Crop and Livestock Insurance Flashcards
AIP
Approved Insurance Providers
APH
Actual Production History
Actual Production History (APH) policies insure producers against yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease. The producer selects the amount of average yield to insure; from 50-75 percent (in some areas to 85 percent). The producer also selects the percent of the predicted price to insure; between 55 and 100 percent of the crop price established annually by RMA. If the harvested plus any appraised production is less than the yield insured, the producer is paid an indemnity based on the difference. Indemnities are calculated by multiplying this difference by the insured percentage of the price selected when crop insurance was purchased and by the insured share.
CAT
Catastrophic Risk Protection
CAT is short for “catastrophic” and refers to crop insurance coverage at the lowest, or catastrophic level. CAT coverage is set at the 50/55 level, which means that your yield must fall below 50% of your average yield before a loss is paid, These losses are paid at a rate of 55% of the highest price election. You must pay an administrative fee to become eligible to receive CAT coverage, but the government pays the entire premium.
ECO
Enhanced Coverage Option
EU
Enterprise Unit for crop insurance
An EU is an insurance unit structure that consists of all insurable acreage of the same insured crop in the county in which you have a share on the date coverage begins for the crop year. EUs are available for crops and counties where the actuarial documents specify availability.
FCIC
Federal Crop Insurance Corporation
HELC
Highly Erodible Land Conservation
LGM
Livestock Gross Margin Insurance Market Value of Livestock Minus Feed Costs
LRP
Livestock Risk Protection Program Unexpected Market Decline. Locks floor
MPCI
Multi-Peril Crop Insurance
MPCI was established in the 1930’s to cover yield losses from most natural causes. MPCI operated on a somewhat limited basis up through the early 1980’s when a private/public partnership was established. At that point, insurance availability was greatly expanded and premium subsidies increased in hopes of replacing the disaster payment program. Major reforms legislated in 1944 – introduction of a low-cost CAT coverage level, increased premium subsidies, and a requirement that participants in other farm program obtain crop insurance – increased participation to over 200 million acres, covering the majority of acres of major field crops planted in the United States.
PP
Prevented Planting crop insurance
RMA
USDA Risk Management Agency RMA helps to ensure that farmers have the financial tools necessary to manage their agricultural risks. RMA provides coverage through the Federal Crop Insurance Corporation, which promotes national welfare by improving the economic stability of agriculture.
RP
Revenue Protection Plan
RP-HPE
Revenue Protections with Harvest Price Exclusion
T-Yield
Transitional Yield 10 Year County Average
WC
Wetland Conservation
WFRP
Whole Farm Revenue Protection
Whole-Farm Revenue Protection (WFRP) provides a risk management safety net for all commodities on the farm under one insurance policy and is available in all counties nationwide. This insurance plan is tailored for any farm with up to $8.5 million in insured revenue, including farms with specialty or organic commodities (both crops and livestock), or those marketing to local, regional, farm-identity preserved, specialty, or direct markets.
YP
Yield Protection Plan
Crop Yield Insurance – Also known as Yield Protection (YP), crop yield insurance pays indemnities to producers when yields fall below the producer’s insured average yield due to most natural causes. Crop yield insurance is subsidized by the USDA’s Risk Management Agency (RMA).
ARPI
Area Risk Protection Insurance (ARPI) is an insurance plan that provides coverage based on the experience of an entire area, generally a county. ARPI replaces the Group Risk Plan (GRP) and the Group Risk Income Protection Plan (GRIP).
ARPI provides protection against widespread loss of revenue or widespread loss of yield in a county. Individual farm revenues and yields are not considered under ARPI and it is possible that your individual farm may experience reduced revenue or reduced yield and not receive an indemnity under ARPI.
GRP
Group Risk Plan (GRP) is designed as a risk management tool to insure against widespread loss of production of the insured crop in a county. GRP policies use a county yield index as the basis for determining a loss. When the estimated county yield for the insured crop, as determined by National Agricultural Statistics Service (NASS), falls below the trigger yield level chosen by the producer, an indemnity is paid. Payments are not based on an individual producer’s crop yields. Coverage levels are available for up to 90 percent of the expected county yield. GRP involves less paperwork and costs less than plans of insurance against individual loss, as described above. Under GRP, insured acreage for an individual producer’s crop may have low yields and not receive a payment if the county does not suffer a similar level of yield loss. This insurance is primarily intended for producers whose crop yields typically follow the average county yield.
DRP
Dairy Revenue Protection
Dairy Revenue provides protection against a decline in revenue (yield and/or price) on the milk produced from dairy cows on a quarterly basis.
Acreage Report
The acreage report shows the crops you have planted, acreage prevented from planting, what share you have in the crop, where the crop is located, how many acres you planted, the dates you planted and what insurance unit they are located on, the practice. The acreage report is the basis for determining the amount of insurance provided and the premium charged.
CEPP
Commodity Exchange price Provision (CEPP) – A part of the Common Crop Insurance Policy used for all crops for which revenue protection is available. It is a document which contains the information necessary to derive protected price and the harvest price for the insured crop.
Indemnity
Indemnity – This is the money you receive for qualifying losses paid under an insurance policy. The indemnity compensates for losses that exceed the deductible, up to the level of the insurance guarantee.
