CROP REVENUE COVERAGE
WHAT IS IT?

Be sure to see the CRC Example below.

PDF Of CRC Policy (follow this link)

Don't forget to ask about IP and RA...

CRC brings to the farmer an alternative to the Multiple Peril Crop Insurance (MPCI) policy. CRC protects the farmer from lost revenue caused by low yields, low prices, or a combination of both.  Since it is based on minimum revenue per acre dollar amount, the producer does not have to experience a production loss to receive a loss payment.

  • After March 1, a Spring Market Price is established and a Minimum Guarantee income per acre is determined.

  • Minimum Guarantee is based on yield history or Actual Production History (APH), Base Price (Spring Market Price), and the farmer's selected level.

  • A Harvest Guarantee is established at harvest using the farmer’s APH , Harvest Price (determined by the futures), and the farmer’s selected level.

  • The farmer’s final guarantee is the greater of the spring or harvest guarantee.

  • Once the crop is harvested, the actual yield is multiplied by the Harvest Price, giving a Calculated Revenue.  The Calculated Revenue is compared to the Final Guarantee, if the Calculated Revenue is less than the Final Guarantee, the farmer is paid the difference.

  • Also ask about IP Income Protection and RA Revenue Assurance...

  • These products are similar to CRC as outlined but vary with regard to unit division, harvest price options, and of course premium rates. Contact us for further information on these revenue products...

 
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MPCI vs. CRC  (Example on Corn using 2003 Prices with declining prices)

Assumptions…

  • MPCI at $2.20/bu. Market Price.
  • CRC Spring Market Price is $2.42/bu. (Feb. ave. of Dec. Corn on CBOT)
  • CRC Harvest Market Price is $2.20/bu. (Oct. ave. of Dec. Corn on CBOT)
  • APH (actual production history) 150 bushels.
  • 1 acre unit produces 127 bu./acre yield at harvest.

  Calculations…  

LANDLORD
MPCI @85%

 TENANT#1
CRC @80%		 TENANT#2
CRC @85%
       150 Bu Proven Yield
    x .85 Coverage
    127.5 Bu. Guar./Acre		        150 Bu Proven Yield
    x .80 Coverage
      120 Bu.		        150 Bu Proven Yield
     x .85 Coverage
    127.5 Bu.
   x 2.20 Price Election
$280.50 Coverage/Acre		    x 2.42 Spring Market Price
$290.40 Spring Revenue Guar.		    x 2.42 Spring Market Price
$308.55 Spring Revenue Guar.
Guar. 127.5 Bu./Acre Guar. $290.40/Acre Guar. $308.55/Acre
128 Bu. Produced

     128 Bu. Produced
x $2.20Harvest Market Price
    $281.60Harvest Revenue Guar.		       128 Bu. Produced
x $2.20 Harvest Market Price
    $281.60 Harvest Revenue Guar.
127.5 Bushel Guar.
128 Bu. Produced
No Payable Loss		 $290.40Guar. Rev/Acre*
-$281.60 Harvest Revenue
$8.80 Payable/Acre		 $308.55 Guar. Rev/Acre*
-$281.60Harvest Revenue
$26.95 Payable/Acre
Regardless of Harvest Price, with MPCI no loss is payable unless bushels are below the Bushel Guarantee. With this 80% CRC example ($2.20 Harvest Price) you would collect on harvested Bushels below 150.6/BPA.** With this 85% CRC example ($2.20 Harvest Price) you would collect on harvested Bushels below 140.3/BPA.**
* Under CRC for the maximum revenue guarantee, the insured uses the higher of the Spring Market Price or the Harvest Market Price.  The premium is based off of the Spring Market Price.  Maximum up or down movement from the Spring market price is $1.50/bu. for corn and $3.00/bu. for soybeans.

**The CRC Harvest Price used in the examples could even be less  than $2.20/Bu. --raising  the bushel trigger even higher!
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Last Modified:  02/13/07