The Crop Insurance Menu

A quick look at crop insurance options.

By Des Keller

There are numerous variations of crop insurance a producer can buy. But those variations generally fall into two categories. The first type pays a farmer if their yield loss exceeds a certain, pre-determined level. The second type of insurance pays the operator if their revenue declined below a given threshold for the year. The main policy types are below.

• Actual Production History (APH). These policies insure against yield loss due to disaster based on several years worth average yield on their farm. They can insure 50% to 75% (in some areas 85%) of the average yield. A producer also selects between 55% and 100% of the predicted crop price to insure. The price is established by USDA’s Risk Management Agency.

• Actual Revenue History (ARH). Similar to APH except that this type of policy insures historical revenues on the farm. (It’s the category that includes Crop Revenue Coverage.) Each crop insured this way carries unique provisions, with the idea being that farms are protected against low yields, low prices, low quality or any combination of these events that cause the farm’s revenue to fall below a certain level.

• Adjusted Gross Revenue (AGR). These policies insure revenue of the entire farm rather than individual crops by guaranteeing a percentage of average gross farm revenue. This type of policy uses information from a producer’s Schedule F tax forms and current year expected farm revenue to calculate policy revenue guarantee.

• Dollar Plan. These policies provide protection against declining value due to damage that causes a yield shortfall. The amount of insurance is based on the cost of growing a crop in a specific area. Farmers can collect on this insurance when a year’s crop value is less than the amount of insurance.

• Group Risk Plans. These crop insurance plans use county-wide averages to insure individual producers. If your average yields are usually near the county averages then these policies make sense. You can insure from 70% to 90% of the average county yield. There are also group risk plans that are based on county-wide averages for revenue, rather than yield. These plans pay when the county average, for yield or revenue, is less than the selected trigger yield in the policy.

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