% 

54% 

42% 

49% 

51%

51%

41%

48%

 50% 52%

 41%

 48%

 47% 

45% 

42% 

45% 

50%

43%

42%

45%

 51%

 50%

 42%

 48%

 50% 

44% 

41% 

45% 

50% 

42% 

39% 

44% 

50% 

50% 

42% 

47% 

60% 

60% 

60% 

60% 

-10% 

-18% 

-21% 

-16% 

Safflower Safflower 

ND SD 

CA 

Total 

MT 62%

64%

63%

 62%

 65%

 64%

 63% 

66% 

65% 

63%

65%

64%

 64%

 67%

 66%

 67% 

71% 

69% 

57%

66%

62%

 57%

 66%

 62%

 58% 

68% 

63% 

58% 

68% 

63% 

61% 

67% 

64% 

60% 60% 

60% 

-2% 

8% 

3% 

Sugar Beets Sugar Beets Sugar Beets 

MI 

MN ND ID OR 

Total 

49%

NE CO 45%

MT WY 43%

46%

 48%

 45%

 43%

 45%

 48% 

45% 

42% 

45% 

47%

44%

41%

44%

 47%

 44%

 41%

 44%

 46% 

36% 

38% 

40% 

48%

38%

41%

42%

 49%

 39%

 41%

 43%

 49% 

39% 

42% 

43% 

49% 

39% 

42% 

43% 

48% 

41% 

41% 

44% 

45% 

45% 

45% 

45% 

4% 

-6% 

-3% 

-2% 

Sunflowers-oil ND SD MN 54% 54% 51% 50% 50% 45% 44% 46% 44% 44% 48% 60% -16% 

Sunflowerconfectionery ND SD 

Total 

MN 49%

51%

 49%

 51%

 47% 

49% 

46%

48%

 45%

 48%

 42% 

43% 

40%

42%

 42%

 44%

 41% 

42% 

41% 

42% 

44% 

46% 

60% 

60% 

-19% 

-18% 

Tobacco Tobacco 

KY TN VA NC 

Total 

48%

SC 51%

50%

 47%

 52%

 50%

 27% 

32% 

30% 

28%

32%

30%

 28%

 32%

 30%

 25% 

29% 

27% 

25%

30%

28%

 26%

 32%

 29%

 26% 

32% 29% 

26% 

32% 

29% 

31% 

35% 

33% 

35% 

35% 

35% 

-9% 

-3% 

-6% 

41
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

3.2. Adequacy of prevented planting payment amounts 

In addition to forming a judgment on the adequacy of the RMA methodology, we used RMA Summary of 

Business data to determine how the resulting PP payments compare to our estimates of PP costs. 

If the ratio of PP payments to costs is above 1, this may indicate that farmers are being overcompensated 

(PP payments > estimated PP costs). If, on the other hand, the ratio is below 1 (estimated PP costs > PP 

payments), then farmers may be undercompensated. Ideally, the ratio of PP payments to costs would be 

1, i.e. farmers would be precisely compensated for costs they have incurred prior to a prevented planting 

claim. However, one must keep in mind that payments are also affected by market prices and by the 

coverage levels the farmers elect. 

For each coverage level, including CAT coverage, RMA’s Summary of Business data provides total liabilities 

and acres insured. We divided the liabilities at each Buy-up coverage level by the coverage level to estimate 

the guarantee at 100% of expected revenue. This assumes that all growers take 100% of the price. For CAT 

we also adjusted for the lower price coverage of 55%. We then multiplied that total liability by the RMA PP 

factor and divided the result by the total acres in each region for that crop. 

The result of those calculations is an estimate of the base level PP payment for each crop and region if 

producers were able to have 100% coverage. We then divided those PP payments by the estimated PP costs 

reviewed in the Evaluation Report. The calculated payments, estimated costs, and the ratio between the 

two are provided in Appendix A. 

Overall, we found results mostly consistent with the findings from our analysis of prevented planting costs: 

	 Many crops have ratios well above 1, i.e., consistent with the recommendation that the PP 

payment rate ought to be lowered; 

	 Quite a few crops have ratios close enough to 1 to support leaving the rate unchanged; and 

	 There are a few exceptions where the ratio is below 1, indicating that an increase in the PP 

rate may be warranted. 

Our recommended changes, considering both the production cost analysis and a review of the ratio of actual 

payments to estimated costs, are shown in Table 18. 

We recommend the following: 

	 Factor reductions for silage sorghum, tobacco, corn, hybrid sorghum seed, buckwheat, millet, 

popcorn, hybrid corn seed, canola, flax, mustard, sunflower seed, upland and ELS cotton, 

cotton with cottonseed endorsement, dry beans, dry peas, and southern onions. 

	 Keeping the factor the same for wheat, soybeans, grain sorghum, barley, rye, safflower, 

peanuts, rice, sugar beets, processing beans, processing sweet corn, and northern onions. 

	 Increasing the factors for potatoes, green peas, and oats. 

Table 18: Recommended changes in prevented planting factors 

42
 
 

 

 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Recommended Current New Change in 

Change Crops factor factor payment 

% points % % % 

+15 Potatoes – northern and southern 25 40 60.0% 

+10 Green peas 40 50 25.0% 

+5 Oats 60 65 8.3% 

0 Wheat, soybeans, grain sorghum, 

barley, rye, safflower 60 

0 Peanuts 50 

0 Rice, sugar beets 45 

0 Processing beans and sweet corn 40 

0 Onions – northern (storage) 35 

-5 Silage sorghum, hybrid sorghum seed 60 55 -8.3% 

-5 Tobacco 35 30 -14.3% 

-10 Corn, buckwheat, millet, popcorn 60 50 -16.7% 

-10 Hybrid corn seed 50 40 -20.0% 

-15 Canola, flax, mustard, sunflower seed 60 45 -25.0% 

-15 Cotton with cottonseed endorsement 50 35 -30.0% 

-20 Dry beans, dry peas 60 40 -33.3% 

-20 Cotton and ELS cotton 50 30 -40.0% 

-20 Onions – southern (fresh) 35 15 -57.1% 

Figure 9 presents a scatterplot of these recommended changes in coverage levels, versus the ratio of 2012 

RMA payment rates to production costs incurred in a prevented planting situation. As one would expect, 

the recommended increases in coverage levels are for crops where the ratio is less than or close to one. 

And the recommended decreases generally get progressively larger as the ratios get larger. 

43
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 9: Scatterplot of payment ratio versus recommended coverage change 

44
 
 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

3.3. The case for differentiation 

In our recommendations regarding changes in prevented planting factors, we adhered to RMA’s current 

practice of specifying a single percentage for each commodity. However, in the case of cotton and 

cottonseed the practical effect will be two percentages within the cotton plan – 30% when just the fiber is 

insured and 35% when a grower adds the cottonseed endorsement. 

More generally, one could make a case for differentiating the percentages for various reasons. For example, 

for the crops in Table 16 and Table 17 that have multiple regions, one can readily see that there is typically 

a range of plus or minus a few percent around our recommended percentages. Sometimes the deviation is 

up to a tenth of the base percentage, e.g. plus or minus 5 percentage points for a crop with a 50% factor. 

As a practical matter, however, it would be challenging to differentiate treatment in the insurance plans 

based on the current study because the ERS resource regions do not use state boundaries. Moreover, as 

discussed earlier, there is no perfect percentage factor. There will always be a fairly wide distribution of 

prevented planting costs among any farmer population being served. We think that in most cases the 

recommended percentages are good enough to meet the risk management objectives of both farmers and 

the Federal Crop Insurance Corporation. 

There is one crop though for which differentiation may be advisable: onions. The percentage of costs that 

could be considered unavoidable pre-planting expenses varies significantly between fresh market onions 

(spring and summer non-storage) and storage onions. Using a single PP rate for all onions will likely 

overestimate the costs incurred by producers of fresh market onions (and if changed, will underestimate 

the costs faced by storage onion producers). This single figure may thus encourage fresh market onion 

producers to file prevented planting claims. Based on our crop budget review, it would be more appropriate 

to maintain the 35% figure for storage onion producers, but to lower the PP rate for fresh market onion 

producers to 15%. 

This would have to be done on a geographic basis because the insurance plan does not distinguish storage 

and non-storage types. The following states should be classified as producers of fresh market onions: 

Georgia, Nevada, New Mexico, and Texas. All others should be treated as producers of storage onions. 

California does produce fresh market onions (13,200 of 43,300 planted acres in 2012), but only processing 

(storage) onions are insured. It should thus be treated as a storage onion state. Production in Washington 

State in 2012 was over 90% storage onions (22,000 of 24,000 planted acres). Also, there were no prevented 

planting indemnities for onions in Washington from 2003 through 2012. Classifying Washington as a storage 

onion state (and thus maintaining the current 35% PP rate there) thus appears appropriate. 

3.4. Appropriateness of additional 5% or 10% coverage 

For all of the crops eligible for prevented planting except onions and tobacco, farmers may elect an 

additional 5% or 10% PP coverage for additional premium on their buy-up coverage. This option is not 

available for CAT policies. Table 19 breaks out 1994-2013 PP indemnities by the different levels of PP 

coverage for the 31 separately identified eligible crops. Of the total indemnities, 46% are associated with 

policies for which the additional 10% coverage was elected. Almost no producers appear to elect the 

additional 5% coverage. 

45
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 19: PP indemnities by crop and coverage level 

Crop 

Prevented 

planting 

PP 10% 

buy-up 

PP 5% 

buy-up 

Total PP 

indemnities 

PP10% 

Share 

Barley 

Buckwheat

Canola 

Corn 

Cotton

Cotton, extra long staple

Dry beans 

Dry peas 

Flax 

Grain sorghum

Green peas 

Hybrid corn seed 

Hybrid sorghum seed 

Millet 

Mustard 

Oats 

Onions 

Peanuts 

Popcorn

Potatoes

Processing beans 

Rice 

Rye 

Safflower 

Silage sorghum 

Soybeans

Sugar beets 

Sunflowers

Sweetcorn

Tobacco 

Wheat

-------------$1,000,000------------- 

99.7 94.2 0.3 194.1 

0.1 0.0 - 0.1 

122.4 197.2 2.0 321.6 

1,940.5 1,528.0 9.4 3,477.9 

94.4 97.4 0.0 191.8 

58.0 93.7 - 151.7 

74.3 131.6 0.1 206.0 

33.8 12.8 0.2 46.8 

17.5 17.1 0.2 34.9 

58.2 16.0 0.0 74.2 

1.1 0.1 - 1.1 

1.4 0.1 - 1.4 

0.0 - - 0.0 

3.3 0.1 - 3.4 

1.1 0.6 - 1.7 

11.8 2.9 0.0 14.7 

50.9 4.3 - 55.2 

5.6 0.1 - 5.7 

2.2 0.7 - 2.9 

16.5 38.1 - 54.6 

1.0 0.3 - 1.4 

90.1 149.4 0.2 239.7 

0.1 - - 0.1 

2.2 2.8 - 5.0 

0.5 - - 0.5 

815.5 600.3 3.1 1,418.9 

19.2 18.3 0.0 37.4 

221.7 256.5 0.4 478.6 

1.0 0.1 0.0 1.2 

1.1 0.0 - 1.1 

1,001.4 817.0 7.5 1,825.8 

percent 

49% 

7% 

61% 

44% 

51% 

62% 

64% 

27% 

49% 

22% 

5% 

4% 

0% 

3% 

34% 

20% 

8% 

2% 

25% 

70% 

23% 

62% 

0% 

57% 

0% 

42% 

49% 

54% 

12% 

0% 

45% 

Total 4,746.7 4,079.5 23.5 8,849.6 46% 

There does appear to be a relationship between the share of PP indemnities associated with the additional 

10% coverage and the share of total indemnities attributable to prevented planting. Figure 10 plots that 

relationship for the more significant crops. 

46
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 10: PP intensity mapping by crop 

The circled crops in Figure 10 are those that are among the highest in both dimensions – a high incidence 

of PP among total indemnities (x axis) and a high selection of the extra 10% coverage (y axis). Five of the 

eight are among the crops for which we recommend reductions of 15-20% in the PP factor. 

As noted earlier, we are unable to conclusively evaluate the appropriateness of the additional coverage 

because we do not have the experience data that would show who elected the various levels and did not 

claim an indemnity. Moreover, we do not know what portion of the indemnities at the basic coverage level 

was associated with CAT policies where one cannot add additional coverage. 

Some parts of the country are more subject to weather conditions that prevent planting than others. That 

being said, there is no striking geographic dimension to the incidence of indemnities associated with the 

additional 10% coverage. Table 20 shows the PP10% share by state. It is high in the Dakotas and the 

Mississippi Delta, but it is also high in Texas and California. 

47
 
 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 20: PP indemnities by state and coverage level 

State PP PP10% PP5% PP Total 

PP10% 

Share 

ND 

SD 

MN

IA

MO

IL 

TX 

CA

IN

OH 

AR

WI 

CO 

MT

MS

KS 

NE 

LA 

All others

-------------$1,000,000------------- 

1,437.8 2,052.6 11.5 3,502.0 

787.4 680.4 2.7 1,470.4 

502.0 182.6 1.7 686.3 

377.4 135.7 1.6 514.7 

140.4 131.1 0.6 272.1 

147.7 116.6 1.6 265.9 

124.7 139.9 0.2 264.9 

85.7 153.5 0.0 239.3 

117.0 88.3 1.0 206.4 

124.8 80.4 0.9 206.1 

102.1 82.9 0.0 185.0 

135.2 23.1 0.3 158.7 

126.0 11.5 0.1 137.7 

99.6 11.2 0.5 111.3 

58.9 52.2 - 111.1 

77.0 3.6 0.0 80.7 

45.1 14.3 0.1 59.5 

39.5 4.9 0.0 44.5 

218.0 114.6 0.5 333.2 

percent 

59% 

46% 

27% 

26% 

48% 

44% 

53% 

64% 

43% 

39% 

45% 

15% 

8% 

10% 

47% 

4% 

24% 

11% 

34% 

Total 4,746.7 4,079.5 23.5 8,849.6 46% 

One could question the logic behind offering this additional coverage. As we illustrated earlier in Table 11, 

the additional 10% in a revenue plan in a high price year can easily end up covering 80% or more of 

production costs and make prevented planting more profitable than taking the risk of growing the crop. If 

one purpose was to allow growers with higher than average PP costs to have appropriate insurance coverage, 

perhaps there should have been parallel -5% and -10% options for those with a lower cost structure. Today 

the main reason to continue to offer these options is to allow the insurance plans to collect higher premium 

in proportion to the higher risk of claims among those who elect the additional 10% coverage. 

The prevented planting coverage should primarily aim to cover the average costs incurred by all producers 

of the crop in a prevented planting situation. There will inevitably be some variability among farmers, 

among regions, and over time in the success of achieving that, but this is true of the underlying insurance 

plans as well. Those plans use average county yields, average prices, and other components that are 

averages for all producers. If a farmer wants higher prevented planting coverage, he or she can also select 

a higher coverage level in the underlying plan. Nevertheless we have concluded that the buy-up options 

serve an insurance purpose by differentiating the rates charged to growers with different risk profiles. 

3.5. Impact analysis 

In accordance with the Statement of Work, we are required to document the change in PP payments under 

any recommended methodology, in comparison to the past five years, by eligible crop, segregated by 

48
 
 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

region. We use the Cause of Loss data for 2008-2012 to estimate the potential change in indemnity 

payments. Our methodology and findings regarding the impact of our proposed changes are shown below. 

3.5.1. Methodology 

We analyze the impact of our proposed recommendations under two scenarios: implementation of our 

recommended changes in PP coverage factors, and elimination of the options for additional coverage in 

addition to adopting our recommended changes. This analysis assumes “all else equal”, i.e., it assumes 

that farmer selection of coverage and behavior would remain the same, both under changed rates and under 

changed rates with no additional coverage options. Although these assumptions cannot be accurate, we 

expect the marginal effect of these policy changes on behavior would be limited and would, if anything, 

result in additional reductions in indemnities beyond what we estimate. Since in most circumstances the 

PP rate is too high, the net effect of these two changes would likely be more planting and fewer claims - 

in addition to lower indemnity payments per policy. The procedures for the two scenarios are as follows: 

1.	 Scenario #1: Calculate what PP payments would have been with the proposed coverage levels. 

To do this, we first separated cause of loss data into the basic prevented planting coverage, 5% 

buy-up, and 10% buy-up. Because the 5% buy-up indemnities were negligible, these small amounts 

were included with the basic PP indemnities. We then derived two values, by crop and year: the 

new PP payments for policies with just the standard coverage level, and the new payments for 

policies with 10% buy-up. 

a. The new basic PP payments were calculated by multiplying the base period indemnities 

paid by the ratio of the proposed and current rates. (For onions we did not differentiate 

geographically; we applied a reduction of 10%.) 

b. The new 10% buy-up PP payments were derived by multiplying claims paid for those 

policies by the ratio between the new rate (proposed +10%) and the current rate (rate + 

10%) 

c. These two figures were then added, and the total was subtracted from the actual PP 

payments. The final results show how payments would have changed under Scenario #1 

for each crop and year. 

2.	 Scenario #2: Calculate what PP payments would have been under the new proposed rates AND 

if PP buy-up is eliminated as an option. Scenario #2 is the same as Scenario #1, except for the 

added change that step (b) involved multiplying the actual 10% PP buy-up indemnities by the ratio 

between the recommended base rate and the current rate plus 10%. 

3.5.2. Estimated change in PP payments by crop 

From 2008-2012, total prevented planting indemnities were over $4.82 billion – just over $960 million per 

year, on average. Total indemnities over this five year period, by crop, are shown in the second column of 

Table 21 (“Total Actual”). Note that this figure includes “all other crops”. This data actually covers the 

same individual crops listed but is presented in this line to maintain confidentiality at the county level. We 

assumed an average reduction of 5% in the coverage level for the policies included in this category. Crops 

for which we recommend increased coverage levels (green peas, oats and potatoes) have increased costs, 

shown in brackets in the table’s indemnity reduction column. 

Table 21: Potential change in indemnities by crop 

Total 

Actual 

Total 

Scenario 

#1 

Total 

Scenario 

#2 

Indemnity 

Reduction 

#1 

Indemnity 

Reduction 

#2 

10% buy-up 

percent 

All Other Crops 

----------------------------------$1,000-------------------------------- 

784,742 723,217 676,774 61,525 107,969 

% 

43% 

49
 
 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Barley 88,973 88,973 82,369 0 6,603 100% 

Buckwheat 88 73 72 14 15 6% 

Burley Tobacco 467 400 400 67 67 0% 

Canola 147,709 113,939 101,309 33,770 46,400 27% 

Corn 1,608,981 1,363,075 1,229,531 245,906 379,450 35% 

Cotton 37,018 23,429 20,383 13,589 16,635 18% 

ELS cotton 82,563 52,514 45,074 30,049 37,490 20% 

Dry beans 56,870 39,683 34,375 17,187 22,495 24% 

Dry peas 36,284 24,553 23,461 11,731 12,823 9% 

Flax 17,193 13,192 12,005 4,002 5,189 23% 

Flue cured tobacco 186 159 159 27 27 0% 

Grain sorghum 29,031 29,031 28,207 0 824 100% 

Green peas 316 395 395 (79) (79) 0% 

Hybrid corn seed 666 555 555 111 111 0% 

Hybrid sorghum seed 41 34 34 7 7 0% 

Millet 2,573 2,147 2,132 426 441 3% 

Mustard 799 613 558 186 241 23% 

Oats 3,482 3,764 3,663 (282) (181) -55% 

Onions 12,975 9,268 9,268 3,707 3,707 0% 

Peanuts 1,611 1,611 1,604 0 6 100% 

Popcorn 1,376 1,154 1,109 222 267 17% 

Potatoes 7,785 11,034 9,680 (3,249) (1,896) -71% 

Processing beans 645 645 611 0 34 100% 

Rice 87,316 87,316 78,741 0 8,575 100% 

Rye 23 23 23 0 0 0% 

Safflower 1,582 1,582 1,573 0 9 100% 

Silage sorghum 356 326 326 30 30 0% 

Soybeans 664,888 664,888 617,107 0 47,781 100% 

Sugar beets 2,292 2,292 2,120 0 172 100% 

Sunflower seed 199,879 153,660 138,657 46,219 61,222 25% 

Sweet corn 271 271 256 0 14 100% 

Wheat 944,535 944,535 888,430 0 56,105 100% 

Total 4,823,514 4,358,351 4,010,963 465,163 812,551 43% 

If the rates we propose had been in effect for the period 2008-2012, then PP indemnity payments under 

Scenario #1 would have been $4.36 billion. This is shown in column 3 of Table 21 (“Total Scenario #1”). 

This would have represented a $465 million reduction in PP payments ($93 million less per year). A little 

more than 60% of the reduction on the individual crops listed would have been on corn claims. 

If the rates we propose had been in effect, and no buy-up options had been available, PP indemnity 

payments would have been $4.01 billion. This is shown in column 4 (“Total Scenario #2”). This would have 

represented an $813 million reduction in PP payments ($163 million less per year). The share of the 

indemnity reduction attributable to corn would have been about 54%. 

The final column of Table 21 shows the share of indemnity reduction attributable to elimination of the buyup options. This is 100% for the crops for which we recommended no change in coverage level. 

50
 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

3.5.3. Estimated change in PP payments by region 

Table 22 shows PP indemnities by region for each of the five years. The Northern Plains region accounted 

for $2.85 billion (59.1%) of the total, and the Corn Belt for an additional $940 million (19.5%). The regions 

are shown in the map from USDA in Figure 11 below and do not correspond to the resource regions that 

USDA currently uses for its work on production practices and costs. In the past, USDA had different regional 

definitions for each crop, but here we use one of the more standardized ones. 

Figure 11: Map of regions used for regional comparison 

51
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 22: Prevented planting indemnities by region 

Actual Indemnities 2008 2009 2010 2011 2012 Total 

--------------------$1,000,000---------------------

Appalachian 6 17 53 37 4 117 

Corn Belt 193 162 270 292 23 940 

Delta 10 37 41 78 10 176 

Mountain 11 14 15 128 49 219 

Northeast 1 4 6 21 4 36 

Northern Plains 136 437 734 1,485 63 2,854 

Pacific 5 57 33 13 14 123 

Southeast 1 5 9 3 1 18 

Southern Plains 7 14 36 13 52 122 

Upper Midwest 12 48 32 123 4 218 

Total 382 795 1,229 2,192 225 4,824 

Table 23 and Table 24 show our estimates of indemnities under Scenario #1 and Scenario #2 by region. With 

revised coverage levels and with the ability to continue to purchase an additional 10% coverage, indemnity 

reductions over the five years would have again been $465 million, with 59% of that occurring in the 

Northern Plains region. If the buy-up options are eliminated, the indemnity reduction rises to $813 million, 

with $499 million of that in the Northern Plains. Savings in the Corn Belt would be $152 million, and these 

two regions together would account for 80% of the indemnity reduction, about the same proportion as their 

share of historic indemnities in Table 22. 

Table 23: Potential indemnity reduction by region under Scenario #1 

Indemnity % of 

Scenario #1 2008 2009 2010 2011 2012 Total Reduction total 

---------------------------$1,000,000---------------------------- % 

Appalachian 5 15 51 34 4 108 9 2% 

Corn Belt 174 146 250 262 22 855 86 18% 

Delta 9 35 39 71 9 164 12 3% 

Mountain 10 13 14 122 44 203 15 3% 

Northeast 1 4 6 19 4 33 3 1% 

Northern Plains 123 388 657 1,355 57 2,581 274 59% 

Pacific 4 37 24 12 10 87 36 8% 

Southeast 1 5 9 2 1 17 1 0% 

Southern Plains 6 12 33 12 50 114 8 2% 

Upper Midwest 11 44 29 109 4 196 22 5% 

Total 344 699 1,112 1,998 206 4,358 465 100% 

52
 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 24: Potential indemnity reduction by region under Scenario #2 

Indemnity % of 

Scenario #2 2008 2009 2010 2011 2012 Total Reduction total 

---------------------------$1,000,000---------------------------- % 

Appalachian 5 14 48 32 3 103 15 2% 

Corn Belt 161 135 229 243 21 788 152 19% 

Delta 9 33 36 67 9 155 21 3% 

Mountain 10 12 13 119 42 196 23 3% 

Northeast 1 3 5 18 4 31 5 1% 

Northern Plains 114 347 592 1,251 52 2,355 499 61% 

Pacific 3 33 20 11 9 77 46 6% 

Southeast 1 5 9 2 1 17 2 0% 

Southern Plains 6 11 30 12 44 103 18 2% 

Upper Midwest 10 40 27 105 4 186 32 4% 

Total 318 634 1,010 1,861 188 4,011 813 100% 

Premium revenue would also be reduced, particularly for Scenario #2 where the 5% and 10% buy-up options 

are eliminated. However, a full evaluation of the rating for prevented planting was not part of our 

assignment so we did not have the five years of policy records and rate factors necessary to calculate the 

premium reduction and any net savings. 

3.6. Pros and cons of recommendations 

Section 2 reviewed many of the challenges in determining how crop insurance plans should handle situations 

in which a farmer is not able to plant the crop due to weather or other conditions. There is no perfect 

solution. The recommendations above have both positive and negative attributes. These are summarized 

below. 

Pros 

A consistent methodology. We analyzed all of the crops for which prevented planting is available in as 

consistent a manner as possible, using the methodology described in Section 2. 

Best, recent data. The current recommendations reflect the most up-to-date assessment, based on the 

latest available data and budgets. Estimates for the major crops that account for 88% of PP indemnities 

are based on producer surveys, and the pre-planting estimates for the smaller crops rely on more recent 

crop budget estimates prepared by regional crop experts. 

Multiple budgets. For some of the smaller crops, an additional check was conducted in the form of “spot 

checking” the implied pre-planting costs for additional published budgets. This was particularly useful 

where the budget analysis indicated deviation from RMA’s current PP rate. 

Consistent with known cost trends. The new recommended rates reflect the fact that inflation for 

operating costs – seed and fertilizer in particular – has outpaced inflation in fixed costs (land, machinery). 

The combined effect of these two trends is to increase the relative importance of avoidable costs in farm 

budgets, thus lowering the proportion of expenditures that would be lost in a prevented planting situation. 

53
 
 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Potentially more nuanced accounting. We do not know the specifics of the methodology RMA used to 

determine the PP rates currently in effect. The current analysis, however, potentially provides more 

accurate rates, given the nuances in our PP accounting “rules.” For instance, we counted as a PP cost only 

the proportion of crop insurance indemnities attributable to prevented planting claims; we treated land 

and machinery depreciation (and other general overhead) costs as sunk costs, regardless of their timing, if 

they were unavoidable; and we treated as pre-planting expense only the proportion of fertilizer that was 

both used and lost to future crops. 

Cons 

Reliance on extension budgets. The crop budgets published by university extension staff are planning 

tools that predict the coming year’s costs to aid farmers in making their decisions about what mix of crops 

to plant. They often do not include various overhead costs. They are not statistically representative records 

of actual costs incurred. They usually cover a specific type, practice or region within a state rather than 

providing a more comprehensive state average. 

Infrequent updating of ARMS surveys. For those crops with statistically representative production cost 

estimates, we used ERS analyses of the most recent survey data but some of that information is dated due 

to USDA budget constraints that limit the frequency of ARMS surveys. For example, the soybean information 

was for the 2006 crop. 

Reliance on a limited number of state budgets. For some of the smaller crops, the production cost analysis 

was limited to budgets published by one (or a few) states. However, many of these same crops are grown 

in multiple states and regions. These localized budgets may not, therefore, be reflective of average or 

typical costs for all producers of that crop. 

Another potential weakness was the significant use of North Dakota budgets for many crops. To the degree 

that North Dakota budgets may be inaccurate, they could skew our analysis and estimates. However, given 

that North Dakota represents over one-third of all prevented planting claims, and in some cases is the only 

major producer of a given crop, its budgets do merit particular attention. 

Also, it was clear that for some state budgets, line item estimates were rough estimates: figures were 

sometimes rounded, and for some crops, annual budgets would show the same cost for a line item year 

after year (e.g. land at $100/acre for many years in a row). Some budgets are simply updated year after 

year using price indexes without reexamination of whether production practices have changed. 

Reliance on limited years. For many minor crops, we obtained crop budgets for most of the years from 

2003-2012. For others, however, we had fewer yearly budgets available, and in some cases, had to rely on 

just one or two yearly budgets to create the ten year budget estimates. This forced us to estimate costs 

for the missing years based on figures that are themselves estimates. 

“Well-managed farm” standard. For the crops using ERS data, pre-planting percentages reflect averages. 

For other crops, the percentages will reflect well-managed enterprises. Farmers with higher costs or with 

poorly managed operations may have higher pre-planting expense rates. If a key policy goal is to provide a 

rate sufficient to fully compensate most farms, rather than the average, then the new rates may be viewed 

as too low. 

Linkage to a guarantee that varies with price. In the current approach, the prevented planting payment 

is a percentage of a guarantee that for the major crops varies with market prices that can be far above or 

well below production costs. Consequently the prevented planting payment will seldom precisely 

correspond to the costs that a farmer has actually incurred in a prevented planting situation. 

54
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

3.7. Updating of prevented planting factors 

The production cost analysis in this report was based on data up through the 2012 crop year. Updating 

should be a combination of ongoing monitoring and a formal review every five years. While costs for 

individual inputs can change significantly over the course of a few years, the share of costs that occurs 

before planting changes more slowly and to a lesser degree. 

We recommend periodic monitoring of developments every two to three years. RMA should apply the 

percentage cost allocations we developed to the production cost estimates and forecasts for major crops 

published by ERS to see if the preplanting share of costs is changing. For the ARMS crops, ERS publishes 

forecasts two years into the future twice a year. For the crops not covered by statistically representative 

ARMS surveys, RMA should use the procedure we describe to update the cost estimates using price indexes 

published by USDA’s National Agricultural Statistics Service. 

Every five years we recommend a more formal review for all crops. This evaluation began in 2013 using 

data up through 2012. A five-year review could be undertaken in 2018 using production cost data for the 

year 2013-1017. For the ARMS crops, we recommend that USDA contract with ERS to do the same cost 

analysis as in their 2007 and 2013 studies cited later in this report. The analysis should cover any crops for 

which survey data was published in the interim. This will include 2012 crop soybeans and 2013 crop peanuts 

and rice. Surveys are also scheduled for 2015 crop cotton and oats, and 2016 crop corn. This is the most 

important component of any updating because the crops covered by ARMS surveys account for 88 percent 

of prevented planting claims. For the other crops, the formal review should involve collection of current 

state-level crop budgets and a fresh analysis of the portion of operating costs incurred prior to planting. 

55
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

4. REVIEW OF CORN, WHEAT, SOYBEANS AND COTTON 

As discussed above, corn, wheat, soybeans, and cotton (both upland and ELS) accounted for 80% of the 

prevented planting indemnities from 1994 to 2013. RMA asked the Economic Research Service to update 

their estimates for these crops of the distribution of costs by phase of production in order to have more 

current numbers that are statistically representative of the average producer. While cotton did not account 

for a high level of PP indemnities, it was included as a crop more reflective of production practice timing 

in southern states. The results of our analysis of these crops are presented below. We also include a 

discussion of cottonseed costs, which is jointly produced with cotton fiber. Section 5 covers the other crops 

for which USDA conducts ARMS surveys and publishes production cost estimates, plus some related crops. 

Section 6 covers all the remaining crops. Where data is unavailable for some years, the estimates developed 

using price indexes are in italics. Years where there is published data are highlighted in blue. 

For each crop we also review the ratio between actual PP indemnity payments per acre and the estimated 

preplanting costs (except cottonseed, which is covered via an endorsement to the cotton plans). A quick 

glance at Figure 12 shows that the ratio for all five of these crops began between 0.5 and 1.5 in 2003. (The 

lines are the simple averages of the regional ratios. The symbols after the crop names signify a 

recommendation of either no change in coverage level (0), a reduction (-) or an increase (+).) By 2012, the 

ratio for all five was above 1 (i.e., RMA PP payments exceeded PP cost estimates). Wheat and soybeans 

were not substantially above 1, which was consistent with our findings that PP costs remain close to 60% of 

total costs. We recommend no change in the 60% rate for these two. 

Corn and the two cotton crops, however, now have ratios well above 1. We recommend lowering the RMA 

PP factor on all three. 

Figure 12: Ratio of payments to costs for major crops 

56
 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

4.1. Corn 

Overview 

Corn is the quintessentially American crop and by far the most important in economic terms. It is produced 

on more acres and generates more revenue for farmers than any other field crop. In 2012, the final year 

covered by our analysis, planted area was just shy of 100 million acres with 87 million harvested for grain 

and 7 million for silage, compared to harvested area of 75 million for soybeans, and about 50 million each 

for wheat and hay, the next two most extensively cultivated crops. The value of corn for grain in 2012 

accounted for over 40% of the total value of the principal US crops. 

Figure 13: US corn acres planted in 2012 

Sources of production cost information 

Because corn is a major crop, there are crop budgets available for most of the important agricultural states. 

However, corn is one of the crops for which the Economic Research Service conducts periodic statistically 

representative surveys of farm finances and production practices on which it bases annual production cost 

estimates. The most recent survey covered the 2010 crop. RMA contracted with ERS to prepare estimates 

of costs incurred at each stage of the production process that year and we are able to use that information 

in developing our estimates of prevented planting costs. 

The annual production cost series maintained by ERS for each farm resource region are available at the 

following link: http://www.ers.usda.gov/data-products/commodity-costs-and-returns.aspx. 

Production practices 

Corn is a spring-planted crop and mostly relies on normal precipitation for moisture. According to the 2012 

Census of Agriculture, about 15 percent of planted acres are irrigated, principally in the Great Plains from 

Northern Texas up into Nebraska, and along the Mississippi from the Missouri boot heel down into Louisiana. 

Field work begins with some fall cultivation and application of fertilizer, particularly potassium and 

phosphate. Between a third and a half of those two nutrients are applied in the fall because they bond 

57
 
 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

well with the soil and are not lost or degraded over the winter to any great degree. This reduces the 

amount of work that has to be accomplished in the spring. Only about 18% of the nitrogen fertilizer is 

applied in the fall, and then mostly in the form of anhydrous ammonia which has less tendency to convert 

to nitrate in the soil, provided it is applied after soil temperatures fall below 40 degrees. 

The main change in production practices during the 2003-2012 period was the increased use of biotech 

varieties – from 40% of plantings to 88%. In 2003 only 11% of plantings were herbicide resistant compared 

to 21% in 2012. Insect resistant varieties fell from 25% of plantings to 15%, but this was due to development 

of stacked gene varieties that are both insect and herbicide resistant. These accounted for 52% of plantings 

in 2012 compared to only 4% in 2003. One result is that seed’s share of total production costs in the Cornbelt 

rose from 10% of total costs to 24% over the period while the cost of chemicals stagnated in nominal terms 

and fell from an 8% share of costs to just 4%. This means that the number of field operations for chemical 

treatments after planting fell, so that a lower share of machinery operating costs are in the post-planting 

period. 

Prevented planting experience 

Table 25 summarizes the incidence of prevented planting indemnity payments over the period. States with 

at least $10 million in a single year are individually identified and the remaining states are combined in the 

“other” category. There was a high incidence of prevented planting claims in the 2008-2011 period, 

particularly in North and South Dakota. Those two states accounted for 64% of all claims over the ten-year 

period. 

Table 25: Prevented planting indemnities for corn ($ million) 

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total 

IA 0.2 0.2 0.3 0.1 2.1 28.9 9.9 21.4 10.8 0.2 73.9 

IL 8.4 0.3 0.1 0.6 0.1 12.5 29.7 12.6 12.2 0.0 76.3 

IN 9.7 1.3 0.1 6.4 0.0 16.8 16.8 7.0 39.0 0.0 97.1 

MN 1.0 1.2 10.9 1.4 2.0 1.9 13.4 5.4 59.4 0.3 96.9 

MO 0.2 0.4 0.0 0.0 2.3 22.2 14.8 31.5 8.2 2.0 81.7 

ND 11.9 5.0 18.5 20.9 25.4 16.1 129.1 132.2 229.8 9.2 598.0 

OH 12.8 10.0 0.1 0.8 0.1 5.1 0.9 10.1 70.7 0.0 110.7 

SD 7.8 5.3 13.9 19.1 50.2 43.7 53.7 235.6 197.8 4.3 631.4 

WI 0.4 12.9 0.0 1.2 0.2 3.2 2.0 1.8 5.7 0.0 27.4 

Other 19.4 15.1 6.2 6.9 7.9 12.9 9.5 13.4 35.2 10.1 136.6 

Total 71.8 51.5 50.0 57.5 90.2 163.5 279.9 470.9 668.7 26.0 1,930.1 

Analysis 

On its website, ERS provides annual estimates of corn production costs for six farm resource regions. These 

are based on the periodic ARMS surveys. We use these costs as our starting point. The results are 

summarized in Figure 14. On average, the PP share of total cost fell from 54% at the beginning of the period 

to 51% at the end. Shares for individual regions in 2012 ranged from 48% to 55% compared to 50-58% in 

2003. The PP share of total cost fell primarily because seed costs per acre, included in total cost but not 

PP cost, almost tripled. Thus total costs went up by 96% while prevented planting costs went up by only 

83%. 

Figure 14: Share of costs incurred prior to planting corn 

58
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

0% 

10% 

20% 

30% 

40% 

50% 

60% 

70% 

80% 

90% 

100% 

Southern Seaboard Eastern Uplands Prairie Gateway 

N. Great Plains Heartland Northern Crescent 

Average 

Comparison of RMA payments to estimated PP cost 

From 2003 to 2006 the ratio of RMA payments to estimated costs averaged slightly less than 1.00 for all 

regions together. Leaving aside the Prairie Gateway region, which is an outlier, the ratios rose to about 

1.35 for two years, fell back to 1.10 for two years, and then rose to 1.50 for two years. For the final six 

years the Heartland region averaged 1.44. Taking into account the fact that 44% of the PP claims were 

associated with the additional 10% option, that ratio would be 7% higher at 1.55 (10%/60% * .46 = .073). 

Figure 15: Ratio of RMA payment to PP costs for corn 

59
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Recommendation 

Taking into account the lower corn prices expected for 2014-2015, reducing the PP payment rate so that a 

PP indemnity is 17% lower would put it in line with estimated PP costs. We recommend reducing RMA’s PP 

factor for corn from 60% to 50%. 

60
 
Evaluation of Preven

Pre

Table 26: Corn production costs per planted acre: Southern Seaboard

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 33.36 34.05 36.54 38.84 43.78 54.31 71.43 67.14 

 Fertilizer 57.95 67.87 73.55 83.79 97.29 148.39 139.55 137.78 

Chemicals 24.86 25.24 21.48 22.37 23.08 24.06 26.53 35.30 

 Custom operations 12.76 12.78 6.47 6.76 7.05 7.05 7.53 17.76 

 Fuel, lube, and electricity 20.21 22.61 22.68 25.10 26.82 33.64 24.24 31.67 

Repairs 17.15 17.53 20.27 20.99 21.71 22.29 22.72 26.03 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 7.23 8.70 8.16 9.44 14.44 18.70 16.73 15.18 

 Interest on operating costs 0.82 1.33 3.08 4.68 4.87 2.14 0.42 0.31 

 Total, operating costs 174.34 181.41 184.07 202.53 224.60 291.88 292.42 315.99 

Allocated overhead: 

Hired Labor 6.73 6.77 6.11 6.33 6.55 6.77 6.92 4.13 

 Opportunity cost of unpaid labor 35.15 36.43 24.69 25.59 26.49 27.39 27.99 32.46  Capital recovery of machinery & equip. 56.36 58.00 63.62 66.93 70.24 76.86 81.64 81.80 

 Opportunity cost of land (rental rate) 51.32 53.38 54.69 53.8 57.62 64.50 74.25 66.88 

 Taxes and insurance 10.13 10.22 7.87 8.28 8.95 9.93 9.69 11.91  General farm overhead 16.96 17.25 16.85 17.45 18.05 18.53 18.89 25.68 

 Total, allocated overhead 176.65 182.05 173.83 178.38 187.90 203.98 219.38 222.86 

Total costs listed 350.99 363.46 357.90 380.91 412.50 495.86 511.80 538.85 

61
Evaluation of Preven

Pre

Table 27: Corn production costs per planted acre: Eastern Uplands

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 35.02 34.65 37.61 39.98 45.06 55.90 73.52 56.01 

 Fertilizer 64.34 68.88 87.96 100.21 116.35 177.46 166.89 131.41 

Chemicals 24.74 24.31 22.26 23.18 23.92 24.94 27.50 24.55 

 Custom operations 9.68 10.04 8.87 9.27 9.67 9.67 10.33 6.27 

 Fuel, lube, and electricity 10.54 12.69 17.86 19.76 21.23 27.95 19.71 19.01 

Repairs 10.95 11.91 11.86 12.28 12.70 13.04 13.29 22.67 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 6.54 8.55 7.63 9.02 12.81 18.56 14.98 13.02 

 Interest on operating costs 0.74 1.15 3.17 4.84 5.06 2.29 0.45 0.26 

 Total, operating costs 162.55 172.18 197.22 218.54 246.80 329.81 326.67 273.20 

Allocated overhead: 

Hired Labor 4.22 4.64 1.17 1.21 1.25 1.29 1.32 2.34 

 Opportunity cost of unpaid labor 48.46 49.63 37.75 39.12 40.49 41.86 42.77 33.8  Capital recovery of machinery & equip. 47.79 51.95 56.81 59.77 62.73 68.64 72.91 71.86 

 Opportunity cost of land (rental rate) 50.12 51.94 62.77 61.75 66.13 74.02 85.21 72.63 

 Taxes and insurance 6.2 6.19 5.13 5.4 5.83 6.47 6.32 10.95 

 General farm overhead 12.53 12.86 10.54 10.92 11.30 11.60 11.83 23.38  Total, allocated overhead 169.32 177.21 174.17 178.17 187.73 203.88 220.36 214.96 

Total costs listed 331.87 349.39 371.39 396.71 434.53 533.69 547.03 488.16 

62
Evaluation of Preven

Pre

Table 28: Corn production costs per planted acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 35.41 36.32 40.96 43.54 43.54 54.02 71.04 63.21 

Fertilizer 44.23 45.84 55.62 63.36 63.36 96.64 90.88 84.96 

Chemicals 28.04 28.76 19.23 20.02 20.02 20.87 23.01 26.42 

 Custom operations 16.16 16.66 14.10 14.74 14.74 14.74 15.75 19.04 

 Fuel, lube, and electricity 47.93 56.75 59.79 66.16 76.30 98.36 67.07 42.51 

Repairs 21.60 22.88 22.04 22.83 22.83 23.44 23.90 32.37 

 Purchased irrigation water 0.63 0.66 0.18 0.19 0.19 0.19 0.20 0.37 

 Crop Insurance 8.47 10.40 8.96 11.04 17.26 23.46 18.86 14.86 

 Interest on operating costs 1.01 1.62 3.60 5.46 5.46 2.28 0.42 0.27 

 Total, operating costs 203.48 219.89 224.48 247.34 263.70 334.00 311.13 284.01 

Allocated overhead: 

Hired Labor 5.48 5.58 3.66 3.79 3.79 3.92 4.01 3.34 

 Opportunity cost of unpaid labor 32.74 33.19 24.24 25.12 25.12 25.97 26.54 24.37  Capital recovery of machinery & equip. 73.28 77.58 81.97 86.23 86.23 94.36 100.23 101.04 

 Opportunity cost of land (rental rate) 73.48 76.61 70.82 69.67 69.67 77.98 89.77 86.46  Taxes and insurance 6.74 6.8 8 8.42 8.42 9.35 9.13 10.45  General farm overhead 14.99 15.30 12.64 13.09 13.09 13.44 13.70 16.84  Total, allocated overhead 206.71 215.06 201.33 206.32 206.32 225.02 243.38 242.50 

Total costs listed 410.19 434.95 425.81 453.66 470.02 559.02 554.51 526.51 

63
Evaluation of Preven

Pre

Table 29: Corn production costs per planted acre: Northern Great Plains 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 32.47 36.32 39.34 41.82 47.14 58.48 76.91 80.03 

Fertilizer 33.76 35.73 46.25 52.69 61.18 93.31 87.75 94.88 

Chemicals 20.50 20.66 15.82 16.47 16.99 17.71 19.52 18.34 

 Custom operations 10.72 10.50 9.16 9.58 9.99 9.99 10.67 16.16 

 Fuel, lube, and electricity 20.02 21.86 25.85 28.60 31.92 41.67 28.23 26.75 

Repairs 14.30 14.60 15.25 15.79 16.33 16.77 17.10 26.86 

 Purchased irrigation water 1.94 1.95 1.50 1.57 1.64 1.64 1.75 0.75 

 Crop Insurance 9.03 11.55 10.03 11.99 21.70 30.00 20.90 17.74 

 Interest on operating costs 0.71 1.11 2.60 3.94 4.08 1.77 0.35 0.26 

 Total, operating costs 143.45 154.28 165.80 182.45 210.97 271.34 263.18 281.77 

Allocated overhead: 

Hired Labor 5.30 5.42 3.30 3.42 3.54 3.66 3.74 3.17 

 Opportunity cost of unpaid labor 22.62 23 21.29 22.06 22.83 23.6 24.12 26.59 

 Capital recovery of machinery & equip. 53.78 55.05 69.07 72.66 76.25 83.44 88.63 95.85  Opportunity cost of land (rental rate) 53.65 54.73 59.79 58.82 62.99 70.51 81.17 75.46 

 Taxes and insurance 5.1 5.13 4.06 4.27 4.61 5.12 5.00 8.85 

 General farm overhead 11.45 11.86 9.20 9.53 9.86 10.12 10.32 18.08  Total, allocated overhead 151.90 155.19 166.71 170.76 180.08 196.45 212.98 228.00 

Total costs listed 295.35 309.47 332.51 353.21 391.05 467.79 476.16 509.77 

64
Evaluation of Preven

Pre

Table 30: Corn production costs per planted acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 34.89 37.05 41.23 43.83 49.40 61.29 80.61 87.72 

 Fertilizer 51.43 56.01 72.67 82.79 96.13 146.62 137.89 118.09 

Chemicals 26.50 27.11 24.71 25.73 26.55 27.68 30.52 26.95 

 Custom operations 10.09 10.53 8.99 9.40 9.80 9.80 10.47 15.25 

 Fuel, lube, and electricity 18.81 25.41 20.32 22.48 25.00 32.73 22.13 22.18 

Repairs 12.63 13.82 12.23 12.67 13.11 13.46 13.72 21.77 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 8.17 9.95 8.43 10.03 17.28 23.21 17.54 14.05 

 Interest on operating costs 0.79 1.26 3.07 4.66 4.85 2.16 0.43 0.29 

 Total, operating costs 163.31 181.14 191.65 211.59 242.12 316.95 313.31 306.30 

Allocated overhead: 

Hired Labor 2.30 2.30 1.41 1.46 1.51 1.56 1.59 2.61 

 Opportunity cost of unpaid labor 23.79 24.28 19.8 20.52 21.24 21.96 22.44 20.21  Capital recovery of machinery & equip. 53.06 58.11 60.45 63.59 66.73 73.02 77.56 81.22 

 Opportunity cost of land (rental rate) 100.28 103.58 104.87 103.16 110.48 123.66 142.36 150.49 

 Taxes and insurance 5.19 5.24 6.06 6.37 6.88 7.64 7.46 7.77 

 General farm overhead 10.93 11.17 12.14 12.57 13.00 13.35 13.61 17.37  Total, allocated overhead 195.55 204.68 204.73 207.67 219.84 241.19 265.02 279.67 

Total costs listed 358.86 385.82 396.38 419.26 461.96 558.14 578.33 585.97 

65
Evaluation of Preven

Pre

Table 31: Corn production costs per planted acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 35.48 37.18 41.23 43.83 49.40 61.29 80.61 75.26 

 Fertilizer 58.95 64.01 78.36 89.27 103.65 158.09 148.67 122.11 

Chemicals 25.77 26.35 19.95 20.77 21.43 22.34 24.63 25.70 

 Custom operations 12.09 12.43 12.46 13.03 13.59 13.59 14.52 20.27 

 Fuel, lube, and electricity 22.31 26.46 25.29 27.98 31.05 41.11 27.96 23.76 

Repairs 14.90 16.04 14.10 14.60 15.10 15.50 15.80 23.58 

 Purchased irrigation water 0.00 0.00 0.02 0.02 0.02 0.02 0.02 0.02 

 Crop Insurance 6.95 8.71 7.95 9.25 16.01 21.57 15.89 13.02 

 Interest on operating costs 0.86 1.37 3.25 4.95 5.16 2.31 0.45 0.29 

 Total, operating costs 177.31 192.55 202.61 223.70 255.41 335.82 328.55 304.01 

Allocated overhead: 

Hired Labor 3.72 3.97 3.03 3.14 3.25 3.36 3.43 3.59 

 Opportunity cost of unpaid labor 34.8 35.36 31.78 32.94 34.1 35.26 36.03 29.98 

 Capital recovery of machinery & equip. 60.99 65.68 60.53 63.68 66.83 73.13 77.68 73.91 

 Opportunity cost of land (rental rate) 68.88 71.2 77.15 75.9 81.28 90.98 104.74 82.67 

 Taxes and insurance 5.8 5.81 9.00 9.47 10.23 11.35 11.08 9.08 

 General farm overhead 16.22 16.46 17.67 18.30 18.93 19.43 19.81 23.85 

 Total, allocated overhead 190.41 198.48 199.16 203.43 214.62 233.51 252.77 223.08 

Total costs listed 367.72 391.03 401.77 427.13 470.03 569.33 581.32 527.09 

66
Evaluation of Preven

Pre

Table 32: Corn - share of expenses incurred before planting 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 31% 31% 31% 31% 31% 31% 31% 31% 

Chemicals 21% 21% 21% 21% 21% 21% 21% 21% 

Custom operations 28% 28% 28% 28% 28% 28% 28% 28% 

Fuel, lube, and electricity 22% 22% 22% 22% 22% 22% 22% 22% 

Repairs 19% 19% 19% 19% 19% 19% 19% 19% 

Purchased irrigation water 0% 0% 0% 0% 0% 0% 0% 0% Crop Insurance 13% 13% 13% 13% 13% 13% 13% 13% 

Interest on operating costs 32% 32% 32% 32% 32% 32% 32% 32% 

 Total, operating costs Allocated overhead: 

Hired Labor 34% 34% 34% 34% 34% 34% 34% 34% 

Opportunity cost of unpaid labor 31% 31% 31% 31% 31% 31% 31% 31% 

Capital recovery of machinery & equip. 100% 100% 100% 100% 100% 100% 100% 100% 

Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

67
Evaluation of Preven

Pre

Table 33: Corn prevented planting cost per acre: Southern Seaboard 

Item 2003 2004 2005 2006 2007 2008 2009 20

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

Fertilizer 17.96 21.04 22.80 25.97 30.16 46.00 43.26 42.

Chemicals 5.22 5.30 4.51 4.70 4.85 5.05 5.57 7.

 Custom operations 3.57 3.58 1.81 1.89 1.97 1.97 2.11 4. Fuel, lube, and electricity 4.45 4.97 4.99 5.52 5.90 7.40 5.33 6.

Repairs 3.26 3.33 3.85 3.99 4.12 4.24 4.32 4.

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

 Crop Insurance 0.94 1.13 1.06 1.23 1.88 2.43 2.17 1.

 Interest on operating costs 0.26 0.43 0.99 1.50 1.56 0.68 0.13 0.

 Total, operating costs 35.66 39.78 40.01 44.80 50.44 67.78 62.90 69.

Allocated overhead: 

Hired Labor 2.29 2.30 2.08 2.15 2.23 2.30 2.35 1.

 Opportunity cost of unpaid labor 10.90 11.29 7.65 7.93 8.21 8.49 8.68 10. Capital recovery of machinery & equip. 56.36 58.00 63.62 66.93 70.24 76.86 81.64 81.

 Opportunity cost of land (rental rate) 51.32 53.38 54.69 53.80 57.62 64.50 74.25 66.

 Taxes and insurance 10.13 10.22 7.87 8.28 8.95 9.93 9.69 11.

 General farm overhead 16.96 17.25 16.85 17.45 18.05 18.53 18.89 25.

 Total, allocated overhead 147.95 152.45 152.76 156.55 165.30 180.61 195.50 197.

Total costs listed 183.62 192.23 192.77 201.35 215.74 248.39 258.40 266.

Total costs 350.99 363.46 357.90 380.91 412.50 495.86 511.80 538.

Prevented planting % 52% 53% 54% 53% 52% 50% 50% 5

68
Evaluation of Preven

Pre

Table 34: Corn prevented planting cost per acre: Eastern Uplands

 Item 2003 2004 2005 2006 2007 2008 2009 20

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

Fertilizer 19.95 21.35 27.27 31.07 36.07 55.01 51.74 40.

Chemicals 5.20 5.11 4.67 4.87 5.02 5.24 5.78 5.

 Custom operations 2.71 2.81 2.48 2.60 2.71 2.71 2.89 1. Fuel, lube, and electricity 2.32 2.79 3.93 4.35 4.67 6.15 4.34 4.

Repairs 2.08 2.26 2.25 2.33 2.41 2.48 2.53 4.

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

 Crop Insurance 0.85 1.11 0.99 1.17 1.67 2.41 1.95 1.

 Interest on operating costs 0.24 0.37 1.01 1.55 1.62 0.73 0.14 0.

 Total, operating costs 33.34 35.80 42.61 47.93 54.17 74.73 69.36 57.

Allocated overhead: 

Hired Labor 1.43 1.58 0.40 0.41 0.43 0.44 0.45 0.

 Opportunity cost of unpaid labor 15.02 15.39 11.70 12.13 12.55 12.98 13.26 10. Capital recovery of machinery & equip. 47.79 51.95 56.81 59.77 62.73 68.64 72.91 71.

 Opportunity cost of land (rental rate) 50.12 51.94 62.77 61.75 66.13 74.02 85.21 72.

 Taxes and insurance 6.20 6.19 5.13 5.40 5.83 6.47 6.32 10.

 General farm overhead 12.53 12.86 10.54 10.92 11.30 11.60 11.83 23.

 Total, allocated overhead 133.10 139.90 147.35 150.38 158.97 174.15 189.98 190.

Total costs listed 166.43 175.71 189.97 198.31 213.13 248.88 259.33 248.

Total costs 331.87 349.39 371.39 396.71 434.53 533.69 547.03 488.

Prevented planting % 50% 50% 51% 50% 49% 47% 47% 5

69
Evaluation of Preven

Pre

Table 35: Corn prevented planting cost per acre: Prairie Gateway 

Item 2003 2004 2005 2006 2007 2008 2009 20

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

Fertilizer 13.71 14.21 17.24 19.64 19.64 29.96 28.17 26.

Chemicals 5.89 6.04 4.04 4.20 4.20 4.38 4.83 5.

 Custom operations 4.52 4.66 3.95 4.13 4.13 4.13 4.41 5. Fuel, lube, and electricity 10.54 12.49 13.15 14.56 16.79 21.64 14.76 9.

Repairs 4.10 4.35 4.19 4.34 4.34 4.45 4.54 6.

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

 Crop Insurance 1.10 1.35 1.16 1.44 2.24 3.05 2.45 1.

 Interest on operating costs 0.32 0.52 1.15 1.75 1.75 0.73 0.13 0.

 Total, operating costs 40.20 43.62 44.89 50.05 53.09 68.34 59.30 54.

Allocated overhead: 

Hired Labor 1.86 1.90 1.24 1.29 1.29 1.33 1.36 1.

 Opportunity cost of unpaid labor 10.15 10.29 7.51 7.79 7.79 8.05 8.23 7.

 Capital recovery of machinery & equip. 73.28 77.58 81.97 86.23 86.23 94.36 100.23 101.

 Opportunity cost of land (rental rate) 73.48 76.61 70.82 69.67 69.67 77.98 89.77 86. Taxes and insurance 6.74 6.80 8.00 8.42 8.42 9.35 9.13 10.

 General farm overhead 14.99 15.30 12.64 13.09 13.09 13.44 13.70 16.

 Total, allocated overhead 180.50 188.48 182.19 186.49 186.49 204.51 222.42 223.

Total costs listed 220.70 232.09 227.08 236.53 239.57 272.85 281.72 278.

Total costs 410.19 434.95 425.81 453.66 470.02 559.02 554.51 526.

Prevented planting % 54% 53% 53% 52% 51% 49% 51% 5

70
Evaluation of Preven

Pre

Table 36: Corn prevented planting cost per acre: Northern Great Plains 

Item 2003 2004 2005 2006 2007 2008 2009 20

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

Fertilizer 10.47 11.08 14.34 16.33 18.97 28.93 27.20 29.

Chemicals 4.31 4.34 3.32 3.46 3.57 3.72 4.10 3.

 Custom operations 3.00 2.94 2.56 2.68 2.80 2.80 2.99 4. Fuel, lube, and electricity 4.40 4.81 5.69 6.29 7.02 9.17 6.21 5.

Repairs 2.72 2.77 2.90 3.00 3.10 3.19 3.25 5.

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

 Crop Insurance 1.17 1.50 1.30 1.56 2.82 3.90 2.72 2.

 Interest on operating costs 0.23 0.36 0.83 1.26 1.31 0.57 0.11 0.

 Total, operating costs 26.29 27.79 30.94 34.59 39.58 52.26 46.58 51.

Allocated overhead: 

Hired Labor 1.80 1.84 1.12 1.16 1.20 1.24 1.27 1.

Opportunity cost of unpaid labor 7.01 7.13 6.60 6.84 7.08 7.32 7.48 8.

 Capital recovery of machinery & equip. 53.78 55.05 69.07 72.66 76.25 83.44 88.63 95. Opportunity cost of land (rental rate) 53.65 54.73 59.79 58.82 62.99 70.51 81.17 75.

 Taxes and insurance 5.10 5.13 4.06 4.27 4.61 5.12 5.00 8.

 General farm overhead 11.45 11.86 9.20 9.53 9.86 10.12 10.32 18. Total, allocated overhead 132.79 135.74 149.84 153.28 161.99 177.75 193.87 207.

Total costs listed 159.09 163.54 180.79 187.87 201.57 230.01 240.45 258.

Total costs 295.35 309.47 332.51 353.21 391.05 467.79 476.16 509.

Prevented planting % 54% 53% 54% 53% 52% 49% 50% 5

71
Evaluation of Preven

Pre

Table 37: Corn prevented planting cost per acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 20

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

Fertilizer 15.94 17.36 22.53 25.66 29.80 45.45 42.75 36.

Chemicals 5.57 5.69 5.19 5.40 5.58 5.81 6.41 5.

 Custom operations 2.83 2.95 2.52 2.63 2.74 2.74 2.93 4. Fuel, lube, and electricity 4.14 5.59 4.47 4.95 5.50 7.20 4.87 4.

Repairs 2.40 2.63 2.32 2.41 2.49 2.56 2.61 4.

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

 Crop Insurance 1.06 1.29 1.10 1.30 2.25 3.02 2.28 1.

 Interest on operating costs 0.25 0.40 0.98 1.49 1.55 0.69 0.14 0.

 Total, operating costs 32.19 35.92 39.11 43.85 49.91 67.48 61.98 57.

Allocated overhead: 

Hired Labor 0.78 0.78 0.48 0.50 0.51 0.53 0.54 0.

Opportunity cost of unpaid labor 7.37 7.53 6.14 6.36 6.58 6.81 6.96 6.

 Capital recovery of machinery & equip. 53.06 58.11 60.45 63.59 66.73 73.02 77.56 81.

 Opportunity cost of land (rental rate) 100.28 103.58 104.87 103.16 110.48 123.66 142.36 150.

 Taxes and insurance 5.19 5.24 6.06 6.37 6.88 7.64 7.46 7.

 General farm overhead 10.93 11.17 12.14 12.57 13.00 13.35 13.61 17.

 Total, allocated overhead 177.62 186.41 190.14 192.55 204.19 225.01 248.49 264.

Total costs listed 209.80 222.33 229.24 236.40 254.10 292.48 310.47 321.

Total costs 358.86 385.82 396.38 419.26 461.96 558.14 578.33 585.

Prevented planting % 58% 58% 58% 56% 55% 52% 54% 5

72
Evaluation of Preven

Pre

Table 38: Corn prevented planting cost per acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 20

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

Fertilizer 18.27 19.84 24.29 27.67 32.13 49.01 46.09 37.

Chemicals 5.41 5.53 4.19 4.36 4.50 4.69 5.17 5.

 Custom operations 3.39 3.48 3.49 3.65 3.81 3.81 4.07 5. Fuel, lube, and electricity 4.91 5.82 5.56 6.16 6.83 9.04 6.15 5.

Repairs 2.83 3.05 2.68 2.77 2.87 2.95 3.00 4.

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.

 Crop Insurance 0.90 1.13 1.03 1.20 2.08 2.80 2.07 1.

 Interest on operating costs 0.28 0.44 1.04 1.58 1.65 0.74 0.14 0.

 Total, operating costs 35.99 39.30 42.29 47.40 53.87 73.04 66.69 60.

Allocated overhead: 

Hired Labor 1.26 1.35 1.03 1.07 1.11 1.14 1.17 1.

 Opportunity cost of unpaid labor 10.79 10.96 9.85 10.21 10.57 10.93 11.17 9. Capital recovery of machinery & equip. 60.99 65.68 60.53 63.68 66.83 73.13 77.68 73.

 Opportunity cost of land (rental rate) 68.88 71.20 77.15 75.90 81.28 90.98 104.74 82. Taxes and insurance 5.80 5.81 9.00 9.47 10.23 11.35 11.08 9. General farm overhead 16.22 16.46 17.67 18.30 18.93 19.43 19.81 23.

 Total, allocated overhead 163.94 171.46 175.23 178.63 188.95 206.96 225.65 200.

Total costs listed 199.93 210.76 217.52 226.03 242.82 280.00 292.33 260.

Total costs 367.72 391.03 401.77 427.13 470.03 569.33 581.32 527.

Prevented planting % 54% 54% 54% 53% 52% 49% 50% 4

73
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

4.2. Wheat 

Overview 

Wheat is the world’s leading human food crop and one of the most widely cultivated crops in the United 

States. Production is concentrated in the Great Plains and northwestern states, but there are 39 states 

that produce at least a million bushels annually. Winter wheat accounts for about three quarters of acreage 

and production, and durum and other spring wheat account for the other quarter. Figure 16 below shows 

the distribution of winter wheat plantings. Spring wheat is grown principally in the same parts of 

Washington, Idaho, Montana and the Dakotas. Durum wheat is grown mostly in northern Montana and 

northwestern North Dakota. 

Figure 16: US winter wheat acres planted in 2012 

Sources of production cost information 

Quite a few states produce wheat budgets and these can vary by region within the state or by practice. 

Fortunately the 2004 and 2009 ARMS surveys on wheat provide statistically representative cost estimates 

and ERS uses that data to publish annual production cost estimates for six farm resource regions. Those 

are what we have used for the current analysis. 

Production practices 

One virtue of wheat as a crop is that it does well with a comparatively limited amount of water. According 

to the 2012 Census of Agriculture, only 3.4 million of the 49 million acres harvested were irrigated. These 

were mostly in California’s central valley, eastern Washington, Idaho’s Snake River valley, western Kansas, 

and the Texas high plains. 

74
 
 

 

 

 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Production practices vary greatly by region. This variation is well-described in a recent ERS publication 

based on the ARMS survey covering the 2009 wheat crop.14 The key variables affecting production costs are 

winter low temperatures, summer high temperatures, and the amount of normal precipitation. Winter 

wheat is planted in the fall and after a period of growth it goes dormant for the winter. In the main 

producing states the most active planting period is mid-September to mid-October. Harvest is in June and 

July. Cattle may graze on the early foliage growth in the fall and early spring, particularly in the Southern 

Plains. In the northernmost parts of the country, temperatures in the winter may go low enough to kill the 

dormant wheat. But farmers would normally still have the ability to plant a spring wheat crop. Winter 

wheat has higher yield potential due to the longer growing season. Spring wheat is mostly planted from 

mid-April through the end of May and harvested in August and early September. 

In irrigated areas and in the eastern states where there is more precipitation, farmers are able to apply 

more fertilizer to boost yields per acre. While the additional fertilizer is a major cost item, machinery and 

a variety of fixed costs can be spread over more bushels, reducing average production cost per bushel. 

Prevented planting experience 

Prevented planting claims have only been 12.9% of total indemnities the last 20 years. During the period 

covered by this study, prevented planting indemnities totaled $1.1 billion, of which 65% were in North 

Dakota. Over half of the claims were in a single year – 2011. 

Table 39: Prevented planting indemnities for wheat ($ million) 

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total

 IL 0.0 0.0 1.8 0.0 1.5 0.0 2.2 19.1 0.0 3.9 28.5

 KS 0.2 0.4 2.3 0.3 0.2 0.3 6.2 12.6 0.5 0.3 23.4

 KY 0.1 0.0 1.2 0.0 1.5 0.0 0.0 10.0 0.0 0.1 13.1

 MN 0.5 4.6 5.0 0.5 0.3 0.6 11.7 1.5 8.2 0.0 32.9

 MT 0.1 1.1 0.1 0.0 1.3 0.3 0.8 2.7 69.8 0.5 76.6

 ND 16.5 41.9 13.6 13.7 16.2 9.0 57.6 59.1 479.3 16.2 723.2

 SD 1.1 0.5 0.8 1.9 3.4 4.2 10.4 16.4 25.4 0.6 64.5 

Other 5.4 2.9 24.2 1.5 8.2 3.7 12.7 66.3 13.4 18.9 157.2 

Total 24.0 51.4 48.9 17.9 32.7 18.2 101.4 187.7 596.7 40.4 1,119.5 

Analysis 

Over the ten-year period, the share of costs incurred in a prevented planting situation has declined by about 

five percentage points, from the low 60s to the high 50s. This was due to a decline in labor costs and 

moderation in growth of other overhead costs per acre. The decline in share would have been one or two 

percentage points greater if not for the rising expenditure on crop insurance as farmers switched to revenue 

insurance in the recent years of high crop prices. In 2012 the range by region was 55-61%. 

14 Gary Vocke and Mir Ali, “U.S. Wheat Production Practices, Costs, and Yields: Variations Across Regions”, Economic 

Information Bulletin Number 116, Economic Research Service, USDA, August 2013. 

75
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 17: Share of costs incurred prior to planting wheat 

Comparison of RMA payments to estimated PP costs 

The ratio of RMA PP payments to estimated PP costs was about 0.75 during the first half of the period and 

varied between 0.90 and 1.30 during the second half. The average for all regions for 2008-2012 was 1.05. 

Taking into account the 10% option, the ratio is about 1.10. 

Figure 18: Ratio of RMA payment to PP costs for wheat 

76
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Recommendation 

Currently the appropriate level for a prevented planting payment is still 60%, but if prices remain at lower 

levels, a reduction to 55% might be appropriate in coming years. The RMA payment experience is consistent 

with the recommendation based on production costs that the payment factor remains at 60%. 

