Revenue Assurance (RA)

A Revenue Assurance policy allows you to receive an indemnity payment when your gross revenue is below your revenue guarantee.  This policy allows you to select a harvest price option and more unit structure alternatives are available than with Crop Revenue Coverage (CRC). 

Big Picture

  • RA guarantees revenue per acre with comprehensive protection against weather-related losses and certain other unavoidable perils, inlcuding low crop prices. 
  • Protects against low prices, low yields, poor quality, late planting (subject to crop policy provisions), replanting costs (on many crop policies), or when planting is prevented.
  • Available for basic, optional, enterprise or whole farm units.
  • Harvest Price Option (HPO), if selected, allows for the revenue guarantee to be based on the higher of harvest prices of preplanting estimated prices.  This gives added protection if prices go up at harvest.

Benefits

  • Bottom-line revenue guarantees for more security in marketing your crop.
  • HPO can be used to offset effects of high harvest prices on insurance guarantee and marketing.
  • Provides income guarantee for bank loans.
  • Prices are set using regional commodity exchanges to more closely reflect price differences.

The basic RA policy Pays When actual revenue is less than revenue guarantees; high harvest prices may result in lower indemnity payments.  With the addition of the HPO, the greater of the harvest price or the projected price is used to calculate your guarantee.

RA Example

Situation:  Loss of production, higher price at harvest
Revenue Guarantee:  (initial and final without HPO):
APH (180 bu) x Level (.85) x Base Price ($4.05) = $619.65/Acre
Harvest Price:  $4.50
Final Revenue Guarantee:  APH (180 bu) x Level (.85) x Harvest Price ($4.50) = $688.50/Acre
Harvest Yield:  125 bu/Acre
Harvest Revenue:  Yield (125 bu) x Harvest Price ($4.50) = $562.50/Acre
RA with Harvest Price Option (HPO):
Indemnity Payment:  Final Revenue Guarantee ($688.50) - Harvest Revenue ($562.50) = $126/Acre
RA without Harvest Price Option (HPO):
Indemnity Payment:  Revenue Guarantee ($619.65) - Harvest Revenue ($562.50) = $57.15/Acre


About Water Street Solutions

Water Street Solutions helps farmers with profitability, using a business model that you won't find anywhere else.  We combine experts in the areas of financial consulting, crop insurance and commodity marketing -- and get them working together on a plan tailored for your farming business.

All opinions expressed in this website are solely those of Water Street Advisory. Client testimonials are not indicative of future performance or success. There is significant risk of loss involved in commodity futures and options trading and may not be suitable for all investors. You should always consider these risks and evaluate your suitability based on your financial condition.

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