Harvest Price to Trigger Payments Under Revenue Insurance


Revenue policies pay you when your gross income (i.e., price times yield) declines below your coverage level (in this example, either 65% or 75% or 85% of gross income). It doesn’t matter if the decline in gross income is due to declining yield, price, or both. However, if you don’t have much of a yield decline, then it takes a large decline in price to trigger an RP payment, given the likely 80 cent base price level. Hence, if your yields are normal, an RP policy won’t provide any better pure price protection than the 52 cent loan rate.

Comments are closed.