77
 
Evaluation of Preven

Pre

Table 40: Wheat production costs per planted acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 5.25 5.42 5.70 5.86 6.87 10.89 10.72 8.66 

 Fertilizer 18.54 19.84 23.24 24.80 28.72 45.19 35.77 27.62 

 Chemicals 3.16 3.75 3.81 3.97 4.01 4.13 8.44 8.15 

 Custom operations 8.05 6.24 6.29 6.40 6.50 7.49 10.07 10.07 

 Fuel, lube, and electricity 13.11 15.26 19.97 22.10 24.41 31.81 13.52 16.77 

 Repairs 10.39 12.67 13.21 13.48 13.94 14.56 18.74 19.09 

Other variable expenses 0.17 0.07 0.07 0.08 0.08 0.08 0.06 0.06 

 Crop Insurance 5.03 5.03 5.62 5.65 8.14 10.87 17.60 10.10 

 Interest on operating costs 0.31 0.50 1.23 1.84 1.89 0.95 0.14 0.09 

 Total, operating costs 64.01 68.78 79.14 84.18 94.56 125.97 115.06 100.61 

Allocated overhead: 

Hired Labor 2.15 2.27 2.34 2.43 2.51 2.60 1.57 1.58 

 Opportunity cost of unpaid labor 18.22 23.6 24.34 25.22 26.11 26.99 16.79 16.88 

 Capital recovery of machinery & equip 48.01 43.95 46.93 49.38 51.82 56.70 64.36 66.68 

 Opportunity cost of land (rental rate) 30.17 28.05 31.24 30.6 33 36.12 36.39 37.47 

 Taxes and insurance 3.22 3.9 4.69 4.94 5.73 6.46 5.00 5.17 

General farm overhead 6.34 6.21 6.49 6.72 6.95 7.14 9.15 9.32 

 Total, allocated overhead 108.11 107.98 116.03 119.29 126.12 136.01 133.26 137.10 

 Total costs listed 172.12 176.76 195.17 203.47 220.68 261.98 248.32 237.71 

78
Evaluation of Preven

Pre

Table 41: Wheat production costs per planted acre: Northern Great Plains 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 7.89 8.06 8.47 8.71 10.22 16.19 14.06 11.35  Fertilizer 19.74 19.41 22.74 24.26 28.10 44.21 39.12 30.21 

 Chemicals 10.02 14.26 14.50 15.08 15.25 15.72 20.64 19.92 

 Custom operations 4.68 6.80 6.86 6.97 7.08 8.16 8.32 8.32 

 Fuel, lube, and electricity 7.02 6.28 8.22 9.10 10.05 13.09 9.12 11.31 

 Repairs 10.38 9.89 10.31 10.53 10.88 11.37 18.21 18.55 

Other variable expenses 0.18 0.10 0.10 0.11 0.11 0.11 0.18 0.19 

 Crop Insurance 4.96 5.50 5.31 6.56 8.44 18.20 12.08 8.81 

 Interest on operating costs 0.32 1.10 1.21 1.80 1.83 0.90 0.16 0.10 

 Total, operating costs 65.19 71.40 77.72 83.12 91.96 127.95 121.89 108.76 

Allocated overhead: 

Hired Labor 1.80 1.80 1.86 1.92 1.99 2.06 1.32 1.33 

 Opportunity cost of unpaid labor 12.62 13.94 14.38 14.9 15.42 15.94 13.53 13.6 

 Capital recovery of machinery & equip 52.88 42.45 45.33 47.69 50.05 54.77 74.50 77.18 

 Opportunity cost of land (rental rate) 37.71 35.5 39.53 38.73 41.76 45.71 39.66 40.84 

 Taxes and insurance 4.08 6.88 8.28 8.71 10.11 11.40 5.82 6.02 

 General farm overhead 7.16 9.00 9.40 9.74 10.07 10.34 9.45 9.63  Total, allocated overhead 116.25 109.57 118.78 121.69 129.40 140.22 144.28 148.60 

 Total costs listed 181.44 180.97 196.50 204.81 221.36 268.17 266.17 257.36 

79
Evaluation of Preven

Pre

Table 42: Wheat production costs per planted acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 12.78 15.93 16.74 17.22 20.19 32.00 27.06 21.85 

 Fertilizer 42.45 45.08 52.81 56.35 65.27 102.67 99.32 76.70 

 Chemicals 3.70 4.81 4.89 5.09 5.14 5.30 9.16 8.84 

 Custom operations 7.97 5.88 5.93 6.03 6.13 7.06 10.18 10.18 

 Fuel, lube, and electricity 7.22 6.00 7.85 8.68 9.59 12.50 9.04 11.21 

 Repairs 8.76 8.89 9.27 9.46 9.78 10.22 13.78 14.04 

Other variable expenses 0.60 0.52 0.54 0.56 0.59 0.59 0.44 0.45 

 Crop Insurance 3.86 4.26 4.22 5.01 6.65 11.91 13.37 8.06 

 Interest on operating costs 0.44 0.69 1.67 2.49 2.61 1.41 0.24 0.14 

 Total, operating costs 87.78 92.06 103.92 110.89 125.95 183.66 182.59 151.47 

Allocated overhead: 

Hired Labor 1.61 1.02 1.05 1.09 1.13 1.17 1.51 1.52 

 Opportunity cost of unpaid labor 19.81 16.38 16.89 17.51 18.12 18.73 16.07 16.16 

 Capital recovery of machinery & equip 47.26 44.49 47.51 49.98 52.45 57.40 56.83 58.88 

 Opportunity cost of land (rental rate) 67.87 68.45 76.23 74.67 80.53 88.13 99.64 102.60 

 Taxes and insurance 3.49 4.99 6 6.32 7.33 8.26 6.11 6.32 

 General farm overhead 8.12 8.28 8.65 8.96 9.27 9.52 12.48 12.72 

 Total, allocated overhead 148.16 143.61 156.33 158.53 168.83 183.21 192.64 198.20 

 Total costs listed 235.94 235.67 260.25 269.42 294.78 366.87 375.23 349.67 

80
Evaluation of Preven

Pre

Table 43: Wheat production costs per planted acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 12.67 20.08 21.10 21.71 25.46 40.34 31.61 25.53 

 Fertilizer 40.36 46.88 54.92 58.60 67.87 106.77 89.60 69.20 

 Chemicals 2.89 5.38 5.47 5.69 5.75 5.93 9.96 9.61 

 Custom operations 12.46 10.68 10.77 10.95 11.13 12.82 9.90 9.90 

 Fuel, lube, and electricity 6.39 7.55 9.88 10.94 12.08 15.74 9.98 12.38  Repairs 6.92 10.66 11.12 11.35 11.73 12.25 15.05 15.33 

Other variable expenses 2.19 0.75 0.77 0.81 0.85 0.85 1.17 1.21 

 Crop Insurance 3.71 4.17 4.45 4.63 6.24 11.44 12.74 7.36 

 Interest on operating costs 0.44 0.80 1.94 2.89 3.02 1.62 0.24 0.14 

 Total, operating costs 88.03 106.95 120.42 127.57 144.13 207.76 180.25 150.66 

Allocated overhead: 

Hired Labor 0.44 1.16 1.20 1.24 1.28 1.33 2.11 2.12 

 Opportunity cost of unpaid labor 17.85 24.34 25.1 26.01 26.93 27.84 18.62 18.72 

 Capital recovery of machinery & equip 42.18 50.82 54.27 57.09 59.92 65.56 60.41 62.59 

 Opportunity cost of land (rental rate) 70.59 61.86 68.89 67.48 72.78 79.65 81.75 84.17 

 Taxes and insurance 4.31 7.78 9.36 9.85 11.43 12.89 10.62 10.98 

 General farm overhead 8.88 14.08 14.71 15.24 15.76 16.18 19.64 20.01 

 Total, allocated overhead 144.25 160.04 173.53 176.91 188.10 203.45 193.15 198.59 

 Total costs listed 232.28 266.99 293.95 304.48 332.23 411.21 373.40 349.25 

81
Evaluation of Preven

Pre

Table 44: Wheat production costs per planted acre: Basin and Range 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 10.83 10.82 11.37 11.70 13.72 21.74 16.92 13.66 

 Fertilizer 35.97 31.34 36.71 39.18 45.37 71.38 50.14 38.72 

 Chemicals 15.04 13.97 14.20 14.78 14.94 15.40 21.74 20.98 

 Custom operations 4.33 6.26 6.31 6.42 6.52 7.51 8.48 8.48 

 Fuel, lube, and electricity 12.14 9.38 12.28 13.59 15.01 19.56 12.49 15.49 

 Repairs 15.36 12.57 13.11 13.38 13.83 14.45 23.40 23.84 

Other variable expenses 1.26 0.75 0.77 0.81 0.85 0.85 0.73 0.75 

 Crop Insurance 5.65 5.27 5.01 5.87 7.56 11.51 21.74 12.14 

 Interest on operating costs 0.50 0.67 1.61 2.40 2.47 1.25 0.19 0.12 

 Total, operating costs 101.08 91.03 101.37 108.13 120.27 163.65 155.83 134.18 Allocated overhead: 

Hired Labor 6.27 3.94 4.06 4.21 4.36 4.51 3.66 3.68 

 Opportunity cost of unpaid labor 28.77 26.45 27.28 28.27 29.26 30.25 18.3 18.4 

 Capital recovery of machinery & equip 74.50 55.28 59.03 62.10 65.18 71.32 84.05 87.08 

 Opportunity cost of land (rental rate) 53.71 47.84 53.28 52.19 56.28 61.60 59.90 61.68 

 Taxes and insurance 7.39 6.9 8.3 8.73 10.13 11.43 7.81 8.08 

 General farm overhead 12.82 8.41 8.79 9.10 9.41 9.67 12.41 12.64 

 Total, allocated overhead 183.46 148.82 160.74 164.60 174.62 188.78 186.13 191.56 

 Total costs listed 284.54 239.85 262.11 272.73 294.89 352.43 341.96 325.74 

82
Evaluation of Preven

Pre

Table 45: Wheat production costs per planted acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 12.42 9.24 9.71 9.99 11.71 18.56 16.63 13.43 

 Fertilizer 37.00 25.61 30.00 32.01 37.08 58.33 46.18 35.66 

 Chemicals 14.07 8.79 8.94 9.30 9.40 9.69 17.48 16.87 

 Custom operations 14.06 6.81 6.87 6.98 7.09 8.17 11.98 11.98  Fuel, lube, and electricity 21.84 38.28 50.11 55.45 61.25 79.81 27.15 33.67 

 Repairs 15.83 18.01 18.78 19.17 19.81 20.70 31.19 31.78 

Other variable expenses 7.00 2.70 2.78 2.93 3.06 3.06 6.82 7.04 

 Crop Insurance 5.70 5.05 4.90 4.92 6.53 9.40 20.83 11.62 

 Interest on operating costs 0.65 0.86 2.16 3.27 3.35 1.65 0.23 0.15 

 Total, operating costs 128.57 115.35 134.25 144.02 159.28 209.37 178.49 162.20 

Allocated overhead: 

Hired Labor 8.34 7.05 7.27 7.53 7.80 8.06 8.68 8.73 

 Opportunity cost of unpaid labor 21.91 32.92 33.95 35.18 36.42 37.65 20.28 20.39 

 Capital recovery of machinery & equip 69.23 72.67 77.60 81.64 85.68 93.75 96.26 99.73 

 Opportunity cost of land (rental rate) 83.45 71.58 79.71 78.09 84.21 92.17 89.30 91.95 

 Taxes and insurance 5.99 6.88 8.28 8.71 10.11 11.40 8.42 8.71 

 General farm overhead 11.14 11.17 11.67 12.09 12.50 12.84 15.14 15.43 

 Total, allocated overhead 200.06 202.27 218.48 223.24 236.72 255.87 238.08 244.94 

 Total costs listed 328.63 317.62 352.73 367.26 396.00 465.24 416.57 407.14 

83
Evaluation of Preven

Pre

Table 46: Wheat - share of expenses incurred before planting: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0% 0% 0% 0% 0% 0% 0% 0% 

 Fertilizer 11% 11% 11% 11% 11% 11% 11% 11% 

 Chemicals 43% 43% 43% 43% 43% 43% 43% 43% 

 Custom operations 16% 16% 16% 16% 16% 16% 16% 16% 

 Fuel, lube, and electricity 32% 32% 32% 32% 32% 32% 32% 32% 

 Repairs 30% 30% 30% 30% 30% 30% 30% 30%  Other variable expenses 0% 0% 0% 0% 0% 0% 0% 0% 

 Crop Insurance 14% 14% 14% 14% 14% 14% 14% 14% 

 Interest on operating costs 31% 31% 31% 31% 31% 31% 31% 31% 

 Total, operating costs Allocated overhead: Hired Labor 38% 38% 38% 38% 38% 38% 38% 38% 

 Opportunity cost of unpaid labor 37% 37% 37% 37% 37% 37% 37% 37% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100%  Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100%  Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100%  General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

84
Evaluation of Preven

Pre

Table 47: Wheat - share of expenses incurred before planting: Northern Great Plains 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 21% 21% 21% 21% 21% 21% 21% 21% 

Chemicals 24% 24% 24% 24% 24% 24% 24% 24% 

Custom operations 15% 15% 15% 15% 15% 15% 15% 15% 

Fuel, lube, and electricity 24% 24% 24% 24% 24% 24% 24% 24% 

Repairs 21% 21% 21% 21% 21% 21% 21% 21% 

Other variable expenses 0% 0% 0% 0% 0% 0% 0% 0% Crop Insurance 14% 14% 14% 14% 14% 14% 14% 14% 

Interest on operating costs 26% 26% 26% 26% 26% 26% 26% 26% 

 Total, operating costs Allocated overhead: 

Hired Labor 31% 31% 31% 31% 31% 31% 31% 31% 

 Opportunity cost of unpaid labor 26% 26% 26% 26% 26% 26% 26% 26% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

85
Evaluation of Preven

Pre

Table 48: Wheat - share of expenses incurred before planting: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 11% 11% 11% 11% 11% 11% 11% 11% 

Chemicals 43% 43% 43% 43% 43% 43% 43% 43% 

Custom operations 16% 16% 16% 16% 16% 16% 16% 16% 

Fuel, lube, and electricity 32% 32% 32% 32% 32% 32% 32% 32% 

Repairs 30% 30% 30% 30% 30% 30% 30% 30% 

Other variable expenses 0% 0% 0% 0% 0% 0% 0% 0% Crop Insurance 14% 14% 14% 14% 14% 14% 14% 14% 

Interest on operating costs 31% 31% 31% 31% 31% 31% 31% 31% 

 Total, operating costs Allocated overhead: 

Hired Labor 38% 38% 38% 38% 38% 38% 38% 38% 

 Opportunity cost of unpaid labor 37% 37% 37% 37% 37% 37% 37% 37% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

86
Evaluation of Preven

Pre

Table 49: Wheat - share of expenses incurred before planting: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 11% 11% 11% 11% 11% 11% 11% 11% 

Chemicals 43% 43% 43% 43% 43% 43% 43% 43% 

Custom operations 16% 16% 16% 16% 16% 16% 16% 16% 

Fuel, lube, and electricity 32% 32% 32% 32% 32% 32% 32% 32% 

Repairs 30% 30% 30% 30% 30% 30% 30% 30% 

Other variable expenses 0% 0% 0% 0% 0% 0% 0% 0% Crop Insurance 14% 14% 14% 14% 14% 14% 14% 14% 

Interest on operating costs 31% 31% 31% 31% 31% 31% 31% 31% 

 Total, operating costs Allocated overhead: 

Hired Labor 38% 38% 38% 38% 38% 38% 38% 38% 

 Opportunity cost of unpaid labor 37% 37% 37% 37% 37% 37% 37% 37% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

87
Evaluation of Preven

Pre

Table 50: Wheat - share of expenses incurred before planting: Basin and Range

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 11% 11% 11% 11% 11% 11% 11% 11% 

Chemicals 43% 43% 43% 43% 43% 43% 43% 43% 

Custom operations 16% 16% 16% 16% 16% 16% 16% 16% 

Fuel, lube, and electricity 32% 32% 32% 32% 32% 32% 32% 32% 

Repairs 30% 30% 30% 30% 30% 30% 30% 30% 

Other variable expenses 0% 0% 0% 0% 0% 0% 0% 0% Crop Insurance 14% 14% 14% 14% 14% 14% 14% 14% 

Interest on operating costs 31% 31% 31% 31% 31% 31% 31% 31% 

 Total, operating costs Allocated overhead: 

Hired Labor 38% 38% 38% 38% 38% 38% 38% 38% 

 Opportunity cost of unpaid labor 37% 37% 37% 37% 37% 37% 37% 37% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

88
Evaluation of Preven

Pre

Table 51: Wheat - share of expenses incurred before planting: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 14% 14% 14% 14% 14% 14% 14% 14% 

Chemicals 37% 37% 37% 37% 37% 37% 37% 37% 

Custom operations 16% 16% 16% 16% 16% 16% 16% 16% 

Fuel, lube, and electricity 29% 29% 29% 29% 29% 29% 29% 29% 

Repairs 27% 27% 27% 27% 27% 27% 27% 27% 

Other variable expenses 0% 0% 0% 0% 0% 0% 0% 0% Crop Insurance 14% 14% 14% 14% 14% 14% 14% 14% 

Interest on operating costs 29% 29% 29% 29% 29% 29% 29% 29% 

 Total, operating costs Allocated overhead: 

Hired Labor 36% 36% 36% 36% 36% 36% 36% 36% 

 Opportunity cost of unpaid labor 33% 33% 33% 33% 33% 33% 33% 33% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

89
Evaluation of Preven

Pre

Table 52: Wheat prevented planting cost per acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 2.04 2.18 2.56 2.73 3.16 4.97 3.93 3.04 

 Chemicals 1.36 1.61 1.64 1.71 1.72 1.78 3.63 3.50 

 Custom operations 1.27 0.98 0.99 1.01 1.02 1.18 1.58 1.58 

 Fuel, lube, and electricity 4.20 4.88 6.39 7.07 7.81 10.18 4.33 5.37 

 Repairs 3.12 3.80 3.96 4.04 4.18 4.37 5.62 5.73 

Other variable expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 0.70 0.70 0.79 0.79 1.14 1.52 2.46 1.41 

 Interest on operating costs 0.10 0.16 0.38 0.57 0.59 0.29 0.04 0.03  Total, operating costs 12.78 14.32 16.71 17.92 19.62 24.29 21.60 20.66 

Allocated overhead: 

Hired Labor 0.82 0.86 0.89 0.92 0.95 0.99 0.60 0.60 

 Opportunity cost of unpaid labor 6.74 8.73 9.01 9.33 9.66 9.99 6.21 6.25 

 Capital recovery of machinery & equip 48.01 43.95 46.93 49.38 51.82 56.70 64.36 66.68 

 Opportunity cost of land (rental rate) 30.17 28.05 31.24 30.60 33.00 36.12 36.39 37.47 

 Taxes and insurance 3.22 3.90 4.69 4.94 5.73 6.46 5.00 5.17 

General farm overhead 6.34 6.21 6.49 6.72 6.95 7.14 9.15 9.32 

 Total, allocated overhead 95.30 91.70 99.25 101.89 108.11 117.39 121.71 125.49 

 Total costs listed 108.08 106.02 115.95 119.81 127.74 141.68 143.31 146.15 

Total costs 172.12 176.76 195.17 203.47 220.68 261.98 248.32 237.71 Prevented planting % 63% 60% 59% 59% 58% 54% 58% 61% 

90
Evaluation of Preven

Pre

Table 53: Wheat prevented planting cost per acre: Northern Great Plains 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 4.15 4.08 4.78 5.09 5.90 9.28 8.22 6.34 

 Chemicals 2.40 3.42 3.48 3.62 3.66 3.77 4.95 4.78 

 Custom operations 0.70 1.02 1.03 1.05 1.06 1.22 1.25 1.25 

 Fuel, lube, and electricity 1.68 1.51 1.97 2.18 2.41 3.14 2.19 2.71  Repairs 2.18 2.08 2.17 2.21 2.28 2.39 3.82 3.90 

Other variable expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 0.69 0.77 0.74 0.92 1.18 2.55 1.69 1.23 

 Interest on operating costs 0.08 0.29 0.31 0.47 0.48 0.23 0.04 0.03  Total, operating costs 11.89 13.16 14.48 15.54 16.98 22.59 22.16 20.24 

Allocated overhead: 

Hired Labor 0.56 0.56 0.58 0.60 0.62 0.64 0.41 0.41 

 Opportunity cost of unpaid labor 3.28 3.62 3.74 3.87 4.01 4.14 3.52 3.54 

 Capital recovery of machinery & equip 52.88 42.45 45.33 47.69 50.05 54.77 74.50 77.18 

 Opportunity cost of land (rental rate) 37.71 35.50 39.53 38.73 41.76 45.71 39.66 40.84 

 Taxes and insurance 4.08 6.88 8.28 8.71 10.11 11.40 5.82 6.02  General farm overhead 7.16 9.00 9.40 9.74 10.07 10.34 9.45 9.63 

 Total, allocated overhead 105.67 98.01 106.86 109.34 116.62 127.00 133.36 137.62 

 Total costs listed 117.56 111.17 121.34 124.88 133.59 149.60 155.52 157.86 

Total costs 181.44 180.97 196.50 204.81 221.36 268.17 266.17 257.36 

Prevented planting % 65% 61% 62% 61% 60% 56% 58% 61% 

91
Evaluation of Preven

Pre

Table 54: Wheat prevented planting cost per acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 4.67 4.96 5.81 6.20 7.18 11.29 10.93 8.44 

 Chemicals 1.59 2.07 2.10 2.19 2.21 2.28 3.94 3.80 

 Custom operations 1.25 0.92 0.93 0.95 0.96 1.11 1.60 1.60 

 Fuel, lube, and electricity 2.31 1.92 2.51 2.78 3.07 4.00 2.89 3.59  Repairs 2.63 2.67 2.78 2.84 2.93 3.07 4.13 4.21 

Other variable expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 0.54 0.60 0.59 0.70 0.93 1.67 1.87 1.13 

 Interest on operating costs 0.14 0.21 0.52 0.77 0.81 0.44 0.07 0.04  Total, operating costs 13.13 13.35 15.25 16.42 18.10 23.85 25.44 22.81 

Allocated overhead: 

Hired Labor 0.61 0.39 0.40 0.41 0.43 0.44 0.57 0.58 

 Opportunity cost of unpaid labor 7.33 6.06 6.25 6.48 6.70 6.93 5.95 5.98 

 Capital recovery of machinery & equip 47.26 44.49 47.51 49.98 52.45 57.40 56.83 58.88 

 Opportunity cost of land (rental rate) 67.87 68.45 76.23 74.67 80.53 88.13 99.64 102.60 

 Taxes and insurance 3.49 4.99 6.00 6.32 7.33 8.26 6.11 6.32  General farm overhead 8.12 8.28 8.65 8.96 9.27 9.52 12.48 12.72 

 Total, allocated overhead 134.68 132.66 145.04 146.82 156.71 170.68 181.58 187.08 

 Total costs listed 147.81 146.01 160.28 163.25 174.81 194.54 207.02 209.89 

Total costs 235.94 235.67 260.25 269.42 294.78 366.87 375.23 349.67 Prevented planting % 63% 62% 62% 61% 59% 53% 55% 60% 

92
Evaluation of Preven

Pre

Table 55: Wheat prevented planting cost per acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 4.44 5.16 6.04 6.45 7.47 11.74 9.86 7.61 

 Chemicals 1.24 2.31 2.35 2.45 2.47 2.55 4.28 4.13 

 Custom operations 1.96 1.68 1.69 1.72 1.75 2.02 1.56 1.56 

 Fuel, lube, and electricity 2.04 2.42 3.16 3.50 3.87 5.04 3.19 3.96  Repairs 2.08 3.20 3.34 3.41 3.52 3.68 4.52 4.60 

Other variable expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 0.52 0.58 0.62 0.65 0.87 1.60 1.78 1.03 

 Interest on operating costs 0.14 0.25 0.60 0.90 0.94 0.50 0.07 0.04  Total, operating costs 12.42 15.60 17.81 19.07 20.88 27.13 25.26 22.94 

Allocated overhead: 

Hired Labor 0.17 0.44 0.46 0.47 0.49 0.51 0.80 0.81 

 Opportunity cost of unpaid labor 6.60 9.01 9.29 9.62 9.96 10.30 6.89 6.93 

 Capital recovery of machinery & equip 42.18 50.82 54.27 57.09 59.92 65.56 60.41 62.59 

 Opportunity cost of land (rental rate) 70.59 61.86 68.89 67.48 72.78 79.65 81.75 84.17 

 Taxes and insurance 4.31 7.78 9.36 9.85 11.43 12.89 10.62 10.98 

 General farm overhead 8.88 14.08 14.71 15.24 15.76 16.18 19.64 20.01 

 Total, allocated overhead 132.73 143.99 156.97 159.75 170.34 185.09 180.11 185.48 

 Total costs listed 145.15 159.58 174.78 178.82 191.22 212.21 205.37 208.42 

Total costs 232.28 266.99 293.95 304.48 332.23 411.21 373.40 349.25 Prevented planting % 62% 60% 59% 59% 58% 52% 55% 60% 

93
Evaluation of Preven

Pre

Table 56: Wheat prevented planting cost per acre: Basin and Range

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 3.96 3.45 4.04 4.31 4.99 7.85 5.52 4.26 

 Chemicals 6.47 6.01 6.11 6.36 6.42 6.62 9.35 9.02 

 Custom operations 0.68 0.98 0.99 1.01 1.03 1.18 1.33 1.33 

 Fuel, lube, and electricity 3.88 3.00 3.93 4.35 4.80 6.26 4.00 4.96  Repairs 4.61 3.77 3.93 4.01 4.15 4.34 7.02 7.15 

Other variable expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 0.79 0.74 0.70 0.82 1.06 1.61 3.04 1.70 

 Interest on operating costs 0.16 0.21 0.50 0.74 0.77 0.39 0.06 0.04  Total, operating costs 20.54 18.16 20.20 21.60 23.22 28.25 30.32 28.46 

Allocated overhead: 

Hired Labor 2.38 1.50 1.54 1.60 1.66 1.71 1.39 1.40 

 Opportunity cost of unpaid labor 10.64 9.79 10.09 10.46 10.83 11.19 6.77 6.81  Capital recovery of machinery & equip 74.50 55.28 59.03 62.10 65.18 71.32 84.05 87.08 

 Opportunity cost of land (rental rate) 53.71 47.84 53.28 52.19 56.28 61.60 59.90 61.68 

 Taxes and insurance 7.39 6.90 8.30 8.73 10.13 11.43 7.81 8.08  General farm overhead 12.82 8.41 8.79 9.10 9.41 9.67 12.41 12.64  Total, allocated overhead 161.45 129.71 141.04 144.18 153.48 166.93 172.33 177.69 

 Total costs listed 181.99 147.87 161.24 165.78 176.70 195.17 202.65 206.15 

Total costs 284.54 239.85 262.11 272.73 294.89 352.43 341.96 325.74 Prevented planting % 64% 62% 62% 61% 60% 55% 59% 63% 

94
Evaluation of Preven

Pre

Table 57: Wheat prevented planting cost per acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 5.27 3.65 4.28 4.56 5.28 8.31 6.58 5.08 

 Chemicals 5.17 3.23 3.29 3.42 3.45 3.56 6.42 6.20 

 Custom operations 2.21 1.07 1.08 1.10 1.12 1.29 1.89 1.89 

 Fuel, lube, and electricity 6.39 11.20 14.66 16.22 17.92 23.34 7.94 9.85 

 Repairs 4.27 4.86 5.07 5.18 5.35 5.59 8.42 8.58 

Other variable expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 0.80 0.71 0.69 0.69 0.91 1.32 2.92 1.63 

 Interest on operating costs 0.19 0.25 0.63 0.95 0.97 0.48 0.07 0.04  Total, operating costs 24.31 24.97 29.68 32.11 35.01 43.89 34.24 33.27 

Allocated overhead: 

Hired Labor 3.00 2.54 2.62 2.71 2.81 2.90 3.12 3.14 

 Opportunity cost of unpaid labor 7.23 10.86 11.20 11.61 12.02 12.42 6.69 6.73  Capital recovery of machinery & equip 69.23 72.67 77.60 81.64 85.68 93.75 96.26 99.73 

 Opportunity cost of land (rental rate) 83.45 71.58 79.71 78.09 84.21 92.17 89.30 91.95 

 Taxes and insurance 5.99 6.88 8.28 8.71 10.11 11.40 8.42 8.71  General farm overhead 11.14 11.17 11.67 12.09 12.50 12.84 15.14 15.43 

 Total, allocated overhead 180.04 175.70 191.08 194.85 207.33 225.49 218.94 225.69 

 Total costs listed 204.35 200.67 220.76 226.96 242.33 269.37 253.17 258.96 

Total costs 328.63 317.62 352.73 367.26 396.00 465.24 416.57 407.14 Prevented planting % 62% 63% 63% 62% 61% 58% 61% 64% 

95
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

4.3. Soybeans 

Overview 

Soybean area planted is second only to that of corn at 75-77 million acres in recent years. Production has 

historically been concentrated in the Cornbelt in rotation with corn, but plantings have been expanding in 

the Northern Plains as better adapted seed varieties have become available. The Mississippi Valley and the 

DelMarVa region are also important production areas. Soybeans are the world’s leading oilseed crop and 

provide the majority of the protein meal that goes into animal feed, and over a quarter of the world’s 

vegetable oil supply. The United States and Brazil each produce almost 90 million tons of soybeans annually, 

and this accounts for over 60% of total world output. 

Figure 19: US soybean acres planted in 2012 

Sources of production cost information 

Because soybeans are a major crop, there are crop budgets available for most of the important agricultural 

states. However, soybeans are one of the crops for which the Economic Research Service conducts periodic 

statistically representative surveys of farm finances and production practices on which it bases annual 

production cost estimates. The most recent survey covered the 2012 crop but that data had not been 

compiled in time for use in this study. Current production cost estimates are based on surveys for the 2002 

and 2006 crops. RMA contracted with ERS to prepare estimates of costs incurred at each stage of the 

production process in 2006 and we are able to use that information in developing our estimates of prevented 

planting costs. 

The annual production cost series maintained by ERS for each farm resource region are available at the 

following link: http://www.ers.usda.gov/data-products/commodity-costs-and-returns.aspx. 

Production practices 

Soybeans and corn are typically grown in rotation for sound agronomic reasons. Continuous production of 

one or the other generally results in more disease and pest problems and lower yields than when the crops 

96
 
 

 

 

 

 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

are grown in rotation. Soybeans are also a nitrogen fixing crop that provides a nutritional benefit to the 

corn crop that follows them. In theory, soybeans do not need any nitrogen fertilizer, but as discussed below 

there can be a significant amount applied. 

High corn prices in recent years caused some farmers to grow corn year after year on the same ground, or 

to plant two years of corn followed by one of soybeans. In some parts of the country, soybeans can be 

double-cropped after winter wheat or other crops that are harvested by early summer. On average, about 

7% of total soybean plantings follow another harvested crop, but the share has ranged from 3% to 10% in 

the last five years. Double cropping is most common in DelMarVa and the Southeast. 

Almost all soybeans are now biotechnology varieties with genetics that provide resistance to various 

herbicides. The share of plantings that are biotech rose from 75% in 2002 to 93% in 2012. Seed costs per 

acre more than doubled over that period but chemical costs were flat due to the reduced need to battle 

weeds. 

Prevented planting experience 

Prevented planting claims have been 13% of total indemnities the last 20 years. PP indemnities for soybeans 

totaled $909 million over the last decade, with slightly more than half of those occurring in 2010 and 2011. 

Excess moisture/precipitation/rain was the cause of loss for 94% of the total. North and South Dakota 

accounted for 66% of the soybean PP indemnities. 

Table 58: Prevented planting indemnities for soybeans ($ million) 

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total 

IA 0.1 0.3 0.2 0.0 0.7 10.8 4.7 14.9 7.7 0.5 39.8 

IL 1.8 0.3 0.3 0.1 0.2 3.5 5.4 9.1 10.7 0.2 31.6 

MN 0.6 4.0 15.2 0.5 1.7 1.4 8.5 5.2 14.6 0.2 52.0 

MO 0.3 1.6 0.1 0.0 2.0 16.8 7.2 22.3 8.3 0.8 59.5 

ND 6.2 5.8 24.0 9.0 40.2 8.8 42.7 48.9 97.8 7.4 291.0 

SD 5.0 5.0 13.5 7.6 46.2 20.8 22.0 89.9 98.4 2.6 311.0 

Other 19.3 19.1 3.1 3.0 7.1 15.2 8.5 20.0 27.1 2.0 124.4 

Total 33.4 36.1 56.4 20.2 98.2 77.3 99.1 210.3 264.6 13.6 909.2 

Analysis 

Overall the PP share of expenses fell about 2% over the decade (although farmers in the south saw a 5 

percentage point decline). The simple average for the seven regions for which ERS estimates production 

costs fluctuated in the 58-61% range. Two regions are outliers. Heartland farmers unable to plant incurred 

63-68% of their total costs due principally to higher land costs. Southern Seaboard farmers incurred costs 

in the 46-54% range due to lower capital recovery and land costs. One concludes that there is no compelling 

reason to change the national 60% factor for soybeans. If one were to differentiate by region, the range 

could be as wide as 50-65%. However, we are not recommending regional differentiation in PP factors. 

Comparison of estimated PP cost to RMA payments 

As with the other major field crops, the ratio of RMA PP payments to estimated PP costs started the period 

at a moderate level (the 0.70 to 1.00 range) and then had some years in the 1.20 to 1.50 range during 2008­

97
 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

2012. The average for all regions for 2008-2012 was 1.17. Taking into account the 10% option, the ratio is 

7% higher at 1.25. With lower soybean prices in revenue plans, the ratio should fall back closer to 1.00. 

Figure 20: Share of costs incurred prior to planting soybeans 

Figure 21: Ratio of RMA payment to PP costs for soybeans 

98
 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Recommendation 

Both the production cost analysis and the payment rate analysis indicate that the PP payment factor should 

remain at 60%. 

99
 
Evaluation of Preven

Pre

Table 59: Soybean production costs per planted acre: Southern Seaboard 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 21.72 31.72 33.57 30.23 36.40 40.59 50.52 54.29 

 Fertilizer 11.60 13.08 16.03 34.76 38.79 63.95 60.11 46.09 

 Chemicals 19.17 17.04 15.37 15.75 16.00 16.74 18.48 18.23 

 Custom operations 11.15 11.23 11.71 5.34 5.61 5.61 6.11 6.19  Fuel, lube, and electricity 6.21 6.26 8.59 9.98 11.02 14.36 9.52 11.86 

 Repairs 7.39 7.83 8.62 9.62 9.89 10.22 10.42 10.62 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 4.22 6.32 5.90 7.22 8.81 16.07 12.31 11.39 

 Interest on operating costs 0.41 0.68 1.58 2.51 2.64 3.39 0.22 0.15 

 Total, operating costs 81.87 94.16 101.37 115.41 129.16 170.93 167.69 158.82 

Allocated overhead: 

Hired Labor 2.99 3.05 3.07 2.65 2.74 2.84 2.90 2.93 

 Opportunity cost of unpaid labor 20.02 19.82 20.95 17.43 18.04 18.65 19.06 19.26 

 Capital recovery of machinery & equip 36.96 38.96 42.99 51.25 53.78 58.85 62.51 64.77 

 Opportunity cost of land 34.44 36.49 37.02 39.18 39.74 42.79 49.46 57.35 

 Taxes and insurance 4.56 4.65 4.77 6.83 7.37 8.18 9.18 7.99  General farm overhead 8.55 8.72 9.18 10.04 10.32 10.66 10.87 11.08 

 Total, allocated overhead 107.52 111.69 117.98 127.38 131.99 141.97 153.98 163.38 

 Total costs listed 189.39 205.85 219.35 242.79 261.15 312.90 321.67 322.20 

100 
Evaluation of Preven

Pre

Table 60: Soybean production costs per planted acre: Eastern Uplands 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 25.03 28.79 32.45 31.44 37.86 42.21 52.55 56.46 

 Fertilizer 13.67 15.12 18.60 21.11 23.56 38.84 36.51 27.99 

 Chemicals 16.14 14.84 13.86 11.49 11.67 12.21 13.48 13.30 

 Custom operations 6.31 6.40 6.65 7.24 7.60 7.60 8.28 8.39 

 Fuel, lube, and electricity 7.13 7.66 11.06 11.66 12.88 16.78 11.12 13.86 

 Repairs 7.86 8.48 9.18 10.50 10.79 11.15 11.37 11.59 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 3.90 5.48 5.27 6.22 7.94 15.87 10.83 9.74 

 Interest on operating costs 0.44 0.64 1.55 2.22 2.34 2.88 0.19 0.13 

 Total, operating costs 80.48 87.41 98.62 101.88 114.64 147.54 144.33 141.46 

Allocated overhead: 

Hired Labor 1.95 2.22 2.20 2.70 2.79 2.89 2.95 2.98 

 Opportunity cost of unpaid labor 16.93 16.85 17.26 16.63 17.21 17.8 18.19 18.38 

 Capital recovery of machinery & equip 38.54 41.54 45.07 54.77 57.48 62.90 66.81 69.21 

 Opportunity cost of land 55.11 58.18 58.96 56.61 57.41 61.83 71.47 82.87 

 Taxes and insurance 3.85 3.87 4.03 6.16 6.65 7.38 8.28 7.20  General farm overhead 7.54 7.69 8.11 13.14 13.50 13.96 14.23 14.50 

 Total, allocated overhead 123.92 130.35 135.63 150.01 155.04 166.76 181.93 195.14 

 Total costs listed 204.40 217.76 234.25 251.89 269.68 314.30 326.26 336.60 

101 
Evaluation of Preven

Pre

Table 61: Soybean production costs per planted acre: Prairie Gateway 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 25.92 26.57 30.66 30.69 36.96 41.20 51.29 55.11 

 Fertilizer 5.06 5.08 6.14 7.63 8.52 14.04 13.19 10.12  Chemicals 14.56 13.62 10.58 12.94 13.14 13.76 15.18 14.98 

 Custom operations 7.43 7.50 7.78 7.69 8.08 8.08 8.80 8.91 

 Fuel, lube, and electricity 21.09 23.03 31.69 26.34 29.10 37.91 25.13 31.30 

 Repairs 13.12 14.09 14.85 16.85 17.31 17.90 18.24 18.59 

 Purchased irrigation water 1.80 1.78 1.78 1.54 1.62 1.62 1.76 1.78  Crop Insurance 5.93 8.58 7.48 9.04 11.34 21.84 13.85 12.08 

 Interest on operating costs 0.47 0.72 1.74 2.46 2.57 3.01 0.19 0.14 

 Total, operating costs 95.38 100.97 112.70 115.18 128.64 159.36 147.63 153.01 

Allocated overhead: 

Hired Labor 0.88 0.89 0.91 1.90 1.97 2.03 2.08 2.10 

 Opportunity cost of unpaid labor 23.56 23.45 24.39 19.03 19.7 20.37 20.81 21.03 

 Capital recovery of machinery & equip 50.81 54.75 57.91 72.62 76.21 83.39 88.58 91.77 

 Opportunity cost of land 63.97 66.48 67.54 60.64 61.5 66.23 76.55 88.77 

 Taxes and insurance 4.44 4.46 4.55 8.01 8.64 9.59 10.77 9.37 

 General farm overhead 9.19 9.36 9.72 14.72 15.13 15.63 15.94 16.24 

 Total, allocated overhead 152.85 159.39 165.02 176.92 183.15 197.24 214.73 229.28 

 Total costs listed 248.23 260.36 277.72 292.10 311.79 356.60 362.36 382.29 

102 
Evaluation of Preven

Pre

Table 62: Soybean production costs per planted acre: Northern Great Plains 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 26.76 29.96 31.98 34.36 41.37 46.13 57.43 61.71 

 Fertilizer 7.49 7.96 9.16 6.15 6.86 11.31 10.64 8.15 

 Chemicals 13.83 12.78 11.40 12.47 12.67 13.26 14.63 14.43 

 Custom operations 5.65 5.43 5.90 5.05 5.30 5.30 5.78 5.85 

 Fuel, lube, and electricity 7.84 8.47 12.55 10.12 11.18 14.57 9.65 12.03  Repairs 9.70 10.44 11.15 12.27 12.61 13.03 13.29 13.54 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 5.59 8.19 7.22 8.01 10.59 20.76 12.24 11.14 

 Interest on operating costs 0.38 0.59 1.38 1.91 2.02 2.32 0.16 0.12 

 Total, operating costs 77.24 83.82 90.74 90.34 102.60 126.68 123.82 126.97 

Allocated overhead: 

Hired Labor 1.84 2.01 2.02 1.50 1.55 1.61 1.64 1.66 

 Opportunity cost of unpaid labor 11.45 11.38 12.19 13.21 13.67 14.14 14.45 14.6 

 Capital recovery of machinery & equip 42.52 45.80 48.79 65.82 69.07 75.58 80.29 83.18 

 Opportunity cost of land 46.17 47.38 49.99 46.65 47.31 50.95 58.89 68.29 

 Taxes and insurance 4.91 5.01 5.16 6.89 7.43 8.25 9.26 8.06  General farm overhead 9.65 9.97 10.37 10.75 11.05 11.42 11.64 11.86 

 Total, allocated overhead 116.54 121.55 128.52 144.82 150.08 161.95 176.17 187.65 

 Total costs listed 193.78 205.37 219.26 235.16 252.68 288.63 299.99 314.62 

103 
Evaluation of Preven

Pre

Table 63: Soybean production costs per planted acre: Heartland 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 27.78 29.56 32.59 32.01 38.54 42.98 53.50 57.49 

 Fertilizer 7.35 8.10 10.17 12.73 14.21 23.42 22.01 16.88 

 Chemicals 17.49 16.71 14.09 14.38 14.61 15.29 16.87 16.64 

 Custom operations 5.48 5.53 5.75 5.27 5.54 5.54 6.03 6.10 

 Fuel, lube, and electricity 7.16 7.72 11.14 10.99 12.14 15.82 10.48 13.06 

 Repairs 8.73 9.64 10.08 10.59 10.88 11.25 11.47 11.69 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 4.73 7.04 6.53 7.34 8.82 18.45 11.49 9.52 

 Interest on operating costs 1.39 0.61 1.41 2.04 2.15 2.56 0.17 0.12 

 Total, operating costs 80.11 84.91 91.76 95.35 106.89 135.31 132.02 131.50 

Allocated overhead: 

Hired Labor 1.24 1.27 1.29 1.15 1.19 1.23 1.26 1.27 

 Opportunity cost of unpaid labor 15.09 15.14 15.63 14.33 14.83 15.34 15.67 15.84 

 Capital recovery of machinery & equip 40.68 44.92 46.99 58.48 61.37 67.16 71.33 73.90 

 Opportunity cost of land 95.93 98.97 102.09 101.33 102.77 110.67 127.92 148.33 

 Taxes and insurance 5.89 5.95 6.15 7.94 8.57 9.51 10.68 9.29  General farm overhead 12.10 12.35 12.97 13.50 13.87 14.34 14.62 14.90 

 Total, allocated overhead 170.93 178.60 185.12 196.73 202.60 218.25 241.48 263.53 

 Total costs listed 251.04 263.51 276.88 292.08 309.49 353.56 373.50 395.03 

104 
Evaluation of Preven

Pre

Table 64: Soybean production costs per planted acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 27.46 29.56 31.69 34.67 41.75 46.55 57.94 62.26 

 Fertilizer 12.75 14.02 17.58 19.62 21.90 36.10 33.93 26.02 

 Chemicals 17.21 16.99 13.91 13.92 14.14 14.80 16.33 16.11 

 Custom operations 9.37 9.36 9.81 8.17 8.58 8.58 9.35 9.46 

 Fuel, lube, and electricity 10.30 10.73 15.10 12.45 13.75 17.92 11.88 14.79 

 Repairs 11.14 11.83 12.82 10.53 10.82 11.18 11.40 11.62 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 4.85 7.37 7.13 8.03 9.93 20.11 12.36 10.45 

 Interest on operating costs 0.47 0.73 1.70 2.36 2.49 3.03 0.20 0.14 

 Total, operating costs 93.55 100.59 109.74 109.75 123.36 158.27 153.39 150.85 

Allocated overhead: 

Hired Labor 3.26 3.28 3.30 1.17 1.21 1.25 1.28 1.29 

 Opportunity cost of unpaid labor 21.76 21.67 22.25 16.71 17.3 17.88 18.27 18.47 

 Capital recovery of machinery & equip 48.44 51.46 55.80 52.98 55.60 60.84 64.62 66.95 

 Opportunity cost of land 69.41 71.37 71.96 70.99 72 77.54 89.62 103.92 

 Taxes and insurance 7.43 7.45 7.75 9.99 10.78 11.97 13.43 11.68 

 General farm overhead 14.10 14.31 15.06 17.36 17.84 18.44 18.80 19.16 

 Total, allocated overhead 164.40 169.54 176.12 169.20 174.73 187.92 206.02 221.47 

 Total costs listed 257.95 270.13 285.86 278.95 298.09 346.19 359.41 372.32 

105 
Evaluation of Preven

Pre

Table 65: Soybean production costs per planted acre: Mississippi Portal

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 29.25 32.44 35.56 32.59 39.24 43.75 54.47 58.53 

 Fertilizer 7.59 8.19 10.22 13.00 14.51 23.92 22.48 17.24 

 Chemicals 18.13 17.46 15.14 18.57 18.86 19.74 21.79 21.49 

 Custom operations 8.11 8.20 8.48 9.15 9.61 9.61 10.47 10.60 

 Fuel, lube, and electricity 11.77 12.26 18.44 26.66 29.45 38.37 25.43 31.68 

 Repairs 15.50 16.31 17.42 17.89 18.38 19.00 19.37 19.74 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 2.73 3.55 3.23 3.61 4.36 7.97 6.57 6.68 

 Interest on operating costs 0.48 0.75 1.77 2.80 2.91 3.46 0.22 0.16 

 Total, operating costs 93.56 99.16 110.26 124.27 137.32 165.82 160.80 166.12 

Allocated overhead: 

Hired Labor 6.51 6.93 6.92 6.68 6.91 7.15 7.31 7.38 

 Opportunity cost of unpaid labor 16.24 16.23 16.57 18.13 18.77 19.4 19.83 20.04 

 Capital recovery of machinery & equip 59.49 62.58 67.19 68.95 72.36 79.18 84.10 87.13 

 Opportunity cost of land 58.85 62.73 62.6 64.34 65.25 70.27 81.22 94.18 

 Taxes and insurance 6.64 6.72 6.98 7.5 8.09 8.98 10.08 8.77 

 General farm overhead 12.21 12.46 13.15 9.71 9.98 10.31 10.51 10.71 

 Total, allocated overhead 159.94 167.65 173.41 175.31 181.36 195.29 213.05 228.21 

 Total costs listed 253.50 266.81 283.67 299.58 318.68 361.11 373.85 394.33 

106 
Evaluation of Preven

Pre

Table 66: Soybeans - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 4% 4% 4% 4% 4% 4% 4% 4% 

Chemicals 25% 25% 25% 25% 25% 25% 25% 25% 

Custom operations 23% 23% 23% 23% 23% 23% 23% 23% 

Fuel, lube, and electricity 24% 24% 24% 24% 24% 24% 24% 24% 

Repairs 19% 19% 19% 19% 19% 19% 19% 19% 

Purchased irrigation water 0% 0% 0% 0% 0% 0% 0% 0% Crop Insurance 13% 13% 13% 13% 13% 13% 13% 13% 

Interest on operating costs 23% 23% 23% 23% 23% 23% 23% 23% 

 Total, operating costs Allocated overhead: 

Hired Labor 31% 31% 31% 31% 31% 31% 31% 31% 

 Opportunity cost of unpaid labor 29% 29% 29% 29% 29% 29% 29% 29% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

Opportunity cost of land 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

107 
Evaluation of Preven

Pre

Table 67: Soybean prevented planting cost per acre: Southern Seaboard 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.46 0.52 0.64 1.39 1.55 2.56 2.40 1.84  Chemicals 4.79 4.26 3.84 3.94 4.00 4.19 4.62 4.56 

 Custom operations 2.56 2.58 2.69 1.23 1.29 1.29 1.41 1.42 

 Fuel, lube, and electricity 1.49 1.50 2.06 2.40 2.64 3.45 2.28 2.85 

 Repairs 1.40 1.49 1.64 1.83 1.88 1.94 1.98 2.02 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.55 0.82 0.77 0.94 1.15 2.09 1.60 1.48 

 Interest on operating costs 0.09 0.16 0.36 0.58 0.61 0.78 0.05 0.03 

 Total, operating costs 11.36 11.33 12.01 12.30 13.12 16.29 14.35 14.20 

Allocated overhead: 

Hired Labor 0.93 0.95 0.95 0.82 0.85 0.88 0.90 0.91 

 Opportunity cost of unpaid labor 5.81 5.75 6.08 5.05 5.23 5.41 5.53 5.59 

 Capital recovery of machinery & equip 36.96 38.96 42.99 51.25 53.78 58.85 62.51 64.77 

 Opportunity cost of land 34.44 36.49 37.02 39.18 39.74 42.79 49.46 57.35 

 Taxes and insurance 4.56 4.65 4.77 6.83 7.37 8.18 9.18 7.99  General farm overhead 8.55 8.72 9.18 10.04 10.32 10.66 10.87 11.08 

 Total, allocated overhead 91.24 95.51 100.99 113.18 117.29 126.77 138.45 147.68  Total costs listed 102.60 106.85 112.99 125.47 130.41 143.06 152.79 161.89 

Total costs 189.39 205.85 219.35 242.79 261.15 312.90 321.67 322.20 

Prevented planting % 54% 52% 52% 52% 50% 46% 47% 50% 

108 
Evaluation of Preven

Pre

Table 68: Soybean prevented planting cost per acre: Eastern Uplands

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.55 0.60 0.74 0.84 0.94 1.55 1.46 1.12  Chemicals 4.04 3.71 3.47 2.87 2.92 3.05 3.37 3.33 

 Custom operations 1.45 1.47 1.53 1.67 1.75 1.75 1.90 1.93 

 Fuel, lube, and electricity 1.71 1.84 2.65 2.80 3.09 4.03 2.67 3.33 

 Repairs 1.49 1.61 1.74 2.00 2.05 2.12 2.16 2.20 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.51 0.71 0.69 0.81 1.03 2.06 1.41 1.27 

 Interest on operating costs 0.10 0.15 0.36 0.51 0.54 0.66 0.04 0.03 

 Total, operating costs 9.85 10.10 11.18 11.49 12.32 15.23 13.02 13.20 

Allocated overhead: 

Hired Labor 0.60 0.69 0.68 0.84 0.86 0.90 0.91 0.92 

 Opportunity cost of unpaid labor 4.91 4.89 5.01 4.82 4.99 5.16 5.28 5.33 

 Capital recovery of machinery & equip 38.54 41.54 45.07 54.77 57.48 62.90 66.81 69.21 

 Opportunity cost of land 55.11 58.18 58.96 56.61 57.41 61.83 71.47 82.87 

 Taxes and insurance 3.85 3.87 4.03 6.16 6.65 7.38 8.28 7.20  General farm overhead 7.54 7.69 8.11 13.14 13.50 13.96 14.23 14.50 

 Total, allocated overhead 110.55 116.85 121.86 136.34 140.90 152.13 166.98 180.03 

 Total costs listed 120.40 126.95 133.04 147.83 153.22 167.35 180.00 193.23 

Total costs 204.40 217.76 234.25 251.89 269.68 314.30 326.26 336.60 

Prevented planting % 59% 58% 57% 59% 57% 53% 55% 57% 

109 
Evaluation of Preven

Pre

Table 69: Soybean prevented planting cost per acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.20 0.20 0.25 0.31 0.34 0.56 0.53 0.40  Chemicals 3.64 3.41 2.65 3.24 3.29 3.44 3.80 3.75 

 Custom operations 1.71 1.73 1.79 1.77 1.86 1.86 2.02 2.05 

 Fuel, lube, and electricity 5.06 5.53 7.61 6.32 6.98 9.10 6.03 7.51 

 Repairs 2.49 2.68 2.82 3.20 3.29 3.40 3.47 3.53 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.77 1.12 0.97 1.18 1.47 2.84 1.80 1.57 

 Interest on operating costs 0.11 0.17 0.40 0.57 0.59 0.69 0.04 0.03 

 Total, operating costs 13.98 14.82 16.48 16.57 17.82 21.89 17.69 18.85 

Allocated overhead: 

Hired Labor 0.27 0.28 0.28 0.59 0.61 0.63 0.64 0.65 

 Opportunity cost of unpaid labor 6.83 6.80 7.07 5.52 5.71 5.91 6.03 6.10 

 Capital recovery of machinery & equip 50.81 54.75 57.91 72.62 76.21 83.39 88.58 91.77 

 Opportunity cost of land 63.97 66.48 67.54 60.64 61.50 66.23 76.55 88.77 

 Taxes and insurance 4.44 4.46 4.55 8.01 8.64 9.59 10.77 9.37 

 General farm overhead 9.19 9.36 9.72 14.72 15.13 15.63 15.94 16.24 

 Total, allocated overhead 135.52 142.13 147.08 162.10 167.80 181.38 198.52 212.90 

 Total costs listed 149.50 156.94 163.55 178.67 185.63 203.27 216.21 231.75 

Total costs 248.23 260.36 277.72 292.10 311.79 356.60 362.36 382.29 

Prevented planting % 60% 60% 59% 61% 60% 57% 60% 61% 

110 
Evaluation of Preven

Pre

Table 70: Soybean prevented planting cost per acre: Northern Great Plains 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.30 0.32 0.37 0.25 0.27 0.45 0.43 0.33  Chemicals 3.46 3.20 2.85 3.12 3.17 3.32 3.66 3.61 

 Custom operations 1.30 1.25 1.36 1.16 1.22 1.22 1.33 1.35 

 Fuel, lube, and electricity 1.88 2.03 3.01 2.43 2.68 3.50 2.32 2.89 

 Repairs 1.84 1.98 2.12 2.33 2.40 2.48 2.53 2.57 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.73 1.06 0.94 1.04 1.38 2.70 1.59 1.45 

 Interest on operating costs 0.09 0.14 0.32 0.44 0.46 0.53 0.04 0.03 

 Total, operating costs 9.60 9.98 10.96 10.77 11.58 14.19 11.88 12.21 

Allocated overhead: 

Hired Labor 0.57 0.62 0.63 0.47 0.48 0.50 0.51 0.51 

 Opportunity cost of unpaid labor 3.32 3.30 3.54 3.83 3.96 4.10 4.19 4.23 

 Capital recovery of machinery & equip 42.52 45.80 48.79 65.82 69.07 75.58 80.29 83.18 

 Opportunity cost of land 46.17 47.38 49.99 46.65 47.31 50.95 58.89 68.29 

 Taxes and insurance 4.91 5.01 5.16 6.89 7.43 8.25 9.26 8.06  General farm overhead 9.65 9.97 10.37 10.75 11.05 11.42 11.64 11.86 

 Total, allocated overhead 107.14 112.08 118.47 134.41 139.30 150.80 164.78 176.14 

 Total costs listed 116.74 122.06 129.43 145.17 150.89 164.99 176.66 188.35 

Total costs 193.78 205.37 219.26 235.16 252.68 288.63 299.99 314.62 

Prevented planting % 60% 59% 59% 62% 60% 57% 59% 60% 

111 
Evaluation of Preven

Pre

Table 71: Soybean prevented planting cost per acre: Heartland 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.29 0.32 0.41 0.51 0.57 0.94 0.88 0.68  Chemicals 4.37 4.18 3.52 3.60 3.65 3.82 4.22 4.16 

 Custom operations 1.26 1.27 1.32 1.21 1.27 1.27 1.39 1.40 

 Fuel, lube, and electricity 1.72 1.85 2.67 2.64 2.91 3.80 2.52 3.13 

 Repairs 1.66 1.83 1.92 2.01 2.07 2.14 2.18 2.22 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.61 0.92 0.85 0.95 1.15 2.40 1.49 1.24 

 Interest on operating costs 0.32 0.14 0.32 0.47 0.49 0.59 0.04 0.03 

 Total, operating costs 10.24 10.51 11.01 11.39 12.12 14.96 12.71 12.86 

Allocated overhead: 

Hired Labor 0.38 0.39 0.40 0.36 0.37 0.38 0.39 0.39 

 Opportunity cost of unpaid labor 4.38 4.39 4.53 4.16 4.30 4.45 4.54 4.59 

 Capital recovery of machinery & equip 40.68 44.92 46.99 58.48 61.37 67.16 71.33 73.90 

 Opportunity cost of land 95.93 98.97 102.09 101.33 102.77 110.67 127.92 148.33 

 Taxes and insurance 5.89 5.95 6.15 7.94 8.57 9.51 10.68 9.29  General farm overhead 12.10 12.35 12.97 13.50 13.87 14.34 14.62 14.90 

 Total, allocated overhead 159.36 166.97 173.13 185.76 191.25 206.51 229.48 251.41 

 Total costs listed 169.60 177.49 184.15 197.15 203.37 221.47 242.20 264.27 

Total costs 251.04 263.51 276.88 292.08 309.49 353.56 373.50 395.03 

Prevented planting % 68% 67% 67% 67% 66% 63% 65% 67% 

112 
Evaluation of Preven

Pre

Table 72: Soybean prevented planting cost per acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.51 0.56 0.70 0.78 0.88 1.44 1.36 1.04  Chemicals 4.30 4.25 3.48 3.48 3.54 3.70 4.08 4.03 

 Custom operations 2.16 2.15 2.26 1.88 1.97 1.97 2.15 2.18 

 Fuel, lube, and electricity 2.47 2.58 3.62 2.99 3.30 4.30 2.85 3.55 

 Repairs 2.12 2.25 2.44 2.00 2.06 2.12 2.17 2.21 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.63 0.96 0.93 1.04 1.29 2.61 1.61 1.36 

 Interest on operating costs 0.11 0.17 0.39 0.54 0.57 0.70 0.05 0.03 

 Total, operating costs 12.29 12.91 13.81 12.72 13.60 16.85 14.26 14.39 

Allocated overhead: 

Hired Labor 1.01 1.02 1.02 0.36 0.38 0.39 0.40 0.40 

 Opportunity cost of unpaid labor 6.31 6.28 6.45 4.85 5.02 5.19 5.30 5.36 

 Capital recovery of machinery & equip 48.44 51.46 55.80 52.98 55.60 60.84 64.62 66.95 

 Opportunity cost of land 69.41 71.37 71.96 70.99 72.00 77.54 89.62 103.92 

 Taxes and insurance 7.43 7.45 7.75 9.99 10.78 11.97 13.43 11.68 

 General farm overhead 14.10 14.31 15.06 17.36 17.84 18.44 18.80 19.16 

 Total, allocated overhead 146.70 151.89 158.05 156.53 161.61 174.36 192.17 207.47 

 Total costs listed 159.00 164.80 171.86 169.25 175.22 191.22 206.43 221.86 

Total costs 257.95 270.13 285.86 278.95 298.09 346.19 359.41 372.32 

Prevented planting % 62% 61% 60% 61% 59% 55% 57% 60% 

113 
Evaluation of Preven

Pre

Table 73: Soybean prevented planting cost per acre: Mississippi Portal

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.30 0.33 0.41 0.52 0.58 0.96 0.90 0.69  Chemicals 4.53 4.37 3.79 4.64 4.72 4.94 5.45 5.37 

 Custom operations 1.87 1.89 1.95 2.10 2.21 2.21 2.41 2.44 

 Fuel, lube, and electricity 2.82 2.94 4.43 6.40 7.07 9.21 6.10 7.60 

 Repairs 2.95 3.10 3.31 3.40 3.49 3.61 3.68 3.75 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.35 0.46 0.42 0.47 0.57 1.04 0.85 0.87 

 Interest on operating costs 0.11 0.17 0.41 0.64 0.67 0.80 0.05 0.04 

 Total, operating costs 12.94 13.25 14.71 18.18 19.30 22.75 19.44 20.76 

Allocated overhead: 

Hired Labor 2.02 2.15 2.15 2.07 2.14 2.22 2.27 2.29 

 Opportunity cost of unpaid labor 4.71 4.71 4.81 5.26 5.44 5.63 5.75 5.81 

 Capital recovery of machinery & equip 59.49 62.58 67.19 68.95 72.36 79.18 84.10 87.13 

 Opportunity cost of land 58.85 62.73 62.60 64.34 65.25 70.27 81.22 94.18 

 Taxes and insurance 6.64 6.72 6.98 7.50 8.09 8.98 10.08 8.77 

 General farm overhead 12.21 12.46 13.15 9.71 9.98 10.31 10.51 10.71 

 Total, allocated overhead 143.92 151.35 156.87 157.83 163.27 176.58 193.93 208.89 

 Total costs listed 156.85 164.60 171.58 176.01 182.57 199.34 213.37 229.65 

Total costs 253.50 266.81 283.67 299.58 318.68 361.11 373.85 394.33 

Prevented planting % 62% 62% 60% 59% 57% 55% 57% 58% 

114 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

4.4. Cotton 

Overview 

Upland cotton accounts for over 95% of the cotton planted in the United States. It is grown in 17 states on 

10-15 million acres, making it the fourth ranking crop in terms of area, after corn, soybeans and wheat. 

Major concentration areas include the Texas High and Rolling Plains, the Mississippi, Arkansas, and Louisiana 

Delta, Southern Georgia, and the Carolinas. About 40% of upland cotton acreage is irrigated. Only 20-25% 

of cotton production is used domestically, with the balance being exported. 

Figure 22: Upland cotton acres planted in 2012 

Sources of production cost information 

We have used the ERS estimates of production costs and returns per acre for cotton. The latest available 

survey information is for the 2003 and 2007 crops. Since over 95% of cotton grown in the US is upland 

cotton, these figures should be representative of upland production costs. Estimates are available for the 

following regions: Heartland, Prairie Gateway, Southern Seaboard, Fruitful Rim, Mississippi Delta, and 

Eastern Uplands. However, ERS discontinued the estimates for the Eastern Uplands after the 2006 crop due 

to the decline in that region’s production. We have used price indexes to project the 2006 costs forward 

through 2012, and the results look reasonable in relation to the data for the other regions. 

State extension services in several of the cotton producing states also prepare cost budgets. The Texas 

Tech University Cotton Economics Research Institute has created an online Cotton Production Cost 

Calculator where producers can determine the true costs of production for enterprises within a farming 

operation. Texas AgriLife Extension has two dozen different cotton crop budgets that vary by practice and 

location. Georgia also has an online calculator. 

Production practices 

Cotton plants cannot withstand frost. They require a lot of sunshine, warm conditions, and four to five 

months of frost-free temperatures to mature and produce cotton. Therefore, planting begins as soon as 

115 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

early March in South Texas and as late as mid-May further north in Kansas. Planting should be done when 

soil temperatures are 65 degrees F by 10am; if the conditions are too cold, planting will be delayed. 

In the spring, farmers prepare for planting in several ways. Producers who plant using no-till or conservation 

tillage methods use special equipment designed to plant the seed through the litter from the previous crop 

that covers the soil surface. Producers who use conventional tillage practices plow the land into rows, 

forming firm seed beds for planting. Production methods also vary by area within a state, type of irrigation, 

row width, solid versus skip-row, first or second crop, and biotechnology seed trait. 

Regional differences are also important. For example, North Carolina extension specialists recommend that 

producers use in-furrow fungicides in addition to treated seeds in fields where there is a history of seedling 

disease problems or when planting early, or when cool, wet weather is expected. 

Prevented planting experience 

Cotton has very low prevented planting claims, just 2.2% of total indemnities over the last 20 years, because 

farmers are usually able to plant and then collect a full indemnity if there is a problem, rather than the 

50% PP indemnity. Since insurance coverage for cottonseed is provided through an endorsement to the 

cotton policies, the cotton indemnities include payments for both cotton fiber and cottonseed. 

As in the case of other crops, the most common cause of a prevented planting situation is too much 

moisture. During 2003-2012, 69 percent of PP indemnities paid were for the following causes of loss: cold 

wet weather, excess moisture/precip/rain, or flood. Failure of the irrigation supply in California and 

Arizona accounted for 24 percent of indemnities. Drought accounted for less than 6 percent, principally in 

Georgia and Texas. The leading states for upland cotton PP claims are shown in Table 74. 

Table 74: Prevented planting indemnities 

for upland cotton, 2003-2012

 $million 

Mississippi 18.7 

California 14.2 

New Mexico 10.7 

Arkansas 8.5 

Texas 6.2 

North Carolina 4.2 

South Carolina 3.7 

Other 10.4 

 Total 76.6 

Analysis 

The share of costs incurred by cotton growers in a prevented planting situation has been stable over the 

last decade and varies little among regions. Over the ten years the average for the five regions has stayed 

between 29% and 31% with no upward or downward trend. The average for the period is 30%. The annual 

calculations for the regions are all in a range of 25-34%. These estimates are well below the 50% prevented 

planting factor in the current insurance plan. If one includes the 5-7% of costs allocated to cottonseed, as 

discussed below in Section 4.6, a total of 34-37% of costs are incurred in a PP situation. 

116 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 23: Share of cotton pre-planting costs allocated to cotton fiber 

Comparison of estimated PP cost to RMA payments 

With the exception of the Eastern Upland region, the ratio of RMA’s incurred base PP payment to estimated 

PP costs has been close to 1.00, but it rose to about 1.50 for 2011 and 2012. Since 51% of PP indemnities 

are associated with the additional 10% coverage, all of these ratios would be higher by about 10% if that 

were taken into account (10%/50%*0.51 = 0.102). For example, the Southern Seaboard ratio of 1.38 in 2012 

would be 1.52 if one assumes the 10% buy-up indemnity share is the same in all regions. 

Figure 24: Ratio of RMA payment to PP costs for upland cotton 

117 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Recommendation 

Reducing the PP payment rate so that a PP indemnity is 30-40% lower would put it in line with estimated 

PP costs, as long as farm prices for cotton remain 70-80 cents per pound or higher. We recommend reducing 

the PP payment rate for cotton fiber from 50% of the guarantee to 30%, which cuts the indemnity by 40%. 

We recommend reducing it from 50% to 35% for policies with the cottonseed endorsement elected, cutting 

the indemnity by 30%. 

118 
Evaluation of Preven

Pre

Table 75: Upland cotton production costs per planted acre: Southern Seaboard

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 38.84 48.10 55.05 63.42 64.65 72.10 82.56 90.32 

 Fertilizer 50.63 53.77 62.01 70.64 93.68 154.58 145.16 112.51  Chemicals 65.37 65.37 65.37 68.07 79.15 82.73 91.42 88.13 

 Custom operations 24.94 25.14 26.16 27.35 21.09 21.09 22.53 23.26  Fuel, lube, and electricity 12.25 13.94 19.27 20.68 39.27 51.54 34.74 42.46  Repairs 19.77 20.21 21.10 21.85 32.21 33.29 33.94 34.80 

Ginning 108.30 100.06 114.64 104.61 100.25 105.09 120.45 113.56 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 13.24 15.56 12.50 14.68 14.29 19.51 15.49 18.25 

 Interest on operating costs 1.12 1.79 4.23 6.43 7.31 3.85 0.77 0.51 

 Total, operating costs 334.46 343.94 380.33 397.73 451.90 543.78 547.06 523.80 

Allocated overhead: Hired Labor 12.57 12.89 13.29 13.77 12.74 13.17 13.46 13.60  Opportunity cost of unpaid labor 31.78 32.59 33.61 34.83 19.59 20.25 20.7 20.92 

 Capital recovery of machinery & equip. 57.88 62.10 66.32 69.77 111.28 121.77 129.34 134.00 

 Opportunity cost of land (rental rate) 46.5 46.5 48.44 47.65 62.21 71.65 82.48 84.93 

 Taxes and insurance 9.29 9.44 9.52 10.01 7.63 7.97 7.78 8.05 

 General farm overhead 23.97 24.51 25.59 26.50 17.31 17.89 18.24 18.70 

 Total, allocated overhead 181.99 188.03 196.77 202.53 230.76 252.70 272.00 280.20 

 Total costs listed 516.45 531.97 577.10 600.26 682.66 796.48 819.06 804.00 

119 
Evaluation of Preven

Pre

Table 76: Upland cotton production costs per planted acre: Eastern Uplands

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 46.52 57.62 65.94 75.97 85.15 108.11 124.81 129.40 

 Fertilizer 48.97 52.01 59.98 68.33 83.86 152.19 106.77 97.84  Chemicals 62.93 62.93 62.93 65.53 66.04 71.16 76.28 73.72 

 Custom operations 10.32 10.40 10.82 11.31 11.49 13.24 13.33 13.33 

 Fuel, lube, and electricity 9.15 10.21 14.65 14.68 16.22 21.13 14.07 17.44 

 Repairs 16.17 16.53 17.26 17.88 18.48 18.72 19.08 19.44 

 Ginning 90.85 76.93 100.37 64.79 68.05 68.05 72.71 75.04 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 9.93 11.48 9.85 11.75 12.51 19.35 12.96 14.81 

 Interest on operating costs 1.03 1.66 3.94 6.00 6.41 6.72 6.18 6.00 

 Total, operating costs 295.87 299.77 345.74 336.24 368.21 478.68 446.19 447.03 

Allocated overhead: Hired Labor 10.79 11.06 11.41 11.82 12.23 12.65 13.00 13.06 

 Opportunity cost of unpaid labor 23.27 23.86 24.61 25.5 26.39 27.29 28.04 28.18 

 Capital recovery of machinery & equip. 47.53 50.99 54.45 57.28 60.11 65.78 69.87 72.39 

 Opportunity cost of land (rental rate) 49.11 49.11 51.16 50.33 53.97 62.15 71.55 73.68 

 Taxes and insurance 6.61 6.71 6.76 7.11 7.61 8.85 8.62 8.90 

 General farm overhead 10.74 10.98 11.46 11.87 12.71 14.78 14.40 14.86 

 Total, allocated overhead 148.05 152.71 159.85 163.91 173.04 191.50 205.47 211.07 

 Total costs listed 443.92 452.48 505.59 500.15 541.25 670.18 651.66 658.10 

120 
Evaluation of Preven

Pre

Table 77: Upland cotton production costs per planted acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 29.06 35.99 41.19 47.46 44.57 49.70 56.91 62.27 

 Fertilizer 12.74 13.53 15.60 17.77 34.64 57.16 53.67 41.60  Chemicals 28.15 28.15 28.15 29.31 36.95 38.62 42.68 41.14 

 Custom operations 10.41 10.49 10.92 11.42 12.83 12.83 13.71 14.15  Fuel, lube, and electricity 24.49 33.80 46.85 47.07 51.59 61.98 41.39 53.51  Repairs 18.65 19.07 19.91 20.62 29.97 30.98 31.58 32.38 

 Ginning 42.73 75.63 87.45 57.34 136.38 65.44 72.20 113.70  Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 12.19 14.19 10.85 14.45 13.79 20.05 16.05 18.36 

 Interest on operating costs 0.65 1.11 2.76 4.11 4.66 2.34 0.45 0.36 

 Total, operating costs 179.07 231.96 263.68 249.55 365.38 339.10 328.64 377.47 

Allocated overhead: Hired Labor 12.08 12.39 12.78 13.24 11.30 11.68 11.94 12.07  Opportunity cost of unpaid labor 36.44 37.37 38.54 39.94 27.64 28.58 29.2 29.51 

 Capital recovery of machinery & equip. 56.10 60.19 64.28 67.62 100.82 110.32 117.18 121.41 

 Opportunity cost of land (rental rate) 27.17 27.17 28.3 27.84 30.55 35.18 40.50 41.71 

 Taxes and insurance 5.59 5.68 5.73 6.03 6.18 6.46 6.30 6.52 

 General farm overhead 10.39 10.62 11.09 11.49 11.50 11.89 12.12 12.43 

 Total, allocated overhead 147.77 153.42 160.72 166.16 187.99 204.11 217.24 223.65 

 Total costs listed 326.84 385.38 424.40 415.71 553.37 543.21 545.88 601.12 

121 
Evaluation of Preven

Pre

Table 78: Upland cotton production costs per planted acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 46.59 57.70 66.03 76.07 95.09 106.04 121.43 132.85 

 Fertilizer 39.85 42.32 48.81 55.61 75.44 124.49 116.89 90.60 

 Chemicals 77.15 77.15 77.15 80.34 78.17 81.70 90.29 87.03 

 Custom operations 9.77 9.85 10.25 10.72 13.02 13.02 13.91 14.36 

 Fuel, lube, and electricity 15.87 19.40 25.39 28.27 48.16 63.34 40.89 52.03 

 Repairs 22.39 22.89 23.90 24.75 41.14 42.52 43.35 44.45 

Ginning 93.49 114.05 104.89 111.55 145.81 154.86 132.97 164.34 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 1.44 1.70 1.54 2.21 1.91 2.69 2.54 4.22  Interest on operating costs 1.12 1.81 4.28 6.52 7.78 4.34 0.81 0.59 

 Total, operating costs 307.67 346.87 362.24 396.04 506.52 593.00 563.08 590.47 

Allocated overhead: Hired Labor 15.06 15.44 15.92 16.50 16.60 17.16 17.54 17.73  Opportunity cost of unpaid labor 20.49 21.01 21.67 22.46 25.97 26.85 27.44 27.73 

 Capital recovery of machinery & equip. 59.90 64.26 68.62 72.19 152.19 166.53 176.89 183.27 

 Opportunity cost of land (rental rate) 56.01 56.01 58.34 57.39 76.82 88.47 101.85 104.87 

 Taxes and insurance 8.51 8.64 8.71 9.16 6.69 6.99 6.82 7.06 

 General farm overhead 19.21 19.64 20.51 21.24 13.10 13.54 13.80 14.16  Total, allocated overhead 179.18 185.00 193.77 198.94 291.37 319.54 344.34 354.82 

 Total costs listed 486.85 531.87 556.01 594.98 797.89 912.54 907.42 945.29 

122 
Evaluation of Preven

Pre

Table 79: Upland cotton production costs per planted acre: Mississippi Portal 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 52.25 64.71 74.06 85.32 81.10 90.44 103.56 113.30 

 Fertilizer 46.67 49.56 57.16 65.12 80.08 132.14 124.08 96.18 

 Chemicals 104.42 104.42 104.42 108.73 91.48 95.62 105.66 101.85 

 Custom operations 45.03 45.40 47.25 49.40 26.79 26.79 28.62 29.54 

 Fuel, lube, and electricity 18.08 21.22 27.85 31.10 36.75 47.05 30.79 39.36  Repairs 22.99 23.50 24.54 25.42 37.55 38.81 39.57 40.57 

Ginning 109.29 114.67 106.72 114.80 143.03 126.30 117.38 151.95 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 5.86 5.91 4.35 5.07 3.31 4.27 5.14 7.56 

 Interest on operating costs 1.53 2.44 5.70 8.63 7.84 4.12 0.80 0.57 

 Total, operating costs 406.12 431.83 452.05 493.59 507.93 565.54 555.60 580.88 

Allocated overhead: Hired Labor 16.80 17.23 17.77 18.42 15.74 16.27 16.63 16.81 

 Opportunity cost of unpaid labor 24.23 24.85 25.63 26.56 19.32 19.97 20.41 20.63 

 Capital recovery of machinery & equip. 66.13 70.95 75.77 79.71 128.63 140.75 149.51 154.89 

 Opportunity cost of land (rental rate) 76.5 76.5 79.69 78.39 78.29 90.17 103.80 106.88 

 Taxes and insurance 8.89 9.03 9.10 9.57 9.31 9.73 9.50 9.82  General farm overhead 16.27 16.63 17.36 17.98 18.22 18.83 19.20 19.69  Total, allocated overhead 208.82 215.19 225.32 230.63 269.51 295.72 319.05 328.72 

 Total costs listed 614.94 647.02 677.37 724.22 777.44 861.26 874.65 909.60 

123 
Evaluation of Preven

Pre

Table 80: Upland cotton production costs per planted acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 27.28 33.79 38.67 44.55 59.64 66.51 76.16 83.32 

 Fertilizer 39.93 42.41 48.91 55.72 78.41 129.39 121.50 94.17  Chemicals 88.27 88.27 88.27 91.92 85.69 89.56 98.98 95.41 

 Custom operations 52.59 53.02 55.18 57.69 57.58 57.58 61.52 63.50 

 Fuel, lube, and electricity 51.85 65.67 84.34 94.99 91.70 113.05 75.13 95.28  Repairs 24.62 25.17 26.28 27.22 34.71 35.87 36.57 37.51 

 Ginning 129.10 177.27 173.14 217.09 215.92 171.96 180.20 219.79 

 Purchased irrigation water 22.45 22.63 23.55 24.62 33.59 33.59 35.89 37.04 

 Crop Insurance 10.77 13.06 10.48 13.59 11.87 16.83 15.37 16.59 

 Interest on operating costs 1.62 2.61 6.21 9.38 9.78 5.16 0.99 0.73 

 Total, operating costs 448.48 523.90 555.03 636.77 678.89 719.50 702.31 743.34 

Allocated overhead: Hired Labor 31.19 31.98 32.98 34.18 25.96 26.84 27.43 27.72 

 Opportunity cost of unpaid labor 48.64 49.88 51.44 53.31 31.06 32.11 32.81 33.17 

 Capital recovery of machinery & equip. 78.50 84.22 89.94 94.62 128.35 140.45 149.18 154.56  Opportunity cost of land (rental rate) 79.47 79.47 82.78 81.43 86.98 100.17 115.32 118.74 

 Taxes and insurance 15.3 15.54 15.66 16.47 10.00 10.45 10.20 10.55  General farm overhead 31.23 31.93 33.34 34.53 25.66 26.52 27.04 27.73 

 Total, allocated overhead 284.33 293.02 306.14 314.54 308.01 336.54 361.98 372.47  Total costs listed 732.81 816.92 861.17 951.31 986.90 1,056.04 1,064.29 1,115.81 

124 
Evaluation of Preven

Pre

Table 81: Upland cotton - share of expenses incurred before planting 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 15% 15% 15% 15% 15% 15% 15% 15% 

Chemicals 15% 15% 15% 15% 15% 15% 15% 15% 

Custom operations 14% 14% 14% 14% 14% 14% 14% 14% 

Fuel, lube, and electricity 15% 15% 15% 15% 15% 15% 15% 15% 

Repairs 15% 15% 15% 15% 15% 15% 15% 15% 

Ginning 0% 0% 0% 0% 0% 0% 0% 0% Purchased irrigation water 0% 0% 0% 0% 0% 0% 0% 0% Crop Insurance 2% 2% 2% 2% 2% 2% 2% 2% Interest on operating costs 13% 13% 13% 13% 13% 13% 13% 13% 

 Total, operating costs Allocated overhead: 

Hired Labor 36% 36% 36% 36% 36% 36% 36% 36% 

Opportunity cost of unpaid labor 35% 35% 35% 35% 35% 35% 35% 35% Capital recovery of machinery & equip. 100% 100% 100% 100% 100% 100% 100% 100% 

Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

125 
Evaluation of Preven

Pre

Table 82: Upland cotton prevented planting cost per acre: Southern Seaboard 

Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Fertilizer 6.46 6.86 7.91 9.01 11.94 18.78 17.64 13Chemicals 8.33 8.33 8.33 8.68 10.09 10.05 11.11 10

 Custom operations 2.97 2.99 3.11 3.25 2.51 2.39 2.55 2 Fuel, lube, and electricity 1.56 1.78 2.46 2.64 5.01 6.26 4.22 5

Repairs 2.52 2.58 2.69 2.79 4.11 4.04 4.12 4

Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.23 0.26 0.21 0.25 0.24 0.32 0.25 0

 Interest on operating costs 0.12 0.20 0.47 0.71 0.81 0.41 0.08 0

 Total, operating costs 22.19 23.00 25.18 27.32 34.71 42.25 39.98 36

Allocated overhead: 

Hired Labor 3.85 3.94 4.07 4.21 3.90 3.84 3.92 3

 Opportunity cost of unpaid labor 9.45 9.70 10.00 10.36 5.83 5.74 5.87 5 Capital recovery of machinery & equip. 49.20 52.79 56.37 59.30 94.59 98.63 104.77 108

 Opportunity cost of land (rental rate) 39.53 39.53 41.17 40.50 52.88 58.04 66.81 68

 Taxes and insurance 7.90 8.02 8.09 8.51 6.49 6.46 6.30 6

 General farm overhead 20.37 20.83 21.75 22.53 14.71 14.49 14.77 15

 Total, allocated overhead 130.29 134.81 141.46 145.42 178.39 187.20 202.44 208 Total costs listed 152.48 157.81 166.64 172.74 213.10 229.45 242.42 245

Total costs 516.45 531.97 577.10 600.26 682.66 796.48 819.06 804

Prevented planting % 30% 30% 29% 29% 31% 29% 30% 3

126 
Evaluation of Preven

Pre

Table 83: Upland cotton prevented planting cost per acre: Eastern Uplands

 Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Fertilizer 6.24 6.63 7.65 8.71 10.69 18.49 12.97 11Chemicals 8.02 8.02 8.02 8.36 8.42 8.65 9.27 8

 Custom operations 1.23 1.24 1.29 1.35 1.37 1.50 1.51 1 Fuel, lube, and electricity 1.17 1.30 1.87 1.87 2.07 2.57 1.71 2

Repairs 2.06 2.11 2.20 2.28 2.36 2.27 2.32 2

Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.17 0.20 0.17 0.20 0.21 0.31 0.21 0

 Interest on operating costs 0.11 0.18 0.44 0.66 0.71 0.71 0.65 0

 Total, operating costs 19.01 19.68 21.63 23.43 25.82 34.50 28.64 27

Allocated overhead: 

Hired Labor 3.30 3.38 3.49 3.62 3.74 3.69 3.79 3

 Opportunity cost of unpaid labor 6.92 7.10 7.32 7.59 7.85 7.74 7.95 7

 Capital recovery of machinery & equip. 40.40 43.34 46.28 48.69 51.10 53.28 56.59 58

 Opportunity cost of land (rental rate) 41.74 41.74 43.49 42.78 45.87 50.35 57.96 59

 Taxes and insurance 5.62 5.70 5.75 6.04 6.47 7.17 6.99 7

 General farm overhead 9.13 9.33 9.74 10.09 10.81 11.97 11.66 12

 Total, allocated overhead 107.12 110.60 116.07 118.80 125.84 134.19 144.94 149 Total costs listed 126.12 130.28 137.70 142.23 151.67 168.69 173.58 177

Total costs 443.92 452.48 505.59 500.15 541.25 670.18 651.66 658

Prevented planting % 28% 29% 27% 28% 28% 25% 27% 2

127 
Evaluation of Preven

Pre

Table 84: Upland cotton prevented planting cost per acre: Prairie Gateway 

Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Fertilizer 1.62 1.73 1.99 2.27 4.42 6.94 6.52 5

Chemicals 3.59 3.59 3.59 3.74 4.71 4.69 5.19 5

 Custom operations 1.24 1.25 1.30 1.36 1.53 1.45 1.55 1 Fuel, lube, and electricity 3.12 4.31 5.97 6.00 6.58 7.53 5.03 6

Repairs 2.38 2.43 2.54 2.63 3.82 3.76 3.84 3

Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.21 0.24 0.18 0.25 0.23 0.32 0.26 0

 Interest on operating costs 0.07 0.12 0.30 0.45 0.51 0.25 0.05 0

 Total, operating costs 12.23 13.67 15.88 16.69 21.80 24.96 22.43 22

Allocated overhead: 

Hired Labor 3.70 3.79 3.91 4.05 3.46 3.41 3.48 3

 Opportunity cost of unpaid labor 10.84 11.12 11.47 11.88 8.22 8.10 8.28 8

 Capital recovery of machinery & equip. 47.69 51.16 54.64 57.48 85.70 89.36 94.92 98

 Opportunity cost of land (rental rate) 23.09 23.09 24.06 23.66 25.97 28.50 32.81 33

 Taxes and insurance 4.75 4.83 4.87 5.13 5.25 5.23 5.10 5

 General farm overhead 8.83 9.03 9.43 9.77 9.78 9.63 9.82 10

 Total, allocated overhead 98.90 103.02 108.37 111.97 138.37 144.23 154.40 159 Total costs listed 111.13 116.69 124.25 128.66 160.18 169.18 176.84 181

Total costs 326.84 385.38 424.40 415.71 553.37 543.21 545.88 601

Prevented planting % 34% 30% 29% 31% 29% 31% 32% 3

128 
Evaluation of Preven

Pre

Table 85: Upland cotton prevented planting cost per acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Fertilizer 5.08 5.40 6.22 7.09 9.62 15.13 14.20 11

 Chemicals 9.84 9.84 9.84 10.24 9.97 9.93 10.97 10

 Custom operations 1.16 1.17 1.22 1.28 1.55 1.48 1.58 1 Fuel, lube, and electricity 2.02 2.47 3.24 3.60 6.14 7.70 4.97 6

Repairs 2.85 2.92 3.05 3.16 5.25 5.17 5.27 5Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.02 0.03 0.03 0.04 0.03 0.04 0.04 0

 Interest on operating costs 0.12 0.20 0.47 0.72 0.86 0.46 0.09 0

 Total, operating costs 21.11 22.03 24.06 26.13 33.41 39.89 37.11 35

Allocated overhead: 

Hired Labor 4.61 4.72 4.87 5.05 5.08 5.00 5.11 5

 Opportunity cost of unpaid labor 6.10 6.25 6.45 6.68 7.73 7.61 7.78 7

 Capital recovery of machinery & equip. 50.92 54.62 58.33 61.36 129.36 134.89 143.28 148

 Opportunity cost of land (rental rate) 47.61 47.61 49.59 48.78 65.30 71.66 82.50 84

 Taxes and insurance 7.23 7.34 7.40 7.79 5.69 5.66 5.52 5 General farm overhead 16.33 16.69 17.43 18.05 11.14 10.97 11.18 11 Total, allocated overhead 132.79 137.24 144.07 147.71 224.29 235.80 255.38 263

 Total costs listed 153.90 159.27 168.13 173.84 257.70 275.69 292.49 298

Total costs 486.85 531.87 556.01 594.98 797.89 912.54 907.42 945

Prevented planting % 32% 30% 30% 29% 32% 30% 32% 3

129 
Evaluation of Preven

Pre

Table 86: Upland cotton prevented planting cost per acre: Mississippi Portal

 Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Fertilizer 5.95 6.32 7.29 8.30 10.21 16.06 15.08 11

Chemicals 13.31 13.31 13.31 13.86 11.66 11.62 12.84 12

 Custom operations 5.36 5.40 5.62 5.88 3.19 3.04 3.25 3

 Fuel, lube, and electricity 2.31 2.71 3.55 3.97 4.69 5.72 3.74 4

Repairs 2.93 3.00 3.13 3.24 4.79 4.72 4.81 4

Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.10 0.10 0.07 0.09 0.06 0.07 0.08 0

 Interest on operating costs 0.17 0.27 0.63 0.95 0.87 0.43 0.08 0

 Total, operating costs 30.13 31.11 33.61 36.29 35.46 41.65 39.88 37

Allocated overhead: 

Hired Labor 5.14 5.27 5.44 5.64 4.82 4.74 4.85 4

 Opportunity cost of unpaid labor 7.21 7.39 7.62 7.90 5.75 5.66 5.79 5

 Capital recovery of machinery & equip. 56.21 60.31 64.40 67.75 109.34 114.01 121.10 125

 Opportunity cost of land (rental rate) 65.03 65.03 67.74 66.63 66.55 73.04 84.08 86

 Taxes and insurance 7.56 7.68 7.74 8.13 7.91 7.88 7.70 7 General farm overhead 13.83 14.14 14.76 15.28 15.49 15.25 15.55 15 Total, allocated overhead 154.97 159.81 167.69 171.34 209.85 220.58 239.06 246

 Total costs listed 185.10 190.92 201.30 207.63 245.30 262.23 278.94 283

Total costs 614.94 647.02 677.37 724.22 777.44 861.26 874.65 909

Prevented planting % 30% 30% 30% 29% 32% 30% 32% 3

130 
Evaluation of Preven

Pre

Table 87: Upland cotton prevented planting cost per acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Fertilizer 5.09 5.41 6.24 7.10 10.00 15.72 14.76 11Chemicals 11.25 11.25 11.25 11.72 10.93 10.88 12.03 11

 Custom operations 6.26 6.31 6.57 6.87 6.85 6.53 6.98 7 Fuel, lube, and electricity 6.61 8.37 10.75 12.11 11.69 13.74 9.13 11

Repairs 3.14 3.21 3.35 3.47 4.43 4.36 4.44 4Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.18 0.22 0.18 0.23 0.20 0.27 0.25 0

 Interest on operating costs 0.18 0.29 0.69 1.04 1.08 0.54 0.10 0

 Total, operating costs 32.72 35.06 39.03 42.54 45.17 52.04 47.69 46

Allocated overhead: Hired Labor 9.54 9.79 10.09 10.46 7.94 7.83 8.00 8 Opportunity cost of unpaid labor 14.47 14.84 15.30 15.86 9.24 9.10 9.30 9 Capital recovery of machinery & equip. 66.73 71.59 76.45 80.43 109.10 113.76 120.84 125

 Opportunity cost of land (rental rate) 67.55 67.55 70.36 69.22 73.93 81.14 93.41 96

 Taxes and insurance 13.01 13.21 13.31 14.00 8.50 8.46 8.26 8 General farm overhead 26.55 27.14 28.34 29.35 21.81 21.48 21.90 22 Total, allocated overhead 197.84 204.11 213.86 219.31 230.53 241.78 261.71 269

 Total costs listed 230.56 239.17 252.88 261.85 275.70 293.82 309.40 316

Total costs 732.81 816.92 861.17 951.31 986.90 1,056.04 1,064.29 1,115

Prevented planting % 31% 29% 29% 28% 28% 28% 29% 2

131 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

4.5. ELS cotton 

Overview 

Pima or extra long staple (ELS) cotton is grown in the southwestern part of the United States. The majority 

of production is in California where yields are 1,200 to 2,200 lbs of cotton fiber per acre. ELS cotton 

accounts for over half of California’s planted cotton acreage. Small quantities of ELS cotton are grown in 

West Texas, New Mexico, and Arizona but yields are considerably lower and acreage in those states has 

been declining. 

