Overseeing Production Risks

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DISCLAIMER The motivation behind the accompanying material is to advance the familiarity with hazard administration ideas and to highlight USDA's hazard administration items, elements, advantages and accessibility. This material does not change the substance or the significance of current arrangement arrangements, recorded actuarial archives or endorsed systems.

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Today's Objectives Sources of Production Risk when Alternative Actions/Plans are Taken Various Production Risks Management Strategies Specific Focus: Crop Insurance Programs

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Review and Answer the 'Inquiries to Consider' Blocks toward the end of every area.

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Sources of Production Risk Technology & Crop Production Practices Sustainable Agriculture Elements of Sustainability Integrated Pest Management Soil & Water Conservation Field/Landscape Diversity Seed Selection Precision Agriculture Biotechnology Organically Grown Crops

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Sources of Production Risk Enterprise Diversification Capital Investments Irrigation Drainage Machinery Landlord/Tenant Relationship Contract Production

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CROP INSURANCE USDA sponsored protection programs give cultivate makers and proprietors different techniques to lower creation yield and income dangers. Generation Risk Strategy Programs

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USDA's RISK MANAGEMENT PROGRAMS/PRODUCTS

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IDAHO Apples, Barley, Canola, Corn, Dry Beans, Dry Peas, Grapes, Green Peas, Nursery, Oats, Onions, Potatoes, Safflower, Sugar Beets, Processing Beans, Processing Sweet Corn and Wheat (Program accessibility differs by province and is liable to change) Insurance Availability by State

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OREGON Apples, Barley, Cabbage, Canola, Cherries, Corn, Cranberries, Dry Beans, Dry Peas, Forage, Grapes, Green Peas, Nursery, Oats, Onions, Pears, Potatoes, Sugar Beets, Processing Beans, Processing Sweet Corn and Wheat (Program accessibility shifts by region and is liable to change) Insurance Availability by State

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WASHINGTON Apples, Barley, Cabbage, Canola, Cherries, Corn, Cranberries, Dry Beans, Dry Peas, Grapes, Green Peas, Mint, Nursery, Oats, Onions, Pears, Potatoes, Sugar Beets, Processing Beans, Processing Sweet Corn and Wheat (Program accessibility fluctuates by area and is liable to change) Insurance Availability by State

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YIELD/PRODUCTION RISK CROP INSURANCE COVERAGE PROGRAMS

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Yield Guarantee Units Contract Changes Reporting of Insured Acreage Reporting Crop Damage Reporting of Production Records Multi-Peril Crop Insurance (MPCI)

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Actual Production History (APH) is a basic normal of 4-10 years of real yields, in light of a maker's records. On the off chance that a maker does not have records for four (4) years: A move yield is utilized to finish the four (4) year least base. "T" yields depend on a province's normal yield dictated by USDA's National Agricultural Statistics Service (NASS). Demonstrating Yields

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When utilizing "T" yields, a huge misfortune would need to happen before a reimbursement would be paid. The Reason to Prove Yields

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YEAR YIELD 90 No records No records 91 No records No records 92 No records No records 93 No records 80 Bu. Real Yld 94 No records 72 Bu. Genuine Yld 95 48 Bu. T Yld 81 Bu. Real Yld 96 48 Bu. T Yld 76 Bu. Genuine Yld 97 48 Bu. T Yld 78 Bu. Real Yld 98 80 Bu. Genuine Yld 80 Bu. Real Yld 224 Total Bu. Isolated by 4 years = 56 Bu. 467 Total Bu. Partitioned by 6 years = 78 Bu. Giving Production Evidence

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Assume: 80 BU Average Wheat Yield 60 BU "T" Yield 3.30 Expected Market Price (MPCI PE) Yields Not Provided/Certified: 65% "T" = 39 BU 75% LEVEL: 75% X 39 BU = 29 BU 29 BU X $3.30 = $96.53/air conditioning Yields Provided/Certified: 75% LEVEL: 75 % X 80 BU = 60 BU 60 BU X $3.30 = $198/air conditioning Proving Your Yields PAYS DIVIDENDS !! Advantages of Actual/Certified Yields

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COVERAGE LEVEL & PRICES Coverage Options - Choice of variable rates of the APH, from half up to 75%, in 5% increases (85% for Wheat and IP Barley in a few zones). Value Elections - Price at which you are repaid in case of a misfortune. Decision of 60 to 100% of the normal market cost or market value race. Multi-Peril Crop Insurance (MPCI)

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CATASTROPHIC CROP INSURANCE (CAT) CAT Coverage is accessible at the half scope level and 55% most extreme value race (this is a change from earlier year's 60%). Multi-Peril Crop Insurance (MPCI)

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Insurance Coverage Endorsements Wheat Insurance Policy Endorsements Winter Wheat Option A Winter Wheat Option B Malting Barley Price and Quality Endorsements Option An Option B Multi-Peril Crop Insurance (MPCI)

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Group Risk Plan (GRP) Named-Peril Protection Program (Hail, Fire, Flood) Non-Insured Assistance Program (NAP) Additional Production Risk Tools

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YIELD/PRODUCTION and REVENUE RISK CROP INSURANCE COVERAGE PROGRAMS

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Enterprise Unit (County) CAT is Available Projected/Harvest Price got from Portland Grain Exchange Late Planting/Replant Payment IP Barley with Malt Barley Option (Price got from Corn Futures) INCOME PROTECTION (IP)

