What Is T Yield In Crop Insurance?

Underreporting of planted acreage per unit: Production for an insured crop is calculated from all planted acreage per unit for that crop. Inflated yields and a lesser indemnity payment result from under-reported acres.
Over-reported acreage per unit: Acreage will be decreased to the right amount of acres if it is over-reported. Due to the reduction in your overall guarantee (not your per acre guarantee), your indemnity payments will be slightly lower, and any premium overpayment will be repaid.
Failure to report all farm serial numbers (FSNs) planted: FSNs that aren’t reported won’t be covered. This error usually occurs when new land is added, but it sometimes happens when a producer forgets to include the planted acreage figure beneath the farm number on their acreage reporting form. The payment of indemnification will be lowered.
Failure to submit production for all farm serial numbers (FSNs): If all FSNs with production information are not reported on or before the production reporting date, production cannot be contributed at the time of acreage reporting. The variable T-yield approach will be used to assign a yield to the unit that is not producing; this yield will be lower than the grower’s real yields. The amount of the indemnification payment will be reduced. If the insured can’t offer a minimum of four years of actual production history, T-yield is a projected county yield of the insured crop.
Failure to elect “New Producer” status: If you are a new producer, you will have your crop yield awarded using the variable T-yield method (a proportion of the county T-yield) rather than the more favorable way of using 100% of the county T-yield. The amount of the indemnification payment will be reduced.
Failure to identify additional land will result in a yield estimated using the variable T-yield approach rather than more advantageous methods. The payment of indemnity will be reduced.
Harvesting the crop in a way that is not insured: For example, if a producer insures his corn as grain but harvests it as silage without notifying the crop insurance provider and filing a claim, the adjuster will be unable to assess the grain content of produced corn silage. There will be no payment of indemnification.
Production for a crop that is destroyed before the claim adjustment is made will be assessed at the full production guarantee, and no indemnity will be given.

What is TA yield?

Yield Adjustment (YA), Yield Endorsement (YE), and Trend-Adjustment Yield Endorsement are all options for determining yields used in crop insurance guarantee and premium calculation for farmers and other insureds (TA). To assist in analyzing these options, the APH Yield Calculator has been included to the 2016 Crop Insurance Decision Tool. Farmers should choose the alternative that yields the highest Actual Production History (APH) yield as a general rule. This occurs frequently as a result of 1) utilizing TA, 2) using YE in years where it is available and omitting the yield raises the Actual Production History (APH) yield, and 3) using YA when the actual yield is less than the YA substitute yield and YE is unavailable.

YA, YE, and TA

When more than four years of yields are available, the yields used to determine crop insurance guarantees and premiums are usually based on the insurable unit’s actual yields. Yield Adjustment (YA), Yield Endorsement (YE), and Trend Adjustment Endorsement can all be used to adjust APH yields in some instances (TA).

Where the T-yield or transitional yield is defined by the Risk Management Agency, YA permits 60 percent of the T-yield to replace the real yield (RMA). When the actual yield is less than 65 percent of the T-yield, using YA may be useful. As an example, consider a T-yield of 125 bushels per acre. In this scenario, YA permits any yield below 75 bushels per acre (.60 x 125 T-yield) to be substituted for 75 bushels per acre (.60 x 125 T-yield). A YA substitute isn’t always possible. The insured must make the request.

YA, YE, and TA Decisions and the 2016 Crop Insurance Decision Tool

The APH Yield Calculator, which is part of the 2016 Crop Insurance Decision Tool, can be used to assess the effects of YA, YE, and TA decisions (available for download here). Figure 1 depicts a calculator example for corn farmed in Saline County, Illinois. County yields are used in this example: 139 bushels per acre in 2006, 126 in 2007, 153 in 2008, 163 in 2009, 133 in 2010, 132 in 2011, 50 in 2012, 171 in 2013, 188 in 2014, and 187 in 2015. (see Figure 1).

