Multi Peril Crop Insurance (MPCI)
Multiple Peril Crop Insurance (MPCI) is the universal name given to crop coverage provided through the Federal Crop Insurance Corporation (FCIC). MPCI provides coverage to the insured for a number of naturally occurring perils.
MPCI policies provide coverage for loss of production. Products that combine yield and price coverage have been introduced in the last few years. These products cover loss in value due to a change in market price during the insurance period, in addition to the perils covered by the standard loss of yield coverage.
Individual plans are based upon the insured’s production and for some coverage, there is protection against a loss of revenue caused by price increase or decrease. The most common individual plans are Revenue Protection (RP) and Actual Production History (APH).
Actual Production History (APH)
The APH plan of insurance provides the producer protection against a loss of production due to nearly all unavoidable, natural occurring events. For most crops, that includes drought, excess moisture, cold and frost, wind, flood and unavoidable damage from insects and disease. This plan of insurance guarantees the producer a yield based on their production history, which is why it is called the APH plan.
The guarantee is calculated by multiplying their average yield by the level of coverage elected for the producer’s share of the crop. An indemnity may be due if the production (harvested and appraised) is less than the guaranteed amount.
The pricing for most crops insured under the APH plan of insurance is established by RMA.
Many of our perennial crops such as apples, peaches and grapes fall under the APH plan, as well as crops that do not have revenue coverage available. Some grain crops such as oats, rye, flax and buckwheat are also covered under the APH plan of insurance.
Yield Protection (YP)
The Yield Protection plan is very similar to the APH plan, but is only available on crops that are eligible for Revenue Protection. The Yield Protection plan of insurance provides protection against a loss of production.
It works the same as the APH plan but instead of using a price election established by RMA, the price is established according to the applicable board of trade/exchange as defined in the policy document called the Commodity Exchange Price Provisions (CEPP). The price that is used is called the Projected Price. The Projected Price is used to calculate the guarantee, premium and loss payments.
The guarantee is established by multiplying the average yield by the coverage level and by the Projected Price, and an indemnity may be due when the value of the production to count is less than the yield protection guarantee plan.
Revenue Protection (RP)
The Revenue Protection Plan provides protection against a loss of revenue caused by price increase or decrease, loss of production, or a combination of both. It is available for the same crops where YP coverage is available.
The RP plan uses the Commodity Exchange Price Provisions (CEPP) to establish the pricing, however it is a different from the YP plan since it uses two different price discovery periods. The projected price is determined in the same manner as YP and is used to calculate the premium, replant and Prevented Planting payments. The harvest price is released near harvest time. This price is used to calculate an indemnity.
The revenue protection guarantee is established by: Average Yield X Coverage Level X Insured’s Share Percentage X Projected Price.
An indemnity may be due when the calculated revenue (insured’s production X harvest price) is less than the revenue protection guarantee for the crop acreage.
Note: When the harvest price is released, if it is greater than the projected price, the revenue guarantee will be recalculated using the harvest price as well.
While the revenue guarantee is increased, the insured is not charged any additional premium for this increase. If the harvest price is less than the projected price, the policy guarantee remains at the projected price.
Revenue Protection with Harvest Price Exclusion (HP-HPE)
The Revenue Protection Plan with Harvest Exclusion Plan (RP-HPE) is similar to the Revenue Protection (RP) plan, however it provides coverage against loss of revenue caused by price decrease, low yields or a combination of both – the price increase is not covered because the guarantee is not adjusted up by the harvest price for this plan.
The projected price is used to determine the revenue guarantee, the premium and any replant or prevented planting payment. The harvest price is only used to value the production to count in a production or revenue loss. It is not used to recalculate the guarantee if there is an increase.
The producer does not receive the benefit of price movement with the RP-HPE plan.
Dollar Plans of Insurance
Dollar Plans of Insurance are available for some commodities. Dollar Plans of Insurance are usually insured in dollar per acre or some other measurement applicable to the crop. The maximum dollar amount per acre or other measurement is established and published by RMA. The insured chooses a percentage of the maximum dollar amount to establish the guarantee. A loss occurs when the dollar to count per acre falls below the dollar amount of insurance.
Actual Revenue History (ARH)
The Actual Revenue History is based upon the insured’s revenue history for the crop insured. The guarantee is calculated based upon the insured’s production and revenue history. A loss occurs when the revenue to count for the current year falls below the insured’s guaranteed revenue.
MPCI Area Plans
Area Plans insure against an area-wide usually county-wide loss of production on a crop. It is based on the concept that when an entire county’s crop yield is low, most producers in that county will also have low yields. National Agricultural Statistical Service (NASS) county data is used to set the expected and actual county yields.
Under an area plan, the insured chooses a percent of the expected county yield or revenue which is published by RMA in the actuarial documents. If the actual county yield or revenue falls below the expected county yield, a loss occurs regardless of the farm-specific production.
There are three Area Plans of Insurance:
Area Yield Protection Plan (AYP)
The AYP plan provides coverage based on the experience of the county, rather than an individual farm. A loss may occur if the final county yield falls below the insured’s expected (or trigger) yield. FCIC issues the final county yield in the calendar year following the insured crop year. Since this plan is based on a county yield and not a producer’s individual yield, it is possible for a producer to have a low yield on their farm and not receive any payment under this plan.
Area Revenue Protection (ARP)
The Area Revenue Protection Plan provides the yield protection of the Area Yield Protection Plan, but also provides against a loss of revenue due to production loss, price decline or a combination of both. ARP is similar to the RP plan as the initial guarantee is calculated using the projected price, but the revenue guarantee will increase if the harvest price is greater than the projected price. If the harvest price is lower than the projected price, the policy guarantee remains the same. A loss occurs when the Final County Revenue falls below the Expected County Revenue (or Trigger) Guarantee.
