At Suhr & Lichty Insurance Agency we realize that farming is the backbone of our country, and no matter how large or small your farming operation is, we have the expertise to help properly insure your business.
Being independent, we have partnered with the best crop insurance company in Nebraska. This is important because crop insurance costs are the same no matter what crop insurance provider you are with.
This means we have the flexibility to truly find you the best possible product at the best price.
So what is Multiple Peril Crop Insurance (MPCI)?
Multiple Peril Crop Insurance (MPCI) is the general name given to crop coverage provided through the Federal Crop Insurance Corporation (FCIC). As the name suggests, these policies provide coverage to the ag producer 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.
What does Crop Insurance cover?
drought, excessive moisture, hail, wind, frost, insects, and disease, and as stated above, revenue losses
How does Crop Insurance work?
Crop insurance covers damage to the crop caused by hail, droughts, flooding, or other natural disaster. Coverage falls into two categories: Individual Plans & Area Plans.
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) & Yield Protection (YP).
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.
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.
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.
How much does Crop Insurance cost?
Premium rates and insurance terms and conditions are established by the Federal Crop Insurance Corporation (FCIC) for the products it develops. There are also products developed by insurance providers and established with FCIC approval. In both cases, the price of insurance is constant throughout the industry. In other words, the cost is the same regardless of the Crop Insurance company or agency.
How to get started on your crop insurance quote
To get started on your quote, call our office or click over to our quotes page. Either way we’ll make the process simple!