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It was introduced as a new product a number of years ago. This product has evolved to mirror Crop Revenue Coverage (CRC) in certain scenarios or Income Protection (IP) in others.
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 division of the Basic Unit Structure if each optional unit is located in a separate section and there is a discernible break in the planting pattern and separate production records are proven.
Enterprise: One or more basic units of the same insured crop that are located in two or more separate sections or two or more optional units of the same insured crop established by separate sections.
Whole Farm: All insurable acreage of the insurable crops in the county. The insurable acreage must qualify for at least two enterprise units. |
APH (Actual Production History) – The yield information for previous years, including planted acreage and harvested production. Used by us to determine your yield for insurance purposes.
Levels of Coverage – You may insure your APH at 65%, 70%, or 75%. Most Midwestern areas also have 80% and 85% availability.
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 November for the December CBOT Corn Contract. For Soybeans, 100% of the average closing price during October for the November CBOT.
Harvest Price Option – An option that allows you to use the greater of either the spring price, or the Fall harvest price to determine your revenue guarantee. This must be elected by the March 15th sales closing date.
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.
Example of how RA works
| Crop: |
Corn Level of Coverage: 85% |
| Unit structure: |
Enterprise Spring Price: $2.45 per bushel |
| Acres: |
400 Fall Price: $2.00 per bushel |
| APH 160 bushels per acre |
Harvested bushels: 130 per acre |
| Interest: |
100% |
160 APH x 85% level of coverage x $2.45 per bushel = $333 guarantee
120 bu. Harvested x $2.00 Fall price = $240 Revenue to Count
$333 - $240 = $93 per acre loss x 400 acres x 100% interest = $37,280 Loss Award
The $333 guarantee per acre is the maximum amount of coverage. If the harvest price increases, it will take fewer bushels to meet the guarantee. In the example above, if the Fall harvest price was $2.80 per bushel, there would not have been a payable loss.
160 APH x 85% level of coverage x $2.45 per bushel = $333 guarantee
120 bu. Harvested x $2.80 Fall price = $336 Revenue to Count = No Payable Loss!
Example of how RA-HPO works:
With the Harvest Price Option, should the Fall price increase over the Spring price, the guarantee would automatically be increased at no additional premium. In the above example when the harvest price increased to $2.80, the guarantee would have been recalculated.
160 APH x 85% level of coverage x $2.80 per bushel = $381 new guarantee per acre
120 bu. Harvested x $2.80 Fall price = $336 Revenue to Count
$381 - $336 = $45 per acre loss x 400 acres x 100% interest = $17,920 Loss Award
Additional coverages:
| Late planting coverage |
Replant provisions |
| Prevented planting |
Quality adjustment |
What is the difference between a CRC policy and the RA-HPO policy?
When the Harvest Price Option is added to the RA policy it becomes very similar to the CRC policy. There are some differences that need to be mentioned.
The CRC policy is limited to the amount the Fall price can increase for both corn and soybeans. Corn is limited to $1.50 per bushel, and soybeans to $3.00. The upward price movement on RA-HPO is unlimited.
The Spring price is determined in the same manner for both corn and soybeans on both plans. The Fall harvest price for soybeans is also determined in the same manner for both plans. However, the Fall harvest price for corn is calculated differently, depending on the plan that is chosen. The CRC price is determined during the month of October using the December Closing Prices, while the price for RA and RA-HPO is determined using the December Futures Contract during November.
Both plans use Basic and Optional unit structures. Both plans also offer Enterprise Units. The number of acres planted in that crop season determines the discount on a CRC policy. RA and RA-HPO each use the actual number of sections in which the insured crop is planted to determine the Enterprise discount.
Whole Farm Units are available on RA and RA-HPO plans but are not available on CRC.
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