MULTI-PERIL CROP INSURANCE
Multi-Peril Crop Insurance
Agricultural producers in California and Arizona face a distinct combination of production and financial risks. Drought, excessive heat, frost, wind, hail, fire, disease, insects, failure of an irrigation water supply caused by an insured event, and changes in covered commodity prices can affect an operation’s production and income.
Multi-Peril Crop Insurance, commonly known as MPCI, provides federally supported protection against many unavoidable agricultural risks. Federal crop insurance is administered by USDA’s Risk Management Agency and sold and serviced by private Approved Insurance Providers through licensed crop insurance agents.
MPCI includes a variety of insurance plans designed to protect a producer’s yield, revenue, crop value or a combination of these measures. Depending on the crop, county and insurance plan, coverage may be based on individual production history, actual revenue history, the value of the insured crop or results within a defined geographic area.
Examples of MPCI Coverage in California and Arizona
Almonds, Pistachios and Walnuts
California almond, pistachio and walnut producers may have access to crop-specific policies that protect against production losses caused by insured causes of loss.
Depending on the crop provisions, the insurance guarantee is generally determined using the producer’s approved production history or production records, selected coverage level and applicable price election. Program requirements differ among almonds, pistachios and walnuts.
For example, an indemnity may be payable when an almond producer’s production to count falls below the applicable guarantee because of an insured cause of loss, subject to all policy provisions and loss-adjustment requirements.
Wine Grapes, Table Grapes and Raisins
California grape operations may have coverage available for wine grapes, table grapes or raisins, depending on the county, variety, intended use and applicable actuarial documents.
Coverage may protect against a reduction in production caused by insured causes of loss, subject to the applicable crop provisions. California grape producers may also have access to endorsements addressing specified risks, including Fire Insurance Protection–Smoke Index coverage where available.
Separate grapevine insurance may be available in eligible areas. Grape or table-grape crop insurance generally protects the insured fruit production, while grapevine insurance may protect against the death or severe damage of eligible vines caused by specified insured causes of loss.
Arizona and California Citrus
Eligible citrus fruit may be insured under the Arizona-California Citrus Crop Provisions. Depending on the location and actuarial documents, coverage may be available for oranges, lemons, grapefruit, mandarins, tangerines, tangelos and other designated citrus fruit groups.
An indemnity may be payable when an insured cause of loss results in production to count falling below the applicable guarantee, after any required appraisal, grading, quality adjustment or other policy calculations.
In specified California counties, certain citrus may also be eligible for Actual Revenue History coverage. Separate California citrus-tree coverage may be available for eligible trees in designated counties.
Cotton and Extra-Long Staple Cotton
Upland cotton producers in California and Arizona may have access to Yield Protection, Revenue Protection or Revenue Protection with Harvest Price Exclusion, depending on the county and actuarial documents.
Revenue Protection can respond when insured revenue falls because of reduced yield, a decline in the applicable harvest price or a combination of both. Under standard Revenue Protection, the revenue guarantee may increase when the harvest price is higher than the projected price.
Extra-Long Staple cotton is insured under separate crop provisions and should be evaluated independently from upland cotton coverage.
Rice, Wheat, Corn and Other Field Crops
Depending on the commodity and county, California rice producers and California or Arizona producers of wheat, corn and other field crops may have access to individual yield, individual revenue or area-based insurance plans.
For example, a wheat producer who purchases Revenue Protection may qualify for an indemnity when the policy’s calculated revenue falls below the revenue guarantee because of an insured yield loss, a covered price decline or a combination of both.
Processing Tomatoes and Other Specialty Crops
Depending on the county and actuarial documents, California producers may have crop-specific insurance programs available for processing tomatoes, fresh-market tomatoes, onions, stone fruit, cherries, avocados, olives, pears and other specialty crops.
Because specialty-crop programs differ significantly, protection may be based on production history, revenue history, crop value, contract terms, dollar amounts of insurance or another method established by the applicable policy and crop provisions.
Forage Production
Forage Production coverage may protect eligible established forage grown for hay when production falls below the guarantee because of an insured cause of loss.
This coverage differs from Pasture, Rangeland and Forage Rainfall Index insurance. PRF does not measure an individual producer’s actual forage production or rainfall. Indemnities are determined using precipitation data for selected intervals and the assigned geographic grid.
Whole-Farm Revenue Protection
Diversified California and Arizona operations may also consider Whole-Farm Revenue Protection. WFRP provides whole-farm revenue protection based on an operation’s approved expected revenue rather than insuring each commodity solely under a separate individual crop policy.
The program may be particularly useful for eligible operations producing multiple specialty, organic or direct-marketed commodities.
Selecting the Appropriate Protection
A crop insurance policy involves more than selecting a crop and coverage percentage. Producers may also need to evaluate:
- The appropriate insurance plan
- Coverage level
- Available basic, optional, enterprise or other unit structures
- Price, value or revenue elections
- Production, revenue and acreage-reporting requirements
- Available endorsements and supplemental coverage
- Irrigated and non-irrigated practices
- Contract-price provisions or options, when available and applicable
- Sales closing, production reporting, acreage reporting and other applicable deadlines
At Boman & Associates, we understand the crops, production practices and risk-management challenges facing California and Arizona agriculture. We work with producers to review their production history, crop mix, marketing arrangements, geographic exposure and financial objectives.
Our goal is to help each producer understand the available alternatives and establish a crop insurance program that provides practical protection for the operation.
Policy availability, insured causes of loss, exclusions, coverage options and deadlines vary by crop, county and crop year. Contact Boman & Associates to review the current policy provisions, actuarial documents and Special Provisions applicable to your operation.