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RMA launches new Area Risk Protection Insurance plan

Brandon Willis

Brandon Willis

Farmers who prefer to take out crop insurance based on the yield and revenue in their area rather than on the individual farm will have the option of a new simplified policy beginning with winter wheat this fall, Agriculture Department Risk Management Agency Administrator Brandon Willis said today.

“We are trying to make things easier for producers,” Willis told The Hagstrom Report.

Only about 5 percent of producers currently use area plans, but they are popular in states such as Iowa in which individual yields and area yields are similar. Under the new plan, producers who take out area coverage will have to report their yields, which they did not have to report under the previous plans, Willis said.

RMA announced that it has combined two previous area policies: the Group Risk Plan (GRP) and the Group Risk Income Protection Plan (GRIP) into the Area Risk Protection Insurance (ARPI).

RMA put out the initial rule on ARPI in 2011, received 300 comments and the agency believes it has addressed the issues raised in the rule.

Crop insurance industry groups did not respond to requests for comment today.

In the past farmers who wanted area coverage for both yield and revenue loss had to take out two policies.

“ARPI combines the Group Risk Plan (GRP), which covers against loss of yield due to a county level production loss, and the Group Risk Income Protection Plan (GRIP), which covers against loss of revenue due to a county level production loss, price decline, or combination of both, into one insurance policy,” RMA said in a news release. “With the publication of this final rule the GRP and GRIP insurance plans will not be available for the 2014 crop year.”

  • RMA also said:
    Under ARPI, producers will be able to choose from one of three area insurance plans: Area Revenue Protection, Area Revenue Protection with the Harvest Price Exclusion, or Area Yield Protection all under one umbrella policy with specific provisions for each crop. Previously, under GRP and GRIP, insurance providers would issue two separate policies, so a policyholder might have had multiple copies of essentially the same information.
  • ARPI includes crop provisions for barley, corn, cotton, forage, grain sorghum, peanuts, soybeans, and wheat. The first major contract change date is June 30 for wheat. Current GRP and GRIP policyholders do not have to reapply as their policy will roll to the similar ARPI plan of insurance.
  • ARPI uses the same Commodity Exchange Price Provisions (CEPP) that the Common Crop Policy uses, providing consistent prices for both individual and area-based insurance plans. ARPI includes provisions that will require production reporting by a production reporting date at the conclusion of the current insurance year to assist in more accurately and efficiently operating the area-based program.

Here are the states currently using GRP and GRIP:
  • Colorado
  • Illinois
  • Indiana
  • Iowa
  • Kansas
  • Kentucky
  • Louisiana
  • Maryland
  • Michigan
  • Minnesota
  • Mississippi
  • Missouri
  • Nebraska
  • North Carolina
  • Ohio
  • Oklahoma
  • Pennsylvania
  • South Dakota
  • Tennessee
  • Texas
  • Wisconsin