|
Farm Profile 4
An apple orchard has a retail store with café and petting zoo and also makes cider, apple pies and donuts. The farm also sells its apples to wholesalers and some to a processor.
5 Year History of Allowable Annual Incomes/Sales (2000 - 2004)
| 2000 |
$250,000 |
| 2001 |
$230,000 |
| 2002 |
$280,000 |
| 2003 |
$330,000 |
| 2004 |
$360,000 |
| Average: |
$290,000 |
Expected Commodity - Revenue and Insurable Revenue
Product |
Expected Income |
Insurable Revenue |
Note |
Apples (for fresh market) |
$300,000 |
$300,000 |
Combined retail and wholesale sales |
Apples (for processing market) |
80,000 |
80,000 |
Combined retail and wholesale sales |
Apple cider, pies and donuts sold in the retail store and to the café |
50,000 |
25,000 |
Costs of processing including labor and materials are estimated to be $25,000 which is not insurable |
Café |
50,000 |
0 |
Income from the café is not considered agriculture production income, so it is not insurable. |
Petting zoo |
15,000 |
0 |
Income for the petting zoo is not considered animal production, so it is not insurable. |
Total |
$495,000 |
$405,000 |
|
Premium Example - for the 2006 Insurance Year
(Estimated Only. This could change depending on which county the farm is located in and what other crop insurance programs the farm might have.)
This farm has an Approved Adjusted Gross Revenue of $405,000.
Coverage Level |
Payment Rate |
Liability($) |
Total Premium ($) |
Premium Subsidy (%) |
Premium Subsidy ($) |
Farmer Premium ($) |
Premium as Percent of Liability (%) |
|
65% |
75%
90% |
$197,438
$236,925 |
$7,305
$8,766 |
59%
59% |
$4,310
$5,172 |
$2,995
$3,594 |
1.5%
1.5% |
|
75% |
75%
90% |
$227,813
$273,375 |
$12,758
$15,309 |
55%
55% |
$7,017
$8,420 |
$5,741
$6,889 |
2.5%
2.5% |
|
Coverage at the 80% level is not available for the farm because it only has two qualified crops – fresh market apples and processing apples. |
Loss and Payment Scenario (Estimated Only)
Assuming during the insurance year, a hail storm hit part of the apple orchard and caused quality and yield loss of the apple crop that resulted in some of the apple crop had to be sold for processing at a much lower price or abandoned on trees. Also a rainy fall reduced the retail store and U-pick traffic. At the end of the insurance year, the farm realized a total allowable revenue of $280,000.
The farm has an AGR-Lite policy of 75% coverage and 90% payment rate with a premium payment of $6,889.
- Approved Adjusted Gross Revenue is $405,000
- Coverage Level 75% (or loss/payment trigger) = $405,000 * 75% = $303,750
- Actual Allowable Revenue = $280,000
- Difference between coverage level and revenue realized = $303,750 - $280,000 = $23,750
- Payment Rate 90%
- Insurance Payout = $23,750 * 90% = $21,375
- Insurance Benefit/Premium Cost Ratio = $21,375/$6,889 = $3.10
Back to Farm Profiles
|
