Introduction

Producing an agricultural commodity entails risk. In some years, producers may plant and harvest crops with no losses relative to their expected crop production. In other years, producers may plant their crops normally but incur losses after planting. In still other years, weather events may result in conditions that delay or prevent the planting of crops. How farmers respond to production losses resulting from adverse planting conditions may be influenced by the risk management tools available to them, including insurance coverage purchased from the federal crop insurance program (FCIP).

FCIP policies provide indemnities for losses on planted acres. In certain situations, they can provide payments for replanting acres after losses or for situations where planting is not possible. These payments can help farmers manage cash flow and financial risk for their operations. The FCIP has specific rules (including policy conditions and deadlines) for replanting, delayed planting, and prevented planting to limit opportunities for waste, fraud, and abuse in the program. Understanding the FCIP rules around planting requirements can help to reveal how policy changes to the program may influence how producers respond to market conditions and weather related setbacks, as well as how the cost of risk is shared between producers and the U.S. government.

The total amount of replanting, delayed planting, and prevented planting that occurs each year depends on weather and soil conditions. Generally, delayed and prevented planting is associated with excessive springtime moisture or wet conditions that prevent farmers from getting into their fields by specific planting dates established under the FCIP. In contrast, replanting is usually associated with a late springtime freeze that kills immature crops or an unusually heavy rain that washes out planted crops before their root systems are established.

While total acres insured under the FCIP increased from 2010 to 2020, total acres replanted and prevented from planting did not always follow the same pattern (Figure 1).¹ FCIP expenditures on replanting payments typically comprise a small share of total FCIP indemnities, while expenditures on prevented planting payments can account for a substantial share of total FCIP indemnities in years with particularly adverse spring planting conditions (Figure 2).² For example, adverse spring planting conditions in 2011, 2013, 2019, and 2020 resulted in high levels of prevented plantings. Prevented planting payments accounted for 20% of total indemnities in 2011, 18% of total indemnities in 2013, 47% of total indemnities in 2019, and 25% of total indemnities in 2020.

Figure 1. FCIP Insured, Replanted, and Prevented Planting Acres 2010-2020 Crop Years

Source: CRS calculations using USDA RMA Cause of Loss data files and Summary of Business database, downloaded on June 14, 2021.

Figure 2. FCIP Total, Replanting, and Prevented Planting Indemnities 2010-2020 Crop Years

Source: CRS calculations using USDA RMA Cause of Loss data files and Summary of Business database, downloaded on June 14, 2021. Notes: Amounts not adjusted for inflation.

In most years, FCIP expenditures associated with replanting, delayed planting, and prevented planting are a relatively small portion of the overall program cost. However, FCIP rules around these provisions can influence farmers' planting decisions, and thereby aggregate crop production and market prices. By design, the FCIP limits the amount of coverage available on planted acres so that producers can never earn more money from collecting crop insurance than from harvesting and selling their crops. Coverages provided for replanting and prevented planting are not bound by the same limits as coverage on planted acres, and there exists the potential for farmers to earn better economic returns from collecting prevented planting payments than from crop production. Supplemental payments provided for prevented planting acres in 2019 provided additional economic incentives for farmers to collect prevented planting payments instead of opting to plant their crops late in the season, calling into question whether prevented planting payments mitigate the need for ad hoc disaster assistance funding.³ This has also renewed interest among industry stakeholders in evaluating how the FCIP rules on prevented planting may contribute to the moral hazard of the overall program.⁴ Additionally, there has been increased congressional interest in how the FCIP's rules influence the incentives for farmers to address broader conservation and environmental goals,⁵ as well as the potential cost of the overall program (see "Issues for Congress").

This report reviews the connections between crop planting cycles and FCIP policy deadlines, and provides an overview of FCIP rules for replanting, delayed planting, and prevented planting. The report also identifies several possible issues for Congress as it carries out its oversight function.

