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Farm Profile 8
A greenhouse operation grows bedding plants, hanging baskets and potted flowers (i.e. geranium) in the greenhouse, and also some perennials and hard mums in the fields. The store opens April to October and sells directly to the public.
5 Year History of Allowable Annual Incomes/Sales (2000 - 2004)
| 2000 |
$80,000 |
| 2001 |
$90,000 |
| 2002 |
$120,000 |
| 2003 |
$130,000 |
| 2004 |
$150,000 |
| Average: |
$114,000 |
Expected
Revenue for the Insurance Year - Expected Income and Insurable Revenue
|
Product |
Expected Income
|
Insurable Revenue
|
Note |
|
Greenhouse crops |
$140,000 |
$140,000 |
Produced and sold at the retail market |
|
Nursery crops - trees/shrubs purchased for resale and perennials produced on farm |
$50,000 |
$30,000 |
The cost of purchasing trees and shrubs for resale at the retail market was $20,000. That amount is not insurable income. |
|
Total |
$190,000 |
$170,000 |
|
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 $170,000.
Coverage Level |
Payment Rate |
Liability($) |
Total Premium ($) |
Premium Subsidy (%) |
Premium Subsidy ($) |
Farmer Premium ($) |
Premium as Percent of Liability (%) |
|
65% |
75%
90% |
$82,875
$99,450 |
$2,156
$2,585 |
59%
59% |
$1,272
$1,525 |
$884
$1,060 |
1.1%
1.1% |
|
75% |
75%
90% |
$95,625
$114,750 |
$3,824
$4,589 |
55%
55% |
$2,103
$2,524 |
$1,721
$2,065 |
1.8%
1.8% |
|
Coverage at the 80% level is not available due to not meeting the minimum 3 qualified crops rule. |
Loss and Payment Scenario (Estimated Only)
Assuming during the insurance year, a cold and rainy spring reduced retail sales. Moreover, a new Home Depot with a large garden outlet opened up right down the road and offered large price discount to attract new sales also lowered customer traffic for the business during the year. The greenhouse business had to lower prices of many crops to compete. At the end of the insurance year, the farm realized a total allowable revenue of $115,000.
The farm has an AGR-Lite policy of 75% coverage and 90% payment rate with a premium payment of $2,065.
- Approved Adjusted Gross Revenue is $170,000
- Coverage Level 75% (or loss/payment trigger) = $170,000 * 75% = $127,500
- Actual Allowable Revenue = $115,000
- Difference between coverage level and revenue realized = $127,500 - $115,000 = $12,500
- Payment Rate 90%
- Insurance Payout = $12,500 * 90% = $11,250
- Insurance Benefit/Premium Cost Ratio = $11,250/$2,065 = $5.44
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