ARPI- AREA REVENUE PROTECTION INSURANCE
ARPI requires less paperwork. Production reporta are due February 15th.
Then only an acreage report by July 15th.
Coverage levels are 70% - 90% of county expected yields.
No notice of
loss required payments are based on entire county.
ARPI has NO prevented
planting or replant provisions. Prevented Planting at $150.00/acre an be added to a hail policy. It is possible that a producer
would suffer a yield on their acreage and still not have any indemnity payment due.
Lenders may not accept ARP as adequate
protection for loan collateral.
The producer must sign a Disclaimer.
The federal government can
adjust the final yield.
Final county yields are not published until the following March and indemnities are paid in April
of the following year.
Not available in all counties on all crops.
Area Revenue Protection
The Area Revenue Protection
(ARP) policy functions similar to a County Based RA policy. The difference is that ARPI focuses on COUNTY
revenue. There is limited availability in some states and counties. ARPI is designed to insure against
widespread loss of revenue from the insured crop in a county. It is intended for those producers whose yields highly
correlate to those of other producers in the county.
has elected to insure his 100 acres of corn with 90% ARPI. The county expected yield is 122 bu/ac (from NASS) and the
maximum protection per acre is $439.20 (From NASS).
100 acres x $439.20/ac = $43,920 total
122 bu/ac yield x $2.93/bu expected county price = $357.46 expected county revenue
$357.46 x 150% max
protection = $536.19 max. protection per acre
$536.19 x 100 acres = $53,619 max. coverage
$357.46 x 90% = 321.71
NASS announces county yield at 130 bu/ac
The final harvest price is set at $2.00/bu
Factor = Trigger Revenue - Actual Revenue - Trigger Revenue
$321.71 - $260.00 - $321.71 = .192 Factor
Total Coverage x .192 Factor = $10,295 Loss Payment
100 acres x $439.20/ac = $44,920
122 bu/ac yield x $2.93 expected harvest price = $357.46 expected county revenue
$357.46 x 150%
max. protection = $536.19 max. protection per acre
$536.19 x 100 acres = $53,619.00 max. coverage
$357.46 x 90%
= $321.71 trigger revenue
NASS announces a county yield of 95 bu/ac
The final harvest price is set at $3.40/bu
95 bu/ac x $3.40 = $323.00/ac actual revenue
Trigger revenue is $321.71. Under a standard ARPI policy
there would be no loss. Due to HRO endorsement, the policy will increase the Trigger Revenue.
$3.40 x 122
bu X 90% = $373.32 Trigger Revenue
$374.00 - $323.00 = $51 - $374.00 = .136 Factor
Since the Harvest Price was higher
than the expected Harvest Price, increase in coverage also.
$3.40 - 2.93 = 1.16
$53,619 x 1.16 = $62,220 x .136
factor = $8,462 Loss Payment