Now there is a way to protect your operation from both yield and commodity price risks with a Revenue
type policy. There are many risks with farming today and yield loss and commodity are often the farmer's greatest risk.
The Revenue Policy has expanded the Multi Peril Crop Insurance Policy to include the commodity price risk. Now you can
protect yourself from both yield and commodity prices. RP is also a great tool to utilize for marketing your grain!!
News Flash: Ask us about Enterprise Units in
2012. Huge discounts are now available for Revenue Protection and Yield
Coverage (RP)- 2012 Projected Prices: Corn- $5.60E+, Soybeans- $12.45E+
The Revenue Protection
Policy is the most widely accepted policy. This policy guarantees an amount of revenue based on your actual production
history (APH) x a commodity price based on the Chicago Board of Trade. The RP policy protects you against a loss
or revenue cause by low prices, low yields, or a combination of both. You could have an indemnity even when there
is no yield loss because it protects you against a low market price at harvest time. The coverage and exclusions of RP
are similar to those of the standard YP policy. The final guarantee is based upon the greater of the spring projected
price or the fall harvest price. While the guarantee may increase, your premium will not.
RP is available from 50%- 85% levels of coverage in 5% increments
The revenue guarantee is based upon the higher of the spring projected price (February trade of November soybeans
futures and December corn futures) or the fall harvest price if elected (October trade of November soybeans futures and October
trade of December corn futures). There is a 200% price movement limit up with no down limit from
the spring projected price.
Example using RP coverage: E = Estimated
An insured has a 150 bushel APH average and elects the 80% level of coverage. 150 X 80% = 120 bushel per acre guarantee.
120 bushel X $5.60E spring projected price = $672.00 per acre of minimum revenue protection.
this example the fall harvest price falls to $4.00E per bushel. 120 bushel minimum guarantee
X $4.00 = $280.00 per acre crop value in the fall. With a minimum guarantee of $672.00 minus the $280.00 crop value at
harvest, a payment of $392.00 per acre indemnity is earned. This also means a trigger yield below 168 bushel per acre is a
loss. $672.00 / $4.00 = 168 trigger yield.
In this example the fall harvest price increases
to $8.00E per bushel. Whenever the fall harvest price is higher than the spring projected price, you MUST
have a yield below your guarantee (120 in this example). Each bushel produced below 120 bushel per acre will now receive a
payment of $8.00 per bushel. Your coverage is raised automatically to $960.00 per acre with NO PREMIUM INCREASE.
BE AWARE: You can elect that the Fall Harvest Price be
excluded from your coverage for a reduced premium. If this is elected in the example above, and corn prices increase
to $8.00, you would need to have a yield below 84 bushel per acre. ( 84 X $8.00 = $672.00). The spring dollar per acre guarantee
will not increase upward when the RP-HPE is elected.