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MPCI provides yield based coverage at a specific price set by FCIC each year.
Multiple Peril Crop Insurance (MPCI) was developed by the Federal Crop Insurance Corporation (FCIC) and provides coverage against an unavoidable crop loss caused by acts of nature or disease.
To better understand Multiple Peril Crop Insurance it is necessary to understand some definitions.
APH (Actual Production History) – The amount of production per acre computed and used to determine guarantees within the MPCI program. An APH may contain up to 10 consecutive APH crop years of actual and/or assigned yields.
Expected Market Price - The price per unit of production that is anticipated during the period the insured crop is normally marketed. The price is set by FCIC early in the crop insurance year and remains constant throughout the insurance year.
Levels of Coverage – 50% to 75% in 5% increments. Most Midwestern states also have 80% and 85% levels available.
Unit Structure –
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Basic: All insurable acreage of the insured crop in the county is which you have a 100% crop share or is owned by one person and operated by another person on a share basis.
Optional: A Basic Unit may be sub-divided into Optional units if each optional unit is located in a separate section or FSA Farm Serial Number (whichever applies), and there is a discernible break in the planting pattern, and separate production records are proven. |
Amount of Protection – The APH multiplied by the Expected Market Price, multiplied by the Level of Coverage. This establishes the liability per acre.
Loss Trigger –Loss amounts are determined when your harvested bushels or pounds (whichever applies) are less than your APH multiplied by the level of coverage (per acre guarantee).
Does cost vary from agent to agent?
No! Federal Crop Insurance Corporation (FCIC) sets the rates. However, different approved yields or levels of coverage selected will affect your cost per acre.
Examples based on a per acre basis:
APH based upon farmer’s submitted and approved records = 160 APH
FCIC Expected Market Price on corn = $2.20 per bushel
Level of coverage selected = 75%
Amount of Protection Calculation:
160 APH x 75% = 120 Bushels per Acre Guarantee
120 Bushels x $2.20 = $264 per liability
Loss Payment Calculation:
120 Bushels per Acre Guarantee – 100 Bushels harvested per acre = 20 Bushels per acre Loss
20 x $2.20 = $44 per acre loss payment
Loss payments apply when, due to an insured peril, the number of harvested bushels is less than your bushels per acre guarantee.
Why purchase Multiple Peril Crop Insurance?
Provides protection against production loss
Acreage may be insured on a Basic Unit or Optional Unit basis to establish separate APH yields
Provides coverage levels of up to 85% for some crops and counties
Pays Expected Market Price if a yield loss is suffered
Acts as an excellent credit enhancement for agricultural loans
Provides peace of mind
Careful planning with your Strategic Farm Marketing agent is the key to your well-being in the wettest, the driest, or the best of times.
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