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MPCI Crop Insurance Explainer


Your commercial property or farm policy does
not cover your growing crops. Consequently, farmers who wish insure their
commodities must purchase crop insurance. Here is how Federal Multi-Peril Crop Insurance
Program (MPCI) works. MPCI is developed, managed and reinsured by
the USDA Risk Management Agency. RMA in turn contracts with approved private
insurers to issue policies, adjust claims and pay losses to the grower. The government also dictates the
crops insured, policy language and premium rates. There are no differences in
coverage or premium between carriers, making it easier for you. Nearly 125 crops are insurable nationwide,
in the West those include many specialty crops such as:
* Avocado * Blueberries
* Citrus * Grapes
* Almonds The policy covers a loss of yields as a result
of damage from natural causes such as drought, untimely rains, hail, frost, insects,
and wildlife. Farmers who wish to
buy a policy, must do so before they plant their crops. MPCI crop policies purchased are based on
yield or revenue. A yield-based policy
provides a payout if the farmer suffers a yield loss relative to their historical yield. Coverage levels begin at 50% and are available
up to 75% or 85% of your historical average production, depending upon the crop. Beth farms 10 acres of wine grapes in Napa. With the help of her crop insurance
professional Domenic, she wants to insure 50 percent of her average yield. So,
she selects 50 percent coverage. The FCIC sets the value of the crop at $3,000/ton. Beth suffers a crop loss due to a peril such
as frost damage. Beth notifies her agent within 72 hours of
the event happening. The carrier sends their adjuster to inspect
the damage. The crop is deemed a total loss. Her historical actual production history was
4 tons per acre. At 50% coverage that’s a guarantee of 2
tons per acre. 2 tons multiplied by the insurance value of
$3,000 per ton, equals a payable loss of $6,000 per acre
Her total payable indemnity will be $60,000 This can help her to cover the fixed costs
she has invested in the crop, and keeping her business going. Because federal crop insurance is partially
subsidized and backed by the USDA, rates are affordable. The farmer pays a portion of the premium,
the government pays the rest. Your first and most important decision is
to choose a specialist in this type of insurance coverage. Someone who not only understands the program,
but also the risks you face in bringing your crop to
completion. At Golden Pacific Crop Insurance, our agents
have over 18 years of experience in crop insurance and still farm our own crops
as well. We know full well what you
face out there with ever increasing regulations, and food safety issues. Give us a
call and learn how we can make this very important risk management tool
something that can be easy to use and much more affordable than you may think. Call us at (559) 825-2767 or by email at [email protected]

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