Crop Revenue Coverage for Farmers

Crop Revenue Coverage for Farmers is a vital safety net for those who rely on their crops for income. This program provides financial protection against crop revenue losses due to natural disasters, such as floods or droughts.

Farmers can receive up to 90% of their crop revenue if they experience a significant loss. This percentage can vary depending on the level of loss, with higher losses resulting in higher coverage.

Crop Revenue Coverage is designed to help farmers recover from unexpected events that can devastate their crops. By providing financial support, this program can help farmers stay afloat during difficult times.

The program is administered by the USDA's Risk Management Agency, which works to ensure that farmers receive the support they need to recover from crop losses.

Crop revenue coverage is a type of insurance that protects farmers against revenue losses due to low yields or low market prices. This can be a lifesaver for farmers who rely on a good harvest to make a living.

The production portion of the revenue guarantee for crop revenue coverage is based on your Actual Production History (APH). This is an historic average of your actual yields.

There are two main types of crop insurance: Yield Protection (YP) and Revenue Protection (RP). Yield Protection provides financial protection if your crops produce yields that are lower than expected.

Yield Protection (YP) is a multi-peril policy that guards against yield losses due to natural disasters. This type of insurance pays out if the actual yield is lower than the expected yield.

The market value of your crops is also a key factor in crop revenue coverage. If the market value of your crops is lower than expected, you may be eligible for a payout under a Revenue Protection (RP) insurance plan.

The revenue guarantee is computed by multiplying the higher of either the projected price or the harvest market price by the APH yield for your farm, by your chosen coverage level (50% to 85%).

Your actual revenue for insurance purposes is computed by multiplying your actual yield by the harvest price.

The harvest price is determined by averaging the new crop futures prices during October for both corn and soybeans.

To calculate the revenue guarantee, you need to know the average of the December CME Group futures contract price during February for corn, or the average of the November CME Group futures contract price during February for soybeans.

The revenue guarantee is equal to the higher of the projected price or the harvest price multiplied by the APH yield and chosen coverage level.

Here's a summary of the revenue guarantee calculation:

You'll receive an indemnity payment if your actual revenue falls below your revenue guarantee. The payment is equal to the difference between the revenue guarantee and the actual revenue.

Crop insurance premiums are subsidized through the Federal Crop Insurance Corporation.

The premium for a Revenue Protection (RP) policy is calculated using the projected price, and if the harvest price is higher, the amount of insurance coverage increases, but the premium doesn't change.

Premiums for RP-High Price Election (RP-HPE) policies are generally slightly lower than for RP policies.

Estimated premiums can be obtained from a crop insurance agent, the Farmdoc website, or the Risk Management Agency website.

Premiums for multiple-peril crop insurance are subsidized through the Federal Crop Insurance Corporation.

The premium for an RP policy is calculated using the projected price.

If the harvest price is higher, the amount of insurance coverage increases but the premium does not change.

The possibility of increased coverage has already been built into the premium structure.

Premiums for RP-HPE will generally be slightly lower than for RP policies.

Estimated premiums can be obtained from a crop insurance agent, the Farmdoc website, or the Risk Management Agency website.

The Enhanced Option is a game-changer for farmers looking to boost their coverage. An area-based policy option that offers additional coverage levels up to 90 or 95% on underlying insurance policies.

This means you can have more peace of mind knowing you're protected in case of crop failure or other disasters. The Enhanced Coverage Option (ECO) is a smart choice for those who want extra security.

With ECO, you can choose from two different coverage levels: 90% or 95%. This flexibility allows you to tailor your coverage to your specific needs and risk tolerance.

This option is a great way to safeguard your farm's income and stability. By adding extra coverage, you can better withstand unexpected setbacks and stay on track with your business goals.

Crop revenue coverage is a vital risk management tool for farmers and ranchers. It helps protect against losses due to low prices, low yields, or both.

There are several types of crop insurance, including Multiple Peril Crop Insurance (MPCI) and Crop-Hail Insurance. MPCI provides protection against a wide range of perils, including drought, excessive moisture, and pests.

Agriculture Risk Coverage (ARC) is an income support program that provides payments when actual crop revenue declines below a specific guaranteed level. This can be a lifesaver for farmers who experience crop failures or significant revenue declines.

The Revenue Protection (RP) plan provides revenue insurance that allows the guarantee to increase during years when prices at harvest are higher than those used to set guarantees prior to planting. This can help farmers maximize their revenue and stay afloat during tough times.

Here are the main types of crop insurance plans available for multi-peril coverage:

Business insurance can help protect your agricultural operation from unexpected losses. You can purchase multiple peril crop insurance (MPCI) or crop-hail insurance to safeguard against natural disasters or declining commodity prices.

Crop insurance is a specialized type of business insurance that's designed to meet the unique needs of farmers and ranchers. Our agents only sell crop insurance, which means they're experts in finding the best policy for your operation.

A tailored risk management plan can be developed for your specific situation. This is because our agents don't work on commission and can focus on providing you with individualized attention.

Using your operation's production history, our agents can make informed risk management decisions backed by data. They'll help you leverage opportunities and reduce risk with a range of federally affiliated and private crop insurance policy options.

Here are some types of crop insurance to consider:

The harvest price used to set the guarantee cannot be more than 100% above the projected price established in February, that is, double.

This means that farmers have a cap on how much the harvest price can increase compared to the projected price. For example, if the projected price is $100, the harvest price can be at most $200.

