Economic Decisions

Whether to harvest a crop or plow up a failed crop should only be decided by comparing potential returns with costs yet to be incurred. Costs already incurred and which are non-refundable should not be considered. Harvesting a grain crop, then, depends on whether the revenue from grain sales exceeds the cost of harvesting, hauling, and drying.

Harvesting a grain crop for grain or for forage depends on the relative returns above harvest costs for each of these two alternatives, examining only the potential returns and their related costs not yet incurred.

If you are covered by Multiple Peril Crop Insurance (MPCI) or Catastrophic (CAT) coverage, and you plan to do anything besides harvest the grain crop for grain, notify your insurer for clearance and for yield loss determination prior to plowing it out or harvesting for forage. For MPCI, notify your insurer and CAT notify FSA. Failing to do so may result in a loss of insurance benefits.

If you are participating in the government farm program, a prudent rule to follow is to check with your local FSA office for information and/or approval for any actions you take regarding haying, grazing, plowout, or harvesting for forage as these actions may impact program eligibility. In the 1996 Farm Bill, producers were given virtual unlimited flexibility to plant any commodity other than fruits and vegetables on program acreage and still maintain program eligibility. However, if a producer wants to plow under a failed crop and plant some alternative, he should check with FSA to make sure he is not foregoing benefits from the noninsured crop disaster assistance program (NAP) before plowing crops under. For example, wheat pasture would be eligible for NAP.

For those who are required to repay unearned advance deficiency payments the amount owed will be deducted from transition payments due them. For wheat, the repayments will be deducted from the 1996 transition payment and as of now, for feed grains, the repayments will be deducted from the 1997 transition payment. Note that unlike deficiency payments, producers will receive transition payments regardless of whether they suffered a crop failure.