Revenue Guarantees
Crop Revenue Coverage (CRC)
- Uses APH x Coverage Level x Share% x Base Price (derived from Chicago Board of Trade futures)
- Base Price is set in the Spring of the year and determines minimum guarantees
- Harvest Price is set in the Fall of the year and (in conjunction with yield) determines if a claim is earned and to what amount
- If Harvest price is HIGHER than the Base price, then guarantee INCREASES to the higher price
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Corn Spring Price uses a February average of December CBOT daily settlements
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Soybeans Spring Price uses a February average of November CBOT daily settlements
- Indemnity is paid if COMBINATION of CBOT Harvest price x harvested yield is less than revenue guarantee set in the spring
- Works well with forward contracts, and/or futures and options marketing strategies
- Price cap of 200% of Base Price applies | No cup limit
- Enterprise Unit is available to save premium, although it reduces the likelihood of a payable loss
Spring Example (Corn)
- APH (160) x Level (80%) = Guar./Acre (128) x Price ($4.25) = Covg./Acre ($544)
- Covg./Acre ($544) x Acres in Unit (100) = Unit Guarantee ($54,400)
Harvest Example (Harvest Price Lower)
- Actual production = 120 Bu./acre (12,000 Bu. Farm Total)
- Acres = 100
- Harvest Price = $3.50/Bu.
- Revenue Loss = $16,000 [$54,400 – (12,000 x $3.50/Bu. Fall Price)]
- Indemnity = $16,000 [$54,400 – $38,400]
Harvest Example (Harvest Price Higher)
- Actual production = 110 Bu./acre (11,000 Bu. Farm Total)
- Acres = 100
- Harvest Price = $6.25/Bu.
- Revenue Loss = $11,250 [$80,000 – (11,000 x $6.25/Bu. Fall Price)]
- Indemnity = $11,250 [$80,000 – $68,750]
Revenue Assurance with Harvest Price Option (RA-HPO)
RA-HPO works exactly like CRC, except:
- The Harvest Price for Corn is figured during November instead of October
- You may remove the Harvest Price Option (HPO) to save premium, although this exposes you to upward price risk
- Enterprise and/or Whole-Farm Unit structure is available to save premium, although it reduces the likelihood of a payable loss
Income Protection (IP)
- IP offers coverage similar to RA with Enterprise Unit, but without HPO
- Available only in select crops, states, and counties