Insurance guarantees reduced due to lower 2013 yields
For a yield history with less than 10 yields, the 2013 yield will add to the history. In these case, an average before and after the 2013 yield provide an indication of impacts of 2013 yields.
A low 2013 yield will have a fairly long impact on APH yields. The 2013 yield will remain in the yield history until 10 later yields have been added to the yield history.
Lower Yields and Chance of Payments
Lower APH yields will impact the chance of payments in future years. It is difficult to pinpoint the exact size of the reduction. Under typical situations, an evaluation of iFarm results suggest that a reduction of an APH yield by 2 bushels per acre will reduce the chance of payments by between 4 and 5 percent at an 85% coverage level for a Revenue Protection (RP) policy. The same 2 bushels reduction will have between a 2 and 3 percent reduction at a 75 percent coverage level. Reductions will decline with lower APH yields relative to expected yields. Reductions also will decline with lower coverage levels.
Low 2013 actual yields could results in lower APH yields in future years. Lower APH yields then lower insurance guarantees in future years. The possibility of low yields could be a reason that favors taking a prevented planting payment. It would also be a factor in deciding not to plant a crop after the late planting period.
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