What is one of the main differences between Revenue Protection (RP) and Yield Protection (YP)?

Revenue Protection (RP) is designed to guard against both yield loss and declines in market prices, thereby allowing farmers to maintain a level of revenue even when either of these factors negatively impacts their crop. This comprehensive coverage means that if a farmer suffers a loss in yield due to natural disasters, such as drought or flooding, or if the market prices drop significantly, RP helps to mitigate the financial impact by compensating for the lost revenue.

In contrast, Yield Protection (YP) focuses solely on the yield aspect, which means it provides coverage only for losses due to reduced crop production without addressing price fluctuations. Therefore, the main difference lies in the fact that RP encompasses price risk while YP does not. This distinction is crucial for farmers choosing the appropriate insurance coverage based on their risk management strategies.