ELS is considered a superior blend of cotton because it is extremely durable and absorbent. ELS cotton got 

its name because the staple is at least 1 3/8” or longer. ELS yields are lower on average than American 

Upland cotton. Producers get higher prices for it because it has higher quality cotton lint and higher 

production costs based on different ginning methods, since it is roller-ginned to preserve the fiber’s longer 

length. 

Figure 25: ELS cotton acres planted in 2012 

Sources of production cost information 

ERS published a thorough study of cotton production costs in 201215 . This document has some information 

specific to ELS cotton. ERS also prepares an annual estimate of production costs and returns for cotton but 

not specifically for ELS cotton. Since over 95% of the cotton grown in the US is Upland, it is likely that the 

national cost estimates do not accurately account for the costs of producing ELS cotton. However, we know 

that roughly half of the cotton grown in the Fruitful Rim ERS region is ELS cotton. Therefore, the cost 

numbers for that region should be closer to the actual costs of producing ELS cotton. 

15 Linda Foreman, “Characteristics and Production Costs of US Cotton Farms, 2007”, Economic Research Service, USDA, 

EIB 104, December 2012 

132 
 

 

 

 

 

 

 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

The University of California Cooperative Extension at Davis has conducted a number of studies of production 

costs for various types of ELS cotton in the San Joaquin Valley, Sacramento Valley, and Imperial County. 

The San Joaquin Valley is where the vast majority of ELS cotton is produced. California published budgets 

in 2003 and 2012 for the San Joaquin Valley specifically for extra long staple cotton.16 Agralytica used these 

two budgets to identify prevented planting costs. As a side note, upland and Pima cotton budgets from 

California were compared to see if there were significant differences in production costs. The 2003 budgets 

and the 2013 budgets showed insignificant differences in production costs for the two types, less than $30 

per acre out of $600-$1,000 in total costs. 

Although Texas AgriLife Extension has more than two dozen different cotton crop budgets, none are 

specifically for ELS cotton, and the acreage of that type grown in the state is too low to be representative 

of typical costs. 

Production practices 

Preplanting land preparation operations occur from November to March. Cotton fields are typically 

prepared with two stubble disc operations, sprayed with herbicide, and then undergo a final disc pass to 

incorporate the herbicides. Deep ripping of the soil occurs every 3 years to break up compaction that 

adversely impacts root penetration and water uptake. After the beds and furrow are formed with a lister, 

preplanting irrigation may be applied if rainfall has been insufficient. 

ELS cotton is longer maturing than upland cotton and yields are dramatically affected by planting date, as 

much as 500 lbs per acre for a 14-day difference. For best yields, planting takes place about mid-April. 

Farmers in the northern part of the Valley use 30-inch rows for the best yields, while farmers in the south 

may use 30-40 inch rows without adverse yield affects. 

Prevented planting experience 

During 1994-2013, PP claims were 82% of total indemnities. From 2003 to 2012, indemnities for extra long 

staple cotton totaled about $112.6 million dollars. California accounted for virtually all of the indemnities, 

more than 99.9%. Arizona was the only other state with claims, but they only totaled $83,300, about 0.07%. 

Prevented planting claims accounted for $101.3 million in California, almost 90% of all ELS cotton insurance 

claims for that decade. Prevented planting insurance is clearly important to California ELS cotton growers. 

Table 88: Causes of loss for prevented planting of ELS Cotton in California (million dollars) 

2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Total 

Cold Wet Weather 6.1 0.0 0.0 0.0 0.0 0.0 0.0 12.3 0.1 0.0 18.5 

Excess Moisture/Precip/Rain 4.3 0.0 1.0 3.4 0.0 0.0 0.7 3.6 0.4 0.0 13.4 

Failure Irrig Supply 0.4 0.2 0.0 0.0 3.1 3.7 46.6 4.1 0.0 10.9 68.9 

Other 0.2 0.0 0.0 0.0 0.0 0.2 0.0 0.0 0.1 0.0 0.5 

Total 11.0 0.2 1.0 3.4 3.2 3.8 47.2 20.0 0.5 11.0 101.3 

16 Available at http://cottoninfo.ucdavis.edu/Cost_Studies/ 

133 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Analysis 

In 2003, preplanting costs accounted for 29% of total costs according to the California extension budget. In 

2012, this rose slightly to 30% due to changes in overhead costs rising faster than cash expenses. Since 

overhead costs are heavily weighted as preplanted sunk costs, these tend to drive preplanting costs more 

than cash expenses. These PP cost shares calculated from the extension budgets are virtually the same as 

those for upland cotton in the Fruitful Rim resource region which fell in a range of 28-31% over the decade. 

Figure 26: Share of ELS cotton pre-planting costs allocated to cotton fiber 

Comparison of RMA payments to estimated PP costs 

The ratio of RMA’s incurred base PP payment to estimated PP costs has varied between 1.50 and 2.00 over 

the decade. The estimated costs are based on a budget for California, where most of the ELS cotton is 

produced. Since 62% of PP indemnities are associated with the additional 10% coverage, the ratio would be 

higher by about 12% if that were taken into account (10%/50%*0.62 = 0.124). For example, a ratio of 1.50 

becomes 1.69 when the 10% buy-up is taken into account. 

134 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 27: Ratio of RMA payment to PP costs for ELS cotton 

Recommendation 

As in the case of upland cotton, we recommend reducing the PP factor from 50% to 30%. This would probably 

still leave the PP indemnity somewhat above estimated PP costs, especially if the 10% buy-up option remains 

in place. 

135 
Evaluation of Preven

Pre

Table 89: ELS cotton production costs per planted acre: California San Joaquin Valley

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Cultivation 70.08 75.18 80.29 84.46 88.64 96.99 103.03 106.74 1

 Planting 26 26.68 28.36 30.73 34.44 43.73 50.48 52.34 

 Irrigation 205 211.03 218.57 226.10 232.13 241.18 239.67 244.19 2

 Fertilizer 53 59.84 70.10 75.23 92.32 167.55 117.54 107.71 1

 Chemicals 291 291.00 295.81 307.83 310.24 334.29 358.34 346.31 3

 Pickup Truck 14 13.88 13.88 13.64 13.40 13.03 13.28 13.64 

 Harvest costs 60.00 64.37 68.74 72.32 75.89 83.05 88.21 91.39 

 Ginning 16.00 17.17 18.33 19.28 20.24 22.15 23.52 24.37 

 Assessments 23.00 24.05 25.63 27.21 29.15 33.89 33.01 34.06 

 Postharvest operations 15.00 16.09 17.19 18.08 18.97 20.76 22.05 22.85 

 Crop Insurance 8.13 6.41 6.36 6.54 6.51 5.78 31.99 17.38 

 Interest on operating capital 25.48 26.29 30.08 36.05 38.48 40.38 37.13 36.05 

 Total, operating costs 806.68 831.99 873.34 917.47 960.42 1102.77 1118.25 1097.03 11Allocated overhead: Land rent 150.00 156.12 162.24 169.39 181.63 209.18 240.82 247.96 2

 Office expenses 30.00 30.88 31.99 33.09 33.97 35.29 35.07 35.74 

 Liability Insurance 1.00 1.06 1.13 1.20 1.30 1.50 1.45 1.50 

 Property Taxes 5.00 5.16 6.01 6.86 7.75 8.10 7.91 8.26 

 Property Insurance 4.00 4.26 4.51 4.80 5.18 6.02 5.79 5.98 

 Investment Repairs 3.00 3.09 3.22 3.29 3.40 3.44 3.51 3.57 

 Total, allocated overhead 193.00 200.57 209.10 218.62 233.23 263.54 294.54 303.00 3

 Total costs listed 999.68 1,032.55 1,082.44 1,136.10 1,193.65 1366.31 1412.79 1400.03 14

136 
Evaluation of Preven

Pre

Table 90: ELS cotton - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Cultivation 40% 40% 40% 40% 40% 40% 40% 40% 

 Planting 0% 0% 0% 0% 0% 0% 0% 0% 

Irrigation 25% 26% 26% 27% 28% 28% 29% 30% 

 Fertilizer 15% 15% 15% 15% 15% 15% 15% 15% 

 Chemicals 15% 15% 15% 15% 15% 15% 15% 15% 

 Pickup Truck 42% 41% 41% 41% 40% 40% 40% 39% 

 Harvest costs 0% 0% 0% 0% 0% 0% 0% 0% Ginning 0% 0% 0% 0% 0% 0% 0% 0%  Assessments 0% 0% 0% 0% 0% 0% 0% 0% 

 Postharvest operations 0% 0% 0% 0% 0% 0% 0% 0%  Crop Insurance 82% 82% 82% 82% 82% 82% 82% 82% 

 Interest on operating capital 13% 13% 13% 13% 13% 13% 13% 13% 

Allocated overhead: Land rent 100% 100% 100% 100% 100% 100% 100% 100% 

 Office expenses 100% 100% 100% 100% 100% 100% 100% 100% 

 Liability Insurance 100% 100% 100% 100% 100% 100% 100% 100% 

 Property Taxes 100% 100% 100% 100% 100% 100% 100% 100% 

 Property Insurance 100% 100% 100% 100% 100% 100% 100% 100% 

 Investment Repairs 100% 100% 100% 100% 100% 100% 100% 100% 

137 
Evaluation of Preven

Pre

Table 91: ELS cotton prevented planting costs per acre: California San Joaquin Valley

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Cultivation 23.83 25.56 27.30 28.72 30.14 31.43 33.38 34.58 

 Planting 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Irrigation 43.56 46.64 48.30 51.89 55.25 54.70 56.30 59.34 

 Fertilizer 6.76 7.63 8.94 9.59 11.77 20.36 14.28 13.09 

 Chemicals 37.10 37.10 37.72 39.25 39.56 40.62 43.54 42.08 

 Pickup Truck 5.00 4.84 4.84 4.75 4.55 4.22 4.30 4.31 

 Harvest costs 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Assessments 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Postharvest operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 5.67 4.47 4.43 4.56 4.54 3.84 21.25 11.54 

 Interest on operating capital 2.82 2.90 3.32 3.98 4.25 4.25 3.91 3.80 

 Total, operating costs 124.73 129.14 134.85 142.74 150.06 159.41 176.96 168.73 1

Allocated overhead: Land rent 127.50 132.70 137.91 143.98 154.39 169.44 195.06 200.85 2

 Office expenses 25.50 26.25 27.19 28.13 28.88 28.59 28.41 28.95 

 Liability Insurance 0.85 0.90 0.96 1.02 1.10 1.22 1.17 1.21  Property Taxes 4.25 4.38 5.11 5.83 6.59 6.56 6.40 6.69  Property Insurance 3.40 3.62 3.84 4.08 4.41 4.87 4.69 4.85  Investment Repairs 2.55 2.63 2.74 2.79 2.89 2.79 2.84 2.89  Total, allocated overhead 164.05 170.48 177.73 185.83 198.25 213.47 238.58 245.43 2

 Total costs listed 288.78 299.62 312.58 328.57 348.30 372.88 415.54 414.17 4

Total costs 999.68 1,032.55 1,082.44 1,136.10 1,193.65 1,366.31 1,412.79 1,400.03 1,4

Prevented planting % 29% 29% 29% 29% 29% 27% 29% 30% 

138 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

4.6. Cottonseed 

Overview 

Background on production of upland cotton and ELS cotton is reviewed in Sections 4.4 and 4.5. As noted in 

those discussions, cottonseed and cotton lint are joint products. When cotton is ginned, the mill recovers 

the cottonseed which then goes on to be crushed, yielding cottonseed oil and cottonseed meal. The grower 

gets a payment from the ginner for the seed as well as for the lint. 

Cottonseed oil goes primarily to human edible consumption where it competes with other vegetable oils 

(soybean, corn, canola, peanut, palm etc.) and with animal fats (butter, lard, tallow and fish oil). In the 

US market, cottonseed oil accounts for about 2% of consumption of fats and oils and 5% of exports. 

Cottonseed meal is used mostly as a high-protein animal feed. About 90% is used domestically and 10% is 

exported. 

The ERS cost and return estimates for cotton include returns per acre for both lint and seed. For the period 

under study, there are two distinct periods for the relationship between lint and seed returns. During 2003­

2007, the returns from cottonseed averaged 15% of total returns. During 2008-2012, the average rose to 

19% due to higher US and world market prices for protein meal and vegetable oil relative to cotton. 

The preceding cotton discussions cover sources of production cost information, production practices, and 

prevented planting experience. 

Analysis 

The cottonseed endorsement establishes a grower’s guarantee using an established price for cottonseed 

and a yield that is calculated in relation to lint yield using a conversion factor determined by RMA. Both of 

these are shown in the actuarial documents, on the price and rates pages. 

Since lint and seed are joint products, and the seed yield guarantee is linked to the lint yield guarantee, 

one can simply make a pro rata attribution of the appropriate portion of production costs, in the same 

fashion as for upland and ELS cotton. As part of the attribution of costs for cottonseed to the preplanting 

period, we include only 15% of those costs for 2003-2007 and 19% for 2008-2012. These factors are applied 

in the PP cost worksheets. The results are shown in Figure 28. 

Recommendation 

The indemnity for cottonseed in a prevented planting situation should represent approximately 7% of total 

production costs. With the portion of costs covered under the cotton lint plan, a total of up to 37% of a 

grower’s costs would be covered. Thus it appears that the current 50% factor in the insurance plans for 

cotton and cottonseed is too high. We recommend factors of 30% for upland and ELS cotton, and 35% when 

the grower elects the cottonseed endorsement. 

139 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 28: Share of cotton pre-planting costs allocated to cottonseed 

140 
Evaluation of Preven

Pre

Table 92: Cottonseed production costs per planted acre: Southern Seaboard 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 38.84 48.10 55.05 63.42 64.65 72.10 82.56 90.32 

 Fertilizer 50.63 53.77 62.01 70.64 93.68 154.58 145.16 112.51  Chemicals 65.37 65.37 65.37 68.07 79.15 82.73 91.42 88.13 

 Custom operations 24.94 25.14 26.16 27.35 21.09 21.09 22.53 23.26  Fuel, lube, and electricity 12.25 13.94 19.27 20.68 39.27 51.54 34.74 42.46  Repairs 19.77 20.21 21.10 21.85 32.21 33.29 33.94 34.80 

Ginning 108.30 100.06 114.64 104.61 100.25 105.09 120.45 113.56 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 13.24 15.56 12.50 14.68 14.29 19.51 15.49 18.25 

 Interest on operating costs 1.12 1.79 4.23 6.43 7.31 3.85 0.77 0.51 

 Total, operating costs 334.46 343.94 380.33 397.73 451.90 543.78 547.06 523.80 

Allocated overhead: Hired Labor 12.57 12.89 13.29 13.77 12.74 13.17 13.46 13.60  Opportunity cost of unpaid labor 31.78 32.59 33.61 34.83 19.59 20.25 20.7 20.92 

 Capital recovery of machinery & equip. 57.88 62.10 66.32 69.77 111.28 121.77 129.34 134.00 

 Opportunity cost of land (rental rate) 46.5 46.5 48.44 47.65 62.21 71.65 82.48 84.93 

 Taxes and insurance 9.29 9.44 9.52 10.01 7.63 7.97 7.78 8.05 

 General farm overhead 23.97 24.51 25.59 26.50 17.31 17.89 18.24 18.70 

 Total, allocated overhead 181.99 188.03 196.77 202.53 230.76 252.70 272.00 280.20 

 Total costs listed 516.45 531.97 577.10 600.26 682.66 796.48 819.06 804.00 

141 
Evaluation of Preven

Pre

Table 93: Cottonseed production costs per planted acre: Eastern Uplands 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 46.52 57.62 65.94 75.97 85.15 108.11 124.81 129.40 

 Fertilizer 48.97 52.01 59.98 68.33 83.86 152.19 106.77 97.84  Chemicals 62.93 62.93 62.93 65.53 66.04 71.16 76.28 73.72 

 Custom operations 10.32 10.40 10.82 11.31 11.49 13.24 13.33 13.33 

 Fuel, lube, and electricity 9.15 10.21 14.65 14.68 16.22 21.13 14.07 17.44 

 Repairs 16.17 16.53 17.26 17.88 18.48 18.72 19.08 19.44 

 Ginning 90.85 76.93 100.37 64.79 68.05 68.05 72.71 75.04 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 9.93 11.48 9.85 11.75 12.51 19.35 12.96 14.81 

 Interest on operating costs 1.03 1.66 3.94 6.00 6.41 6.72 6.18 6.00 

 Total, operating costs 295.87 299.77 345.74 336.24 368.21 478.68 446.19 447.03 

Allocated overhead: Hired Labor 10.79 11.06 11.41 11.82 12.23 12.65 13.00 13.06 

 Opportunity cost of unpaid labor 23.27 23.86 24.61 25.5 26.39 27.29 28.04 28.18 

 Capital recovery of machinery & equip. 47.53 50.99 54.45 57.28 60.11 65.78 69.87 72.39 

 Opportunity cost of land (rental rate) 49.11 49.11 51.16 50.33 53.97 62.15 71.55 73.68 

 Taxes and insurance 6.61 6.71 6.76 7.11 7.61 8.85 8.62 8.90 

 General farm overhead 10.74 10.98 11.46 11.87 12.71 14.78 14.40 14.86 

 Total, allocated overhead 148.05 152.71 159.85 163.91 173.04 191.50 205.47 211.07 

 Total costs listed 443.92 452.48 505.59 500.15 541.25 670.18 651.66 658.10 

142 
Evaluation of Preven

Pre

Table 94: Cottonseed production costs per planted acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 29.06 35.99 41.19 47.46 44.57 49.70 56.91 62.27 

 Fertilizer 12.74 13.53 15.60 17.77 34.64 57.16 53.67 41.60  Chemicals 28.15 28.15 28.15 29.31 36.95 38.62 42.68 41.14 

 Custom operations 10.41 10.49 10.92 11.42 12.83 12.83 13.71 14.15  Fuel, lube, and electricity 24.49 33.80 46.85 47.07 51.59 61.98 41.39 53.51  Repairs 18.65 19.07 19.91 20.62 29.97 30.98 31.58 32.38 

 Ginning 42.73 75.63 87.45 57.34 136.38 65.44 72.20 113.70  Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 12.19 14.19 10.85 14.45 13.79 20.05 16.05 18.36 

 Interest on operating costs 0.65 1.11 2.76 4.11 4.66 2.34 0.45 0.36 

 Total, operating costs 179.07 231.96 263.68 249.55 365.38 339.10 328.64 377.47 

Allocated overhead: Hired Labor 12.08 12.39 12.78 13.24 11.30 11.68 11.94 12.07  Opportunity cost of unpaid labor 36.44 37.37 38.54 39.94 27.64 28.58 29.2 29.51 

 Capital recovery of machinery & equip. 56.10 60.19 64.28 67.62 100.82 110.32 117.18 121.41 

 Opportunity cost of land (rental rate) 27.17 27.17 28.3 27.84 30.55 35.18 40.50 41.71 

 Taxes and insurance 5.59 5.68 5.73 6.03 6.18 6.46 6.30 6.52 

 General farm overhead 10.39 10.62 11.09 11.49 11.50 11.89 12.12 12.43 

 Total, allocated overhead 147.77 153.42 160.72 166.16 187.99 204.11 217.24 223.65 

 Total costs listed 326.84 385.38 424.40 415.71 553.37 543.21 545.88 601.12 

143 
Evaluation of Preven

Pre

Table 95: Cottonseed production costs per planted acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 46.59 57.70 66.03 76.07 95.09 106.04 121.43 132.85 

 Fertilizer 39.85 42.32 48.81 55.61 75.44 124.49 116.89 90.60 

 Chemicals 77.15 77.15 77.15 80.34 78.17 81.70 90.29 87.03 

 Custom operations 9.77 9.85 10.25 10.72 13.02 13.02 13.91 14.36 

 Fuel, lube, and electricity 15.87 19.40 25.39 28.27 48.16 63.34 40.89 52.03 

 Repairs 22.39 22.89 23.90 24.75 41.14 42.52 43.35 44.45 

Ginning 93.49 114.05 104.89 111.55 145.81 154.86 132.97 164.34 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 1.44 1.70 1.54 2.21 1.91 2.69 2.54 4.22  Interest on operating costs 1.12 1.81 4.28 6.52 7.78 4.34 0.81 0.59 

 Total, operating costs 307.67 346.87 362.24 396.04 506.52 593.00 563.08 590.47 

Allocated overhead: Hired Labor 15.06 15.44 15.92 16.50 16.60 17.16 17.54 17.73  Opportunity cost of unpaid labor 20.49 21.01 21.67 22.46 25.97 26.85 27.44 27.73 

 Capital recovery of machinery & equip. 59.90 64.26 68.62 72.19 152.19 166.53 176.89 183.27 

 Opportunity cost of land (rental rate) 56.01 56.01 58.34 57.39 76.82 88.47 101.85 104.87 

 Taxes and insurance 8.51 8.64 8.71 9.16 6.69 6.99 6.82 7.06 

 General farm overhead 19.21 19.64 20.51 21.24 13.10 13.54 13.80 14.16  Total, allocated overhead 179.18 185.00 193.77 198.94 291.37 319.54 344.34 354.82 

 Total costs listed 486.85 531.87 556.01 594.98 797.89 912.54 907.42 945.29 

144 
Evaluation of Preven

Pre

Table 96: Cottonseed production costs per planted acre: Mississippi Portal 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 52.25 64.71 74.06 85.32 81.10 90.44 103.56 113.30 

 Fertilizer 46.67 49.56 57.16 65.12 80.08 132.14 124.08 96.18 

 Chemicals 104.42 104.42 104.42 108.73 91.48 95.62 105.66 101.85 

 Custom operations 45.03 45.40 47.25 49.40 26.79 26.79 28.62 29.54 

 Fuel, lube, and electricity 18.08 21.22 27.85 31.10 36.75 47.05 30.79 39.36  Repairs 22.99 23.50 24.54 25.42 37.55 38.81 39.57 40.57 

Ginning 109.29 114.67 106.72 114.80 143.03 126.30 117.38 151.95 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 5.86 5.91 4.35 5.07 3.31 4.27 5.14 7.56 

 Interest on operating costs 1.53 2.44 5.70 8.63 7.84 4.12 0.80 0.57 

 Total, operating costs 406.12 431.83 452.05 493.59 507.93 565.54 555.60 580.88 

Allocated overhead: Hired Labor 16.80 17.23 17.77 18.42 15.74 16.27 16.63 16.81 

 Opportunity cost of unpaid labor 24.23 24.85 25.63 26.56 19.32 19.97 20.41 20.63 

 Capital recovery of machinery & equip. 66.13 70.95 75.77 79.71 128.63 140.75 149.51 154.89 

 Opportunity cost of land (rental rate) 76.5 76.5 79.69 78.39 78.29 90.17 103.80 106.88 

 Taxes and insurance 8.89 9.03 9.10 9.57 9.31 9.73 9.50 9.82  General farm overhead 16.27 16.63 17.36 17.98 18.22 18.83 19.20 19.69  Total, allocated overhead 208.82 215.19 225.32 230.63 269.51 295.72 319.05 328.72 

 Total costs listed 614.94 647.02 677.37 724.22 777.44 861.26 874.65 909.60 

145 
Evaluation of Preven

Pre

Table 97: Cottonseed production costs per planted acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 27.28 33.79 38.67 44.55 59.64 66.51 76.16 83.32 

 Fertilizer 39.93 42.41 48.91 55.72 78.41 129.39 121.50 94.17  Chemicals 88.27 88.27 88.27 91.92 85.69 89.56 98.98 95.41 

 Custom operations 52.59 53.02 55.18 57.69 57.58 57.58 61.52 63.50 

 Fuel, lube, and electricity 51.85 65.67 84.34 94.99 91.70 113.05 75.13 95.28  Repairs 24.62 25.17 26.28 27.22 34.71 35.87 36.57 37.51 

 Ginning 129.10 177.27 173.14 217.09 215.92 171.96 180.20 219.79 

 Purchased irrigation water 22.45 22.63 23.55 24.62 33.59 33.59 35.89 37.04 

 Crop Insurance 10.77 13.06 10.48 13.59 11.87 16.83 15.37 16.59 

 Interest on operating costs 1.62 2.61 6.21 9.38 9.78 5.16 0.99 0.73 

 Total, operating costs 448.48 523.90 555.03 636.77 678.89 719.50 702.31 743.34 

Allocated overhead: Hired Labor 31.19 31.98 32.98 34.18 25.96 26.84 27.43 27.72 

 Opportunity cost of unpaid labor 48.64 49.88 51.44 53.31 31.06 32.11 32.81 33.17 

 Capital recovery of machinery & equip. 78.50 84.22 89.94 94.62 128.35 140.45 149.18 154.56  Opportunity cost of land (rental rate) 79.47 79.47 82.78 81.43 86.98 100.17 115.32 118.74 

 Taxes and insurance 15.3 15.54 15.66 16.47 10.00 10.45 10.20 10.55  General farm overhead 31.23 31.93 33.34 34.53 25.66 26.52 27.04 27.73 

 Total, allocated overhead 284.33 293.02 306.14 314.54 308.01 336.54 361.98 372.47  Total costs listed 732.81 816.92 861.17 951.31 986.90 1,056.04 1,064.29 1,115.81 

146 
Evaluation of Preven

Pre

Table 98: Cottonseed - share of expenses incurred before planting 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 15% 15% 15% 15% 15% 15% 15% 15% 

Chemicals 15% 15% 15% 15% 15% 15% 15% 15% 

Custom operations 14% 14% 14% 14% 14% 14% 14% 14% 

Fuel, lube, and electricity 15% 15% 15% 15% 15% 15% 15% 15% 

Repairs 15% 15% 15% 15% 15% 15% 15% 15% 

Ginning 0% 0% 0% 0% 0% 0% 0% 0% Purchased irrigation water 0% 0% 0% 0% 0% 0% 0% 0% Crop Insurance 2% 2% 2% 2% 2% 2% 2% 2% Interest on operating costs 13% 13% 13% 13% 13% 13% 13% 13% 

 Total, operating costs Allocated overhead: 

Hired Labor 36% 36% 36% 36% 36% 36% 36% 36% 

Opportunity cost of unpaid labor 35% 35% 35% 35% 35% 35% 35% 35% Capital recovery of machinery & equip. 100% 100% 100% 100% 100% 100% 100% 100% 

Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

147 
Evaluation of Preven

Pre

Table 99: Cottonseed prevented planting cost per acre: Southern Seaboard 

Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Fertilizer 1.14 1.21 1.40 1.59 2.11 4.41 4.14 3

Chemicals 1.47 1.47 1.47 1.53 1.78 2.36 2.61 2

 Custom operations 0.52 0.53 0.55 0.57 0.44 0.56 0.60 0 Fuel, lube, and electricity 0.28 0.31 0.43 0.47 0.88 1.47 0.99 1

Repairs 0.44 0.45 0.47 0.49 0.72 0.95 0.97 0

Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.04 0.05 0.04 0.04 0.04 0.07 0.06 0

 Interest on operating costs 0.02 0.03 0.08 0.13 0.14 0.10 0.02 0

 Total, operating costs 3.92 4.06 4.44 4.82 6.13 9.91 9.38 8

Allocated overhead: 

Hired Labor 0.68 0.70 0.72 0.74 0.69 0.90 0.92 0

 Opportunity cost of unpaid labor 1.67 1.71 1.76 1.83 1.03 1.35 1.38 1

 Capital recovery of machinery & equip. 8.68 9.32 9.95 10.47 16.69 23.14 24.57 25

 Opportunity cost of land (rental rate) 6.98 6.98 7.27 7.15 9.33 13.61 15.67 16

 Taxes and insurance 1.39 1.42 1.43 1.50 1.14 1.51 1.48 1

 General farm overhead 3.60 3.68 3.84 3.98 2.60 3.40 3.47 3 Total, allocated overhead 22.99 23.79 24.96 25.66 31.48 43.91 47.49 49 Total costs listed 26.91 27.85 29.41 30.48 37.61 53.82 56.86 57Total costs 516.45 531.97 577.10 600.26 682.66 796.48 819.06 804

Prevented planting % 5% 5% 5% 5% 6% 7% 7% 

148 
Evaluation of Preven

Pre

Table 100: Cottonseed prevented planting cost per acre: Eastern Uplands

 Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Fertilizer 1.10 1.17 1.35 1.54 1.89 4.34 3.04 2

Chemicals 1.42 1.42 1.42 1.47 1.49 2.03 2.17 2

 Custom operations 0.22 0.22 0.23 0.24 0.24 0.35 0.35 0 Fuel, lube, and electricity 0.21 0.23 0.33 0.33 0.36 0.60 0.40 0

Repairs 0.36 0.37 0.39 0.40 0.42 0.53 0.54 0

Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.03 0.03 0.03 0.04 0.04 0.07 0.05 0

 Interest on operating costs 0.02 0.03 0.08 0.12 0.12 0.17 0.15 0

 Total, operating costs 3.35 3.47 3.82 4.13 4.56 8.09 6.72 6

Allocated overhead: 

Hired Labor 0.58 0.60 0.62 0.64 0.66 0.87 0.89 0

 Opportunity cost of unpaid labor 1.22 1.25 1.29 1.34 1.39 1.81 1.86 1

 Capital recovery of machinery & equip. 7.13 7.65 8.17 8.59 9.02 12.50 13.28 13

 Opportunity cost of land (rental rate) 7.37 7.37 7.67 7.55 8.10 11.81 13.60 14

 Taxes and insurance 0.99 1.01 1.01 1.07 1.14 1.68 1.64 1

 General farm overhead 1.61 1.65 1.72 1.78 1.91 2.81 2.74 2 Total, allocated overhead 18.90 19.52 20.48 20.97 22.21 31.48 34.00 35 Total costs listed 22.26 22.99 24.30 25.10 26.76 39.57 40.72 41Total costs 443.92 452.48 505.59 500.15 541.25 670.18 651.66 658

Prevented planting % 5% 5% 5% 5% 5% 6% 6% 

149 
Evaluation of Preven

Pre

Table 101: Cottonseed prevented planting cost per acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Fertilizer 0.29 0.30 0.35 0.40 0.78 1.63 1.53 1

Chemicals 0.63 0.63 0.63 0.66 0.83 1.10 1.22 1

 Custom operations 0.22 0.22 0.23 0.24 0.27 0.34 0.36 0 Fuel, lube, and electricity 0.55 0.76 1.05 1.06 1.16 1.77 1.18 1

Repairs 0.42 0.43 0.45 0.46 0.67 0.88 0.90 0

Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.04 0.04 0.03 0.04 0.04 0.08 0.06 0

 Interest on operating costs 0.01 0.02 0.05 0.08 0.09 0.06 0.01 0

 Total, operating costs 2.16 2.41 2.80 2.95 3.85 5.85 5.26 5

Allocated overhead: 

Hired Labor 0.65 0.67 0.69 0.71 0.61 0.80 0.82 0

 Opportunity cost of unpaid labor 1.91 1.96 2.02 2.10 1.45 1.90 1.94 1

 Capital recovery of machinery & equip. 8.42 9.03 9.64 10.14 15.12 20.96 22.26 23

 Opportunity cost of land (rental rate) 4.08 4.08 4.25 4.18 4.58 6.68 7.70 7

 Taxes and insurance 0.84 0.85 0.86 0.90 0.93 1.23 1.20 1

 General farm overhead 1.56 1.59 1.66 1.72 1.73 2.26 2.30 2 Total, allocated overhead 17.45 18.18 19.12 19.76 24.42 33.83 36.22 37 Total costs listed 19.61 20.59 21.93 22.70 28.27 39.69 41.48 42Total costs 326.84 385.38 424.40 415.71 553.37 543.21 545.88 601

Prevented planting % 6% 5% 5% 5% 5% 7% 8% 

150 
Evaluation of Preven

Pre

Table 102: Cottonseed prevented planting cost per acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Fertilizer 0.90 0.95 1.10 1.25 1.70 3.55 3.33 2

Chemicals 1.74 1.74 1.74 1.81 1.76 2.33 2.57 2

 Custom operations 0.21 0.21 0.22 0.23 0.27 0.35 0.37 0 Fuel, lube, and electricity 0.36 0.44 0.57 0.64 1.08 1.81 1.17 1

Repairs 0.50 0.52 0.54 0.56 0.93 1.21 1.24 1Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.00 0.01 0.00 0.01 0.01 0.01 0.01 0

 Interest on operating costs 0.02 0.04 0.08 0.13 0.15 0.11 0.02 0

 Total, operating costs 3.72 3.89 4.25 4.61 5.90 9.36 8.71 8

Allocated overhead: 

Hired Labor 0.81 0.83 0.86 0.89 0.90 1.17 1.20 1

 Opportunity cost of unpaid labor 1.08 1.10 1.14 1.18 1.36 1.79 1.82 1

 Capital recovery of machinery & equip. 8.99 9.64 10.29 10.83 22.83 31.64 33.61 34

 Opportunity cost of land (rental rate) 8.40 8.40 8.75 8.61 11.52 16.81 19.35 19

 Taxes and insurance 1.28 1.30 1.31 1.37 1.00 1.33 1.30 1 General farm overhead 2.88 2.95 3.08 3.19 1.97 2.57 2.62 2 Total, allocated overhead 23.43 24.22 25.42 26.07 39.58 55.31 59.90 61 Total costs listed 27.16 28.11 29.67 30.68 45.48 64.67 68.61 70

Total costs 486.85 531.87 556.01 594.98 797.89 912.54 907.42 945

Prevented planting % 6% 5% 5% 5% 6% 7% 8% 

151 
Evaluation of Preven

Pre

Table 103: Cottonseed prevented planting cost per acre: Mississippi Portal

 Item 2003 2004 2005 2006 2007 2008 2009 20

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Fertilizer 1.05 1.12 1.29 1.47 1.80 3.77 3.54 2 Chemicals 2.35 2.35 2.35 2.45 2.06 2.73 3.01 2

 Custom operations 0.95 0.95 0.99 1.04 0.56 0.71 0.76 0 Fuel, lube, and electricity 0.41 0.48 0.63 0.70 0.83 1.34 0.88 1

 Repairs 0.52 0.53 0.55 0.57 0.84 1.11 1.13 1

Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.02 0.02 0.01 0.02 0.01 0.02 0.02 0 Interest on operating costs 0.03 0.05 0.11 0.17 0.15 0.10 0.02 0

 Total, operating costs 5.32 5.49 5.93 6.40 6.26 9.77 9.35 8

Allocated overhead: Hired Labor 0.91 0.93 0.96 0.99 0.85 1.11 1.14 1

 Opportunity cost of unpaid labor 1.27 1.30 1.35 1.39 1.01 1.33 1.36 1

 Capital recovery of machinery & equip. 9.92 10.64 11.37 11.96 19.29 26.74 28.41 29

 Opportunity cost of land (rental rate) 11.48 11.48 11.95 11.76 11.74 17.13 19.72 20

 Taxes and insurance 1.33 1.35 1.37 1.44 1.40 1.85 1.81 1

 General farm overhead 2.44 2.49 2.60 2.70 2.73 3.58 3.65 3 Total, allocated overhead 27.35 28.20 29.59 30.24 37.03 51.74 56.08 57

 Total costs listed 32.66 33.69 35.52 36.64 43.29 61.51 65.43 66

Total costs 614.94 647.02 677.37 724.22 777.44 861.26 874.65 909

Prevented planting % 5% 5% 5% 5% 6% 7% 7% 

152 
Evaluation of Preven

Pre

Table 104: Cottonseed prevented planting cost per acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 20

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Fertilizer 0.90 0.95 1.10 1.25 1.76 3.69 3.46 2

 Chemicals 1.99 1.99 1.99 2.07 1.93 2.55 2.82 2

 Custom operations 1.10 1.11 1.16 1.21 1.21 1.53 1.64 1

 Fuel, lube, and electricity 1.17 1.48 1.90 2.14 2.06 3.22 2.14 2

 Repairs 0.55 0.57 0.59 0.61 0.78 1.02 1.04 1

Ginning 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 0.03 0.04 0.03 0.04 0.04 0.06 0.06 0

 Interest on operating costs 0.03 0.05 0.12 0.18 0.19 0.13 0.02 0

 Total, operating costs 5.77 6.19 6.89 7.51 7.97 12.21 11.19 10

Allocated overhead: Hired Labor 1.68 1.73 1.78 1.85 1.40 1.84 1.88 1

 Opportunity cost of unpaid labor 2.55 2.62 2.70 2.80 1.63 2.14 2.18 2

 Capital recovery of machinery & equip. 11.78 12.63 13.49 14.19 19.25 26.69 28.34 29

 Opportunity cost of land (rental rate) 11.92 11.92 12.42 12.21 13.05 19.03 21.91 22

 Taxes and insurance 2.30 2.33 2.35 2.47 1.50 1.99 1.94 2

 General farm overhead 4.68 4.79 5.00 5.18 3.85 5.04 5.14 5

 Total, allocated overhead 34.91 36.02 37.74 38.70 40.68 56.71 61.39 63 Total costs listed 40.69 42.21 44.63 46.21 48.65 68.92 72.58 74Total costs 732.81 816.92 861.17 951.31 986.90 1,056.04 1,064.29 1,115

Prevented planting % 6% 5% 5% 5% 5% 7% 7% 

153 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

5. ADDITIONAL CROPS COVERED BY THE ARMS SURVEYS 

Results for barley, grain sorghum, oats, peanuts, and rice are covered in this section. For these crops ERS 

publishes annual estimates of production costs by region based on ARMS surveys. In addition, we review 

popcorn, silage sorghum, hybrid corn seed, and hybrid sorghum seed in this section because their production 

methods are similar to those for crops for which ARMS data are available. 

Figure 29 shows the simple average of regional rates (shown in subsequent sections) for barley, grain 

sorghum, peanuts, and rice. The symbols after the crop names signify a recommendation of either no 

change in coverage level (0), a reduction (-) or an increase (+). All four crops began in 2003 with relatively 

low ratios, from 0.5 to 0.8. By 2012, however, the ratios had risen to around 1.0 for peanuts, grain sorghum, 

and rice, while barley had risen to above 0.8. 

Figure 29: Ratios for other crops with ERS data and no change in coverage level 

Other crops for which we have updated cost data but relevant older prevented planting estimates include 

hybrid corn seed, popcorn, silage sorghum, and oats, shown in Figure 30. Hybrid corn seed and popcorn 

both began above 1 and are now above 1.5. Silage sorghum began in 2005 at just about 1, has fluctuated 

slightly, and is now just above 1. 

154 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 30: Ratios for other crops with ERS data and changes in coverage level 

155 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

5.1. Barley 

Overview 

Barley is the world’s oldest cultivated grain. It is a short season, early maturing crop adapted to a wide 

variety of climates and suited to both dryland and irrigated production methods. It fits nicely into rotations 

with sugar beets, legumes and corn and is an alternate to dryland wheat. It is also a good forage crop 

alternative. However, corn and soybeans have replaced barley acreage as world demand for feed 

ingredients has exploded. Total US production has fallen from a peak of 609 million bushels in 1986/87 to 

215 million bushels in 2013/14. 

US production is concentrated in the Northern Plains states of Minnesota, Montana, Wyoming, and North 

Dakota, and in the Pacific Northwest states of Idaho, Washington, and Oregon. There is minor production 

in California, Colorado, Delaware, Maryland, New York, Utah, and Wisconsin. North Dakota and Montana 

are the two largest barley-producing states. North Dakota accounts for 36% of production and Montana 

accounts for 22% 

Barley is used for several end products. Between 60% and 90% of the barley grown in the US is produced for 

malt. Other uses include feed grain, hay, and a minor amount is used for human food. Farmers regularly 

grow barley for the malt market but use the feed market as a backup if the barley fails to meet malt 

specifications. Almost all malting barley is grown under contract. 

Figure 31: Barley acres planted by county in 2012 

Sources of production costs 

Cost estimates for barley came from the ERS cost and return estimates. The most recent ARMS survey 

underpinning those estimates covered the 2011 barley crop. The cost tables are available at 

http://www.ers.usda.gov/data-products/commodity-costs-and-returns.aspx. 

156 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Production practices 

Barley does best in rotation following row crops such as sugar beets, corn, peas, beans, or lentils. It is a 

frost resistant crop and can be planted in early April, or as early as soil and climate conditions permit. 

Barley can be grown in any tillage system; however, residue management is critical to success. Nitrogen 

management is also critical for barley; it is usually applied and tilled in just before planting or at planting 

in a band offset. Additional applications later in the season may be necessary. 

Malting barley is grown to variety requirements and tight specifications due to rigid brewer requirements. 

Due to these standards, barley for malting requires more intensive management and precision growing 

parameters than barley for other end uses. 

Prevented planting experience 

Prevented planting claims have accounted for 30.7% of total indemnities the last 20 years. Barley 

indemnities from 2003 to 2012 totaled $341 million. Indemnities due to prevented planting were $113 

million (33% of total claims). 

Of prevented planting indemnities, $95.9 million (85%) were in North Dakota. Montana ($7.5 million, 6.6%) 

and Minnesota ($3.7 million, 3.3%) accounted for most of the rest. The most common cause of prevented 

planting claims was excess moisture/precipitation/rain, which represented $107 million (95%). 

Analysis 

Prevented planting costs for barley generally ranged from 60% to 65% over the past ten years, with the 

Northern Crescent around 59%-60% and the other regions in the 63%-65% range. A straight average of costs 

across all five regions shows prevented planting costs at 63% in both 2003 and 2012. 

Figure 32: Share of costs incurred prior to planting barley 

157 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of estimated PP cost to RMA payments 

The ratio of RMA’s incurred base PP payment to estimated PP costs has been under 1.00, though the ratio 

has increased in the past five years from 0.58 to 0.81. Also, since 49% of PP indemnities are associated 

with the additional 10% coverage, all of these ratios would be higher by about 8% if that were taken into 

account (10%/60%*0.49 = 0.082). This would bring the average of the ratios to 0.88. 

Figure 33: Ratio of RMA payment to PP costs for barley 

Recommendation 

The ratio of RMA’s PP payments to estimated PP costs is already close to 1.0 in a couple of regions. 

However, PP claims as a percentage of total indemnities are relatively high. Finally, estimates of the PP 

share of production costs are just a touch over RMA’s 60% rate. On balance, the PP payment rate should 

be left at 60%. 

158 
Evaluation of Preven

Pre

Table 105: Barley production costs per planted acre: Basin and Range

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 10.81 10.39 10.53 10.31 11.25 15.82 15.32 13.35 

 Fertilizer 24.70 26.23 32.67 34.86 40.14 67.04 63.11 48.76 

 Chemicals 12.22 12.22 12.42 12.93 12.87 13.61 15.05 14.51 

 Custom operations 7.17 7.23 6.94 7.06 7.17 8.26 8.32 8.32 

 Fuel, lube, and electricity 11.54 13.44 17.80 19.70 21.76 28.36 18.79 23.41 

 Repairs 15.46 15.81 16.60 16.94 17.72 18.31 18.67 19.03 

 Purchased irrigation water 3.54 3.57 3.80 4.00 4.17 4.17 4.60 4.65 

 Crop Insurance 3.16 3.71 4.95 4.19 5.47 9.56 9.17 7.45 

 Interest on operating costs 0.45 0.70 1.71 2.54 2.77 1.29 0.21 0.13 

 Total, operating costs 89.05 93.30 107.42 112.53 123.32 166.42 153.24 139.61 

Allocated overhead: 

Hired Labor 2.78 2.85 2.92 3.03 3.13 3.24 3.31 3.35 

 Opportunity cost of unpaid labor 27.85 28.56 29.27 30.33 31.4 32.46 33.17 33.53 

 Capital recovery of machinery & equip. 65.29 67.46 74.80 78.69 82.59 90.37 95.99 99.45 

 Opportunity cost of land 63.52 63.52 63.52 62.22 77.78 85.13 101.98 105.00 

 Taxes and insurance 6.53 6.63 7.8 8.2 9.52 10.73 10.33 10.68 

 General farm overhead 8.56 8.75 9.22 9.55 9.88 10.14 10.34 10.54  Total, allocated overhead 174.53 177.77 187.53 192.02 214.30 232.07 255.12 262.55 

 Total costs listed 263.58 271.07 294.95 304.55 337.62 398.49 408.36 402.16 

159 
Evaluation of Preven

Pre

Table 106: Barley production costs per planted acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 12.97 12.47 12.63 12.37 13.50 18.99 18.38 16.02 

 Fertilizer 27.40 29.10 36.24 38.67 44.53 74.37 70.01 54.09 

 Chemicals 15.58 15.58 15.84 16.48 16.41 17.36 19.19 18.50 

 Custom operations 11.89 11.99 11.51 11.70 11.89 13.70 13.79 13.79 

 Fuel, lube, and electricity 24.07 28.02 37.14 41.09 45.39 59.14 39.20 48.83 

 Repairs 19.18 19.61 20.59 21.01 21.98 22.72 23.16 23.61 

 Purchased irrigation water 5.85 5.90 6.27 6.60 6.89 6.89 7.60 7.69 

 Crop Insurance 4.52 4.84 4.72 4.50 4.43 7.97 6.09 5.34 

 Interest on operating costs 0.61 0.97 2.38 3.56 3.86 1.77 0.28 0.18 

 Total, operating costs 122.07 128.48 147.32 155.98 168.88 222.91 197.70 188.05 

Allocated overhead: 

Hired Labor 7.96 8.16 8.37 8.67 8.97 9.28 9.48 9.58 

 Opportunity cost of unpaid labor 26.97 27.66 28.34 29.37 30.41 31.44 32.12 32.47 

 Capital recovery of machinery & equip. 75.22 77.72 86.18 90.66 95.15 104.11 110.59 114.57 

 Opportunity cost of land 84.35 84.35 84.35 82.63 103.29 113.04 135.42 139.44 

 Taxes and insurance 6.71 6.81 8.01 8.43 9.78 11.03 10.61 10.98 

 General farm overhead 10.48 10.71 11.29 11.69 12.09 12.41 12.66 12.90 

 Total, allocated overhead 211.69 215.41 226.54 231.45 259.69 281.31 310.88 319.94 

 Total costs listed 333.76 343.89 373.86 387.43 428.57 504.22 508.58 507.99 

160 
Evaluation of Preven

Pre

Table 107: Barley production costs per planted acre: Northern Great Plains

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 8.21 7.89 8.00 7.83 8.54 12.02 11.64 10.14 

 Fertilizer 16.43 17.45 21.73 23.19 26.70 44.60 41.98 32.43 

 Chemicals 12.16 12.16 12.36 12.86 12.81 13.55 14.97 14.44 

 Custom operations 6.13 6.18 5.93 6.03 6.13 7.06 7.11 7.11 

 Fuel, lube, and electricity 7.76 9.03 11.97 13.25 14.63 19.07 12.64 15.74 

 Repairs 14.24 14.56 15.29 15.60 16.32 16.87 17.20 17.53 

 Purchased irrigation water 0.69 0.70 0.74 0.78 0.81 0.81 0.90 0.91 

 Crop Insurance 5.21 4.90 5.08 5.66 6.56 12.07 8.62 7.63 

 Interest on operating costs 0.35 0.54 1.29 1.91 2.07 0.95 0.15 0.10 

 Total, operating costs 71.18 73.41 82.39 87.11 94.57 127.00 115.21 106.03 

Allocated overhead: 

Hired Labor 1.97 2.02 2.07 2.15 2.22 2.30 2.35 2.37 

 Opportunity cost of unpaid labor 17.82 18.27 18.73 19.41 20.09 20.77 21.23 21.45 

 Capital recovery of machinery & equip. 63.56 65.67 72.82 76.61 80.40 87.97 93.45 96.81 

 Opportunity cost of land 32.41 32.41 32.41 31.75 39.69 43.43 52.03 53.58 

 Taxes and insurance 6.77 6.88 8.08 8.5 9.87 11.13 10.71 11.07 

General farm overhead 8.10 8.28 8.72 9.03 9.35 9.60 9.78 9.97 

 Total, allocated overhead 130.63 133.53 142.83 147.45 161.62 175.20 189.55 195.25 

 Total costs listed 201.81 206.94 225.22 234.56 256.19 302.20 304.76 301.28 

161 
Evaluation of Preven

Pre

Table 108: Barley production costs per planted acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 10.80 10.38 10.52 10.30 11.24 15.81 15.31 13.34 

 Fertilizer 19.76 20.99 26.13 27.89 32.11 53.63 50.49 39.01 

 Chemicals 5.02 5.02 5.10 5.31 5.29 5.59 6.18 5.96 

 Custom operations 13.05 13.16 12.63 12.84 13.05 15.03 15.14 15.14 

 Fuel, lube, and electricity 7.68 8.94 11.85 13.11 14.48 18.87 12.51 15.58 

 Repairs 9.64 9.86 10.35 10.56 11.05 11.42 11.64 11.86 

 Purchased irrigation water 0.57 0.57 0.61 0.64 0.67 0.67 0.74 0.75 

 Crop Insurance 3.29 3.26 3.48 2.84 3.47 7.29 5.72 5.30 

 Interest on operating costs 0.35 0.54 1.31 1.94 2.11 1.00 0.16 0.10 

 Total, operating costs 70.16 72.72 81.98 85.43 93.47 129.31 117.89 107.04 

Allocated overhead: 

Hired Labor 2.16 2.22 2.27 2.35 2.44 2.52 2.57 2.60 

 Opportunity cost of unpaid labor 22.35 22.92 23.49 24.34 25.2 26.05 26.62 26.91 

 Capital recovery of machinery & equip. 42.28 43.68 48.44 50.96 53.48 58.52 62.16 64.40 

 Opportunity cost of land 52.55 52.55 52.55 51.48 64.35 70.42 84.37 86.87 

 Taxes and insurance 4.34 4.41 5.18 5.45 6.32 7.13 6.86 7.10 

General farm overhead 7.32 7.48 7.88 8.16 8.45 8.67 8.84 9.01 

 Total, allocated overhead 131.00 133.26 139.81 142.74 160.24 173.31 191.42 196.89 

 Total costs listed 201.16 205.98 221.79 228.17 253.71 302.62 309.31 303.93 

162 
Evaluation of Preven

Pre

Table 109: Barley production costs per planted acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 13.03 12.53 12.69 12.43 13.56 19.07 18.47 16.09 

 Fertilizer 22.09 23.46 29.22 31.18 35.90 59.96 56.44 43.61 

 Chemicals 2.87 2.87 2.92 3.04 3.02 3.20 3.53 3.41 

 Custom operations 15.95 16.08 15.44 15.69 15.95 18.37 18.50 18.50 

 Fuel, lube, and electricity 10.22 11.90 15.77 17.45 19.27 25.11 16.64 20.73 

 Repairs 9.73 9.95 10.45 10.66 11.15 11.53 11.75 11.98 

 Purchased irrigation water 2.07 2.09 2.22 2.34 2.44 2.44 2.69 2.72 

 Crop Insurance 1.76 1.99 2.85 2.30 3.56 5.52 4.42 3.79 

 Interest on operating costs 0.39 0.62 1.51 2.23 2.44 1.16 0.19 0.12 

 Total, operating costs 78.11 81.49 93.07 97.32 107.29 146.36 132.63 120.95 

Allocated overhead: 

Hired Labor 2.17 2.23 2.28 2.36 2.45 2.53 2.58 2.61 

 Opportunity cost of unpaid labor 29.97 30.73 31.5 32.64 33.79 34.93 35.7 36.08 

 Capital recovery of machinery & equip. 42.83 44.25 49.07 51.62 54.18 59.28 62.97 65.24 

 Opportunity cost of land 48.15 48.15 48.15 47.17 58.96 64.53 77.30 79.59 

 Taxes and insurance 3.74 3.8 4.46 4.7 5.45 6.15 5.91 6.12 

General farm overhead 8.06 8.24 8.68 8.99 9.30 9.55 9.73 9.92 

 Total, allocated overhead 134.92 137.40 144.14 147.48 164.13 176.97 194.19 199.56 

 Total costs listed 213.03 218.89 237.21 244.80 271.42 323.33 326.82 320.51 

163 
Evaluation of Preven

Pre

Table 110: Barley - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% Fertilizer 30% 30% 30% 30% 30% 30% 30% 30% 

Chemicals 17% 17% 17% 17% 17% 17% 17% 17% 

Custom operations 29% 29% 29% 29% 29% 29% 29% 29% 

Fuel, lube, and electricity 23% 23% 23% 23% 23% 23% 23% 23% 

Repairs 20% 20% 20% 20% 20% 20% 20% 20% Purchased irrigation water 0% 0% 0% 0% 0% 0% 0% 0% Crop Insurance 31% 31% 31% 31% 31% 31% 31% 31% 

Interest on operating costs 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: 

Hired Labor 29% 29% 29% 29% 29% 29% 29% 29% 

 Opportunity cost of unpaid labor 25% 25% 25% 25% 25% 25% 25% 25% 

 Capital recovery of machinery & equip. 100% 100% 100% 100% 100% 100% 100% 100% 

Opportunity cost of land 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

164 
Evaluation of Preven

Pre

Table 111: Barley prevented planting cost per acre: Basin and Range

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 7.41 7.87 9.80 10.46 12.04 20.11 18.93 14.63 

 Chemicals 2.08 2.08 2.11 2.20 2.19 2.31 2.56 2.47 

 Custom operations 2.08 2.10 2.01 2.05 2.08 2.40 2.41 2.41 

 Fuel, lube, and electricity 2.65 3.09 4.09 4.53 5.00 6.52 4.32 5.38 

 Repairs 3.09 3.16 3.32 3.39 3.54 3.66 3.73 3.81 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 0.98 1.15 1.53 1.30 1.70 2.96 2.84 2.31 

 Interest on operating costs 0.11 0.18 0.43 0.64 0.69 0.32 0.05 0.03 

 Total, operating costs 18.41 19.62 23.30 24.56 27.25 38.29 34.86 31.04 

Allocated overhead: 

Hired Labor 0.81 0.83 0.85 0.88 0.91 0.94 0.96 0.97 

 Opportunity cost of unpaid labor 6.96 7.14 7.32 7.58 7.85 8.12 8.29 8.38 

 Capital recovery of machinery & equip. 65.29 67.46 74.80 78.69 82.59 90.37 95.99 99.45 

 Opportunity cost of land 63.52 63.52 63.52 62.22 77.78 85.13 101.98 105.00 

 Taxes and insurance 6.53 6.63 7.80 8.20 9.52 10.73 10.33 10.68 

 General farm overhead 8.56 8.75 9.22 9.55 9.88 10.14 10.34 10.54  Total, allocated overhead 151.67 154.33 163.50 167.12 188.53 205.42 227.89 235.02 

 Total costs listed 170.07 173.95 186.81 191.68 215.77 243.72 262.75 266.06 

Total costs 263.58 271.07 294.95 304.55 337.62 398.49 408.36 402.16 Prevented planting % 65% 64% 63% 63% 64% 61% 64% 66% 

165 
Evaluation of Preven

Pre

Table 112: Barley prevented planting cost per acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 8.22 8.73 10.87 11.60 13.36 22.31 21.00 16.23 

 Chemicals 2.65 2.65 2.69 2.80 2.79 2.95 3.26 3.15 

 Custom operations 3.45 3.48 3.34 3.39 3.45 3.97 4.00 4.00 

 Fuel, lube, and electricity 5.54 6.44 8.54 9.45 10.44 13.60 9.02 11.23 

 Repairs 3.84 3.92 4.12 4.20 4.40 4.54 4.63 4.72 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 1.40 1.50 1.46 1.40 1.37 2.47 1.89 1.66 

 Interest on operating costs 0.15 0.24 0.60 0.89 0.97 0.44 0.07 0.05 

 Total, operating costs 25.24 26.97 31.62 33.73 36.77 50.29 43.87 41.02 

Allocated overhead: 

Hired Labor 2.31 2.37 2.43 2.51 2.60 2.69 2.75 2.78 

 Opportunity cost of unpaid labor 6.74 6.92 7.09 7.34 7.60 7.86 8.03 8.12 

 Capital recovery of machinery & equip. 75.22 77.72 86.18 90.66 95.15 104.11 110.59 114.57 

 Opportunity cost of land 84.35 84.35 84.35 82.63 103.29 113.04 135.42 139.44 

 Taxes and insurance 6.71 6.81 8.01 8.43 9.78 11.03 10.61 10.98 

 General farm overhead 10.48 10.71 11.29 11.69 12.09 12.41 12.66 12.90 

 Total, allocated overhead 185.81 188.87 199.34 203.27 230.51 251.14 280.06 288.79 

 Total costs listed 211.05 215.84 230.96 237.00 267.28 301.44 323.93 329.81 

Total costs 333.76 343.89 373.86 387.43 428.57 504.22 508.58 507.99 Prevented planting % 63% 63% 62% 61% 62% 60% 64% 65% 

166 
Evaluation of Preven

Pre

Table 113: Barley prevented planting cost per acre: Northern Great Plains

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 4.93 5.24 6.52 6.96 8.01 13.38 12.59 9.73 

 Chemicals 2.07 2.07 2.10 2.19 2.18 2.30 2.54 2.45 

 Custom operations 1.78 1.79 1.72 1.75 1.78 2.05 2.06 2.06 

 Fuel, lube, and electricity 1.78 2.08 2.75 3.05 3.36 4.39 2.91 3.62 

 Repairs 2.85 2.91 3.06 3.12 3.26 3.37 3.44 3.51 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 1.62 1.52 1.57 1.75 2.03 3.74 2.67 2.37 

 Interest on operating costs 0.09 0.14 0.32 0.48 0.52 0.24 0.04 0.03 

 Total, operating costs 15.11 15.74 18.05 19.29 21.15 29.47 26.26 23.76 

Allocated overhead: 

Hired Labor 0.57 0.59 0.60 0.62 0.64 0.67 0.68 0.69 

 Opportunity cost of unpaid labor 4.46 4.57 4.68 4.85 5.02 5.19 5.31 5.36 

 Capital recovery of machinery & equip. 63.56 65.67 72.82 76.61 80.40 87.97 93.45 96.81 

 Opportunity cost of land 32.41 32.41 32.41 31.75 39.69 43.43 52.03 53.58 

 Taxes and insurance 6.77 6.88 8.08 8.50 9.87 11.13 10.71 11.07 

General farm overhead 8.10 8.28 8.72 9.03 9.35 9.60 9.78 9.97 

 Total, allocated overhead 115.87 118.39 127.31 131.37 144.98 157.99 171.96 177.48 

 Total costs listed 130.98 134.13 145.36 150.66 166.12 187.46 198.22 201.24 

Total costs 201.81 206.94 225.22 234.56 256.19 302.20 304.76 301.28 Prevented planting % 65% 65% 65% 64% 65% 62% 65% 67% 

167 
Evaluation of Preven

Pre

Table 114: Barley prevented planting cost per acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 5.93 6.30 7.84 8.37 9.63 16.09 15.15 11.70 

 Chemicals 0.85 0.85 0.87 0.90 0.90 0.95 1.05 1.01 

 Custom operations 3.78 3.82 3.66 3.72 3.78 4.36 4.39 4.39 

 Fuel, lube, and electricity 1.77 2.06 2.73 3.02 3.33 4.34 2.88 3.58 

 Repairs 1.93 1.97 2.07 2.11 2.21 2.28 2.33 2.37 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 1.02 1.01 1.08 0.88 1.08 2.26 1.77 1.64 

 Interest on operating costs 0.09 0.14 0.33 0.49 0.53 0.25 0.04 0.03 

 Total, operating costs 15.37 16.14 18.57 19.49 21.46 30.53 27.61 24.73 

Allocated overhead: 

Hired Labor 0.63 0.64 0.66 0.68 0.71 0.73 0.75 0.75 

 Opportunity cost of unpaid labor 5.59 5.73 5.87 6.09 6.30 6.51 6.66 6.73 

 Capital recovery of machinery & equip. 42.28 43.68 48.44 50.96 53.48 58.52 62.16 64.40 

 Opportunity cost of land 52.55 52.55 52.55 51.48 64.35 70.42 84.37 86.87 

 Taxes and insurance 4.34 4.41 5.18 5.45 6.32 7.13 6.86 7.10 

General farm overhead 7.32 7.48 7.88 8.16 8.45 8.67 8.84 9.01 

 Total, allocated overhead 112.70 114.49 120.58 122.82 139.61 151.98 169.63 174.86 

 Total costs listed 128.07 130.63 139.15 142.30 161.07 182.52 197.24 199.59 

Total costs 201.16 205.98 221.79 228.17 253.71 302.62 309.31 303.93 Prevented planting % 64% 63% 63% 62% 63% 60% 64% 66% 

168 
Evaluation of Preven

Pre

Table 115: Barley prevented planting cost per acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 6.63 7.04 8.77 9.35 10.77 17.99 16.93 13.08 

 Chemicals 0.49 0.49 0.50 0.52 0.51 0.54 0.60 0.58 

 Custom operations 4.63 4.66 4.48 4.55 4.63 5.33 5.37 5.37 

 Fuel, lube, and electricity 2.35 2.74 3.63 4.01 4.43 5.78 3.83 4.77 

 Repairs 1.95 1.99 2.09 2.13 2.23 2.31 2.35 2.40 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 0.55 0.62 0.88 0.71 1.10 1.71 1.37 1.17 

 Interest on operating costs 0.10 0.16 0.38 0.56 0.61 0.29 0.05 0.03 

 Total, operating costs 16.68 17.69 20.72 21.84 24.28 33.94 30.49 27.40 

Allocated overhead: 

Hired Labor 0.63 0.65 0.66 0.68 0.71 0.73 0.75 0.76 

 Opportunity cost of unpaid labor 7.49 7.68 7.88 8.16 8.45 8.73 8.93 9.02 

 Capital recovery of machinery & equip. 42.83 44.25 49.07 51.62 54.18 59.28 62.97 65.24 

 Opportunity cost of land 48.15 48.15 48.15 47.17 58.96 64.53 77.30 79.59 

 Taxes and insurance 3.74 3.80 4.46 4.70 5.45 6.15 5.91 6.12 

General farm overhead 8.06 8.24 8.68 8.99 9.30 9.55 9.73 9.92 

 Total, allocated overhead 110.90 112.77 118.90 121.32 137.05 148.98 165.58 170.65 

 Total costs listed 127.58 130.46 139.61 143.16 161.33 182.92 196.08 198.04 

Total costs 213.03 218.89 237.21 244.80 271.42 323.33 326.82 320.51 Prevented planting % 60% 60% 59% 58% 59% 57% 60% 62% 

169 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

5.2. Grain sorghum 

Overview 

In the United States, sorghum is used mostly as a feed grain for livestock. It has high nutritional value and 

is more tolerant to drought than other crops. About 80% of planted area is harvested for grain, 6-7% is 

harvested for silage, and the remainder either fails or is grazed. Total area harvested for grain sorghum in 

2013 was 6.5 million acres, up substantially over 2011 (3.9 million acres) and 2012 (5.0 million acres). 

From 2011 through 2013, average national annual production was 283 million bushels. Over three-quarters 

of this total was produced by two states, Kansas (119 million bu, 42%) and Texas (99 million bu, 35%). A 

dozen other states produce the rest. Key production areas are shown in the accompanying map. 

Figure 34: Sorghum acres planted in 2012 

Sources of production cost information 

Many states produce sorghum crop budgets. Moreover, sorghum is one of the crops for which the Economic 

Research Service conducts a periodic statistically representative survey of farm finances and production 

practices on which it bases annual production cost estimates. The most recent survey covered the 2011 

crop. 

RMA contracted with ERS in 2007 to prepare estimates of costs incurred at each stage of the sorghum 

production process and we have used some of that information in developing our estimates of prevented 

planting costs. 

The annual production cost series maintained by ERS for each farm resource region are available at the 

following link: http://www.ers.usda.gov/data-products/commodity-costs-and-returns.aspx. 

170 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Production practices 

Sorghum is a warm weather, drought tolerant crop. Typical soil preparation involves several field passes 

prior to planting for field cultivation/seedbed preparation, a spring burndown with glyphosate, and the use 

of fertilizer: nitrogen, some phosphate and potash, and occasionally lime. Nitrogen represents roughly half 

of fertilizer costs. Most nitrogen is applied pre-planting. 

Post-planting herbicides and insecticides are also used. Grain sorghum is produced under both non-irrigated 

and irrigated systems. 

Prevented planting experience 

Total insurance indemnities paid to farmers for grain sorghum were $1.167 billion for the period 2003-2012. 

Of this total, $42.2 million (3.6%) was for prevented planting claims. Of this prevented planting total, over 

three-quarters came from four states: Texas ($10.4 million, 24.6%), Kansas ($9.9 million, 23.5%), Oklahoma 

($7.4 million, 17.6%), and Colorado ($4.9 million, 11.7%). 

Analysis 

Production costs and prevented planting percentages vary by region and generally fell by 4-5 percentage 

points over the decade. Most grain sorghum production and prevented planting claims come from the 

Prairie Gateway region, where the prevented planting cost percentage has dropped from an estimated 58% 

(close to RMA’s 60% rate) in 2003 to 54% in 2012. Elsewhere, prevented planting percentages were higher. 

Table 116: Grain sorghum production costs and percentages by region 2003 and 2012 

Region PP costs 2003 PP costs 2012 PP% 2003 PP % 2012 

Fruitful Rim $123 of $207 $200 of $357 59% 56% 

Prairie Gateway $129 of $224 $210 of $386 58% 54% 

Northern Great Plains $105 of $162 $167 of $267 65% 62% 

Heartland $189 of $280 $296 of $466 68% 63% 

Comparison of RMA payments to estimated PP costs 

In 2003, the ratio of RMA’s incurred base PP payment to estimated PP costs was well below 1.00, but it has 

since risen to 1.00. 

171 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 35: Share of costs incurred prior to planting grain sorghum 

Figure 36: Ratio of RMA payment to PP costs for grain sorghum 

Recommendation 

Current PP indemnity payments match estimated PP costs. RMA’s 60% rate should be left as is. 

