Coverages
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Wheat - General Summary
What Is It? What Are Its Benefits?
This program provides comprehensive protection for wheat by establishing a dollar guarantee based on 100% of the CBOT or exchange early futures price (projected price). Coverage levels are available from 50-75% (80 and 85% levels available in limited areas) of the Actual Production History (APH) and 100% of the price. Catastrophic (CAT) coverage is available at 27.5% of the APH and 100% of the price. The perils covered are weather related causes of loss, low price, and certain other unavoidable perils. Income Protection Coverage provides prevented planting and replanting protection for wheat.
Dollar Guarantee
The dollar guarantee for the insurance unit is the historical yield (APH) times the projected price, times level of coverage, times insured acreage, times ownership share. Growers have the flexibility to vary the dollar protection from 50/100 to 75/100 (up to 85/100 in limited areas).
Value of Production
The value of production to count is the harvested production, 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 amount of indemnity.
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
Unit divisions are limited to an enterprise basis. Enterprise units consist of all insurable acreage of the insured crop in the county, regardless of interest or persons sharing.
How It Works (wheat illustration)
| 1 | ||
| "Projected Price" is higher than the "Harvest Price"— | ||
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| Dollar Guarantee | 40 Bu./A. × 75% 1000A. | @
$3.00/Bu. = $90,000 |
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| Value of Production | 25 Bu./A. × 1000A. | @
$2.85/Bu. = $71,250 |
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| Loss Payment (indemnity) | Assume 100% ownership | = $18,750 |
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| 2 | ||
| "Projected Price" is lower than the "Harvest Price"— | ||
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| Dollar Guarantee | 40 Bu./A. × 75% 1000A. | ------------- = $90,000 |
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| Value of Production | 25 Bu./A. × 1000A. | @
$2.85/Bu. = $78,750 |
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| Loss Payment (indemnity) | Assume 100% ownership | = $11,250 |
Benefits of IP
- Loss payments more closely track with economic results of the crop.
- May be viewed more favorably as loan collateral.
- Maintain a steady income throughout a bad economy with price fluctuation coverage.
Availability and Prices
| CROP | STATE | COUNTY | PROJECTED PRICE | HARVEST PRICE |
| Winter Wheat | ID | Idaho, Latah, Lewis, and Nez Perce | Aug. 15 - Sept. 14 pre-harvest
year's average for CBOT Sept. wheat (harvest year) plus “ basis “ (5-year average difference between Aug. average for nearby CBOT Sept. wheat and Aug. average for PME soft white wheat) |
Aug. average for PME 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 |
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| MT | All counties except: Daniels, Lincoln, Sheridan, Silver Bow, and Yellowstone National | Aug. 15 - Sept. 14 average for CBOT July wheat | Aug. average for CBOT Sept. wheat |
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| 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, Washabugh, and Yankton |
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| KS | Harper, Harvey, Jewell, Kingman, Mitchell,
Osborne, Phillips, Reno, Rooks, Sedgwick, Smith, and Sumner |
Aug. 15 - Sept. 14 average for CBOT July wheat | June average for CBOT July wheat | |
| Spring Wheat | MN | All counties except: Carlton, Cook, Itasca, Lake and Ramsey | Feb. average for CBOT Sept. wheat | Aug. average for CBOT Sept. wheat |
| MT | All counties except: Lincoln, Silver Bow, and Yellowstone | |||
| ND | All counties where MPCI is available | |||
| SD | Beadle, Brookings, Brown, Campbell,
Clark, Clay, Codington,
Corson, Day, Duel, Edmunds, Faulk, Grant, Hamlin, Kingsbury, Lake, Lincoln, McCook,
McPherson, Marshall, Miner, Minnehaha, Moody, Roberts, Spink, Turner, Union, Walworth, and Yankton |
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08/18/03
Note: This summary is for general illustration only. See policy for program details.
