Peanut Insurance
USDA's Risk Management Agency (RMA) web site is the best source to learn more about the different types of crop insurance available to peanut growers. Essentially, there are two types of products:
The Multiple Peril Insurance Program (MPCI) insures producers against yield losses due to natural causes such as drought, excessive moisture, hail, wind, frost, insects, and disease. Crop insurance coverage calculations are based upon either Actual Production History (APH - producer's actual yield history), a percentage of an established county yield (T Yield), or a combination of both. APH requires a minimum of four years of production records and will accumulate to a maximum of ten years of production records. Producers who have less than four years of production records are required to use the County T Yield for those years without actual production records. The grower selects the amount of average yield to insure, normally at the 65 or 75 percent levels. If the harvest is less than the yield insured, the farmer is paid an indemnity based on the difference. Indemnities are calculated by multiplying this difference by the insured percentage of the established price selected when crop insurance was purchased.
Group Risk Protection (GRP) is based on whether or not the county experiences a yield loss. GRP indemnifies the insured in the event the county average per acre yield falls below the insured's tripper yield. GRP does not offer individual farm or producer coverage. If a producer has a low yield but the county peanut average yield is good, the producer would not receive an indemnity payment. GRP does not require APH.
Managing farm risk is complicated for a host of reasons. Growers do not manage weather risk in isolation but rather as part of more comprehensive strategies that also consider risks posed by price fluctuations and policy changes. Crop insurance agents and other agribusiness specialists listed in the USDA/RMA agent locator can assist farmers in developing a good management plan. Risk management tools, such as climate information and crop insurance, often work best when they are used together.