172 
Evaluation of Preven

Pre

Table 117: Grain sorghum production costs per planted acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 5.56 5.84 6.35 6.46 6.68 7.90 8.96 9.18 

 Fertilizer 19.70 20.92 24.13 27.49 31.92 48.76 46.42 35.59 

 Chemicals 7.20 7.20 7.20 7.50 7.74 8.10 9.06 8.94 

 Custom operations 9.84 9.92 10.32 10.79 11.25 11.25 12.25 12.64 

 Fuel, lube, and electricity 13.94 16.60 22.06 21.84 29.24 35.76 22.67 33.25 

 Repairs 14.46 14.78 15.43 15.98 16.53 16.97 17.30 17.63 

 Purchased irrigation water 0.55 0.55 0.57 0.60 0.63 0.63 0.69 0.71  Crop Insurance 5.24 5.62 4.95 5.78 8.54 10.47 10.36 10.06 

 Interest on operating inputs 0.38 0.60 1.46 2.14 2.29 0.96 0.17 0.12 

 Total, operating costs 76.87 82.03 92.47 98.58 114.82 140.80 127.88 128.12 

Allocated overhead: Hired labor 12.73 13.05 13.46 13.95 14.44 14.93 15.26 15.42 

 Opportunity cost of unpaid labor 21.56 22.11 22.8 23.63 24.46 25.29 25.84 26.12 

 Capital recovery of machinery & equip 49.83 53.46 57.09 60.06 63.03 68.97 73.59 75.90 

 Opportunity cost of land 34.2 34.2 35.63 35.05 37.54 42.02 45.91 47.27 

 Taxes and insurance 2.63 2.67 2.69 2.83 3.06 3.40 3.82 3.32  General farm overhead 9.52 9.67 10.10 10.46 10.82 11.11 11.33 11.55 

 Total, allocated overhead 130.47 135.16 141.77 145.98 153.35 165.72 175.75 179.58 

Total costs listed 207.34 217.19 234.24 244.56 268.17 306.52 303.63 307.70 

173 
Evaluation of Preven

Pre

Table 118: Grain sorghum production costs per planted acre: Prairie Gateway 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 4.27 4.48 4.87 4.96 5.13 6.07 6.88 7.05 

 Fertilizer 18.02 19.14 22.07 25.14 29.19 44.59 42.45 32.55 

 Chemicals 19.74 19.74 19.74 20.56 21.21 22.20 24.83 24.50 

 Custom operations 9.08 9.15 9.52 9.95 10.38 10.38 11.30 11.66 

 Fuel, lube, and electricity 22.11 28.67 38.73 39.56 49.77 63.00 42.60 53.26 

 Repairs 17.04 17.42 18.19 18.84 19.49 20.01 20.40 20.79 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 5.09 7.18 6.09 7.23 11.91 16.47 13.02 12.42 

 Interest on operating inputs 0.48 0.78 1.92 2.81 2.98 1.23 0.22 0.15 

 Total, operating costs 95.83 106.56 121.13 129.05 150.06 183.95 161.70 162.38 

Allocated overhead: Hired labor 3.18 3.26 3.36 3.48 3.60 3.72 3.80 3.84 

 Opportunity cost of unpaid labor 26.44 27.11 27.96 28.98 30 31.02 31.7 32.04 

 Capital recovery of machinery & equip 55.52 59.56 63.60 66.91 70.22 76.84 81.99 84.56 

 Opportunity cost of land 32.59 32.59 33.95 33.4 35.77 40.04 43.75 45.05 

 Taxes and insurance 3.81 3.87 3.9 4.1 4.43 4.92 5.52 4.80 

General farm overhead 6.20 6.30 6.58 6.82 7.06 7.25 7.39 7.53 

 Total, allocated overhead 127.74 132.69 139.35 143.69 151.08 163.79 174.15 177.82 

Total costs listed 223.57 239.25 260.48 272.74 301.14 347.74 335.85 340.20 

174 
Evaluation of Preven

Pre

Table 119: Grain sorghum production costs per planted acre: Northern Great Plains

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 5.96 6.26 6.81 6.93 7.17 8.48 9.61 9.85 

 Fertilizer 15.71 16.68 19.24 21.92 25.45 38.88 37.01 28.38 

 Chemicals 13.89 13.89 13.89 14.46 14.92 15.61 17.46 17.23 

 Custom operations 7.09 7.15 7.44 7.78 8.11 8.11 8.83 9.11 

 Fuel, lube, and electricity 4.07 4.69 6.28 6.44 8.43 11.54 7.18 8.85 

 Repairs 7.57 7.74 8.08 8.37 8.66 8.89 9.06 9.23 

 Purchased irrigation water 0.14 0.14 0.15 0.16 0.17 0.17 0.19 0.20  Crop Insurance 4.93 6.69 5.64 6.34 10.91 13.47 9.36 9.25 

 Interest on operating inputs 0.29 0.45 1.05 1.56 1.61 0.68 0.13 0.08 

 Total, operating costs 59.65 63.69 68.58 73.96 85.43 105.83 98.83 92.18 

Allocated overhead: Hired labor 0.55 0.56 0.58 0.60 0.62 0.64 0.65 0.66 

 Opportunity cost of unpaid labor 14.55 14.92 15.39 15.95 16.51 17.07 17.44 17.63 

 Capital recovery of machinery & equip 35.70 38.30 40.90 43.03 45.16 49.42 52.73 54.39 

 Opportunity cost of land 35.74 35.74 37.23 36.62 39.22 43.90 47.97 49.39 

 Taxes and insurance 5.34 5.42 5.46 5.74 6.2 6.88 7.72 6.71  General farm overhead 10.18 10.34 10.80 11.19 11.58 11.89 12.12 12.35 

 Total, allocated overhead 102.06 105.28 110.36 113.13 119.29 129.80 138.63 141.13 

Total costs listed 161.71 168.97 178.94 187.09 204.72 235.63 237.46 233.31 

175 
Evaluation of Preven

Pre

Table 120: Grain sorghum production costs per planted acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 7.64 8.02 8.72 8.87 9.18 10.86 12.31 12.62 

 Fertilizer 36.48 38.74 44.68 50.90 59.10 90.28 85.94 65.90 

 Chemicals 19.48 19.48 19.48 20.28 20.92 21.89 24.48 24.15 

 Custom operations 5.41 5.45 5.67 5.93 6.18 6.18 6.73 6.95 

 Fuel, lube, and electricity 8.96 11.31 14.08 15.94 18.25 23.53 15.16 18.53 

 Repairs 14.44 14.76 15.41 15.96 16.51 16.95 17.28 17.61 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 4.50 6.01 5.46 5.55 8.90 12.36 10.52 10.72 

 Interest on operating inputs 0.49 0.77 1.84 2.79 2.87 1.26 0.23 0.15 

 Total, operating costs 97.40 104.54 115.34 126.22 141.91 183.31 172.65 156.63 

Allocated overhead: Hired labor 2.18 2.24 2.31 2.39 2.47 2.55 2.61 2.64 

 Opportunity cost of unpaid labor 23.39 23.99 24.74 25.64 26.54 27.44 28.04 28.34 

 Capital recovery of machinery & equip 47.18 50.62 54.06 56.87 59.68 65.30 69.67 71.86 

 Opportunity cost of land 64.48 64.48 67.17 66.08 70.77 79.21 86.55 89.12 

 Taxes and insurance 20.3 20.62 20.78 21.86 23.62 26.22 29.44 25.61 

 General farm overhead 24.61 24.99 26.10 27.03 27.96 28.71 29.27 29.83 

 Total, allocated overhead 182.14 186.94 195.16 199.87 211.04 229.43 245.58 247.40 

Total costs listed 279.54 291.48 310.50 326.09 352.95 412.74 418.23 404.03 

176 
Evaluation of Preven

Pre

Table 121: Grain sorghum - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 31% 31% 31% 31% 31% 31% 31% 31% 

Chemicals 40% 40% 40% 40% 40% 40% 40% 40% 

Custom operations 17% 17% 17% 17% 17% 17% 17% 17% 

Fuel, lube, and electricity 16% 16% 16% 16% 16% 16% 16% 16% 

Repairs 24% 24% 24% 24% 24% 24% 24% 24% 

Purchased irrigation water 0% 0% 0% 0% 0% 0% 0% 0% 

Crop Insurance 4% 4% 4% 4% 4% 4% 4% 4% Interest on operating inputs 27% 27% 27% 27% 27% 27% 27% 27% 

 Total, operating costs Allocated overhead: 

Hired labor 36% 36% 36% 36% 36% 36% 36% 36% 

 Opportunity cost of unpaid labor 27% 27% 27% 27% 27% 27% 27% 27% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

Opportunity cost of land 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

177 
Evaluation of Preven

Pre

Table 122: Grain sorghum prevented planting cost per acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 6.11 6.49 7.48 8.52 9.90 15.12 14.39 11.03  Chemicals 2.88 2.88 2.88 3.00 3.10 3.24 3.62 3.58 

 Custom operations 1.67 1.69 1.75 1.83 1.91 1.91 2.08 2.15 

 Fuel, lube, and electricity 2.23 2.66 3.53 3.49 4.68 5.72 3.63 5.32 

 Repairs 3.47 3.55 3.70 3.84 3.97 4.07 4.15 4.23 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.21 0.22 0.20 0.23 0.34 0.42 0.41 0.40 

 Interest on operating inputs 0.10 0.16 0.39 0.58 0.62 0.26 0.05 0.03 

 Total, operating costs 16.67 17.64 19.94 21.49 24.51 30.74 28.34 26.74 

Allocated overhead: Hired labor 4.58 4.70 4.85 5.02 5.20 5.37 5.49 5.55 

 Opportunity cost of unpaid labor 5.82 5.97 6.16 6.38 6.60 6.83 6.98 7.05 

 Capital recovery of machinery & equip 49.83 53.46 57.09 60.06 63.03 68.97 73.59 75.90 

 Opportunity cost of land 34.20 34.20 35.63 35.05 37.54 42.02 45.91 47.27 

 Taxes and insurance 2.63 2.67 2.69 2.83 3.06 3.40 3.82 3.32  General farm overhead 9.52 9.67 10.10 10.46 10.82 11.11 11.33 11.55 

 Total, allocated overhead 106.58 110.67 116.51 119.80 126.25 137.70 147.12 150.64 

Total costs listed 123.26 128.31 136.45 141.30 150.76 168.44 175.46 177.39 

Total costs 207.34 217.19 234.24 244.56 268.17 306.52 303.63 307.70 

Prevented planting % 59% 59% 58% 58% 56% 55% 58% 58% 

178 
Evaluation of Preven

Pre

Table 123: Grain sorghum prevented planting cost per acre: Prairie Gateway 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 5.59 5.93 6.84 7.79 9.05 13.82 13.16 10.09  Chemicals 7.90 7.90 7.90 8.22 8.48 8.88 9.93 9.80 

 Custom operations 1.54 1.56 1.62 1.69 1.76 1.76 1.92 1.98 

 Fuel, lube, and electricity 3.54 4.59 6.20 6.33 7.96 10.08 6.82 8.52 

 Repairs 4.09 4.18 4.37 4.52 4.68 4.80 4.90 4.99 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.20 0.29 0.24 0.29 0.48 0.66 0.52 0.50 

 Interest on operating inputs 0.13 0.21 0.52 0.76 0.80 0.33 0.06 0.04 

 Total, operating costs 22.99 24.65 27.68 29.61 33.22 40.34 37.30 35.92 

Allocated overhead: Hired labor 1.14 1.17 1.21 1.25 1.30 1.34 1.37 1.38 

 Opportunity cost of unpaid labor 7.14 7.32 7.55 7.82 8.10 8.38 8.56 8.65 

 Capital recovery of machinery & equip 55.52 59.56 63.60 66.91 70.22 76.84 81.99 84.56 

 Opportunity cost of land 32.59 32.59 33.95 33.40 35.77 40.04 43.75 45.05 

 Taxes and insurance 3.81 3.87 3.90 4.10 4.43 4.92 5.52 4.80 

General farm overhead 6.20 6.30 6.58 6.82 7.06 7.25 7.39 7.53 

 Total, allocated overhead 106.40 110.81 116.79 120.31 126.88 138.76 148.58 151.97 

Total costs listed 129.39 135.46 144.47 149.92 160.10 179.11 185.88 187.89 

Total costs 223.57 239.25 260.48 272.74 301.14 347.74 335.85 340.20 

Prevented planting % 58% 57% 55% 55% 53% 52% 55% 55% 

179 
Evaluation of Preven

Pre

Table 124: Grain sorghum prevented planting cost per acre: Northern Great Plains

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 4.87 5.17 5.96 6.80 7.89 12.05 11.47 8.80 

 Chemicals 5.56 5.56 5.56 5.78 5.97 6.24 6.98 6.89 

 Custom operations 1.21 1.22 1.26 1.32 1.38 1.38 1.50 1.55 

 Fuel, lube, and electricity 0.65 0.75 1.00 1.03 1.35 1.85 1.15 1.42 

 Repairs 1.82 1.86 1.94 2.01 2.08 2.13 2.17 2.22 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.20 0.27 0.23 0.25 0.44 0.54 0.37 0.37 

 Interest on operating inputs 0.08 0.12 0.28 0.42 0.43 0.18 0.04 0.02 

 Total, operating costs 14.37 14.94 16.24 17.62 19.53 24.38 23.69 21.26 

Allocated overhead: Hired labor 0.20 0.20 0.21 0.22 0.22 0.23 0.23 0.24 

 Opportunity cost of unpaid labor 3.93 4.03 4.16 4.31 4.46 4.61 4.71 4.76 

 Capital recovery of machinery & equip 35.70 38.30 40.90 43.03 45.16 49.42 52.73 54.39 

 Opportunity cost of land 35.74 35.74 37.23 36.62 39.22 43.90 47.97 49.39 

 Taxes and insurance 5.34 5.42 5.46 5.74 6.20 6.88 7.72 6.71  General farm overhead 10.18 10.34 10.80 11.19 11.58 11.89 12.12 12.35 

 Total, allocated overhead 91.09 94.03 98.75 101.10 106.84 116.93 125.48 127.84 

Total costs listed 105.46 108.97 114.99 118.72 126.38 141.31 149.17 149.10 

Total costs 161.71 168.97 178.94 187.09 204.72 235.63 237.46 233.31 

Prevented planting % 65% 64% 64% 63% 62% 60% 63% 64% 

180 
Evaluation of Preven

Pre

Table 125: Grain sorghum prevented planting cost per acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 11.31 12.01 13.85 15.78 18.32 27.99 26.64 20.43 

 Chemicals 7.79 7.79 7.79 8.11 8.37 8.76 9.79 9.66 

 Custom operations 0.92 0.93 0.96 1.01 1.05 1.05 1.14 1.18 

 Fuel, lube, and electricity 1.43 1.81 2.25 2.55 2.92 3.76 2.43 2.96 

 Repairs 3.47 3.54 3.70 3.83 3.96 4.07 4.15 4.23 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.18 0.24 0.22 0.22 0.36 0.49 0.42 0.43 

 Interest on operating inputs 0.13 0.21 0.50 0.75 0.77 0.34 0.06 0.04 

 Total, operating costs 25.23 26.53 29.27 32.26 35.75 46.46 44.63 38.93 

Allocated overhead: Hired labor 0.78 0.81 0.83 0.86 0.89 0.92 0.94 0.95 

 Opportunity cost of unpaid labor 6.32 6.48 6.68 6.92 7.17 7.41 7.57 7.65 

 Capital recovery of machinery & equip 47.18 50.62 54.06 56.87 59.68 65.30 69.67 71.86 

 Opportunity cost of land 64.48 64.48 67.17 66.08 70.77 79.21 86.55 89.12 

 Taxes and insurance 20.30 20.62 20.78 21.86 23.62 26.22 29.44 25.61 

 General farm overhead 24.61 24.99 26.10 27.03 27.96 28.71 29.27 29.83 

 Total, allocated overhead 163.67 167.99 175.62 179.62 190.09 207.77 223.44 225.02 

Total costs listed 188.90 194.52 204.89 211.88 225.84 254.23 268.07 263.95 

Total costs 279.54 291.48 310.50 326.09 352.95 412.74 418.23 404.03 

Prevented planting % 68% 67% 66% 65% 64% 62% 64% 65% 

181 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

5.3. Oats 

Overview 

Oats are grown for human consumption, animal feed, and for forage. Each market has its own quality 

standards. Planted area has been 2.5-3.0 million acres in recent years, and 30-40% of that is harvested for 

grain, with the remainder grown for forage. Although oats are a high quality product for human 

consumption, they are used far less than other grains. Oats are highly palatable and provide excellent 

nutritional value for dairy and beef cattle, sheep, hogs and horses. Acreage in oat production has declined 

for many years as corn and soybeans have become the major feed crops. 

Oats are grown in cooler regions than many other cereals. They have a lower summer heat requirement 

and are more tolerant of rain. Although oats are grown in most states, most production never leaves the 

farm. Commercial oats are primarily grown in Wisconsin, Minnesota, North Dakota, Iowa, South Dakota, 

Texas, Oregon, Ohio, Pennsylvania, and New York. 

Figure 37: Oats acres planted by county in 2012 

Sources of production cost information 

ERS prepares estimates of production costs and returns per acre for oats based on periodic ARMS surveys, 

the most recent of which covered the 2005 crop year. Estimates were available for the following regions 

beginning with the 2005 crop year: Heartland, Prairie Gateway, Northern Great Plains, Northern Crescent, 

and the US as a whole. Prior to 2005, ERS used different regional definitions for oats. We developed cost 

estimates for 2003 and 2004 using price indexes to adjust the 2005 figures. 

The annual production cost series maintained by ERS for each farm resource region is available at the 

following link: http://www.ers.usda.gov/data-products/commodity-costs-and-returns.aspx. 

182 
 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Production practices 

Oats can be planted in the spring or fall depending on the region. Spring sowing is the most common, and 

oats can be planted as soon as the soil can be worked. Early planting is necessary for good yields because 

oats go dormant in the summer. In warmer areas, oats are sown in late summer or early fall. Overwintering 

oat types are cold tolerant and are unaffected by late frosts or snow. 

There are a limited number of seed treatments available. Hulless types require treatment. In areas prone 

to smut, seed should be treated with a fungicide prior to planting, especially in Wisconsin and Minnesota. 

Oats require effective management of nitrogen. Nitrogen fertilization is typically split into two 

applications, one in the fall at the time of plowing and one in the spring, generally at planting, in sidebands. 

Phosphorus is also an important fertilizer and is applied along with other fertilizers, if needed, in the spring 

around planting. 

Prevented planting experience 

Prevented planting claims represent 11% of total indemnities the last 20 years. Over three-quarters of the 

PP claims came from North Dakota, South Dakota, and Minnesota. From 2003 to 2012, total oat indemnities 

were $46.6 million. Prevented planting claims for oats totaled about $5.1 million, 11% of total oat claims. 

North Dakota farmers received 49%, or $2.5 million of the prevented planting insurance payments. 

Minnesota and South Dakota accounted for 17% and 16%, respectively. The most common cause of loss was 

excess moisture; it made up 97% or $4.9 million, of the prevented planting claims. 

Analysis 

The results are summarized in Figure 38. On average, the PP share of total cost remained the same from 

the beginning of the period to the end. Shares for individual regions in 2012 ranged from 58% to 70% with 

an average of about 63%. 

Comparison of RMA payments to estimated PP costs 

The ratios of RMA’s incurred base PP payments to estimated PP costs were well below 1.00 for the entire 

period from 2003 through 2012. The ratios were below 0.4 from 2003 through 2007, and have since 

fluctuated around 0.5. About 20% of PP indemnities are associated with the additional 10% coverage, but 

even so, this brings the ratio up by only 3% (10%/60%*0.2 = 0.033). 

183 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 38: Share of costs incurred prior to planting oats 

Figure 39: Ratio of RMA payment to PP costs for oats 

Recommendation 

RMA’s PP payment rate of 60% does not cover estimated PP costs. Our estimates suggest that pre-planting 

costs represent 63% of total production costs. The comparison of actual payments to estimated costs 

confirms that farmers are undercompensated in a PP situation. Consequently, our recommendation is to 

raise the payment factor to 65%. 

184 
Evaluation of Preven

Pre

Table 126: Oats production costs per planted acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 6.30 6.46 6.87 7.23 8.44 10.16 10.16 9.65 10

 Fertilizer 25.84 29.18 34.18 36.47 43.98 72.57 68.36 52.78 69

 Chemicals 0.79 0.79 0.80 0.83 0.85 0.89 0.98 0.95 0

 Custom operations 2.63 2.53 2.55 2.67 2.80 3.03 3.06 3.06 3

 Fuel, lube, and electricity 6.62 7.81 10.22 11.31 12.49 16.28 10.79 13.44 17

 Repairs 8.67 8.93 9.31 9.64 9.91 10.24 10.44 10.64 11

 Straw baling 0.25 0.24 0.24 0.25 0.26 0.26 0.27 0.27 0

 Crop Insurance 2.44 2.32 2.70 2.51 3.52 4.39 6.31 4.42 4 Interest on operating costs 0.92 0.95 1.09 1.16 1.76 0.94 0.15 0.09 0

 Total, operating costs 54.47 59.20 67.96 72.07 84.01 118.76 110.52 95.30 116

Allocated overhead: Hired Labor 0.33 0.34 0.35 0.36 0.38 0.39 0.40 0.40 0

 Opportunity cost of unpaid labor 24.13 24.59 25.36 26.28 27.2 28.13 28.74 29.05 29

 Capital recovery of machinery & equip 36.22 38.86 41.50 43.66 45.82 50.14 53.25 55.17 58

 Opportunity cost of land 32.88 33.68 34.48 35.04 38.17 42.72 51.18 52.70 56

 Taxes and insurance 4.38 4.45 4.66 4.9 5.74 6.37 6.13 6.34 6

 General farm overhead 4.75 4.89 5.06 5.24 5.39 5.57 5.67 5.78 6

 Total, allocated overhead 

102.69 106.81 111.41 115.48 122.70 133.32 145.37 149.44 157

 Total costs listed 157.16 166.01 179.37 187.55 206.71 252.08 255.89 244.74 274

185 
Evaluation of Preven

Pre

Table 127: Oats production costs per planted acre: Northern Great Plains

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 5.65 5.79 6.16 6.48 7.57 9.11 9.11 8.65 9 Fertilizer 8.55 9.65 11.31 12.07 14.55 24.01 22.62 17.47 22

 Chemicals 3.05 3.05 3.10 3.23 3.31 3.45 3.81 3.67 3

 Custom operations 2.42 2.32 2.34 2.45 2.57 2.78 2.80 2.80 2 Fuel, lube, and electricity 7.49 8.82 11.55 12.78 14.12 18.39 12.19 15.19 19

 Repairs 11.78 12.13 12.65 13.10 13.46 13.92 14.19 14.46 15

 Straw baling 0.77 0.74 0.75 0.78 0.80 0.83 0.84 0.86 0 Crop Insurance 2.78 2.79 3.51 3.23 4.80 8.32 6.89 5.62 6 Interest on operating costs 0.69 0.71 0.81 0.87 1.26 0.60 0.10 0.06 0 Total, operating costs 43.18 46.01 52.18 54.99 62.44 81.41 72.55 68.78 81

Allocated overhead: Hired Labor 0.31 0.32 0.33 0.34 0.35 0.37 0.37 0.38 0

 Opportunity cost of unpaid labor 19.36 19.73 20.35 21.09 21.83 22.57 23.06 23.31 23

 Capital recovery of machinery & equip 51.03 54.75 58.47 61.51 64.55 70.64 75.03 77.73 82

 Opportunity cost of land 41.49 42.50 43.51 44.22 48.16 53.91 64.58 66.50 71

 Taxes and insurance 3.19 3.24 3.39 3.57 4.18 4.64 4.46 4.61 4

 General farm overhead 6.47 6.66 6.90 7.15 7.34 7.59 7.74 7.89 8

 Total, allocated overhead 

121.86 127.20 132.95 137.88 146.41 159.72 175.24 180.42 191

 Total costs listed 165.03 173.22 185.13 192.87 208.85 241.13 247.79 249.20 272

186 
Evaluation of Preven

Pre

Table 128: Oats production costs per planted acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 8.50 8.72 9.27 9.76 11.40 13.70 13.70 13.02 13

 Fertilizer 14.82 16.73 19.60 20.91 25.22 41.62 39.20 30.27 39

 Chemicals 1.62 1.62 1.65 1.72 1.76 1.84 2.03 1.96 1 Custom operations 10.87 10.43 10.52 11.00 11.55 12.52 12.61 12.61 12

 Fuel, lube, and electricity 9.48 11.18 14.63 16.19 17.88 23.30 15.44 19.24 24 Repairs 10.13 10.43 10.88 11.27 11.58 11.97 12.20 12.43 12

 Straw baling 5.71 5.48 5.53 5.73 5.89 6.08 6.20 6.32 6 Crop Insurance 2.56 2.58 3.13 2.77 3.77 6.37 4.69 3.98 4 Interest on operating costs 1.04 1.07 1.23 1.30 1.91 0.92 0.15 0.10 0 Total, operating costs 64.74 68.25 76.44 80.65 90.96 118.32 106.22 99.93 117

Allocated overhead: Hired Labor 0.18 0.18 0.19 0.20 0.20 0.21 0.22 0.22 0

 Opportunity cost of unpaid labor 28.81 29.36 30.28 31.38 32.48 33.58 34.32 34.68 35

 Capital recovery of machinery & equip 46.73 50.14 53.54 56.33 59.11 64.68 68.70 71.18 75

 Opportunity cost of land 78.99 80.91 82.84 84.19 91.7 102.64 122.96 126.60 136 Taxes and insurance 4.26 4.33 4.53 4.77 5.58 6.20 5.96 6.17 6

 General farm overhead 8.31 8.55 8.86 9.18 9.43 9.75 9.94 10.13 10 Total, allocated overhead 

167.28 173.48 180.24 186.05 198.50 217.06 242.10 248.98 264

 Total costs listed 232.02 241.73 256.68 266.70 289.46 335.38 348.32 348.91 381

187 
Evaluation of Preven

Pre

Table 129: Oats production costs per planted acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed Fertilizer Chemicals  Custom operations Fuel, lube, and electricity Repairs Straw baling  Crop Insurance  Interest on operating costs 

8.94

23.30

1.99

10.3611.6211.08

1.85

1.60 

1.21

 9.17 

26.30 

1.99 

9.95 13.70 11.40 

1.78 1.79 1.25 

9.75 

30.81 

2.02 

10.03 17.93 11.89 

1.79 

2.24 

1.43 

10.26

32.88

2.10

10.4919.8412.31

1.85

1.98

1.53

 11.99

 39.64

 2.16

 11.01 21.91 12.65

 1.91 2.65 2.27

 14.41 

65.42 

2.25 

11.94 28.56 13.08 

1.97 4.37 1.14 

14.41

61.62

2.48

12.0218.9313.33

2.01

3.50

0.18

 13.69

 47.58

 2.39

 12.02 23.57 13.59

 2.05

 3.24

 0.11

 14

62.56 

2.40 

12.27 30.05 14.10 

2.12 

3.80 

0.07 

 Total, operating costs 71.94 77.32 87.89 93.24 106.19 143.14 128.48 118.24 142Allocated overhead: Hired Labor  Opportunity cost of unpaid labor  Capital recovery of machinery & equip  Opportunity cost of land  Taxes and insurance  General farm overhead 

1.37

38.3645.0756.22

4.138.08

 1.40 

39.09 48.36 57.59 

4.19 8.31 

1.44 

40.31 51.64 58.96 

4.39 8.61 

1.49

41.7854.3359.92

4.628.92

 1.54

 43.24 57.01 65.26

 5.41 9.16

 1.60 

44.71 62.39 73.05 

6.00 9.47 

1.63

45.6866.2787.51

5.789.66

 1.65

 46.17 68.65 90.11

 5.98 9.84 

1.68 

46.91 72.83 97.15 

6.29 10

 Total, allocated overhead 

153.22 158.94 165.35 171.06 181.62 197.22 216.53 222.40 235

 Total costs listed 225.16 236.25 253.24 264.30 287.81 340.36 345.01 340.64 377

188 
Evaluation of Preven

Pre

Table 130: Oats - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 24% 24% 24% 24% 24% 24% 24% 24% 

 Chemicals 18% 18% 18% 18% 18% 18% 18% 18% 

 Custom operations 15% 15% 15% 15% 15% 15% 15% 15% 

 Fuel, lube, and electricity 21% 21% 21% 21% 21% 21% 21% 21% 

 Repairs 18% 18% 18% 18% 18% 18% 18% 18% 

Straw baling 0% 0% 0% 0% 0% 0% 0% 0% 

Crop Insurance 11% 11% 11% 11% 11% 11% 11% 11% 

Interest on operating costs 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: 

Hired Labor 28% 30% 30% 30% 30% 30% 30% 30% 

 Opportunity cost of unpaid labor 22% 30% 30% 30% 30% 30% 30% 30% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 1

Opportunity cost of land 100% 100% 100% 100% 100% 100% 100% 100% 1

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 1General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 1

189 
Evaluation of Preven

Pre

Table 131: Oats prevented planting cost per acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Fertilizer 6.20 7.00 8.20 8.75 10.56 17.42 16.41 12.67 16

 Chemicals 0.14 0.14 0.14 0.15 0.15 0.16 0.18 0.17 0

 Custom operations 0.40 0.38 0.38 0.40 0.42 0.45 0.46 0.46 0 Fuel, lube, and electricity 1.39 1.64 2.15 2.38 2.62 3.42 2.27 2.82 3 Repairs 1.56 1.61 1.68 1.74 1.78 1.84 1.88 1.92 1 Straw baling 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Crop Insurance 0.27 0.26 0.30 0.28 0.39 0.48 0.69 0.49 0 Interest on operating costs 0.23 0.24 0.27 0.29 0.44 0.24 0.04 0.02 0 Total, operating costs 10.19 11.26 13.12 13.98 16.36 24.01 21.92 18.54 23

Allocated overhead: Hired Labor 0.09 0.10 0.11 0.11 0.11 0.12 0.12 0.12 0

 Opportunity cost of unpaid labor 5.31 7.38 7.61 7.88 8.16 8.44 8.62 8.72 8

 Capital recovery of machinery & equip 36.22 38.86 41.50 43.66 45.82 50.14 53.25 55.17 58

 Opportunity cost of land 32.88 33.68 34.48 35.04 38.17 42.72 51.18 52.70 56

 Taxes and insurance 4.38 4.45 4.66 4.90 5.74 6.37 6.13 6.34 6

 General farm overhead 4.75 4.89 5.06 5.24 5.39 5.57 5.67 5.78 6

 Total, allocated overhead 

83.63 89.35 93.41 96.83 103.39 113.36 124.97 128.83 137

 Total costs listed 93.82 100.62 106.53 110.81 119.76 137.37 146.89 147.37 160

Total costs 157.16 166.01 179.37 187.55 206.71 252.08 255.89 244.74 274Prevented planting % 60% 61% 59% 59% 58% 54% 57% 60% 

190 
Evaluation of Preven

Pre

Table 132: Oats prevented planting cost per acre: Northern Great Plains

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Fertilizer 2.05 2.32 2.71 2.90 3.49 5.76 5.43 4.19 5 Chemicals 0.55 0.55 0.56 0.58 0.60 0.62 0.69 0.66 0 Custom operations 0.36 0.35 0.35 0.37 0.39 0.42 0.42 0.42 0 Fuel, lube, and electricity 1.57 1.85 2.43 2.68 2.97 3.86 2.56 3.19 4 Repairs 2.12 2.18 2.28 2.36 2.42 2.51 2.55 2.60 2 Straw baling 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Crop Insurance 0.31 0.31 0.39 0.36 0.53 0.92 0.76 0.62 0 Interest on operating costs 0.17 0.18 0.20 0.22 0.32 0.15 0.03 0.02 0 Total, operating costs 7.13 7.73 8.91 9.46 10.70 14.23 12.43 11.70 14

Allocated overhead: Hired Labor 0.09 0.10 0.10 0.10 0.11 0.11 0.11 0.11 0

 Opportunity cost of unpaid labor 4.26 5.92 6.11 6.33 6.55 6.77 6.92 6.99 7

 Capital recovery of machinery & equip 51.03 54.75 58.47 61.51 64.55 70.64 75.03 77.73 82

 Opportunity cost of land 41.49 42.50 43.51 44.22 48.16 53.91 64.58 66.50 71

 Taxes and insurance 3.19 3.24 3.39 3.57 4.18 4.64 4.46 4.61 4

 General farm overhead 6.47 6.66 6.90 7.15 7.34 7.59 7.74 7.89 8

 Total, allocated overhead 

106.53 113.17 118.47 122.88 130.88 143.66 158.84 163.84 174

 Total costs listed 113.66 120.90 127.39 132.34 141.59 157.90 171.27 175.54 188Total costs 165.03 173.22 185.13 192.87 208.85 241.13 247.79 249.20 272Prevented planting % 69% 70% 69% 69% 68% 65% 69% 70% 

191 
Evaluation of Preven

Pre

Table 133: Oats prevented planting cost per acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Fertilizer 3.56 4.02 4.70 5.02 6.05 9.99 9.41 7.26 9 Chemicals 0.29 0.29 0.30 0.31 0.32 0.33 0.37 0.35 0 Custom operations 1.63 1.56 1.58 1.65 1.73 1.88 1.89 1.89 1 Fuel, lube, and electricity 1.99 2.35 3.07 3.40 3.75 4.89 3.24 4.04 5 Repairs 1.82 1.88 1.96 2.03 2.08 2.15 2.20 2.24 2 Straw baling 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Crop Insurance 0.28 0.28 0.34 0.30 0.41 0.70 0.52 0.44 0 Interest on operating costs 0.26 0.27 0.31 0.33 0.48 0.23 0.04 0.03 0 Total, operating costs 9.84 10.65 12.26 13.04 14.83 20.18 17.66 16.25 19Allocated overhead: Hired Labor 0.05 0.06 0.06 0.06 0.06 0.06 0.07 0.07 0

 Opportunity cost of unpaid labor 6.34 8.81 9.08 9.41 9.74 10.07 10.30 10.40 10 Capital recovery of machinery & equip 46.73 50.14 53.54 56.33 59.11 64.68 68.70 71.18 75

 Opportunity cost of land 78.99 80.91 82.84 84.19 91.70 102.64 122.96 126.60 136

 Taxes and insurance 4.26 4.33 4.53 4.77 5.58 6.20 5.96 6.17 6

 General farm overhead 8.31 8.55 8.86 9.18 9.43 9.75 9.94 10.13 10 Total, allocated overhead 

144.68 152.79 158.91 163.94 175.62 193.41 217.92 224.55 239

 Total costs listed 154.51 163.44 171.17 176.98 190.46 213.58 235.58 240.80 259Total costs 232.02 241.73 256.68 266.70 289.46 335.38 348.32 348.91 381Prevented planting % 67% 68% 67% 66% 66% 64% 68% 69% 

192 
Evaluation of Preven

Pre

Table 134: Oats prevented planting cost per acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Fertilizer 5.59 6.31 7.39 7.89 9.51 15.70 14.79 11.42 15

 Chemicals 0.36 0.36 0.36 0.38 0.39 0.41 0.45 0.43 0

 Custom operations 1.55 1.49 1.50 1.57 1.65 1.79 1.80 1.80 1 Fuel, lube, and electricity 2.44 2.88 3.77 4.17 4.60 6.00 3.98 4.95 6 Repairs 1.99 2.05 2.14 2.22 2.28 2.35 2.40 2.45 2 Straw baling 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0 Crop Insurance 0.18 0.20 0.25 0.22 0.29 0.48 0.39 0.36 0 Interest on operating costs 0.30 0.31 0.36 0.38 0.57 0.29 0.05 0.03 0 Total, operating costs 12.42 13.60 15.77 16.83 19.29 27.01 23.84 21.43 26

Allocated overhead: Hired Labor 0.38 0.42 0.43 0.45 0.46 0.48 0.49 0.50 0

 Opportunity cost of unpaid labor 8.44 11.73 12.09 12.53 12.97 13.41 13.70 13.85 14 Capital recovery of machinery & equip 45.07 48.36 51.64 54.33 57.01 62.39 66.27 68.65 72

 Opportunity cost of land 56.22 57.59 58.96 59.92 65.26 73.05 87.51 90.11 97

 Taxes and insurance 4.13 4.19 4.39 4.62 5.41 6.00 5.78 5.98 6

 General farm overhead 8.08 8.31 8.61 8.92 9.16 9.47 9.66 9.84 10

 Total, allocated overhead 

122.31 130.60 136.13 140.77 150.27 164.80 183.41 188.93 201

 Total costs listed 134.73 144.20 151.90 157.60 169.57 191.82 207.26 210.36 227Total costs 225.16 236.25 253.24 264.30 287.81 340.36 345.01 340.64 377Prevented planting % 60% 61% 60% 60% 59% 56% 60% 62% 

193 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

5.4. Peanuts 

Overview 

Peanuts are grown principally in the southeastern states in an arc stretching from southern Alabama and 

the Florida Panhandle up through the piedmont region to Virginia. A second production area is western 

Texas and southwestern Oklahoma, which together account for about 10% of US acreage and production. 

Georgia is the most important producing state, accounting for about 40% of the sector. 

There are four market types of peanuts grown in the United States: runner, Virginia, Spanish, and Valencia. 

	 Runners have an intermediate size seed and are grown in Florida and the Southeast. 

	 Virginia peanuts have a large seed and are grown mostly in North Carolina, Virginia, and Texas, 

but some are grown in Florida. 

	 Spanish peanuts have small kernels and are grown mostly in Texas and Oklahoma. 

	 Valencia peanuts are usually about the same size as Spanish peanuts but are considered 

special-use peanuts, such as for boiling. Florida is a major producer of boiling peanuts which 

are usually planted early and throughout the year (February-July) to keep a continuous supply. 

Figure 40: US peanut acres planted in 2012 

Sources of production cost information 

All of the extension offices located in peanut producing states publish crop budgets for that crop, in most 

cases on an annual basis. The University of Florida has detailed production budgets, but published in 2005. 

The University of Georgia has interactive enterprise budgets, printed budgets, and computer spreadsheet 

budgets available for peanut production in Georgia. These were all useful in determining the share of total 

cost that farmers incur in a prevented planting situation. Since ERS publishes annual production cost 

estimates based on ARMS surveys, we used those as our starting point. Budgets are available for the 

following resource regions: Southern Seaboard, Fruitful Rim, and Prairie Gateway. 

194 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Production practices 

Peanut yields respond better than most crops to crop rotation. They fit into corn, cotton, and forage crop 

rotation schemes. Crop rotation reduces the effects of pests (disease, nematodes, insects, and weeds). 

Research has been conducted on which crop rotations reduce which pests in peanut operations. 

Peanuts are a legume that produces a fruit in a pod underground. In the presence of rhizobium bacteria in 

the soil, peanuts fix nitrogen and little if any supplemental nitrogen fertilizer is required. Peanuts grow 

best on well-drained soils and in full sun. If planted on poorly-drained soils, diseases will be prevalent and 

yields will be low. Peanuts can grow on sandy or excessively-drained soils, but irrigation may be needed 

for consistent production. 

In northern Florida, peanuts are planted during the second half of May until the first week of June. Peanuts 

planted before this window could suffer serious yield loss from tomato spotted wilt virus (TSWV) and after 

this window will suffer yield losses. 

Prevented planting experience 

Since peanuts require a high level of management, many decisions are required in growing the crop. Most 

of these decisions can be made prior to planting. For example, land selection, variety, and crop rotation 

are of vital importance in preventing many weed, insect, disease, and nematode problems. 

Improper or faulty irrigation equipment may cause a producer not to plant peanuts. Also drought conditions 

may result in a prevented planting claim. However, over the last 20 years, less than 1% of indemnities for 

peanuts were attributable to prevented planting. 

Analysis 

The PP share of costs fell from about 47% in 2003 to 45%, the current PP factor, in the final years of the 

period studied. The shares were very uniform across the three regions, varying by only a percent or two. 

The share declined over the period because overhead costs grew at a slower rate than cash expenses. 

Comparison of RMA payments to estimated PP costs 

Up through 2010, the ratio of RMA’s base PP payment to estimated PP costs was close to 0.80. It rose for 

2011 and 2012 due to stronger US and world oilseed prices and averaged close to 1.00. Only about 2% of 

PP indemnities have been associated with the additional 10% coverage, so this does not affect the ratio 

significantly. 

195 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 41: Share of costs incurred prior to planting peanuts 

Figure 42: Ratio of RMA payment to PP costs for peanuts 

Recommendation 

The fact that the payment ratio has been low and there have been almost no prevented planting claims 

argues for leaving the PP factor at 50%. 

196 
Evaluation of Preven

Pre

Table 135: Peanuts production costs per planted acre: Southern Seaboard

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 80.74 82.84 82.11 84.00 88.34 120.94 111.34 109.74 

 Fertilizer 54.19 61.18 71.67 76.48 91.32 150.68 141.48 108.76 

 Chemicals 112.44 112.44 113.37 118.94 120.15 125.26 138.46 136.60 

 Custom operations 5.75 5.52 5.70 6.14 6.35 6.62 6.67 6.67 

 Fuel, lube, and electricity 46.84 55.20 76.67 81.44 88.32 115.08 76.28 95.01 

 Repairs 26.88 27.67 29.08 29.29 30.77 31.80 32.42 33.04 

 Purchased irrigation water & hay baling 0.36 0.37 0.38 0.41 0.43 0.43 0.47 0.47 

 Commercial drying 3.26 3.84 4.35 4.92 4.53 8.71 5.81 5.27 

 Crop Insurance 10.14 10.62 11.63 12.29 15.32 18.97 16.94 17.88 

 Interest on operating costs 2.65 2.73 6.44 9.52 9.54 4.57 0.74 0.49 

 Total, operating costs 343.24 362.41 401.40 423.43 455.07 583.06 530.61 513.93 

Allocated overhead: Hired Labor 22.91 23.35 24.08 24.96 25.83 26.71 27.29 27.58 

 Opportunity cost of unpaid labor 62.18 63.37 65.35 67.73 70.1 72.48 74.06 74.86  Capital recovery of machinery & equip. 122.82 131.77 140.72 148.04 155.36 170.00 180.57 187.08 

 Opportunity cost of land 55.72 57.99 60.4 60.4 66.7 74.65 84.89 92.09  Taxes and insurance 21.97 22.98 23.17 29.8 33.02 36.65 41.14 35.78 

 General farm overhead 35.71 37.35 39.26 39.53 41.53 42.92 43.76 44.60 

 Total, allocated overhead 321.32 336.81 352.98 370.46 392.54 423.41 451.71 461.99 

 Total costs listed 664.56 699.22 754.38 793.89 847.61 1,006.47 982.32 975.92 

197 
Evaluation of Preven

Pre

Table 136: Peanuts production costs per planted acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 65.64 67.35 66.76 88.37 71.82 98.33 90.52 89.22 

 Fertilizer 50.85 57.41 67.25 71.95 85.69 141.40 132.77 102.06 

 Chemicals 117.04 117.04 118.01 120.80 125.07 130.39 144.12 142.19 

 Custom operations 9.14 8.77 9.05 6.35 10.08 10.52 10.60 10.60 

 Fuel, lube, and electricity 27.87 32.85 45.63 89.96 52.56 68.49 45.39 56.54  Repairs 29.09 29.95 31.48 30.97 33.30 34.42 35.09 35.76 

 Purchased irrigation water & hay baling 0.26 0.27 0.28 0.43 0.31 0.31 0.34 0.34 

 Commercial drying 21.50 25.34 35.96 4.50 39.92 62.85 40.75 55.00 

 Crop Insurance 8.86 9.43 10.76 11.73 14.32 16.70 15.06 16.00 

 Interest on operating costs 2.40 2.48 5.75 9.69 8.49 4.02 0.67 0.44 

 Total, operating costs 332.66 350.89 390.93 434.75 441.56 567.43 515.31 508.15 

Allocated overhead: Hired Labor 28.95 29.50 30.42 31.53 32.63 33.74 34.48 34.85 

 Opportunity cost of unpaid labor 84.97 86.59 89.3 92.54 95.79 99.04 101.2 102.28 

 Capital recovery of machinery & equip. 111.93 120.08 128.23 134.90 141.58 154.92 164.55 170.48 

 Opportunity cost of land 51.70 53.81 56.05 56.05 61.9 69.28 78.78 85.46  Taxes and insurance 28.24 29.53 29.77 38.27 42.41 47.07 52.84 45.96 

 General farm overhead 27.34 28.59 30.05 30.26 31.79 32.86 33.50 34.14 

 Total, allocated overhead 333.11 348.10 363.82 383.55 406.10 436.91 465.35 473.17 

 Total costs listed 665.78 698.99 754.75 818.30 847.66 1,004.34 980.66 981.32 

198 
Evaluation of Preven

Pre

Table 137: Peanuts production costs per planted acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 62.17 63.78 63.22 64.68 68.02 93.12 85.72 84.49 

 Fertilizer 37.19 41.99 49.19 52.49 62.67 103.42 97.11 74.65 

 Chemicals 40.85 40.85 41.19 43.21 43.65 45.51 50.30 49.63 

 Custom operations 34.18 32.81 33.87 36.51 37.72 39.37 39.65 39.65 

 Fuel, lube, and electricity 72.89 85.91 119.32 126.74 137.46 179.11 118.71 147.87 

 Repairs 37.45 38.55 40.52 40.80 42.87 44.30 45.17 46.03 

 Purchased irrigation water & hay baling 0.22 0.23 0.24 0.26 0.26 0.26 0.29 0.29 

 Commercial drying 

Crop Insurance

27.11 31.95 45.50 48.72 55.59 66.58 43.35 58.40 

 Interest on operating costs 2.33 2.40 5.91 8.75 8.80 4.19 0.63 0.44 

 Total, operating costs 314.38 338.47 398.96 422.16 457.04 575.86 480.93 501.45 

Allocated overhead: Hired Labor 16.24 16.55 17.07 17.69 18.31 18.93 19.34 19.55 

 Opportunity cost of unpaid labor 68.14 69.44 71.61 74.21 76.82 79.42 81.16 82.03 

 Capital recovery of machinery & equip. 111.56 119.69 127.82 134.47 141.12 154.41 164.02 169.93 

 Opportunity cost of land 46.03 47.91 49.91 49.91 55.11 61.69 70.14 76.09  Taxes and insurance 28.24 29.53 29.77 38.27 42.41 47.07 52.84 45.96 

 General farm overhead 36.62 38.30 40.26 40.54 42.59 44.02 44.87 45.73 

 Total, allocated overhead 306.83 321.42 336.44 355.09 376.36 405.54 432.37 439.29 

 Total costs listed 621.21 659.89 735.40 777.25 833.40 981.40 913.30 940.74 

199 
Evaluation of Preven

Pre

Table 138: Peanuts - share of expenses incurred before planting 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 0% 0% 0% 0% 0% 0% 0% 0% 

Chemicals 30% 30% 30% 30% 30% 30% 30% 30% 

Custom operations 0% 0% 0% 0% 0% 0% 0% 0% 

Fuel, lube, and electricity 33% 33% 33% 33% 33% 33% 33% 33% Repairs 25% 25% 25% 25% 25% 25% 25% 25% 

 Purchased irrigation water & hay baling 0% 0% 0% 0% 0% 0% 0% 0% 

Commercial drying 0% 0% 0% 0% 0% 0% 0% 0% 

Crop Insurance 1% 1% 1% 1% 1% 1% 1% 1% 

Interest on operating costs 25% 25% 25% 25% 25% 25% 25% 25% 

 Total, operating costs Allocated overhead: 

Hired Labor 28% 28% 28% 28% 28% 28% 28% 28% 

 Opportunity cost of unpaid labor 28% 28% 28% 28% 28% 28% 28% 28%  Capital recovery of machinery & equip. 100% 100% 100% 100% 100% 100% 100% 100% 

Opportunity cost of land 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

200 
Evaluation of Preven

Pre

Table 139: Peanuts prevented planting cost per acre: Southern Seaboard

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Chemicals 33.73 33.73 34.01 35.68 36.05 37.58 41.54 40.98 

Custom operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fuel, lube, and electricity 15.46 18.22 25.30 26.88 29.15 37.98 25.17 31.35 

Repairs 

 Purchased irrigation water & hay 

6.72 6.92 7.27 7.32 7.69 7.95 8.11 8.26 

baling 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Commercial drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Crop Insurance 0.10 0.11 0.12 0.12 0.15 0.19 0.17 0.18 

 Interest on operating costs 0.66 0.68 1.61 2.38 2.39 1.14 0.19 0.12 

 Total, operating costs 56.67 59.65 68.31 72.38 75.42 84.84 75.17 80.89 

Allocated overhead: 

Hired Labor 6.42 6.54 6.74 6.99 7.23 7.48 7.64 7.72 

 Opportunity cost of unpaid labor  Capital recovery of machinery & 

17.41 17.74 18.30 18.96 19.63 20.29 20.74 20.96 

equip. 122.82 131.77 140.72 148.04 155.36 170.00 180.57 187.08 

 Opportunity cost of land 55.72 57.99 60.40 60.40 66.70 74.65 84.89 92.09 

Taxes and insurance 21.97 22.98 23.17 29.80 33.02 36.65 41.14 35.78 

 General farm overhead 35.71 37.35 39.26 39.53 41.53 42.92 43.76 44.60 

 Total, allocated overhead 260.05 274.37 288.59 303.72 323.47 351.99 378.74 388.23 

 Total costs listed 316.72 334.03 356.90 376.11 398.89 436.83 453.91 469.13 

Total costs 664.56 699.22 754.38 793.89 847.61 1,006.47 982.32 975.92 

Prevented planting % 48% 48% 47% 47% 47% 43% 46% 48% 

201 
Evaluation of Preven

Pre

Table 140: Peanuts prevented planting cost per acre: Fruitful Rim 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Chemicals 35.11 35.11 35.40 36.24 37.52 39.12 43.24 42.66 

 Custom operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Fuel, lube, and electricity 9.20 10.84 15.06 29.69 17.34 22.60 14.98 18.66 

 Repairs 7.27 7.49 7.87 7.74 8.33 8.61 8.77 8.94  Purchased irrigation water & hay baling 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Commercial drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.09 0.09 0.11 0.12 0.14 0.17 0.15 0.16  Interest on operating costs 0.60 0.62 1.44 2.42 2.12 1.01 0.17 0.11  Total, operating costs 52.27 54.15 59.88 76.21 65.46 71.50 67.31 70.53 

Allocated overhead: Hired Labor 8.11 8.26 8.52 8.83 9.14 9.45 9.65 9.76  Opportunity cost of unpaid labor 23.79 24.25 25.00 25.91 26.82 27.73 28.34 28.64 

 Capital recovery of machinery & equip. 111.93 120.08 128.23 134.90 141.58 154.92 164.55 170.48  Opportunity cost of land 51.70 53.81 56.05 56.05 61.90 69.28 78.78 85.46 

 Taxes and insurance 28.24 29.53 29.77 38.27 42.41 47.07 52.84 45.96 

 General farm overhead 27.34 28.59 30.05 30.26 31.79 32.86 33.50 34.14 

 Total, allocated overhead 251.10 264.52 277.62 294.22 313.64 341.31 367.66 374.44 

 Total costs listed 303.37 318.67 337.50 370.43 379.09 412.80 434.97 444.96 

Total costs 665.78 698.99 754.75 818.30 847.66 1,004.34 980.66 981.32 

Prevented planting % 46% 46% 45% 45% 45% 41% 44% 45% 

202 
Evaluation of Preven

Pre

Table 141: Peanuts prevented planting cost per acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Chemicals 12.26 12.26 12.36 12.96 13.10 13.65 15.09 14.89 

 Custom operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fuel, lube, and electricity 24.05 28.35 39.38 41.82 45.36 59.11 39.17 48.80 

 Repairs 9.36 9.64 10.13 10.20 10.72 11.08 11.29 11.51 

 Purchased irrigation water & hay baling 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Commercial drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Interest on operating costs 0.58 0.60 1.48 2.19 2.20 1.05 0.16 0.11 

 Total, operating costs 46.25 50.84 63.34 67.17 71.37 84.88 65.71 75.30 

Allocated overhead: 

Hired Labor 4.55 4.63 4.78 4.95 5.13 5.30 5.42 5.47 

 Opportunity cost of unpaid labor 19.08 19.44 20.05 20.78 21.51 22.24 22.72 22.97 

 Capital recovery of machinery & equip. 111.56 119.69 127.82 134.47 141.12 154.41 164.02 169.93  Opportunity cost of land 46.03 47.91 49.91 49.91 55.11 61.69 70.14 76.09 

 Taxes and insurance 28.24 29.53 29.77 38.27 42.41 47.07 52.84 45.96 

 General farm overhead 36.62 38.30 40.26 40.54 42.59 44.02 44.87 45.73 

 Total, allocated overhead 246.08 259.51 272.59 288.92 307.87 334.73 360.01 366.15 

 Total costs listed 292.33 310.35 335.93 356.10 379.24 419.61 425.72 441.46 

Total costs 621.21 659.89 735.40 777.25 833.40 981.40 913.30 940.74 

Prevented planting % 47% 47% 46% 46% 46% 43% 47% 47% 

203 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

5.5. Rice 

Overview 

Rice production for 2013 is estimated at 9.5 million tons (190 million cwt), harvested from almost 2.5 million 

acres. Yield was estimated at almost 7,700 pounds/acre. Production was 6.6 million tons (69%) long grain, 

2.7 million tons (29%) medium grain, and 154,000 tons (2%) short grain. 

Three states produce the majority of US rice: Arkansas (4 million tons, 43%), California (2.4 million tons, 

25%), and Louisiana (1.5 million tons, 16%). Other producer states are Texas, Missouri, and Mississippi. 

Arkansas, Louisiana, and other Gulf states produce mostly long grain rice; California produces primarily 

medium grain rice, as well as almost all the short grain rice. 

Figure 43: Rice acres planted by county in 2012 

Sources of production cost information 

The most accurate rice production cost data are derived from ERS’s ARMS surveys of 2000 and 2006. The 

cost and returns estimates are available at http://www.ers.usda.gov/data-products/commodity-costs-andreturns.aspx. For rice ERS does not organize the cost data on the basis of the resource regions used for 

most of the other major crops. Instead, the regions are described as California, Gulf Coast, Arkansas NonDelta, and Mississippi River Delta. California is clearly Fruitful Rim. The Gulf Coast region is about equally 

split between Fruitful Rim and Mississippi Portal. Arkansas Non-Delta is Eastern Uplands. And Mississippi 

River Delta is Mississippi Portal. 

Production practices 

Rice production practices vary, even within regions. For example, Louisiana publishes 24 rice budgets. 

Arkansas publishes five. Other states publish their own budgets as well. 

Preparation generally includes field work in the fall and spring, and an herbicide burndown in the spring. 

204 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Rice can be dry planted or water planted, each with different implications for labor, water, and chemical 

usage. 

Post-planting practices involve irrigation, repeated applications of fertilizer, and responding to birds, 

disease, and insects, so practices will vary widely. 

Prevented planting experience 

Prevented planting claims have been 56% of total indemnities over the past 20 years. Over the 10 year 

period 2003-2012, total indemnities for rice were $220.6 million, $115.1 million of which (52.2%) were 

prevented planting. Prevented planting claims for rice came almost entirely from Texas ($26.4m, 97.4%), 

with most of the rest from California ($593,545, 2.2%). Cause of loss in Texas was irrigation supply failures; 

in California, it was split between excess moisture/precipitation/rain and irrigation failure. 

Analysis 

The percentage used by RMA for prevented planting for rice is 45%. The straight average of all producing 

regions shows prevented planting costs at 50% in 2003, dropping slightly to 49% in 2012. In the Gulf Coast 

region, including Texas, the source of almost all of the prevented planting claims, pre-planting costs 

dropped from an estimated 48% in 2003 ($250 of $638 per acre) to 45% ($381 of $1,049 per acre). 

Figure 44: Share of costs incurred prior to planting rice 

Comparison of estimated PP cost to RMA payments 

With the exception of the Fruitful Rim region, the ratios of RMA’s incurred base PP payment to estimated 

PP costs have been close to 1.00 over the past five years. Also, because 62% of PP indemnities are associated 

with the additional 10% coverage, all of these ratios would be higher by about 14% if that were taken into 

account (10%/45%*0.62 = 0.138). For example, the Mississippi Portal ratio of 1.05 in 2012 would be 1.19 if 

one assumes the 10% buy-up indemnity share is the same in all regions. 

205 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 45: Ratio of RMA payment to PP costs for rice 

Recommendation 

Based solely on a review of production costs, one might conclude that a 5% increase in the PP payment rate 

might be warranted (from 45% to 50%). 

However, given the fact that the RMA payment / PP cost ratio in most regions is already near 1, that PP 

claims have accounted for a majority of indemnities, that almost two-thirds of PP claims are associated 

with buy-up, and that most claims are in the Gulf Coast region where preplanting costs are 45%, we suggest 

that the 45% payment rate be left as is. 

206 
Evaluation of Preven

Pre

Table 142: Rice production costs per planted acre: California

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 23.21 34.86 25.93 41.41 45.81 50.81 73.72 74.17 

 Fertilizer 60.21 67.78 73.11 69.58 76.39 125.92 118.36 90.88 

Chemicals 87.98 80.55 80.56 90.88 92.31 96.48 106.48 104.82 

 Custom operations 160.22 161.42 166.63 82.00 86.13 86.13 92.03 94.98 

 Fuel, lube, and electricity 43.34 49.66 55.93 63.72 70.39 91.71 61.05 75.72 

Repairs 18.88 19.62 20.15 25.45 26.15 27.03 27.56 28.26 

 Commercial drying 43.00 45.17 45.17 48.26 49.81  Purchased irrigation water 43.30 43.66 44.27 32.49 38.69 50.66 34.94 40.31 

 Crop Insurance 4.02 4.78 3.80 4.51 5.75 8.63 10.07 9.37 

 Interest on operating costs 2.31 3.60 7.87 9.98 10.62 3.87 0.76 0.52  Total, operating costs 443.47 465.93 478.25 463.02 497.41 586.41 573.23 568.84 

Allocated overhead:

 Hired Labor 35.82 36.09 37.79 23.72 24.55 25.38 25.94 26.22 

 Opportunity cost of unpaid labor 59.9 61.09 62.48 65.18 67.47 69.75 71.28 72.04 

 Capital recovery of machinery & equip 88.78 92.26 94.75 101.22 106.23 116.24 123.47 127.92 

 Opportunity cost of land (rental rate) 197.02 197.02 216.72 234.25 251.18 289.28 333.03 342.91 

 Taxes and insurance 20.47 20.65 21.17 13.67 15.45 16.42 15.76 16.30 

 General farm overhead 25.79 26.37 27.72 34.46 35.41 36.60 37.31 38.26 

 Total, allocated overhead 427.78 433.48 460.63 472.50 500.29 553.67 606.79 623.65 

 Total costs listed 871.25 899.41 938.88 935.52 997.70 1,140.08 1,180.02 1,192.49 

207 
Evaluation of Preven

Pre

Table 143: Rice production costs per planted acre: Gulf Coast

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 20.45 33.10 34.34 35.08 38.81 43.05 62.45 62.84 

 Fertilizer 65.80 70.78 87.20 75.15 82.50 136.01 127.84 98.16 

Chemicals 50.06 49.48 49.06 67.38 68.44 71.53 78.95 77.71 

 Custom operations 67.56 68.74 69.49 48.73 51.18 51.18 54.69 56.44  Fuel, lube, and electricity 81.74 92.30 139.73 111.17 122.80 160.01 106.52 132.10 

Repairs 21.82 23.22 24.62 25.66 26.37 27.25 27.78 28.49 

 Commercial drying 15.43 15.93 15.34 15.98 16.78 16.78 17.93 18.51 

 Purchased irrigation water 35.41 39.19 49.49 36.39 42.69 

 Crop Insurance 2.92 3.70 3.35 4.59 5.54 5.91 10.37 7.13 

 Interest on operating costs 1.71 2.78 7.08 9.10 9.77 3.74 0.69 0.47 

 Total, operating costs 327.49 360.03 430.21 428.25 461.38 564.95 523.61 524.54 

Allocated overhead: 

Hired Labor 28.68 29.55 29.77 9.18 9.50 9.82 10.04 10.15 

 Opportunity cost of unpaid labor 62.46 61.54 63.54 46.55 48.18 49.82 50.91 51.45 

 Capital recovery of machinery & equip 90.89 96.69 102.59 95.13 99.83 109.24 116.04 120.22 

 Opportunity cost of land (rental rate) 93.58 101.41 96.7 109.98 117.93 135.82 156.36 160.99 

 Taxes and insurance 13.81 13.96 14.31 12.7 14.35 15.25 14.64 15.14 

 General farm overhead 21.44 21.97 22.97 21.38 21.97 22.71 23.15 23.74 

 Total, allocated overhead 310.86 325.12 329.88 294.92 311.76 342.66 371.14 381.69 

 Total costs listed 638.35 685.15 760.09 723.17 773.14 907.61 894.75 906.23 

208 
Evaluation of Preven

Pre

Table 144: Rice production costs per planted acre: Arkansas Non-Delta

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 15.82 20.62 24.13 34.38 38.03 42.19 61.20 61.58 

Fertilizer 45.18 47.18 59.19 51.99 57.08 94.09 88.44 67.91 

Chemicals 49.34 49.19 49.52 56.75 57.64 60.25 66.49 65.45 

 Custom operations 42.40 42.75 44.10 27.93 29.34 29.34 31.35 32.35 

 Fuel, lube, and electricity 80.11 81.34 114.29 102.66 113.40 147.76 98.36 121.99 

Repairs 21.51 23.15 24.05 27.66 28.42 29.38 29.95 30.71 

 Commercial drying 0.00 0.00 0.00 0.18 0.19 0.19 0.20 0.21 

Purchased irrigation water 12.90 14.83 18.07 12.21 14.49 

 Crop Insurance 4.02 4.78 3.80 4.51 5.75 8.63 10.07 9.37 

 Interest on operating costs 1.34 2.08 5.31 7.24 7.78 2.98 0.55 0.38 

 Total, operating costs 259.72 271.09 324.39 326.20 352.46 432.88 398.82 404.44 

Allocated overhead:

 Hired Labor 23.06 26.29 25.75 19.61 20.30 20.99 21.44 21.67 

 Opportunity cost of unpaid labor 50.14 49.91 50.73 35.32 36.56 37.8 38.62 39.04 

 Capital recovery of machinery & equip 83.35 89.69 93.19 98.55 103.42 113.17 120.21 124.54 

 Opportunity cost of land (rental rate) 83.75 92.34 92.34 89.46 95.93 110.48 127.18 130.96 

 Taxes and insurance 15.47 15.62 15.99 16.28 18.4 19.55 18.76 19.41 

 General farm overhead 22.00 22.49 23.64 19.13 19.66 20.32 20.71 21.24 

 Total, allocated overhead 277.77 296.34 301.64 278.35 294.27 322.31 346.92 356.86 

Total costs listed 537.49 567.43 626.03 604.55 646.73 755.19 745.74 761.30 

209 
Evaluation of Preven

Pre

Table 145: Rice production costs per planted acre: Mississippi River Delta

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 19.53 24.34 27.23 39.35 43.53 48.29 70.05 70.48 

 Fertilizer 58.85 61.38 75.58 59.34 65.15 107.39 100.94 77.51 

Chemicals 62.16 60.65 60.70 56.10 56.98 59.56 65.73 64.70 

 Custom operations 49.34 50.23 51.43 34.05 35.76 35.76 38.21 39.44 

 Fuel, lube, and electricity 75.52 79.99 110.48 97.23 107.40 139.95 93.16 115.54 

Repairs 20.52 21.99 22.95 24.94 25.63 26.49 27.00 27.69 

 Commercial drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Purchased irrigation water 10.47 12.08 14.60 9.72 11.88 

 Crop Insurance 2.62 2.96 2.22 2.95 3.32 3.97 6.05 6.79 

 Interest on operating costs 1.51 2.35 5.87 7.46 8.03 3.09 0.57 0.40 

 Total, operating costs 290.05 303.89 356.46 331.89 357.88 439.10 411.43 414.43 

Allocated overhead:

 Hired Labor 28.69 30.27 29.56 19.77 20.46 21.16 21.62 21.85 

 Opportunity cost of unpaid labor 16.48 16.62 16.86 28.94 29.96 30.97 31.65 31.99 

 Capital recovery of machinery & equip 86.72 92.70 97.06 89.75 94.19 103.06 109.48 113.42 

 Opportunity cost of land (rental rate) 75.69 83.3 85.5 84.48 90.59 104.33 120.10 123.67 

 Taxes and insurance 17.47 17.45 18.07 19.77 22.34 23.75 22.79 23.57 

 General farm overhead 27.81 28.07 29.81 26.89 27.63 28.56 29.12 29.86 

 Total, allocated overhead 252.86 268.41 276.86 269.60 285.17 311.83 334.76 344.36 

Total costs listed 542.91 572.30 633.32 601.49 643.05 750.93 746.19 758.79 

210 
Evaluation of Preven

Pre

Table 146: Rice - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 27% 27% 27% 27% 27% 27% 27% 27% 

Chemicals 8% 8% 8% 8% 8% 8% 8% 8% Custom operations 13% 13% 13% 25% 25% 25% 25% 25% 

Fuel, lube, and electricity 10% 10% 10% 10% 10% 10% 10% 10% 

Repairs 23% 23% 23% 23% 23% 23% 23% 23% 

Commercial drying 0% 0% 0% 0% 0% 0% 0% 0% Purchased irrigation water 0% 0% 0% 0% 0% 0% 0% 0% 

Crop Insurance 56% 56% 56% 56% 56% 56% 56% 56% 

Interest on operating costs 16% 16% 16% 16% 16% 16% 16% 16% 

 Total, operating costs Allocated overhead: 

Hired Labor 46% 46% 46% 46% 46% 46% 46% 46% 

 Opportunity cost of unpaid labor 49% 49% 49% 49% 49% 49% 49% 49%  Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

211 
Evaluation of Preven

Pre

Table 147: Rice prevented planting cost per acre: California

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Fertilizer 16.26 18.30 19.74 18.79 20.63 34.00 31.96 24.54 

Chemicals 7.04 6.44 6.44 7.27 7.38 7.72 8.52 8.39 

 Custom operations 20.83 20.98 21.66 20.50 21.53 21.53 23.01 23.75 

 Fuel, lube, and electricity 4.33 4.97 5.59 6.37 7.04 9.17 6.11 7.57 

Repairs 4.34 4.51 4.63 5.85 6.01 6.22 6.34 6.50 

 Commercial drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 2.25 2.68 2.13 2.53 3.22 4.83 5.64 5.25 

 Interest on operating costs 0.37 0.58 1.26 1.60 1.70 0.62 0.12 0.08 

 Total, operating costs 55.42 58.46 61.46 62.90 67.52 84.09 81.69 76.07 

Allocated overhead: Hired Labor 16.48 16.60 17.38 10.91 11.29 11.67 11.93 12.06 

 Opportunity cost of unpaid labor 29.35 29.93 30.62 31.94 33.06 34.18 34.93 35.30 

 Capital recovery of machinery & equip 88.78 92.26 94.75 101.22 106.23 116.24 123.47 127.92 

 Opportunity cost of land (rental rate) 197.02 197.02 216.72 234.25 251.18 289.28 333.03 342.91 

 Taxes and insurance 20.47 20.65 21.17 13.67 15.45 16.42 15.76 16.30  General farm overhead 25.79 26.37 27.72 34.46 35.41 36.60 37.31 38.26 

 Total, allocated overhead 377.89 382.84 408.36 426.45 452.62 504.39 556.43 572.75 

 Total costs listed 433.31 441.30 469.82 489.35 520.14 588.48 638.12 648.82 

Total costs 871.25 899.41 938.88 935.52 997.70 1,140.08 1,180.02 1,192.49 

Prevented planting % 50% 49% 50% 52% 52% 52% 54% 54% 

212 
Evaluation of Preven

Pre

Table 148: Rice prevented planting cost per acre: Gulf Coast

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Fertilizer 17.77 19.11 23.54 20.29 22.28 36.72 34.52 26.50 

Chemicals 4.00 3.96 3.92 5.39 5.48 5.72 6.32 6.22 

 Custom operations 8.78 8.94 9.03 12.18 12.80 12.80 13.67 14.11 

 Fuel, lube, and electricity 8.17 9.23 13.97 11.12 12.28 16.00 10.65 13.21 

Repairs 5.02 5.34 5.66 5.90 6.07 6.27 6.39 6.55 

 Commercial drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 1.64 2.07 1.88 2.57 3.10 3.31 5.81 3.99  Interest on operating costs 0.27 0.44 1.13 1.46 1.56 0.60 0.11 0.08 

 Total, operating costs 45.66 49.09 59.15 58.91 63.56 81.42 77.46 70.66 

Allocated overhead: 

Hired Labor 13.19 13.59 13.69 4.22 4.37 4.52 4.62 4.67 

 Opportunity cost of unpaid labor 30.61 30.15 31.13 22.81 23.61 24.41 24.95 25.21 

 Capital recovery of machinery & equip 90.89 96.69 102.59 95.13 99.83 109.24 116.04 120.22 

 Opportunity cost of land (rental rate) 93.58 101.41 96.70 109.98 117.93 135.82 156.36 160.99 

 Taxes and insurance 13.81 13.96 14.31 12.70 14.35 15.25 14.64 15.14 

 General farm overhead 21.44 21.97 22.97 21.38 21.97 22.71 23.15 23.74 

 Total, allocated overhead 263.52 277.78 281.40 266.22 282.06 311.95 339.75 349.97 

Total costs listed 309.17 326.87 340.55 325.13 345.61 393.37 417.22 420.63 

Total costs 638.35 685.15 760.09 723.17 773.14 907.61 894.75 906.23 

Prevented planting % 48% 48% 45% 45% 45% 43% 47% 46% 

213 
Evaluation of Preven

Pre

Table 149: Rice prevented planting cost per acre: Arkansas Non-Delta

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Fertilizer 12.20 12.74 15.98 14.04 15.41 25.40 23.88 18.34 

 Chemicals 3.95 3.94 3.96 14.19 14.41 15.06 16.62 16.36 

 Custom operations 5.51 5.56 5.73 6.98 7.34 7.34 7.84 8.09 

 Fuel, lube, and electricity 8.01 8.13 11.43 10.27 11.34 14.78 9.84 12.20 

Repairs 4.95 5.32 5.53 6.36 6.54 6.76 6.89 7.06 

 Commercial drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 2.25 2.68 2.13 2.53 3.22 4.83 5.64 5.25 

 Interest on operating costs 0.21 0.33 0.85 1.16 1.24 0.48 0.09 0.06 

 Total, operating costs 37.08 38.70 45.61 55.52 59.50 74.64 70.79 67.36 

Allocated overhead: 

Hired Labor 10.61 12.09 11.85 9.02 9.34 9.66 9.86 9.97 

 Opportunity cost of unpaid labor 24.57 24.46 24.86 17.31 17.91 18.52 18.92 19.13 

 Capital recovery of machinery & equip 83.35 89.69 93.19 98.55 103.42 113.17 120.21 124.54 

 Opportunity cost of land (rental rate) 83.75 92.34 92.34 89.46 95.93 110.48 127.18 130.96 

 Taxes and insurance 15.47 15.62 15.99 16.28 18.40 19.55 18.76 19.41 

 General farm overhead 22.00 22.49 23.64 19.13 19.66 20.32 20.71 21.24 

 Total, allocated overhead 239.75 256.69 261.86 249.75 264.66 291.70 315.65 325.25 

Total costs listed 276.83 295.39 307.48 305.27 324.16 366.34 386.44 392.60 

Total costs 537.49 567.43 626.03 604.55 646.73 755.19 745.74 761.30 

Prevented planting % 52% 52% 49% 50% 50% 49% 52% 52% 

214 
Evaluation of Preven

Pre

Table 150: Rice prevented planting cost per acre: Mississippi River Delta 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Fertilizer 15.89 16.57 20.41 16.02 17.59 29.00 27.25 20.93 

Chemicals 4.97 4.85 4.86 4.49 4.56 4.76 5.26 5.18 

 Custom operations 6.41 6.53 6.69 8.51 8.94 8.94 9.55 9.86 

 Fuel, lube, and electricity 7.55 8.00 11.05 9.72 10.74 14.00 9.32 11.55 

Repairs 4.72 5.06 5.28 5.74 5.89 6.09 6.21 6.37 

 Commercial drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 1.47 1.66 1.24 1.65 1.86 2.22 3.39 3.80 

 Interest on operating costs 0.24 0.38 0.94 1.19 1.28 0.49 0.09 0.06 

 Total, operating costs 41.26 43.04 50.46 47.33 50.87 65.51 61.07 57.75 

Allocated overhead: 

Hired Labor 13.20 13.92 13.60 9.09 9.41 9.73 9.95 10.05 

 Opportunity cost of unpaid labor 8.08 8.14 8.26 14.18 14.68 15.18 15.51 15.68 

 Capital recovery of machinery & equip 86.72 92.70 97.06 89.75 94.19 103.06 109.48 113.42 

 Opportunity cost of land (rental rate) 75.69 83.30 85.50 84.48 90.59 104.33 120.10 123.67 

 Taxes and insurance 17.47 17.45 18.07 19.77 22.34 23.75 22.79 23.57 

 General farm overhead 27.81 28.07 29.81 26.89 27.63 28.56 29.12 29.86 

 Total, allocated overhead 228.96 243.59 252.30 244.16 258.84 284.61 306.94 316.25 

Total costs listed 270.22 286.63 302.76 291.49 309.71 350.11 368.01 374.00 

Total costs 542.91 572.30 633.32 601.49 643.05 750.93 746.19 758.79 

Prevented planting % 50% 50% 48% 48% 48% 47% 49% 49% 

215 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

5.6. Popcorn 

Overview 

Popcorn is grown primarily in the Heartland. Key producers are Nebraska and Indiana, which combined 

accounted for 71% of all popcorn crop insurance liabilities in 2013. Most of the rest of production takes 

place in Ohio, Illinois, Missouri, and Kentucky. 

Annual popcorn production is just shy of one billion pounds. A large portion of the commercial crop is 

produced under contract with processors, which specify the varieties to be grown. 

Figure 46: US popcorn production areas 

Sources of production cost information 

The most detailed source of popcorn production cost information is a 2008 budget published by Ohio State 

University. We used this as the key budget in our analysis. In addition, we also reviewed a 2010 budget 

published by Iowa State University Extension, and a 2013 budget published by the University of Missouri 

Extension. The USDA has no information available on popcorn production costs. 

Production practices 

Popcorn production practices, for the most part, are similar to those for dent corn, including weed and 

insect control. 

There are a few differences, however. Popcorn seed germinates more slowly, and seedlings grow more 

slowly, and the popcorn root system is less extensive. Consequently, well-drained, medium- to coarsetextured soils are best. 

Prevented planting experience 

Prevented planting claims have accounted for 5.5% of total indemnities in the past 20 years. PP 10% buyup is associated with 25% of the PP indemnities. Over the 10 year period 2003-2012, total indemnities for 

popcorn were $33.9 million, $2.3 million of which (6.9%) were prevented planting. Prevented planting for 

popcorn has occurred primarily in Illinois (31%), Indiana (26%), and Ohio (14%). Excess 

moisture/precipitation/rain is the cause of prevented planting for 94% of the indemnities. 

216 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Analysis 

Based on analysis of the Ohio State University budget, pre-planting costs for popcorn were an estimated 

53% in 2003 ($195 of $367 per acre); by 2012, the pre-planting share of costs were also 53% ($347 out of 

$650). These shares are similar to those for corn harvested for grain which fell from 55% at the beginning 

of the period to 52% at the end. 

A separate review of other budgets shows roughly similar figures. The University of Missouri Extension 

budget for 2013 for irrigated popcorn indicated a pre-planting cost share of 55%. A budget for 2010 

published by Iowa State University Extension also showed prevented planting costs of 55%. 

Figure 47: Share of costs incurred prior to planting popcorn 

Comparison of RMA payments to estimated PP costs 

The ratio of RMA’s incurred base PP payment to estimated PP costs was close to 1.00 through 2006, but has 

since fluctuated at a higher level, exceeding 1.5 in 2011 and 2012. 

217 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 48: Ratio of RMA payment to PP costs for popcorn 

Recommendation 

The ratio of payments to estimated costs supports a recommendation to reduce the PP payment rate. Our 

actual estimate of PP costs for popcorn was 53%, and for corn overall, 51%, so a cut to 50% would appear 

to be the most appropriate adjustment in light of the high ratio of RMA payments to PP costs. 

218 
Evaluation of Preven

Pre

Table 151: Popcorn production costs per planted acre: Ohio 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 15.46 15.86 16.86 18.27 20.48 26.00 30.02 31.12 

 Fertilizer 45.79 51.69 60.55 64.99 79.75 144.74 101.54 93.05 

 Chemicals 45.97 45.97 46.73 48.63 49.01 52.81 56.61 54.71 

 Fuel, lube, and repairs 20.80 24.51 32.09 35.50 39.22 51.10 34.02 42.19 

 Hired labor 41.70 42.49 43.82 45.41 47.01 48.60 49.93 50.19 

 Miscellaneous 6.11 6.39 6.81 7.23 7.74 9.00 8.77 9.05 

 Crop insurance 13.27 13.48 14.12 14.76 15.50 15.50 16.56 17.09 

 Interest on operating capital 9.91 10.23 11.70 14.02 14.97 15.71 14.44 14.02 

 Total, operating costs 199.00 210.63 232.69 248.81 273.68 363.46 311.88 311.42 

Allocated overhead: Management expenses 32.22 32.84 33.87 35.10 36.33 37.56 38.59 38.79 

 Capital recovery of machinery & equip 47.01 50.44 53.86 56.66 59.47 65.07 69.12 71.61 

 Opportunity cost of land (rental rate) 88.5585 92.1732 95.7878 100.005 107.234 123.50 142.176 146.393  Total, allocated overhead 

167.79 175.45 183.52 191.77 203.03 226.13 249.88 256.79 

 Total costs listed 366.79 386.08 416.20 440.58 476.71 589.59 561.76 568.21 

Source for budget(s): Ohio State University Ext. http://aede.osu.edu/sites/aede/files/!import/popcorn2008.pdf Notes: Based on 2008 budget; values for other years derived using price indices (in italics) 

219 
Evaluation of Preven

Pre

Table 152: Popcorn - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 31% 31% 31% 31% 31% 31% 31% 31% 

Chemicals 25% 25% 25% 25% 25% 25% 25% 25% 

Fuel, lube, and repairs 25% 25% 25% 25% 25% 25% 25% 25% 

Hired labor 30% 30% 30% 30% 30% 30% 30% 30% Miscellaneous 50% 50% 50% 50% 50% 50% 50% 50% 

Crop insurance 6% 6% 6% 6% 6% 6% 6% 6% Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% 

 Total, operating costs Allocated overhead: 

Management expenses 30% 30% 30% 30% 30% 30% 30% 30% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

220 
Evaluation of Preven

Pre

Table 153: Popcorn prevented planting cost per acre: Ohio 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 14.19 16.02 18.77 20.15 24.72 44.87 31.48 28.84 

 Chemicals 11.49 11.49 11.68 12.16 12.25 13.20 14.15 13.68 

 Fuel, lube, and repairs 5.20 6.13 8.02 8.88 9.80 12.78 8.50 10.55 

 Hired labor 12.51 12.75 13.15 13.62 14.10 14.58 14.98 15.06 

 Miscellaneous 3.05 3.19 3.40 3.61 3.87 4.50 4.38 4.52 

 Crop insurance 0.80 0.81 0.85 0.89 0.93 0.93 0.99 1.03 

 Interest on operating capital 2.48 2.56 2.93 3.51 3.74 3.93 3.61 3.51 

 Total, operating costs 49.72 52.95 58.80 62.81 69.43 94.78 78.10 77.18 

Allocated overhead: Management expenses 9.67 9.85 10.16 10.53 10.90 11.27 11.58 11.64 

 Capital recovery of machinery & equip 47.01 50.44 53.86 56.66 59.47 65.07 69.12 71.61 

 Opportunity cost of land (rental rate) 88.56 92.17 95.79 100.00 107.23 123.50 142.18 146.39 

 Total, allocated overhead 

145.24 152.46 159.81 167.20 177.60 199.84 222.87 229.64 

 Total costs listed 194.96 205.41 218.61 230.01 247.02 294.62 300.97 306.82 

Total costs 366.79 386.08 416.20 440.58 476.71 589.59 561.76 568.21 

Prevented planting % 53% 53% 53% 52% 52% 50% 54% 54% 

221 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

5.7. Silage sorghum 

Overview 

Silage sorghum is grown in the same regions as grain sorghum. From 2011 through 2013, average annual 

production was 3.9 million tons. From 2011 through 2013, three-quarters of production came from 4 states: 

Texas (averaging 1.4 million tons, or 36% of overall production), Kansas (860,000 tons, 22%), Arkansas 

(390,000 tons, 10%) and New Mexico (230,000 tons, 6%). 

Figure 49: US sorghum acres planted in 2012 

Sources of production cost information 

Production of silage sorghum is broadly similar to grain sorghum production. However, there are many 

different methods of sorghum production, and costs vary dramatically (especially for irrigated vs. nonirrigated systems). Rather than use one of the many budgets (Texas alone publishes twenty different 

sorghum production budgets), we have used the ERS data for sorghum production for the Prairie Gateway 

region, where most silage sorghum is grown. 

Production practices 

Both the Texas budgets and a sorghum expert confirm that there is generally greater nitrogen use preplanting in the case of silage sorghum. We have therefore assumed a 70% nitrogen use rate pre-planting, 

vs. 61% for grain sorghum. 

Prevented planting experience 

Over the 7 year period 2005-2012 (the years for which crop insurance was available), total indemnities for 

silage sorghum were $23 million, $382,000 of which (1.7%) were prevented planting. Prevented planting 

claims came almost exclusively from Colorado (99%), and most of this was due to irrigation failure. Drought 

accounted for the remaining claims of less than $50,000. 

222 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Analysis 

Based on the ERS budget data for the Prairie Gateway region, pre-planting costs for silage sorghum were 

an estimated 59% in 2003 ($129 of $218 per acre); by 2012, the pre-planting share of costs had dropped 

slightly to 54% ($168 out of $384). 

We also reviewed a Texas 2012 budget for irrigated silage sorghum. It indicated prevented planting (sunk) 

costs of $320 out of $663 (48%). This system would be expected to have a lower than average prevented 

planting cost percentage, however, given its higher overall inputs at and after planting and higher harvest 

costs. 

Figure 50: Share of costs incurred prior to planting silage sorghum 

223 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of RMA payments to estimated PP costs 

The ratio of RMA’s incurred base PP payment to estimated PP costs has been close to 1.00, but rose slightly 

in 2011 and 2012 to over 1.1. 

Figure 51: Ratio of RMA payment to PP costs for silage sorghum 

Recommendation 

We recommend reducing the PP payment rate for silage sorghum from 60% of guarantee to 55%, which cuts 

the indemnity by 8.3%. 