Crop Planting Schedules and Federal Crop Insurance Deadlines

Agricultural production occurs on a specific schedule driven by a region's agro-climatic setting, including latitude, altitude, soil type, and weather patterns. Crops require a certain period of time after planting—uninterrupted by freezing temperatures—to grow to maturity. In addition, different crops require certain weather and climate conditions to support growth, including sufficient precipitation, soil moisture, sunshine, and daily minimum and maximum temperatures. Crops planted too early in the crop year may fail to sprout due to frosts or other cold weather-related conditions. Crops planted too late in the crop year may fail to mature due to an insufficient number of warm, sunny days and/or other climate and weather conditions unsuitable for crop production such as an early freeze in the fall. Crops harvested either too early or too late in the crop year may fail to reach optimum yields.

The start of the growing season varies by crop and by location. Areas with milder winter climates are typically able to begin planting earlier and finish harvesting earlier than areas with more severe winter conditions. Major field work generally begins earlier in southern states and works its way north to the Canadian border through the spring. Additionally, crops with longer maturation periods are typically planted earlier in the year compared to crops with shorter maturation periods. For example, corn and spring wheat planting tends to start in March or April, while soybean and cotton planting tends to start in April or May.⁶

For most crops, early planting will generally produce average or above-average yields, whereas late planting tends to produce below-average yields.⁷ Because the timing of planting can impact the likelihood of producing a viable crop, the FCIP imposes certain production and reporting deadlines that producers must meet in order to maintain eligibility for indemnity payments on their FCIP coverage (see text box "Federal Crop Insurance Program Deadlines for Producers"). These deadlines vary by crop and location, but generally correspond to the schedule of crop planting and harvesting for the local area.⁸ Because the timing of crop planting depends on the weather and climate conditions, farmers can face certain challenges in meeting FCIP deadlines around planting dates, including replanting after crop damage, delayed planting, and/or prevented planting.⁹

FCIP Coverage for Replanting

Farmers who purchased FCIP policies and whose crops are damaged by an insurable cause of loss—such as frost, hail, wind, floods, or other natural occurrences—are eligible for FCIP indemnities if the harvested crops' values are below the insured levels. However, if the crops are damaged early enough in the year, producers may prefer to replant those acres in order to earn a better overall return from producing a replanted crop than they would expect to receive from FCIP indemnities plus the reduced harvest on the initially planted crop. Farmers cannot insure the full value of their crops under federal crop insurance. Maximum coverages vary by policy and crop, but generally do not exceed 80% or 85% of the expected outcome. Because the FCIP limits the amount of coverage available, producers can never earn more money from collecting crop insurance than from harvesting and selling their crops; this is meant to reduce the potential for moral hazard in the program.

Farmer Requirements for Replanting Coverage

Producers are not required to replant damaged acres—that is one of the options they can pursue after their Approved Insurance Provider (AIP) assesses the practicality of replanting. Farmers are required to notify their AIP about any crop damage within 72 hours of discovering it. Once notified, the AIP will make a determination if it is practical to replant those acres. An AIP may consider it not practical to replant if replanting is physically impossible, or if the AIP believes there is no chance of seed germination, emergence, and formation of a healthy plant at that point in the season.¹¹

If the AIP determines that it is practical to replant, the producer may choose not to replant, choose to replant the same crop, or choose to replant a different crop.

• If the producer chooses not to replant, then no indemnity is provided for the damaged crop and no premium is charged for the policy.
• If the producer chooses to replant the same crop, no indemnity is provided and full insurance coverage continues on the replanted crop just as it was on the initially planted crop. There is no decrease in the yield or revenue guarantee, and the producer receives a replanting payment.
• If the producer chooses to replant a different crop, no indemnity or replanting payments are provided. Coverage is transferred from the initially planted crop to the new crop—provided that all insurability requirements are met for the new crop. If the second crop is planted prior to its final planting date, it will be eligible for full insurance coverage.

If the AIP determines that it is not practical to replant, the producer may choose not to replant or choose to replant and insure a second crop or choose to replant and not insure a second crop.