The TA element comes into play. In Saline County, the corn factor is 1.58 bushels per acre (See Figure 1)
The T-yield for 2016. In Saline County, the T-yield for corn in 2016 is 132 bushels per acre (See Figure 1)
Yields from a YA replacement. The T-yield of a YA substitution is equivalent to 65 percent of the T-yield of the previous year. Substitute yields in Saline County range from 60 bushels per acre in 2006 to 79 bushels per acre in 2015.
Eligibility for a YE position. Years with a YE are denoted by an asterisk (*) “In the YE eligibility column, type “use.” The actual corn yield in Saline County in 2012 can be ignored.
The average of all real yields is commonly called rate yield. The rate yield in this example is 144 bushels per acre.
The impacts of YA substitutions are included in adjusted yield (or APH without YE and TA).
Yield that has been approved (or APH with YE and TA). This yield takes into account TA adjustments and excludes years in which YE is selected. The allowed yield in this case is 153 bushels per acre. The approved yield equals the adjusted yield if TA and YE are not employed.
Use TA or don’t use it. Figure 1 depicts the situation where TA was used, resulting in a yield of 154 bushels per acre being approved. The permitted yield without TA is 144 bushels per acre, which is the same as the rate yield in this case.
In 2012, YA was not used. The actual yield of 50 bushels per acre is less than the 75 bushels per acre substitution output. Figure 2 depicts the YA selection, as indicated by the arrows “In the 2012 row, it’s “YA.” When YA is combined with TA, an adjusted yield of 147 bushels per acre and an approved yield of 157 bushels per acre is achieved.
In 2012, you can either utilize or not use YE. Because of YE, the 2012 yield can also be discounted. If YE is selected, 2012 is excluded from the approved yield calculation (see Figure 3). In this example, the permitted yield is 164 bushels per acre (see Figure 3).

Both YA and YE are accessible for this Saline County case in 2012; however, neither YA nor YE can be employed in 2012. It must be decided whether to use YA, YE, or the actual yield.

In most circumstances, choosing the option that produces the maximum APH yield will benefit the farmers. In the case of Saline County, this means 1) using TA and 2) excluding 2012 using YE. This yields in a 164 bushel per acre acceptable yield.

Caveats

Because there are ten actual yields to base the rate, adjusted, and approved yields on, the preceding example is quite simple. When just four or fewer real yields are available, things get a lot more difficult. T-yields are used in the calculation of APH yields in certain cases.

APH yields have yield floors as well (106 bushels per acre in the example in Figure 1). In some cases, the APH yield cannot fall by more than 10% from the previous year’s APH. The use of YA, YE, and TA is linked to the ability to apply yield floors and caps.

Summary

In determining the insurance guarantee, most farmers will find it advantageous to have the largest production. If enough yield data is available, the following options usually produce the highest APH yield:

Utilizing YE instead of the real yield results in a lower authorized yield, and using YE results in a lower approved yield.
When the actual yield is less than the substitute yield and YE is not available, YA is used.

What is yield crop insurance?

Yield Protection (YP) is a broad-based crop insurance program governed by the Risk Management Agency (RMA) of the United States Department of Agriculture and supported by the Federal Crop Insurance Corporation (FCIC). In some jurisdictions, not all of these crops are covered.

What are the two main types of crop yield insurance?

Crop insurance for main field crops is divided into two categories: yield-based coverage, which pays an indemnity (covers losses) in the event of low yields, and revenue plans, which guarantee a certain level of crop income based on both yields and the prices that determine a crop’s worth. The primary ones have the following characteristics. The USDA’s Risk Management Agency (RMA) website has descriptions of fresh produce policy and pilot programs.

MPCI (Multiple Peril Crop Insurance) protects crops against natural disasters like drought, excessive precipitation, hail, wind, cold, insects, and disease. You decide how much of your average return you wish to insure, ranging from 50% to 75%. (in some areas up to 85 percent ). You can also select a percentage of the crop’s projected price, ranging from 55% to 100%. This pricing is established by RMA on an annual basis. Due to the uncertainties surrounding the agricultural bill, it had not been set as of press time.

What is trend adjustment in crop insurance?

For each crop and county, a trend adjustment factor is calculated. This factor is equal to the projected annual increase in production and is calculated each year by the National Agricultural Statistics Service (NASS) using county average yields.

How do you calculate APH for crop insurance?

Establishing the proven yield and unit structure is the first stage in building a crop risk management program for a farm. Except for the Area RiskProtection Insurance (ARPI) Products, the actualproduction history yield (APH) is used to set the guarantees under all Federal CropInsurance Corporation (FCIC)-backed insurance plans. True risk mitigation must be based on the farm’s ability to produce. The most practical technique of assessing it is to provide historical yield information.

