Area Revenue Protection is a county-based revenue insurance product that pays the producer in the event the Final County Revenue falls below the Trigger Revenue level selected by the producer. The Trigger Revenue is calculated using the higher of the Projected Price or Harvest Price. Individual farm revenues and yields are not considered, so a producer’s individual farm may experience reduced yield/revenue but not receive an indemnity. ARP offers “upside” Harvest Price Protection by valuing lost bushels at the Harvest Price.
ARP-HPE is a county-based revenue insurance product that insures in the same way as ARP, but uses only the Projected Price to determine the loss guarantee.
How Does It Work?
- Both plans use county yields based on National Agriculture Statistics Service (NASS) data.
- The Commodity Exchange Price Provisions (CEPP) are used to determine the Projected and Harvest Prices.
- Both plans pay an indemnity if the Final County Revenue is lower than the selected Trigger Revenue.
What Are the Benefits
- Both are a flexible program that allows the producer to choose between several coverage levels and amounts of protection
- ARP allows the producer to increase Expected County Revenue if the Harvest Price is higher than the Projected Price. ARP-HPE guarantees the producer a set amount of county revenue.
- Subsidized by Federal Crop Insurance Corporation (FCIC) and protects against widespread loss of yield in a county
- Fits well with a full coverage crop hail policy, which provides additional coverages
ARP/ARP-HPE allows the producer to select a coverage level, randing from 70% up to 90% in 5% increments, for each crop, type, and practice.*
Units do not apply for county-based plans. Coverage is based on a producer's crop, practice, and share arrangement.
Per-acre premiums will depend on the county of the insured crop, practice, type and the coverage levels and protection factors chosen by the producer. Higher coverage levels and protection factors result in higher premiums.
Expected County Yield
NASS or other FCIC data sources establish an Expected County Yield per acre for each crop. Planted, harvested, and unharvested acres, in addition to yield trends, are used in establishing these yields.
(Expected County Yield) x (coverage Level) x (Greater of Harvest or Projected Price)
ARP-HPE uses the Projected Price only. If the Trigger Revenue is greater thant he Final County Revenue, then an indemnity is paid.
The Payment Factor is the percentage of loss utilized to determine the indemnity payment.
Producers may not purchase ARP/ARP-HPE and other MPCI coverage for the same crop and year. ARP/ARP-HPE does not include Late Planting Coverage, Prevented Planting, Replant Provisions, unit-by-unit, or acre-by-acre coverage.*
The producer is allowed to select a Protection Factor, from 80% to 120% in 1% increments, for each crop, type and practice. This factor allows the producer to customize their coverage.
Final Policy Protection
(Expected County Yield) x (Greater of Harvest or Projected Price) x (Protection Factor)
This is the amount of coverage the producer purchases. The total indemnity will never exceed the Final Policy Protection.
Final County Yield
The Final County Yields are determined by NASS or other FCIC data sources. The Final County Yields are released in march of the year following harvest.
Final County Revenue
(Final County Yield) x (Harvest Price)
Harvest Price is used for both ARP and ARP-HPE is this calculation. If the Trigger Revenue is greater than the Final County Revenue, then an indemnity is paid.
Loss Limit Factor
The Loss Limit Factor represents the percentage of the expected county revenue at which no additional indemnity amount is payable. This can be found in your county actuarial.