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It provides revenue protection based on price and yield expectations by paying for losses below the guarantee at the higher of an early-season price or the harvest price.
Unit Structure –
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Basic: All insurable acreage of the insured crop in the county in which you have a 100% crop share or is owned by one person and operated by another person on a share basis.
Optional: A further division of the Basic Unit into optional units. If each optional unit is located in a separate section, there is a discernible break in the planting pattern, and separate production records are proven.
Enterprise: This must be requested by sales closing date. All of the insurable acres in the county of the same crop are combined into one unit. To qualify there must be at least 50 acres, two or more basic units in two or more sections or two or more optional units in two or more sections. The discount earned is dependent on the type of crop and total number of acres. The discount is as follows for corn 50-299 acres = 22%, 300-549 acres = 28%, and 550+ acres = 34% discount. For soybeans, if you have 50-299 acres = 22%, 300-549 acres = 37% and 550+ acres = 41% discount. Although you are combining your production together, which may reduce a claim on an individual field; we feel the discounts are just too large to pass up if you are a relatively large producer. |
Unit Structure Options
| 80 acres owned |
Section 1 |
160 bu. APH |
| 160 acres cash rented |
Section 2 |
150 bu. APH |
| 80 acres shared 50/50 |
Section 3 |
148 bu. APH |
This could be two basic units (lines 1&2), (line 3), or two optional units (line 1), (line 2), and one basic unit (line 3), or one enterprise unit of 320 acres. It all depends on how the insured elects to establish the unit structure. Each of these examples would result in a different premium. An agent from Strategic Farm Marketing will assist you in coming up with the correct rate.
APH (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 – 50% to 85% in 5% increments.
Spring 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.
Historic Prices
Corn
Year |
Spring |
Fall |
Soybeans
Year |
Spring |
Fall |
| 1994 |
$2.68 |
$2.16 |
1994 |
$6.48 |
$5.41 |
| 1995 |
$2.57 |
$3.28 |
1995 |
$5.85 |
$6.56 |
| 1996 |
$3.08 |
$2.68 |
1996 |
$7.23 |
$7.07 |
| 1997 |
$2.73 |
$2.76 |
1997 |
$6.97 |
$6.82 |
| 1998 |
$2.84 |
$2.19 |
1998 |
$6.64 |
$5.46 |
| 1999 |
$2.40 |
$1.96 |
1999 |
$5.11 |
$4.85 |
| 2000 |
$2.51 |
$2.11 |
2000 |
$5.32 |
$4.72 |
| 2001 |
$2.46 |
$2.05 |
2001 |
$4.67 |
$4.37 |
| 2002 |
$2.32 |
$2.52 |
2002 |
$4.50 |
$5.45 |
| 2003 |
$2.42 |
$2.26 |
2003 |
$5.26 |
$7.32 |
| 2004 |
$2.83 |
$2.05 |
2004 |
$6.72 |
$5.26 |
| 2005 |
$2.32 |
$2.02 |
2005 |
$5.53 |
$5.75 |
Does cost vary from agent to agent?
No! Federal Crop Insurance Corporation (FCIC) sets the rates. However, different approved yields, levels of coverage, or unit structure will affect your cost per acre.
CRC Example 1:
| Crop: |
Corn Level of Coverage: 85% |
| Unit: |
Enterprise Spring Price: $2.45 |
| Acres: |
400 Fall Price: $2.00 |
| APH: |
160 Harvest per acre: 130 bushel |
160 bu. X 85% = 136 bu. X $2.45 = $333 minimum guarantee
130 harvested bu. X $2.00 =$260 revenue to count
$333 - $260 = $73 per acre award x 400 acres = $29,280 loss award
CRC Example 2:
| Crop: |
Corn Level of Coverage: 85% |
| Unit: |
Optional Spring Price: $2.45 |
| Acres: |
400 Fall Price: $2.80 |
| APH: |
160 Harvest per acre: 100 bushel |
160 bu. X 85% = 136 bu. X $2.45 = $333 minimum guarantee per acre
160 bu. X 85% = 136 bu. X $2.80 = $381 new guarantee per acre
If the harvest price increases in the fall so does the revenue guarantee. This is only available for CRC and RA (HPO). It is not available on basic RA or IP revenue policies.
160 bu. X 85% = 136 bu. X $2.80 = $381 new revenue guarantee
100 bu. X $2.80 = $280 revenue to count
$381 - $280 = $101 per acre x 400 acres = $40,320 loss award
These examples are only intended to demonstrate the basic workings of CRC. To determine which crop insurance program best suits your operation; contact an agent from Strategic Farm Marketing before the March 15 sales closing date.
Additional coverages of this policy:
Late Planting coverage – provides additional time to plant crops when conditions prevent timely planting, however your guarantee will be reduced 1% per day for up to 20 days.
Prevented Planting – allows for payments of 60% of your guarantee 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.
What is the difference between a CRC policy, and an RA (HPO) policy?
Now that the RA policy with the Harvest Price Option has been “tweaked” over the last couple of years, there really isn’t much difference between the two. CRC has a limit on how much the fall price can increase or decrease ($1.50 on corn, and $3.00 on soybeans), and RA with HPO doesn’t.
The CRC policy gives a 10% discount for maintaining basic units. The RA HPO policy adds a surcharge for optional units.
The way the enterprise discount is determined is a little different. The discount for CRC is based on total number of acres planted to the same crop, and RA HPO uses the total number of sections of the same crop.
Both use the CBOT to determine the Harvest (fall) price. The only difference is that CRC uses the average closing price for the month of October for December futures, and the RA-HPO uses the average closing price for the month of November for December futures, to set the Fall prices.
Why is CRC better than Income Protection (IP)?
IP, and basic RA do not protect the insured if prices go up in the fall. An increase in fall prices with either of these types of policies actually works against the insured. When prices go up, it takes fewer bushels to reach the revenue guarantee. The guarantees for these two products don’t increase when prices go up. NO UPWARD PRICE PROTECTION.
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