2. RMA Crop Production and Revenue Insurance Products
Lesson Overview
In this lesson, we will learn about:
Wyoming acres of annually-planted crops and acres insured
Multiple Peril Crop Insurance
Catastrophic Risk Protection (CAT)
Crop Revenue Insurance (CRC)
Group Risk Plan (GRP)
Group Risk Income Protection (GRIP)
Forage Insurance
Seed and Specialty Crop Insurance
Alfalfa Seed Protection Insurance
Nursery Crop Insurance
Adjusted Gross Revenue-Lite (AGR-Lite)
Speaker Notes:
Now let’s discuss Group Risk Income Protection or GRIP.

3. RMA Crop Production and Revenue Insurance Products
Group Risk Income Protection (GRIP):
Lesson Overview
In this lesson, you will learn about:
Wyoming acres of annually-planted crops, and acres insured
Multiple Peril Crop Insurance
Catastrophic Risk Protection (CAT)
Crop Revenue Insurance (CRC)
Group Risk Plan (GRP)
Group Risk Income Protection (GRIP)
Speaker Notes:
Let’s discuss Group Risk Income Protection, GRIP. Group Risk Income Protection is available for wheat and corn for grain in select Wyoming counties.
GRIP is available for corn for grain only in Goshen County.
GRIP is available for wheat in Goshen and Laramie counties.
Group Risk Income Protection covers losses in income per acre that may occur due to a decline in county-yield for the commodity and/or market conditions that may result in a decline in commodity price. So any combination of declines in county-level yield and/or price that results in a decline gross income below an insured level may be indemnified. GRIP is not based on individual farm commodity production or income per acre.
The only insurable unit for Group Risk Income Protection is the enterprise unit.

4. RMA Crop Production and Revenue Insurance Products
GRIP Overview
Under GRIP, the producer’s income per acre, his yield times and the price of selling the commodity does not enter indemnity calculation
Speaker Notes:
Under GRIP, the producer’s actual income per acre, the producer’s yield times the price at which the producer sells the commodity, does not enter the indemnity calculation.
Indemnities for insurable losses are awarded when the actual county revenue for a crop is less than a producer’s trigger yield.
Let’s look at some key terms and then an example for GRIP.

5. RMA Crop Production and Revenue Insurance Products
GRIP for Wheat Example
Let’s take a look at an example. Arlen is a wheat producer, and is working to find his group risk insurance protection
Speaker Notes:
Let’s look at an example of Group Risk Income Protection for wheat and put some values on the terms we just discussed.
The expected county revenue per acre is $86.40.
This is the expected yield of 24 bushels per acre time the $3.60 per bushel expected price. The expected price for wheat is based on the September Kansas City Board of Trade’s winter wheat futures contract.
The $86.40 per acre is multiplied by 1.5 to arrive at the maximum protection per acre of $130.
The producer selects 100 percent protection, so the producer’s protection per acre is $130.
The producer selects 100% protection, so the producer’s protection per acre is $130.
The trigger revenue for a producer is the expected county revenue of $86.40 per acre multiplied the coverage level the producer selects and the producer’s choices are 70, 75, 80, 85 or 90% of expected revenue.
This producer selected 90%, so .90 times $86.40 per acre is $77.76 per acre, the “trigger revenue”. Only if actual county revenue falls below this level will the producer receive an indemnity.
The gross premium is the $130 per acre multiplied times an assumed 6% premium rate. As this is a group product the subsidy rate at 90% coverage is 55% and for subsidies by coverage level refer to the rate table in the previous lesson on Group Risk Protection.

6. RMA Crop Production and Revenue Insurance Products
GRIP Expected County Prices
Producers often want to know where to obtain the expected price for the crop they wish to insure under Group Risk Income Protection
* Producers may go to the RMA website: select Bulletins and Handbooks and the Product Management Bulletins to locate the appropriate announcement for expected county prices
** Expected county prices for spring-planted crops covered by GRIP are announced in the spring prior to the insurance sales closing dates
Speaker Notes:
Producers often want to know where to obtain the expected price for the crop they wish to insure under Group Risk Income Protection.
Perhaps the easiest source of expected price is their crop insurance agent. Otherwise, for the expected price they may go to the RMA web site indicated and select Bulletins and Handbooks and then search through the Product Management Bulletins to find the GRIP announcement. The tabled values provide GRIP expected prices for corn and wheat applicable to the select Wyoming counties.

7. RMA Crop Production and Revenue Insurance Products
GRIP for Wheat Example
A producer will be paid an indemnity when the actual county revenue, a value determined by multiplying the final county yield times the harvest price, is less than the producer’s trigger revenue
Speaker Notes:
A producer will be indemnified if the actual county revenue is less than the producer’s trigger revenue.
The actual county revenue is the harvest price, a price derived from the settlement prices for a specified future contract for the crop, times a yield established after harvest and based on National Agricultural Statistics Service data.

8. RMA Crop Production and Revenue Insurance Products
GRIP for Wheat Example (cont.)
How will the indemnity be calculated?
First a payment calculation factor is determined as:
Payment Calculation Factor= [(Trigger Revenue- County Revenue)/(Trigger Revenue)]
Then, the per acre indemnity is calculated as:
Per Acre Indemnity = (Payment Calculation Factor) x (Protection per Acre)
Total Indemnity= (Per Acre Indemnity) x (Acres Insured)
Speaker Notes:
To calculate the indemnity a ratio labeled the “payment calculation factor” is determined by the trigger revenue less the actual county revenue and the difference divided by the trigger revenue.
The per acre indemnity is the payment calculation factor multiplied by the producer’s protection per acre.

9. RMA Crop Production and Revenue Insurance Products
Using Arlen’s information from the example page, let’s say that the actual county revenue, after the harvest price and final county yield data were known, is determined to be $ per acre
Will Arlen receive an indemnity on the 100 acres he had insured? (Yes/No)
Speaker Notes:
Continuing with Arlen’s information, suppose the actual county revenue, determined several months after harvest, is $57.60 per acre.
Will Arlen receive an indemnity? Yes, Arlen will receive an indemnity. The actual county revenue of $ per acre is less than the trigger revenue of $77.76 per acre.

10. RMA Crop Production and Revenue Insurance Products
Group Risk Income Protection (GRIP): Summary
In this lesson, you have learned:
Producers likely to use GRIP are those with farm yields that are highly correlated with county yields for the crops they wish to insure
Currently GRIP has limited availability in Wyoming. It is available for corn (for grain) in Goshen County. It is available for wheat in Goshen and Laramie counties
As GRIP is a group risk product, based on county-level crop revenues, its premium subsidy rates by coverage level are the same for GRP
Speaker Notes:
This concludes our discussion of Group Risk Insurance Protection, or GRIP crop insurance. This group plan is based on per acre county-level crop income per acre rather than an individual producer’s crop revenue per acre.
GRIP covers widespread losses in crop income per acre in a county due to yield losses, price declines, or both. As producers are well aware, yield losses can arise because of a number of perils that impact yields in their county but perhaps did not occur in nearby counties such as hail or high winds. Producers also recognize that expected and harvest prices used in this product are influenced by national markets, not local market conditions.
GRIP may be attractive to producers with individual farm yields highly positively correlated with county yields. They may find this product in combination with appropriate companion single peril insurance will provide them some risk protection against declines in per acre crop income due to county-level yield losses.