• If the producer chooses not to replant, the producer will receive 100% of the indemnity on the insured crop. In lieu of replanting the insured crop, farmers may plant a cover crop for haying and grazing without any FCIP restrictions.
• If the producer chooses to replant and insure a second crop, the producer will receive 35% of the original indemnity on the first (damaged) crop. If the second crop does not suffer a loss, the producer can receive the remaining 65% of the indemnity from the first crop. If the second crop suffers a loss, the producer will be eligible to receive an indemnity payment for the second crop in addition to the 35% indemnity on the first crop.
• If the producer chooses to replant and not insure the second crop, the producer will receive an indemnity of 100% of the insured value on the first crop. No insurance coverage will be provided for the second crop.

Replanting Payments

The amount of the replanting payment is either the actual costs for replanting or an amount specified in the Crop Provisions or Special Provisions attached to the policy—whichever amount is lower.¹² The amount specified in the Crop Provisions or Special Provisions is generally set as a crop-specific factor multiplied by the projected price for that crop (see Table 1).¹³ Calculating replanting payments as a multiple of the projected price ensures that incentives to replant increase automatically in years with higher projected crop prices. The crop-specific factor allows USDA to provide replanting payments that correspond with the costs incurred in replanting each crop.¹⁴ In general, the maximum replanting payment per acre is limited and cannot exceed 20% of the insured value.

Claims for Replanting Payments

Since 2010, claims for replanting payments have typically impacted less than 4 million insured acres each year (Figure 1). The 2017 crop year had the largest number of replanted acres, at 6.8 million, and also the largest expenditure on replanting payments, at $214.4 million (Figure 2).

In 2020, the most common reasons for replanting were excess moisture, precipitation, or rain (58% of claims) and cold wet weather (14% of claims).¹⁵ Soybeans were the most commonly replanted crop (48% of claims), and corn was the second most commonly replanted crop (33% of claims); corn and soybeans also accounted for 40% of all acreage policies sold that year.¹⁶ The states with the most replanting claims were Illinois (14%), Indiana (8%), and Missouri (7%); corn and soybeans accounted for the majority of insured acres in these three states in 2020.

FCIP Coverage for Delayed Planting

Farmers may be delayed in planting some or all of their acres for a variety of reasons, such as poor weather, poor soil conditions for planting, impeded access to fields, or other reasons. If the delays are resolved before the final planting date, then there is no modification to the FCIP crop insurance coverage.

When planting is delayed, producers can choose to plant their originally chosen crop, an alternative crop, a cover crop,¹⁷ or not to replant. If farmers plant their originally chosen crop, the yields from those planted acres will be included in future calculations of yield or revenue guarantees under crop insurance.¹⁸ Yields from late planted crops are likely to be lower than yields from crops planted on time, so including them in future calculations could result in lower insurance guarantees in future years. Some farmers may prefer to plant an alternative crop instead of their originally chosen crop so that future calculations of yield or revenue guarantees do not include yields from crops planted late. If planting is delayed but not prevented, the FCIP provides no extra incentives to plant cover crops or an alternative crop.

Not all crops qualify for late planting period coverage. For those crops that do qualify (see Table 2), the most commonly purchased yield and revenue policies include provisions that specify a late planting period of up to 25 days (depending on the crop).¹⁹ If the planting delays are resolved after the final planting date but before the end of the late planting period, then FCIP coverage is reduced 1% per day for each day after the final planting date. If the delays are resolved after the end of the late planting period, then FCIP coverage is reduced to the minimum level specified for each crop. For example, the minimum level is 55% for corn and 60% for soybeans. Producers may be able to increase the minimum level by 5 or 10 percentage points by paying a higher premium (see "Prevented Planting Payments").

Producers may receive regular indemnity payments for insurable losses incurred on delayed plantings.²⁰ Producers are not eligible for prevented planting indemnity payments if planting occurs before the end of the late planting period. Producers planting after the end of the late planting period may be eligible for prevented planting indemnities (see "FCIP Coverage for Prevented Planting").

Most FCIP policies include a combination of basic provisions that are common to all crops insured under that policy, crop-specific provisions that are unique to the specific crop insured, and special provisions that allow for specific coverage options (e.g., using a contracted price in lieu of a market price to establish the insured guarantee).