224 
Evaluation of Preven

Pre

Table 154: Silage Sorghum production costs per planted acre: Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 4.27 4.48 4.87 4.96 5.13 6.07 6.88 7.05 

 Fertilizer 18.02 19.14 22.07 25.14 29.19 44.59 42.45 32.55 

 Chemicals 19.74 19.74 19.74 20.56 21.21 22.20 24.83 24.50 

 Custom operations 9.08 9.15 9.52 9.95 10.38 10.38 11.30 11.66 

 Fuel, lube, and electricity 22.11 28.67 38.73 39.56 49.77 63.00 42.60 53.26 

 Repairs 17.04 17.42 18.19 18.84 19.49 20.01 20.40 20.79 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 7.70 10.10 8.68 8.34 13.25 12.85 

 Interest on operating inputs 0.48 0.78 1.92 2.81 2.98 1.23 0.22 0.15 

 Total, operating costs 90.74 99.38 122.74 131.92 146.83 175.82 161.93 162.81 

Allocated overhead: Hired labor 3.18 3.26 3.36 3.48 3.60 3.72 3.80 3.84 

 Opportunity cost of unpaid labor 26.44 27.11 27.96 28.98 30 31.02 31.7 32.04 

 Capital recovery of machinery & equip 55.52 59.56 63.60 66.91 70.22 76.84 81.99 84.56 

 Opportunity cost of land 32.59 32.59 33.95 33.4 35.77 40.04 43.75 45.05 

 Taxes and insurance 3.81 3.87 3.9 4.1 4.43 4.92 5.52 4.80 

General farm overhead 6.20 6.30 6.58 6.82 7.06 7.25 7.39 7.53 

 Total, allocated overhead 127.74 132.69 139.35 143.69 151.08 163.79 174.15 177.82 

Total costs listed 218.48 232.07 262.09 275.61 297.91 339.61 336.08 340.63 

225 
Evaluation of Preven

Pre

Table 155: Silage sorghum - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 35% 35% 35% 35% 35% 35% 35% 35% 

Chemicals 40% 40% 40% 40% 40% 40% 40% 40% 

Custom operations 17% 17% 17% 17% 17% 17% 17% 17% 

Fuel, lube, and electricity 16% 16% 16% 16% 16% 16% 16% 16% 

Repairs 24% 24% 24% 24% 24% 24% 24% 24% 

Purchased irrigation water 0% 0% 0% 0% 0% 0% 0% 0% 

Crop Insurance 2% 2% 2% 2% 2% 2% 2% 2% Interest on operating inputs 27% 27% 27% 27% 27% 27% 27% 27% 

 Total, operating costs Allocated overhead: 

Hired labor 36% 36% 36% 36% 36% 36% 36% 36% 

 Opportunity cost of unpaid labor 27% 27% 27% 27% 27% 27% 27% 27% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

Opportunity cost of land 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

226 
Evaluation of Preven

Pre

Table 156: Silage sorghum prevented planting cost per acre: Prairie Gateway 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 6.31 6.70 7.72 8.80 10.22 15.61 14.86 11.39 

 Chemicals 7.90 7.90 7.90 8.22 8.48 8.88 9.93 9.80 

 Custom operations 1.54 1.56 1.62 1.69 1.76 1.76 1.92 1.98 

 Fuel, lube, and electricity 3.54 4.59 6.20 6.33 7.96 10.08 6.82 8.52 

 Repairs 4.09 4.18 4.37 4.52 4.68 4.80 4.90 4.99 

 Purchased irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop Insurance 0.00 0.00 0.15 0.20 0.17 0.17 0.27 0.26 

 Interest on operating inputs 0.13 0.21 0.52 0.76 0.80 0.33 0.06 0.04 

 Total, operating costs 23.50 25.13 28.47 30.53 34.08 41.63 38.75 36.98 

Allocated overhead: Hired labor 1.14 1.17 1.21 1.25 1.30 1.34 1.37 1.38 

 Opportunity cost of unpaid labor 7.14 7.32 7.55 7.82 8.10 8.38 8.56 8.65 

 Capital recovery of machinery & equip 55.52 59.56 63.60 66.91 70.22 76.84 81.99 84.56 

 Opportunity cost of land 32.59 32.59 33.95 33.40 35.77 40.04 43.75 45.05 

 Taxes and insurance 3.81 3.87 3.90 4.10 4.43 4.92 5.52 4.80 

General farm overhead 6.20 6.30 6.58 6.82 7.06 7.25 7.39 7.53 

 Total, allocated overhead 106.40 110.81 116.79 120.31 126.88 138.76 148.58 151.97 

Total costs listed 129.91 135.94 145.26 150.83 160.96 180.40 187.32 188.96 

Total costs 218.48 232.07 262.09 275.61 297.91 339.61 336.08 340.63 

Prevented planting % 59% 59% 55% 55% 54% 53% 56% 55% 

227 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

5.8. Hybrid corn seed 

Overview 

Corn is produced on more acres, and generates more revenue for farmers, than any other field crop. 

Virtually all US corn is grown from hybrid corn strains. Hybrid corn grown for seed is generally grown in the 

same areas as corn for grain. However, inbred corn must be grown on the best land possible and under the 

most favorable environmental conditions. Hybrid seed production centers on Nebraska, Indiana, Illinois, 

and Iowa. Production methods are similar to those for corn for grain with some additional requirements. 

All seed corn is grown under contract to one of the commercial seed producers. 

Corn for seed competes for the highest value land and management practices. As such, farmers are paid a 

premium over the return that acre of land would yield in commercial corn production in order to secure 

enough acreage to produce adequate supply. 

The map below shows where corn is produced. The dark green areas also are the primary regions where 

hybrid corn seed is produced. 

Figure 52: US corn acres planted by county in 2012 

Sources of production cost information 

Although corn is a major crop, there are no public crop budgets available for hybrid seed corn. However, 

corn is one of the crops for which the Economic Research Service conducts periodic statistically 

representative surveys of farm finances and production practices on which it bases annual production cost 

estimates. We used that information as a basis for developing our estimates of prevented planting costs, 

combined with expert opinions to reflect the higher inputs necessary for hybrid seed corn production. 

The annual production cost series maintained by ERS for each farm resource region are available at the 

following link: http://www.ers.usda.gov/data-products/commodity-costs-and-returns.aspx. 

228 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Production practices 

Seed corn is a late spring-planted crop due to its intolerance of extreme environmental conditions. Seed 

corn is a management intensive, input critical, and timing sensitive crop. It is also more labor and capital 

intensive. The necessity of detasseling the corn for proper breeding significantly increases the cost of 

production. Many production acres are irrigated for greater control over the growing process. The planting 

process for seed corn can be more time consuming than corn for grain. More tillage passes, slower tractor 

speeds, male/female row planting ratios, and border rows all serve to increase the time required to plant 

seed corn. 

Fieldwork begins in the fall with cultivation and application of fertilizer, particularly potassium and 

phosphate. Seed corn generally requires the same fertilizer inputs as 120-160 bushel/acre yield commercial 

corn. Between a third and half of those two nutrients are applied in the fall because they bond well with 

the soil and are not lost or degraded over the winter to any great degree. This reduces the amount of work 

that has to be accomplished in the spring. 

Planting occurs in two passes. The female seeds and male seeds are planted in specific alternating rows, 

typically 4:1, or 6:2 patterns. In addition, they must be planted so that they are in the reproductive phase 

at the same time for proper fertilization. This may mean the males and females are planted several days 

or even a week apart depending on which inbreds are used. On some fields, border rows are necessary to 

prevent cross-pollination from a neighboring cornfield. Border rows are not harvested for seed and serve 

only to provide a buffer zone. 

Before pollination occurs, the tassels are removed from the female plants by a specialized detasseling 

machine. The machine leaves anywhere from 60 to 90% of the tassels in the plants, so crews of mostly 

teenagers are hired for several weeks to remove the remaining tassels. Machine detasseling reduces the 

total detasseling costs, however it reduces yields by anywhere from 4-45%. However, it is far more cost 

effective even with the yield losses than fully manual detasseling. 

After pollination ends, the male plants are usually destroyed by specialized machines to reduce competition 

and increase yields in the pollinated female plants. During the growing phase, water availability is crucial 

for proper yields in drought prone areas. Irrigation is usually done 1-2 times in a normal year but may be 

done 2-3 times in a dry year. Irrigation is used in about 15% of commercial corn but a higher percentage of 

seed corn is irrigated. 

During the growing phase, depending on cultivar and region, an insecticide may be required to reduce pest 

pressure. The seed companies sometimes provide the farmer with a specific insecticide but it is up to the 

farmer to apply it. 

Prevented planting experience 

Insurance indemnities paid out for hybrid seed corn totaled more than $137.5 million over the 10-year 

period. Prevented planting accounted for $672,000, a mere half a percent of total indemnities. 

Analysis 

Several costs for hybrid seed corn are typically covered by the seed company. These include insecticides 

for specifics pests, seed costs, crop insurance, and harvest costs. In addition, although the seed company 

may provide an insecticide the farmer must apply it. There are also additional costs of production that are 

not covered by the seed company. The most costly of these is detasseling (although one company has found 

229 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

a genetic solution for this). This has the effect of raising overall costs for the post-planting phase. This 

effectively pushes the share of preplanting costs significantly lower than for commercial corn. 

Figure 53: Share of costs incurred prior to planting hybrid seed corn 

The liabilities per acre (at 100%) for hybrid corn seed are much higher than for corn, e.g. $1,599 in the 

Heartland region in 2012 compared to $971 for regular corn. This suggests we may have underestimated 

production costs, which we put at $901 for the seed versus $705 for corn. 

However, less than one percent of total indemnities for hybrid corn seed the last twenty years have been 

for prevented planting. Seed companies are intent on getting the seed produced because their business is 

directly dependent on having that supply, so contract growers have a strong incentive to produce the crop 

rather than file for prevented planting. 

Hybrid seed corn – possible future changes to crop management practices 

In 2011, Pioneer Hi-Bred was cleared by the USDA APHIS to release its Seed Production Technology (SPT) 

Process DP-32138-1 Corn. According to Pioneer, DP-32138-1 is engineered to produce male sterile female 

inbred plants for the generation of hybrid corn seed that is non-transgenic (Pioneer 2009). DP-32139-1 

contains a male sterile trait that eliminates the need for costly detasseling operations. This patented 

process has the potential to change production costs depending on the level of incorporation and adoption. 

Pioneer Hi-Bred currently has a 30% market share of the hybrid corn seed market The total adoption and 

thus, elimination of detasseling represents costs upwards of $280-$350 million (2010) dollars due to 

increased yields and reduced inputs according to the USDA APHIS report. Even if only a portion of Pioneer 

Hi-Bred’s 450 corn varieties incorporates this technology, it could represent noticeable changes in the cost 

structure of hybrid corn seed production. The effect on the prevented planting factor would be to raise it 

due to the removal of detasseling costs from the denominator. RMA will have to monitor developments in 

this area. 

230 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of estimated PP cost to RMA payments 

The ratios in the chart below are almost all in the 1.50-2.50 range, suggesting that payments are well in 

excess of our estimates of prevented planting costs. 

Figure 54: Ratio of RMA payment to PP costs for hybrid corn seed 

Recommendation 

Given the low incidence of PP claims, we do not think the high ratios in the chart above dictate a greater 

reduction in the payment factor than we recommend based on production costs, which is to reduce the 

factor from 50% to 40%. 

231 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 157: Hybrid corn seed production costs per planted acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses:

 Seed 

 Fertilizer 

Chemicals 

 Custom operations  Fuel, lube, and electricity 

Repairs 

 Purchased irrigation water  Crop Insurance 

Detassling 

 Interest on operating costs 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

51.43 56.01 72.67 82.79 96.13 146.62 137.89 118.09 155.18 165.9126.50 27.11 24.71 25.73 26.55 27.68 30.52 26.95 26.95 28.45

10.09 10.53 8.99 9.40 9.80 9.80 10.47 15.25 15.53 15.82

18.81 25.41 20.32 22.48 25.00 32.73 22.13 22.18 27.76 26.10

12.63 13.82 12.23 12.67 13.11 13.46 13.72 21.77 22.45 23.12

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

248.36 253.11 261.02 270.51 280.00 289.49 297.40 298.98 303.73 314.80

0.79 1.26 3.07 4.66 4.85 2.16 0.43 0.29 0.17 0.24

 Total, operating costs 368.61 387.25 403.01 428.24 455.44 521.94 512.56 503.51 551.77 574.44 

Allocated overhead: 

Hired Labor 

 Opportunity cost of unpaid labor  Capital recovery of machinery & equip.  Opportunity cost of land (rental rate)  Taxes and insurance  General farm overhead 

2.30 2.30 1.41 1.46 1.51 1.56 1.59 2.61 2.64 2.75

23.79 24.28 19.8 20.52 21.24 21.96 22.44 20.21 20.42 21.28

53.06 58.11 60.45 63.59 66.73 73.02 77.56 81.22 86.16 90.75

100.28 103.58 104.87 103.16 110.48 123.66 142.36 150.49 163.77 184.42

5.19 5.24 6.06 6.37 6.88 7.64 7.46 7.77 8.18 8.62

10.93 11.17 12.14 12.57 13.00 13.35 13.61 17.37 17.91 18.45

 Total, allocated overhead 195.55 204.68 204.73 207.67 219.84 241.19 265.02 279.67 299.08 326.27 Total costs listed 564.16 591.93 607.74 635.91 675.28 763.13 777.58 783.18 850.85 900.71 

Source for budget(s): [Source here] http://linktobudgethere.com Notes: Type notes here in case 2000-2002 columns get delete 

232 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 158: Hybrid corn seed production costs per planted acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses:

 Seed 

 Fertilizer 

Chemicals 

 Custom operations  Fuel, lube, and electricity 

Repairs 

 Purchased irrigation water  Crop Insurance 

Detassling 

 Interest on operating costs 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

58.95 64.01 78.36 89.27 103.65 158.09 148.67 122.11 160.46 172.06

25.77 26.35 19.95 20.77 21.43 22.34 24.63 25.70 25.70 26.95

12.09 12.43 12.46 13.03 13.59 13.59 14.52 20.27 20.65 21.15

22.31 26.46 25.29 27.98 31.05 41.11 27.96 23.76 29.95 28.70

14.90 16.04 14.10 14.60 15.10 15.50 15.80 23.58 24.31 25.04

0.00 0.00 0.02 0.02 0.02 0.02 0.02 0.02 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

248.36 253.11 261.02 270.51 280.00 289.49 297.40 298.98 303.73 314.80

0.86 1.37 3.25 4.95 5.16 2.31 0.45 0.29 0.17 0.24

 Total, operating costs 383.24 399.77 414.45 441.13 470.00 542.45 529.45 514.71 564.97 588.94 

Allocated overhead: 

Hired Labor 

 Opportunity cost of unpaid labor  Capital recovery of machinery & equip.  Opportunity cost of land (rental rate)  Taxes and insurance  General farm overhead 

3.72 3.97 3.03 3.14 3.25 3.36 3.43 3.59 3.63 3.78

34.8 35.36 31.78 32.94 34.1 35.26 36.03 29.98 30.3 31.57

60.99 65.68 60.53 63.68 66.83 73.13 77.68 73.91 78.41 82.27

68.88 71.2 77.15 75.9 81.28 90.98 104.74 82.67 89.13 91.86

5.8 5.81 9.00 9.47 10.23 11.35 11.08 9.08 9.55 9.98

16.22 16.46 17.67 18.30 18.93 19.43 19.81 23.85 24.59 25.33

 Total, allocated overhead 190.41 198.48 199.16 203.43 214.62 233.51 252.77 223.08 235.61 244.79 Total costs listed 573.65 598.25 613.61 644.56 684.62 775.96 782.22 737.79 800.58 833.73 

Source for budget(s): [Source here] http://linktobudgethere.com 

Notes: Type notes here in case 2000-2002 columns get delete 

233 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 159: Hybrid corn seed - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses: 

Seed Fertilizer Chemicals Custom operations Fuel, lube, and electricity Repairs Purchased irrigation water Crop Insurance Detassling Interest on operating costs 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 

21% 21% 21% 21% 21% 21% 21% 21% 21% 21% 28% 28% 28% 28% 28% 28% 28% 28% 28% 28% 

44% 44% 44% 44% 44% 44% 44% 44% 44% 44% 

40% 40% 40% 40% 40% 40% 40% 40% 40% 40% 

10% 10% 10% 10% 10% 10% 10% 10% 10% 10% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

32% 32% 32% 32% 32% 32% 32% 32% 32% 32%

 Total, operating costs Allocated overhead: 

Hired Labor 

 Opportunity cost of unpaid labor  Capital recovery of machinery & equip.  Opportunity cost of land (rental rate) 

Taxes and insurance General farm overhead 

34% 34% 34% 34% 34% 34% 34% 34% 34% 34%

31% 31% 31% 31% 31% 31% 31% 31% 31% 31%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

 Total, allocated overhead  Total costs listed 

234 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 160: Hybrid corn seed prevented planting costs per acre: Heartland

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses:

 Seed 

 Fertilizer 

Chemicals 

 Custom operations  Fuel, lube, and electricity 

Repairs 

 Purchased irrigation water  Crop Insurance 

Detassling 

 Interest on operating costs 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

14.40 15.68 20.35 23.18 26.92 41.05 38.61 33.07 43.45 46.45

5.57 5.69 5.19 5.40 5.58 5.81 6.41 5.66 5.66 5.97

2.83 2.95 2.52 2.63 2.74 2.74 2.93 4.27 4.35 4.43

8.28 11.18 8.94 9.89 11.00 14.40 9.74 9.76 12.21 11.48

5.05 5.53 4.89 5.07 5.24 5.38 5.49 8.71 8.98 9.25

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.25 0.40 0.98 1.49 1.55 0.69 0.14 0.09 0.05 0.08

 Total, operating costs 36.37 41.44 42.87 47.67 53.03 70.09 63.31 61.55 74.71 77.67 

Allocated overhead: 

Hired Labor 

 Opportunity cost of unpaid labor  Capital recovery of machinery & equip.  Opportunity cost of land (rental rate)  Taxes and insurance  General farm overhead 

0.78 0.78 0.48 0.50 0.51 0.53 0.54 0.89 0.90 0.94

7.37 7.53 6.14 6.36 6.58 6.81 6.96 6.27 6.33 6.60

53.06 58.11 60.45 63.59 66.73 73.02 77.56 81.22 86.16 90.75

100.28 103.58 104.87 103.16 110.48 123.66 142.36 150.49 163.77 184.42

5.19 5.24 6.06 6.37 6.88 7.64 7.46 7.77 8.18 8.62

10.93 11.17 12.14 12.57 13.00 13.35 13.61 17.37 17.91 18.45

 Total, allocated overhead 177.62 186.41 190.14 192.55 204.19 225.01 248.49 264.00 283.25 309.77 Total costs listed 213.99 227.84 233.01 240.21 257.22 295.09 311.80 325.56 357.95 387.44 Total costs 564.16 591.93 607.74 635.91 675.28 763.13 777.58 783.18 850.85 900.71 Prevented planting % 38% 38% 38% 38% 38% 39% 40% 42% 42% 43% 

235 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 161: Hybrid corn seed prevented planting costs per acre: Northern Crescent

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses:

 Seed 

 Fertilizer 

Chemicals 

 Custom operations  Fuel, lube, and electricity 

Repairs 

 Purchased irrigation water  Crop Insurance 

Detassling 

 Interest on operating costs 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

16.51 17.92 21.94 25.00 29.02 44.27 41.63 34.19 44.93 48.18

5.41 5.53 4.19 4.36 4.50 4.69 5.17 5.40 5.40 5.66

3.39 3.48 3.49 3.65 3.81 3.81 4.07 5.68 5.78 5.92

9.82 11.64 11.13 12.31 13.66 18.09 12.30 10.45 13.18 12.635.96 6.42 5.64 5.84 6.04 6.20 6.32 9.43 9.72 10.02

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.28 0.44 1.04 1.58 1.65 0.74 0.14 0.09 0.05 0.08

 Total, operating costs 41.35 45.43 47.43 52.74 58.68 77.79 69.63 65.24 79.06 82.48 

Allocated overhead: 

Hired Labor 

 Opportunity cost of unpaid labor  Capital recovery of machinery & equip.  Opportunity cost of land (rental rate)  Taxes and insurance  General farm overhead 

1.26 1.35 1.03 1.07 1.11 1.14 1.17 1.22 1.23 1.29

10.79 10.96 9.85 10.21 10.57 10.93 11.17 9.29 9.39 9.79

60.99 65.68 60.53 63.68 66.83 73.13 77.68 73.91 78.41 82.27

68.88 71.20 77.15 75.90 81.28 90.98 104.74 82.67 89.13 91.86

5.80 5.81 9.00 9.47 10.23 11.35 11.08 9.08 9.55 9.98

16.22 16.46 17.67 18.30 18.93 19.43 19.81 23.85 24.59 25.33

 Total, allocated overhead 163.94 171.46 175.23 178.63 188.95 206.96 225.65 200.02 212.31 220.51 Total costs listed 205.30 216.89 222.66 231.37 247.63 284.75 295.28 265.27 291.37 302.99 

573.65 598.25 613.61 644.56 684.62 775.96 782.22 737.79 800.58 833.73 Total costs 

Prevented planting % 36% 36% 36% 36% 36% 37% 38% 36% 36% 36% 

236 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

5.9. Hybrid sorghum seed 

Overview 

Hybrid sorghum seed is produced primarily within a 100-mile radius of Dumas, Texas. Approximately 80% 

of the world’s supply of hybrid sorghum seed is grown in the Northern High Plains and the Panhandle of 

Texas according to the Texas Seed Trade Association. Of the 2.75 million acres planted to sorghum in 

Texas, approximately 5%, or 135,000 acres, are hybrid seed production acres. 

Figure 55: US hybrid sorghum seed production areas 

Source: Agralytica, Texas Seed Trade Association 

Sources of production cost information 

There are no production cost budgets for hybrid sorghum seed publicly available. While Texas A&M’s 

AgriLife Extension Service produces about two dozen sorghum budgets each year, none cover hybrid seed 

production. We had to rely on interviews with experts to determine hybrid seed production costs and 

management practices. During these interviews, it was revealed that many costs are the same as for grain 

sorghum, with some exceptions, particularly around inputs used. We were provided with the costs for 

hybrid grain sorghum seed, hybrid forage sorghum seed, and hybrid Sudan grass sorghum seed, all of which 

are produced in the this region. Costs vary little among the three. The only noted difference is the seed 

cost. Grain seed is provided free to the farmer, forage seed is provided free but a necessary seed treatment 

costs $4.50 per acre. Sudan grass seed costs $16 per acre. We calculated the preplant production costs for 

each type of seed produced but because the costs are so close, preplant cost ratios are virtually identical. 

We constructed the hybrid sorghum seed budget as a composite of 2003-2012 ERS grain sorghum production 

costs for the Prairie Gateway and the information obtained from interviews for the latest crop year, 2013. 

The allocated overhead costs, with the exception of “Hired Labor” came from the ERS data, things such as 

land costs and machinery costs. Most of the variable costs or cash expense values were direct inputs from 

the interview. There were a couple of exceptions, crop insurance, interest on operating capital, and repairs 

costs were not known. Production costs for these three categories were taken from the ERS grain sorghum 

237 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

data for the Prairie gateway region. The only one of these that may have an issue was “Repairs”. The issue 

is that our contact could not give us any value for this. We were informed that although the equipment is 

the same, the number of preplant field passes, 4-5, is more than for grain sorghum in the area; typically, 

2-3 passes are required for grain sorghum. Wear and tear on machinery would increase due to the number 

of passes, but to what degree it would increase repair costs we cannot say. Therefore, while we 

acknowledge that the ERS repair cost is probably on the low side, it is the best approximation of cost we 

have available. 

Production methods 

Hybrid sorghum seed, like other hybrid seeds, is sensitive to environmental extremes. Although sorghum is 

typically a warm weather, drought tolerant crop, hybrid seed is a completely different thing. Because of 

its genetic instability, hybrid seed needs plenty of water, nutrients, and moderate environmental conditions 

to thrive. Hybrid sorghum seed is produced under irrigation and intensive management. According to our 

expert, typical soil preparation entails 2-4 rouging passes and one to two cultivation passes. Preplant 

fertilizer applications include nitrogen (half of fertilizer costs, with most applied pre-planting), some 

phosphate, potash, and occasionally lime. Virtually all hybrid sorghum seed growers hire crop consultants 

to help optimize field nutrients and management according to our source. 

As with other seed production, hybrid sorghum seed companies typically provide the farmers with free or 

heavily subsidized services, to ensure maximum quality, yield, and germination rates from the finished 

seed. Generally, these services are in the form of custom hauling, custom spraying, small reimbursements 

for extra field passes, and other services out of the ordinary for normal grain sorghum production. Although 

seed production costs are certainly higher, the farmer does not bear these burdens alone. According to our 

expert, the seed companies do everything in their power to prevent any production loss either before or 

after planting. 

Prevented planting history 

Total insurance indemnities paid to farmers for hybrid sorghum seed for the period 2003-2012 totaled more 

than $13 million. Prevented planting indemnities occurred in one year of the last decade. In 2009, claims 

totaling $40,776 were paid out. This amount accounts for a mere 0.3% of the total indemnities. In addition, 

in our discussion with the seed company representative, it was made clear that prevented planting 

situations simply did not occur, crop failures after planting were reported as uncommon as well. 

Analysis 

The prevented planting percentage of production was relatively stable at 52 to 54%. The cost structures 

for seed for grain sorghum, forage sorghum, and Sudan grass are all quite similar. It must be noted that 

the majority of budget data came from expert opinions and was relevant to the 2013 crop year. The values 

for all other years were filled in using price indexes and a combination of ERS ARMS survey data for grain 

sorghum. For example, land rent prices were imputed from the Prairie Gateway grain sorghum data. 

Comparison of RMA payments to estimated PP costs 

The ratio for hybrid sorghum seed is high at 1.4 to 1.7 in recent years, although not as high as for hybrid 

corn seed. 

Figure 56: Share of costs incurred prior to planting hybrid sorghum seed 

238 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 57: Ratio of RMA payment to PP costs for hybrid sorghum seed 

Recommendation 

In comparing costs for grain sorghum and costs for hybrid sorghum seed in the Prairie Gateway, it is apparent 

that the share of costs incurred in a prevented planting situation for hybrid sorghum seed is comparable to 

that for grain sorghum. We conclude that the methodology we used is valid and we recommend reducing 

the factor from 60% to 55%. 

239 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 162: Hybrid sorghum seed production costs per planted acre – Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses:

 Seed 

Fertilizer Chemicals 

 Custom operations 

Fuel, lube, & electricity Repairs Purchased irrigation water Hauling 

 Crop Insurance  Interest on operating capital 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

56.36 63.64 74.55 80.00 98.18 178.18 125.00 114.55 149.09 151.3689.20 89.20 90.67 94.36 95.10 102.47 109.84 106.15 106.89 112.7923.89 22.93 23.12 23.50 23.89 27.52 27.71 27.71 28.28 30.0078.87 92.96 121.69 134.65 148.73 193.80 129.01 160.00 203.94 202.82

17.04 17.42 18.19 18.84 19.49 20.01 20.40 20.79 21.57 22.22

141.50 145.66 150.87 156.07 160.23 166.47 165.43 168.55 173.76 176.88

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

5.09 7.18 6.09 7.23 11.91 16.47 13.02 12.42 19.00 17.44

0.48 0.78 1.92 2.81 2.98 1.23 0.22 0.15 0.08 0.11

 Total, operating costs 412.43 439.77 487.10 517.46 560.51 706.15 590.63 610.32 702.61 713.62 Allocated overhead: Hired labor  Opportunity cost of unpaid labor  Capital recovery of machinery & equip  Opportunity cost of land (rental rate)  Taxes and insurance 

General farm overhead 

18.96 19.32 19.93 20.65 21.38 22.10 22.71 22.83 23.19 24.03

26.44 27.11 27.96 28.98 30.00 31.02 31.70 32.04 32.55 33.74

55.52 59.56 63.60 66.91 70.22 76.84 81.99 84.56 89.71 93.75

32.59 32.59 33.95 33.40 35.77 40.04 43.75 45.05 48.57 50.05

3.81 3.87 3.90 4.10 4.43 4.92 5.52 4.80 5.05 5.16 

6.20 6.30 6.58 6.82 7.06 7.25 7.39 7.53 7.81 8.05

 Total, allocated overhead 143.52 148.75 155.92 160.86 168.86 182.17 193.06 196.81 206.88 214.78

 Total costs listed 555.96 588.52 643.01 678.32 729.36 888.32 783.69 807.13 909.49 928.40 

240 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 163: Hybrid sorghum seed - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses:

 Seed 

Fertilizer Chemicals 

 Custom operations 

Fuel, lube, & electricity Repairs Purchased irrigation water Hauling 

 Crop Insurance  Interest on operating capital 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

65% 65% 65% 65% 65% 65% 65% 65% 65% 65%50% 50% 50% 50% 50% 50% 50% 50% 50% 50%50% 50% 50% 50% 50% 50% 50% 50% 50% 50%45% 45% 45% 45% 45% 45% 45% 45% 45% 45%45% 45% 45% 45% 45% 45% 45% 45% 45% 45%25% 25% 25% 25% 25% 25% 25% 25% 25% 25%

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2% 0.2%

25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: Hired labor  Opportunity cost of unpaid labor  Capital recovery of machinery & equip  Opportunity cost of land (rental rate)  Taxes and insurance  General farm overhead 

50% 50% 50% 50% 50% 50% 50% 50% 50% 50%

50% 50% 50% 50% 50% 50% 50% 50% 50% 50%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100%100% 100% 100% 100% 100% 100% 100% 100% 100% 100%100% 100% 100% 100% 100% 100% 100% 100% 100% 100%100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

241 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 164: Hybrid sorghum seed prevented planting costs per acre – Prairie Gateway

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses:

 Seed 

Fertilizer Chemicals 

 Custom operations 

Fuel, lube, & electricity Repairs Purchased irrigation water Hauling 

 Crop Insurance  Interest on operating capital 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

36.64 41.36 48.45 52.00 63.82 115.82 81.25 74.45 96.91 98.3944.60 44.60 45.34 47.18 47.55 51.23 54.92 53.08 53.45 56.3911.94 11.46 11.56 11.75 11.94 13.76 13.85 13.85 14.14 15.0035.49 41.83 54.76 60.59 66.93 87.21 58.06 72.00 91.77 91.27

7.67 7.84 8.19 8.48 8.77 9.00 9.18 9.36 9.71 10.00

35.38 36.42 37.72 39.02 40.06 41.62 41.36 42.14 43.44 44.22

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

0.01 0.01 0.01 0.01 0.02 0.03 0.03 0.02 0.04 0.03

0.12 0.20 0.48 0.70 0.75 0.31 0.06 0.04 0.02 0.03

 Total, operating costs 171.85 183.72 206.51 219.73 239.84 318.98 258.70 264.94 309.47 315.33 

Allocated overhead: Hired labor  Opportunity cost of unpaid labor  Capital recovery of machinery & equip  Opportunity cost of land (rental rate)  Taxes and insurance 

General farm overhead 

9.48 9.66 9.96 10.33 10.69 11.05 11.35 11.41 11.59 12.02

13.22 13.56 13.98 14.49 15.00 15.51 15.85 16.02 16.28 16.87

55.52 59.56 63.60 66.91 70.22 76.84 81.99 84.56 89.71 93.75

32.59 32.59 33.95 33.40 35.77 40.04 43.75 45.05 48.57 50.05

3.81 3.87 3.90 4.10 4.43 4.92 5.52 4.80 5.05 5.16 

6.20 6.30 6.58 6.82 7.06 7.25 7.39 7.53 7.81 8.05

 Total, allocated overhead 120.82 125.54 131.97 136.05 143.17 155.61 165.85 169.37 179.01 185.90 Total costs listed 292.67 309.26 338.48 355.78 383.00 474.60 424.55 434.31 488.48 501.23 Total costs 555.96 588.52 643.01 678.32 729.36 888.32 783.69 807.13 909.49 928.40 Prevented planting % 53% 53% 53% 52% 53% 53% 54% 54% 54% 54% 

242 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6. CROPS FOR WHICH ANALYSIS IS BUDGET BASED 

About half the crops under study have no statistically representative production cost information available. 

For these we have relied primarily on crop budgets prepared by university extension staff. 

For most of these crops, a review of the PP payment to PP cost ratio shows that it is “high,” i.e., it is well 

above 1.0, suggesting a reduction in the PP rate may be warranted. 

Figures 58-60 show the crops for which we recommend rate reductions: buckwheat, canola, dry beans, dry 

peas, flax, mustard, millet, southern onions, sunflower seed (confectionery and oil), and tobacco. All have 

PP payment to PP cost ratios above 1 (sometimes well above 1), with the exception of buckwheat and 

millet. Buckwheat has a short history and a ratio near 1; millet’s ratio is near 0.75. We recommend rate 

reductions for these two as well, with greater detail provided under each crop’s summary. 

Figure 58: Other crops: buckwheat, canola, dry beans, and dry peas 

243 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 59: Other crops: flax, mustard, millet, and hybrid sorghum seed 

Figure 60: Other crops: sunflower seed (confectionery and oil) and tobacco 

244 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figures 61 and 62 show crops for which the ratio is close to 1 and for which we recommend no change: 

northern onions, processing beans, rye, safflower, sugar beets, and sweet corn. 

Figure 61: Other crops: northern onions, processing beans, and rye 

Figure 62: Other crops: safflower, sugar beets, and sweet corn 

245 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Finally, among these budget-based crops there are two for which we propose increases in the PP rates: 

green peas and potatoes. 

Our production cost analysis suggests that the 40% rate for green peas is too low to cover PP costs. 

Nevertheless, the PP payment to PP cost ratio for green peas has bounced upward and back from 1. We 

recommend a 10 percentage point increase to 50%. 

Potato PP payments are well below our estimated PP costs. Moreover, the payment ratio has been around 

0.6 since 2006 and this further supports an increase in the PP rate for both northern and southern potatoes. 

We recommend that the PP factor be increased from 25% to 40% 

Figure 63: Other crops: green peas and potatoes 

246 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.1. Buckwheat 

Overview 

Buckwheat is a fast maturing crop that is used as a cover crop or grown under contract for niche and export 

markets. In the United States, about 25,000 acres are planted with buckwheat each year. Buckwheat is 

produced mainly in Washington, North Dakota, and New York. 

Figure 64: US buckwheat production areas 

Source: Agralytica and AgMRC.org 

Sources of production cost information 

Two of the largest producers of buckwheat in the US, Washington and New York, do not have budgets 

available. However, budgets are available from North Dakota State University Extension. 

NDSU has published budgets for seven of the nine state regions for 2004 to 2012. Production costs from 

each regional budget were compiled and averaged to obtain an average state budget for each year. The 

2003 data were estimated using NASS Prices Paid Indexes. 

Production practices 

Buckwheat grows well in a variety of soils but does best in loamy soil. It yields better than other grains in 

low fertility soils but not as well as other grains in highly fertile soil. This makes it a great choice for poorer 

quality soils where the production of other grains, like corn or wheat, is marginal. Overall, buckwheat 

requires relatively low inputs for a high yield per acre, even in marginal soils. 

Buckwheat is sensitive to frost. Seeding must be delayed until there is no danger of spring frost; it must 

also be planted at least 12 weeks before the first killing frost in the fall. Frost damaged buckwheat rarely 

achieves sufficient yields to be worth harvesting. Seeding dates therefore range from early June to midJuly in most states. The crop matures in around 80 days. 

Preplanting field operations consist of a fall tillage and burn down. Generally, there is little tillage needed 

in the spring, especially if the ground is too wet. Fertilizer is applied at or after planting. The crop is a 

heavy user of phosphorus but uses very little nitrogen. 

247 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Prevented planting history 

Buckwheat crop insurance began in 2010. Total indemnities for buckwheat from 2010 to 2012 were 

$660,638. For the 3-year period, prevented planting claims were 13% ($87,591) of total claims. All of these 

occurred in North Dakota and were caused by excess moisture / cold wet weather. 

Table 165: Buckwheat indemnities and prevented planting

 2010 2011 2012 Total 

Total indemnities $98,347 $150,427 $411,864 $660,638 

Prevented planting $5,496 $73,325 $8,770 $87,591 

Prevented planting % 6% 49% 2% 13% 

Source: USDA RMA 

Analysis 

We constructed buckwheat budgets using NDSU data. Prevented planting costs rose from $60 per acre in 

2003 to $121 per acre in 2012. As a percentage of total per acre costs, however ($106 in 2003 and $237 in 

2012), the share that represents prevented planting costs dropped from 56% to 47%, primarily due to the 

rapid growth of (avoidable) seed and fertilizer costs. 

Based on the crop budget analysis, a more appropriate percentage for buckwheat would be 50%. 

Figure 65: Share of costs incurred prior to planting buckwheat 

248 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of RMA payments to estimated PP costs 

There are only 3 years of data. For those years, the ratio of RMA’s incurred base PP payment to estimated 

PP costs has been close to 1.00. 

Buckwheat PP indemnities represented 13% of total indemnities on average over the three years, totaling 

under $30,000 per year. Also, only 7% of PP indemnities are associated with the additional 10% coverage. 

Figure 66: Ratio of RMA payment to PP costs for buckwheat 

Recommendation 

We recommend reducing the PP payment rate from 60% to 50%. This would put it in line with estimated PP 

costs, which were 45-48% over the 2010-2012 period. 

249 
Evaluation of Preven

Pre

Table 165: Buckwheat production costs per planted acre: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 13.65 14.00 14.00 14.00 15.00 16.50 25.00 25.00 

 Fertilizer 5.00 5.64 7.37 7.34 6.21 12.50 17.86 12.97 

 Herbicides 0.00 0.00 0.00 0.00 8.74 9.68 14.29 12.00 

 Crop insurance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2.46 

 Fuel & lubrication 4.82 5.68 8.37 10.89 11.47 14.54 9.85 11.83 

 Repairs 9.17 9.44 9.49 9.84 10.30 11.02 12.27 13.84 

 Miscellaneous 0.97 1.00 1.00 1.00 1.00 1.50 1.50 1.50  Interest on operating capital 1.04 1.07 1.31 1.67 2.17 2.47 2.22 2.09  Total, operating costs 34.64 36.83 41.54 44.74 54.89 68.21 82.99 81.69 

Allocated overhead: Returns to labor & mgmt 20.13 20.51 21.15 21.92 22.69 23.46 24.10 24.23 

 Misc 3.17 3.31 3.25 3.33 3.42 3.53 4.76 5.00 

 Machinery depreciation 10.75 11.53 11.63 12.07 12.59 13.27 14.66 15.92 

 Machinery investment 6.62 7.1 6.99 7.24 7.52 7.85 8.62 9.4 

 Land charge 30.99 32.25 31.83 32.40 33.36 36.00 39.49 40.97 

 Total, allocated overhead 

71.64 74.70 74.85 76.96 79.58 84.11 91.63 95.52 

 Total costs listed 106.28 111.53 116.39 121.70 134.47 152.32 174.62 177.21 

Source for budget(s): NDSU extension http://www.ag.ndsu.edu/farmmanagement/crop-budget-archive Notes: Based on 2004-2012 budgets; 2003 and select values derived using price indices (in italic

 Data reflects average of budgets for 7 ND regions w/buckwheat budgets 

 Returns to labor & management: avge for 2004-2012, used f/2008, then adjusted fwd & 

index 

250 
Evaluation of Preven

Pre

Table 166: Buckwheat - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 20% 20% 20% 20% 20% 20% 20% 20% 20% 

Herbicides 0% 0% 0% 0% 0% 0% 0% 0% 0% 

Crop insurance 13% 13% 13% 13% 13% 13% 13% 13% 13% 

Fuel & lubrication 20% 20% 20% 20% 20% 20% 20% 20% 20% 

Repairs 20% 20% 20% 20% 20% 20% 20% 20% 20% 

Miscellaneous 10% 10% 10% 10% 10% 10% 10% 10% 10% Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% 25% 

 Total, operating costs Allocated overhead: 

Returns to labor & mgmt 20% 20% 20% 20% 20% 20% 20% 20% 20% 

Misc 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Machinery depreciation 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Machinery investment 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Land charge 100% 100% 100% 100% 100% 100% 100% 100% 100% 

251 
Evaluation of Preven

Pre

Table 167: Buckwheat prevented planting cost per acre: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 1.00 1.13 1.47 1.47 1.24 2.50 3.57 2.59 3.90 

 Herbicides 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop insurance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.32 1.55 

 Fuel & lubrication 0.96 1.14 1.67 2.18 2.29 2.91 1.97 2.37 2.91 

 Repairs 1.83 1.89 1.90 1.97 2.06 2.20 2.45 2.77 2.95 

 Miscellaneous 0.10 0.10 0.10 0.10 0.10 0.15 0.15 0.15 0.15 

 Interest on operating capital 0.26 0.27 0.33 0.42 0.54 0.62 0.56 0.52 0.64 

 Total, operating costs 4.15 4.52 5.47 6.13 6.24 8.38 8.70 8.72 12.09 

Allocated overhead: Returns to labor & mgmt 4.03 4.10 4.23 4.38 4.54 4.69 4.82 4.85 4.92 

 Misc 3.17 3.31 3.25 3.33 3.42 3.53 4.76 5.00 6.17 

 Machinery depreciation 10.75 11.53 11.63 12.07 12.59 13.27 14.66 15.92 16.80  Machinery investment 6.62 7.10 6.99 7.24 7.52 7.85 8.62 9.40 9.94 

 Land charge 30.99 32.25 31.83 32.40 33.36 36.00 39.49 40.97 42.91  Total, allocated overhead 

55.54 58.29 57.93 59.42 61.43 65.34 72.35 76.14 80.74 

 Total costs listed 59.69 62.81 63.40 65.56 67.67 73.72 81.05 84.86 92.83 

Total costs 106.28 111.53 116.39 121.70 134.47 152.32 174.62 177.21 204.64 

Prevented planting % 56% 56% 54% 54% 50% 48% 46% 48% 45% 

252 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.2. Canola 

Overview 

Canola, a rapeseed variety developed for human and animal consumption, is produced primarily in North 

Dakota, which accounts for (84%) of national production. The second largest producer is Oklahoma (8%); 

more than half a dozen other states produce the rest. 

Figure 66: US canola production areas 

Source: Canolainfo.org 

Sources of production cost information 

Canola is grown primarily in North Dakota and NDSU publishes canola budgets, so we used North Dakota 

averages as proxy for canola production costs. 

Budgets were available for 2004-2013. The state is split into nine budget regions; eight have published 

canola budgets. Agralytica aggregated the relevant budgets by year and averaged the costs to get yearly 

production costs. The 2003 data were estimated using NASS Prices Paid Indexes. 

Production practices 

Canola yields best in rotation with small grain crops. It can be spring planted or winter planted. Canola 

does well in most soil types, but grows best in clay-loam soils that do not crust. A firm, weed-free seedbed 

is crucial for canola seeds and care must be taken to prepare the ground accordingly. Good drainage is 

essential to canola because it cannot tolerate standing water. In addition, canola is less tolerant to drought 

than small grain crops. 

Spring canola. In most of North Dakota, farmers use no-till practices or one pass seeding. Most producers 

(60%) spray nitrogen in the fall; the remainder use fertilizer just prior to planting. Nitrogen accounts for 

75%-80% of the fertilizer budget. Canola is also a high user of sulfur. Sulfur levels determine whether a 

canola crop grows or not and providing adequate sulfur at/before planting is ideal. Yield response to sulfur 

application decreases quickly after planting. In addition, soil packing with a roller is sometimes used just 

prior to planting to increase seed-to-soil contact. 

253 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Spring planted canola should be planted in late April to early May. Planting beyond May 15 results in yield 

reductions that become significant if planting is pushed into June. Seed that is not used can generally be 

returned to the supplier or held until the following year. 

Herbicide practices have changed in the last 10-20 years. Roundup Ready varieties allow all chemical use 

to take place at or after planting. 

Winter canola is typically planted in regions with less harsh winters, like Oklahoma and Kansas, and parts 

of Wisconsin. Seeding dates for winter canola range from late August to the first week of October in the 

Plains states, and from mid-August to the first week in September in Wisconsin and Minnesota. 

Prevented planting experience 

Prevented planting claims have been 56% of total indemnities the last 20 years. Total canola indemnities 

from 2003 to 2012 were $369.3 million. Of this total, prevented planting claims accounted for $199.4 (54%). 

Of prevented planting claims, $190.8 million (96%) came from North Dakota. Most of the rest came from 

Minnesota. 

The cause of prevented planting was almost always excess moisture ($193.3 million, 96.9% of prevented 

planted claims) or cold wet weather ($5.7 million, 2.9%) 

Analysis 

Analysis of crop production cost estimates for canola suggests that prevented planting costs as a share of 

production have dropped from 48% in 2003 ($70 of $146) to 43% in 2012 ($125 of $289). 

The decreased share of pre-planting costs is primarily due to the relative increase in seed and fertilizer 

costs, which are mostly avoidable in a prevented planting situation. 

Figure 67: Share of costs incurred prior to planting canola 

254 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of RMA payments to estimated PP costs 

The ratio of RMA’s incurred base PP payment to estimated PP costs has been high, above 1.5 for the past 7 

years. 

Also, since 61% of PP indemnities are associated with the additional 10% coverage, the ratio would be higher 

by about 10% if that were taken into account (10%/60%*0.61 = 0.102). Factoring this in, the ratio has been 

over 2.0 for the period 2008-2012. 

Figure 68: Ratio of RMA payment to PP costs for canola 

Recommendation 

The current canola PP payment rate is much too high. Consistent with this is the very high proportion of 

PP 10% buy-up, and the fact that a majority of canola indemnities come from prevented planting claims. 

Reducing the PP payment rate to 45% will better align the indemnity payments with estimated PP costs. 

255 
Evaluation of Preven

Pre

Table 168: Canola production costs per planted acre: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: Seed 16.08 16.50 17.05 17.60 18.15 18.25 39.50 4

 Fertilizer 23.45 26.48 29.99 35.10 32.33 49.08 63.83 4

 Herbicides 15.75 15.75 16.00 17.50 18.25 19.31 18.00 1

 Insecticides 7.00 7.00 7.00 6.00 7.00 6.00 0.00  Fuel & lubrication 5.03 5.93 8.44 10.79 11.16 14.16 10.18 1

 Repairs 9.56 9.84 9.73 9.96 10.00 10.72 12.41 1 Miscellaneous 0.97 1.00 1.00 1.00 2.00 2.63 3.75  Crop insurance 6.65 7.27 6.80 7.88 10.37 21.29 12.12 1 Interest on operating capital 2.53 2.61 3.07 3.98 4.47 5.00 4.43  Total, operating costs 87.03 92.38 99.08 109.81 113.73 146.44 164.22 14

Allocated overhead: Returns to labor & management 3.55 3.62 3.73 3.87 4.00 4.14 4.25 

 Miscellaneous overhead 3.35 3.50 3.39 3.44 3.41 3.52 4.84 

 Machinery depreciation 11.31 12.13 12.11 12.42 12.45 13.13 14.90 1 Machinery investment 7.07 7.59 7.29 7.48 7.35 7.70 8.75 

 Opportunity cost of land (rental rate) 33.35 34.71 33.94 35.03 35.56 38.44 42.15 4

 Total, allocated overhead 

58.63 61.55 60.46 62.24 62.77 66.93 74.89 7

 Total costs listed 145.66 153.93 159.54 172.05 176.50 213.37 239.11 22

Source for budget(s): NDSU extension http://www.ag.ndsu.edu/farmmanagement/crop-budget-archive Notes: Based on 2004-2012 budgets; 2003 and select values derived using price indices (in 

 Data reflects average of budgets for 8 ND regions w/canola budgets  Returns to labor & management: avge for 2004-2012, used f/2008, then adjusted fw

256 
Evaluation of Preven

Pre

Table 169: Canola - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 201

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0

Fertilizer 25% 25% 25% 25% 25% 25% 25% 25

Herbicides 0% 0% 0% 0% 0% 0% 0% 0Insecticides 0% 0% 0% 0% 0% 0% 0% 0Fuel & lubrication 25% 25% 25% 25% 25% 25% 25% 25

Repairs 25% 25% 25% 25% 25% 25% 25% 25

Miscellaneous 25% 25% 25% 25% 25% 25% 25% 25

Crop insurance 56% 56% 56% 56% 56% 56% 56% 56

Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25

Allocated overhead: 

Returns to labor & management 25% 25% 25% 25% 25% 25% 25% 25

Miscellaneous overhead 100% 100% 100% 100% 100% 100% 100% 100

Machinery depreciation 100% 100% 100% 100% 100% 100% 100% 100

Machinery investment 100% 100% 100% 100% 100% 100% 100% 100

Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100

257 
Evaluation of Preven

Pre

Table 170: Canola prevented planting cost per acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 5.86 6.62 7.50 8.78 8.08 12.27 15.96 10.67 

 Herbicides 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Insecticides 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fuel & lubrication 1.26 1.48 2.11 2.70 2.79 3.54 2.55 3.04 

 Repairs 2.39 2.46 2.43 2.49 2.50 2.68 3.10 3.49 

 Miscellaneous 0.24 0.25 0.25 0.25 0.50 0.66 0.94 0.94 

 Crop insurance 3.72 4.07 3.81 4.41 5.81 11.92 6.79 6.82 

 Interest on operating capital 0.63 0.65 0.77 1.00 1.12 1.25 1.11 0.92 

 Total, operating costs 14.11 15.54 16.87 19.62 20.80 32.32 30.44 25.88 

Allocated overhead: Returns to labor & management 0.89 0.90 0.93 0.97 1.00 1.04 1.06 1.07 

 Miscellaneous overhead 3.35 3.50 3.39 3.44 3.41 3.52 4.84 5.07 

 Machinery depreciation 11.31 12.13 12.11 12.42 12.45 13.13 14.90 16.11 

 Machinery investment 7.07 7.59 7.29 7.48 7.35 7.70 8.75 9.49 

 Opportunity cost of land (rental rate) 33.35 34.71 33.94 35.03 35.56 38.44 42.15 43.68 

 Total, allocated overhead 

55.96 58.83 57.66 59.34 59.77 63.83 71.70 75.42 

 Total costs listed 70.07 74.37 74.53 78.96 80.57 96.14 102.14 101.30 

Total costs 145.66 153.93 159.54 172.05 176.50 213.37 239.11 221.05 

Prevented planting % 48% 48% 47% 46% 46% 45% 43% 46% 

258 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.3. Dry beans 

Overview 

Dry beans are grown across the US, although primarily in the North and in the West. Fourteen main varieties 

are grown: adzuki, baby lima, black, blackeye, cranberry, dark red kidney, light red kidney, garbanzo, great 

northern, large lima, navy, pink, pinto, and yelloweye. The five types grown in largest volumes are pinto, 

navy, great northern, red kidney, and black beans. Pinto beans account for 40% of production. 

Total US production was 31.9 million hundredweight (cwt) in 2012. Of this total, 11.7 million cwt (37%) 

were grown in North Dakota. Major producing states include Michigan (14%), Nebraska (11%), Minnesota 

(10%), and Idaho (9%). Other producers include California, Washington, and Colorado. 

Figure 69: US dry bean acres planted in 2012 

Source: USDA 

Sources of production cost information 

The primary sources of production cost information come from North Dakota State University Extension and 

Nebraska University Extension. 

NDSU publishes dry bean budgets annually for all regions except Northwest and Southwest. We averaged 

costs for the seven other regions to an average budget for each year from 2004 to 2012. We used price 

indices to estimate the budget figures for 2003. 

Nebraska University Extension has published dry bean budgets every few years (2004, 2006, 2009, and 2012) 

for multiple state regions. We averaged budget costs across each region for each year, and estimated 

missing years (2003, 2005, 2007-8, 2010-11) using price indices. 

Dry bean production budgets are also available from California, Colorado, Kentucky, and Michigan. 

However, these are not comparable between years or only one budget year is available. 

259 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Production practices 

Dry beans are a warm season crop and are not planted until all danger of frost has passed. Cultivation 

keeps the bean fields weed-free, which reduces the need for chemical weed control. Cultivation also helps 

prepare the seedbed for efficient "pulling" of the bean plant at harvest. 

For single-cropped fields, the ground is typically disced twice in the fall. For double-cropped fields, discing 

generally occurs in June, after the wheat or other winter cereal is harvested. 

Prior to planting, pre-plant herbicides are sprayed onto the soil and mixed in with two passes of a finishing 

disc. A starter fertilizer is generally applied at planting or just before planting. Fields are pre-irrigated if 

conditions are too dry to germinate seed; however, this is not often the case for much of the Upper Midwest. 

In fact, too much moisture is a common occurrence. If the soil is over-saturated with water or moisture, 

dry bean producers will likely file a prevented planting claim. Soil with too much water has lower amounts 

of oxygen, which results in reduced root growth and stand loss. The ability of fungi to invade plant tissue 

is also higher in wet conditions. 

Prevented planting experience 

Prevented planting claims have been 31% of total indemnities the last 20 years. Total insurance indemnities 

paid to farmers were almost $352 million for the period 2003-2012. Close to $107 million (31%) were paid 

out due to prevented planting. Of prevented planting claims, excess moisture was the most common cause 

of loss, accounting for $97 million (91%). Geographically, North Dakota accounted for $92 million (86%) of 

overall prevented planting claims. 

Analysis 

The percentage used by RMA for prevented planting for dry beans is 60%. 

Analysis of the North Dakota budgets indicates that the percentage of pre-planting costs decreased from 

48% in 2003 to 41% in 2012. Pre-planting costs went from $83 out of $173 in 2003 to $138 out of $338 in 

2012. 

The Nebraska budgets indicate that the percentage of pre-planting costs decreased from 43% in 2003 to 40% 

in 2012. Pre-planting costs went from $167 out of $392 in 2003 to $311 out of $782 in 2012. 

Averaging the two budgets, the pre-planting cost percentage has declined from 45% in 2003 to 40% in 2012. 

However, differences in the dry beans produced, the regions where they are grown, and our reliance on 

extension budgets can introduce significant variability in cost calculations. 

260 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 70: Share of costs incurred prior to planting dry beans 

Comparison of RMA payments to estimated PP costs 

The ratio of RMA’s incurred base PP payment to estimated PP costs has been too high. In the Prairie 

Gateway region, the ratio is approximately 1.5, and in the Northern Great Plains, twice that. Since 64% of 

PP indemnities are associated with the additional 10% coverage, these ratios would be higher by about 11% 

if that were taken into account (10%/60%*0.64 = 0.107). 

Figure 71: Ratio of RMA payment to PP costs for dry beans 

261 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Recommendation 

Based on the crop budget review, a more appropriate PP rate for dry beans would be 40%. Reducing the PP 

payment rate from 60% so that a PP indemnity is 33% lower would bring it closer in line with estimated PP 

costs. 

262 
Evaluation of Preven

Pre

Table 171: Dry bean production costs per planted acre - Nebraska 

Items 2003 2004 2005 2006 2007 2008 2009 2010 2

 Field operations Materials and services: 

69.95 75.05 79.69 83.84 50.83 92.24 123.50 223.54 237

Fertilizer 14.43 16.29 15.18 16.29 50.83 92.24 64.71 30.33 39

 Herbicide 22.70 22.90 18.97 20.12 19.14 20.39 22.12 52.50 51

 Seed 22.42 23.00 22.89 24.80 21.15 26.85 31.00 29.83 31

 Other 52.54 55.00 30.96 32.70 35.50 40.35 39.25 4.11 4

 Insecticide 4.41 4.35 2.01 2.00 2.98 3.14 3.24 2.77 2

 Custom 6.94 6.66 6.69 6.80 7.07 8.14 8.20 44.35 45

 Scouting drybeans 9.55 9.17 9.25 9.40 9.55 11.01 11.08 11.08 11

 Drybean premium 16.80 17.29 17.91 18.53 19.02 19.76 19.64 20.01 20

 Crop Insurance 9.83 9.19 9.77 11.78 13.37 20.85 18.74 19.33 20

 Interest 6.61 6.82 5.07 6.08 6.49 6.81 6.26 6.08 6

 Total 

236.18 245.73 218.40 232.34 235.93 341.80 347.75 443.94 471

Allocated overhead  Farm overhead 7.87 8.00 7.65 8.00 8.40 8.40 8.98 9.27 9

 Management incl scouting 28.85 30.20 28.59 30.20 32.41 36.84 35.84 36.84 40

 Machinery taxes, housing, ins & int 17.08 18.17 19.05 20.27 21.89 25.41 24.46 25.27 28

 Irrigation system taxes, ins & int 9.49 10.10 11.97 12.73 13.75 15.95 15.36 15.87 17

 Land incl interest and depreciation 92.74 95.00 100.64 110.00 114.68 128.72 143.55 148.23 159 Total, allocated overhead 

156.03 161.47 167.90 181.20 191.14 215.33 228.18 235.48 256

 Total costs listed 392.21 407.20 386.31 413.54 427.07 557.13 575.93 679.41 728Source for budget(s): U. Nebraska­ http://www.ianrpubs.unl.edu/pages/publicationD.jsp?publicationId=597 Lincoln 

263 
Evaluation of Preven

Pre

Table 172: Dry bean production costs per planted acre - North Dakota 

Items 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 28.75 29.50 32.50 31.00 31.00 33.50 42.00 42.00 

 Chemicals 27.12 20.42 21.22 23.25 24.00 24.80 31.30 45.50 

 Fertilizer 14.92 16.85 21.64 21.92 21.68 21.60 37.25 28.35 

 Crop Insurance 9.97 10.13 12.36 14.52 14.42 17.87 18.32 23.33 

 Fuel & Lubrication 6.26 7.38 10.71 13.90 15.20 19.23 13.52 16.15 

 Repairs 11.77 12.12 12.02 12.42 12.84 13.36 15.56 16.55 

 Miscellaneous 0.97 1.00 1.00 1.00 1.00 1.50 8.50 4.67  Operating Interest 2.83 2.92 3.55 4.57 4.96 4.95 4.58 4.63 

 Total, operating costs 102.61 100.33 115.00 122.58 125.09 136.80 171.03 181.19 

Allocated overhead: Misc. Overhead 4.25 4.37 4.26 4.38 4.44 4.55 5.77 5.97 

 Machinery Depreciation 14.78 15.86 15.67 16.24 16.65 17.29 19.88 20.84 

 Machinery Investment 9.83 10.55 10.25 10.60 10.81 11.17 11.86 12.53 

 Land Charge 41.39 42.40 40.59 42.78 43.33 47.25 51.37 54.70 

 Total, allocated overhead 

70.25 73.18 70.77 74.00 75.23 80.26 88.87 94.04 

 Total costs listed 172.86 173.51 185.77 196.58 200.33 217.06 259.90 275.23 

Source for budget(s): NDSU extension http://www.ag.ndsu.edu/farmmanagement/crop-budget-archive Notes: Based on 2004-2012 budgets; 2003 and select values derived using price indices (in ita

 Data reflects average of budgets for 7 ND regions w/dry bean budgets 

 Returns to labor & management: avge for 2004-2012, used f/2008, then adjusted fwd 

index 

264 
Evaluation of Preven

Pre

Table 173: Dry bean - share of expenses incurred before planting - Nebraska 

Items 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Field operations 

Materials and services: 

20% 20% 20% 20% 20% 20% 20% 20% 20% 

Fertilizer 0% 0% 0% 0% 0% 0% 0% 0% 0% Herbicide 20% 20% 20% 20% 20% 20% 20% 20% 20% 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 0% Other 20% 20% 20% 20% 20% 20% 20% 20% 20% 

Insecticide 0% 0% 0% 0% 0% 0% 0% 0% 0% Custom 0% 0% 0% 0% 0% 0% 0% 0% 0% 

Scouting drybeans 0% 0% 0% 0% 0% 0% 0% 0% 0% Drybean premium 0% 0% 0% 0% 0% 0% 0% 0% 0% Crop Insurance 31% 31% 31% 31% 31% 31% 31% 31% 31% Interest 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead 

Farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Management incl scouting 20% 20% 20% 20% 20% 20% 20% 20% 20% 

 Machinery taxes, housing, ins & int 100% 100% 100% 100% 100% 100% 100% 100% 100% 

 Irrigation system taxes, ins & int 100% 100% 100% 100% 100% 100% 100% 100% 100% 

 Land incl interest and depreciation 100% 100% 100% 100% 100% 100% 100% 100% 100% 

265 
Evaluation of Preven

Pre

Table 174: Dry beans - share of expenses incurred before planting - North Dakota 

Items 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Cash expenses: Seed 0% 0% 0% 0% 0% 0% 0% 0% 0% Chemicals 20% 20% 20% 20% 20% 20% 20% 20% 20%  Fertilizer 0% 0% 0% 0% 0% 0% 0% 0% 0%  Crop Insurance 31% 31% 31% 31% 31% 31% 31% 31% 31%  Fuel & Lubrication 20% 20% 20% 20% 20% 20% 20% 20% 20%  Repairs 20% 20% 20% 20% 20% 20% 20% 20% 20%  Miscellaneous 20% 20% 20% 20% 20% 20% 20% 20% 20% 

Operating Interest 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: Misc. Overhead 100% 100% 100% 100% 100% 100% 100% 100% 100% 

 Machinery Depreciation 100% 100% 100% 100% 100% 100% 100% 100% 100% 

 Machinery Investment 100% 100% 100% 100% 100% 100% 100% 100% 100% 

 Land Charge 100% 100% 100% 100% 100% 100% 100% 100% 100% 

266 
Evaluation of Preven

Pre

Table 175: Dry bean prevented planting cost per acre - Nebraska 

Items 2003 2004 2005 2006 2007 2008 2009 2010 2

 Field operations Materials and services: 

13.99 15.01 15.94 16.77 10.17 18.45 24.70 44.71 47

Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Herbicide 4.54 4.58 3.79 4.02 3.83 4.08 4.42 10.50 10

 Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Other 10.51 11.00 6.19 6.54 7.10 8.07 7.85 0.82 0

 Insecticide 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Custom 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Scouting drybeans 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Drybean premium 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 3.05 2.85 3.03 3.65 4.14 6.46 5.81 5.99 6

 Interest 1.65 1.71 1.27 1.52 1.62 1.70 1.57 1.52 1

 Total 

33.74 35.14 30.22 32.50 26.86 38.76 44.35 63.54 66

Allocated overhead  Farm overhead 7.87 8.00 7.65 8.00 8.40 8.40 8.98 9.27 9

 Management incl scouting 5.77 6.04 5.72 6.04 6.48 7.37 7.17 7.37 8

 Machinery taxes, housing, ins & int 17.08 18.17 19.05 20.27 21.89 25.41 24.46 25.27 28

 Irrigation system taxes, ins & int 9.49 10.10 11.97 12.73 13.75 15.95 15.36 15.87 17

 Land incl interest and depreciation 92.74 95.00 100.64 110.00 114.68 128.72 143.55 148.23 159 Total, allocated overhead 

132.95 137.31 145.03 157.04 165.21 185.86 199.51 206.00 223

 Total costs listed 166.69 172.45 175.25 189.54 192.07 224.62 243.86 269.54 290Total costs 392.21 407.20 386.31 413.54 427.07 557.13 575.93 679.41 728Prevented planting % 43% 42% 45% 46% 45% 40% 42% 40% 4

267 
Evaluation of Preven

Pre

Table 176: Dry bean prevented planting cost per acre - North Dakota 

Items 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Chemicals 5.42 4.08 4.24 4.65 4.80 4.96 6.26 9.10 9 Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Crop Insurance 3.09 3.14 3.83 4.50 4.47 5.54 5.68 7.23 7

 Fuel & Lubrication 1.25 1.48 2.14 2.78 3.04 3.85 2.70 3.23 3

 Repairs 2.35 2.42 2.40 2.48 2.57 2.67 3.11 3.31 3

 Miscellaneous 0.19 0.20 0.20 0.20 0.20 0.30 1.70 0.93 1

 Operating Interest 0.71 0.73 0.89 1.14 1.24 1.24 1.15 1.16 1

 Total, operating costs 13.02 12.05 13.71 15.76 16.32 18.56 20.60 24.96 25

Allocated overhead: Misc. Overhead 4.25 4.37 4.26 4.38 4.44 4.55 5.77 5.97 7

 Machinery Depreciation 14.78 15.86 15.67 16.24 16.65 17.29 19.88 20.84 21

 Machinery Investment 9.83 10.55 10.25 10.60 10.81 11.17 11.86 12.53 12

 Land Charge 41.39 42.40 40.59 42.78 43.33 47.25 51.37 54.70 57

 Total, allocated overhead 

70.25 73.18 70.77 74.00 75.23 80.26 88.88 94.04 98

 Total costs listed 83.28 85.23 84.48 89.76 91.55 98.82 109.48 119.00 124

Total costs 172.86 173.51 185.77 196.58 200.33 217.06 259.90 275.23 293

Prevented planting % 48% 49% 45% 46% 46% 46% 42% 43% 4

268 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.4. Dry peas 

Overview 

Dry peas are legumes primarily sold to processors or used as feed. RMA insures three types of dry peas: 

lentils, chickpeas, and split peas. Dry peas are differentiated from green/succulent peas, in that green 

peas are grown for the fresh and frozen markets for human consumption. 

Most dry peas (over 90% in 2011 and 2012) are grown in Montana, North Dakota, and Washington. Acreage 

can vary substantially from one year to the next. U.S. planted area in 2012 was 649,000 acres for dry peas, 

463,000 acres for lentils, and 208,000 acres for chickpeas. In 2012, the country produced 572,650 tons, 

41% in Montana, 39% in North Dakota, and 13% in Washington. Small amounts are also produced in Idaho 

and Oregon. 

Figure 72: US dry pea production areas 

Source: Dry Pea and Lentil Council 

Sources of production cost information 

The primary source of production cost information for dry peas comes from the North Dakota State 

University Extension, which publishes budgets annually for field peas, lentils, and chickpeas for a number 

of regions within the state. (All field peas grown in North Dakota are split peas.) 

We averaged costs for each type of pea across North Dakota’s regional budgets to build an overall crop 

budget for each year. We used actual crop budget data for 2004-2012, and used price indices to come up 

with budget figures for 2003. 

Washington State Extension had one budget available for 2004 and this was used as a check against the 

North Dakota data. Other states do not publish crop budgets for dry peas. 

Production practices 

The pea is a hardy, cool season legume. Peas can be grown on a wide range of soil types, but there must 

be good drainage as field peas do not tolerate soggy or water-soaked conditions. 

269 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

As a cool season crop, peas cannot tolerate hot weather or drought stress during flowering, thus seeding 

early is important. Seeding should be as early in the spring as feasible provided soil temperature in the 

upper inch is over 40°F. In Minnesota and Wisconsin, this ranges from mid-March to mid-April. 

Drought conditions are also likely to cause producers not to plant pea crops. 

Peas need a weed free seedbed and they grow best when planted into a seedbed with a minimum amount 

of residue on the soil surface. In the Red River Valley, many farmers cultivate in the fall and spring to 

prepare the soil for seeding. Outside the Red River Valley, most North Dakota farmers utilize a no tillmethod with a chemical burn down and one pass seeding. In early spring, herbicide is sprayed on the field 

to get rid of any weeds. The one pass seeding then serves to break up the soil sufficiently at the same time 

the seed is planted. 

Peas are vulnerable to seed blights and rots; seeds should therefore be pre-treated with fungicides. 

Phosphate is applied at seeding, while potassium and sulfur are applied in bands beside the growing shoots. 

Prevented planting experience 

Prevented planting claims have been 24% of total indemnities the last 20 years. Total indemnities for dry 

peas were $163.8 million from 2003-2013. Prevented planting indemnities were $37.6 million, about 23% 

of this total. The majority of prevented planting claims over the decade (77%) originate from North Dakota, 

almost all due to excess moisture. Most remaining prevented planting claims (15%) came from Montana. 

Analysis 

In addition to the usual variation in cultivation costs, dry pea costs also vary significantly by crop type. For 

field peas the share of costs incurred pre-planting was 45%; for lentils, 39%. For field peas, this percentage 

dropped from 50% to 45% from 2003 to 2012; for lentils, the drop was smaller, from 42% to 39% over the 

same period. 

Figure 73: Share of costs incurred prior to planting dry peas 

270 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Chickpeas, by contrast, are more expensive to grow, particularly due to the high cost of seed. The share 

of costs incurred pre-planting for chickpeas, however, is much lower than for the other dry peas. The 

percentage of pre-planting costs rose, however, from 27% in 2003 to 30% in 2012. 

Averaged across all three pea types, the pre-planting percentage dropped from 40% in 2003 to 38% in 2012. 

Given the crop budget analysis, 40% would be a more appropriate PP rate for dry peas. However, chickpea 

prevented planting costs appear to be substantially lower than those for other dry peas, due to the much 

higher cost of chickpea seed. There may be merit to assigning chickpeas a 30% rate. 

Comparison of RMA payments to estimated PP costs 

The ratio of RMA’s incurred base PP payment to estimated PP costs was close to 1.00 from 2005 through 

2007, but has since been closer to 1.60. Also, since 27% of PP indemnities are associated with the additional 

10% coverage, this ratio would be higher by about 5% if that were taken into account (10%/60%*0.27 = 

0.045). 

Figure 74: Ratio of RMA payment to PP costs for dry peas 

Recommendation 

We recommend reducing the PP payment rate for dry peas from 60% of guarantee to 40%, which cuts the 

indemnity by 33%. 

271 
Evaluation of Preven

Pre

Table 177: Field pea production costs per planted acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 20

Cash expenses: Seed 16.22 17.25 17.25 17.25 19.20 31.50 33.00 31.50 31.

 Herbicides 14.26 14.64 14.64 16.00 18.00 19.89 23.54 24.86 25.

 Fertilizer 3.84 4.50 4.43 4.96 4.89 8.11 12.34 6.00 10.

 Crop Insurance 5.92 6.20 6.07 5.93 6.16 7.40 12.43 8.04 6.

 Fuel & Lubrication 4.77 6.24 8.50 11.13 12.26 15.02 10.88 12.60 15.

 Repairs 10.29 10.73 10.29 10.69 11.19 11.79 13.62 15.02 15.

 Miscellaneous 1.88 2.00 2.00 2.00 3.33 5.64 5.54 6.29 7.

 Operating Interest 1.62 1.85 2.06 2.64 3.10 3.73 3.06 2.74 2.

 Total, operating costs 58.80 63.41 65.24 70.60 78.13 103.08 114.41 107.05 115.

Allocated overhead: Opportunity cost of labor 11.23 11.58 12.00 12.42 12.84 13.19 13.55 13.62 13.

 Misc. Overhead 3.52 3.75 3.53 3.63 3.63 3.68 5.05 5.26 6.

 Machinery Depreciation 12.65 13.51 13.18 13.69 13.98 14.53 16.55 17.51 18.

 Machinery Investment 7.63 8.15 7.57 7.84 7.87 8.04 9.24 9.90 10.

 Land Charge 25.36 26.35 33.38 33.67 33.83 34.36 42.06 43.33 45.

 Total, allocated overhead 

60.38 63.34 69.66 71.25 72.15 73.80 86.45 89.62 94.

 Total costs listed 119.18 126.75 134.90 141.85 150.28 176.88 200.86 196.67 210.

