Managing Production Risk 

For decades, agricultural risk has been synonymous with production risk. Reducing variability in expected yields has been a major focus of farm managers. Over time, improvements in technology and production practices have helped decrease agronomic risks and increase yields. For example, genetic engineering has produced new seed varieties that are disease and drought resistant, commercial petroleum-based fertilizers were manufactured increasing yields, effective herbicides and insecticides were developed controlling weeds and bugs, and a whole host of improved production and management practices have been disseminated. Coincident to these production improvements, the economic climate has changed accompanied by increasing non-production risks—marketing, financial, environmental, legal, etc. For instance, increased disposable income has changed consumer demands. Communication and transportation developments have revolutionized supply systems, inventory controls, and marketing opportunities. Increased production costs associated with expansion has increased demand for debt capital as a means of leveraging growth. And shifting societal goals have placed an increased emphasis. 

The same underlying changes that are driving the increase in economic risks are also changing the nature of production risks. Not only is yield variability still a formidable production risk, but also the industrialization of agriculture is impacting the entire agricultural production sector. Changes that initially started in the livestock sector are now starting to revolutionize the grain industry. These structural shifts mean that farmers are vulnerable not only to the vagaries of weather and Mother Nature, but are vulnerable to economic forces that exacerbate traditional production risks. Some view these risks as potentially more threatening than bad weather. 
Crop Insurance

Group Risk Plan (GRP) coverage is based on the experience of the county rather than individual farms, so APH is not required for this program. GRP indemnifies the insured in the event the county average per-acre yield or payment yield falls below the insured’s trigger yield. The Federal Crop Insurance Corporation (FCIC) will issue the payment yield in the calendar year following the crop year insured. Since this plan is based on county yields and not individual yields, the insured may have a low yield on their farm and not receive payment under GRP. 
Revenue Products pilot programs with limited availability provide revenue guarantees instead of MPCI yield guarantees. Revenue policies protect a grower's loss of revenue resulting from low prices, low yields, or a combination of the two. 
Crop Revenue Coverage (CRC): A loss results when the calculated revenue is less than the final guarantee. The difference between these two figures times the insured's share results in a payable indemnity. Losses are based on the minimum or harvest guarantee (whichever is higher) and the calculated revenue.

Income Protection (IP): Policies pay when the harvested and appraised production to count, multiplied by the harvest price, is below the IP guarantee. The harvest price is an average of daily futures market closing prices for the crop during the month of harvest. If a yield loss is offset by a price increase, or vice versa, no indemnity is paid. The insurance unit is the grower's share of all acres of the insured crop in the county. 
Revenue Assurance (RA): An indemnity is payable when the production to count (any combination of harvested and appraised yield) multiplied by the county harvest price is less than the unit revenue guarantee. 
Group Risk Income Protection (GRIP): Provides coverage against potential loss of revenue resulting from a significant reduction in the county yield or commodity price of a specific crop. When the county yield estimates are released, the county revenues (or payment revenues) will be calculated prior to April 16 of the following crop year. GRIP will pay a loss when the county revenue is less than the trigger revenue. Since this plan is based on county revenue and not individual revenue, the insured may have a loss in revenue on their farm and not receive payment under GRIP. 
Income Protection (IP) is a revenue product that, based on the individual producer’s APH, protects against a loss of income when prices and/or yields fall. While IP looks a lot like CRC, it does not have the increasing price function of CRC. The guarantee and the premium will be calculated using the spring-time generated price (projected price). An indemnity is due when the revenue to count (production to count x harvest price) is less than the amount of protection.

Group Risk Income Protection (GRIP) is the newest revenue product to come along. GRIP is based on the experience of the county rather than individual farms, so APH is not required for this program. 
A GRIP policy includes coverage against potential loss of revenue resulting from a significant reduction in the county yield or commodity price of a specific crop. When the county yield estimates are released, the county revenues (or payment revenues) will be calculated prior to April 16 of the following crop year. GRIP will pay a loss when the county revenue is less than the trigger revenue. Since this plan is based on county revenue and not individual revenue, the insured may have a loss in revenue on their farm and not receive payment under GRIP. 
Importance Date and Deadline

Sales Closing Date: To participate, a person must apply for insurance on or before the applicable sales closing date. This is the last date to apply for crop insurance coverage for any FCIC policy, or make changes in coverage from the previous year. Growers need to decide by this date the type of policy and the level of protection they want. Sales closing dates vary by crop and by state. 

Final Planting Date: Last day to plant unless insured for late planting. 
Acreage Reporting Date: Producers must report (by type and or varietal group, if applicable) the number of acres insurable and uninsurable for which the insured grower has a share. 
Premium Billing Date: Although premiums are payable on the day after the sales closing date, the policy holder will not be billed until the premium billing date. Generally this date falls near harvest. 
End of Insurance Period: Following this date, the farmer no longer has any production or revenue guarantee on the crop. This date is the earliest date the crop is harvested, abandoned, or totally destroyed, the day the final adjustment on losses is made, or a specific calendar date set in each crop policy. 

Date to File Notice of Damage: This is the last date to report actual production or quality losses in order to receive an indemnity payment. Notice is required within 72 hours of the discovery of the damage, but not later than 15 days after the end of the insurance period. 

Policy Termination Date: If premiums are not paid by this date, the insurance coverage for the following year will be terminated. 
Cancellation Date: Last date to give written notice to the insurance company if the grower does not wish to carry crop insurance the next year. Otherwise the policy will renew automatically for another year. 
Production Reporting Date: Date to submit most recent production records to recalculate APH yield.