FCIP Coverage for Prevented Planting

FCIP defines prevented planting as "the failure to plant an insured crop with the proper equipment by the final planting date or during the late planting period, if applicable."²¹ For policies offering prevented planting coverage, any eligible insured acres that cannot be timely planted due to insurable causes of loss can receive a prevented planting payment. The FCIP provides coverage for prevented planting due to insured causes of loss—such as adverse weather conditions, drought, floods, and other natural events—that affect a particular geographic region. Failure to plant a crop by the final planting date due to factors that impact only an individual farm may not qualify for prevented planting payments.

The Federal Crop Insurance Reform and Department of Agriculture Reorganization Act of 1994 (P.L. 103-354) required USDA to include prevented planting coverage with basic crop insurance coverage in order to reduce the need for ad hoc disaster assistance for producers who were prevented from planting due to widespread natural events like floods and droughts. Prevented planting coverage is currently available for certain crops (see Table 2) and the most commonly purchased policies for these crops. Prevented planting coverage is not available for area-based policies, catastrophic-only coverage, or certain other policies.

Farmer Requirements for Prevented Planting Coverage

In order to be eligible for prevented planting payments, the insured acres must have been planted to a crop, insured, and harvested at least once in the previous four years.²² From 2012 to 2020, this requirement only applied to the Prairie Pothole region—an area in the upper Midwest prone to wet conditions during spring planting time. Starting in 2021, this requirement applies nationwide. Following a year with a claim of prevented planting, farmers must have two consecutive years of harvests (or losses for causes other than those associated with prevented planting) in order to quality for prevented planting coverage again.²³ A farmer must also have at least 20 acres or 20% of the acres in the insured unit prevented from planting in order to be eligible for prevented planting payments.²⁴

Producers are required to notify their AIPs about insured acres that were prevented from planting within 72 hours after the final planting date, or if a late planting period applies, within 72 hours of deciding that they will not be able to plant or do not intend to plant before the end of the late planting period.²⁵ AIPs make a determination if prevented planting has occurred based on the circumstances impacting the producer submitting the claim as well as the circumstances impacting similar producers in the local area. Producers may be asked to provide weather records, soil moisture indices, written opinions from local experts, and/or other information to verify the cause of loss for prevented planting.

Farmers' options when confronted by prevented planting are similar to the options they have when planting is delayed: the producers can choose to plant their originally chosen crop, an alternative crop, a cover crop, or not to plant.

• If producers choose to plant their originally chosen crop, they will receive no prevented planting payment. Producers have the option to insure the originally chosen crop under the terms that apply to delayed plantings (see "FCIP Coverage for Delayed Planting").
• If producers choose to plant an alternative crop, they will receive a payment equal to 35% of the prevented planting payment for the originally chosen crop. The alternative crop can also be insured, but coverage levels will be reduced by 1% per day for each day of the late planting period for the alternative crop. Yield for the original crop will be assigned as 60% of the regularly expected yield (i.e., actual production history) when calculating future yield or revenue guarantees.
• If producers choose to plant a cover crop, they will receive 100% of the prevented planting payment for the original crop provided that the cover crop is not harvested for grain or seed.²⁶ No yield will be assigned for the original crop for the purposes of calculating future yield or revenue guarantees.
• If producers choose to plant nothing on the acres, they will receive the full prevented planting payment for their originally chosen crop. No yield will be assigned for the original crop for the purposes of calculating future yield or revenue guarantees.

Prevented Planting Payments

The prevented planting payments associated with a crop insurance policy are calculated as a fixed proportion of the policy's insurance guarantee (i.e., insured liability). The fixed proportion varies by crop (see Table 3). Farmers can purchase additional prevented planting coverage, which provides payments based on larger fixed proportions of the insurance guarantee, of either 5% or 10% above the standard guarantee.²⁷ For example, standard prevented planting payments for corn and soybean Yield Protection and Revenue Protection policies are calculated as 55% of the insurance guarantee for corn and 60% of the insurance guarantee for soybeans. Therefore, the maximum prevented planting coverage that can be purchased is 65% for corn and 70% for soybeans.