Actual Production History

For each insurance unit, records must be kept for a minimum of four years and a maximum of ten years in order to prove an APH yield. Sale receipts, farm or commercial storage records, and feed consumption records are all examples of evidence used to prove crop yields. The records must span multiple years, beginning with the most current year and going backwards in time. When a missing year is reached, no previous history can be used. For example, if a producer has nine years of production records spanning a ten-year period, only the years after the missing one are counted, i.e., if one year of data is missing from six years ago, only the most recent five years of records are used. It is not permissible to reduce a yield from one year to the next due to poor output in that year. If the crop being insured was not planted in a specific year, an exemption can be made. In that situation, a zero acreage report is filed, and records are kept indefinitely, even if no data is available for that year. This is critical for growers who rotate crops and those who have summer fallow acres that aren’t typically planted to the same crop year after year.

Transition Yields

If at least four years of records are absent, a transition or Tyield must be substituted for each missing year. Each Tyield is unique to that county. It’s based on the county’s 10-year historical average yield. APH yield was awarded to growers who had no data at 65 percent of the T yield (Example 1). Growers who set a record in one year receive 80% of the Tyield in the following three years. They obtain 90% of the T yield with two records, and 100% of the Tyield with three records for the one remaining year required to calculate the APH. The APH is simply the average of the four yields after each year has been allocated a yield.

Because of the reduced T yields, the APH yield may be significantly lower than the actual predicted yield if only a few years of yield records are available. Buying an ARPI Product, which is based on county yields rather than individual farm yields, could be a suitable strategy in that instance. This may provide more security as the farm establishes records to determine a realistic APH production.

APH will receive 100% of the T yield for a new farmer or one who has never planted the crop to be insured. The Tyields will be replaced with actual production each year if the crop is grown for four years. New producers who have been directly linked with farming a particular unit in the past, such as children taking over a family farm, can utilize the prior operator’s records to determine an APH yield.

The APH is the simpleaverage of all of the yearly reported yields once four years or more of production history is available. The four years of history will eventually be extended to ten. After ten years of data, the APH transforms into a moving ten-year average yield. The oldest record is removed from the equation as each new year of production history is added.

Cup and Floor

When a new yield record is added to the APH’s history, the APH has a 10% cup, which means that the proved yield cannot fall by more than 10% in a single year.

For growers with only a one-year record, the APH has a floor equal to 70% of the T output.

Growers with two to four years of production records have a floor of 75% of T output, while those with five or more years of yield records have an 80 percent of T yield floor. This prevents a year in which a producer experiences a significant crop failure from having an excessively high impact on the APH output, especially when only a few years of yield data are available.

Producers can also ask for a poor yield for a specific year to be substituted with a yield equivalent to 60% of the county T yield. Beginning farmers can replace a low yield with 80 percent of the county T output if they qualify. As a result, this becomes the minimal yield reported. This adjustment can be requested for any previous year in which the APH yield was calculated.

Although the APH yield is normally just a basic average of an insuranceunit’s production history, a grower who starts farming, adds more land, plants a new crop, or suffers a crop failure can trigger one or more of the special conditions. As a result, long before the sign-up date, it is a good idea to create the APH for each insurance unit with a licensed crop insurance agent. Even at the catastrophic level of coverage, each farmunit requires an APHvalue.

Insurance Units

A unit is a piece of land that is insured separately from other parcels. Several insurance units can be found in a single farming business. It is conceivable to get called out and receive an indemnity payout on one unit while other units on the same farm produce a record yield. As a result, many farmers enjoy dividing their country into as many sections as possible. Of course, this might mean higher premiums for each.

Basic Units

Within a county, producers might specify a basic unit for any land tracts they own or cash rent. They also get one basic unit for each piece of land they rent from a separate landowner. If a crop is planted on land rented under a cropshare lease with Mr. Smith (Farms B & E), a cash rent lease with Mrs. Jones (Farms C & D), and a crop share lease with Black, Inc. (Farm G), and the other crop land is owned (Farms A & F), the land would qualify as three basic units (Example 2). Each crop share owner would have one basic unit, while the cash rented and owned land would have one basic unit. Each crop share proprietor might insure his or her own crop interest as a distinct unit as well.