Area Revenue with Harvest Price Exclusion (ARP-HPE)
The ARP-HPE is similar to the ARP plan except that the guarantee is not adjusted up by the Harvest Price. The guarantee is always based on the projected price, but losses are calculated using the harvest price. This plan is very similar to the RPE-HPE plan except it is based on the experience of the county, rather than the individual producer.
The Pasture, Rangeland, Forage (PRF) Pilot Insurance Program is designed to provide insurance coverage on your pasture, rangeland, or forage acres grown for the intended use of grazing by livestock or haying. This program is designed to give you the ability to buy insurance protection for losses of forage produced for grazing or harvested for hay, which result in increased costs for feed, destocking, depopulating, or other actions. PRF is an area-based plan of insurance that uses a rainfall index to determine losses and trigger indemnities.
PRF is available in the 48 contiguous states with the exception of a few grids that cross international borders.
The Rainfall Index uses National Oceanic and Atmospheric Administration Climate Prediction Center (NOAA CPC) data and each grid is approximately 17 x 17 miles. You must select at least two, 2-month periods where precipitation is important to your operation. These periods are called index intervals. It is important for ranchers and farmers to understand that payments are not based on individual rain gauges on their farm or a single weather station, but the interpolated data for the entire NOAA CPC grid which may not be traced back to a single reporting station.
The Annual Forage pilot program provides coverage to acreage that is planted each year and used as feed and fodder by livestock. This pilot program utilizes the Rainfall Index to correlate to this annually planted acreage. The Annual Forage pilot program is available only in a select number of states and counties. Ask your trusted ProAg agent for more information.
Pasture, rangeland, and forage cover approximately 55 percent of all U.S. land. Forage grows differently in different areas, so it’s important for farmers and ranchers to know which types and techniques work best for their region. Contact your ProAg agent for the complete details on how PRF or Annual Forage fits into your operation. Come experience the ProAg difference today!
Apiculture Pilot Insurance Program
The Apiculture Pilot Insurance Program provides a safety net for beekeeper’s primary income sources – honey, pollen collection, wax and breeding stock. The program offered by ProAg and the Risk Management Agency uses rainfall or vegetation indices to estimate local rainfall or vegetative growth, allowing beekeepers to purchase insurance protection against production risks.
Specifically, the Rainfall Index Apiculture program uses proven technology to assess losses in plant production across diverse plant conditions and environments. The Rainfall Index uses the same basic provisions as the Pasture, Rangeland, Forage pilot program.
Nursery crop insurance is available in all states to all persons operating nurseries that meet certain criteria. Insurance coverage applies, by practice (field-grown or container), to all of your nursery plants in a county that:
Are on the eligible plant list
Are grown in a nursery that receives at least 50 percent of its gross income from the wholesale marketing of nursery plants
Meet all the requirements for insurability
Are grown in an appropriate medium
Crop Hail Decision Making
Hail is one catastrophe that is most likely to totally destroy a part of your crop and leave the rest undamaged. The acres and loss of crop yield caused by hail damage may be less than the deductible of your federal crop insurance policy or it may not lower your yield enough for a revenue insurance policy to protect your profits. Crop hail insurance can fill that gap.
While federal crop policies protect you against losses severe enough to significantly drop the yield per insured unit, crop hail insurance gives you acre-by-acre protection that can be up to the actual cash value of the crop. Crop hail is especially important to those with area risk policies, like ARPI, which leaves individuals exposed to spot losses due to hail.
You can also buy additional crop hail coverage during the growing season (prior to damage) to protect added profit potential from bumper crop yields or high-than-normal crop values. Even if your frequency of hail damage is low, remember that crop hail coverage is rated for your area. It is an inexpensive way to protect against hail damage.
The benefits of crop hail insurance include:
Helps shelter pre-harvest crop sales
Protect crops up to the full cash value
Acre-by-acre coverage provides protection from isolated damage
May be used as loan collateral
Crop Hail Flexibility
Your ProAg agent works with you to design crop hail coverage to fit your risk management strategy and flexible deductibles allow you to tailor the cost of your crop hail policy to meet your budget.
Your crop hail policy may also provide coverage for perils other than hail. In many areas, basic hail coverage includes:
Fire and lightning
Reimbursement of replanting costs
Carry over coverage
Stored grain coverage
ProAg offers a range of crop-hail plans, from Basic Hail to a variety of Companion Plans that are specific to each state. Not all plans are available in all states; however, ProAg has tailored the plans to meet the needs of insureds in each state and region. By working with your trusted ProAg agent, you can determine which available plan will best meet your risk management needs for the current insurance year.
Which Crop Hail Insurance Plan Is The Right Plan For You?
Crop hail insurance is available in a variety of forms and not all plans of insurance are available everywhere or for every crop. Contact your professional ProAg crop insurance agent for assistance in comparing the risk management options available to you and your unique operation.
Whole Farm Revenue Protection
Whole Farm Revenue Protection was released in the 2014 farm bill and it was designed to provide a risk management safety net for all commodities on the farm under one insurance policy and it is available in all counties nationwide. The policy will cover any farm up to $8.5 million dollars in insured revenue, including farms with specialty or organic commodities or those marketing to local, regional, specialty or direct markets. Agriliance is well versed in the Whole Farm Revenue Protection Policy and we would appreciate the opportunity to add value to your operation through this revenue-based insurance product. Below is a few items to be thinking about when it comes the whole farm protection policy.
5 years of schedule f’s
Intended Farm Plan by commodity and county
Established record keeping
2 or more crops