All FCIP coverage for planted acres has a deductible. By statute, FCIP coverage for production losses can only cover a maximum of 85% of a farmers' insured yield or 95% of the area yield (7 U.S.C. §1508(c)(4)).²⁸ Thus, if farmers incur a loss on planted acres, the loss must exceed 15% of their insured yield (the deductible) in order to receive an indemnity payment. The deductible helps to insure that farmers cannot earn higher returns from collecting insurance indemnities than from producing crops.

In contrast, prevented planting payments do not have a deductible. The statute does not place any limitations on the amount of loss that can be insured under the FCIP when a farmer is prevented from planting a crop, meaning that prevented planting payments can equal or exceed the amount of financial losses incurred when a farmer is prevented from planting a crop.

Although prevented planting payments are calculated as a proportion of insured liabilities, RMA calibrates prevented planting payment coverage factors in relation to estimates of the pre-planting costs incurred by farmers in planting their crops.²⁹ Under the FCIP, pre-planting costs can include purchase of machinery, land rent, fertilizers and pesticides applied prior to planting, actions taken to prepare the land for planting, labor, and repairs. RMA targets the prevented planting coverage to correspond to varying amounts of these costs by crop, and updates the prevented planting coverage factors on a five-year cycle.³⁰ For example, USDA includes 100% of land costs, but varying proportions of machinery depreciation and capital recovery costs, in the prevented planting coverage factor for each crop.

Because prevented planting payments are calculated as a proportion of insured liabilities, the value of prevented planting payments depends on market prices for the commodities covered. In years of higher commodity prices, prevented planting payments may account for a larger share of total production costs than in years of lower commodity prices. For example, RMA sets prevented planting payments for corn at 55% of average liabilities, which is intended to be sufficient to offset an approximately equal proportion of pre-plant costs for corn. This formula resulted in prevented planting coverage that varied between 88% and 91% of estimated pre-plant costs during the 2017 to 2020 period (see Table 4).

Additionally, providing higher prevented planting payments in years of higher commodity prices could increase the incentive for farmers to opt for prevented planting payments instead of planting a second crop. In setting prevented planting coverage factors, USDA does not consider the relative profit associated with planting a second crop. If prevented planting payments cover a larger share of farmers' costs in certain years, then choosing not to plant a second crop and collecting the prevented planting payment could be more profitable than what could be earned from planting a late second crop. An analysis by USDA's Office of the Inspector General (OIG) found that more than 99% of prevented planting acres from 2008 to 2011—years of relatively high prices for corn and other agricultural commodities—were not planted to a second crop.³¹

Prevented Planting Claims

Since 2010, claims for prevented planting payments have typically impacted fewer than 10 million insured acres each year out of the 260 million to 398 million acres insured annually over the period 2010-2020 (see Figure 1). The years with more than 10 million acres of prevented planting were 2011, 2019, and 2020—all years with widespread, unusually poor spring planting conditions. Expenditures on prevented planting payments ranged from $230 million in 2012 to a high of $4.9 billion in 2019 (see Figure 2 and discussion below in "Prevented Planting in 2019").

In 2020, the most common reasons for prevented planting were excess moisture, precipitation, or rain (78% of claims) and cold wet weather (12% of claims).³² The crops with the most prevented planting claims were corn (32%), soybeans (29%), wheat (17%), and cotton (5%); these four crops also accounted for the majority of acreage planted and insured in 2020. The states with the most prevented planting claims were North Dakota (21%), South Dakota (15%), Missouri (7%), and Arkansas (7%); corn, soybeans, and wheat were some of the principal crops insured in these states in 2020.

Prevented Planting in 2019

The 2019 crop year was exceptional in that it marked the highest number of prevented planting acres on record since USDA began reporting on these data in 2007.³³ U.S. agricultural production got off to a late start in 2019 due to prolonged cool, wet springtime conditions throughout the major growing regions, particularly in states across the northern plains and eastern Corn Belt.³⁴ Other states that were significantly affected included Arkansas, Texas, Mississippi, Louisiana, North Carolina, Tennessee, New York, and Oklahoma. Saturated soils prevented many farmers from planting their intended crops and caused others to delay planting.³⁵ As of November 1, 2019, USDA reported that farmers were unable to plant 19.6 million acres in 2019—including 11.4 million acres of corn and 4.5 million acres of soybeans.