Each single crop forms its own unit, and land parcels in different counties must be insured separately. Each crop may have its own policy and level of coverage, as well as an indemnity payment that is unrelated to the other units. Each basic unit must have its own production records. Producers can get a 10% discount on their premiums if they insure all of their acres as basic units.

Optional Units

If the four farms mentioned above were all owned or rented on a cash lease, each crop would only be eligible for one basic unit. The operator might choose to insure the four farms as four independent optional units if they were located in four different township parts. The operator would not be eligible for the 10% premiumdiscount until each optional unit has its own APH record.

When a crop is grown using distinctly different farming procedures, optional units may be assigned. Optional units may be available to growers who have both irrigated and dryland acres of the same crop. However, there must be a clear distinction between irrigated and dry land acres. Other unique farming practices may qualify acres for insurance as individual units.

Enterprise Units

Enterprise units are an option in both Yield Protection (YP) and Revenue Protection (RP and RP-HPE) policies. An enterprise unit is a single unit that unites all acres of a single crop within a county in which the policyholder has a financial interest, regardless of whether they are owned or rented, or how many landlords are involved. Maize-soybean growers, for example, might have only two enterprise units for the entire country: a corn enterprise unit and a soybean enterprise unit. Two or more basic units must be merged to form an enterprise unit. Within a county, the crop must be grown in at least two township sections, with at least two of the sections having the smaller of 20 acres or 20% of the total area of the crop.

Due to the fact that enterprise units are often larger than basic or optional units, the average yield is less likely to be low enough to trigger an indemnity payment in a given year. As a result, premiums for business units are frequently smaller. Furthermore, they receive the same monetary subsidy as basic units, resulting in a greater subsidy percentage (Table 1).

Whole Farm Unit

Growers who combine their corn and soybean acres into a single insurance unit might save even more money on their premiums. A wholefarm unit is what this is termed. The discount amount will be determined by the percentage of total acres planted to each crop. The highest entire farm unit premium reduction is available to growers who plant an equal number of corn and soybean acres. At higher levels of coverage, the premium subsidy is likewise larger for full farm units. Only Revenue Protection (RP) and Revenue Protection (RP-HPE) whole farm units are available.

When deciding on insurance units for their crops, all producers should consult with an informed crop insurance consultant.

All of the farms in this business would qualify for one enterprise unit.

Additional enterprise units could be defined if more than one crop was cultivated, or if some farms were located in a different county.

All acres on the farms displayed might be consolidated into a single complete farm unit if both corn and soybeans were planted.

Other counties may be able to designate more complete farm units.

What is variable t-yield?

Before applying APH YE, any variable T-Yield percentage uses the number of actual/assigned yields for the crop/county. Example: For the crop/county, a producer has four actual/assigned yields. The producer possesses an APH database with three actual yields, two of which are suitable for exclusion, which the producer has done.

How is insurance yield calculated?

Yield on Invested Assets – Insurance Term (IRIS) It’s the difference between the mean of cash and net invested assets divided by the annual net investment income after expenses. The average return on a company’s invested assets is measured by this ratio. This is the ratio before capital gains and losses, as well as income taxes.

What percentage of the T-yield will the insured receive if no production history is submitted and no indication of new producer status is given?

If no producer records are submitted, the adjusted yield will be 65 percent of the transitional or determined yield; 80 percent if one year’s worth of records are submitted; and 90 percent if two years’ worth of records are submitted. (d) A well-received product.

What are the types of crop insurance?

Currently, four crop insurance schemes are being implemented in the country: the National Agricultural Insurance Scheme (NAIS), the Pilot Modified National Agricultural Insurance Scheme (MNAIS), the Pilot Weather Based Crop Insurance Scheme (WBCIS), and the Pilot Coconut Palm Insurance Scheme (CPIS).

What is Upsc crop?

Even as the Centre made the plan optional and decreased its contribution, domestic general insurance companies are gradually lowering their exposure to the Pradhan Mantri Fasal Bima Yojana (PMFBY) to reduce their losses due to excessive claims.

In 2020, PMFBY and the RWBCIS (Restructured Weather Based Crop Insurance Scheme) were restructured.