Source for budget: North Dakota State University - Extension http://www.ag.ndsu.edu/farmmanagement/crop-budget-archive Notes:  Based on 2004-2012 budgets; 2003 values based on price indices  Data reflects the average of budgets for North Dakota  North Dakota accounts for 84% of national production Returns to labor (& management & risk) averaged for 2003-2012, used for 2008, then adjusted forward & back using labor index 

272 
Evaluation of Preven

Pre

Table 178: Lentil production costs per planted acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 15.14 16.10 14.00 13.30 13.30 23.80 26.60 28.00 30

 Herbicides 15.72 16.14 16.14 20.14 21.50 22.33 31.00 32.50 3

 Fertilizer 2.21 2.59 2.76 3.07 3.25 5.10 8.26 3.94 

 Crop Insurance 8.50 8.90 10.33 10.30 10.29 12.90 22.23 17.10 15

 Fuel & Lubrication 4.96 6.49 8.92 11.04 11.25 13.88 9.56 10.97 1

 Repairs 10.33 10.77 10.56 10.98 10.98 11.62 13.28 14.73 15

 Miscellaneous 3.75 4.00 4.00 4.00 4.00 6.00 6.25 7.00 8

 Operating Interest 1.70 1.95 2.17 2.82 3.08 3.59 3.22 3.00 

 Total, operating costs 62.32 66.94 68.88 75.65 77.65 99.22 120.40 117.24 126

Allocated overhead: Opportunity cost of labor 58.54 60.37 62.57 64.76 66.96 68.79 70.66 71.04 7

 Misc. Overhead 3.34 3.56 3.52 3.61 3.49 3.52 4.83 5.04 6

 Machinery Depreciation 11.89 12.70 12.70 13.92 13.61 14.09 15.92 16.90 1

 Machinery Investment 7.51 8.02 7.75 8.04 7.61 7.68 8.73 9.40 9

 Land Charge 26.21 27.24 27.87 28.67 28.83 30.67 33.00 33.47 34

 Total, allocated overhead 

107.50 111.89 114.41 119.00 120.50 124.75 133.14 135.85 140

 Total costs listed 169.81 178.83 183.29 194.65 198.15 223.97 253.54 253.09 267

Source for budget(s): North Dakota State University - Extension http://www.ag.ndsu.edu/farmmanagement/crop-budget-archive Notes:  Based on 2004-2012 budgets; 2003 values based on price indices  Data reflects the average of budgets for North Dakota  North Dakota accounts for 84% of national production Returns to labor (& management & risk) averaged for 2003-2012, used for 2008, then adjusted forward & back using labor index 

273 
Evaluation of Preven

Pre

Table 179: Chickpea production costs per planted acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 56.43 60.00 84.00 78.00 78.00 78.00 78.00 72.00 69

 Herbicides 15.72 16.14 16.14 16.14 20.50 21.25 28.80 32.50 3

 Fungicide 27.81 29.00 49.00 49.00 49.00 50.00 65.00 18.00 18

 Fertilizer 2.56 3.00 3.38 3.76 3.83 6.01 9.91 16.34 19

 Crop Insurance 0.00 0.00 0.00 6.90 8.04 10.95 10.65 10.85 12

 Fuel & Lubrication 4.42 5.79 8.79 11.44 11.36 14.02 9.96 12.29 15

 Repairs 9.49 9.90 11.34 11.78 11.80 12.49 14.23 16.76 1

 Miscellaneous 14.08 15.00 6.00 6.00 6.00 7.00 7.00 7.00 8

 Operating Interest 3.64 4.17 5.81 7.09 7.78 7.49 6.15 4.88 4

 Total, operating costs 134.16 143.00 184.46 190.11 196.31 207.21 229.70 190.62 19

Allocated overhead: Opportunity cost of labor 52.89 54.55 56.53 58.51 60.50 62.15 63.85 64.19 6

 Misc. Overhead 3.06 3.26 3.71 3.81 3.59 3.55 4.94 5.47 6

 Machinery Depreciation 11.57 12.36 14.36 14.91 14.24 14.56 16.61 19.82 20

 Machinery Investment 6.64 7.09 8.55 8.86 8.15 7.97 9.25 10.77 1

 Land Charge 18.76 19.50 25.35 25.85 26.25 27.75 30.30 30.30 3

 Total, allocated overhead 

92.93 96.76 108.50 111.94 112.73 115.98 124.95 130.55 13

 Total costs listed 227.09 239.76 292.96 302.05 309.04 323.19 354.65 321.17 33

Source for budget(s): North Dakota State University - Extension http://www.ag.ndsu.edu/farmmanagement/crop-budget-archive Notes:  Based on 2004-2012 budgets; 2003 values based on price indices  Data reflects the average of budgets for North Dakota  North Dakota accounts for 84% of national production Returns to labor (& management & risk) averaged for 2003-2012, used for 2008, then adjusted forward & back using labor index 

274 
Evaluation of Preven

Pre

Table 180: Field pea - share of expenses incurred before planting 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Herbicides 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 

Fertilizer 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 

Crop Insurance 24% 24% 24% 24% 24% 24% 24% 24% 24% 24% 

Fuel & Lubrication 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Repairs 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Miscellaneous 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 

Operating Interest 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: 

Opportunity cost of labor 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Misc. Overhead 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Machinery Depreciation 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Machinery Investment 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Land Charge 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

275 
Evaluation of Preven

Pre

Table 181: Lentil - share of expenses incurred before planting 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Herbicides 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 

Fertilizer 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 

Crop Insurance 24% 24% 24% 24% 24% 24% 24% 24% 24% 24% 

Fuel & Lubrication 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Repairs 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Miscellaneous 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 

Operating Interest 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: 

Opportunity cost of labor 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Misc. Overhead 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Machinery Depreciation 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Machinery Investment 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Land Charge 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

276 
Evaluation of Preven

Pre

Table 182: Chickpea - share of expenses incurred before planting 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% Herbicides 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Fungicide 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 20% 20% 20% 20% 20% 20% 20% 20% 20% 20% 

Crop Insurance 24% 24% 24% 24% 24% 24% 24% 24% 24% 24% 

Fuel & Lubrication 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Repairs 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% Miscellaneous 15% 15% 15% 15% 15% 15% 15% 15% 15% 15% 

Operating Interest 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: 

Opportunity cost of labor 25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Misc. Overhead 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Machinery Depreciation 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Machinery Investment 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

Land Charge 100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

277 
Evaluation of Preven

Pre

Table 183: Field pea prevented planting cost per acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Herbicides 2.14 2.20 2.20 2.40 2.70 2.98 3.53 3.73 3.80 

 Fertilizer 0.77 0.90 0.89 0.99 0.98 1.62 2.47 1.20 2.14 

 Crop Insurance 1.42 1.49 1.46 1.42 1.48 1.78 2.98 1.93 1.62 

 Fuel & Lubrication 0.72 0.94 1.28 1.67 1.84 2.25 1.63 1.89 2.34 

 Repairs 1.54 1.61 1.54 1.60 1.68 1.77 2.04 2.25 2.39 

 Miscellaneous 0.28 0.30 0.30 0.30 0.50 0.85 0.83 0.94 1.07 

 Operating Interest 0.40 0.46 0.52 0.66 0.78 0.93 0.77 0.69 0.72 

 Total, operating costs 7.27 7.89 8.17 9.05 9.95 12.18 14.25 12.63 14.08 

Allocated overhead: Opportunity cost of labor 2.81 2.89 3.00 3.10 3.21 3.30 3.39 3.41 3.46 

 Misc. Overhead 3.52 3.75 3.53 3.63 3.63 3.68 5.05 5.26 6.42 

 Machinery Depreciation 12.65 13.51 13.18 13.69 13.98 14.53 16.55 17.51 18.46 

 Machinery Investment 7.63 8.15 7.57 7.84 7.87 8.04 9.24 9.90 10.40  Land Charge 25.36 26.35 33.38 33.67 33.83 34.36 42.06 43.33 45.64 

 Total, allocated overhead 

51.96 54.65 60.66 61.93 62.52 63.91 76.29 79.41 84.38 

 Total costs listed 59.24 62.55 68.83 70.98 72.47 76.09 90.54 92.04 98.46 

Total costs 119.18 126.75 134.90 141.85 150.28 176.88 200.86 196.67 210.62 

Prevented planting % 50% 49% 51% 50% 48% 43% 45% 47% 47% 

278 
Evaluation of Preven

Pre

Table 184: Lentil prevented planting cost per acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Herbicides 2.36 2.42 2.42 3.02 3.23 3.35 4.65 4.88 4.95 

 Fertilizer 0.44 0.52 0.55 0.61 0.65 1.02 1.65 0.79 1.40 

 Crop Insurance 2.04 2.14 2.48 2.47 2.47 3.10 5.34 4.10 3.79 

 Fuel & Lubrication 0.74 0.97 1.34 1.66 1.69 2.08 1.43 1.65 2.04 

 Repairs 1.55 1.62 1.58 1.65 1.65 1.74 1.99 2.21 2.34 

 Miscellaneous 0.56 0.60 0.60 0.60 0.60 0.90 0.94 1.05 1.20 

 Operating Interest 0.43 0.49 0.54 0.71 0.77 0.90 0.81 0.75 0.77 

 Total, operating costs 8.12 8.75 9.52 10.72 11.05 13.09 16.81 15.42 16.49 

Allocated overhead: Opportunity cost of labor 14.64 15.09 15.64 16.19 16.74 17.20 17.67 17.76 18.04 

 Misc. Overhead 3.34 3.56 3.52 3.61 3.49 3.52 4.83 5.04 6.21 

 Machinery Depreciation 11.89 12.70 12.70 13.92 13.61 14.09 15.92 16.90 17.83 

 Machinery Investment 7.51 8.02 7.75 8.04 7.61 7.68 8.73 9.40 9.93  Land Charge 26.21 27.24 27.87 28.67 28.83 30.67 33.00 33.47 34.67 

 Total, allocated overhead 

63.59 66.61 67.48 70.43 70.28 73.16 80.15 82.57 86.68 

 Total costs listed 71.71 75.36 77.00 81.15 81.33 86.24 96.95 97.99 103.18 

Total costs 169.81 178.83 183.29 194.65 198.15 223.97 253.54 253.09 267.00 

Prevented planting % 42% 42% 42% 42% 41% 39% 38% 39% 39% 

279 
Evaluation of Preven

Pre

Table 185: Chickpea prevented planting cost per acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Herbicides 2.36 2.42 2.42 2.42 3.08 3.19 4.32 4.88 4.95 

 Fungicide 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.51 0.60 0.68 0.75 0.77 1.20 1.98 3.27 3.84 

 Crop Insurance 0.00 0.00 0.00 1.66 1.93 2.63 2.56 2.60 2.93 

 Fuel & Lubrication 0.66 0.87 1.32 1.72 1.70 2.10 1.49 1.84 2.30 

 Repairs 1.42 1.49 1.70 1.77 1.77 1.87 2.13 2.51 2.64 

 Miscellaneous 2.11 2.25 0.90 0.90 0.90 1.05 1.05 1.05 1.20 

 Operating Interest 0.91 1.04 1.45 1.77 1.95 1.87 1.54 1.22 1.21 

 Total, operating costs 7.98 8.67 8.47 10.98 12.09 13.92 15.07 17.37 19.07 

Allocated overhead: Opportunity cost of labor 13.22 13.64 14.13 14.63 15.12 15.54 15.96 16.05 16.30 

 Misc. Overhead 3.06 3.26 3.71 3.81 3.59 3.55 4.94 5.47 6.61  Machinery Depreciation 11.57 12.36 14.36 14.91 14.24 14.56 16.61 19.82 20.73 

 Machinery Investment 6.64 7.09 8.55 8.86 8.15 7.97 9.25 10.77 11.28  Land Charge 18.76 19.50 25.35 25.85 26.25 27.75 30.30 30.30 31.60 

 Total, allocated overhead 

53.26 55.85 66.10 68.06 67.35 69.37 77.06 82.41 86.52 

 Total costs listed 61.24 64.51 74.57 79.04 79.44 83.28 92.14 99.78 105.59 

Total costs 227.09 239.76 292.96 302.05 309.04 323.19 354.65 321.17 333.21 

Prevented planting % 27% 27% 25% 26% 26% 26% 26% 31% 32% 

280 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.5. Flaxseed 

Overview 

Flaxseed is produced primarily in North Dakota (84% of national acreage in 2011) and Montana (10%). Small 

amounts are also produced in South Dakota and Minnesota. 

The map below from NASS provides a snapshot of the main areas of production. Production is concentrated 

in the western half of North Dakota. 

Figure 75: US flaxseed acres planted by county in 2012 

Sources of production cost information 

The primary source of production cost information comes from the North Dakota State University Extension, 

which publishes budgets annually for flaxseed and other crops for a number of regions within the state. 

Other states do not publish flax crop budgets. The USDA has no information available on flax production 

costs. 

Because flax production is concentrated in North Dakota’s Northwest (NW), North-central (NC), and 

Southwest (SW) regions, we averaged costs for these three regions to build an overall crop budget for flax. 

We used actual crop budget data for 2004-2012, and used price indices to come up with budget figures for 

2003. 

NDSU also published a detailed guide on flaxseed production, Flax Production in North Dakota (2007): 

http://www.ag.ndsu.edu/pubs/plantsci/crops/a1038.pdf. 

281 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Production practices 

Flaxseed is typically rotated with other crops (potatoes, canola, or sugar beets), and its recommended 

frequency within a rotation is no more often than once every three years. 

Most flaxseed is now produced under no-till practice. An herbicide, typically Glyphosate (sometimes in 

combination with other products), is applied in a burndown either late in the fall, or more commonly early 

in the spring. All other effort and labor either takes place at or after planting. 

Prevented planting experience 

Prevented planting claims have accounted for 39% of total indemnities over the last 20 years. For the 10­

year period 2003-2012, there were $68.3 million in indemnities for flaxseed, $23.4 million (34%) of which 

were for prevented planting. Excess moisture/rain was the cause of 99% of prevented planting claims. 

Claims came primarily from North Dakota ($22.9m, 97.8%); Montana ($0.25m, 1.1%) and Minnesota ($0.2m, 

0.8%) accounted for most of the rest. 

Analysis 

In 2003, pre-planting costs for flaxseed were 53% ($58 of $110 per acre); by 2012, the pre-plant share of 

costs dropped to 45% ($86 out of $191). 

The decreased share of pre-planting costs is primarily due to the combination of the relative increase in 

the cost of fertilizer and the relative decrease in the cost of machinery investment and depreciation (as a 

percentage of total costs). 

Figure 76: Share of costs incurred prior to planting flaxseed 

282 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of RMA payments to estimated PP costs 

The ratio of RMA’s incurred base PP payment to estimated PP costs was close to 1.00 from 2003 through 

2005, but has since risen and was closer to 2.00 in 2012. Since 49% of PP indemnities are associated with 

the additional 10% coverage, this ratio would be higher by about 8% if that were taken into account 

(10%/60%*0.49 = 0.082). 

Figure 77: Ratio of RMA payment to PP costs for flaxseed 

Recommendation 

We recommend reducing the PP payment rate for flax from 60% of guarantee to 45%, which cuts the 

indemnity by 25%. This would put it closer to but still well above actual RMA payment levels. 

283 
Evaluation of Preven

Pre

Table 186: Flaxseed production costs per planted acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 5.56 5.70 8.87 5.70 5.07 10.45 8.87 7.92 11 Herbicides 14.71 14.71 14.71 16.83 18.71 20.06 24.50 23.50 24

 Fertilizer 7.86 8.87 11.61 10.96 11.91 18.79 20.08 15.23 24 Crop Insurance 5.91 6.00 4.43 5.57 4.76 6.47 8.63 6.37 6

 Fuel & Lubrication 5.25 6.19 8.09 9.49 9.83 12.42 8.78 10.28 12

 Repairs 9.98 10.28 9.53 9.38 9.70 10.40 11.85 13.29 14

 Miscellaneous 0.96 1.00 1.00 1.00 3.67 4.50 1.50 1.50 1

 Operating Interest 1.53 1.58 1.89 2.28 2.63 3.12 2.32 2.05 2

 Total, operating costs 51.75 54.33 60.14 61.21 66.26 86.21 86.53 80.13 96

Allocated overhead: Returns to labor & management 9.61 9.79 10.10 10.47 10.83 11.20 11.51 11.57 11 Misc. Overhead 3.38 3.53 3.32 3.23 3.28 3.30 4.61 4.80 5

 Machinery Depreciation 11.67 12.52 11.98 11.82 11.89 12.32 13.94 14.90 15 Machinery Investment 7.34 7.87 7.22 6.92 7.05 7.16 8.18 8.82 9

 Land Charge 26.17 27.24 27.83 28.67 28.83 30.67 33.00 33.47 34 Total, allocated overhead 

58.16 60.96 60.45 61.10 61.88 64.65 71.24 73.55 77

 Total costs listed 109.92 115.29 120.59 122.32 128.15 150.86 157.77 153.68 174

Source for budget(s): North Dakota State University - Extension http://www.ag.ndsu.edu/farmmanagement/crop-budget-archive Notes: Based on 2004-2012 budgets; 2003 values based on price indices  Data reflects the average of budgets for North Dakota's Northwest, North-Central, and Southwest regions (the key flax growing areas)  North Dakota accounts for 84% of national production Returns to labor (& management & risk) averaged for 2003-2012, used for 2008, then adjusted forward & back using labor index 

284 
Evaluation of Preven

Pre

Table 187: Flaxseed - share of expenses incurred before planting 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 Cash expenses: Seed 0% 0% 0% 0% 0% 0% 0% 0% 0% 

Herbicides 25% 25% 25% 25% 25% 25% 25% 25% 25% 

 Fertilizer 0% 0% 0% 0% 0% 0% 0% 0% 0% 

 Crop Insurance 39% 39% 39% 39% 39% 39% 39% 39% 39% 

 Fuel & Lubrication 10% 10% 10% 10% 10% 10% 10% 10% 10% 

 Repairs 10% 10% 10% 10% 10% 10% 10% 10% 10% 

 Miscellaneous 0% 0% 0% 0% 0% 0% 0% 0% 0% 

Operating Interest 25% 25% 25% 25% 25% 25% 25% 25% 25% 

 Total, operating costs Allocated overhead: Returns to labor & management 20% 20% 20% 20% 20% 20% 20% 20% 20% 

 Misc. Overhead 100% 100% 100% 100% 100% 100% 100% 100% 100% 

 Machinery Depreciation 100% 100% 100% 100% 100% 100% 100% 100% 100% 

 Machinery Investment 100% 100% 100% 100% 100% 100% 100% 100% 100% 

 Land Charge 100% 100% 100% 100% 100% 100% 100% 100% 100% 

285 
Evaluation of Preven

Pre

Table 188: Flaxseed prevented planting cost per acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Herbicides 3.68 3.68 3.68 4.21 4.68 5.02 6.13 5.88 6.00 

 Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop Insurance 2.30 2.34 1.73 2.17 1.86 2.52 3.37 2.48 2.72 

 Fuel & Lubrication 0.52 0.62 0.81 0.95 0.98 1.24 0.88 1.03 1.27 

 Repairs 1.00 1.03 0.95 0.94 0.97 1.04 1.19 1.33 1.41 

 Miscellaneous 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Operating Interest 0.38 0.40 0.47 0.57 0.66 0.78 0.58 0.51 0.59 

 Total, operating costs 7.89 8.06 7.64 8.84 9.14 10.60 12.13 11.23 11.99 

Allocated overhead: Returns to labor & management 1.92 1.96 2.02 2.09 2.17 2.24 2.30 2.31 2.35 

 Misc. Overhead 3.38 3.53 3.32 3.23 3.28 3.30 4.61 4.80 5.96 

 Machinery Depreciation 11.67 12.52 11.98 11.82 11.89 12.32 13.94 14.90 15.78 

 Machinery Investment 7.34 7.87 7.22 6.92 7.05 7.16 8.18 8.82 9.34 

 Land Charge 26.17 27.24 27.83 28.67 28.83 30.67 33.00 33.47 34.67 

 Total, allocated overhead 

50.48 53.12 52.37 52.73 53.22 55.69 62.04 64.30 68.09 

 Total costs listed 58.36 61.18 60.01 61.57 62.36 66.29 74.17 75.52 80.08 

 Total costs 110.41 115.29 120.59 122.32 128.15 150.86 157.77 153.68 174.26 

Prevented planting % 53% 53% 50% 50% 49% 44% 47% 49% 46% 

286 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.6. Green peas 

Overview 

Green peas, also known as succulent peas, are closely related to field/dry peas. They differ from dry peas 

under RMA insurance specifications but are closely related and have similar production inputs, disease 

susceptibilities, and environmental requirements. Green peas are grown primarily in Washington, Oregon, 

Minnesota, Wisconsin, Iowa, New York, Maryland, and Delaware. 

Figure 78: Green pea production areas 

Sources: Agralytica, University of Nebraska, Small Grains.org, Montana State University, North Dakota State University 

Sources of production cost information 

The primary source of production cost information comes from the University of Minnesota’s FINBIN system, 

which collects cost data from groups of farms. Other states with green pea budgets include North Dakota 

(NDSU Extension) and Nebraska (UN-Lincoln Extension). 

For this budget review we worked with the FINBIN budgets and the NDSU budgets. FINBIN provided 

production data for all years (2003-2012). NDSU provided yearly budgets for 2004-2012 for seven of the 

state’s nine growing regions; these were averaged and 2003 figures estimated using price indexes. 

Production practices 

The pea is a hardy, cool season, legume that is cultivated throughout the world. Peas are a rich source of 

proteins, amino acids, and vitamins. Peas can be grown on a wide range of soil types, from light sandy 

loams to heavy clays, but in any soil, there must be good drainage as field peas do not tolerate soggy or 

water-soaked conditions. If the soil is over-saturated with water or moisture producers will likely file a 

prevented planting claim. Peas need a weed free seedbed and they grow best when planted into a seedbed 

with a minimum amount of residue on the soil surface. 

As a cool season crop, pea cannot tolerate hot weather or drought stress during flowering, thus seeding 

early is important. Drought conditions are also likely to cause producers not to plant pea crops. Seeding 

should be as early in the spring as feasible provided soil temperature in the upper inch is over 40°F. In 

Minnesota and Wisconsin, this ranges from mid-March to mid-April. 

287 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Peas are vulnerable to seed blights and rots; therefore seeds should be pretreated with fungicides before 

planting. Phosphate is applied at seeding while potassium and sulfur are applied in bands beside the growing 

shoots. Although snap and lima beans are typically nitrogen-fixing crops, the nitrogen fixing ability is 

dependent on inoculating the seeds with a bacterial strain. Commercial producers do not inoculate their 

seed, instead relying on chemical nitrogen fertilization at the time of planting. 

Prevented planting experience 

Total crop insurance indemnities for green peas from 2003 to 2012 totaled more than $46.4 million. 

Prevented planting indemnities were $865,000, less than 2% of the total. Moreover, PP 10% buy-up accounts 

for only 5% of green pea PP indemnities. 

Most prevented planting claims came from Wisconsin ($340,000, 39%) and Minnesota ($297,000, 34%). 

Almost all prevented planting claims (98%) were due to excess moisture/precipitation/rain. 

Analysis 

The percentage used by RMA for prevented planting for green peas is 40%. 

Analysis of the North Dakota budgets indicates that the percentage of pre-planting costs decreased from 

55% in 2003 to 49% in 2012. 

FINBIN data for Minnesota suggest considerably higher pre-planting percentages, declining from 68% in 2003 

to 64% in 2012. For the FINBIN budgets, land alone represented over 40% of total production costs. 

Averaging these two budgets, the pre-planting cost percentage declined from 61% in 2003 to 56% in 2012. 

Given this crop budget analysis, a more appropriate PP rate would be 60%. 

Figure 79: Share of costs incurred prior to planting green peas 

288 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of estimated PP cost to RMA payments 

The ratio of RMA’s incurred base PP payment to estimated PP costs in the Northern Crescent has been close 

to 1.00. This would seem to argue that the payment factor is not that far out of line. 

Figure 80: Ratio of RMA payment to PP costs for green peas 

Recommendation 

Although the ratio of RMA’s base PP payment to estimated PP costs may appear appropriate, green pea 

farmers are neither making PP claims nor going for buy-up policies in any meaningful way. 

It appears, rather, that the 40% payment factor is too low to adequately compensate farmers in a PP 

situation. 

RMA should increase the PP payment rate, by 25%, to a new rate of 50%, to better match estimated costs 

and thus more adequately compensate farmers unable to plant in PP situations. 

289 
Evaluation of Preven

Pre

Table 189: Green peas production costs per planted acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 16.22 17.25 17.25 17.25 19.20 31.50 33.00 31.50 31

 Herbicides 14.40 14.64 14.64 16.00 18.00 19.89 23.54 24.86 25

 Fertilizer 3.84 4.50 4.43 4.96 4.89 8.11 12.34 6.00 10

 Crop Insurance 5.92 6.20 6.07 5.93 6.16 7.40 12.43 8.04 6

 Fuel & Lubrication 4.77 6.24 8.50 11.13 12.26 15.02 10.88 12.60 15

 Repairs 10.29 10.73 10.29 10.69 11.19 11.79 13.62 15.02 15

 Miscellaneous 1.93 2.00 2.00 2.00 3.33 5.64 5.54 6.29 7

 Operating Interest 1.62 1.85 2.06 2.64 3.10 3.73 3.06 2.74 2

 Total, operating costs 58.99 63.41 65.24 70.60 78.13 103.08 114.41 107.05 115

Allocated overhead: Misc. Overhead 3.62 3.75 3.53 3.63 3.63 3.68 5.05 5.26 6

 Machinery Depreciation 12.65 13.51 13.18 13.69 13.98 14.53 16.55 17.51 18

 Machinery Investment 7.63 8.15 7.57 7.84 7.87 8.04 9.24 9.90 10

 Land Charge 26.63 26.35 33.38 33.67 33.83 34.36 42.06 43.33 45

 Total, allocated overhead 

50.53 51.76 57.66 58.83 59.31 60.61 72.90 76.00 80

 Total costs listed 109.52 115.17 122.90 129.43 137.44 163.69 187.31 183.05 196

Source for budget: NDSU-Extension http://www.ag.ndsu.edu/farmmanagement/crop-budget-archive Notes:  Based on 2004-2012 budgets; 2003 values based on price indices  Data reflects the average of budgets for North Dakota's seven green pea-growing regions 

290 
Evaluation of Preven

Pre

Table 190: Green peas production costs per planted acre: Minnesota and Wisconsin 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Direct Expenses Seed 0.09 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Fertilizer 15.10 15.11 14.98 15.87 14.32 26.72 40.85 26.17 32

 Crop chemicals 13.10 14.91 14.92 12.60 15.30 15.86 17.50 17.76 18

 Crop insurance 5.34 5.94 4.42 5.26 5.31 6.69 5.49 4.92 6

 Fuel & oil 5.42 6.66 7.81 8.49 9.89 13.54 8.68 12.29 13

 Repairs 10.51 10.53 11.10 10.08 13.86 15.02 20.94 17.32 18

 Custom hire 1.85 1.99 1.96 1.65 3.36 4.99 4.01 5.47 5

 Hired labor 0.02 0.07 0.00 0.00 0.44 2.98 2.65 3.23 1

 Land rent 83.62 67.10 79.46 76.24 83.57 95.00 141.95 104.34 113

 Machinery leases 0.46 0.23 0.04 0.33 0.30 0.06 0.39 1.54 0

 Utilities 0.02 0.00 0.04 0.00 0.03 0.49 0.93 0.55 0

 Marketing 1.08 0.34 0.08 0.32 0.06 0.28 0.47 0.37 0

 Operating interest 3.27 3.21 3.12 4.58 4.08 4.42 4.79 4.58 2

 Miscellaneous 0.51 0.39 0.78 1.05 1.38 1.95 1.05 4.72 1

Total direct expenses 140.39 126.48 138.71 136.47 151.90 188.00 249.70 203.26 215

Overhead Expenses  Custom hire 0.64 0.92 0.68 0.72 0.70 0.28 0.00 0.24 0

 Hired labor 3.95 3.63 3.64 3.47 4.62 4.48 14.47 5.29 6

 Machinery leases 1.29 3.26 1.55 1.17 1.35 0.48 0.92 0.65 0

 Building leases 0.00 0.00 0.07 0.12 0.26 0.46 0.70 0.30 0

 RE & pers. property taxes 2.75 4.49 4.01 5.70 6.02 6.74 4.47 9.14 9

 Farm insurance 2.64 3.67 2.61 2.67 2.32 2.77 3.70 2.78 3

 Utilities 1.74 1.48 1.62 1.49 1.47 1.71 1.82 2.15 2

 Dues & professional fees 0.61 0.51 1.13 1.05 0.74 0.97 1.46 1.24 1

 Interest 11.95 14.80 13.15 15.22 18.54 15.90 11.40 19.53 17

 Mach & bldg depreciation 11.29 10.51 10.93 10.45 12.39 14.72 16.99 17.73 16

 Miscellaneous 2.70 1.90 2.05 1.75 3.15 3.05 6.44 4.14 4

Total overhead expenses 39.56 45.17 41.44 43.81 51.56 51.56 62.37 63.19 63

Total expenses 179.97 171.66 180.16 180.28 203.47 239.60 312.07 266.47 279

Source for budget: FINBIN (University of Minnesota) http://www.finbin.umn.edu/CropEnterpriseAnalysis/Default.aspx

291 
Evaluation of Preven

Pre

Table 191: Green peas - share of expenses incurred before planting: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 20

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 0% Herbicides 25% 25% 25% 25% 25% 25% 25% 25% 2

Fertilizer 25% 25% 25% 25% 25% 25% 25% 25% 2Crop Insurance 2% 2% 2% 2% 2% 2% 2% 2% 

Fuel & Lubrication 25% 25% 25% 25% 25% 25% 25% 25% 2

Repairs 25% 25% 25% 25% 25% 25% 25% 25% 2

Miscellaneous 25% 25% 25% 25% 25% 25% 25% 25% 2Operating Interest 25% 25% 25% 25% 25% 25% 25% 25% 2

 Total, operating costs Allocated overhead: 

Misc. Overhead 100% 100% 100% 100% 100% 100% 100% 100% 10

Machinery Depreciation 100% 100% 100% 100% 100% 100% 100% 100% 10Machinery Investment 100% 100% 100% 100% 100% 100% 100% 100% 10

Land Charge 100% 100% 100% 100% 100% 100% 100% 100% 10

292 
Evaluation of Preven

Pre

Table 192: Green peas - share of expenses incurred before planting: Minnesota and Wisconsin 

Item 2003 2004 2005 2006 2007 2008 2009 2010 20

Direct Expenses Seed 0% 0% 0% 0% 0% 0% 0% 0% 

 Fertilizer 25% 25% 25% 25% 25% 25% 25% 25% 2

 Crop chemicals 25% 25% 25% 25% 25% 25% 25% 25% 2

 Crop insurance 2% 2% 2% 2% 2% 2% 2% 2% 

 Fuel & oil 25% 25% 25% 25% 25% 25% 25% 25% 2

 Repairs 25% 25% 25% 25% 25% 25% 25% 25% 2

 Custom hire 25% 25% 25% 25% 25% 25% 25% 25% 2

 Hired labor 30% 30% 30% 30% 30% 30% 30% 30% 3

 Land rent 100% 100% 100% 100% 100% 100% 100% 100% 10

 Machinery leases 100% 100% 100% 100% 100% 100% 100% 100% 10

 Utilities 25% 25% 25% 25% 25% 25% 25% 25% 2

 Marketing 0% 0% 0% 0% 0% 0% 0% 0% 

 Operating interest 25% 25% 25% 25% 25% 25% 25% 25% 2

 Miscellaneous 25% 25% 25% 25% 25% 25% 25% 25% 2

Overhead Expenses  Custom hire 25% 25% 25% 25% 25% 25% 25% 25% 2

 Hired labor 30% 30% 30% 30% 30% 30% 30% 30% 3

 Machinery leases 100% 100% 100% 100% 100% 100% 100% 100% 10

 Building leases 100% 100% 100% 100% 100% 100% 100% 100% 10 RE & pers. property taxes 100% 100% 100% 100% 100% 100% 100% 100% 10 Farm insurance 100% 100% 100% 100% 100% 100% 100% 100% 10 Utilities 25% 25% 25% 25% 25% 25% 25% 25% 2

 Dues & professional fees 100% 100% 100% 100% 100% 100% 100% 100% 10

 Interest 25% 25% 25% 25% 25% 25% 25% 25% 2

 Mach & bldg depreciation 100% 100% 100% 100% 100% 100% 100% 100% 10 Miscellaneous 100% 100% 100% 100% 100% 100% 100% 100% 10

293 
Evaluation of Preven

Pre

Table 193: Green peas prevented planting cost per acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Herbicides 3.60 3.66 3.66 4.00 4.50 4.97 5.89 6.22 6

 Fertilizer 0.96 1.13 1.11 1.24 1.22 2.03 3.09 1.50 2

 Crop Insurance 0.12 0.12 0.12 0.12 0.12 0.15 0.25 0.16 0

 Fuel & Lubrication 1.19 1.56 2.13 2.78 3.07 3.76 2.72 3.15 3

 Repairs 2.57 2.68 2.57 2.67 2.80 2.95 3.41 3.76 3

 Miscellaneous 0.48 0.50 0.50 0.50 0.83 1.41 1.39 1.57 1

 Operating Interest 0.40 0.46 0.52 0.66 0.78 0.93 0.77 0.69 0

 Total, operating costs 9.33 10.11 10.60 11.97 13.32 16.19 17.49 17.04 19

Allocated overhead: Misc. Overhead 3.62 3.75 3.53 3.63 3.63 3.68 5.05 5.26 6

 Machinery Depreciation 12.65 13.51 13.18 13.69 13.98 14.53 16.55 17.51 18

 Machinery Investment 7.63 8.15 7.57 7.84 7.87 8.04 9.24 9.90 10 Land Charge 26.63 26.35 33.38 33.67 33.83 34.36 42.06 43.33 45

 Total, allocated overhead 

50.53 51.76 57.66 58.83 59.31 60.61 72.90 76.00 80

 Total costs listed 59.86 61.87 68.26 70.80 72.63 76.80 90.39 93.04 100

Total costs 109.52 115.17 122.90 129.43 137.44 163.69 187.31 183.05 196

Prevented planting % 55% 54% 56% 55% 53% 47% 48% 51% 

294 
Evaluation of Preven

Pre

Table 194: Green peas prevented planting cost per acre: Minnesota and Wisconsin 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Direct Expenses Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Fertilizer 3.78 3.78 3.75 3.97 3.58 6.68 10.21 6.54 8

Crop chemicals 3.28 3.73 3.73 3.15 3.83 3.97 4.38 4.44 4

Crop insurance 0.11 0.12 0.09 0.11 0.11 0.13 0.11 0.10 0

Fuel & oil 1.36 1.67 1.95 2.12 2.47 3.39 2.17 3.07 3

Repairs 2.63 2.63 2.78 2.52 3.47 3.76 5.24 4.33 4

Custom hire 0.46 0.50 0.49 0.41 0.84 1.25 1.00 1.37 1

Hired labor 0.01 0.02 0.00 0.00 0.13 0.89 0.80 0.97 0

Land rent 83.62 67.10 79.46 76.24 83.57 95.00 141.95 104.34 113

Machinery leases 0.46 0.23 0.04 0.33 0.30 0.06 0.39 1.54 0

Utilities 0.01 0.00 0.01 0.00 0.01 0.12 0.23 0.14 0

Marketing 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

Operating interest 0.82 0.80 0.78 1.15 1.02 1.11 1.20 1.15 0

Miscellaneous 0.13 0.10 0.20 0.26 0.35 0.49 0.26 1.18 0

Total direct expenses 96.64 80.67 93.27 90.26 99.66 116.84 167.93 129.16 138

Overhead Expenses Custom hire 0.16 0.23 0.17 0.18 0.18 0.07 0.00 0.06 0

Hired labor 1.19 1.09 1.09 1.04 1.39 1.34 4.34 1.59 1

Machinery leases 1.29 3.26 1.55 1.17 1.35 0.48 0.92 0.65 0

Building leases 0.00 0.00 0.07 0.12 0.26 0.46 0.70 0.30 0

RE & pers. property taxes 2.75 4.49 4.01 5.70 6.02 6.74 4.47 9.14 9

Farm insurance 2.64 3.67 2.61 2.67 2.32 2.77 3.70 2.78 3

Utilities 0.44 0.37 0.41 0.37 0.37 0.43 0.46 0.54 0

Dues & professional fees 0.61 0.51 1.13 1.05 0.74 0.97 1.46 1.24 1

Interest 2.99 3.70 3.29 3.81 4.64 3.98 2.85 4.88 4

Mach & bldg depreciation 11.29 10.51 10.93 10.45 12.39 14.72 16.99 17.73 16

Miscellaneous 2.70 1.90 2.05 1.75 3.15 3.05 6.44 4.14 4

Total overhead expenses 26.05 29.73 27.30 28.31 32.79 35.01 42.33 43.05 44

Total Costs Listed 122.69 110.40 120.57 118.56 132.46 151.84 210.26 172.21 182

Total costs 179.97 

68% 

171.66

64%

 180.16 67%

 180.28 

66% 

203.47 

65%

239.60

 63%

 312.07 

67% 

266.47

65%

 279

 

Prevented planting % 

295 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.7. Millet 

Overview 

Proso (common) millet is produced primarily in Colorado (55%), with lesser amounts in Nebraska (21%) and 

South Dakota (19%). Several other states produce the remainder (5%). Total production in 2011 was an 

estimated 9.1 million bushels worth $53.7 million. 

Figure 81: US millet production areas 

Sources of production cost information 

The primary source of production cost information comes from Colorado State University (CSU), which has 

published proso millet budgets for each of the years 2010-2012. The University of Nebraska-Lincoln (UNL) 

Extension has also published recent budgets. The USDA has no information available on millet production 

costs. 

We used the CSU budgets as a proxy for all millet production, given that Colorado produces more than half 

of the country’s millet. We used crop budget data for 2010-2012 and used price indices to come up with 

budget figures for the years 2003-2009. We also checked recent UNL budgets and obtained copies of budgets 

from a decade ago for comparison purposes. 

Production practices 

Proso millet is grown for birdseed and to a lesser extent, as forage for animal feed. It is typically rotated 

with other crops, often with winter annuals such as wheat, or warm season broadleaf crops such as 

sunflower. Proso is seen as an alternative to summer fallow. It is an excellent dry land and no-till crop. 

Millet can be grown in just 60-100 days, has limited water requirements, and can yield well with inconsistent 

water availability. 

Millet is typically planted in late May / early June and harvested in late August or early September. 

Millet is mostly produced under no-till practice. Glyphosate is typically used following a fall crop and/or 

before seeding millet in the spring. 

296 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Fertilizer and other products, however, are generally used only post-planting. Millet generally is a lowmaintenance crop, especially under no-till, which has become more common. 

Prevented planting experience 

Prevented planting claims have only been 5% of total indemnities from 1993-2012, and only 3% of PP 

indemnities were associated with the additional 10% coverage. Over the 10 year period 2003-2012, total 

indemnities for millet were $52.8 million, $3.2 million of which (6%) were prevented planting. Prevented 

planting for millet has occurred primarily in Colorado (53%), South Dakota (31%), and Nebraska (13%). Excess 

moisture is the main cause ($2 million), though drought is a reason also ($1.2 million), particularly in 

Colorado. 

Analysis 

Based on analysis of the Colorado budget, pre-planting costs for millet were an estimated 49% in 2003 ($61 

of $124 per acre); in 2012, the pre-planting share of costs remained at 49% ($99 out of $203). 

A separate review of the University of Nebraska-Lincoln Extension budget for 2012 for millet suggested preplanting costs of 52%. 

Figure 82: Share of costs incurred prior to planting millet 

297 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of estimated PP cost to RMA payments 

The ratio of RMA’s incurred base PP payment to estimated PP costs has been well below 1.00, averaging 

about 0.75 in recent years. 

Figure 83: Ratio of RMA payment to PP costs for millet 

Recommendation 

The production cost information points to a PP factor of 50%, but the payment ratio suggests that the PP 

base payment rate is not high enough. However, there may be logical reasons for the discrepancy. 

RMA’s PP payments appear to be going to less productive land: its payments of $65/acre imply production 

costs of $108/acre. Our total production cost estimate, by contrast, exceeds $200 per acre (Colorado); and 

the University of Nebraska-Lincoln identifies budget costs in excess of $300/acre. 

For well managed millet production, we stick with recommending that the PP payment rate be reduced to 

50%, reducing indemnity payments by 16.7%. This would bring payments more in line with estimated PP 

costs. 

298 
Evaluation of Preven

Pre

Table 195: Millet production costs per planted acre: Colorado

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 1.62 1.66 1.77 1.91 2.15 2.72 3.14 3.26 

 Fertilizer 8.32 9.39 11.00 11.81 14.49 26.30 18.45 16.91 

 Herbicide 10.03 10.03 10.20 10.61 10.70 11.53 12.35 11.94 

 Custom operations 5.17 4.97 5.01 5.09 5.17 5.96 6.00 6.00 

 Crop insurance 5.15 5.23 5.48 5.72 6.01 6.01 6.42 6.63 

 Fuel 3.24 3.82 5.00 5.53 6.11 7.96 5.30 6.57 

 Repairs & maintenance 3.83 3.94 4.11 4.19 4.33 4.39 4.48 4.56 

 Labor 1.95 1.99 2.05 2.13 2.20 2.28 2.34 2.35 

 Harvest costs 24.66 23.67 23.87 24.26 24.66 28.40 28.60 28.60 

 Interest on operating capital 1.44 1.49 1.70 2.04 2.18 2.29 2.10 2.04 

 Total, operating costs 65.41 66.19 70.18 73.30 78.00 97.84 89.19 88.86 

Allocated overhead: Capital recovery of machinery & equip 26.50 28.43 30.36 31.94 33.52 36.67 38.96 40.36  Opportunity cost of land (rental rate) 19.36 20.15 20.94 21.86 23.44 27.00 31.08 32.00  Real estate taxes 1.37 1.43 1.53 1.62 1.74 2.02 1.97 2.03 

 General farm overhead 6.75 7.06 7.53 7.99 8.56 9.95 9.69 10.00 

 Total, allocated overhead 

53.98 57.07 60.35 63.41 67.25 75.64 81.69 84.39 

 Total costs listed 119.39 123.26 130.53 136.71 145.25 173.48 170.88 173.25 

Source for budget: CSU Extension Notes: 

http://www.coopext.colostate.edu/ABM/cropbudgets.htm Based on 2010-2012 millet budgets from CSU; 2003-2009 values derived from 2010 daindices Colorado accounts for 68% of national production 

299 
Evaluation of Preven

Pre

Table 196: Millet - share of expenses incurred before planting: Colorado

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0% 0% 0% 0% 0% 0% 0% 0% Fertilizer 0% 0% 0% 0% 0% 0% 0% 0% Herbicide 33% 33% 33% 33% 33% 33% 33% 33% 

 Custom operations 25% 25% 25% 25% 25% 25% 25% 25% 

 Crop insurance 5% 5% 5% 5% 5% 5% 5% 5% Fuel 25% 25% 25% 25% 25% 25% 25% 25% 

 Repairs & maintenance 10% 10% 10% 10% 10% 10% 10% 10% 

 Labor 25% 25% 25% 25% 25% 25% 25% 25% 

 Harvest costs 0% 0% 0% 0% 0% 0% 0% 0%  Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% 

 Total, operating costs Allocated overhead: Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

 Real estate taxes 100% 100% 100% 100% 100% 100% 100% 100% 

 General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

300 
Evaluation of Preven

Pre

Table 197: Millet prevented planting cost per acre: Colorado

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Herbicide 3.31 3.31 3.37 3.50 3.53 3.80 4.08 3.94 3

 Custom operations 1.29 1.24 1.25 1.27 1.29 1.49 1.50 1.50 1

 Crop insurance 0.26 0.26 0.27 0.29 0.30 0.30 0.32 0.33 0

 Fuel 0.81 0.95 1.25 1.38 1.53 1.99 1.32 1.64 2

 Repairs & maintenance 0.38 0.39 0.41 0.42 0.43 0.44 0.45 0.46 0

 Labor 0.49 0.50 0.51 0.53 0.55 0.57 0.58 0.59 0

 Harvest costs 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Interest on operating capital 0.36 0.37 0.43 0.51 0.54 0.57 0.53 0.51 0

 Total, operating costs 6.90 7.03 7.49 7.90 8.18 9.16 8.78 8.97 9

Allocated overhead: Capital recovery of machinery & equip 26.50 28.43 30.36 31.94 33.52 36.67 38.96 40.36 40

 Opportunity cost of land (rental rate) 19.36 20.15 20.94 21.86 23.44 27.00 31.08 32.00 32

 Real estate taxes 1.37 1.43 1.53 1.62 1.74 2.02 1.97 2.03 2

 General farm overhead 6.75 7.06 7.53 7.99 8.56 9.95 9.69 10.00 10

 Total, allocated overhead 

53.98 57.07 60.35 63.41 67.25 75.64 81.69 84.39 85

 Total costs listed 60.88 64.10 67.84 71.31 75.43 84.80 90.47 93.36 94

 Total costs 124.20 127.51 133.56 142.93 150.17 176.13 170.73 173.25 187

Prevented planting % 49% 50% 51% 50% 50% 48% 53% 54% 

301 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.8. Mustard 

Overview 

Mustard is primarily grown in North Dakota, Minnesota, and Montana. It is also grown in a few other northern 

states. The map below shows the key producing states, although the crop can be grown all across the north, 

from Washington to New York. 

There has been a secular decline in mustard production mustard production, though acreage and output 

can vary considerably from year to year. In 2012, almost 50,000 acres were harvested, yielding just under 

30 million pounds. (In recent years acreage has typically been under 50,000 acres, and production under 

50 million pounds.) The crop is typically grown under contract. Mustard is popular in crop rotations because 

it enhances yields in wheat and barley and breaks disease cycles in most cereal crops. 

Figure 84: Mustard production areas 

Sources of production cost information 

Production cost information comes from the North Dakota State University Extension, which publishes 

budgets annually for mustard and other crops, for a number of regions within the state. The USDA has no 

information available on mustard production costs. 

NDSU publishes separate budgets for each region within the state where a crop is grown. In the case of 

mustard, there were budgets for 7 regions. We averaged costs across all regions for each year for which a 

budget was available. This provided a “state-wide” mustard budget for 2004-2012. We then used price 

indices to develop an estimated budget for 2003. 

Production methods 

Mustard can be grown on many soil types but yields best in fertile, well-drained, loamy soils. Like other 

Brassica varieties (e.g., canola), mustard needs a firm seedbed to produce the highest potential yields. 

Moreover, the crop does not compete well with weeds. 

Consequently, fields are often tilled several times to keep them free and clear before planting. 

302 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

In addition, in North Dakota, herbicide will typically be used in the fall or spring, prior to planting. 

Most fertilizer is applied at planting. 

Prevented planting history 

Prevented planting claims have been 11% of total indemnities in the past 20 years. For the 10-year period 

2003-2012, there were $12.4 million in indemnities for mustard, $1.4 million (11%) of which were for 

prevented planting. All prevented planting claims were due to excess moisture/rain. 

Claims came primarily from North Dakota (89%); Montana (11%) accounted for the rest. 

Analysis 

We constructed mustard budgets using NDSU data. Prevented planting costs rose from $70 per acre in 2003 

to $115 per acre in 2012. As a percentage of total per acre costs, however ($146 in 2003 and $264 in 2012), 

the share that represents prevented planting costs dropped, from 48% to 44%. 

The decreased share of pre-planting costs is primarily due to the relative increase in the cost of fertilizer 

and decrease in the cost of land, as a percentage of total costs. Given this crop budget analysis, a more 

appropriate PP rate would be 45%. 

Figure 85: Share of costs incurred prior to planting mustard 

303 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of estimated PP cost to RMA payments 

The ratio of RMA’s incurred base PP payment to estimated PP costs was close to 1.00 from 2003 through 

2007, but has since risen to 1.2-1.3. Since 34% of PP indemnities are associated with the additional 10% 

coverage, this ratio would be higher by about 6% if that were taken into account (10%/60%*0.34 = 0.057). 

Figure 86: Ratio of RMA payment to PP costs for mustard 

Recommendation 

We recommend that the PP factor be reduced from 60% to 45%. 

304 
Evaluation of Preven

Pre

Table 198: Mustard production costs per planted acre: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 9.06 9.63 9.91 7.43 7.82 10.69 13.77 11.11 

 Herbicides 5.85 5.95 7.41 6.33 9.51 10.21 14.50 13.57 

 Insecticides 0.00 0.00 1.00 1.71 2.00 2.57 3.43 3.43 

 Fertilizer 10.96 12.84 13.36 16.79 15.99 26.85 31.64 24.17 

 Crop insurance 0.00 0.00 3.41 1.30 1.50 1.91 3.76 4.07  Fuel, lube, and electricity 4.68 6.13 8.36 10.24 11.23 13.09 10.14 12.20 

 Repairs 8.96 9.34 9.28 9.34 9.75 10.63 12.56 14.06 

 Miscellaneous 0.94 1.00 1.43 1.00 1.64 2.14 3.43 3.43 

 Interest on operating capital 1.20 1.37 1.81 2.12 2.41 2.79 2.55 2.24  Total, operating costs 41.65 46.26 55.97 56.26 61.85 80.88 95.78 88.28 

Allocated overhead: Returns to labor & mgmt 50.82 52.41 54.31 56.22 58.12 59.71 61.34 61.67 

 Misc. Overhead 3.02 3.22 3.18 3.18 3.27 3.55 4.81 5.18 

 Machinery Depreciation 10.66 11.38 11.39 11.58 12.07 12.91 14.87 16.09 

 Machinery Investment 6.49 6.93 6.79 6.84 7.10 7.55 8.90 9.64 

 Land Charge 31.82 33.07 33.20 33.41 34.86 37.19 39.80 41.26 

 Total, allocated overhead 

102.81 107.01 108.87 111.23 115.42 120.91 129.72 133.84 

 Total costs listed 144.45 153.27 164.84 167.49 177.27 201.79 225.50 222.12 Source for budget(s): NDSU http://www.ag.ndsu.edu/farmmanagement/crop-budget-archive Notes: Based on 2004-2012 budgets; 2003 values derived from 2004 data using price indices

 Data reflects avge of budgets for 7 all ND regions w/mustard budgets 

 Returns to labor & management: avge for 2004-2012, used f/2008, then adjusted fwd & baindex 

305 
Evaluation of Preven

Pre

Table 199: Mustard - share of expenses incurred before planting: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Cash expenses: Seed 0% 0% 0% 0% 0% 0% 0% 0% 0% 

Herbicides 30% 30% 30% 30% 30% 30% 30% 30% 30% 

 Insecticides 0% 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 30% 30% 30% 30% 30% 30% 30% 30% 30% 

 Crop insurance 11% 11% 11% 11% 11% 11% 11% 11% 11% 

 Fuel, lube, and electricity 20% 20% 20% 20% 20% 20% 20% 20% 20% 

 Repairs 20% 20% 20% 20% 20% 20% 20% 20% 20% 

 Miscellaneous 20% 20% 20% 20% 20% 20% 20% 20% 20% 

 Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: Returns to labor & mgmt 20% 20% 20% 20% 20% 20% 20% 20% 20% 

 Misc. Overhead 100% 100% 100% 100% 100% 100% 100% 100% 100% 

 Machinery Depreciation 100% 100% 100% 100% 100% 100% 100% 100% 100% 

 Machinery Investment 100% 100% 100% 100% 100% 100% 100% 100% 100% 

 Land Charge 100% 100% 100% 100% 100% 100% 100% 100% 100% 

306 
Evaluation of Preven

Pre

Table 200: Mustard prevented planting cost per acre: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Herbicides 1.76 1.79 2.22 1.90 2.85 3.06 4.35 4.07 4.22 

 Insecticides 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 3.29 3.85 4.01 5.04 4.80 8.06 9.49 7.25 10.40 

 Crop insurance 0.00 0.00 0.38 0.14 0.17 0.21 0.41 0.45 0.78 

 Fuel, lube, and electricity 0.94 1.23 1.67 2.05 2.25 2.62 2.03 2.44 2.95 

 Repairs 1.79 1.87 1.86 1.87 1.95 2.13 2.51 2.81 2.98 

 Miscellaneous 0.19 0.20 0.29 0.20 0.33 0.43 0.69 0.69 0.73 

 Interest on operating capital 0.30 0.34 0.45 0.53 0.60 0.70 0.64 0.56 0.66 

 Total, operating costs 8.26 9.27 10.87 11.73 12.94 17.20 20.12 18.27 22.71 Allocated overhead: Returns to labor & mgmt 10.16 10.48 10.86 11.24 11.62 11.94 12.27 12.33 12.53 

 Misc. Overhead 3.02 3.22 3.18 3.18 3.27 3.55 4.81 5.18 6.20 

 Machinery Depreciation 10.66 11.38 11.39 11.58 12.07 12.91 14.87 16.09 16.95 

 Machinery Investment 6.49 6.93 6.79 6.84 7.10 7.55 8.90 9.64 10.17 

 Land Charge 31.82 33.07 33.20 33.41 34.86 37.19 39.80 41.26 43.39 

 Total, allocated overhead 

62.15 65.08 65.42 66.25 68.92 73.14 80.65 84.50 89.24 

 Total costs listed 70.41 74.35 76.29 77.98 81.87 90.34 100.77 102.77 111.95 Total costs 146.17 153.27 164.84 167.49 177.27 201.79 225.50 222.12 247.95 

Prevented planting % 48% 49% 46% 47% 46% 45% 45% 46% 45% 

307 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.9. Onions 

Overview 

There are many varieties of onions, broadly classified into spring onions, summer non-storage, and summer 

storage onions. 

	 Spring onions are grown in Texas, Georgia, and California. These are planted in the fall and 

harvested in the spring. 

	 Summer non-storage onions are grown in California, Nevada, New Mexico, and to a lesser 

extent, in Washington and Texas. Summer onions are planted in the spring and harvested in 

the fall. 

Figure 87: US spring & summer non-storage onion production areas 

	 Summer storage onions, the largest category, are grown in Oregon, Washington, California, 

Idaho, and to a lesser extent, Colorado, New York, and a few other states. 

Figure 88: US summer storage onion production areas 

308 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Both spring and summer non-storage onions are fresh market onions. 

In 2011, 7.4 billion pounds of onions were grown on over 118,000 acres. 

Sources of production cost information 

Onion crop budget availability varies by state, but apart from Texas, which produces annual onion budgets 

(http://agecoext.tamu.edu/resources/crop-livestock-budgets/by-commodity/fruits-andvegetables/archives.html), no other large producing states publish annual onion crop budgets. Episodic 

budgets are available from New Mexico (2011), Idaho/Oregon (2011), Colorado (2008, 2010), Georgia (2001, 

2008), Nevada (2008), and Washington (2004). California has multiple onion budgets, but for different 

varieties in different years. 

Production practices 

Onions are typically planted in a rotation with other crops (e.g., in California they are rotated with 

potatoes, small grains, and alfalfa). Onion production is dense, with some farms producing in excess of 25 

tons of onions per acre. Revenue per acre is generally ranges from $3,000-$5,000 or more. 

Typically, fields are worked in the fall, can receive a cover crop, and are prepared again with fertilizer and 

bed shaping prior to planting. Herbicides may also be also applied pre-planting. 

Onions are a thirsty crop, using up to three acre-feet of water over a growing season. Different irrigation 

systems are used for onion cultivation, from no irrigation to drip, rill, and furrow irrigation. 

Onions are susceptible to a variety of crop threats. Cultivation costs are thus significant, with regular 

irrigation and the use of herbicides, fungicides, insecticides, and reapplication of fertilizer all taking place 

during the growing period. 

Harvesting costs are very high for fresh market onions (both spring and summer) and account for most labor 

costs. Some onion operations are integrated and clean, sort, and pack onions on the farm; others contract 

out these activities, sometimes including harvest. 

Prevented planting experience 

Prevented planting claims have been 22% of total onion indemnities over the last 20 years. PP buy-up is 

associated with 8% of onion PP indemnities. For the 10-year period 2003-2012, there were $187.5 million 

in indemnities for onions, $41.3 million (22%) of which were for prevented planting. Excess moisture/rain 

($28.3m, 69%) and failure of irrigation supply ($10.9m, 26%) account for 95% of all onion prevented planting 

claims. 

Of all prevented planting claims, almost 85% had just two causes: excess moisture in Texas ($26.6m, 94% 

of Texas claims) and failure of irrigation supplies in Colorado ($8.4m, 97% of Colorado’s claims). The 

remaining $6.3m (15%) account for all other onion prevented planting claims – including Colorado and Texas 

claims for reasons other than those identified above. 

Production budgets and pre-planting costs 

Onion production is extremely diverse, with many varieties, different growing seasons, and different 

production practices. After reviewing many production budgets for onions, we concluded that - from a 

prevented planting perspective - there are two key production categories. These are fresh market onions 

(both spring onions and summer non-storage onions) and storage onions. 

309 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Their production cost structures are different primarily in that fresh market onions are more delicate and 

are generally hand-harvested, with higher harvest (variable) costs. Storage onions, on the other hand, are 

highly mechanized operations, and are often grown on more expensive land. Their fixed costs (equipment, 

rents) tend to be higher. Calls we made to obtain details on production practices and costs confirmed 

differences between these the production systems. 

We have therefore developed two budgets for onions. After reviewing the available materials, we settled 

on using Texas A&M’s budget for (hybrid yellow) spring onions, and the University of Idaho’s budget for 

storage onions produced in southwestern Idaho / eastern Oregon. We also list other budget sources for 

reference. 

For each budget, we provide three tables: (1) production costs, (2) the estimated pre-planting share of 

costs, and (3) the estimated pre-planting (sunk) costs, i.e., (1) x (2). 

Fresh market onions (spring/summer). Spring onions (primarily produced in Texas and Georgia) are seeded 

in the fall, grow over the winter, and are harvested in the spring. They are destined for the fresh market, 

and are generally hand-harvested. Most harvest, packing, and shipping operations are contracted out to 

intermediaries (approximately three-quarters of production). Land costs tend to be low, and harvest costs 

high, as a percentage of total costs. Irrigation depends in many cases on surface water availability. Most 

expenses are incurred at planting or post-planting. Texas A&M has published its hybrid yellow onion crop 

budget annually since 2004. 

We show that this budget implies pre-planting costs of 10%. An analysis of an onion crop budget for Georgia 

(2008) showed approximately 15% in pre-planting costs. 

Fresh market onions are also grown in the summer in other states, all with high relative harvest costs. A 

budget for summer market onions prepared by Penn State University (2012) shows pre-planting costs 

(including fixed costs) under 15%. A budget for Colorado summer non-storage onions shows costs of 19% 

(2010). 

Summer storage onions. For storage onion production, we selected the University of Idaho budget both 

for its recency (2011) and the level of detail it provides. The budget, expanded through indexes to cover 

the years 2003-2010 and 2012, shows the share of pre-planting costs for onions unchanged, 38% in both 2003 

and 2012. Other west coast onion budgets are similar: 32% for Washington (2004), and 42% for California 

(dry onions for processing, 2011). 

Analysis 

Based on our analysis, the percentage of costs that could be considered unavoidable pre-planting expenses 

varies significantly, especially between fresh market onion and storage onion production. 

Using a single percentage for pre-planting costs for all onion production (currently 35%) may roughly 

approximate costs incurred by storage onion producers, while overestimating the costs incurred by 

producers of fresh market onions. 

The single figure for both crops may encourage producers in areas where pre-planting costs are low (as a 

percentage of total costs) to file prevented planting claims. Prevented planting claims data show that claims 

tend to be higher in states where pre-planting cost percentages are lower (Texas, Colorado, Georgia). 

310 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 89: Share of costs incurred prior to planting fresh market onions 

Figure 90: Share of costs incurred prior to planting storage onions 

311 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of estimated PP cost to RMA payments 

The ratio of RMA’s incurred base PP payment to estimated PP costs is dramatically different between 

summer storage and spring/summer fresh market onions. The rate for summer storage onions has been 

close to 1.0. However, for fresh market onions, the rate has been very high, generally around 4 but 

exceeding 5 in 2012. 

Figure 91: Ratio of RMA payment to PP costs for onions 

Recommendation 

Based on our review of various budgets, and the budgets analyzed, if a single percentage were used, the 

most appropriate figure would be 25%. However, The 35% PP payment rate appears reasonable for summer 

storage onions, based on both the analysis of production costs and a review of the ratio of RMA payments 

to estimated costs for the northern states. However, RMA payments for fresh market onions continue to 

appear too high. The ratio of 4 to 5 confirms this, and adds to the evidence that the payment rate for fresh 

market onions should be reduced. It would be appropriate to reduce the rate from 35% to 15% (i.e., a 

liability payment reduction of 57%), to put payments more in line with costs. By way of reference, the 

Texas budgets we used for analysis yielded a PP cost estimate of 10%; other state budgets implied PP costs 

of 15% (Georgia, Pennsylvania) and 19% (Colorado). We therefore recommend a factor of 15% for fresh 

market onions and 35% for storage onions. 

The following states should be classified as producers of fresh market onions: Georgia, Nevada, New Mexico, 

and Texas. All others should be treated as producers of storage onions. California does produce fresh 

market onions (13,200 of 43,300 planted acres in 2012), but only processing (storage) onions are insured. 

Production in Washington State in 2012 was over 90% storage onions (22,000 of 24,000 planted acres). 

Considering that there were no prevented planting indemnities for onions in Washington from 2003 through 

2012, classifying Washington as a storage onion state (and thus maintaining the current 35% PP rate there) 

appears appropriate. 

312 
Evaluation of Preven

Pre

Table 201: Fresh market onion production costs per planted acre: Texas 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Fertilizer 129.89 152.16 182.54 184.81 184.81 187.09 470.49 229.74 

 Fungicide 131.75 133.93 133.93 133.93 133.93 133.93 169.47 169.47 

 Herbicides 39.82 40.48 40.48 40.48 40.48 40.48 51.81 54.13 

 Insecticide/miticide 33.39 33.94 33.94 33.94 33.94 33.94 43.46 45.62 

 Irrigation 43.49 45.44 45.44 45.44 56.00 56.00 56.00 56.00 

 Seed/plants 141.07 150.00 169.41 189.89 241.09 278.32 288.56 309.04 

 Custom harvest 1809.92 1825.00 1825.00 1825.00 1825.00 1825.00 2211.00 2211.00 

 Other labor 65.56 67.61 61.77 61.77 70.85 70.85 70.85 70.85 

 Fuel 9.26 12.12 19.79 25.17 25.17 32.04 32.04 24.03 

 Repair & maintenance 14.47 15.09 15.09 15.09 15.09 15.09 15.09 15.09 

 Crop insurance 334.21 350.00 365.79 384.21 384.21 410.53 423.68 431.58 

 Interest on operating capital 67.90 77.70 59.69 60.08 60.93 65.67 85.77 75.36 

 Total, operating costs 2820.74 2903.47 2952.87 2999.81 3071.50 3148.94 3918.23 3691.91 Allocated overhead: Capital recovery of machinery & equip 45.54 48.63 46.13 46.13 46.13 46.13 46.13 46.13 

 Opportunity cost of land (rental rate) 96.23 100.00 100.00 100.00 100.00 100.00 100.00 100.00 

 Total, allocated overhead 

141.76 148.63 146.13 146.13 146.13 146.13 146.13 146.13 

 Total costs listed 2,962.50 3,052.10 3,099.00 3,145.94 3,217.63 3295.07 4064.36 3838.04 

Source for budgets: Texas A&M http://agecoext.tamu.edu/resources/crop‐livestock‐budgets/by‐commodity/fruits‐and‐vegetables/archives.h

Notes: Crop insurance for onions (2013) ranges from $360 to $560 per acre; used $450 for 2012. 

Seed costs of $350 / acre; used this figure as budget values had not been updated in 5 years. Based on 2004-2012 budgets; 2003 values derived from 2004 data using price indices. 

313 
Evaluation of Preven

Pre

Table 202: Fresh market onion - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Fertilizer 10% 10% 10% 10% 10% 10% 10% 10% 

 Fungicide 0% 0% 0% 0% 0% 0% 0% 0% Herbicides 67% 67% 67% 67% 67% 67% 67% 67% 

 Insecticide/miticide 0% 0% 0% 0% 0% 0% 0% 0% Irrigation 0% 0% 0% 0% 0% 0% 0% 0% Seed/plants 0% 0% 0% 0% 0% 0% 0% 0%  Custom harvest 0% 0% 0% 0% 0% 0% 0% 0% Other labor 10% 10% 10% 10% 10% 10% 10% 10% 

 Fuel 50% 50% 50% 50% 50% 45% 45% 55% 

 Repair & maintenance 50% 50% 50% 50% 50% 45% 45% 55% 

 Crop insurance 22% 22% 22% 22% 22% 22% 22% 22% 

 Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% 

 Total, operating costs Allocated overhead: Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

314 
Evaluation of Preven

Pre

Table 203: Fresh market onion prevented planting cost per acre: Texas 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Fertilizer 12.99 15.22 18.25 18.48 18.48 18.71 47.05 22.97 

 Fungicide 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Herbicides 26.68 27.12 27.12 27.12 27.12 27.12 34.71 36.27 

 Insecticide/miticide 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Irrigation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Seed/plants 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Custom harvest 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Other labor 6.56 6.76 6.18 6.18 7.09 7.09 7.09 7.09 

 Fuel 4.63 6.06 9.90 12.59 12.59 14.42 14.42 13.22 

 Repair & maintenance 7.23 7.55 7.55 7.55 7.55 6.79 6.79 8.30 

 Crop insurance 73.53 77.00 80.47 84.53 84.53 90.32 93.21 94.95 

 Interest on operating capital 16.98 19.43 14.92 15.02 15.23 16.42 21.44 18.84 

 Total, operating costs 148.59 159.13 164.39 171.46 172.58 180.86 224.71 201.63 

Allocated overhead: Capital recovery of machinery & equip 45.54 48.63 46.13 46.13 46.13 46.13 46.13 46.13 

 Opportunity cost of land (rental rate) 96.23 100.00 100.00 100.00 100.00 100.00 100.00 100.00 

 Total, allocated overhead 

141.76 148.63 146.13 146.13 146.13 146.13 146.13 146.13 

 Total costs listed 290.36 307.76 310.52 317.59 318.71 326.99 370.84 347.76 

Total costs 2821.82 2936.88 2957.48 2992.20 3062.49 3146.88 3899.88 3707.45 

Prevented planting % 10% 10% 10% 11% 10% 10% 10% 9% 

315 
Evaluation of Preven

Pre

Table 204: Storage onion production costs per planted acre: Idaho 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Fertilizer 119.00 139.40 149.60 183.60 333.20 233.75 214.20 278.80 2 Storage 260.44 269.74 279.04 286.49 297.65 295.79 301.37 310.67 3 Herbicides / pesticides 499.71 507.97 528.62 532.75 574.05 615.35 594.70 598.83 6 Irrigation 38.08 39.79 41.21 42.35 43.77 44.62 45.47 47.18 

 Seed/plants 179.37 190.72 206.61 231.59 294.03 339.44 351.92 376.90 4 Custom labor - pre-planting 71.69 72.29 73.49 74.68 86.03 86.63 86.63 88.42  Custom labor - post-planting 217.45 219.26 222.89 226.51 260.94 262.75 262.75 268.19 2 Labor 187.16 193.01 200.03 207.05 214.06 219.91 221.08 224.59 2 Fuel & lubrication 70.58 92.40 102.24 112.93 147.16 97.96 121.49 154.86 1

 Marketing 44.06 45.63 47.21 48.46 50.35 50.04 50.98 52.56  Repair & maintenance 56.14 58.54 59.75 61.75 62.55 63.76 64.96 67.36 

 Crop insurance 22.81 23.89 24.97 26.23 26.23 28.02 28.92 29.46  Interest on operating capital 48.29 55.26 66.21 70.69 74.18 68.20 66.21 72.18  Total, operating costs 1814.80 1907.92 2001.86 2105.08 2464.20 2406.22 2410.70 2570.00 26

Allocated overhead: General overhead 164.28 175.07 185.86 199.05 231.43 225.43 232.62 255.41 2

 Taxes and insurance 3.73 3.98 4.22 4.52 5.26 5.12 5.28 5.80 

 Equipment 137.44 146.77 154.41 162.05 177.32 188.35 195.13 207.01 2 Land 255.00 265.00 276.67 296.67 341.67 393.33 405.00 436.67 4 Total, allocated overhead 

560.45 590.82 621.16 662.28 755.67 812.23 838.04 904.89 9

 Total costs listed 2,375.24 2,498.73 2,623.02 2,767.36 3,219.86 3218.45 3248.74 3474.89 36

Source for budget: University of Idaho http://web.cals.uidaho.edu/idahoagbiz/files/2012/11/EBB2On11.pdf

Based on 2011 budget; 2003-2010 and 2012 values derived using 2011 data and price indices 

316 
Evaluation of Preven

Pre

Table 205: Storage onion - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2

Cash expenses: Fertilizer 20% 20% 20% 20% 20% 20% 20% 20% 

 Storage 20% 20% 20% 20% 20% 20% 20% 20% 

 Herbicides / pesticides 0% 0% 0% 0% 0% 0% 0% 0% 

Irrigation 20% 20% 20% 20% 20% 20% 20% 20% 

 Seed/plants 0% 0% 0% 0% 0% 0% 0% 0% 

 Custom labor - pre-planting 100% 100% 100% 100% 100% 100% 100% 100% 1

 Custom labor - post-planting 0% 0% 0% 0% 0% 0% 0% 0% 

Labor 25% 25% 25% 25% 25% 25% 25% 25% 

 Fuel & lubrication 67% 67% 67% 67% 67% 67% 67% 67% 

 Marketing 0% 0% 0% 0% 0% 0% 0% 0% 

 Repair & maintenance 67% 67% 67% 67% 67% 67% 67% 67% 

 Crop insurance 22% 22% 22% 22% 22% 22% 22% 22% 

 Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% Allocated overhead: General overhead 100% 100% 100% 100% 100% 100% 100% 100% 1

 Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 1

 Equipment 100% 100% 100% 100% 100% 100% 100% 100% 1

 Land 100% 100% 100% 100% 100% 100% 100% 100% 1

317 
Evaluation of Preven

Pre

Table 206: Storage onion prevented planting cost per acre: Idaho 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Fertilizer 23.80 27.88 29.92 36.72 66.64 46.75 42.84 55.76 5

 Storage 52.09 53.95 55.81 57.30 59.53 59.16 60.27 62.13 6

 Herbicides / pesticides 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Irrigation 7.62 7.96 8.24 8.47 8.75 8.92 9.09 9.44 

 Seed/plants 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Custom labor - pre-planting 71.69 72.29 73.49 74.68 86.03 86.63 86.63 88.42 9

 Custom labor - post-planting 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Labor 46.79 48.25 50.01 51.76 53.52 54.98 55.27 56.15 5

 Fuel & lubrication 47.01 61.54 68.09 75.21 98.01 65.24 80.91 103.13 10

 Marketing 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Repair & maintenance 37.44 39.05 39.85 41.19 41.72 42.52 43.33 44.93 4

 Crop insurance 5.02 5.26 5.49 5.77 5.77 6.17 6.36 6.48 

 Interest on operating capital 12.07 13.81 16.55 17.67 18.54 17.05 16.55 18.05 1

 Total, operating costs 303.53 329.99 347.45 368.77 438.51 387.42 401.26 444.49 45

Allocated overhead: General overhead 164.28 175.07 185.86 199.05 231.43 225.43 232.62 255.41 26

 Taxes and insurance 3.73 3.98 4.22 4.52 5.26 5.12 5.28 5.80 

 Equipment 137.44 146.77 154.41 162.05 177.32 188.35 195.13 207.01 21

 Land 255.00 265.00 276.67 296.67 341.67 393.33 405.00 436.67 45

 Total, allocated overhead 

560.45 590.82 621.16 662.28 755.67 812.23 838.04 904.89 93

 Total costs listed 863.98 920.81 968.61 1031.06 1194.18 1199.65 1239.31 1349.38 139

Total costs 2295.55 2400.32 2565.39 2715.69 3132.02 3114.56 3147.28 3424.72 361

Prevented planting % 38% 38% 38% 38% 38% 39% 39% 39% 

318 
 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.10. Potatoes 

Overview 

Potatoes are grown commercially in 30 states and are country’s top vegetable crop. Total production was 

46.7 billion pounds in 2012. The two largest producers are Idaho (14.32 billion pounds, 30.7% of national 

production) and Washington (9.76 billion pounds, 20.9%). Other states with significant production are 

Wisconsin (6.3%), North Dakota (5.4%), Colorado (5.0%), and Oregon (4.9%). 

RMA classifies producers into two regions: 

	 Northern potatoes: Most Fall potatoes, which represent 90.5% of production (42.25 billion 

pounds) are grown in northern states, particularly Idaho and Washington. 

	 Southern potatoes: include some fall potatoes, but also all Spring potatoes (2.67 billion 

pounds, 5.7% of production) and Summer potatoes (1.79 billion pounds, 3.8%). California is 

the largest producer of Spring potatoes, and Texas is the largest producer of Summer potatoes. 

Sources of production cost information 

The primary source of production cost information for northern potatoes comes from the University of 

Idaho-Extension, which published a retrospective budget covering 2005-2010, later updating it to extend it 

through 2012. 

We therefore used crop budget data for 2005-2012 and used price indices to estimate budget figures for 

2003-2004. The budgets omitted crop insurance information, so we took these figures directly from RMA’s 

data, calculating the average per acre cost of crop insurance (to the farmer) for Idaho for each year. 

Other northern potato budgets are available, but are not published consistently. As a check for the 

prevented planting percentage, we also used a California 2008 potato budget. 

Southern potatoes are produced in much smaller quantities. We used a University of Florida (IFAS) table 

potato budget for the Hastings region, as it has updated this budget on a few occasions. 

Production practices 

Northern potatoes are typically seeded in May. Spring potatoes are seeded in the fall, and Summer potatoes 

are planted in winter. 

Potatoes are grown in rotation with other crops. A cover cop may be used. In preparing fields, farmers 

typically disc and rip fields, and depending on the area, may fumigate the soil as well. 

Seed potatoes come from special varieties that are cut and treated prior to planting. The soil is fertilized 

at planting time. Potato cultivation requires fairly extensive use of chemicals during the growing season, 

and is typically irrigated. 

Prevented planting experience 

Prevented planting claims have accounted for 12% of total indemnities over the last 20 years. PP 10% buyup is associated with 70% of PP indemnities. This is very high but may be due to the base rate being too 

low. 

Over the 10 year period 2003-2012, total indemnities for potatoes were $205.8 million, $25.5 million of 

which (12.4%) were prevented planting situations. Prevented planting for potatoes has occurred primarily 

319 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

in North Dakota (87%) and Idaho (4.3%), with prevented planting losses reported in over a dozen additional 

states. Excess moisture is the main cause of prevented planting (92.3% of the time); irrigation failure 

accounts for the rest (7.7%) of prevented planting indemnities. 

Northern potatoes analysis 

Based on analysis of the University of Idaho Extension budget (shown on the following pages), and following 

conversations with the Idaho specialist, pre-planting costs for potatoes were an estimated 46% in 2003 ($680 

of $1,475 per acre); by 2012, the pre-planting share of costs had dropped to 44% ($1,225 out of $2,792). 

Similar results obtain from a review of other northern potato budgets. A separate analysis of a 2008 

University of California Cooperative Extension budget yielded a lower figure (34%). The potato handbook 

shows fixed costs for Arizona (2001) and Washington (2006) at 29% and 24%, respectively, but these 

percentages ignore all operating costs: adding back in sunk costs related to labor, fertilizer, machinery, 

fuel, irrigation, operating interest, among others, plus the costs that are typically entirely sunk such as 

seed, plus a portion of crop insurance, and the pre-planting share jumps closer to 50% in each case. 

These percentages differ significantly from RMA’s current pre-planting rate of 25% for potatoes nationwide. 

Though the budget analysis does suggest that pre-planting costs have dropped slightly over the past 10 

years, it also indicates that the prevented planting rate of 25% is far below a farmer’s actual incurred costs 

if unable to plant after preparing to do so. 

A key variable in this analysis is the extent to which an individual farmer can avoid paying for the seed or 

recoup seed costs in a prevented planting situation. Seed is typically 10%-15% of total costs, and this has a 

very large impact when it is considered a pre-planting cost. A seed specialist in North Dakota indicated 

that in a prevented planting situation, a potato farmer is simply out of luck, as there are no alternative 

uses for the seed potatoes. 

Likewise, Idaho’s potato crop budget specialist explained that seed potatoes would typically be a 100% sunk 

cost because they are often contracted in the fall and farmers usually take delivery in the spring, after the 

seed potatoes have been cut and treated. If they are not cut and treated (typically not the case), then 

they might be salvaged for 15% of their value. 

We do not treat fertilizer as a sunk pre-planting cost since its value will be recouped through a subsequent 

crop. 

Southern potatoes analysis 

Based on an analysis of the University of Florida table potato budget for the Hastings region, pre-planting 

costs for potatoes were an estimated 30% in 2003 ($831 of $2,767 per acre). In 2012, the pre-planting share 

of costs was slightly higher, at 31% ($1,519 out of $4,877). 

These percentages are also higher than RMA’s current pre-planting rate of 25%, although not by as much as 

northern potatoes. Also, in this case, the analysis shows an increase in the sunk cost percentage over the 

past decade, rather than the decline shown for northern potatoes. 

As with northern potatoes, a key variable in this analysis is the extent to which an individual farmer can 

recoup seed costs in a prevented planting situation. This impacts the pre-planting percentage by 10-15 

points. Here we assume the farmer cannot. 

320 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 92: Share of costs incurred prior to planting northern potatoes 

Figure 93: Share of costs incurred prior to planting southern potatoes 

Given this crop budget analysis, one could conclude that the 25% PP factor should be increased to 30% for 

southern potatoes and 40% for northern potatoes. 

321 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of RMA payments to estimated PP costs 

The ratio of RMA’s incurred base PP payment to estimated PP costs has been approximately 0.6 since 2006 

for potatoes in both regions. 

Figure 94: Ratio of RMA payment to PP costs for potatoes 

Recommendation 

Current RMA potato PP payments appear to undercompensate farmers. PP indemnity payments for both 

northern and southern potatoes fall short of estimated costs by a similar factor. Hence the Florida budget 

alone appears insufficient evidence to justify a differentiated PP rate for southern potatoes. Increasing 

the PP payment rate for both regions to 40% so that a PP indemnity is 60% higher would put payments more 

in line with estimated PP costs. 