Farmers who were unable to plant a crop during the spring of 2019 due to natural causes were potentially eligible for multiple payments under federal farm programs. First, federal crop insurance provided $4.3 billion in prevented planting indemnities as part of the standard prevented planting coverage included in FCIP policies sold that year.³⁶ Second, Congress passed an FY2019 supplemental appropriations bill (P.L. 116-20) that, among other assistance, authorized $3 billion in disaster assistance payments for prevented planting losses in addition to crop insurance indemnities. Producers who claimed prevented planting losses in 2019 were eligible to receive an additional disaster assistance payment equal to either 10% or 15% of their prevented planting indemnity.³⁷ As of the end of 2020, payments to prevented planting acres from the 2019 supplemental appropriations bill totaled $596 million³⁸—thus bringing total 2019 prevented planting indemnities and payments to $4.9 billion. Third, USDA's 2019 Market Facilitation Program—a program that provided assistance in response to trade disruptions—also included payments of $15 per acre for eligible cover crops planted on prevented planted acres.³⁹ These latter payments were not provided through the FCIP and are not included in the indemnity total.

Support for Cover Crops on Prevented Planting Acres in 2021

Producers who planted cover crops during the 2021 crop year, including on acres that were prevented from planting their intended crop, were eligible for additional crop insurance premium subsidies through the Pandemic Cover Crop Program (PCCP). The PCCP provided a one-time increase of up to $5 per acre in federal crop insurance premium subsidies for acres planted with a qualifying cover crop by June 15, 2021. Insured acres that were prevented from planting and subsequently planted with a cover crop were also eligible to receive the supplemental premium subsidies.⁴¹ PCCP premium subsidy payments could not exceed the amount of premium owed.

USDA created the PCCP to provide support to producers who planted cover crops amid ongoing financial challenges caused by the COVID-19 pandemic.⁴² USDA established the PCCP using the authorities of the Federal Crop Insurance Corporation and funding provided by Division N of the Consolidated Appropriations Act, 2021 (P.L. 116-260).⁴³

The June 15 deadline to report cover crop acres was before the end of the late planting period for many spring crops. The additional premium subsidy provided under the PCCP could have incentivized some farmers to claim prevented planting and plant cover crops on acres that they would have otherwise chosen to late plant to a cash crop. However, USDA announced the creation of the PCCP on June 1, 2021. Because of the short time frame between the program announcement and the June 15 deadline to report cover crop planted acres, farmers had limited opportunity to change their planting decisions and plant cover crops specifically to benefit from the additional premium subsidy provided by the PCCP.

Issues for Congress

Congress authorized FCIP replanting and prevented planting payments to help mitigate the financial losses caused by adverse weather and planting conditions, as well as to reduce the demand for ad hoc disaster assistance funding. However, Congress provided supplemental prevented planting payments in 2019 in response to the abnormally severe, widespread spring flooding that occurred that year. USDA's method of calculating replanting and prevented planting payments relies on projected crop prices, which may not provide the same degree of financial compensation for crop losses each year and across crops. A 2015 external examination of prevented planting coverage commissioned by USDA considered multiple approaches for ensuring consistent relationships between prevented planting payments and pre-planting costs but noted the challenges faced by USDA in establishing prevented planting payments that do not exceed actual costs incurred by farmers while providing loss coverage perceived as reasonable by farmers.⁴⁴ One option Congress could consider would be to establish explicit goals for loss coverage for replanting and prevented planting payments to ensure that these payments provide a consistent amount of cost reimbursement across crops and on a year-to-year basis. Congress could also consider whether the portion of the risk of financial loss that falls to farmers from replanting and prevented planting is at an appropriate level to reduce the potential for moral hazard associated with these payments.⁴⁵

