What does the Revenue Protection With Harvest Price Exclusion (RP HPE) protect against?

Revenue Protection With Harvest Price Exclusion (RP HPE) is specifically designed to protect crop producers from a combination of revenue loss resulting from low yields and price decreases. In this context, the policy secures farmers against financial hardships that may occur if the market price of their crops falls below the projected price at which their crop was insured. This type of insurance utilizes a fixed harvest price which is based on the projected price at planting time, excluding adjustments for any potential increases in the market price at harvest.

For example, if a farmer faces lower yields due to weather conditions or other factors and at the same time the prices decrease from when they were projected, this policy helps safeguard against that dual risk. It essentially ensures that a farmer is not fully exposed to market volatility and yield uncertainty, thus allowing better financial planning and stability despite adverse conditions.

Other options do address important agricultural risks, like loss due to pests, natural disasters, or market access issues, but they do not specifically encompass the revenue loss scenario created by yield decline coupled with price drops, which is the primary focus of RP HPE insurance coverage.