Coverages
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CRC for Wheat
What Is It? What Are Its Benefits?
This program provides comprehensive protection for wheat through a dollar guarantee based on the board of trade’s early futures price (base price). Additional protection is provided if the near harvest futures price (harvest price) exceeds the base price.
The perils covered are weather related causes of loss, certain other unavoidable perils, and price fluctuations. CRC provides prevented planting protection. Replanting and Winter Wheat Coverage Endorsement are provided for wheat in counties with both spring and fall planting dates. Prevented planting payments are determined by using the higher of the base or harvest price. The base price is used for replanting payments.
Dollar Guarantee
The guarantee is the approved historical yield (APH) multiplied by the selected level of coverage (50-75% in increments of 5%; 80 and 85% levels available in limited areas), the insured acreage, and the higher of the base or harvest price. The harvest price is limited to a 200% increase over the base price. There is no downward price limit.
Value of Production
The value of production to count is the actual yield plus any appraisals, multiplied by the harvest price as defined by the policy provisions. The price at which the crop is sold does not affect the indemnity payment.
Loss Payment
To calculate a payable loss, subtract the value of production (bushels times the defined harvest price) from the dollar guarantee and multiply by the ownership share.
Units
The basic insurance unit is all the acreage of the crop in the county in which the policyholder has 100% ownership or shares with the same person. Most basic insurance units can be further divided into optional units. Optional units may be divided by sections or section equivalents (in areas without sections or section equivalents, separate farm serial numbers (FSN) may be used), by irrigated or non-irrigated practices, by initially planted winter wheat or initially planted spring wheat (if winter and spring types are shown on the actuarial documents), and by acreage grown under an organic farming practice. In AR, LA, and MS, units are only available by FSN. To qualify, a producer must have individual records for each unit and the planting pattern between the units must have a discernible break. Growers can also choose a county crop enterprise unit at a reduced premium rate.
How It Works (wheat illustration)
| 1 | ||
| "Harvest Price" is lower than the "Base Price"— | ||
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Base Price |
| Dollar Guarantee | 40 Bu./A. × 75% 1,000A. | @
$3.00/Bu.1 = $90,000 |
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| Value of Production | 25 Bu./A × 1,000A. | @
$2.85/Bu. = $71,250 |
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| Loss Payment (indemnity) | Assume 100% ownership | = $18,750 |
| 1Assumes base price of $3.00 to determine premium. Higher Harvest Price increases coverage based on $3.15/Bu. | ||
| 2 | ||
| "Harvest Price" is higher than the "Base Price"— | ||
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Harvest Price |
| Dollar Guarantee | 120 Bu./A. × 75% 100A. | @
$3.15/Bu. = $94,500 |
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| Value of Production | 25 Bu./A. × 100A. | @
$3.15/Bu. = $78,750 |
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| Loss Payment (indemnity) | Assume 100% ownership | = $15,750 |
Benefits of CRC
- Fosters greater grower confidence to do pre-harvest sales to improve profits.
- Protects growers who need a specific amount of production to feed livestock.
- Loss payments more closely tracked with economic results.
- May be viewed more favorably as loan collateral.
- Rewards the more risk conscious grower.
- USDA shares in premium.
Availability and Prices
| Crop/Availability | Base Price | Harvest Price | Board/Exch |
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| Spring Wheat - CO, MN, MT ND, SD, WY | Feb. avg. for MGE Sept. hard red spring wheat for Mar. 15 cancellation date | Aug. avg. for MGE Sept. hard red spring wheat for Mar. 15 cancellation date | MGE |
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| Spring Wheat - CO, IA, MT, NE, SD, WI, WY | Aug.
15 to Sept. 14 pre-harvest year’s
avg. for KCBOT July (harvest year) hard red winter wheat for Sept. 30 cancellation date |
Aug. avg. for MGE Sept.
hard red spring wheat for Sept. 30 cancellation date |
KCBOT and MGE |
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| Winter Wheat - IL, IN, MI, OH, PA, WI | Aug.
15 to Sept. 14 pre-harvest year’s
avg. for CBOT July (harvest year) soft red winter wheat |
July 15 to Aug. 14 avg.
for CBOT Sept. soft red winter wheat |
CBOT |
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| Winter Wheat - NY | 85% of the Aug. 15 to Sept. 14 pre-harvest year’s avg. for CBOT July (harvest year) soft red winter wheat | 85% of the July 15 to Aug. 14 harvest year’s avg. for CBOT Sept. soft red winter wheat | CBOT |
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| Winter Wheat - AL, AR, DE, GA, KY, LA, MD, MO, MS, NC, SC, TN, VA | Aug. 15 to Sept. 14 pre-harvest year’s avg. for July (harvest year) hard red winter wheat | June average for CBOT July soft red winter wheat | CBOT |
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| Winter Wheat - IA, MT, NE, SD, WY | Aug. 15 to Sept. 14 pre-harvest year’s avg. for July (harvest year) hard red winter wheat | July 15 to Aug. 14 avg. for KCBOT Sept. hard red winter wheat | KCBOT |
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| Winter Wheat - AZ, CA, CO, KS, NM, OK, TX | Aug. 15 to Sept. 14 pre-harvest year’s avg. for KCBOT July (harvest year) hard red winter wheat | June avg. for KCBOT July hard red winter wheat | KCBOT |
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| Wheat - ID, NV, OR, UT, WA | Aug.
15 to Sept. 14 pre-harvest year’s
avg. for CBOT Sept. (harvest year) soft red winter wheat plus “basis” (5-yr. avg. difference between Aug. avg. nearby CBOT Sept. soft red and Aug. avg. for PME soft white contracts) |
Aug. avg. for PME soft white wheat | CBOT and PME |
08/2008
This institution is an equal opportunity provider and employer.
Note: This summary is for general illustration only. See policy for program details.
