Group Risk Plan (GRP)

When farmers throughout your county face yield losses, chances are you face losses too. So, unlike crop insurance policies written based on your actual yields, Group Risk Plan (GRP) coverage is based on an expected county yield for insured crops. The expected county yield is calculated annually, using years of data from the National Agricultural Statistics Service (NASS). You select a coverage level and a dollar amount of insurance per acre. You don’t need to supply information about your own average yields, just the number of acres you’re planting, your share in the crop, and which crops are being planted. A “trigger yield” is calculated for your policy by multiplying the average county yield by the coverage level you select (from 70% to 90% of expected county yield). Should the average county yield fall below this trigger yield, you may be eligible for a loss payment. Indemnity payments are made after the announcement of the NASS county yield, which is generally several months after the harvest of the crop.


Overview

Protection against widespread loss of production of the insured crop in a county.

Developed on the basis that when an entire county’s crop yield is low, most farmers in that county will also have low crop yields.

You could suffer a loss and not collect an indemnity if the county average yield is above the trigger level. At the same time, you will receive an indemnity if the county yield triggers a loss even if you may not suffer an individual loss.


Benefits

Generally less costly than MPCI coverage based on your actual production history.

Less paperwork: Simplifies risk management because you only need to provide the number of acres planted by the acreage reporting date.

Production history or evidence of loss is not required because loss payments are based on the county-average yield.


Loss Triggers

Pays when the NASS-calculated county yield falls below the “trigger yield. ” Indemnity payments are calculated several months after harvest, when the NASS data is released.

Remember, you could suffer an individual loss and not receive an indemnity if the county average yield does not trigger a payment.


GRP Example

Situation: County yields fall below “trigger yield.”
Trigger Yield: Expected County Yield x Coverage Level (%) = Trigger Yield
150 bu./Acre x 90% = 135 bu./Acre
Policy Protection: Purchased Coverage x # of acres farmed = Policy Protection
$120/Acre x 200 Acres = $24,000
Triggering the Claim:
Trigger Yield – Final County Yield = Production
135 bu./Acre – 125 bu./Acre = 10 bu./Acre
Payout: Production ÷ Trigger Yield x Policy Protection = Payout 10 bu./Acre ÷ 135 bu./Acre x $24,000 = $1,777

Harvest Risk Management is an equal opportunity insurance provider.

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