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Overview | Individual Protection Plans | County Protection Plans

CRC & RA – Crop Revenue Coverage & Revenue Assurance with Harvest Price Option (HPO) are essentially the same product. There are some minor differences; but, they are going to protect your operation when revenues are lost due to production, prices, or a combination. The products guarantee an amount of revenue as well as bushels. This initial guaranteed revenue is derived by taking one’s actual production history (APH) times the spring commodity price on futures, times the selected coverage level. The spring price for corn is the February average of December futures on the Chicago Board of Trade (CBOT). The spring price for soybeans is the February average of November futures on CBOT. For instance:

165 APH x $2.50 Spring Price = $412.50 x 75% coverage level = $309.38/acre coverage

$309.38 is considered to be your trigger revenue. In the fall if production is low, the prices drop, or a combination of those two events occur, you will receive an indemnity payment if your numbers are lower than the trigger revenue. In short, you are guaranteed your corn acres will gross at least $309.38/acre. That figure may go up if fall prices increase!

With CRC and RA with Harvest Price Option, there are provisions in the product to protect against yield loss and increased prices in the fall. The guarantee will be refigured using the higher of the spring or fall price. It is important to note that the guarantee can only increase during the year. The guarantee will not decrease if the price falls. The fall prices are established using different months for the two products:

Corn:
CRC – October average of December futures
RA w/HPO – November average of December futures

Soybeans:
CRC & RA w/HPO – October average of November futures

So, let’s assume the fall price comes in at $2.00 and you produce 170 bushel/acre. You will not receive an indemnity because $340 (2 x 170) does not fall below your trigger revenue.

However, now let’s assume fall price is $3 and you only produce 100 bushel/acre. This gives you a production value of $300/acre. Your guarantee will increase to $371.25. (165APH x $3 x 75%) You will receive an indemnity payment for $71.25/acre for that unit. ($371.25 – $300)

**You can purchase RA without the Harvest Price Option. You will still have a guarantee from the spring price, but that guarantee will not go up if prices increase in the fall. You will be locked in at the spring price.

IP – Income Protection is another revenue product, which similar to RA without the harvest price option, protects your investment from shortfalls in production, decreases in price, or both. There is no upside price protection like on CRC. This coverage is only available on enterprise units. An enterprise unit would be taking all insurable acres of the same insured crop by county, regardless of share, and putting it into one unit. This makes for a discount in the premium. Both the spring and fall prices are futures-based.

Example:
APH = 165 bu/acre
Spring Price = $2.50
Coverage Level = 75%
Spring Guarantee = (165 x 2.5 x 75%) $309.38

Theoretical Harvest Scenario:
Yield = 150 bu
Fall Price = $2.00

Indemnity = $309.38 (Trigger) - $300 (fall revenue) = $9.38/ acre

MPCI – Multi-Peril Crop Insurance guarantees yield based off of your actual production history. It will protect your crop from most natural disasters, quality loss and will be less expensive than a revenue based plan. If a producer’s biggest concern is production risk, then this may be a great fit. The Market Price is set by the RMA and will not change through the policy period.

Example:
APH = 165 bu/acre
Actual Yield = 100 bu/acre
Market Price = 2.25 (set by RMA)
Guarantee = 165 x coverage level (75%) = 123.75 bu.

Indemnity payment:
123.75 bu. – 100 bu. = 23.75 bu x 2.25 market price = $53.44/acre