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IP ensures against decreases in gross wage when yields or costs fall. Wage PROTECTION (IP)

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Guarantees an expressed measure of income - last certification. Covers income misfortunes because of low value, low yield, or any mix of the two. Trim Revenue Coverage (CRC)

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Basic/Optional/Enterprise - Premium Discount CAT Not Available Base/Harvest Price got from Portland Grain Exchange Late Planting/Replant Payment Winter Coverage Endorsement Replacement Coverage Level Crop Revenue Coverage (CRC)

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Side-by-Side WHEAT Insurance Program Comparisons: MPCI Income Protection Crop Revenue Coverage CROP INSURANCE COMPARISON CHART

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Catastrophic Coverage - $60, per edit, per district Limited Coverage - $50 per trim, per province, not to surpass $200/region, $600 add up to Additional Coverage - $20 per trim **Small-Limited Resource Farmer Fee Waiver is Available on Some Programs/Coverage Levels ADMINISTRATIVE FEES

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Crop Insurance Premium Calculation & Loss Indemnity Scenarios & Examples Pacific Northwest Wheat Crop

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Eastern Washington Wheat Farm Multi-Peril Crop Insurance (MPCI) Calculation

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APH Yield is 62 Bushel = 46.5 Bushel/Acre Guarantee Price Election is $3.30 $153.45 Insurance Coverage per Acre $4.33 Producer's Premium Per Acre MPCI Premium Calculation Assume: MPCI Insurance Policy - Non-Irrigated Winter Wheat - WITHOUT Winter Wheat Option - Basic Unit Discount - 75 % Coverage Level

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APH Yield is 62 Bushel = 46.5 Bushel/Acre Guarantee Price Election is $3.30 $153.45 Insurance Coverage per Acre + Winter Damage Coverage $7.08 Producer's Premium Per Acre MPCI Premium Calculation Assume: MPCI Insurance Policy - Non-Irrigated Winter Wheat - WITH Winter Wheat Option B Basic Unit Discount - 75%Coverage Level

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Assume: All Acres Harvested/Winter Wheat - Endorsement Not Exercised MPCI Indemnity 62 Bu APH X 75% Coverage Level = 46.5 Bu/Acre Guarantee 46.5 Bu Guarantee - 35 Bu Production Harvested = 11.5 Bu Loss/Acre 11.5 Bu Loss X $3.30 Price Election = $37.95 Indemnity/Acre

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Eastern Washington Wheat Farm Crop Revenue Coverage (CRC) Insurance Calculation

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Assume: Crop Revenue Protection Insurance Policy - Non-Irrigated Winter Wheat - WITHOUT Winter Wheat Option An or B - Basic Unit Discount - 75% Coverage Level Crop Revenue Coverage (CRC) Insurance Calculation APH Yield is 62 Bushel = 46.5 Bushel/Acre Guarantee Base Price is $3.40 $158.10 Insurance Coverage per Acre $8.35 Producer's Premium Per Acre

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Assume: Crop Revenue Protection Insurance Policy - Non-Irrigated Winter Wheat - WITH Winter Wheat Option B - Basic Unit Discount 75% Coverage Level Crop Revenue Coverage Insurance Premium Calculation APH Yield is 62 Bushel = 46.5 Bushel/Acre Guarantee Base Price is $3.40 $158.10 Insurance Coverage per Acre + Winter Damage Coverage $13.63 Producer's Premium Per Acre

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Assume: All Acres Harvested - Winter Wheat - Endorsement Not Exercised - Harvest Price Lower than Base Price (With a Production Loss) Crop Revenue Coverage Insurance Indemnity Revenue Guarantee: Approved APH yield of 62 Bu/Acre X 75% Coverage Level X the higher of Base Price or Harvest Price is $3.40 Base Price = $158.10/Acre Guarantee Value of Production (Harvested) 35 Bu/Acre X $3.00 Harvest Price = $105/Acre Income Loss Payment: $158.10 Guarantee - $105/Acre Income = $53.10 Acre Indemnity

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Assume: Harvest Price Higher than Base Price (With a Production Loss) Crop Revenue Coverage Insurance Indemnity Revenue Guarantee: Approved APH yield of 62 Bu/Acre X 75% Coverage Level X the higher of Base Price or Harvest Price of $3.70 Harvest Price = $172.05/Acre Guarantee Value of Production (Harvested) 35 Bu/Acre X $3.70 Harvest Price = $129.50/Acre Income Loss Payment: $172.05 Guarantee - $129.50/Acre Income = $42.55 Acre Indemnity

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Eastern Washington Wheat Farm Income Protection (IP) Crop Insurance Calculation

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Assume: Income Protection Insurance Policy - Non-Irrigated Winter Wheat WITHOUT Winter Wheat - Not Available under IP Basic Unit Discount 75 Percent Coverage Level Income Protection Crop Insurance Premium Calculation APH Yield is 62 Bushel = 46.5 Bushel/Acre Guarantee Projected Winter Wheat Price is $3.40 $158.10 Insurance Coverage per Acre $4.83 Producer's Premium Per Acre

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Value of Production (Harvested) 35 Bu/Acre X $3.00 Harvest Price = $105/Acre Income Loss Payment: $158.10 Guarantee - $105/Acre Income = $53.10 Acre Indemnity Income Protection Crop Insurance Indemnity Assume: Harvest Price Lower than Projected Price (With a Pr

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