This rule helps to prevent farmers from getting caught off guard by unexpected price fluctuations. It's a way to ensure that farmers have a clear understanding of the potential risks and rewards of their crop insurance policies.

To illustrate this, let's say a farmer has a projected price of $100, but the harvest price ends up being $200. In this case, the guarantee would double, but it wouldn't be more than double the projected price.

Prevented Planting and Replanting Losses can be a significant concern for farmers. Prevented planting and replanting losses for both RP and RP-HPE will be adjusted in the same manner as APH losses.

If you're unable to plant your crops on time, you'll need to understand how replanted or prevented planting payments work. Any replanted or prevented planting payments will be based on the projected price (February), even if the harvest price is higher.

This means you'll need to factor in the February price when calculating your losses. This can be a bit tricky, but it's essential to get it right to avoid any surprises down the line.

Agriculture risk is a significant concern for farmers and agricultural producers. Crop insurance is a vital tool for managing this risk, and there are several types of insurance products available.

Multiple Peril Crop Insurance (MPCI) and Crop-Hail Insurance are two major types of crop insurance. MPCI protects against natural disasters, while Crop-Hail Insurance supplements a multi-peril insurance policy guarantee covering specific losses from crop/hail damage.

The Risk Management Agency (RMA) offers several insurance products, including Revenue Protection (RP) and Area Revenue Protection (ARP). RP provides revenue insurance with the possibility of a guarantee increase, while ARP provides revenue protection with the possibility of a guarantee increase using county yields.

Before 1997, the only type of insurance protection available was yield insurance. However, in 1997, revenue products were introduced, and since then, there has been a significant shift away from yield insurance to revenue insurances with guarantee increases.

Here's a breakdown of the types of crop insurance products available:

The use of these insurance products has varied over the years, with RP and ARP becoming increasingly popular. In 2020, RP had a 92% share of insured acres for soybeans, while RP-HPE had 2%.

Actual Production History (APH) is a multi-peril policy that helps ensure future yields stay in line with past yields.

This means that if your farm has a history of producing a certain amount of crops, APH will help you manage the risks associated with future production. APH takes into account the average yield of your crops over a certain period of time.

To give you a better idea, here's a quick rundown of how APH works:

By using APH, you can make informed decisions about your farm's production and reduce the risks associated with crop failure or reduced yields.

Crop Revenue Coverage guarantees are calculated based on approved Actual Production History (APH) and projected prices.

Approved APH is a crucial factor in determining the guarantee amount.

For corn, the guarantee is calculated by multiplying the APH by the projected price and share.

The same calculation applies to soybeans, using 3 bushels per acre as the APH.

The guarantee amount is directly tied to the projected price and share of the crop.

When you're dealing with private products, it's essential to understand the concept of crop revenue coverage. This type of coverage is designed to protect farmers from revenue losses due to crop failure or damage.

Farmers can purchase private products to supplement their crop insurance policies, which can provide additional protection against revenue losses. The key is to find the right combination of coverage to meet your specific needs.

Private products can offer a higher level of protection than standard crop insurance policies. For example, they may provide coverage for specific crops or regions.

Private products can be tailored to meet the unique needs of individual farmers. This means you can choose the level of coverage that works best for your operation.

Private products can be purchased on a standalone basis or as part of a crop insurance policy.

Crop insurance use has steadily increased since 2000, and has maintained stable and high levels from 2013 to 2020, averaging 89% for corn, 85% for soybeans, and 67% for wheat.

In the past, crop insurance participation was influenced by changes in premium subsidy rates and participation requirements. For example, crop insurance purchase requirements were repealed in 1996, leading to a significant drop in participation.

From 1989 to 1993, acres insured in Illinois were at relatively low levels, with only slightly over 30% of acres for corn, slightly over 20% for soybeans, and slightly over 8% for wheat insured.

The 1995 crop insurance purchase requirement, which was part of the Commodity title program, led to a surge in crop insurance participation, with highs in 1995 for all three crops.

To purchase crop insurance, you'll need to gather your information, including production history on the acres you plan to insure and input cost estimates.

Gathering this information upfront will help ensure a smooth process. Farm Credit Mid-America will be there to support you along the way.

Here are the general steps to expect when buying a crop insurance policy:

Crop insurance plans can be complex, but understanding the options can help you make informed decisions.

The RMA offers several products that can help you increase your coverage, including the COMBO product and the Supplemental Coverage Option (SCO).

The COMBO product provides three plans: Revenue Protection (RP), RP with the harvest price exclusion (RP-HPE), and Yield Protection (YP). These plans can be combined with the Margin Protection (MP) product, which provides margin protection with or without the harvest price exclusion.

You can also consider the Supplemental Coverage Option (SCO), which provides county coverage from an 86% coverage level down to your COMBO plan's individual coverage. This can give you an extra layer of protection against crop losses.

Here are the three COMBO plans and their corresponding SCO coverage levels:

Remember to review your policy carefully and consider your specific needs and circumstances before making any decisions.

When you're planning to purchase crop insurance, it's natural to have questions about what to expect. The process is designed to be straightforward.

First, you'll need to gather some information. This includes your production history on the acres you're planning to insure, as well as your input cost estimates.

You'll also have the opportunity to work with a representative who will walk you through a proprietary policy decision-making tool. This will help develop a risk management plan tailored to your operation.

As part of the process, you'll be reminded of upcoming deadlines and supported if you need to file a claim.

Here are the steps involved in purchasing crop insurance:

Keep in mind that loans and leases are subject to credit approval, and additional terms and conditions may apply.