Revenue Protection

Revenue Protection (RP) protects the revenue your farm generates, which is the combination of how much you grew and what you got paid for it. This guide explains how RP works, what makes it different from Yield Protection (YP), and how to know which one is right for your operation.

Revenue Protection is a crop insurance product that protects the total revenue from your crop, not just the production harvested.

Yield Protection asks: Did you grow enough of the crop?

Revenue Protection asks: Did you earn enough revenue from your crop?

Revenue Protection covers the same natural causes of loss as Yield Protection — drought, excess moisture, and other natural perils. The difference is in how the indemnity is calculated, not in what events trigger coverage.

Under RP, a claim is triggered when your Harvest Revenue falls below your Revenue Guarantee because:

• Your yield was reduced by a covered peril
• The commodity price fell below your guarantee
• A combination of the two

Crop Availability

Revenue Protection (RP) insurance primarily covers major row crops, including corn, soybeans, wheat, cotton, grain sorghum, barley, canola/rapeseed, sunflowers, popcorn, rice, and, as of recently, flax

Your coverage level is the percentage of your APH you’re choosing to protect, ranging from 50% to 85%. The higher the coverage level, the more protection you have and the higher your premium.

Your APH is your farm’s 10-year average yield. It’s calculated using the average of your actual yields over the past decade (minimum 4 years). This is the foundation of your coverage. The higher your APH, the more protection your policy provides.

APH Example

Corn yields over the last 10 years were:

160, 175, 190, 185, 170, 200, 180, 180, 195, and 165 bu/acre.

Your APH average is: 180 bu/acre.

Your Revenue Guarantee is the minimum revenue per acre your policy will protect you down to. If your actual harvest revenue falls below this number, you have a claim. The formula uses the projected price, not the harvest price, to set the guarantee at the start of the season:

RP’s harvest price option means that if the harvest price is higher than the projected price, your Revenue Guarantee is recalculated upward using the harvest price. Your guarantee can only go up, never down, because of a price change.

Your Harvest Revenue is what you actually produced, valued at the fall harvest price. Your Harvest Revenue is compared against your Revenue Guarantee to determine if a claim exists and how large it is.

The best way to understand Revenue Protection is to walk through three different scenarios using the same corn farmer. Each scenario shows a different market situation and how RP responds to it.*

A summer drought reduces yield to 100 bu/acre. At harvest, corn prices are unchanged at $4.50, the same as the projected price.

Same yield loss and prices have also fallen by harvest. The harvest price is $3.75/bu, a drop of $0.75.

Same yield loss. Prices have risen significantly by harvest. The Harvest Price is $5.25, a $0.75 increase. Since the Harvest Price is higher than the Projected Price, RP recalculates your Revenue Guarantee upward:

*RP example is for illustration purposes only and simplified for educational purposes. See a licensed agent for individualized scenarios and protections.

RP-HPE works exactly like standard RP, with one important difference: the harvest price option is removed. This means:

• Your Revenue Guarantee is set at the projected price and stays there. It will NOT adjust upward if harvest prices rise
• You still get protection against a price drop.
• Because you’re giving up the harvest price upside, RP-HPE premiums are lower than traditional RP

RP with Harvest Price Exclusion (RP-HPE)

RP premiums are higher than YP premiums because the coverage is broader. The additional cost reflects the fact that RP can respond to more types of loss. Factors that affect your RP premium include:

• Your APH
• Your coverage level (50–85%)
• Your county’s risk rating
• The projected price and volatility
• Whether you choose full RP or RP-HPE

Federal crop insurance premiums are subsidized by the USDA. Depending on your coverage level, the government typically covers 41–80% of the total premium. You only pay the remainder of the premium.

RP policies include provisions for Late Planting, Prevented Planting, and Replanting. Prevented Planting and Replant payments are always calculated using the Spring Projected Price. Even if you have standard RP and the Fall Harvest Price skyrockets, your replant or prevented planting compensation will not increase. It remains locked to the early discovery price.