Multi-Peril Crop Insurance
Multiple Peril Crop Insurance provides peace of mind by helping the farmer avoid financial interruptions in a bad year.
Multiple Peril Crop Insurance (MPCI) was developed by the Federal Crop Insurance Corporation and provides coverage against unavoidable crop loss for most crops. MPCI has evolved into numerous products which offer farmers protection against a reduction in yield due to unavoidable crop losses caused by acts of nature or disease as well as revenue protection caused by market fluctuations. Farmers have product choices that range from individual production and/or revenue plans to protection based on county yields and prices.
Yield Protection (YP) provides protection against a loss in yield due to unavoidable, naturally occurring events. For most crops, that includes adverse weather, fire, insects, plant disease, wildlife, earthquake, volcanic eruption, and failure of the irrigation water supply due to a naturally occurring event. YP guarantees a production yield based on the individual producer’s APH. An occurring event. A price for YP is established according to the crops applicable commodity board of trade/ exchange defined in the Commodity Exchange Price Provisions (CEPP). The projected price is used to determine the yield and to value the production to count less than the yield protection guarantee.
Revenue Protection (RP) provides protection against a loss of revenue caused by price increase or decrease, low yields, or a combination of both. This coverage guarantees an amount based on the individual producer’s APH and the greater of the projected price or harvest price. Both the projected price and harvest price are established according to the crop’s applicable commodity board of trade/ exchange as defined in the Commodity Exchange Price Provisions (CEPP).
Revenue Protection with Harvested Price Exclusion (RP-HPE) is like RP, however RP-HPE coverage provides protection against loss of revenue caused by price decrease, low yields, or a combination of both. Unlike RP, he revenue protection guarantee for RP-HPE is based on the projected price only and it does not increase based on the harvest price.
Area Yield Protection (AYP) coverage is based on the experience of the county, rather than individual farms. Maintaining the insured’s actual production history is mandatory and may be used by RMA as a data source to establish and maintain the area programs. The Federal Crop Insurance Corporation (FCIC) will issue the finals county yield in the calendar year following the crop year insured. Since this plan is based on county yields and not individual yields, the insured may have a low yield on the farm and not receive payment under AYP.
Area Revenue Protection with Harvest Price Exclusion (ARP- HPE) like AYP, ARP- HPE is based on the experience of the county rather than individual farms. Maintaining the insured’s actual production history is mandatory and may be used by RMA as a data source to establish and maintain the area programs. An ARP-HPE policy provides protection against loss of revenue due to a county level production loss, price decline, or a combination of both. This plan only uses the projected price and does not provide upside harvest price protection. An indemnity is due under ARP- HPE when the final county revenues published by FCIC are less than the trigger revenue.
Area Revenue Protection (ARP) is based on the experience of the county rather than individual farms. Coverage is provided against loss of revenue due to a county level production loss, a price decline, or a combination of both. Upside harvest price protection is included, which increases the policy protection at the end of the insurance period if the harvest price is greater than the projected price and if there is a production loss. ARP will pay a loss when the final county revenue is less then the trigger revenue, which is calculated using the higher of the project price or harvest price.
Actual Production History (APH) provides protection against a loss in yield due to nearly all natural disasters. Like YP, the APH plan guarantees a yield based on the individual producer’s actual production history. Unlike YP, the available price elections are established by the Risk Management Agency. An indemnity is due when the value of the production to count is less than the liability.
Why Purchase Multiple Peril Crop Insurance?
- Provides protection against production and revenue losses
- Acts as an excellent credit enhancement for agricultural loans
- Provides peace of mind