322 
Evaluation of Preven

Pre

Table 207: Northern potato production costs per planted acre: Idaho, no storage

 Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: Seed 159.50 163.64 174.00 209.00 227.00 252.00 330.00 2 Fertilizer 176.93 199.76 234.00 245.00 307.00 540.00 421.00 3 Chemicals 106.24 106.24 108.00 110.00 102.00 123.00 173.00 1 Custom operations 110.54 106.12 107.00 122.00 133.00 146.00 150.00 1 Machinery: Fuel, oil, lube, repairs 79.07 93.19 122.00 152.00 149.00 198.00 123.00 1

 Transload 30.99 29.75 30.00 33.00 33.00 36.00 41.00 

 Irrigation 61.29 63.17 66.00 61.00 64.00 70.00 74.00 

 Hired labor 117.04 119.27 123.00 127.00 126.00 133.00 139.00 1 Miscellaneous 40.98 42.85 45.67 54.24 65.27 71.84 76.72 

 Crop insurance 25.53 29.32 28.33 26.76 22.73 20.16 29.28 

 Interest on operating capital 24.56 25.34 29.00 41.00 45.00 49.00 44.00 

 Total, operating costs 932.67 978.66 1,067.00 1,181.00 1,274.00 1,639.00 1,601.00 1,4

Allocated overhead: Opportunity cost of unpaid labor 77.07 78.55 81.00 84.00 90.00 100.00 120.00 1

 Capital recovery of machinery & equip 164.09 176.05 188.00 209.00 221.00 234.00 245.00 2 Opportunity cost of land (rental rate) 240.38 250.19 260.00 270.00 325.00 375.00 425.00 4 General farm overhead 24.23 25.34 27.00 29.00 32.00 41.00 40.00 

 Total, allocated overhead 

505.77 530.12 556.00 592.00 668.00 750.00 830.00 8

 Total costs listed 1,438.44 1,508.78 1,623.00 1,773.00 1,942.00 2,389.00 2,431.00 2,2

Source for budget(s): University of Idaho Extension http://web.cals.uidaho.edu/idahoagbiz/enterprise-budgets/ Notes: Based on 2006-2012 budgets; 2003-2005 values derived from 2006 data using price indices 

Crop insurance calculated from RMA data, includes farmer portion only This budget does not include fumigant, which can range from $150-$170 per acre plus $30+ in appl

323 
Evaluation of Preven

Pre

Table 208: Northern potatoes - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 100% 100% 100% 100% 100% 100% 100% 100% 

 Fertilizer 0% 0% 0% 0% 0% 0% 0% 0% Chemicals 15% 15% 15% 15% 15% 15% 15% 15% 

 Custom operations 10% 10% 10% 10% 10% 10% 10% 10% 

 Machinery: Fuel, oil, lube, repairs 25% 25% 25% 25% 25% 25% 25% 25% 

 Transload 0% 0% 0% 0% 0% 0% 0% 0% Irrigation 10% 10% 10% 10% 10% 10% 10% 10% 

 Hired labor 10% 10% 10% 10% 10% 10% 10% 10% 

 Miscellaneous 15% 15% 15% 15% 15% 15% 15% 15% 

 Crop insurance 12% 12% 12% 12% 12% 12% 12% 12% 

 Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% 

 Total, operating costs Allocated overhead: Opportunity cost of unpaid labor 15% 15% 15% 15% 15% 15% 15% 15% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

 General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

324 
Evaluation of Preven

Pre

Table 209: Northern potatoes prevented planting cost per acre: Idaho, no storage

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 159.50 163.64 174.00 209.00 227.00 252.00 330.00 227.00 

 Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Chemicals 15.94 15.94 16.20 16.50 15.30 18.45 25.95 24.45 

 Custom operations 11.05 10.61 10.70 12.20 13.30 14.60 15.00 16.20  Machinery: Fuel, oil, lube, repairs 19.77 23.30 30.50 38.00 37.25 49.50 30.75 35.75  Transload 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Irrigation 6.13 6.32 6.60 6.10 6.40 7.00 7.40 7.30 

 Hired labor 11.70 11.93 12.30 12.70 12.60 13.30 13.90 13.00 

 Miscellaneous 6.15 6.43 6.85 8.14 9.79 10.78 11.51 12.51  Crop insurance 3.06 3.52 3.40 3.21 2.73 2.42 3.51 2.95 

 Interest on operating capital 6.14 6.34 7.25 10.25 11.25 12.25 11.00 9.50 

 Total, operating costs 239.44 248.02 267.80 316.10 335.62 380.30 449.02 348.66 Allocated overhead: Opportunity cost of unpaid labor 11.56 11.78 12.15 12.60 13.50 15.00 18.00 18.75  Capital recovery of machinery & equip 164.09 176.05 188.00 209.00 221.00 234.00 245.00 221.00  Opportunity cost of land (rental rate) 240.38 250.19 260.00 270.00 325.00 375.00 425.00 425.00 

 General farm overhead 24.23 25.34 27.00 29.00 32.00 41.00 40.00 36.00  Total, allocated overhead 

440.26 463.35 487.15 520.60 591.50 665.00 728.00 700.75 

 Total costs listed 679.70 711.37 754.95 836.70 927.12 1045.30 1177.02 1049.41 

Total costs 1,475.49 1,541.87 1,651.33 1,799.76 1,964.73 2,409.16 2,460.28 2,263.59 

Prevented planting % 46% 46% 46% 46% 47% 43% 48% 46% 

325 
Evaluation of Preven

Pre

Table 210: Southern potatoes production costs per planted acre: Florida

 Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: Seed 312.16 320.27 340.54 368.92 413.51 525.00 525.00 5

 Fertilizer 174.26 196.75 230.48 247.34 303.56 550.90 550.90 5

 Chemicals 457.14 457.14 464.69 483.58 487.36 525.14 545.95 5

 Custom operations 15.63 15.00 15.13 15.38 15.63 18.00 19.50 

 Machinery: Fuel, oil, lube, repairs 113.97 134.32 175.83 194.56 214.91 280.03 449.82 5

 Harvest & marketing costs 650.00 670.00 700.00 725.00 745.00 770.00 742.00 7

 Hired labor 231.13 235.55 242.91 251.74 260.58 269.41 284.15 2

 Miscellaneous 13.58 14.20 15.13 16.06 17.20 20.00 20.00 

 Crop insurance 29.97 30.45 31.88 33.32 35.00 35.00 35.00 

 Interest on operating capital 99.94 103.13 118.02 141.41 150.98 158.42 190.87 1

 Total, operating costs 2,097.77 2,176.80 2,334.61 2,477.31 2,643.72 3,151.90 3,363.19 3,4

Allocated overhead: Capital recovery of machinery & equip 64.31 68.99 73.68 77.51 81.34 89.01 99.15 1

 Opportunity cost of land (rental rate) 107.56 111.95 116.34 121.46 130.24 150.00 150.00 1

 General farm overhead & mgmt 498.03 520.84 555.06 589.27 631.09 733.74 535.89 5

 Total, allocated overhead 

669.90 701.79 745.08 788.25 842.68 972.75 785.04 8

 Total costs listed 2,767.67 2,878.58 3,079.69 3,265.56 3,486.40 4,124.65 4,148.23 4,2

Source for budget(s): University of Florida - IFAS http://www.fred.ifas.ufl.edu/iatpc/budgets.php 

http://www.fred.ifas.ufl.edu/iatpc/files/HastingsTablePotato09.pdf http://www.fred.ifas.ufl.edu/iatpc/files/tablepotatoes08I.xls 

Notes: Based on 2008, 2009 budgets; 2003-2007 and 2010-2012 values derived from 2008 and 2009 data using 

326 
Evaluation of Preven

Pre

Table 211: Southern potatoes - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 100% 100% 100% 100% 100% 100% 100% 100% 

 Fertilizer 0% 0% 0% 0% 0% 0% 0% 0% Chemicals 22% 22% 22% 22% 22% 22% 22% 22% 

 Custom operations 10% 10% 10% 10% 10% 10% 10% 10% 

 Machinery: Fuel, oil, lube, repairs 25% 25% 25% 25% 25% 25% 25% 25% 

 Harvest & marketing costs 0% 0% 0% 0% 0% 0% 0% 0%  Hired labor 10% 10% 10% 10% 10% 10% 10% 10% 

 Miscellaneous 100% 100% 100% 100% 100% 100% 100% 100% 

 Crop insurance 12% 12% 12% 12% 12% 12% 12% 12% 

 Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% 

 Total, operating costs Allocated overhead: Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

 General farm overhead & mgmt 30% 30% 30% 30% 30% 30% 30% 30% 

327 
Evaluation of Preven

Pre

Table 212: Southern potatoes prevented planting cost per acre: Florida

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 312.16 320.27 340.54 368.92 413.51 525.00 525.00 544.31 

 Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Chemicals 101.94 101.94 103.63 107.84 108.68 117.11 121.75 117.66 

 Custom operations 1.56 1.50 1.51 1.54 1.56 1.80 1.95 1.95  Machinery: Fuel, oil, lube, repairs 28.49 33.58 43.96 48.64 53.73 70.01 112.46 139.46 

 Harvest & marketing costs 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Hired labor 23.11 23.55 24.29 25.17 26.06 26.94 28.42 28.57 

 Miscellaneous 13.58 14.20 15.13 16.06 17.20 20.00 20.00 20.64 

 Crop insurance 3.60 3.65 3.83 4.00 4.20 4.20 4.20 4.33  Interest on operating capital 24.99 25.78 29.50 35.35 37.74 39.61 47.72 46.32 

 Total, operating costs 509.43 524.48 562.39 607.52 662.69 804.66 861.48 903.25 

Allocated overhead: Capital recovery of machinery & equip 64.31 68.99 73.68 77.51 81.34 89.01 99.15 102.72 

 Opportunity cost of land (rental rate) 107.56 111.95 116.34 121.46 130.24 150.00 150.00 154.45 

 General farm overhead & mgmt 149.41 156.25 166.52 176.78 189.33 220.12 160.77 165.90 

 Total, allocated overhead 

321.28 337.20 356.54 375.76 400.92 459.13 409.92 423.07 

 Total costs listed 830.71 861.68 918.93 983.28 1063.60 1263.79 1271.40 1326.32 

Total costs 2,767.67 2,878.58 3,079.69 3,265.56 3,486.40 4,124.65 4,148.23 4,248.19 

Prevented planting % 30% 30% 30% 30% 31% 31% 31% 31% 

328 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.11. Processing beans 

Overview 

Beans for processing are primarily grown for the frozen and canned markets. RMA insures two types of 

processing beans, snap beans, and lima beans. Processing beans include green beans, also known as snap 

beans, and all types of lima beans. 

Snap beans are of two major types: runner and bush. These categories describe the growing characteristics 

of the plant. Runner types need a pole to support growth while bush types do not. Runner types must be 

handpicked while bush types are compatible with mechanized harvesting. Bush types are the only types 

used for commercial processing. Runner types are planted for pick-your-own, roadside stand, and fresh 

markets. 

Snap beans for processing are also known as green beans, bush beans, or sometimes string beans. Processing 

beans are grown primarily in Wisconsin, Oregon, New York, Michigan, Illinois, Pennsylvania, Minnesota, and 

Indiana. In 2011, snap bean production was 681,000 tons. Wisconsin accounted for about 44% of production. 

Oregon, New York, Michigan, Illinois, and Pennsylvania account for an additional 43% of US production. 

Twelve other states make up the remainder of production. Detailed information on snap bean production 

is limited. 

Lima beans are subdivided into two groups depending on where they came from. Baby lima beans are direct 

descendants of the Mesoamerican variety, a more heat tolerant plant. These lima beans are smaller than 

the larger Fordhook type. Fordhook lima beans descend from the Andean variety, more suited to cooler 

climates. Lima beans are grown in California, the Pacific Northwest, Wisconsin, Illinois, Minnesota, and 

Mid-Atlantic states. Detailed information on lima bean production is limited. 

Figure 95: Processing beans (snap and lima bean) production areas 

Source: USDA NASS 

329 
 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Sources of production cost information 

Budgets for processing beans were sparse. There are no regularly published budgets. We settled on budgets 

for New York (2010, Cornell University Cooperative Extension) and Oregon (2010, Oregon State University 

Extension). These are obvious choices as they are major producers. In addition, New York accounts for 

roughly 40% of prevented planting claims so production costs from there are relevant to this study. 

Production practices 

Snap beans and lima beans grow best on soils that hold water well, and require a constant supply of 

moisture. Performance in sandy soils requires irrigation. Fields for these crops require significant 

preparation prior to planting. 

Nevertheless, many expenses come at or after planting (particularly planting, irrigation, crop protection 

chemicals, and harvest costs). 

Prevented planting experience 

Prevented planting claims have accounted for only 4.4% of total indemnities over the past 20 years. Total 

indemnities for processing beans were $20.3 million for the period 2003-2012. Prevented planting 

indemnities were relatively small compared to total indemnities, only $1 million or 5% of total claims. New 

York accounted for 41% of prevented planting claims, and Wisconsin 40%. Overall, excess 

moisture/precipitation/rain was the cause of loss for 84% of the prevented planting indemnities; drought 

accounted for the rest. 

Analysis 

We constructed processing bean budgets from two sources: New York and Oregon. There were small 

variations in the percentage of costs that would be considered sunk costs at planting time. 

For New York, pre-planting costs were $154 out of $376 in 2003 (41%) and $266 out of $653 in 2012 (also 

41%). In Oregon, the pre-planting portion rose slightly from $313 out of $789 per acre (40%) in 2003, to 

$576 out of $1,381 (42%) in 2012. 

Averaged across both markets, the prevented planting percentage remained fairly steady at 41% - very close 

to the 40% rate used by RMA. 

Comparison of RMA payments to estimated costs 

The ratio of RMA’s incurred base PP payment to estimated PP costs has fluctuated slightly over the past ten 

years, but has generally been close to 1.00. 

330 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 96: Share of costs incurred prior to planting processing beans 

Figure 97: Ratio of RMA payment to PP costs for processing beans 

Recommendation 

We recommend leaving the payment rate unchanged at 40%. 

331 
Evaluation of Preven

Pre

Table 213: Snap bean production costs per planted acre: New York 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 29.31 30.07 31.97 34.64 38.83 49.29 56.91 59.00 

Fertilizer 47.62 53.76 62.98 67.59 82.95 150.53 105.60 96.77 

Land preparation 20.85 24.58 32.17 35.60 39.32 51.24 34.11 42.30 

Planting 5.90 6.05 6.44 6.97 7.82 9.93 11.46 11.88 

Irrigation 12.89 13.27 13.75 14.22 14.60 15.17 15.08 15.36 

Chemicals 54.45 54.45 55.35 57.60 58.05 62.55 67.05 64.80 

Custom 55.70 53.47 53.92 54.81 55.70 64.16 64.61 64.61 

Repair and maintenance 11.63 11.97 12.48 12.74 13.17 13.34 13.59 13.85 

Other variable costs 30.72 31.62 32.75 33.88 34.78 36.14 35.91 36.59 

Business expenses 0.60 0.61 0.64 0.66 0.67 0.70 0.70 0.71 

Crop insurance 4.03 4.09 4.29 4.48 4.71 4.71 5.03 5.19 

Total cash expenses 273.69 283.95 306.73 323.18 350.59 457.75 410.04 411.06 

Allocated overhead: Tractors 3.58 3.84 4.10 4.31 4.53 4.95 5.26 5.45 

Implements 26.86 28.81 30.77 32.37 33.97 37.17 39.49 40.91 

Land rent 32.72 34.06 35.39 36.95 39.62 45.63 52.53 54.09 

Office 6.67 6.83 6.99 7.64 7.97 8.94 9.97 10.30 

Utilities 1.68 1.73 1.79 1.85 1.90 1.98 1.96 2.00 

Liability 1.46 1.48 1.55 1.62 1.70 1.70 1.82 1.88 

Property taxes 20.77 21.72 23.15 24.58 26.32 30.60 29.81 30.76 

Property insurance 2.09 2.18 2.33 2.47 2.64 3.07 2.99 3.09 

Investment repairs 6.77 6.97 7.26 7.41 7.66 7.76 7.91 8.06 

 Total, allocated overhead 

102.59 107.62 113.34 119.21 126.32 141.82 151.75 156.54 

 Total costs listed 376.28 391.58 420.07 442.39 476.91 599.58 561.79 567.60 

Source for budget: Cornell University http://dyson.cornell.edu/outreach/extensionpdf/2011/Cornell-Dyson-eb1110.pdf Notes: Based on 2010 budget; 2003-2009, 2011-2012 values based on price indices 

332 
Evaluation of Preven

Pre

Table 214: Bush bean production costs per planted acre: Oregon 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 99.35 101.94 108.39 117.42 131.61 167.10 192.90 200.00 

Fertilizer 93.49 105.56 123.65 132.70 162.86 295.56 207.34 190.00 

Chemicals 88.23 88.23 89.69 93.33 94.06 101.35 108.65 105.00 

Irrigation 65.48 67.41 69.81 72.22 74.15 77.04 76.56 78.00 

Labor 86.57 88.22 90.98 94.29 97.59 100.90 103.66 104.21 

Machinery 72.49 77.77 83.05 87.37 91.69 100.33 106.57 110.41 

Miscellaneous 1.35 1.41 1.51 1.60 1.71 1.99 1.94 2.00 

Crop insurance 8.13 8.26 8.65 9.04 9.49 9.49 10.14 10.47 

Operating interest 22.32 23.03 26.36 31.58 33.72 35.38 32.53 31.58 

Total overhead costs 537.41 561.82 602.08 639.54 696.89 889.14 840.29 831.67 

Allocated overhead: Property Insurance 16.88 17.65 18.81 19.97 21.39 24.87 24.23 25.00 

Property taxes 13.51 14.12 15.05 15.98 17.11 19.90 19.38 20.00 

Land Rent 120.99 125.93 130.86 136.63 146.50 168.72 194.24 200.00 

Machinery & equip, deprec, Int & Ins 80.54 86.41 92.28 97.08 101.88 111.48 118.41 122.68 

Pickups, truck & ATV, deprec, Int & Ins 9.38 10.07 10.75 11.31 11.87 12.99 13.79 14.29 

 Total, allocated overhead 

241.30 254.18 267.76 280.96 298.75 337.96 370.05 381.97 

 Total costs listed 778.71 816.00 869.83 920.51 995.64 1227.09 1210.34 1213.64 

Source for budget(s): Oregon State University http://arec.oregonstate.edu/oaeb/files/pdf/AEB0004.pdf Notes: Based on 2010 budget; 2003-2009, 2011-2012 values based on price indices 

333 
Evaluation of Preven

Pre

Table 215: Snap bean - share of expenses incurred before planting: New York 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 0% 0% 0% 0% 0% 0% 0% 0% 

Land preparation 100% 100% 100% 100% 100% 100% 100% 100% 

Planting 0% 0% 0% 0% 0% 0% 0% 0% 

Irrigation 0% 0% 0% 0% 0% 0% 0% 0% 

Chemicals 10% 10% 10% 10% 10% 10% 10% 10% 

Custom 25% 25% 25% 25% 25% 25% 25% 25% 

Repair and maintenance 25% 25% 25% 25% 25% 25% 25% 25% 

Other variable costs 25% 25% 25% 25% 25% 25% 25% 25% 

Business expenses 25% 25% 25% 25% 25% 25% 25% 25% 

Crop insurance 4% 4% 4% 4% 4% 4% 4% 4% 

Allocated overhead: Tractors 100% 100% 100% 100% 100% 100% 100% 100% 

Implements 100% 100% 100% 100% 100% 100% 100% 100% 

Land rent 100% 100% 100% 100% 100% 100% 100% 100% 

Office 100% 100% 100% 100% 100% 100% 100% 100% 

Utilities 100% 100% 100% 100% 100% 100% 100% 100% 

Liability 100% 100% 100% 100% 100% 100% 100% 100% 

Property taxes 100% 100% 100% 100% 100% 100% 100% 100% 

Property insurance 100% 100% 100% 100% 100% 100% 100% 100% 

Investment repairs 100% 100% 100% 100% 100% 100% 100% 100% 

334 
Evaluation of Preven

Pre

Table 216: Bush bean - share of expenses incurred before planting: Oregon 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 34% 34% 34% 34% 34% 34% 34% 34% 

Chemicals 0% 0% 0% 0% 0% 0% 0% 0% 

Irrigation 0% 0% 0% 0% 0% 0% 0% 0% 

Labor 14% 14% 14% 14% 14% 14% 14% 14% 

Machinery 31% 31% 31% 31% 31% 31% 31% 31% 

Miscellaneous 0% 0% 0% 0% 0% 0% 0% 0% 

Crop insurance 4% 4% 4% 4% 4% 4% 4% 4% 

Operating interest 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: Property Insurance 100% 100% 100% 100% 100% 100% 100% 100% 

Property taxes 100% 100% 100% 100% 100% 100% 100% 100% 

Land Rent 100% 100% 100% 100% 100% 100% 100% 100% 

Machinery & equip, deprec, Int & Ins 100% 100% 100% 100% 100% 100% 100% 100% 

Pickups, truck & ATV, deprec, Int & Ins 100% 100% 100% 100% 100% 100% 100% 100% 

335 
Evaluation of Preven

Pre

Table 217: Snap bean prevented planting cost per acre: New York 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Land preparation 20.85 24.58 32.17 35.60 39.32 51.24 34.11 42.30 

 Planting 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Irrigation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Chemicals 5.45 5.45 5.54 5.76 5.81 6.26 6.71 6.48 

 Custom 13.92 13.37 13.48 13.70 13.92 16.04 16.15 16.15 

 Repair and maintenance 2.91 2.99 3.12 3.18 3.29 3.33 3.40 3.46 

 Other variable costs 7.68 7.91 8.19 8.47 8.70 9.03 8.98 9.15 

 Business expenses 0.15 0.15 0.16 0.16 0.17 0.18 0.17 0.18 

 Crop insurance 0.16 0.16 0.17 0.18 0.19 0.19 0.20 0.21 

 Total, operating costs 51.12 54.60 62.82 67.06 71.39 86.27 69.72 77.93 

Allocated overhead: Tractors 3.58 3.84 4.10 4.31 4.53 4.95 5.26 5.45 

 Implements 26.86 28.81 30.77 32.37 33.97 37.17 39.49 40.91 

 Land rent 32.72 34.06 35.39 36.95 39.62 45.63 52.53 54.09 

 Office 6.67 6.83 6.99 7.64 7.97 8.94 9.97 10.30 

 Utilities 1.68 1.73 1.79 1.85 1.90 1.98 1.96 2.00 

 Liability 1.46 1.48 1.55 1.62 1.70 1.70 1.82 1.88 

 Property taxes 20.77 21.72 23.15 24.58 26.32 30.60 29.81 30.76 

 Property insurance 2.09 2.18 2.33 2.47 2.64 3.07 2.99 3.09 

 Investment repairs 6.77 6.97 7.26 7.41 7.66 7.76 7.91 8.06 

 Total, allocated overhead 

102.59 107.62 113.34 119.21 126.32 141.82 151.75 156.54 

 Total costs listed 153.71 162.22 176.16 186.27 197.72 228.09 221.47 234.47 

Total costs 376.28 391.58 420.07 442.39 476.91 599.58 561.79 567.60 

Prevented planting % 41% 41% 42% 42% 41% 38% 39% 41% 

336 
Evaluation of Preven

Pre

Table 218: Bush bean prevented planting cost per acre: Oregon 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Fertilizer 31.98 36.11 42.30 45.40 55.71 101.11 70.93 65.00 

Chemicals 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Irrigation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Labor 12.11 12.34 12.73 13.19 13.65 14.12 14.50 14.58 

Machinery 22.66 24.31 25.96 27.31 28.66 31.36 33.31 34.51 

Miscellaneous 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Crop insurance 0.33 0.33 0.35 0.36 0.38 0.38 0.41 0.42 Operating interest 5.58 5.76 6.59 7.90 8.43 8.84 8.13 7.90  Total, operating costs 72.66 78.85 87.92 94.15 106.84 155.81 127.28 122.40 

Allocated overhead: Property Insurance 16.88 17.65 18.81 19.97 21.39 24.87 24.23 25.00 

Property taxes 13.51 14.12 15.05 15.98 17.11 19.90 19.38 20.00 

Land Rent 120.99 125.93 130.86 136.63 146.50 168.72 194.24 200.00 

Machinery & equip, deprec, Int & Ins 80.54 86.41 92.28 97.08 101.88 111.48 118.41 122.68 

Pickups, truck & ATV, deprec, Int & Ins 9.38 10.07 10.75 11.31 11.87 12.99 13.79 14.29 

 Total, allocated overhead 

241.30 254.18 267.76 280.96 298.75 337.96 370.05 381.97 

 Total costs listed 313.96 333.03 355.68 375.12 405.59 493.77 497.34 504.37 

Total costs 778.71 816.00 869.83 920.51 995.64 1,227.09 1,210.34 1,213.64 

Prevented planting % 40% 41% 41% 41% 41% 40% 41% 42% 

337 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.12. Processing sweet corn 

Overview 

Production of sweet corn for processing was almost three million tons in 2012. Production is 

concentrated in a few states. In 2009, key producing states were Minnesota (30%), Washington 

(26%), Wisconsin (21%), and Oregon (7%). 

Figure 98: Processing sweet corn production areas 

Source: USDA NASS 

Sources of production cost information 

Few states publish budgets specifically for sweet corn for processing. One of the most recent budgets in a 

key producing region is a 2010 budget from Oregon State University Extension for the Willamette Valley, 

which has a similar climate to key growing areas in Washington State. This is the budget we have used for 

this analysis. We also checked prevented planting costs from a 2002 budget published by Washington State 

University Extension. 

Production practices 

Sweet corn production for processing differs from traditional feed corn production in planting and postplanting costs are a lot higher: from more expensive seed, to multiple applications of crop inputs, irrigation 

and more expensive harvesting. 

Prevented planting experience 

Prevented planting claims were only 2.7% of total sweet corn indemnities from 1993-2012. Also, only 12% 

of indemnities were associated with 10% buy-up. 

Prevented planting claims represent only a small fraction (1.8%) of all processing sweet corn claims for the 

period 2003-2012: $441,000 out of $25 million. Of these prevented planting claims, they came primarily 

from Minnesota ($200,000), Wisconsin ($121,000), and New York ($111,000). The cause of loss for these 

prevented planting claims was most often excess moisture/precipitation/rain (94%). 

338 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Analysis 

Based on the OSU Extension budget for 2010, pre-planting costs for sweet corn for processing have remained 

relatively stable over the past decade, at 38% of total costs. In comparison with other crops, however, we 

had fewer budgets to work with. Analysis of a 2002 budget from Washington State University Extension 

turned up similar results: pre-planting costs of 38%. RMA’s rate for processing corn is 40%. 

Figure 99: Share of costs incurred prior to planting processing sweet corn 

Comparison of RMA payments to estimated PP costs 

The ratio of RMA’s incurred base PP payment to estimated PP costs has been mostly around 0.8, except for 

2008 and 2009 when it was slightly over 1.0. 

339 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 100: Ratio of RMA payment to PP costs for processing sweet corn 

Recommendation 

RMA’s payments based on the 40% PP rate for sweet corn may be a bit low, though they do not appear 

significantly out of line. We recommend keeping the PP factor at 40%. 

340 
Evaluation of Preven

Pre

Table 219: Processing sweet corn production costs per planted acre: Willamette Valley, Oregon 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 49.68 50.97 54.19 58.71 65.81 83.55 96.45 100.00 

 Fertilizer 137.78 155.56 182.22 195.56 240.00 435.56 305.56 280.00  Chemicals 58.82 58.82 59.79 62.22 62.71 67.57 72.43 70.00 

 Fuel, lube, and repairs 37.67 44.39 58.11 64.30 71.03 92.55 61.61 76.41 

 Irrigation 71.36 73.46 76.08 78.70 80.80 83.95 83.43 85.00 

 Hired labor 43.69 44.52 45.91 47.58 49.25 50.92 52.31 52.59 

 Miscellaneous 1.35 1.41 1.51 1.60 1.71 1.99 1.94 2.00 

 Crop insurance 3.39 3.44 3.60 3.76 3.95 3.95 4.22 4.36 

 Interest on operating capital 16.99 17.53 20.06 24.04 25.67 26.93 24.76 24.04 

 Total, operating costs 420.71 450.10 501.48 536.48 600.93 846.97 702.71 694.40 Allocated overhead: Returns to management / risk 56.45 57.52 59.32 61.48 63.64 65.79 67.59 67.95 

 Capital recovery of machinery & equip 30.87 33.12 35.37 37.21 39.05 42.73 45.38 47.02 

 Opportunity cost of land (rental rate) 120.988 125.926 130.864 136.626 146.502 168.724 194.239 200.00 

 Taxes and insurance 30.3866 31.7784 33.866 35.9536 38.5052 44.768 43.6082 45.00  Total, allocated overhead 

238.69 248.35 259.42 271.26 287.69 322.01 350.82 359.97 

 Total costs listed 659.40 698.44 760.90 807.74 888.62 1,168.98 1,053.54 1,054.37 Source for budget(s): OSU Extension http://arec.oregonstate.edu/oaeb/files/pdf/AEB0006.pdfNotes: Based on 2010 budget; values for other years derived using price indices (in italics) 

341 
Evaluation of Preven

Pre

Table 220: Processing sweet corn - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: Seed 0% 0% 0% 0% 0% 0% 0% Fertilizer 23% 23% 23% 23% 23% 23% 23% 

 Chemicals 0% 0% 0% 0% 0% 0% 0% Fuel, lube, and repairs 23% 23% 23% 23% 23% 3% 23% 

 Irrigation 0% 0% 0% 0% 0% 0% 0%  Hired labor 14% 14% 14% 14% 14% 14% 14% 

 Miscellaneous 0% 0% 0% 0% 0% 0% 0%  Crop insurance 3% 3% 3% 3% 3% 3% 3%  Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: Returns to management / risk 30% 30% 30% 30% 30% 30% 30% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 1

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 1

 Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 1

342 
Evaluation of Preven

Pre

Table 221: Processing sweet corn prevented planting cost per acre: Willamette Valley, Oregon 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 31.69 35.78 41.91 44.98 55.20 100.18 70.28 64.40 

 Chemicals 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fuel, lube, and repairs 8.66 10.21 13.37 14.79 16.34 2.78 14.17 17.57 

 Irrigation 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Hired labor 6.12 6.23 6.43 6.66 6.90 7.13 7.32 7.36 

 Miscellaneous 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop insurance 0.10 0.10 0.11 0.11 0.12 0.12 0.13 0.13 

 Interest on operating capital 4.25 4.38 5.02 6.01 6.42 6.73 6.19 6.01 

 Total, operating costs 50.82 56.71 66.83 72.55 84.97 116.93 98.09 95.48 

Allocated overhead: Returns to management / risk 16.93 17.26 17.80 18.44 19.09 19.74 20.28 20.39 

 Capital recovery of machinery & equip 30.87 33.12 35.37 37.21 39.05 42.73 45.38 47.02 

 Opportunity cost of land (rental rate) 120.99 125.93 130.86 136.63 146.50 168.72 194.24 200.00 

 Taxes and insurance 30.39 31.78 33.87 35.95 38.51 44.77 43.61 45.00 

 Total, allocated overhead 

199.18 208.08 217.89 228.23 243.14 275.96 303.51 312.41 

 Total costs listed 249.99 264.79 284.72 300.78 328.11 392.89 401.60 407.88 

Total costs 659.40 698.44 760.90 807.74 888.62 1,168.98 1,053.54 1,054.37 

Prevented planting % 38% 38% 37% 37% 37% 34% 38% 39% 

343 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.13. Rye 

Overview 

Rye is grown in most US states as a cover crop or for on farm use. In 2013, Oklahoma (21%) and Georgia 

(14%) were the largest producer states. Others include Illinois, Kansas, Michigan, Minnesota, Nebraska, 

New York, North Carolina, North Dakota, Pennsylvania, South Carolina, South Dakota, Texas, and Wisconsin 

Figure 101: Rye production areas 

Source: Agralytica and NASS 2012 

Sources of production cost information 

Rye budgets were available for several states: North Dakota, Wisconsin, Florida, Iowa, North Carolina, and 

Georgia (2 budgets). Budgets from North Dakota and Wisconsin were used to estimate prevented planting 

costs. (Those from Georgia, Florida, Iowa, and North Carolina did not include fixed costs.) In addition, as 

Oklahoma is the largest producer, we requested Oklahoma budgets directly from Oklahoma State University 

Extension and used those to prepare a third rye budget. 

Production practices 

Rye is a hardy crop and can be grown in a wider range of environmental conditions than any other small 

grain. It can survive in harsh winters, sandy soils, and drought conditions. It cannot tolerate heat or 

waterlogged conditions, however, and is rarely seen in tropical or subtropical climates. 

Most rye grown in the US is used for pasture hay or as a cover crop, with less than half of production 

harvested for grain. More than half of the grain goes into animal feeds; the rest is used to make bread or 

alcoholic beverages. 

Rye can be grown in the previous crop stubble without preparation and is an economical choice in fields 

that are reasonably weed free. Rye for forage or straw is increasingly planted in no till systems as it is a 

low value crop. Rye for grain tends to be planted in conventional tillage systems for higher yields. 

Typically, in conventional tillage, a field will be plowed to remove stubble and disced just prior to the 

seeding pass. 

344 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Seeding dates depend on the use of the crop. Winter rye can be seeded from late summer to late fall, 

similar to winter wheat. Stored rye seed loses its ability to germinate faster than other cereal crop seeds 

and should not be stored for long periods. Fungicide treatments used on other small grains are also suitable 

for rye, if needed. 

Winter rye and winter wheat have similar response profiles to fertilizers. However, rye is an efficient user 

of residual fertilizer, especially nitrogen. Phosphorus and potash may be applied just prior to planting, 

either before or after the disc pass, or at planting in sidebands with the seeding pass. In cases where 

nitrogen is needed, half of the nitrogen is applied at planting and the other half by topdressing in the spring. 

Prevented planting experience 

Prevented planting claims for rye were only $51,941 over twenty years, representing only 1.5% of 

indemnities. Only hybrid sorghum seed had a lower dollar amount of PP indemnities. 

Total indemnities paid out for rye losses totaled $2.5 million for the period 2003-2012. Prevented planting 

indemnities totaled $37,500, just 1.5% of the total. Of this total, $32,000 came from North Dakota, $3,200 

from Oklahoma, and $2,300 from South Dakota. 

Analysis 

Rye budgets indicate pre-planting costs in North Dakota dropping from 59% of total costs in 2003 to 42% in 

2012. In Wisconsin, the percentage was 51% in 2003 and 50% in 2012 (essentially flat). The third budget, 

for Oklahoma, showed PP costs dropping from 52% to 43% of total costs between 2003 and 2012. 

The average of the three budgets dropped from 55% in 2003 to 46% in 2012. RMA’s rate has been 60%. Based 

on this crop budget analysis, a more appropriate PP rate for rye would be 45%. 

Figure 102: Share of costs incurred prior to planting rye 

345 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Comparison of RMA payments to estimated PP costs 

The ratio of RMA payment amounts to PP costs ranged mostly from 0.40 to 1.20 for the three budget regions. 

However the Wisconsin budget had costs roughly twice those of North Dakota and Oklahoma, and there 

were only two years with any insured rye acreage in Wisconsin. We used the RMA payments for the entire 

Northern Crescent region and still only had about 100 acres a year insured. We therefore ignore the lowest 

line in the chart below. Oklahoma has the largest rye production and insured acreage, but liabilities per 

acre are low, presumably due to lower yields than in North Dakota. 

Figure 103: Ratio of RMA payment to PP costs for rye 

Recommendation 

In view of the possible deficiencies of the production cost data, the limited insurance experience, and the 

virtual absence of prevented planting claims, we recommend keeping the PP payment rate for rye at 60%. 

346 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 222: Rye production costs per planted acre: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses:

 Seed 

Herbicides Fungicides Insecticides Fertilizer 

 Crop Insurance 

Fuel & Lubrication Repairs Drying Miscellaneous 

 Interest on operating costs 

4.68 4.80 4.80 4.80 4.80 5.40 6.60 6.24 7.20 11.400.00 0.00 0.00 0.00 1.20 1.30 8.60 5.88 3.50 3.500.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

17.79 20.08 25.97 31.68 27.62 46.23 59.14 39.49 60.45 69.89

3.65 3.50 4.56 3.52 4.84 5.48 5.74 5.30 5.44 7.385.03 5.93 8.74 11.45 11.25 14.31 8.87 10.31 12.75 14.349.33 9.60 9.60 9.95 9.68 10.40 11.08 12.41 13.17 13.690.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.000.97 1.00 1.00 1.00 2.60 3.30 6.00 6.00 6.50 6.501.31 1.35 1.78 2.42 2.56 3.24 2.92 2.25 2.73 2.91

 Total, operating costs 42.75 46.26 56.45 64.82 64.55 89.66 108.95 87.88 111.74 129.61 Allocated overhead: Misc. Overhead  Machinery Depreciation 

Machinery Investment Land Charge 

3.45 3.55 3.44 3.53 3.44 3.55 4.59 4.74 5.90 6.02

11.23 12.05 12.04 12.47 12.34 12.95 13.5 14.25 15.14 15.76

6.98 7.49 7.19 7.44 7.15 7.44 7.53 8.04 8.48 8.82

28.09 28.77 28.86 29.52 30.4 32.30 35.16 36.28 37.64 42.48

 Total, allocated overhead 49.75 51.86 51.53 52.96 53.33 56.24 60.78 63.31 67.16 73.08

 Total costs listed 92.49 98.12 107.98 117.78 117.88 145.90 169.73 151.19 178.90 202.69 

Source for budget(s): [Source here] http://linktobudgethere.com Notes: Type notes here in case 2000-2002 columns get deleted 

347 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 223: Rye production costs per planted acre: Wisconsin 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses: 

Fertilizer 

Rye Seed 

 Crop ins 

Scouting 

 Custom operations 

Hauling Herbicides Labor 

 Fuel, lube, electricity  Repairs and Maintenance  Interest on operating costs 

20.07 22.65 26.54 28.48 34.95 63.43 44.50 40.78 53.08 53.89

9.83 10.09 10.72 11.62 13.02 16.53 19.09 19.79 21.19 22.91

7.16 7.39 7.79 8.14 8.60 8.43 9.12 9.41 9.58 9.76 

6.83 6.96 7.17 7.43 7.70 7.96 8.17 8.22 8.35 8.65

9.11 8.74 8.82 8.96 9.11 10.49 10.57 10.57 10.78 11.44 

7.09 6.80 6.86 6.97 7.09 8.16 8.22 8.22 8.39 8.90 2.36 2.36 2.40 2.49 2.51 2.71 2.90 2.81 2.83 2.98 

3.27 3.33 3.44 3.56 3.69 3.81 3.91 3.94 4.00 4.148.69 10.25 13.41 14.84 16.39 21.36 14.22 17.63 22.48 22.35

13.90 14.31 14.93 15.23 15.75 15.95 16.26 16.56 17.18 17.79

2.07 2.14 2.45 2.93 3.13 3.29 3.02 2.93 3.20 3.24

 Total, operating costs 90.37 95.02 104.53 110.67 121.94 162.12 139.98 140.85 161.05 166.06 Allocated overhead: Hired Labor  Capital recovery of machinery & equip  Opportunity cost of land (rental rate)  Interest and insurance  Returns to management 

10.47 10.67 11.00 11.40 11.80 12.20 12.53 12.60 12.80 13.27

14.41 15.45 16.50 17.36 18.22 19.94 21.18 21.94 23.28 24.52

70.85 72.58 74.31 81.22 84.68 95.05 105.99 109.45 118.09 122.12

9.02 9.31 10.65 12.76 13.62 14.30 13.14 12.76 13.91 14.10

65.17 66.42 68.50 70.99 73.48 75.97 78.04 78.46 79.70 82.61

 Total, allocated overhead 169.92 174.43 180.96 193.73 201.80 217.45 230.89 235.21 247.78 256.62 

Total costs listed 260.29 269.45 285.48 304.40 323.74 379.57 370.87 376.06 408.83 422.68 

Source for budget(s): [Source here] http://linktobudgethere.com Notes: Type notes here in case 2000-2002 columns get deleted 

348 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 224: Rye production costs per planted acre: Oklahoma

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses: Rye Seed Fertilizer Pesticide Crop Insurance Operating Capital Machinery Labor Hrs. Custom Hire Machinery Fuel, Lube, Repairs 

11.25 11.25 11.25 10.50 10.50 10.50 14.63 14.63 14.63 14.63 

11.12 14.42 19.07 22.61 26.73 26.73 20.56 20.86 30.08 43.43 

3.39 3.44 3.50 3.50 3.51 3.51 4.73 4.50 3.93 4.14 

1.48 1.48 1.48 1.48 1.48 1.48 1.48 1.48 1.48 4.50 

2.86 3.15 3.72 4.97 5.84 5.84 4.23 4.36 4.90 5.85 

9.00 8.39 9.61 9.61 9.61 9.61 10.35 10.85 11.78 11.78 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

25.35 24.39 37.63 46.55 47.24 47.24 44.83 48.07 53.13 63.62

 Total, operating costs 64.45 66.52 86.26 99.22 104.91 104.91 100.81 104.75 119.93 147.95 Allocated overhead: Interest Taxes Insurance Depreciation Land  Returns to management 

6.20 6.01 7.10 9.01 9.53 9.53 8.00 7.98 7.82 8.47 1.20 1.22 1.47 1.65 1.68 1.68 1.68 1.72 1.74 2.19 0.49 0.52 0.57 0.64 0.65 0.65 0.65 0.67 0.67 0.85 8.36 9.15 10.48 11.70 11.98 11.98 11.98 12.31 12.41 15.57 

30.17 28.05 31.24 30.60 33.00 36.12 36.39 37.47 40.40 41.63

-51.03 0.00 -12.32 -28.54 -34.73 -34.73 -12.79 -17.10 21.83 -19.63

 Total, allocated overhead 46.41 44.96 50.86 53.60 56.84 59.96 58.70 60.15 63.04 68.71

 Total costs listed 110.86 111.48 137.12 152.82 161.75 164.87 159.51 164.90 182.97 216.66 

Source for budget(s): [Source here] http://linktobudgethere.com Notes: Type notes here in case 2000-2002 columns get deleted 

349 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 225: Rye - estimated share of expenses incurred pre-planting: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses: 

Seed Herbicides Fungicides Insecticides Fertilizer Crop Insurance Fuel & Lubrication Repairs Drying Miscellaneous Interest on operating costs 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

43% 43% 43% 43% 43% 43% 43% 43% 43% 43% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 

32% 32% 32% 32% 32% 32% 32% 32% 32% 32% 

30% 30% 30% 30% 30% 30% 30% 30% 30% 30% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 

25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: 

Misc. Overhead Machinery Depreciation Machinery Investment Land Charge 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

350 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 226: Rye - estimated share of expenses incurred pre-planting: Wisconsin 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses: 

Fertilizer Rye Seed Crop ins Scouting Custom operations Hauling Herbicides Labor Fuel, lube, electricity Repairs and Maintenance Interest on operating costs 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

43% 43% 43% 43% 43% 43% 43% 43% 43% 43% 

38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 

32% 32% 32% 32% 32% 32% 32% 32% 32% 32% 

30% 30% 30% 30% 30% 30% 30% 30% 30% 30% 

25% 25% 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: 

Hired Labor 

 Capital recovery of machinery & equip  Opportunity cost of land (rental rate) 

Interest and insurance Returns to management 

38% 38% 38% 38% 38% 38% 38% 38% 38% 38%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100%

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

37% 37% 37% 37% 37% 37% 37% 37% 37% 37% 

351 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 227: Rye - estimated share of expenses incurred pre-planting: Oklahoma

 Item 

Cash expenses: Rye Seed Fertilizer Pesticide Crop Insurance Operating Capital Machinery Labor Hrs. Custom Hire Machinery Fuel, Lube, Repairs 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

2% 2% 2% 2% 2% 2% 2% 2% 2% 2% 

0% 0% 0% 0% 0% 0% 0% 0% 0% 0% 

38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 

38% 38% 38% 38% 38% 38% 38% 38% 38% 38% 

32% 32% 32% 32% 32% 32% 32% 32% 32% 32% 

Allocated overhead: Interest Taxes Insurance Depreciation Land Returns to management 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

100% 100% 100% 100% 100% 100% 100% 100% 100% 100% 

352 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 228: Estimated prevented planting costs per acre in Rye production: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses:

 Seed 

Herbicides Fungicides Insecticides Fertilizer 

 Crop Insurance 

Fuel & Lubrication Repairs Drying Miscellaneous 

 Interest on operating costs 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.52 0.56 3.70 2.53 1.51 1.510.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.000.07 0.07 0.09 0.07 0.10 0.11 0.11 0.11 0.11 0.151.61 1.90 2.80 3.66 3.60 4.58 2.84 3.30 4.08 4.592.80 2.88 2.88 2.99 2.90 3.12 3.32 3.72 3.95 4.110.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.000.24 0.25 0.25 0.25 0.65 0.83 1.50 1.50 1.63 1.630.33 0.34 0.45 0.61 0.64 0.81 0.73 0.56 0.68 0.73

 Total, operating costs 5.05 5.44 6.46 7.57 8.41 10.00 12.21 11.72 11.95 12.70 Allocated overhead: Misc. Overhead  Machinery Depreciation 

Machinery Investment Land Charge 

3.45 3.55 3.44 3.53 3.44 3.55 4.59 4.74 5.90 6.02

11.23 12.05 12.04 12.47 12.34 12.95 13.50 14.25 15.14 15.76

6.98 7.49 7.19 7.44 7.15 7.44 7.53 8.04 8.48 8.82

28.09 28.77 28.86 29.52 30.40 32.30 35.16 36.28 37.64 42.48

 Total, allocated overhead 49.75 51.86 51.53 52.96 53.33 56.24 60.78 63.31 67.16 73.08

 Total costs listed 54.80 57.30 57.99 60.53 61.74 66.24 72.99 75.03 79.11 85.78 Total costs 92.49 98.12 107.98 117.78 117.88 145.90 169.73 151.19 178.90 202.69 Prevented planting % 59% 58% 54% 51% 52% 45% 43% 50% 44% 42% 

353 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 229: Estimated prevented planting costs per acre in Rye production: Wisconsin 

Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses:

 Fertilizer 

Rye Seed 

 Crop ins  Scouting  Custom operations 

Hauling Herbicides Labor Fuel, lube, elec. 

 Repairs and Maintenance  Interest on operating costs 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.000.14 0.15 0.16 0.16 0.17 0.17 0.18 0.19 0.19 0.200.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.000.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.001.01 1.01 1.03 1.07 1.08 1.16 1.25 1.21 1.22 1.281.24 1.27 1.31 1.35 1.40 1.45 1.49 1.50 1.52 1.572.78 3.28 4.29 4.75 5.25 6.84 4.55 5.64 7.19 7.154.17 4.29 4.48 4.57 4.72 4.78 4.88 4.97 5.15 5.340.52 0.53 0.61 0.73 0.78 0.82 0.76 0.73 0.80 0.81

 Total, operating costs 9.87 10.54 11.87 12.64 13.41 15.22 13.10 14.24 16.07 16.35 Allocated overhead: Hired Labor  Capital recovery of machinery & equip  Opportunity cost of land (rental rate) 

Interest and insurance 

 Returns to management 

3.98 4.05 4.18 4.33 4.48 4.64 4.76 4.79 4.86 5.04

14.41 15.45 16.50 17.36 18.22 19.94 21.18 21.94 23.28 24.5270.85 72.58 74.31 81.22 84.68 95.05 105.99 109.45 118.09 122.12

9.02 9.31 10.65 12.76 13.62 14.30 13.14 12.76 13.91 14.10

24.11 24.58 25.34 26.27 27.19 28.11 28.88 29.03 29.49 30.57

 Total, allocated overhead 122.37 125.97 130.99 141.94 148.19 162.02 173.95 177.97 189.63 196.35

 Total costs listed 132.24 136.51 142.86 154.58 161.60 177.25 187.05 192.20 205.70 212.70 Total costs 260.29 269.45 285.48 304.40 323.74 379.57 370.87 376.06 408.83 422.68 Prevented planting % 51% 51% 50% 51% 50% 47% 50% 51% 50% 50% 

354 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Table 230: Estimated prevented planting costs per acre in Rye production: Oklahoma

 Item 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Cash expenses: Rye Seed Fertilizer Pesticide Crop Insurance Operating Capital Machinery Labor Hrs. Custom Hire Machinery Fuel, Lube, Repairs 

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.03 0.09 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 3.42 3.19 3.65 3.65 3.65 3.65 3.93 4.12 4.48 4.48 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 8.11 7.80 12.04 14.90 15.12 15.12 14.35 15.38 17.00 20.36

 Total, operating costs 11.56 11.02 15.72 18.58 18.80 18.80 18.31 19.54 21.51 24.92 Allocated overhead: Interest Taxes Insurance Depreciation Land  Returns to management 

6.20 6.01 7.10 9.01 9.53 9.53 8.00 7.98 7.82 8.47 1.20 1.22 1.47 1.65 1.68 1.68 1.68 1.72 1.74 2.19 0.49 0.52 0.57 0.64 0.65 0.65 0.65 0.67 0.67 0.85 8.36 9.15 10.48 11.70 11.98 11.98 11.98 12.31 12.41 15.57 

30.17 28.05 31.24 30.60 33.00 36.12 36.39 37.47 40.40 41.63

0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00

 Total, allocated overhead 46.41 44.96 50.86 53.60 56.84 59.96 58.70 60.15 63.04 68.71

 Total costs listed 57.97 55.98 66.58 72.18 75.64 78.76 77.01 79.69 84.55 93.63 Total costs 110.86 111.48 137.12 152.82 161.75 164.87 159.51 164.90 182.97 216.66 Prevented planting % 52% 50% 49% 47% 47% 48% 48% 48% 46% 43% 

355 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.14. Safflower 

Overview 

Safflower is an annual, broadleaf, oilseed crop. It has a long taproot system and it is well adapted to 

semiarid regions, such as the Great Plains and California valleys. Safflower is grown primarily for oil, meal, 

and birdseed. 

In 2012, 179.4 million pounds of safflower were grown on 160,100 harvested acres. California is by far the 

most significant producer, accounting for one-third of the acreage and more than three-fifths (61%) of 

production. Other important safflower states include Montana (10% of production), North Dakota (9%), and 

Utah (5%). 

Figure 104: Safflower producing states 

Source: Agralytica and NASS 2012 

Sources of production cost information 

California periodically publishes budgets for safflower production. Because it is by far the largest producer, 

we used California’s data to build our safflower budget presented here. Safflower is grown in California in 

both the Sacramento and San Joaquin Valleys, and can be grown bed planted and irrigated, or on dryland. 

We worked with the Sacramento Valley, bed-planted and irrigated budgets, as there were ones available 

for both 2005 and 2011. We used price indices to calculate cost estimates for the missing years. 

In North Dakota, safflower production is concentrated in the Northwest (NW) and Southwest (SW) regions. 

We averaged costs for these regions for 2004 and 2012 to build an overall crop budget for safflower for 

North Dakota, filling in the years 2003 and 2005-2011 using NASS price indexes. 

Additionally, we ran prevented planting cost calculations on budgets obtained for Utah and Nebraska. 

Production practices 

Safflower is an option for dryland crop rotation; it is usually grown in rotation with small grains or on fallow. 

Most safflower is grown under contract, either with a birdseed company or an oil company for delivery in 

the fall. 

356 
 

 

 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Safflower grows best in fertile, well-drained soils. It is slow to develop in the early growth stages; seedlings 

are weak and stands are poor weed competitors. Weeds must be controlled before planting and preemergence. Farmers also use row spacing for competition control. 

Land planted to safflower is usually tilled in the fall; in the spring, herbicides are used, and there is 

additional preparation of the soil. In California, safflower is planted from January through April, from South 

to North. Outside California, it is typically planted later (in North Dakota it is planted between late April 

and early May). Safflower typically needs 110-140 days to mature. It is a low maintenance crop. 

Safflower yields vary dramatically. Irrigated safflower in California has high yields, typically over a ton 

(average: 2,100 pounds/acre). In other states, yields are typically lower, typically in the 700-900 pounds 

per acre range. 

Prevented planting experience 

Prevented planting claims were 28% of total indemnities over the past 20 years. Total safflower indemnities 

totaled almost $10.5 million from 2003 to 2012, $2.9 million of which were for prevented planting (28%). 

California accounted for the largest portion of prevented planting indemnities ($1.3 million, 45%). Montana 

(20%) and North Dakota (18%) accounted for most of the rest. The most common cause of loss in all three 

states was excess moisture/precipitation/rain. Excess moisture and cold wet weather accounted for 96.5% 

($2.8 million) of safflower prevented planting claims. 

Analysis 

The California safflower budget indicates pre-planting cost estimates of 66% in 2003 ($173 of $270 per acre) 

and 68% in 2012 ($248 of $365 per acre). For North Dakota, the pre-planting percentage declined, from 

62% in 2003 ($74 of $119) to 58% in 2012 ($81 of $257). When averaging both budget percentages, the 

average is 63% for 2003 and 63% for 2012. 

We ran a similar analysis of individual budgets for a number of different states, estimating pre-planting 

costs as follows: 

 North Dakota (western portion of the state): 62% (2004) and 58% (2012) 

 Nebraska: 60% (2007) 

 Utah (Box Elder County): 66% (2013) 

Base on this crop budget analysis, we would recommend no change in RMA’s 60% PP rate. 

Comparison of estimated PP cost to RMA payments 

The ratio of RMA’s incurred base PP payment to estimated PP costs has fluctuated around 1.00 for California, 

which represents over 60% of national production. The ratio has been closer to 0.75 for North Dakota, but 

that state represents less than 10% of production. 

Recommendation 

RMA’s PP payments for safflower are consistent with estimated PP costs for California, the major producer. 

We reviewed several other state budgets, all of which suggested PP costs were in the 58%-68% range. The 

PP payment rate should be left unchanged at 60%. 

357 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 105: Share of costs incurred prior to planting safflower 

Figure 106: Ratio of RMA payment to PP costs for safflower 

358 
Evaluation of Preven

Pre

Table 231: Safflower production costs per planted acre: California

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 11.92 12.23 13.00 13.00 13.00 13.00 13.00 13.00 

 Fertilizer 27.22 30.73 36.00 38.63 47.41 86.05 48.63 44.56 

 Chemicals 21.64 21.64 22.00 22.89 23.07 24.86 19.52 18.87 

 Custom operations 34.09 32.73 33.00 33.55 34.09 35.03 35.27 35.27 

 Fuel, lube, and repairs 10.37 12.22 16.00 17.70 19.56 32.31 21.51 26.67 

 Hired labor 21.88 22.30 23.00 23.84 24.67 25.51 26.21 29.53 

 Irrigation water 10.32 10.62 11.00 11.00 11.00 11.00 11.00 11.00 

 Crop insurance 5.00 5.08 5.32 5.56 5.84 5.84 3.23 3.34 

 Interest on operating capital 4.23 4.37 5.00 5.00 5.00 5.00 5.00 5.00 

 Total, operating costs 146.68 151.92 164.32 171.17 183.65 238.60 183.37 187.24 

Allocated overhead: Managerial labor 23.79 24.24 25.00 25.91 26.82 27.73 24.48 24.61 

 Capital recovery of machinery & equip 29.68 31.84 34.00 35.77 37.54 41.08 24.57 25.45 

 Opportunity cost of land (rental rate) 52.70 54.85 57.00 59.51 63.81 73.49 65.76 67.71 

 Taxes and insurance 2.69 2.82 3.00 2.91 3.12 3.62 3.53 3.64 

 Other farm overhead 13.46 14.08 15.00 10.92 11.69 13.59 13.24 13.66 

 Total, allocated overhead 

122.31 127.82 134.00 135.01 142.97 159.51 131.57 135.07 

 Total costs listed 268.99 279.74 298.32 306.19 326.62 398.11 314.94 322.31 

Source for budget(s): UC Davis http://coststudies.ucdavis.edu/files/SafflowerSV2011.pdfNotes: Based on 2005 and 2011 budgets; values for other years derived using price indices (in 

359 
Evaluation of Preven

Pre

Table 232: Safflower production costs per planted acre: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: -Seed 12.18 12.50 13.00 13.00 13.00 13.00 13.00 13.00  -Herbicides 9.39 9.39 9.55 9.93 10.01 10.79 18.50 17.88 

 -Fungicides 0.10 0.10 0.10 0.11 0.11 0.11 0.00 0.00 

 -Insecticides 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 -Fertilizer 5.78 6.53 7.64 8.20 10.07 18.27 20.72 18.98 

 -Crop Insurance 4.08 4.15 4.35 4.54 4.77 4.77 14.25 14.70 

 -Fuel & Lubrication 3.92 4.63 6.05 6.70 7.40 9.64 7.94 9.85 

 -Repairs 7.82 8.05 8.40 8.57 8.86 8.97 12.15 12.38 

 -Drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 -Miscellaneous 0.96 1.00 1.07 1.13 1.21 1.41 5.53 5.71 

 -Operating Interest 1.35 1.40 1.60 1.91 2.04 2.14 2.23 2.17 

 Total, operating costs 45.59 47.74 51.75 54.09 57.46 69.11 94.32 94.67 

Allocated overhead: - Operator returns 30.96 31.55 32.54 33.72 34.90 36.09 81.95 82.38 

 -Misc. Overhead 6.37 6.67 7.10 7.54 8.08 9.39 4.87 5.03 

 -Machinery Depreciation 9.60 10.30 10.99 11.57 12.14 13.28 12.99 13.46 

 -Machinery Investment 5.58 5.99 6.40 6.73 7.06 7.73 7.20 7.45 

 -Land Charge 20.43 21.27 22.10 23.07 24.74 28.49 29.85 30.74  Total, allocated overhead 72.94 75.77 79.13 82.63 86.92 94.98 136.86 139.06 

 Total costs listed 118.53 123.50 130.88 136.72 144.38 164.08 231.17 233.73 

360 
Evaluation of Preven

Pre

Table 233: Safflower - share of expenses incurred before planting: California

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 100% 100% 100% 100% 100% 100% 100% 100% 

 Chemicals 100% 100% 100% 100% 100% 100% 100% 100%  Custom operations 0% 0% 0% 0% 0% 0% 0% 0% 

Fuel, lube, and repairs 65% 65% 65% 65% 65% 65% 65% 65% 

 Hired labor 50% 50% 50% 50% 50% 50% 50% 50% 

 Irrigation water 0% 0% 0% 0% 0% 0% 0% 0% 

 Crop insurance 29% 29% 29% 29% 29% 29% 29% 29% 

 Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% 

 Total, operating costs Allocated overhead: Managerial labor 20% 20% 20% 20% 20% 20% 20% 20% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100%  Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100%  Other farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

361 
Evaluation of Preven

Pre

Table 234: Safflower - share of expenses incurred before planting: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses -Seed 0% 0% 0% 0% 0% 0% 0% 0% 

-Herbicides 100% 100% 100% 100% 100% 100% 100% 100% 

 -Fungicides 100% 100% 100% 100% 100% 100% 100% 100% 

 -Insecticides 0% 0% 0% 0% 0% 0% 0% 0% 

-Fertilizer 100% 100% 100% 100% 100% 100% 100% 100% 

 -Crop Insurance 29% 29% 29% 29% 29% 29% 29% 29% 

 -Fuel & Lubrication 65% 65% 65% 65% 65% 65% 65% 65% 

 -Repairs 65% 65% 65% 65% 65% 65% 65% 65% 

 -Drying 0% 0% 0% 0% 0% 0% 0% 0% 

-Miscellaneous 50% 50% 50% 50% 50% 50% 50% 50% 

 -Operating Interest 25% 25% 25% 25% 25% 25% 25% 25% 

 Total, operating costs Allocated overhead: - Operator returns 20% 20% 20% 20% 20% 20% 20% 20% 

 -Misc. Overhead 100% 100% 100% 100% 100% 100% 100% 100% 

 -Machinery Depreciation 100% 100% 100% 100% 100% 100% 100% 100% 

 -Machinery Investment 100% 100% 100% 100% 100% 100% 100% 100% 

 -Land Charge 100% 100% 100% 100% 100% 100% 100% 100% 

 Total, allocated overhead 

362 
Evaluation of Preven

Pre

Table 235: Safflower prevented planting cost per acre: California

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 27.22 30.73 36.00 38.63 47.41 86.05 48.63 44.56 

 Chemicals 21.64 21.64 22.00 22.89 23.07 24.86 19.52 18.87 

 Custom operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fuel, lube, and repairs 6.74 7.94 10.40 11.51 12.71 21.00 13.98 17.34 

 Hired labor 10.94 11.15 11.50 11.92 12.34 12.75 13.10 14.77 

 Irrigation water 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop insurance 1.45 1.47 1.54 1.61 1.69 1.69 0.94 0.97 

 Interest on operating capital 1.06 1.09 1.25 1.25 1.25 1.25 1.25 1.25 

 Total, operating costs 69.05 74.04 82.69 87.82 98.48 147.61 97.42 97.75 Allocated overhead: Managerial labor 4.76 4.85 5.00 5.18 5.36 5.55 4.90 4.92 

 Capital recovery of machinery & equip 29.68 31.84 34.00 35.77 37.54 41.08 24.57 25.45 

 Opportunity cost of land (rental rate) 52.70 54.85 57.00 59.51 63.81 73.49 65.76 67.71 

 Taxes and insurance 2.69 2.82 3.00 2.91 3.12 3.62 3.53 3.64 

 Other farm overhead 13.46 14.08 15.00 10.92 11.69 13.59 13.24 13.66 

 Total, allocated overhead 

103.28 108.43 114.00 114.29 121.52 137.33 111.99 115.38 

 Total costs listed 172.34 182.46 196.69 202.10 220.00 284.94 209.41 213.14 

Total costs 268.99 279.74 298.32 306.19 326.62 398.11 314.94 322.31 

Prevented planting % 64% 65% 66% 66% 67% 72% 66% 66% 

363 
Evaluation of Preven

Pre

Table 236: Safflower prevented planting cost per acre: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses -Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 -Herbicides 9.39 9.39 9.55 9.93 10.01 10.79 18.50 17.88 

 -Fungicides 0.10 0.10 0.10 0.11 0.11 0.11 0.00 0.00 

 -Insecticides 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 -Fertilizer 5.78 6.53 7.64 8.20 10.07 18.27 20.72 18.98 

 -Crop Insurance 1.18 1.20 1.26 1.32 1.38 1.38 4.13 4.26 

 -Fuel & Lubrication 2.55 3.01 3.94 4.35 4.81 6.27 5.16 6.40 

 -Repairs 5.08 5.23 5.46 5.57 5.76 5.83 7.90 8.05 

 -Drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 -Miscellaneous 0.48 0.50 0.53 0.57 0.61 0.70 2.76 2.85 

 -Operating Interest 0.34 0.35 0.40 0.48 0.51 0.54 0.56 0.54 

 Total, operating costs 24.90 26.31 28.87 30.53 33.25 43.89 59.73 58.97 Allocated overhead: - Operator returns 6.19 6.31 6.51 6.74 6.98 7.22 16.39 16.48 

 -Misc. Overhead 6.37 6.67 7.10 7.54 8.08 9.39 4.87 5.03 

 -Machinery Depreciation 9.60 10.30 10.99 11.57 12.14 13.28 12.99 13.46 

 -Machinery Investment 5.58 5.99 6.40 6.73 7.06 7.73 7.20 7.45 

 -Land Charge 20.43 21.27 22.10 23.07 24.74 28.49 29.85 30.74  Total, allocated overhead 

48.18 50.53 53.10 55.65 59.00 66.11 71.30 73.16 

 Total costs listed 73.08 76.83 81.97 86.18 92.25 110.00 131.03 132.13 

Total costs 118.53 123.50 130.88 136.72 144.38 164.08 231.17 233.73 

Prevented planting % 62% 62% 63% 63% 64% 67% 57% 57% 

364 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.15. Sugar beets 

Overview 

Sugar beets are currently produced in ten states but four of them account for 80-85 percent of total 

production. Those four are Minnesota, Idaho, North Dakota and Michigan. 

Production is non-irrigated in the East and irrigated in the West. The map below from NASS provides a 

snapshot of the main areas of production. 

Figure 107: US sugar beet acres planted by county in 2012 

Sources of production cost information 

ERS prepared estimates of production cost for sugar beets up through 2007 in connection with the sugar 

program. Estimates are available for three regions, defined as Great Lakes, Great Plains, and Northwest. 

For later years one has to rely primarily on state extension budgets. We found full or partial budgets for 

selected years for Idaho (2009, 2011), Michigan (2011), Colorado (2010, 2012), Nebraska (2011) and 

Minnesota (2010). The recent budgets specifically address costs for Roundup Ready beet production. 

Fortunately we also found actual production cost data for Minnesota and North Dakota through the 

University of Minnesota’s FINBIN database which compiles actual farm financial and operating data from 

participating farmers. An average of 135 sugar beet growers participates each year, which is a respectable 

sample. 

We used the Michigan and Idaho budgets and the FINBIN cost data in extending the production cost estimates 

for the three regions in the ERS data. The resulting budgets are representative of 85 percent of total sugar 

beet harvested area. 

365 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Production practices 

Sugar beets are planted comparatively early in the spring because they do have some degree of frost 

tolerance. Plantings begin in early April and are most active from mid-April to mid-May. They are produced 

in rotation with grain, oilseed and pulse crops. The typical rotation in the east is wheat or another small 

grain, followed by sugar beets, and then an oilseed or corn crop. In the west the rotation may include 

potatoes or dry beans rather than corn or oilseeds. 

The fields are plowed in the fall and receive light cultivation in the spring followed by initial fertilization 

prior to planting. However, if it is too wet to plant it is generally too wet to fertilize. Most passes of 

equipment through the field are after the pre-planting phase. Typically there are about 14 passes through 

the field, two of which occur prior to planting in a PP situation. 

Prevented planting experience 

PP claims were 8.6% of total indemnities over the last 20 years and only 5.3% of indemnities between 2003 

and 2012. Since beet factories are cooperatively owned by the growers, the latter have a strong incentive 

to get a crop planted so that factories have sufficient raw material. Failure of the irrigation supply is the 

most common cause of a prevented planting situation, accounting for 80% of the PP indemnities. Of the 

total payments of $14.7 million over that period, over half were for failure of the irrigation supply in 

Wyoming. The rest were about evenly divided among Colorado, Minnesota, Nebraska, North Dakota, and 

Oregon. 

Analysis 

The current PP guarantee adjustment factor is 45%. Since one-seventh of the field operations occur before 

planting, we allocated 15% of fuel and equipment repair costs to the pre-planting period. In general, the 

share of costs incurred prior to planting did not change significantly over the ten-year period. 

	 Pre-planting costs in the Great Plains averaged 49% in the first half of the period and 44% in 

the second half due to lower capital recovery costs in the source material for the latter period. 

	 Costs in the Great Lakes region were flat at 53%. 

	 Costs in the Northwest rose from 54% to 56%%. 

However these results were affected by unusually high sugar prices in 2010-2012 that inflated the quota 

lease and land rent costs by $50-75 per acre. Without that, the share of costs incurred pre-planting would 

have been about 2% lower at the end of the period for each region. Based on this crop budget analysis, one 

might recommend a PP rate of 50%. 

Comparison of estimated PP cost to RMA payments 

The ratio of RMA PP payments to estimated costs has mostly been 0.80 or below, but rose to 1.20 for the 

Northern Great Plains beginning in 2008 when we started using FINBIN data showing lower production costs. 

For all three regions the ratio rose in 2012 by about 0.20. 

Recommendation 

Since the Northern Great Plains is the most important production region, we give it more weight in 

considering whether the payment ratios argue for any change in the recommendation based on PP cost 

estimates. On balance, we think the payment rate should be kept at 45%. 

366 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 108: Share of costs incurred prior to planting sugar beets 

Figure 109: Ratio of RMA payment to PP costs for sugar beets 

367 
Evaluation of Preven

Pre

Table 237: Sugar beets production costs per planted acre: Great Lakes (Michigan) 

Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: Seed 42.77 46.02 46.98 50.54 56.93 58.51 67.55 70 Fertilizer 2/ 80.31 85.65 100.33 107.06 133.22 173.53 121.74 111

 Chemicals 74.37 74.13 75.36 78.42 79.65 99.70 106.87 103

 Custom operations 30.15 30.86 31.12 31.63 32.14 37.03 37.28 37

 Fuel, lube, and electricity 48.14 59.24 77.55 85.81 94.79 34.81 23.17 28

 Repairs 56.90 59.99 62.56 63.85 65.99 58.04 59.15 60

 Hired labor 32.32 31.19 32.16 33.33 34.50 71.48 73.44 73

 Freight and dirt hauling 21.05 21.38 25.26 29.71 32.06 66.41 66.87 66

 Miscellaneous 3.34 3.55 3.77 3.96 4.39 8.15 7.94 8

 Crop insurance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0

 Interest on operating capital 1.89 3.01 7.19 10.85 11.18 21.60 19.86 19

 Total, operating costs 358.92 383.83 430.12 461.83 510.35 629.25 583.87 579Allocated overhead: Opportunity cost of unpaid labor 108.31 104.53 107.80 111.72 115.64 47.66 48.96 49

 Capital recovery of machinery and equipment 173.35 177.75 189.82 199.70 209.58 229.33 243.60 252

 Opportunity cost of land (rental rate) 129.81 131.62 146.58 143.59 155.70 132.23 152.23 156

 Taxes and insurance 14.74 15.07 18.13 19.07 20.60 25.37 24.71 25

 General farm overhead 29.23 29.88 31.22 32.34 33.46 38.90 37.89 39

 Coop share 12.36 12.66 13.04 13.42 12.24 14.23 13.86 14

 Total, allocated overhead 500.12 502.70 538.75 553.17 581.72 487.72 521.25 537

 Total costs listed 859.04 886.53 968.87 1,015.00 1,092.07 1116.98 1105.12 1116

Sources: ERS, USDA for 2003-2007; Michigan State University for 2011; remaining years calculated with price indexes from 2011 

368 
Evaluation of Preven

Pre

Table 238: Sugar beet - share of expenses incurred before planting: Great Lakes (Michigan)

 Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 2/ 20% 20% 20% 20% 20% 20% 20% Chemicals 0% 0% 0% 0% 0% 0% 0% 

Custom operations 0% 0% 0% 0% 0% 0% 0% 

Fuel, lube, and electricity 15% 15% 15% 15% 15% 15% 15% 

Repairs 15% 15% 15% 15% 15% 15% 15% 

Hired labor 10% 10% 10% 10% 10% 10% 10% Freight and dirt hauling 0% 0% 0% 0% 0% 0% 0% 

Miscellaneous 15% 15% 15% 15% 15% 15% 15% 

Crop insurance 9% 9% 9% 9% 9% 9% 9% 

Interest on operating capital 15% 15% 15% 15% 15% 15% 15% 

Allocated overhead: Opportunity cost of unpaid labor 20% 20% 20% 20% 20% 20% 20% 

 Capital recovery of machinery and equipment 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 

Coop share 100% 100% 100% 100% 100% 100% 100% 

369 
Evaluation of Preven

Pre

Table 239: Sugar beet prevented planting cost per acre: Great Lakes (Michigan)

 Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 2/ 16.06 17.13 20.07 21.41 26.64 34.71 24.35 

Chemicals 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Custom operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Fuel, lube, and electricity 7.22 8.89 11.63 12.87 14.22 5.22 3.48 

Repairs 8.54 9.00 9.38 9.58 9.90 8.71 8.87 

 Hired labor 3.23 3.12 3.22 3.33 3.45 7.15 7.34 

 Freight and dirt hauling 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Miscellaneous 0.50 0.53 0.57 0.59 0.66 1.22 1.19 

 Crop insurance 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Interest on operating capital 0.28 0.45 1.08 1.63 1.68 3.24 2.98 

 Total, operating costs 35.83 39.12 45.94 49.42 56.55 60.24 48.21 

Allocated overhead: Opportunity cost of unpaid labor 21.66 20.91 21.56 22.34 23.13 9.53 9.79 

 Capital recovery of machinery and equipment 173.35 177.75 189.82 199.70 209.58 229.33 243.60 2 Opportunity cost of land (rental rate) 129.81 131.62 146.58 143.59 155.70 132.23 152.23 1

 Taxes and insurance 14.74 15.07 18.13 19.07 20.60 25.37 24.71 

 General farm overhead 29.23 29.88 31.22 32.34 33.46 38.90 37.89 

 Coop share 12.36 12.66 13.04 13.42 12.24 14.23 13.86 

 Total, allocated overhead 417.27 427.46 467.37 481.51 512.93 513.08 533.28 5

 Costs prior to planting 453.10 466.57 513.31 530.92 569.48 573.33 581.49 5 Total costs listed 859.04 886.53 968.87 1,015.00 1,092.07 1,116.98 1,105.12 1,1

 PP costs as % of total 52.7% 52.6% 53.0% 52.3% 52.1% 51.3% 52.6% 

370 
Evaluation of Preven

Pre

Table 240: Sugarbeet production costs per planted acre: Northwest (Idaho) 

Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: Seed 41.83 44.87 45.81 49.28 55.51 70.48 101.88 1

 Fertilizer 2/ 90.39 88.15 103.26 110.19 137.11 248.83 164.45 1 Chemicals 86.88 81.45 82.80 86.17 87.52 94.30 52.24 

 Custom operations 49.84 49.40 49.81 50.63 51.45 59.27 25.50 

 Fuel, lube, and electricity 131.19 133.17 174.33 192.89 213.07 277.64 125.77 1

 Repairs 66.16 67.23 70.11 71.55 73.95 74.91 60.94 

 Hired labor 102.65 109.24 112.65 116.75 120.85 124.95 110.37 1 Purchased irrigation water 17.05 18.33 18.90 19.89 20.87 21.68 38.20 

 Freight and dirt hauling 15.43 16.51 18.37 22.79 26.14 30.11 33.00 

 Miscellaneous 30.74 32.19 34.16 35.88 39.81 46.29 45.09 

 Hauling allowance (-) 1.31 1.29 1.37 1.44 1.60 2.12 1.31 

 Crop insurance 5.82 4.21 5.38 4.68 4.46 8.71 10.01 

 Interest on operating capital 2.80 4.20 10.16 15.37 15.80 16.58 25.15 

 Total, operating costs 640.78 648.95 725.74 776.07 846.54 1,073.74 792.60 8

Allocated overhead: Opportunity cost of unpaid labor 93.42 100.79 103.94 107.72 111.50 115.28 75.00 

 Capital recovery of machinery and equipment 220.36 220.78 235.77 248.04 260.31 284.84 165.00 1

 Opportunity cost of land and quota 215.02 217.04 241.70 236.77 256.74 295.68 300.00 3

 Taxes and insurance 21.96 22.49 27.06 28.47 30.76 35.76 53.30  General farm overhead 47.16 48.50 50.67 52.48 54.29 63.12 24.00 

 Coop share 19.04 19.33 19.92 20.51 18.71 21.75 25.00 

 Total, allocated overhead 616.96 628.93 679.06 693.99 732.31 816.44 642.30 6

 Total costs listed 1,257.74 1,277.88 1,404.80 1,470.06 1,578.85 1,890.18 1,434.90 1,4

Sources for budgets: ERS, USDA for 2003-2007; University of Idaho for 2009 and 2011, with adjustments to the remaining years via price indexes. http://web.cals.uidaho.edu/idahoagbiz/enterprise-budgets/ 

371 
Evaluation of Preven

Pre

Table 241: Sugar beet - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 20% 20% 20% 20% 20% 20% 20% 

Chemicals 0% 0% 0% 0% 0% 0% 0% 

Custom operations 0% 0% 0% 0% 0% 0% 0% 

Fuel, lube, and electricity 15% 15% 15% 15% 15% 15% 15% 

Repairs 15% 15% 15% 15% 15% 15% 15% 

Hired labor 10% 10% 10% 10% 10% 10% 10% Purchased irrigation water 40% 40% 40% 40% 40% 40% 40% 

Freight and dirt hauling 0% 0% 0% 0% 0% 0% 0% Miscellaneous 15% 15% 15% 15% 15% 15% 15% 

Hauling allowance (-) 0% 0% 0% 0% 0% 0% 0% 

Crop insurance 9% 9% 9% 9% 9% 9% 9% Interest on operating capital 15% 15% 15% 15% 15% 15% 15% 

Allocated overhead: Opportunity cost of unpaid labor 20% 20% 20% 20% 20% 20% 20% 

 Capital recovery of machinery and equipment 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land and quota 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 

Coop share 100% 100% 100% 100% 100% 100% 100% 

372 
Evaluation of Preven

Pre

Table 242: Sugar beets prevented planting cost per acre: Northwest (Idaho)

 Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 2/ 18.08 17.63 20.65 22.04 27.42 49.77 32.89 

Chemicals 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Custom operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fuel, lube, and electricity 19.68 19.98 26.15 28.93 31.96 41.65 18.87 

Repairs 9.92 10.08 10.52 10.73 11.09 11.24 9.14 

 Hired labor 10.27 10.92 11.27 11.68 12.09 12.49 11.04 

 Purchased irrigation water 6.82 7.33 7.56 7.96 8.35 8.67 15.28 

 Freight and dirt hauling 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Miscellaneous 4.61 4.83 5.12 5.38 5.97 6.94 6.76 

 Hauling allowance (-) 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Crop insurance 0.42 0.40 0.78 0.90 0.93 0.90 0.00 

 Interest on operating capital 0.42 0.63 1.52 2.31 2.37 2.49 3.77  Total, operating costs 70.22 71.81 83.57 89.92 100.18 134.15 97.75 1

Allocated overhead: Opportunity cost of unpaid labor 18.68 20.16 20.79 21.54 22.30 23.06 15.00 

 Capital recovery of machinery and equipment 220.36 220.78 235.77 248.04 260.31 284.84 165.00 1

 Opportunity cost of land and quota 215.02 217.04 241.70 236.77 256.74 295.68 300.00 3 Taxes and insurance 21.96 22.49 27.06 28.47 30.76 35.76 53.30 

 General farm overhead 47.16 48.50 50.67 52.48 54.29 63.12 24.00  Coop share 19.04 19.33 19.92 20.51 18.71 21.75 25.00 

 Total, allocated overhead 612.86 620.73 681.01 700.04 745.66 860.85 683.82 7

 Costs prior to planting 683.08 692.54 764.58 789.97 845.83 995.00 781.57 8

 Total costs listed 1,257.74 1,277.88 1,404.80 1,470.06 1,578.85 1,890.18 1,434.90 1,4

 PP costs as % of total 54.3% 54.2% 54.4% 53.7% 53.6% 52.6% 54.5% 

373 
Evaluation of Preven

Pre

Table 243: Sugar beet production costs per planted acre: Great Plains (Minnesota and N. Dakota

Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: Seed 49.74 53.87 54.99 59.16 66.64 90.57 131.73 15 Fertilizer 2/ 76.31 78.10 91.49 97.63 121.48 72.44 98.53  Chemicals 78.19 77.77 79.06 82.27 83.56 94.78 60.25 7

 Custom operations 37.84 40.62 40.96 41.64 42.32 19.77 17.78 2

 Fuel, lube, and electricity 50.32 59.59 78.01 86.32 95.35 74.41 54.23 6

 Repairs 54.64 56.07 58.47 59.67 61.67 80.39 84.04 9

 Hired labor 56.50 58.77 60.61 62.81 65.01 61.39 63.45 7

 Freight and dirt hauling 14.81 15.11 16.94 19.21 21.33 9.32 9.16 

 Miscellaneous 19.79 20.51 21.76 22.86 25.36 7.26 4.54 

 Hauling allowance (-) 7.41 7.90 8.38 8.80 9.76 0.00 0.00 

 Crop insurance 16.43 17.93 16.98 18.42 19.96 21.73 22.24 2

 Interest on operating capital 2.04 3.25 7.69 11.54 11.86 20.81 14.4 1

 Total, operating costs 464.02 489.49 535.34 570.33 624.30 552.87 560.35 61

Allocated overhead: Opportunity cost of unpaid labor 160.43 167.05 172.27 178.53 184.79 95.75 95.73 10 Capital recovery of machinery and equipment 173.12 175.40 187.31 197.05 206.79 78.4 82.7 10

 Opportunity cost of land (rental rate) 132.97 136.20 151.68 148.58 161.11 148.15 164.47 19

 Taxes and insurance 16.90 17.10 20.57 21.64 23.38 11.85 13.69 1

 General farm overhead 39.95 40.03 41.82 43.31 44.80 9.7 12.92 1 Coop share 11.75 12.03 12.39 12.75 11.63 13.00 14.00 1

 Total, allocated overhead 535.12 547.81 586.04 601.86 632.50 356.85 383.51 45 Total costs listed 999.14 1,037.30 1,121.38 1,172.19 1,256.80 909.72 943.86 1,06

Sources for budgets: ERS, USDA for 2003-2007; University of Minnesota FINBIN database for 2008-2012 http://www.finbin.umn.edu/ 

374 
Evaluation of Preven

Pre

Table 244: Sugar beet - share of expenses incurred before planting

 Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: 

Seed 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 2/ 20% 20% 20% 20% 20% 20% 20% Chemicals 0% 0% 0% 0% 0% 0% 0% 

Custom operations 0% 0% 0% 0% 0% 0% 0% 

Fuel, lube, and electricity 15% 15% 15% 15% 15% 15% 15% 

Repairs 15% 15% 15% 15% 15% 15% 15% 

Hired labor 10% 10% 10% 10% 10% 10% 10% Freight and dirt hauling 0% 0% 0% 0% 0% 0% 0% Miscellaneous 15% 15% 15% 15% 15% 15% 15% 

Hauling allowance (-) 0% 0% 0% 0% 0% 0% 0% 

Crop insurance 9% 9% 9% 9% 9% 9% 9% 

Interest on operating capital 15% 15% 15% 15% 15% 15% 15% 

Allocated overhead: Opportunity cost of unpaid labor 20% 20% 20% 20% 20% 20% 20% 

 Capital recovery of machinery and equipment 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 

Coop share 100% 100% 100% 100% 100% 100% 100% 

375 
Evaluation of Preven

Pre

Table 245: Sugar beet prevented planting cost per acre: Great Plains (Minnesota and N. Dakota

Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: 

Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 2/ 15.26 15.62 18.30 19.53 24.30 14.49 19.71  Chemicals 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Custom operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fuel, lube, and electricity 7.55 8.94 11.70 12.95 14.30 11.16 8.13 

 Repairs 8.20 8.41 8.77 8.95 9.25 12.06 12.61  Hired labor 5.65 5.88 6.06 6.28 6.50 6.14 6.35  Freight and dirt hauling 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Miscellaneous 2.97 3.08 3.26 3.43 3.80 1.09 0.68  Hauling allowance (-) 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Crop insurance 1.48 1.61 1.53 1.66 1.80 1.96 2.00 

 Interest on operating capital 0.31 0.49 1.15 1.73 1.78 3.12 2.16 

 Total, operating costs 41.41 44.02 50.78 54.52 61.73 50.01 51.63 Allocated overhead: Opportunity cost of unpaid labor 32.09 33.41 34.45 35.71 36.96 19.15 19.15 

 Capital recovery of machinery and equipment 173.12 175.40 187.31 197.05 206.79 78.40 82.70 1

 Opportunity cost of land (rental rate) 132.97 136.20 151.68 148.58 161.11 148.15 164.47 1

 Taxes and insurance 16.90 17.10 20.57 21.64 23.38 11.85 13.69 

 General farm overhead 39.95 40.03 41.82 43.31 44.80 9.70 12.92 

 Coop share 11.75 12.03 12.39 12.75 11.63 13.00 14.00  Total, allocated overhead 448.49 458.68 500.15 515.29 548.18 333.38 360.72 4 Costs prior to planting 489.90 502.70 550.93 569.81 609.91 383.40 412.35 4 Total costs listed 999.14 1,037.30 1,121.38 1,172.19 1,256.80 909.72 943.86 1,0

 PP costs as % of total 49.0% 48.5% 49.1% 48.6% 48.5% 42.1% 43.7% 

376 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.16. Sunflower seed 

Overview 

Sunflower seeds are produced primarily in North Dakota (50%+ of national production in 2011) and South 

Dakota (32%), with lesser amounts in Texas, Kansas, Colorado, and a small handful of additional states. 