Congress could also consider whether proposals to reduce expenditures on prevented planting payments as a means of lowering the total cost of the FCIP would strike the right public policy balance between its objectives for the program and its cost to taxpayers. For example, the President's budgets for FY2016 and FY2017 included proposals to eliminate buy-up coverage for prevented planting and to assign a 60% yield for the year to any acres that received prevented planting payments. The proposals were expected to save $1.1 billion over 10 years. Other proposals to reduce expenditures on prevented planting payments include further limiting the number of consecutive years for which a farmer can file for prevented planting coverage, requiring a successful harvest more frequently than one in four years to qualify for prevented planting coverage, and providing prevented planting coverage as an unsubsidized, stand-alone policy option.⁴⁶ For their part, farmers rely on FCIP coverage to help manage their farm financial risk and in recent testimony before Congress, stated their opposition to FCIP reforms that would reduce the amount of risk coverage available from FCIP policies.⁴⁷

In addition, Congress could consider how FCIP replanting and prevented planting provisions align with its goals for incentivizing farmers to engage in agricultural conservation practices and participate in such programs. The following are examples:

• USDA's Inspector General found that in some years and locations, the prevented planting payment might exceed per-acre payments available from conservation programs such as the Conservation Reserve Program, which removes environmentally sensitive land from production.⁴⁸ The inspector general concluded that prevented planting payments could be disincentivizing some producers from enrolling cropland in the Conservation Reserve Program in certain areas.
• The Environmental Working Group, a major environmental interest group, has suggested that the one-in-four-year harvest requirement incentivizes farmers to cultivate seasonal wetlands.⁴⁹ It is unclear what overall impact an expansion of the one-in-four requirement would have if applied on a national basis because prior to 2021, the requirement was limited to the Prairie Pothole region of North Dakota and South Dakota.
• Using the FCIP to incentivize the use of cover crops to promote conservation goals has received increased interest in recent years. For example, a bipartisan group of U.S. Senators introduced the Cover Crop Flexibility Act of 2021 (S. 1458 in the 117^th Congress), which would remove the haying and grazing date restriction for cover crops on prevented planted acres and allow USDA to include the costs of planting cover crops in calculating prevented planting coverage factors.⁵⁰ This bill could incentivize the use of cover crops by allowing farmers to collect the full amount of prevented planting indemnities and receive the financial benefits of allowing livestock to graze the land in the same season.
• Other ways that replanting and prevented planting coverage could be used to promote the use of cover crops include providing replanting payments for planting cover crops on acres deemed not practical to replant with a first crop or reducing prevented planting payments on acres not planted with cover crops. USDA's approach of providing additional crop insurance premium subsidies for acres planted to cover crops could provide incentives for farmers to plant cover crops provided that subsidies are announced sufficiently in advance of farmers planting decisions.⁵¹ However, it is an open question whether an additional $5 per acre in crop insurance premium subsidies, as some states have offered, would induce many farmers to adopt cover crops given the financial costs, technical constraints, and managerial burdens involved in adding cover crops into farmers' existing crop rotations.⁵²

USDA's Inspector General has identified two additional issues that may be of interest for Congress in performing oversight of FCIP operations. First, the current rules on assigning yields for late plantings on replanted or prevented planted acres may deter farmers from planting a second crop. In the 2014 farm bill, Congress directed USDA to develop FCIP coverage that would allow producers to exclude certain years with severe county losses from calculations of future insurance guarantees. Congress could consider whether USDA may establish a similar type of yield exclusion coverage for years with delayed plantings.

Second, in 2013, the USDA Inspector General found that RMA was not holding private sector insurers accountable for properly establishing and documenting eligibility to receive prevented planting payments. The Inspector General found that RMA's guidance for determining whether acres were available for planting was impractical to implement and administer, and "too subjective for loss adjusters to apply in a uniform manner." Congress may wish to know what changes RMA has made to clarify the requirements for how private sector insurers should determine and document prevented planting eligibility, and how effective these changes have been in reducing opportunities for waste, fraud, and abuse in the FCIP prevented planting provisions.