Key Points

The Ministry of Agriculture and Farmers Welfare administers the program, which began in 2016.
The National Agricultural Insurance Scheme (NAIS) was replaced, and the National Agricultural Insurance Scheme was modified (MNAIS).
Aim: To provide a comprehensive insurance protection against crop failure, thereby assisting farmers in stabilizing their income.
All food and oilseed crops, as well as annual commercial and horticultural crops for which yield data is available, are included.
Premium: Farmers are required to pay a premium of 2% for all Kharif crops and 1.5 percent for all rabi crops. The premium is 5% in the case of annual commercial and horticultural crops.
The expense of premiums over and beyond the farmer portion was subsidized equally by the states and the government of India.
However, to encourage uptake in the region, the Government of India split 90% of the premium subsidy with the North Eastern States.
Empaneled general insurance companies will carry out the implementation. The concerned state government selects the Implementing Agency (IA) through a bidding process.
PMFBY 2.0: The redesigned PMFBY is commonly referred to as PMFBY 2.0, and it includes the following features:
Enrollment is completely voluntary for all farmers beginning in the 2020 Kharif season.
Previously, loanee farmers were required to open a Crop Loan/Kisan Credit Card (KCC) account for notified crops.
Limitation on Central Subsidy: The Centre has agreed to cap PMFBY premium rates at 30 percent in unirrigated areas and 25 percent in irrigated areas, against which it will bear 50 percent of the subsidy.
More State Flexibility: The government has provided states/UTs more flexibility in implementing PMFBY by allowing them to choose from a variety of additional risk covers/features.
Investing in ICE Activities: Insurance companies must now invest 0.5 percent of total premiums collected on IEC activities.
Aim:To protect insured farmers against financial loss due to projected crop loss caused by adverse weather conditions such as rain, temperature, wind, humidity, and so on.
WBCIS compensates cultivators for deemed crop losses by using weather parameters as a “proxy” for agricultural yields.

Challenges in Implementation

Sustainability: In order for insurance markets to function, they must have (a) low risk and (b) low risk correlation among persons purchasing insurance.
Both assumptions are likely to be wrong, given that the program is designed to mitigate the hazards of drought and flooding.
This is because when severe weather strikes, it affects all regional farmers (high correlation), and the occurrence of bad weather is high (once in 5-7 years ie. loss probability of 14 percent – 20 percent ).
According to the PMFBY, premium rates will be 1.5-2 percent, with the balance subsidized by the government. This is negative in the long run and encourages risk-taking, particularly for crops with low MSPs.
Insurance Companies’ Role and Power in Claim Settlement: Insurance companies play a huge role and have a lot of power. It did not analyze losses caused by a localized tragedy in many situations, and as a result, did not pay the claims.
State governments failed to release cash on schedule, causing insurance compensation to be delayed. This defies the scheme’s entire objective, which is to offer timely financial aid to farmers.
Farmers are unaware of crop insurance plans and have little recourse if they have a grievance. At both the federal and state levels, there is a need for a good grievance redressal system and monitoring mechanism to ensure that farmer complaints are resolved quickly.
Identification Issues: The PMFBY program currently does not distinguish between large and small farms, posing an identification problem. The most susceptible group is small farmers.

Way Forward

Awareness Raising: Raising awareness will be one of the most difficult aspects of the scheme’s execution.
The government is also looking for active participation from all stakeholders, particularly states and implementing insurance companies, in order to launch a public awareness campaign/awareness program in rural regions to raise farmer understanding of crop insurance schemes.
Bringing Behavioural Shift: Much more needs to be done to change people’s minds about the expense of insurance as a necessary input rather than a money-back investment.
Waivers and Service Delivery Should Be Rationalized: Loan waiver initiatives launched by state governments, as well as required Aadhar linking, should be rationalized to allow PMFBY to reach a wider audience.
Role of Technology: If farmers have access to localized weather forecasts, drought risk, disease risk, and soil analysis data, which is now much more freely available thanks to technology, they can be more proactive about risk and plan accordingly, decreasing their losses.
The information can also be used to resolve local disaster disputes, which can be difficult to resolve at times.
Insurance firms can use technology to be better prepared and handle premiums and settlements more efficiently.
Beed Model: The government may explore implementing the crop insurance scheme’s ‘Beed model.’ The insurer’s potential losses are limited under this plan.