Revenue Protection is the oldest type of coverage to be offered to farmers. This coverage protects farmers against financial losses due to substandard production or lower commodity prices. Revenue Protection coverage is based on four factors:

 

Actual Production History - The yield information for previous years, including planted acreage and harvested production, used to determine your yield for insurance purposes.

 

Levels of Coverage - Available in 5% increments from 50% to 85% coverage.

 

Base Price - 100% of the average closing price of the December Futures Contract of the Chicago Board of Trade (CBOT) during the month of February for corn. For soybeans, it is 100% of the average closing price for November Futures Contract on the CBOT during the month of February.

 

Harvest Price - 100% of the average closing price during October for the December CBOT Corn Contract. For Soybeans, 100% of the average closing price during October for the November CBOT.

 

The rate for this coverage is set by the Federal Crop Insurance Corporation (FCIC), however different approved yields or levels of coverage selected will affect the cost per acre. The following examples are only intended to demonstrate the basic workings of RP and are not to be used as a guide for purchasing coverage.

 

RP Example 1:

 

Crop: Corn

Unit: Optional

Acres: 100

APH: 185 bu.

Level of Coverage: 85%

Base Price: $4.50

Fall Price: $3.25

Harvest per acre: 190 bu.

 

185 bu. x 85% = 157 bu. x $4.50 = $706.50 minimum guarantee per acre

 

190 harvested bu. x $3.25 = $617.50 Revenue to Count

 

$706.50 - $617.50 = $89 per acre award x 100 acres = $8,900 Loss Award

 

 

RP Example 2:

 

Crop: Corn

Unit: Optional

Acres: 100

APH: 185 bu.

Level of Coverage: 85%

Base Price: $4.50

Fall Price: $5.25

Harvest per acre: 140 bu.

 

185 bu. x 85% = 157 bu. x $4.50 = $706.50 minimum guarantee per acre

 

185 bu. x 85% = 157 bu. x $5.25 = $824.25 new guarantee per acre

 

If the harvest price increases in the fall so does the revenue guarantee. This is only available for RP. It is not available on RP-HPE (Revenue Protection with Harvest Price Exclusion).

 

185 bu. x 85% = 157 bu. x $5.25 = $824.25 new revenue guarantee

 

140 bu. x $5.25 = $735 Revenue to Count

 

$824.25 - $735 = $89.25 per acre x 100 acres = $8,925 loss award

 

Additional coverage of this policy:

 

Late Planting Coverage

Provides additional time to plant crops when conditions prevent timely planting.

 

Prevented Planting

Allows for payments, when due to insurable causes of loss, you are prevented from planting your crops.

 

Replant Provisions

When acreage qualifies, an additional payment for the extra expenses when replanting is necessary.

 

Quality Coverage

Provides coverage when crop's test weight, or grade drops below a certain level.