Coverages | IP | Income Protection

Wheat - General Summary

About IP

IP offers a comprehensive protection through a dollar guarantee. It also provides prevented planting and replant coverage.

IP Coverage

IP covers weather-related causes of loss, price fluctuations, and certain other unavoidable perils.

Dollar Guarantee

The IP dollar guarantee is the historical yield multiplied by the level of coverage (50% to 85%, in 5% increments), insured acreage, and projected price. Coverage levels of 80% and 85% are not available in all areas.

Value of Production

The value of production is the harvested production, plus any appraisals, multiplied by the harvest price. The price at which the crop is sold does not affect the indemnity payment.

Units

Unit divisions are limited to an enterprise basis. An Enterprise Unit is all insurable acreage of the insured crop in the county, regardless of interest or persons sharing.

Loss Payments

To calculate a loss payment, subtract the value of production from the dollar guarantee and multiply by the ownership share.

Benefits of IP

• IP loss payments track closely with the economic results of the crop.
• An IP policy may be viewed more favorably as loan collateral.
• Price fluctuation coverage included in an IP policy may help to maintain a steady income throughout a bad economy.

How It Works for Wheat

		"Projected Price" is higher than the "Harvest Price"
Dollar Guarantee...........	40 Bu./A. x 75% x 1,000A..........	@ $3.00/Bu. =	$90,000
Value of Production......	25 Bu./A. x 1,000A....................	@ $2.85/Bu. =	$71,250
Loss Payment...............	Assume 100% ownership............	......................=	$18,750

		"Projected Price" is lower than the "Base Price"
Dollar Guarantee...........	40 Bu./A. x 75% x 1,000 A.........	......................=	$90,000
Value of Production......	25 Bu./A. x 1,000 A....................	@ $3.15/Bu.. =	$78,750
Loss Payment...............	Assume 100% ownership............	......................=	$11,250

Availability and Prices

Crop	State	County	Projected Price	Harvest Price
Winter Wheat	ID	Idaho, Latah, Lewis, and Nez Perce	August 15 -September 14 pre-harvest year’s average for Chicago Board of Trade September wheat (harvest year) plus “basis” (5-year average difference between August average for nearby Chicago Board of Trade September wheat and August average for Portland Merchants Exchange soft white wheat)	August average for Portland Merchants Exchange soft white wheat
	OR	All counties, except: Clatsop, Coos, Curry, Hood River, Lincoln, and Tillamook
	WA	All counties, except: Clallam, Grays Harbor, Jefferson, Kitsap, Mason, Pacific, Pierce, Skamania, Thurston, and Wahkiakum
	MT	All counties, except: Daniels, Lincoln, Sheridan, Silver Bow, and Yellowstone National	August 15 - September 14 average for Chicago Board of Trade July wheat	August average for Chicago Board of Trade September wheat
	SD	All counties, except: Beadle, Brookings, Brown, Campbell, Clark, Clay, Codington, Corson, Day, Deuel, Edmunds, Faulk, Grant, Hamlin, Kingsbury, Lake, Lincoln, McCook, McPherson, Marshall, Miner, Minnehaha, Moody, Roberts, Spink, Turner, Union, Walworth, and Yankton
	KS	Harper, Harvey, Jewell, Kingman, Mitchell, Osborne, Phillips, Reno, Rooks, Sedgwick, Smith, and Sumner	August 15 - September 14 average for Chicago Board of Trade July wheat	June average for Chicago Board of Trade July wheat
Spring Wheat	MN	All counties, except: Carlton, Cook, Itasca, Lake, and Ramsey	February average for Chicago Board of Trade September wheat	August average for Chicago Board of Trade September wheat
	MT	All counties, except: Lincoln, Silver Bow, and Yellowstone National
	ND	All counties where MPCI is available
	SD	Beadle, Brookings, Brown, Campbell, Clark, Clay, Codington, Corson, Day, Deuel, Edmunds, Faulk, Grant, Hamlin, Kingsbury, Lake, Lincoln, McCook, McPherson, Marshall, Miner, Minnehaha, Moody, Roberts, Spink, Turner, Union, Walworth, and Yankton

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Note: This summary is for general illustration only. See policy for program details.