Area Revenue Plans are based on countywide data and protects you from a potential loss in revenue resulting from a significant reduction in yields or prices of a specific crop in your county. Area Revenue Plans are based on an established "trigger revenue" also calculated from countywide statistics. If you purchase a Area Revenue Plan and the average revenue for your county falls below your trigger revenue, you may be eligible for a loss payment. Purchasing Group Risk Income Protection with the Harvest Price Option allows the ability to increase the revenue guarantee in the event prices increase in the fall.
- Protection against widespread loss of revenues from the insured crop in a county due to low prices and/or low yields.
- Developed on the basis that when an entire county's crop revenues are low, most farmers in that county will also have reduced revenues.
- You may suffer a personal loss in revenue on your farm, but if the countywide revenues are not below the trigger, no indemnity is due. Your revenue could be higher than the countywide average, but if countywide revenues are below the trigger level, you still collect an indemnity.
- Generally less costly than MPCI coverage or individual-based revenue plans.
- No paperwork or loss documentation or adjustment is needed. Settlements are made based upon the county average yields or calculated revenue.
Pays when the NASS-calculated county revenues fall below the trigger revenue for the covered crop. Indemnity payments are made about five months after harvest.
Area Revenue Plan Example
Situation: County revenue falls below trigger revenue.1
Purchased Coverage: $406/ acre
Acres Farmed: 200 acres
Policy Protection: Coverage ($406) x Acres Farmed (200) = $81,200
Expected County Revenue: $271/acre
Coverage Level: 85%
Trigger Revenue: Expected County Revenue ($271/acre) X Coverage Level (85%) = $230/acre
Final County Revenue: $225/acre
Triggering the Claim: Trigger Revenue ($230/acre) – Final County Revenue ($225/acre) = $5/acre
Payout: Revenue Shortfall ($5/acre) / Trigger Revenue($230/acre) x Policy Protection ($81,200) = Indemnity ($1,765)
1All examples assume the policyholder has 100% share of the insured crop. Different rounding rules may apply to different calculations and/or products.