The map below from NASS provides a snapshot of the main areas of production for sunflower seeds for oil. 

Production is concentrated in the western half of North Dakota. Non-oil sunflower seed production is much 

more limited and takes place in the same states. 

Figure 110: Oil sunflower acres planted by county in 2012 

Sources of production cost information 

Production cost information comes from the North Dakota State University Extension, which publishes 

budgets annually for sunflower seed and other crops, for a number of regions within the state. The USDA 

has no information available on sunflower production costs. 

NDSU publishes separate budgets for each region where a crop is grown. In the case of sunflower seed, 

there are 8 budgets for oil sunflower seed, and 7 budgets for confectionery sunflower seed. We averaged 

costs for each type across all regions for which budgets were available. We used actual crop budget data 

for 2004-2012, and used price indices to come up with budget figures for 2003. 

Production practices 

Sunflower seed is typically grown in a 3-4 year rotation with other crops. 

There are different production practices for sunflower seed. Conventional tillage has 2 passes through the 

field (1 of them immediately prior to planting), plus the use of herbicides. No-till practice leaves 60%+ of 

the crop residue, plus a burn-down herbicide application (glyphosate or paraquat). Minimum till involves 

leaving 30%-60% of crop residue, and using two herbicide applications, either in the fall or in the spring. 

377 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

All other effort and labor either takes place at or after planting. Planting takes place typically between 

May 1 and June 1. Sunflower competes well with weeds, but only after plants are well-established. 

Prevented planting experience 

Prevented planting claims accounted for 47% of total sunflower indemnities over the last 20 years. For the 

10-year period 2003-2012, there were $634 million in indemnities for sunflowers, $263 million (41%) of 

which were for prevented planting. Excess moisture/rain was the cause of 95% of prevented planting claims. 

Claims came primarily from North Dakota ($218m, 83%); South Dakota ($31m, 12%) accounted for most of 

the rest. 

Analysis 

We constructed separate budgets for oil sunflower seed and confectionery sunflower seed, both using NDSU 

data. 

	 For oil sunflower seed, preventing planting costs grew from $78 per acre in 2003 to $133 in 

2012. As a percentage of total costs ($145 in 2003 and $303 in 2012), this represented a 

decrease from 54% to 44%. 

	 For confectionery sunflower seed, preventing planting costs grew from $91 per acre in 2003 

to $160 in 2012. As a percentage of total costs ($188 in 2003 and $391 in 2012), this 

represented a decrease from 49% to 41%. 

Overall, oil sunflower seed averaged 5/6 of national production over the two years 2010-2011. Applying 

these weights to the figures above, we get average prevented planting costs of 53% for 2003 and 43% for 

2012. 

Crop Prevented planting % 

Sunflower seed (oil) 

Sunflower seed (confectionery) 

Weighted (5/6 oil, 1/6 confectionery) 

54% 44% 

49% 41% 

53% 43% 

The decreased share of pre-planting costs is due primarily to the relative decrease in the cost of machinery 

and land, as a percentage of total costs. 

Comparison of estimated PP cost to RMA payments 

The ratio of RMA’s incurred base PP payment to estimated PP costs was near 1.0 for sunflower seed (for 

oil) from 2003-2007 (but has since been too high, closer to 1.5). The ratio has been even higher for 

confectionery sunflower seed, which has lower PP costs: the ratio was close to 1.2 during 2003-2007 and 

fluctuated around 1.75 for the five subsequent years. Also, since 54% of PP indemnities are associated with 

the additional 10% coverage, all of these ratios would be 9% higher if that were taken into account 

(10%/60%*0.54 = 0.09). 

378 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 111: Share of costs incurred prior to planting sunflower seeds (confectionery) 

Figure 112: Share of costs incurred prior to planting sunflower seeds (oil) 

379 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 113: Ratio of RMA payment to PP costs for sunflower 

Recommendation 

The ratio of the base PP payment rate to estimated PP costs is quite high, supporting the conclusion from 

the budget analysis that the PP factor for sunflower seed is too high. Furthermore, over half the PP 

indemnities are associated with the 10% buy-up, which suggests that the 60% factor is overly attractive. 

We recommend reducing it to 45% to bring PP payments closer to matching estimated costs. 

380 
Evaluation of Preven

Pre

Table 246: Sunflower seed (confectionery) production costs per planted acre: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 

Cash expenses: Seed 19.74 20.25 20.09 21.18 22.72 25.03 37.54 

 Fertilizer 11.80 13.32 15.83 17.31 14.66 25.89 35.77  Chemicals 18.73 18.73 20.34 26.49 27.52 38.53 36.06 

 Fuel and lubrication 5.87 6.92 10.12 13.25 14.33 16.73 11.91 

 Repairs 10.50 10.81 11.01 11.39 11.71 11.66 13.33 

 Drying 2.72 2.61 2.58 2.52 2.51 2.59 2.57  Miscellaneous 5.26 5.50 5.16 5.75 6.25 13.56 15.25 

 Crop insurance 7.68 7.80 6.71 10.01 10.97 13.71 16.93 

 Interest on operating capital 2.50 2.58 2.99 4.18 4.56 5.54 4.66  Total, operating costs 84.79 88.52 94.83 112.08 115.23 153.24 174.02 

Allocated overhead: Returns to labor & mgmt 37.77 38.76 41.21 44.64 50.04 63.53 73.34 

 Capital recovery of machinery & equip 21.61 24.40 24.40 25.18 25.62 25.53 28.33 

 Opportunity cost of land (rental rate) 39.79 39.79 38.60 39.50 40.31 43.81 47.63 

General farm overhead 3.61 4.25 4.14 4.24 4.27 4.24 5.55 

 Total, allocated overhead 102.78 107.20 108.35 113.56 120.24 137.11 154.85  Total costs listed 187.58 195.72 203.18 225.64 235.47 290.35 328.87 

Source for budget(s): North Dakota State University - Extension http://www.ag.ndsu.edu/farmmanagement/crop-budget-archive Notes: Based on 2004-2012 budgets; 2003 values derived from 2004 data using price indices 

 Data reflects avge of budgets for all ND regions w/budgets: 8 for oil sunflower seed, 7  North Dakota accounts for 50% of national production Returns to labor & management: avge for 2003-2012, used f/2008, then adjusted fwd 

381 
Evaluation of Preven

Pre

Table 247: Sunflower seed (confectionery) - share of expenses incurred before planting: North Dak

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 0% 0% 0% 0% 0% 0% 0% 0% 

Chemicals 25% 25% 25% 25% 25% 25% 25% 25% 

 Fuel and lubrication 25% 25% 25% 25% 25% 25% 25% 25% 

 Repairs 25% 25% 25% 25% 25% 25% 25% 25% 

 Drying 0% 0% 0% 0% 0% 0% 0% 0% 

Miscellaneous 33% 33% 33% 33% 33% 33% 33% 33% 

 Crop insurance 47% 47% 47% 47% 47% 47% 47% 47% 

 Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: Returns to labor & mgmt 30% 30% 30% 30% 30% 30% 30% 30% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

 General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

382 
Evaluation of Preven

Pre

Table 248: Sunflower seed (confectionery) prevented planting cost per acre: North Dakota 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Chemicals 4.68 4.68 5.09 6.62 6.88 9.63 9.02 9.20  Fuel and lubrication 1.47 1.73 2.53 3.31 3.58 4.18 2.98 3.52 

 Repairs 2.63 2.70 2.75 2.85 2.93 2.92 3.33 3.44 

 Drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Miscellaneous 1.74 1.82 1.70 1.90 2.06 4.47 5.03 5.20 

 Crop insurance 3.61 3.67 3.15 4.70 5.16 6.44 7.96 6.16  Interest on operating capital 0.63 0.65 0.75 1.05 1.14 1.39 1.17 1.04 

 Total, operating costs 14.74 15.24 15.97 20.43 21.75 29.03 29.48 28.56 

Allocated overhead: Returns to labor & mgmt 11.33 11.63 12.36 13.39 15.01 19.06 22.00 22.81 

 Capital recovery of machinery & equip 21.61 24.40 24.40 25.18 25.62 25.53 28.33 28.43 

 Opportunity cost of land (rental rate) 39.79 39.79 38.60 39.50 40.31 43.81 47.63 50.54 

 General farm overhead 3.61 4.25 4.14 4.24 4.27 4.24 5.55 5.56 

 Total, allocated overhead 

76.34 80.07 79.50 82.31 85.21 92.64 103.51 107.34 

 Total costs listed 91.08 95.31 95.47 102.74 106.96 121.67 132.99 135.90 Total costs 187.66 195.72 203.18 225.64 235.47 290.35 328.87 323.18 Prevented planting % 49% 49% 47% 46% 45% 42% 40% 42% 

383 
Evaluation of Preven

Pre

Table 249: Sunflower seed (oil) production costs per planted acre: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 14.19 14.56 14.96 14.96 15.41 16.32 24.25 26.52 

 Fertilizer 13.22 14.93 17.45 19.76 17.06 29.13 40.00 26.86 

 Chemicals 13.16 13.16 15.38 20.87 22.31 32.94 30.44 31.06 

 Fuel and lubrication 5.69 6.71 9.77 12.80 13.54 15.90 11.67 13.85 

 Repairs 10.22 10.52 10.77 11.15 11.35 11.38 13.22 13.79 

 Drying 2.91 2.79 2.72 2.68 2.68 2.76 2.77 2.79  Miscellaneous 0.96 1.00 1.00 1.00 1.89 8.25 9.75 10.00 

 Crop insurance 6.53 6.63 5.43 7.14 6.97 10.93 12.98 9.61  Interest on operating capital 2.04 2.11 2.52 3.50 3.76 4.79 3.99 3.53 

68.92 72.41 80.00 93.86 94.97 132.40 149.07 138.01 

Allocated overhead: Returns to labor & management 13.00 13.34 14.18 15.36 17.22 21.86 25.24 26.16 

 Capital recovery of machinery & equip 21.16 23.89 23.90 24.67 24.79 24.76 28.02 28.27 

 Opportunity cost of land (rental rate) 38.03 38.03 37.20 38.08 38.78 42.06 45.73 48.32 

 General farm overhead 3.56 4.19 4.08 4.18 4.17 4.14 5.52 5.57  Total, allocated overhead 

75.74 79.45 79.36 82.29 84.96 92.82 104.51 108.32 

 Total costs listed 144.66 151.86 159.36 176.15 179.93 225.22 253.58 246.33 

Source for budget(s): NDSU http://www.ag.ndsu.edu/farmmanagement/crop-budget-archive Notes: Based on 2004-2012 budgets; 2003 values derived from 2004 data using price indices 

 Data reflects avge of budgets for all ND regions w/budgets: 8 for oil sunflower seed, 7 for confec North Dakota accounts for 50% of national production Returns to labor & management: avge for 2003-2012, used f/2008, then adjusted fwd & back usi

384 
Evaluation of Preven

Pre

Table 250: Sunflower seed (oil) - share of expenses incurred before planting: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0% 0% 0% 0% 0% 0% 0% 0% 

Fertilizer 0% 0% 0% 0% 0% 0% 0% 0% 

Chemicals 25% 25% 25% 25% 25% 25% 25% 25% 

 Fuel and lubrication 25% 25% 25% 25% 25% 25% 25% 25% 

 Repairs 25% 25% 25% 25% 25% 25% 25% 25% 

 Drying 0% 0% 0% 0% 0% 0% 0% 0% 

Miscellaneous 33% 33% 33% 33% 33% 33% 33% 33% 

 Crop insurance 47% 47% 47% 47% 47% 47% 47% 47% 

 Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: Returns to labor & management 30% 30% 30% 30% 30% 30% 30% 30% 

 Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

 Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

 General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

385 
Evaluation of Preven

Pre

Table 251: Sunflower seed (oil) prevented planting cost per acre: North Dakota

 Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fertilizer 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Chemicals 3.29 3.29 3.85 5.22 5.58 8.24 7.61 7.77 

 Fuel and lubrication 1.42 1.68 2.44 3.20 3.39 3.98 2.92 3.46 

 Repairs 2.55 2.63 2.69 2.79 2.84 2.85 3.31 3.45 

 Drying 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Miscellaneous 0.32 0.33 0.33 0.33 0.63 2.75 3.25 3.33 

 Crop insurance 3.07 3.12 2.55 3.36 3.28 5.14 6.10 4.52 

 Interest on operating capital 0.51 0.53 0.63 0.88 0.94 1.20 1.00 0.88 

11.16 11.57 12.50 15.77 16.65 24.14 24.18 23.40 

Allocated overhead: Returns to labor & management 3.90 4.00 4.25 4.61 5.17 6.56 7.57 7.85 

 Capital recovery of machinery & equip 21.16 23.89 23.90 24.67 24.79 24.76 28.02 28.27 

 Opportunity cost of land (rental rate) 38.03 38.03 37.20 38.08 38.78 42.06 45.73 48.32 

 General farm overhead 3.56 4.19 4.08 4.18 4.17 4.14 5.52 5.57 

 Total, allocated overhead 

66.64 70.11 69.43 71.54 72.91 77.52 86.84 90.01 

 Total costs listed 77.81 81.68 81.93 87.31 89.55 101.65 111.02 113.41 Total costs 144.68 151.86 159.36 176.15 179.93 225.22 253.58 246.33 Prevented planting % 54% 54% 51% 50% 50% 45% 44% 46% 

386 
 

Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

6.17. Tobacco 

Overview 

Tobacco production in the United States occurs principally in North Carolina, Kentucky, Tennessee and 

Virginia. The first two of these states account for 75% of national production. Smaller quantities are 

produced in Connecticut and Massachusetts (cigar binder and wrapper) and in Ohio, Pennsylvania, South 

Carolina and Georgia. Kentucky and Tennessee produce mainly burley tobacco that is air-cured in naturally 

ventilated sheds. Tobacco grown on the eastern seaboard is mostly flue-cured with heated air. 

There was a major change in US tobacco policy near the beginning of the period covered by this analysis. 

The Fair and Equitable Tobacco Reform Act of 2004 eliminated the tobacco price supports and marketing 

quotas that had been the mainstay of the sector for decades. Growers received buyout payments as 

compensation. The change led to significant adjustments in the sector. The number of tobacco farms fell 

significantly and by 2008, the remaining farms had increased in scale – by 26% for burley producers and by 

50% for flue-cured. 

We developed estimates of prevented planting costs for two regions, using Kentucky costs for the burley 

region and North Carolina costs for the flue-cured region. The estimates are representative of 85-90% of 

US tobacco production. The concentration of production in those two states and adjacent portions of 

neighboring states is evident in the 2012 Census map below. 

Figure 114: US tobacco acres planted in 2012 

Sources of production cost information 

As long as there was a tobacco price support program, USDA’s Economic Research Service maintained an 

active program of tracking production costs for tobacco but that ended with the reform legislation. We 

were able to use the ERS estimates for 2003 and 2004. For subsequent years we relied on state extension 

service crop budgets. We found budgets for Kentucky, Tennessee, North Carolina, Georgia and Virginia for 

selected years but ended up using those for Kentucky and North Carolina. Kentucky crop budgets for 

tobacco are available at http://www2.ca.uky.edu/agecon/index.php?p=258. North Carolina budgets are 

available at http://ag-econ.ncsu.edu/extension/tobacco-budgets. 

387 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Production practices 

Tobacco differs from most of the other crops covered by this study in that production is very labor intensive. 

The need for a local labor supply tends to limit the size of tobacco farms. Tobacco plants require soils with 

good drainage and benefit from periodic crop rotation and planting of winter cover crops. Production is 

mostly non-irrigated. The USDA irrigation survey for 2008 identified only 23,614 acres of irrigated tobacco. 

Seedlings are grown from pelleted seed in flotation beds in greenhouses or in plastic covered outdoor plant 

beds. This may be done by the tobacco farmer but more commonly the seedlings are purchased from a 

greenhouse business that specializes in producing them. 

Developing flower heads are removed mechanically or by hand to promote growth of the lower leaves. This 

also stimulates growth of lateral shoots referred to as “suckers” and those are usually controlled with 

systemic or contact chemicals. Harvesting may be mechanical, by hand, or a combination and there are 

usually multiple passes through the field. Between cultivation, planting, chemical applications (herbicides, 

fungicides, soil fumigants and other insecticides, and sucker control), and harvesting there can be 20-25 

separate field operations. 

Prevented planting experience 

Tobacco was not eligible for prevented planting coverage prior to 2010 and prevented planting claims have 

been rare, accounting for less than half a percent of total indemnities paid in 2010 and 2011. There was 

virtually no use of the additional 10% coverage option. Causes of loss for prevented planting in those two 

years were almost entirely for excessive moisture. 

Analysis 

Preplanting costs for Kentucky burley were in the 25-27% range throughout the post-quota period, with the 

highs in the 2005-2007 period discernible trend. For North Carolina flue-cured, they were 29-32% with no 

trend. The crop budget analysis, suggests a PP rate of 30% would be more appropriate. 

Comparison of estimated PP cost to RMA payments 

Since the elimination of the tobacco program, RMA payments would have been consistently 20-40% higher 

than estimated costs that growers incur in a prevented planting situation. 

388 
Evaluation of Prevented Planting Program 

Prepared for: AQD and RMA 

Figure 115 Share of costs incurred prior to planting tobacco 

Figure 116: Ratio of RMA payment to PP costs for tobacco 

Recommendation 

We recommend reducing the PP factor to 30% to put the indemnity more or less in line with estimated PP 

costs. 

389 
Evaluation of Preven

Pre

Table 252: Burley tobacco production costs per planted acre: Kentucky 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed and plant bed 110.34 115.51 226.15 245.00 274.62 260.00 300.15 311.20  Fertilizer 333.81 356.58 253.45 272.00 333.82 425.50 298.50 273.54 

 Chemicals 99.47 98.65 282.69 294.18 296.48 320.00 343.02 331.51 

 Custom operations 13.80 13.91 Fuel, lube, and electricity 95.28 110.93

 Repairs 82.05 83.89 163.64 167.00 172.60 186.00 189.58 193.15 

 Hired labor 574.81 624.96 1,026.67 1,064.00 1,101.33 1,800.00 1,849.18 1,859.02  Marketing expenses 56.84 57.12 72.50 75.00 77.00 75.00 74.53 75.94  Miscellaneous 22.22 23.65 13.53 14.00 14.37 14.00 13.91 14.18  Crop insurance 53.96 54.82 57.41 60.00 63.02 100.00 106.85 110.27 

 Interest on operating capital 71.33 73.60 84.23 100.92 107.75 138.96 127.77 124.04 

 Total, operating costs 1,513.90 1,613.62 2,180.27 2,292.10 2,440.99 3,319.46 3,303.50 3,292.84 

Allocated overhead: Opportunity cost of unpaid labor 797.48 867.05 482.46 500.00 517.54 525.00 539.34 542.21 

 Capital recovery of machinery & equip 250.11 264.63 190.11 200.00 209.89 200.00 212.44 220.10  Opportunity cost of land (rental rate) 1,097.76 1,082.40 191.57 200.00 214.46 250.00 287.80 296.34  Taxes and insurance 48.58 48.85 139.41 148.00 158.50 148.00 144.17 148.77 

 General farm overhead 228.42 233.53 10.54 10.92 11.30 11.60 11.83 23.38 

 Total, allocated overhead 2,422.35 2,496.46 1,014.08 1,058.92 1,111.70 1,134.60 1,195.59 1,230.80 

 Total costs listed 3,936.25 4,110.08 3,194.35 3,351.02 3,552.69 4,454.06 4,499.08 4,523.64 

Source for budget(s): ERS, USDA for 2003 and 2004; University of Kentucky for 2006, 2008 and 2011. Notes:  Other years estimated using University budgets and price indexes General farm overhead - used Corn Eastern Uplands 

390 
Evaluation of Preven

Pre

Table 253: Flue-cured tobacco production costs per planted acre: North Carolina

 Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: Seed and plant bed 74.60 76.54 127.65 138.28 155.00 217.00 248.00 21

 Fertilizer 302.44 338.22 158.33 169.91 208.53 383.44 383.44 29

 Chemicals 218.39 216.59 311.95 324.63 327.17 323.08 342.14 34

 Custom operations/hauling 8.05 8.12 46.46 47.23 48.00 48.00 96.00 9

 Fuel, lube, and electricity 89.68 104.41 81.00 89.63 99.00 158.00 158.00 12

 Curing fuel 476.94 607.08 320.73 354.88 392.00 550.00 440.00 35

 Repairs/machinery costs 124.62 127.41 206.03 210.26 217.32 271.36 294.92 22

 Hired labor 699.63 726.63 760.67 788.33 815.99 821.46 903.32 90

 Marketing expenses 83.96 162.64 Miscellaneous 4.26 4.53 6.78 7.01 7.20 7.20 7.20 

 Crop insurance 55.65 56.54 59.21 61.88 65.00 65.00 65.00 6

 Interest on operating capital 18.29 18.87 21.60 25.88 27.63 42.71 45.03 3

 Total, operating costs 2,156.51 2,447.59 2,100.41 2,217.94 2,362.84 2,887.25 2,983.05 2,66Allocated overhead: Opportunity cost of unpaid labor 283.87 294.83

 Capital recovery of machinery and equipment 404.06 417.50 444.97 468.12 491.27 501.45 501.45 50

 Opportunity cost of land (rental rate) 1,227.67 1,549.22 79.50 78.00 81.75 86.25 91.50 9

 Taxes and insurance 152.02 153.76 7.87 8.28 8.95 9.93 9.69 1

 General farm overhead 204.65 209.23 16.85 17.45 18.05 18.53 18.89 2 Total, allocated overhead 2,272.27 2,624.54 549.19 571.85 600.02 616.16 621.53 63

 Total costs listed 4,428.78 5,072.13 2,649.60 2,789.79 2,962.86 3,503.41 3,604.58 3,30

Source for budget(s): ERS, USDA for 2003 and 2004; North Carolina State University for 2007-2011. Notes:

 Other years estimated using University budgets and price indexes  For taxes, insurance and general overhead, used ERS Southern Seaboard estimates for corn For land cost, used 1.5 times the NASS cash rent figure for the state. 

391 
Evaluation of Preven

Pre

Table 254: Burley tobacco - share of expenses incurred before planting: Kentucky 

Item 2003 2004 2005 2006 2007 2008 2009 2010 Cash expenses: 

Seed and plant bed 50% 50% 50% 50% 50% 50% 50% 50% 

Fertilizer 15% 15% 15% 15% 15% 15% 15% 15% 

Chemicals 0% 0% 0% 0% 0% 0% 0% 0% Custom operations 0% 0% 0% 0% 0% 0% 0% 0% Fuel, lube, and electricity 10% 10% 10% 10% 10% 10% 10% 10% 

Repairs 10% 10% 10% 10% 10% 10% 10% 10% 

Hired labor 10% 10% 10% 10% 10% 10% 10% 10% 

Marketing expenses 0% 0% 0% 0% 0% 0% 0% 0% Miscellaneous 25% 25% 25% 25% 25% 25% 25% 25% 

Crop insurance 1% 1% 1% 1% 1% 1% 1% 1% Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 25% 

 Total, operating costs Allocated overhead: 

Opportunity cost of unpaid labor 10% 10% 10% 10% 10% 10% 10% 10% 

Capital recovery of machinery & equip 100% 100% 100% 100% 100% 100% 100% 100% 

Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 100% 

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 100% 

General farm overhead 100% 100% 100% 100% 100% 100% 100% 100% 

392 
Evaluation of Preven

Pre

Table 255: Flue-cured tobacco - share of expenses incurred before planting: North Carolina

 Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: 

Seed and plant bed 50% 50% 50% 50% 50% 50% 50% 

Fertilizer 15% 15% 15% 15% 15% 15% 15% 

Chemicals 35% 35% 35% 35% 35% 35% 35% 

Custom operations 0% 0% 0% 0% 0% 0% 0% Fuel, lube, and electricity 10% 10% 10% 10% 10% 10% 10% 

Curing fuel 0% 0% 0% 0% 0% 0% 0% Repairs 10% 10% 10% 10% 10% 10% 10% 

Hired labor 10% 10% 10% 10% 10% 10% 10% 

Marketing expenses 0% 0% 0% 0% 0% 0% 0% Miscellaneous 25% 25% 25% 25% 25% 25% 25% 

Crop insurance 1% 1% 1% 1% 1% 1% 1% 

Interest on operating capital 25% 25% 25% 25% 25% 25% 25% 

Allocated overhead: 

Opportunity cost of unpaid labor 10% 10% 10% 10% 10% 10% 10% 

Capital recovery of machinery and equipment 100% 100% 100% 100% 100% 100% 100% 1

Opportunity cost of land (rental rate) 100% 100% 100% 100% 100% 100% 100% 1

Taxes and insurance 100% 100% 100% 100% 100% 100% 100% 1

General farm overhead 100% 100% 100% 100% 100% 100% 100% 1

393 
Evaluation of Preven

Pre

Table 256: Burley tobacco prevented planting cost per acre: Kentucky 

Item 2003 2004 2005 2006 2007 2008 2009 2010 

Cash expenses: Seed and plant bed 55.17 57.76 113.08 122.50 137.31 130.00 150.08 155.60 

Fertilizer 50.07 53.49 38.02 40.80 50.07 63.83 44.78 41.03 Chemicals 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Custom operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Fuel, lube, and electricity 9.53 11.09 0.00 0.00 0.00 0.00 0.00 0.00 

 Repairs 8.21 8.39 16.36 16.70 17.26 18.60 18.96 19.32  Hired labor 57.48 62.50 102.67 106.40 110.13 180.00 184.92 185.90  Marketing expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

Miscellaneous 5.56 5.91 3.38 3.50 3.59 3.50 3.48 3.54 

 Crop insurance 0.54 0.55 0.57 0.60 0.63 1.00 1.07 1.10 

 Interest on operating capital 17.83 18.40 21.06 25.23 26.94 34.74 31.94 31.01 

 Total, operating costs 204.38 218.08 295.14 315.73 345.93 431.67 435.22 437.50 

Allocated overhead: Opportunity cost of unpaid labor 79.75 86.71 48.25 50.00 51.75 52.50 53.93 54.22 

 Capital recovery of machinery & equip 250.11 264.63 190.11 200.00 209.89 200.00 212.44 220.10 

 Opportunity cost of land (rental rate) 1,097.76 1,082.40 191.57 200.00 214.46 250.00 287.80 296.34  Taxes and insurance 48.58 48.85 139.41 148.00 158.50 148.00 144.17 148.77 

 General farm overhead 228.42 233.53 10.54 10.92 11.30 11.60 11.83 23.38 

 Total, allocated overhead 1,704.62 1,716.12 579.87 608.92 645.91 662.10 710.18 742.81 

 Total pre-planting costs 1,909.00 1,934.20 875.01 924.65 991.84 1,093.77 1,145.39 1,180.31 

 Total costs 3,936.25 4,110.08 3,194.35 3,351.02 3,552.69 4,454.06 4,499.08 4,523.64 

Prevented planting % 48% 47% 27% 28% 28% 25% 25% 26% 

394 
Evaluation of Preven

Pre

Table 257: Flue-cured tobacco prevented planting cost per acre: North Carolina

 Item 2003 2004 2005 2006 2007 2008 2009 2

Cash expenses: Seed and plant bed 37.30 38.27 63.82 69.14 77.50 108.50 124.00 10

 Fertilizer 45.37 50.73 23.75 25.49 31.28 57.52 57.52 4

 Chemicals 76.44 75.81 109.18 113.62 114.51 113.08 119.75 12

 Custom operations 0.00 0.00 0.00 0.00 0.00 0.00 0.00  Fuel, lube, and electricity 8.97 10.44 8.10 8.96 9.90 15.80 15.80 1 Curing fuel 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Repairs 12.46 12.74 20.60 21.03 21.73 27.14 29.49 2 Hired labor 69.96 72.66 76.07 78.83 81.60 82.15 90.33 9

Marketing expenses 0.00 0.00 0.00 0.00 0.00 0.00 0.00 

 Miscellaneous 1.07 1.13 1.69 1.75 1.80 1.80 1.80 

 Crop insurance 0.56 0.57 0.59 0.62 0.65 0.65 0.65 

 Interest on operating capital 4.57 4.72 5.40 6.47 6.91 10.68 11.26 

 Total, operating costs 256.69 267.07 309.21 325.91 345.88 417.30 450.60 40

Allocated overhead: Opportunity cost of unpaid labor 28.39 29.48 0.00 0.00 0.00 0.00 0.00 

 Capital recovery of machinery and equipment 404.06 417.50 444.97 468.12 491.27 501.45 501.45 50

 Opportunity cost of land (rental rate) 1227.67 1549.22 79.50 78.00 81.75 86.25 91.50 9

 Taxes and insurance 152.02 153.76 7.87 8.28 8.95 9.93 9.69 1

 General farm overhead 204.65 209.23 16.85 17.45 18.05 18.53 18.89 2

 Total, allocated overhead 2016.79 2359.19 549.19 571.85 600.02 616.16 621.53 63

 Total costs listed 2273.48 2626.26 858.40 897.77 945.90 1033.46 1072.13 104

Total costs 4,428.78 5,072.13 2,649.60 2,789.79 2,962.86 3,503.41 3,604.58 3,30

Prevented planting % 51% 52% 32% 32% 32% 29% 30% 

395 
Evaluation of Preven

Pre

APPENDIX A: RATIOS OF RMA PREVENTED PLANTING PAYMENTS TO ESTIMATED PP PRODUCTION COSTS BY 

REGION 

Barley 

Barley Basin & Range 2003 2004 2005 2006 2007 2008 2009 2010 2011 201Liability @ 100% 150.65 151.01 167.75 154.43 203.22 347.28 307.58 257.39 421.73 349.1

Barley @ 60 % 90.39 90.61 100.65 92.66 121.93 208.37 184.55 154.43 253.04 209.5

Estimated PP cost 170.07 173.95 186.81 191.68 215.77 243.72 262.75 266.06 289.84 299.5

Ratio 0.53 0.52 0.54 0.48 0.57 0.85 0.70 0.58 0.87 0.7Barley Fruitful Rim 2003 2004 2005 2006 2007 2008 2009 2010 2011 201Liability @ 100% 178.17 180.74 191.18 171.51 225.53 354.93 338.47 258.07 432.02 411.3

Barley @ 60 % 106.90 108.44 114.71 102.90 135.32 212.96 203.08 154.84 259.21 246.8

Estimated PP cost 211.05 215.84 230.96 237.00 267.28 301.44 323.93 329.81 358.60 371.6

Ratio 0.51 0.50 0.50 0.43 0.51 0.71 0.63 0.47 0.72 0.6Barley Heartland 2003 2004 2005 2006 2007 2008 2009 2010 2011 201Liability @ 100% 137.73 130.67 149.84 132.93 176.25 267.56 268.51 217.16 318.60 395.6

Barley @ 60 % 82.64 78.40 89.90 79.76 105.75 160.54 161.11 130.29 191.16 237.3Estimated PP cost 128.07 130.63 139.15 142.30 161.07 182.52 197.24 199.59 216.91 225.4

Ratio 0.65 0.60 0.65 0.56 0.66 0.88 0.82 0.65 0.88 1.0Barley Northern Crescent 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 126.99 114.94 138.45 114.13 160.48 242.97 257.04 198.70 309.62 348.6

Barley @ 60 % 76.19 68.96 83.07 68.48 96.29 145.78 154.23 119.22 185.77 209.1Estimated PP cost 127.58 130.46 139.61 143.16 161.33 182.92 196.08 198.04 215.43 223.9

Ratio 0.60 0.53 0.60 0.48 0.60 0.80 0.79 0.60 0.86 0.9

396 
Evaluation of Preven

Pre

Barley Northern Great Plains 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 130.61 124.70 127.88 129.62 156.48 268.82 208.69 180.67 282.35 264.3

Barley @ 60 % 78.37 74.82 76.73 77.77 93.89 161.29 125.21 108.40 169.41 158.6Estimated PP cost 130.98 134.13 145.36 150.66 166.12 187.46 198.22 201.24 218.63 225.8

Ratio 0.60 0.56 0.53 0.52 0.57 0.86 0.63 0.54 0.77 0.7

Buckwheat 

Buckwheat - ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 20

Liability @ 100% N/A N/A N/A N/A N/A N/A N/A 138.70 146.46 170.

Buckwheat @ 60 % 0.00 0.00 0.00 0.00 0.00 0.00 0.00 83.22 87.88 102.

Estimated PP cost 59.69 62.81 63.40 65.56 67.67 73.72 81.05 84.86 92.83 110.

Ratio 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.98 0.95 0.

RMA SOB liability : ND + SD + MN Extension budgets: ND 

Canola 

Canola - ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 141.74 147.79 144.49 148.98 216.83 427.48 263.26 247.53 347.87 363.8

Canola @ 60 % 85.04 88.67 86.69 89.39 130.10 256.49 157.96 148.52 208.72 218.3

Estimated PP cost 70.07 74.37 74.53 78.96 80.57 96.14 102.14 101.30 115.96 125.0

Ratio 1.21 1.19 1.16 1.13 1.61 2.67 1.55 1.47 1.80 1.7RMA SOB liability: NDExtension budgets: ND

397 
Evaluation of Preven

Pre

Corn 

Corn Eastern Uplands 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 237.25 279.03 249.24 256.84 426.24 576.80 462.24 475.85 714.71 688.9

Corn @ 60 % 142.35 167.42 149.54 154.10 255.74 346.08 277.34 285.51 428.83 413.3

Estimated PP cost 166.43 175.71 189.97 198.31 213.13 248.88 259.33 248.01 274.37 285.6

Ratio 0.86 0.95 0.79 0.78 1.20 1.39 1.07 1.15 1.56 1.4Corn Heartland 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 324.70 385.23 328.97 365.42 595.89 812.48 624.69 630.75 960.94 970.9

Corn @ 60 % 194.82 231.14 197.38 219.25 357.53 487.49 374.81 378.45 576.56 582.5

Estimated PP cost 209.80 222.33 229.24 236.40 254.10 292.48 310.47 321.48 354.80 384.4

Ratio 0.93 1.04 0.86 0.93 1.41 1.67 1.21 1.18 1.63 1.5Corn Northern Crescent 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 284.68 329.86 291.47 308.18 515.01 684.01 547.62 547.58 830.80 837.6

Corn @ 60 % 170.81 197.92 174.88 184.91 309.01 410.41 328.57 328.55 498.48 502.5

Estimated PP cost 199.93 210.76 217.52 226.03 242.82 280.00 292.33 260.44 287.12 298.8

Ratio 0.85 0.94 0.80 0.82 1.27 1.47 1.12 1.26 1.74 1.6Corn Northern Great Plains 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 238.98 284.43 239.24 266.06 433.07 596.92 445.98 441.54 676.49 696.0

Corn @ 60 % 143.39 170.66 143.54 159.64 259.84 358.15 267.59 264.92 405.89 417.6

Estimated PP cost 159.09 163.54 180.79 187.87 201.57 230.01 240.45 258.73 284.02 303.9

Ratio 0.90 1.04 0.79 0.85 1.29 1.56 1.11 1.02 1.43 1.3Corn Prairie Gateway 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 312.61 360.60 299.65 328.37 536.81 713.38 555.21 536.71 823.73 798.7

Corn @ 60 % 187.57 216.36 179.79 197.02 322.09 428.03 333.13 322.03 494.24 479.2

Estimated PP cost 180.50 188.48 182.19 186.49 186.49 204.51 222.42 223.48 238.41 257.4

Ratio 1.04 1.15 0.99 1.06 1.73 2.09 1.50 1.44 2.07 1.8

398 
Evaluation of Preven

Pre

Corn Southern Seaboard 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 231.76 266.79 241.98 253.26 413.60 557.72 466.51 473.37 709.67 674.3

Corn @ 60 % 139.06 160.07 145.19 151.96 248.16 334.63 279.91 284.02 425.80 404.6

Estimated PP cost 183.62 192.23 192.77 201.35 215.74 248.39 258.40 266.82 295.24 315.8

Ratio 0.76 0.83 0.75 0.75 1.15 1.35 1.08 1.06 1.44 1.2

Cotton 

Cotton Eastern Uplands 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 345.12 445.23 361.95 423.81 419.57 564.33 433.86 538.12 885.55 737.7

Cotton @ 50 % 172.56 222.61 180.98 211.91 209.79 282.17 216.93 269.06 442.77 368.8

Estimated PP cost 126.12 130.28 137.70 142.23 151.67 168.69 173.58 177.06 191.94 199.2

Ratio 1.37 1.71 1.31 1.49 1.38 1.67 1.25 1.52 2.31 1.8Cotton Fruitful Rim 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 464.30 566.52 462.24 441.05 486.08 607.89 499.61 597.26 973.77 861.6

Cotton @ 50 % 232.15 283.26 231.12 220.53 243.04 303.94 249.81 298.63 486.89 430.8

Estimated PP cost 230.56 239.17 252.88 261.85 275.70 293.82 309.40 316.58 339.75 353.3

Ratio 1.01 1.18 0.91 0.84 0.88 1.03 0.81 0.94 1.43 1.2Cotton Heartland 2003 2004 2005 2006 2007 2008 2009 2010 2011 20

Liability @ 100% 375.31 471.49 404.36 445.45 458.64 607.91 545.05 591.95 1150.40 906Cotton @ 50 % 187.66 235.74 202.18 222.73 229.32 303.96 272.52 295.98 575.20 453Estimated PP cost 153.90 159.27 168.13 173.84 257.70 275.69 292.49 298.68 320.46 333

Ratio 1.22 1.48 1.20 1.28 0.89 1.10 0.93 0.99 1.79 1Cotton Mississippi Portal 2003 2004 2005 2006 2007 2008 2009 2010 2011 20

Liability @ 100% 401.04 506.17 426.16 459.90 475.87 605.48 524.32 567.32 1008.51 846Cotton @ 50 % 200.52 253.09 213.08 229.95 237.94 302.74 262.16 283.66 504.26 423Estimated PP cost 185.10 190.92 201.30 207.63 245.30 262.23 278.94 283.99 304.64 317

Ratio 1.08 1.33 1.06 1.11 0.97 1.15 0.94 1.00 1.66 1

399 
Evaluation of Preven

Pre

Cotton Prairie Gateway 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 249.47 285.57 232.69 290.62 287.15 395.04 320.09 381.64 704.63 566.2

Cotton @ 50 % 124.73 142.79 116.35 145.31 143.57 197.52 160.05 190.82 352.32 283.1

Estimated PP cost 111.13 116.69 124.25 128.66 160.18 169.18 176.84 181.79 194.22 202.4

Ratio 1.12 1.22 0.94 1.13 0.90 1.17 0.91 1.05 1.81 1.4

ELS Cotton 

ELS Cotton CA 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Liability @ 100% 835.79 1123.53 1122.99 1094.62 1384.91 1420.48 1276.53 1368.03 1647.17 

Cotton Ex Long Staple @ 50 % 417.90 561.76 561.50 547.31 692.46 710.24 638.26 684.01 823.59 

Estimated PP cost 288.78 299.62 312.58 328.57 348.30 372.88 415.54 414.17 440.23 

Ratio 1.45 1.87 1.80 1.67 1.99 1.90 1.54 1.65 1.87 

RMA SOB liability: Fruitful Rim Extension budgets: CA 

Dry Beans 

Dry Beans ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 245.89 238.01 233.83 266.30 302.27 439.03 422.97 449.27 470.22 727.2

Dry Beans @ 60 % 147.53 142.81 140.30 159.78 181.36 263.42 253.78 269.56 282.13 436.3Estimated PP cost 83.28 85.23 84.48 89.76 91.55 98.82 109.48 119.00 124.73 138.1

Ratio 1.77 1.68 1.66 1.78 1.98 2.67 2.32 2.27 2.26 3.1RMA SOB liability: ND + MN Extension budgets: ND 

Dry Beans NE 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 334.50 317.97 320.28 377.42 416.65 651.70 620.06 628.37 661.67 900.2

Dry Beans @ 60 % 200.70 190.78 192.17 226.45 249.99 391.02 372.04 377.02 397.00 540.1Estimated PP cost 166.69 172.45 175.25 189.54 192.07 224.62 243.86 269.54 290.37 311.4

Ratio 1.20 1.11 1.10 1.19 1.30 1.74 1.53 1.40 1.37 1.7RMA SOB liability: MI Extension budgets: NE 

400 
Evaluation of Preven

Pre

Dry Peas 

Dry Peas ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 144.98 126.43 128.66 120.15 121.14 257.05 263.24 251.43 231.47 296.6

Dry Peas @ 60 % 86.99 75.86 77.20 72.09 72.68 154.23 157.94 150.86 138.88 177.9

Estimated PP cost 64.06 67.47 73.47 77.06 77.75 81.87 93.21 96.60 102.41 109.7

Ratio 1.36 1.12 1.05 0.94 0.93 1.88 1.69 1.56 1.36 1.6RMA SOB liability: ND + MT + ID + WA Extension budgets: ND 

Flax 

Flax ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 83.54 115.12 100.05 140.49 128.26 291.29 228.75 175.08 174.21 284.2

Flax @ 60 % 50.12 69.07 60.03 84.29 76.96 174.77 137.25 105.05 104.53 170.5

Estimated PP cost 58.36 61.18 60.01 61.57 62.36 66.29 74.17 75.52 80.08 86.4

Ratio 0.86 1.13 1.00 1.37 1.23 2.64 1.85 1.39 1.31 1.9

RMA SOB liability: ND Extension budgets: ND 

Grain Sorghum 

Grain Sorghum Fruitful Rim 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 128.17 139.46 125.04 124.16 203.27 273.22 241.67 242.01 342.01 358.3

Grain Sorghum @ 60 % 76.90 83.67 75.03 74.50 121.96 163.93 145.00 145.20 205.21 215.0

Estimated PP cost 123.26 128.31 136.45 141.30 150.76 168.44 175.46 177.39 191.02 199.2

Ratio 0.62 0.65 0.55 0.53 0.81 0.97 0.83 0.82 1.07 1.0Grain Sorghum Heartland 2003 2004 2005 2006 2007 2008 2009 2010 2011 201Liability @ 100% 176.69 210.17 180.32 182.18 298.30 393.95 297.89 330.01 507.48 479.0

Grain Sorghum @ 60 % 106.01 126.10 108.19 109.31 178.98 236.37 178.73 198.00 304.49 287.4Estimated PP cost 188.90 194.52 204.89 211.88 225.84 254.23 268.07 263.95 285.46 295.9

Ratio 0.56 0.65 0.53 0.52 0.79 0.93 0.67 0.75 1.07 0.9

401 
Evaluation of Preven

Pre

Grain Sorghum Northern Great Plains 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 96.10 110.41 87.32 98.73 153.50 194.88 159.32 162.19 253.20 258.4

Grain Sorghum @ 60 % 57.66 66.25 52.39 59.24 92.10 116.93 95.59 97.32 151.92 155.0

Estimated PP cost 105.46 108.97 114.99 118.72 126.38 141.31 149.17 149.10 160.61 166.6

Ratio 0.55 0.61 0.46 0.50 0.73 0.83 0.64 0.65 0.95 0.9

Grain Sorghum Prairie Gateway 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 134.45 154.61 127.76 133.72 217.05 286.35 219.87 235.13 348.75 336.1

Grain Sorghum @ 60 % 80.67 92.77 76.66 80.23 130.23 171.81 131.92 141.08 209.25 201.7

Estimated PP cost 129.39 135.46 144.47 149.92 160.10 179.11 185.88 187.89 202.13 209.7

Ratio 0.62 0.68 0.53 0.54 0.81 0.96 0.71 0.75 1.04 0.9

Green Peas 

Green Peas MN + WI 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 265.72 258.25 288.00 291.95 383.16 589.78 486.05 433.73 639.14 574.7

Green Peas @ 40 % 106.29 103.30 115.20 116.78 153.26 235.91 194.42 173.49 255.66 229.9

Estimated PP cost 122.69 110.40 120.57 118.56 132.46 151.84 210.26 172.21 182.44 219.5

Ratio 0.87 0.94 0.96 0.98 1.16 1.55 0.92 1.01 1.40 1.0RMA SOB liability: MN + WI + IA + IL FINBIN budgets: MN + WI 

Hybrid Corn Seed 

Hybrid Corn Seed 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Liability @ 100% 514.85 604.57 549.07 566.33 960.70 1258.59 1061.98 1039.52 1427.77 

Hybrid Corn Seed @ 60 % 308.91 362.74 329.44 339.80 576.42 755.15 637.19 623.71 856.66 

Estimated PP cost 213.99 227.84 233.01 240.21 257.22 295.09 311.80 325.56 357.95 

Ratio 1.44 1.59 1.41 1.41 2.24 2.56 2.04 1.92 2.39 

RMA SOB liability: Heartland Budgets: estimated ERS Heartland corn budgets 

402 
Evaluation of Preven

Pre

Hybrid Corn Seed 2003 2004 2005 2006 2007 2008 2009 2010 2011 Liability @ 100% 475.54 564.26 517.38 518.09 866.29 1132.73 929.70 868.51 1162.83 13

Hybrid Corn Seed @ 60 % 285.32 338.55 310.43 310.86 519.77 679.64 557.82 521.10 697.70 8

Estimated PP cost 205.30 216.89 222.66 231.37 247.63 284.75 295.28 265.27 291.37 30

Ratio 1.39 1.56 1.39 1.34 2.10 2.39 1.89 1.96 2.39 

RMA SOB liability: Northern Crescent Budgets: estimated ERS Northern Crescent corn budgets 

Hybrid Sorghum Seed 

Hybrid Sorghum Seed 2003 2004 2005 2006 2007 2008 2009 2010 2011 Liability @ 100% 554.62 620.32 552.73 507.83 892.13 1230.54 998.00 987.36 1264.08 1

Hybrid Sorghum Seed @ 60 % 332.77 372.19 331.64 304.70 535.28 738.32 598.80 592.42 758.45 

Estimated PP cost 292.67 309.26 338.48 355.78 383.00 474.60 424.55 434.31 488.48 

Ratio 1.14 1.20 0.98 0.86 1.40 1.56 1.41 1.36 1.55 

RMA SOB liability: Prairie Gateway Budgets: Scaled and Indexed grain sorghum budgets based on producer interviews 

Millet 

Millet ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 Liability @ 100% 77.06 75.44 71.30 70.23 77.08 93.32 98.74 89.85 144.24 107.74 

Millet @ 60 % 46.24 45.26 42.78 42.14 46.25 55.99 59.24 53.91 86.54 64.64 Estimated PP cost 60.88 64.10 67.84 71.31 75.43 84.80 90.47 93.36 94.94 98.84 

Ratio 0.76 0.71 0.63 0.59 0.61 0.66 0.65 0.58 0.91 0.65 

RMA SOB liability: CO + KS + NE + SD Extension budgets: ND 

403 
Evaluation of Preven

Pre

Mustard 

Mustard ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 138.11 126.85 106.87 145.07 156.04 376.41 241.58 196.91 213.68 255.1

Mustard @ 60 % 82.87 76.11 64.12 87.04 93.62 225.85 144.95 118.15 128.21 153.1

Estimated PP cost 70.41 74.35 76.29 77.98 81.87 90.34 100.77 102.77 111.95 115.3

Ratio 1.18 1.02 0.84 1.12 1.14 2.50 1.44 1.15 1.15 1.3RMA SOB liability: ND + MT Extension budgets: ND 

Oats 

Oats Heartland 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 88.15 87.28 108.32 93.01 124.39 215.11 168.84 150.09 190.56 245.8

Oats @ 60 % 52.89 52.37 64.99 55.81 74.63 129.06 101.30 90.06 114.33 147.5

Estimated PP cost 154.51 163.44 171.17 176.98 190.46 213.58 235.58 240.80 259.50 268.9

Ratio 0.34 0.32 0.38 0.32 0.39 0.60 0.43 0.37 0.44 0.5Oats Northern Crescent 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 85.02 82.43 100.57 86.43 115.95 200.91 163.32 138.10 178.86 222.7

Oats @ 60 % 51.01 49.46 60.34 51.86 69.57 120.55 97.99 82.86 107.32 133.6

Estimated PP cost 134.73 144.20 151.90 157.60 169.57 191.82 207.26 210.36 227.63 236.2

Ratio 0.38 0.34 0.40 0.33 0.41 0.63 0.47 0.39 0.47 0.5Oats Northern Great Plains 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 72.67 67.08 81.71 72.17 95.27 164.51 133.43 116.05 142.51 194.9

Oats @ 60 % 43.60 40.25 49.03 43.30 57.16 98.71 80.06 69.63 85.51 116.9Estimated PP cost 113.66 120.90 127.39 132.34 141.59 157.90 171.27 175.54 188.57 195.8

Ratio 0.38 0.33 0.38 0.33 0.40 0.63 0.47 0.40 0.45 0.6

404 
Evaluation of Preven

Pre

Oats Prairie Gateway 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 54.10 52.49 62.57 51.75 69.13 91.39 120.77 102.05 102.24 131.7

Oats @ 60 % 32.46 31.49 37.54 31.05 41.48 54.83 72.46 61.23 61.35 79.0

Estimated PP cost 93.82 100.62 106.53 110.81 119.76 137.37 146.89 147.37 160.39 166.8

Ratio 0.35 0.31 0.35 0.28 0.35 0.40 0.49 0.42 0.38 0.4

Onions 

Southern Onions (Fresh – TX) 2003 2004 2005 2006 2007 2008 2009 2010 20

Liability @ 100% 2786.92 2217.56 2457.52 2671.14 2823.62 2992.87 3219.57 2863.99 2850

Onions @ 35 % 975.42 776.15 860.13 934.90 988.27 1047.50 1126.85 1002.40 997

Estimated PP cost 863.98 920.81 968.61 1031.06 1194.18 1199.65 1239.31 1349.38 1394

Ratio 1.13 0.84 0.89 0.91 0.83 0.87 0.91 0.74 0

RMA SOB liability: TX + GA + CA + NV + NM Extension budgets: TX fresh market onions

Northern Onions (Storage – ID) 2003 2004 2005 2006 2007 2008 2009 2010 20

Liability @ 100% 3079.90 3238.83 3699.71 3842.24 3565.31 4273.08 4016.03 4192.77 4902

Onions @ 35 % 1077.97 1133.59 1294.90 1344.78 1247.86 1495.58 1405.61 1467.47 1715

Estimated PP cost 290.36 307.76 310.52 317.59 318.71 326.99 370.84 347.76 364

Ratio 3.71 3.68 4.17 4.23 3.92 4.57 3.79 4.22 4

RMA SOB liability: ID + OR + WA Extension budgets: ID storage onions 

Peanuts 

Peanuts Fruitful Rim 2003 2004 2005 2006 2007 2008 2009 2010 2011 20

Liability @ 100% 481.58 484.03 505.46 511.45 558.22 644.80 605.95 654.82 825.09 1041

Peanuts @ 50 % 240.79 242.01 252.73 255.73 279.11 322.40 302.98 327.41 412.54 520

Estimated PP cost 303.37 318.67 337.50 370.43 379.09 412.80 434.97 444.96 471.85 488Ratio 0.79 0.76 0.75 0.69 0.74 0.78 0.70 0.74 0.87 1

405 
Evaluation of Preven

Pre

Peanuts Prairie Gateway 2003 2004 2005 2006 2007 2008 2009 2010 2011 20

Liability @ 100% 496.62 517.56 589.91 602.43 655.33 741.41 677.37 736.37 892.84 1020

Peanuts @ 50 % 248.31 258.78 294.95 301.22 327.66 370.70 338.68 368.19 446.42 510

Estimated PP cost 292.33 310.35 335.93 356.10 379.24 419.61 425.72 441.46 476.74 491

Ratio 0.85 0.83 0.88 0.85 0.86 0.88 0.80 0.83 0.94 1

Peanuts Southern Seaboard 2003 2004 2005 2006 2007 2008 2009 2010 2011 20

Liability @ 100% 477.77 494.04 524.73 531.14 580.21 677.88 624.97 690.85 905.98 1166

Peanuts @ 50 % 238.89 247.02 262.37 265.57 290.10 338.94 312.49 345.43 452.99 583

Estimated PP cost 316.72 334.03 356.90 376.11 398.89 436.83 453.91 469.13 500.55 517

Ratio 0.75 0.74 0.74 0.71 0.73 0.78 0.69 0.74 0.90 1

Popcorn 

Popcorn - OH 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 415.09 356.33 401.37 392.75 544.80 777.63 707.34 619.26 941.86 924.5

Popcorn @ 60 % 249.05 213.80 240.82 235.65 326.88 466.58 424.40 371.56 565.11 554.7

Estimated PP cost 194.96 205.41 218.61 230.01 247.02 294.62 300.97 306.82 335.52 346.8

Ratio 1.28 1.04 1.10 1.02 1.32 1.58 1.41 1.21 1.68 1.6RMA SOB liability: Heartland Extension budgets: OH 

Northern Potatoes 

Northern Potatoes - ID 2003 2004 2005 2006 2007 2008 2009 2010 20

Liability @ 100% 1918.83 1923.83 1902.50 2023.37 2144.08 2533.75 3149.54 2563.01 2672

Potatoes @ 25 % 479.71 480.96 475.63 505.84 536.02 633.44 787.39 640.75 668

Estimated PP cost 679.70 711.37 754.95 836.70 927.12 1045.30 1177.02 1049.41 1190

Ratio 0.71 0.68 0.63 0.60 0.58 0.61 0.67 0.61 0

RMA SOB liability: ID + OR + WA Extension budgets: ID 

406 
Evaluation of Preven

Pre

Southern Potatoes 

Southern Potatoes - FL 2003 2004 2005 2006 2007 2008 2009 2010 20

Liability @ 100% 2609.19 2843.32 3039.06 2411.03 2643.55 2894.98 3171.84 3158.57 3403

Potatoes @ 25 % 652.30 710.83 759.77 602.76 660.89 723.75 792.96 789.64 850

Estimated PP cost 830.71 861.68 918.93 983.28 1063.60 1263.79 1271.40 1326.32 1445

Ratio 0.79 0.82 0.83 0.61 0.62 0.57 0.62 0.60 0

RMA SOB liability: AL + AZ + FL + GA + TX Extension budgets: FL 

Processing Beans 

Processing Beans - ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 2

Liability @ 100% 800.25 696.89 761.95 708.61 748.88 995.13 1105.24 910.77 1594.72 97Processing Beans @ 40 % 320.10 278.76 304.78 283.44 299.55 398.05 442.10 364.31 637.89 39Estimated PP cost 313.96 333.03 355.68 375.12 405.59 493.77 497.34 504.37 555.41 57

Ratio 1.02 0.84 0.86 0.76 0.74 0.81 0.89 0.72 1.15 

RMA SOB liability: ID + OR + WA Extension budgets: ND 

Processing Beans - NY 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 449.40 458.35 463.58 454.78 429.29 610.05 591.79 547.78 825.88 769.6

Processing Beans @ 40 % 179.76 183.34 185.43 181.91 171.72 244.02 236.72 219.11 330.35 307.8Estimated PP cost 153.71 162.22 176.16 186.27 197.72 228.09 221.47 234.47 258.46 266.3

Ratio 1.17 1.13 1.05 0.98 0.87 1.07 1.07 0.93 1.28 1.1RMA SOB liability: NY + PA + DE + MD + NJ Extension budgets: NY 

407 
Evaluation of Preven

Pre

Rice 

Rice Eastern Uplands 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 335.98 372.98 392.86 477.65 592.50 755.27 732.79 812.67 924.28 925.6

Rice @ 45 % 151.19 167.84 176.79 214.94 266.62 339.87 329.75 365.70 415.93 416.5

Estimated PP cost 276.83 295.39 307.48 305.27 324.16 366.34 386.44 392.60 423.74 439.4

Ratio 0.55 0.57 0.57 0.70 0.82 0.93 0.85 0.93 0.98 0.9Rice Fruitful Rim 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Liability @ 100% 459.32 487.78 517.51 587.91 735.33 882.62 1082.98 996.31 1267.53 11

Rice @ 45 % 206.70 219.50 232.88 264.56 330.90 397.18 487.34 448.34 570.39 50

Estimated PP cost 433.31 441.30 469.82 489.35 520.14 588.48 638.12 648.82 698.45 7

Ratio 0.48 0.50 0.50 0.54 0.64 0.67 0.76 0.69 0.82 

Rice Southern Seaboard 2003 2004 2005 2006 2007 2008 2009 2010 2011 2

Liability @ 100% 380.00 423.19 462.19 515.25 643.22 787.60 881.29 922.45 1145.09 110

Rice @ 45 % 171.00 190.44 207.99 231.86 289.45 354.42 396.58 415.10 515.29 49

Estimated PP cost 309.17 326.87 340.55 325.13 345.61 393.37 417.22 420.63 455.28 47

Ratio 0.55 0.58 0.61 0.71 0.84 0.90 0.95 0.99 1.13 

Rice Mississippi Portal 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 362.72 391.29 428.94 495.13 618.42 752.76 863.78 850.39 981.72 978.4

Rice @ 45 % 163.22 176.08 193.02 222.81 278.29 338.74 388.70 382.68 441.77 440.3

Estimated PP cost 270.22 286.63 302.76 291.49 309.71 350.11 368.01 374.00 403.33 418.4

Ratio 0.60 0.61 0.64 0.76 0.90 0.97 1.06 1.02 1.10 1.0

408 
Evaluation of Preven

Pre

Rye 

Rye - ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Liability @ 100% 92.01 96.42 124.81 101.47 118.11 133.02 142.41 141.65 142.88 210.68 

Rye @ 60 % 55.21 57.85 74.89 60.88 70.87 79.81 85.45 84.99 85.73 126.41 

Estimated PP cost 54.80 57.30 57.99 60.53 61.74 66.24 72.99 75.03 79.11 85.78 

Ratio 1.01 1.01 1.29 1.01 1.15 1.20 1.17 1.13 1.08 1.47 

RMA SOB liability: Northern Great Plains Extension budgets: ND 

Rye - OK 2003 2004 2005 2006 2007 2008 2009 2010 2011 20

Liability @ 100% 58.37 64.03 80.73 58.92 68.96 78.40 86.47 79.60 81.59 107.

Rye @ 60 % 35.02 38.42 48.44 35.35 41.38 47.04 51.88 47.76 48.96 64.

Estimated PP cost 57.97 55.98 66.58 72.18 75.64 78.76 77.01 79.69 84.55 93.

Ratio 0.60 0.69 0.73 0.49 0.55 0.60 0.67 0.60 0.58 0.

RMA SOB liability: Prairie Gateway Extension budgets: OK 

Rye - WI 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 77.37 78.90 106.20 90.26 113.33 145.16 168.51 120.28 160.03 213.5

Rye @ 60 % 46.42 47.34 63.72 54.16 68.00 87.10 101.11 72.17 96.02 128.1Estimated PP cost 132.24 136.51 142.86 154.58 161.60 177.25 187.05 192.20 205.70 212.7

Ratio 0.35 0.35 0.45 0.35 0.42 0.49 0.54 0.38 0.47 0.6RMA SOB liability: Northern Crescent Extension budgets: WI 

409 
Evaluation of Preven

Pre

Safflower 

Safflower CA 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 266.32 253.96 267.40 262.74 233.47 399.24 618.40 302.14 359.91 518.1

Safflower @ 60 % 159.79 152.38 160.44 157.64 140.08 239.54 371.04 181.28 215.95 310.8

Estimated PP cost 173.45 183.74 198.69 196.38 213.83 278.08 208.90 212.67 240.34 247.4

Ratio 0.92 0.83 0.81 0.80 0.66 0.86 1.78 0.85 0.90 1.2RMA SOB liability: CAExtension budgets: CA

Safflower ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 

Liability @ 100% 74.38 70.34 74.14 75.22 94.34 165.39 199.41 136.57 157.06 193.42 

Safflower @ 60 % 44.63 42.20 44.48 45.13 56.60 99.23 119.65 81.94 94.24 116.05 Estimated PP cost 73.08 76.83 81.97 86.18 92.25 110.00 131.03 132.13 144.87 149.71 Ratio 0.61 0.55 0.54 0.52 0.61 0.90 0.91 0.62 0.65 0.78 

RMA SOB liability: ND + SD + MT Extension budgets: ND 

Silage Sorghum 

Silage Sorghum Prairie Gateway 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 229.32 187.63 313.83 274.00 336.71 300.11 376.35 391.0

Silage Sorghum @ 60 % 137.59 112.58 188.30 164.40 202.03 180.07 225.81 234.6

Estimated PP cost 129.91 135.94 145.26 150.83 160.96 180.40 187.32 188.96 203.38 211.1

Ratio 0.95 0.75 1.17 0.91 1.08 0.95 1.11 1.1

Soybeans 

Soybeans Eastern Uplands 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 147.67 174.74 160.60 175.55 226.26 371.02 282.40 301.43 434.63 410.5

Soybeans @ 60 % 88.60 104.84 96.36 105.33 135.76 222.61 169.44 180.86 260.78 246.3

Estimated PP cost 120.40 126.95 133.04 147.83 153.22 167.35 180.00 193.23 206.98 214.0

Ratio 0.74 0.83 0.72 0.71 0.89 1.33 0.94 0.94 1.26 1.1

410 
Evaluation of Preven

Pre

Soybeans Heartland 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 225.56 271.66 229.44 259.14 343.69 571.80 395.65 414.14 612.11 602.8

Soybeans @ 60 % 135.34 163.00 137.66 155.48 206.21 343.08 237.39 248.48 367.27 361.6

Estimated PP cost 169.60 177.49 184.15 197.15 203.37 221.47 242.20 264.27 283.49 292.8

Ratio 0.80 0.92 0.75 0.79 1.01 1.55 0.98 0.94 1.30 1.2

Soybeans Mississippi Portal 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 143.77 169.28 154.18 170.56 225.94 369.74 321.46 328.66 460.64 444.3

Soybeans @ 60 % 86.26 101.57 92.51 102.34 135.56 221.84 192.88 197.20 276.38 266.6

Estimated PP cost 156.85 164.60 171.58 176.01 182.57 199.34 213.37 229.65 246.05 254.5

Ratio 0.55 0.62 0.54 0.58 0.74 1.11 0.90 0.86 1.12 1.0

Soybeans Northern Crescent 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 210.72 244.38 209.29 232.03 309.07 517.26 360.46 369.32 548.38 534.1

Soybeans @ 60 % 126.43 146.63 125.57 139.22 185.44 310.36 216.28 221.59 329.03 320.4

Estimated PP cost 159.00 164.80 171.86 169.25 175.22 191.22 206.43 221.86 237.70 245.5

Ratio 0.80 0.89 0.73 0.82 1.06 1.62 1.05 1.00 1.38 1.3Soybeans Northern Great Plains 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 165.81 205.34 167.49 191.41 254.43 433.74 288.87 291.52 429.86 424.0

Soybeans @ 60 % 99.49 123.20 100.49 114.85 152.66 260.24 173.32 174.91 257.92 254.4

Estimated PP cost 116.74 122.06 129.43 145.17 150.89 164.99 176.66 188.35 201.46 208.4

Ratio 0.85 1.01 0.78 0.79 1.01 1.58 0.98 0.93 1.28 1.2Soybeans Prairie Gateway 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 190.86 231.52 197.12 223.68 287.33 487.46 337.77 347.03 522.72 505.0

Soybeans @ 60 % 114.52 138.91 118.27 134.21 172.40 292.48 202.66 208.22 313.63 303.0

Estimated PP cost 149.50 156.94 163.55 178.67 185.63 203.27 216.21 231.75 248.63 256.9

Ratio 0.77 0.89 0.72 0.75 0.93 1.44 0.94 0.90 1.26 1.1

411 
Evaluation of Preven

Pre

Soybeans Southern Seaboard 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 142.47 171.54 152.50 167.91 213.73 344.16 274.05 287.92 409.87 378.2

Soybeans @ 60 % 85.48 102.92 91.50 100.75 128.24 206.50 164.43 172.75 245.92 226.9

Estimated PP cost 102.60 106.85 112.99 125.47 130.41 143.06 152.79 161.89 173.25 179.3

Ratio 0.83 0.96 0.81 0.80 0.98 1.44 1.08 1.07 1.42 1.2

Sugar Beets 

Sugar Beets - ID 2003 2004 2005 2006 2007 2008 2009 2010 2011 

Liability @ 100% 916.20 938.71 912.88 961.19 995.67 1047.71 1165.84 1221.54 1328.55 

Sugar Beets @ 45 % 412.29 422.42 410.80 432.54 448.05 471.47 524.63 549.69 597.85 

Estimated PP cost 612.54 620.08 679.18 697.26 742.76 858.25 680.95 701.57 770.21 

Ratio 0.67 0.68 0.60 0.62 0.60 0.55 0.77 0.78 0.78 

RMA SOB liability: ID + OR + MT + WY Budgets: University of ID + ERS Sugar Beets - MI 2003 2004 2005 2006 2007 2008 2009 2010 2011 2

Liability @ 100% 741.16 758.68 753.02 763.43 805.91 812.12 924.74 976.22 1062.50 138

Sugar Beets @ 45 % 333.52 341.41 338.86 343.54 362.66 365.45 416.13 439.30 478.13 62

Estimated PP cost 416.99 427.00 466.29 479.88 511.25 509.84 530.30 545.04 589.29 61

Ratio 0.80 0.80 0.73 0.72 0.71 0.72 0.78 0.81 0.81 

RMA SOB liability: MIExtension budgets: MI

Sugar Beets - FINBIN 2003 2004 2005 2006 2007 2008 2009 2010 2011 Liability @ 100% 817.33 844.46 823.53 827.41 873.08 887.89 983.59 1014.59 1111.48 14

Sugar Beets @ 45 % 367.80 380.01 370.59 372.33 392.89 399.55 442.62 456.57 500.17 6

Estimated PP cost 448.19 458.19 499.00 513.56 546.40 330.26 358.56 417.45 447.21 5

Ratio 0.82 0.83 0.74 0.73 0.72 1.21 1.23 1.09 1.12 

RMA SOB liability: MN + ND + NE + CO Budgets: FINBIN + ERS 

412 
Evaluation of Preven

Pre

Sunflower 

Sunflower Oil - ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 201

Liability @ 100% 153.16 168.32 148.25 166.80 205.92 428.74 259.49 272.74 386.84 402.6

Sunflower oil @ 60 % 91.90 100.99 88.95 100.08 123.55 257.24 155.69 163.64 232.10 241.5

Estimated PP cost 91.08 95.31 95.47 102.74 106.96 121.67 132.99 135.90 147.80 159.9

Ratio 1.01 1.06 0.93 0.97 1.16 2.11 1.17 1.20 1.57 1.5RMA SOB liability: ND + SD + MN 

Extension budgets: ND 

Sunflower Seed - ND 2003 2004 2005 2006 2007 2008 2009 2010 2011 201Liability @ 100% 153.16 168.32 148.25 166.80 205.92 428.74 259.49 272.74 386.84 402.6

Sunflower seed @ 60 % 91.90 100.99 88.95 100.08 123.55 257.24 155.69 163.64 232.10 241.5

Estimated PP cost 77.81 81.68 81.93 87.31 89.55 101.65 111.02 113.41 123.82 133.2Ratio 1.18 1.24 1.09 1.15 1.38 2.53 1.40 1.44 1.87 1.8RMA SOB liability: ND + SD + MN 

Extension budgets: ND 

Processing Sweet Corn 

Processing sweet corn - OR 2003 2004 2005 2006 2007 2008 2009 2010 2011 2

Liability @ 100% 544.94 538.32 534.46 550.46 592.77 1022.54 1068.02 773.30 898.49 90

Sweet Corn @ 40 % 217.98 215.33 213.78 220.18 237.11 409.02 427.21 309.32 359.40 36Estimated PP cost 249.99 264.79 284.72 300.78 328.11 392.89 401.60 407.88 456.02 46

Ratio 0.87 0.81 0.75 0.73 0.72 1.04 1.06 0.76 0.79 RMA SOB liability: WA + OR + ID Extension budgets: OR 

413 
Evaluation of Preven

Pre

Tobacco 

Tobacco, Burley - KY 2003 2004 2005 2006 2007 2008 2009 2010 20Liability @ 100% 4087.68 4160.97 3476.51 3545.74 3954.05 4419.98 4573.52 4356.54 4152

Tobacco @ 35 % 1430.69 1456.34 1216.78 1241.01 1383.92 1546.99 1600.73 1524.79 1453

Estimated PP cost 1909.00 1934.20 875.01 924.65 991.84 1093.77 1145.39 1180.31 1141

Ratio 0.75 0.75 1.39 1.34 1.40 1.41 1.40 1.29 1

RMA SOB liability: KY + TN 

Extension budgets: KY 

Tobacco, Flue cured - NC 2003 2004 2005 2006 2007 2008 2009 2010 20

Liability @ 100% 4191.29 4232.67 3107.68 3063.46 3441.70 3651.05 4238.28 4067.78 3730.

Tobacco @ 35 % 1466.95 1481.43 1087.69 1072.21 1204.60 1277.87 1483.40 1423.72 1305

Estimated PP cost 2273.48 2626.26 858.40 897.77 945.90 1033.46 1072.13 1040.87 1046

Ratio 0.65 0.56 1.27 1.19 1.27 1.24 1.38 1.37 1

RMA SOB liability: NC + SC + VA Extension budgets: NC 

Wheat 

Wheat Basin & Range 2003 2004 2005 2006 2007 2008 2009 2010 

Liability @ 100% 176.01 172.34 184.88 192.58 236.30 320.27 454.10 295.51 41

Wheat @ 60 % 105.61 103.41 110.93 115.55 141.78 192.16 272.46 177.31 24

Estimated PP cost 181.99 147.87 161.24 165.78 176.70 195.17 202.65 206.15 22

Ratio 0.58 0.70 0.69 0.70 0.80 0.98 1.34 0.86 

Wheat Fruitful Rim 2003 2004 2005 2006 2007 2008 2009 2010 

Liability @ 100% 208.43 212.00 221.81 213.02 260.06 345.91 514.05 333.63 49

Wheat @ 60 % 125.06 127.20 133.09 127.81 156.04 207.55 308.43 200.18 29

Estimated PP cost 204.35 200.67 220.76 226.96 242.33 269.37 253.17 258.96 27

Ratio 0.61 0.63 0.60 0.56 0.64 0.77 1.22 0.77 

414 
Evaluation of Preven

Pre

Wheat Heartland 2003 2004 2005 2006 2007 2008 2009 2010 

Liability @ 100% 167.40 173.63 167.33 177.85 219.77 333.74 422.68 257.29 42

Wheat @ 60 % 100.44 104.18 100.40 106.71 131.86 200.25 253.61 154.37 25

Estimated PP cost 147.81 146.01 160.28 163.25 174.81 194.54 207.02 209.89 22

Ratio 0.68 0.71 0.63 0.65 0.75 1.03 1.23 0.74 

Wheat Northern Crescent 2003 2004 2005 2006 2007 2008 2009 2010 

Liability @ 100% 194.15 196.49 201.94 197.31 238.55 353.05 477.53 316.64 46

Wheat @ 60 % 116.49 117.89 121.16 118.39 143.13 211.83 286.52 189.98 27

Estimated PP cost 145.15 159.58 174.78 178.82 191.22 212.21 205.37 208.42 22

Ratio 0.80 0.74 0.69 0.66 0.75 1.00 1.40 0.91 

Wheat Northern Great Plains 2003 2004 2005 2006 2007 2008 2009 2010 

Liability @ 100% 116.22 120.12 115.10 131.82 167.53 321.53 246.28 192.13 32

Wheat @ 60 % 69.73 72.07 69.06 79.09 100.52 192.92 147.77 115.28 19

Estimated PP cost 117.56 111.17 121.34 124.88 133.59 149.60 155.52 157.86 17

Ratio 0.59 0.65 0.57 0.63 0.75 1.29 0.95 0.73 

Wheat Prairie Gateway 2003 2004 2005 2006 2007 2008 2009 2010 

Liability @ 100% 120.89 115.89 120.84 119.05 152.29 196.47 288.29 178.65 24

Wheat @ 60 % 72.54 69.54 72.51 71.43 91.37 117.88 172.97 107.19 14

Estimated PP cost 108.08 106.02 115.95 119.81 127.74 141.68 143.31 146.15 15Ratio 0.67 0.66 0.63 0.60 0.72 0.83 1.21 0.73 

415 
Evaluation of Preven

Pre

This page left intentionally blank 

416