What is the Area Revenue Protection (ARP) guarantee based on?

The Area Revenue Protection (ARP) guarantee is based on the greater of the projected price or the harvest price. This structure is designed to provide crop insurance coverage that responds to fluctuations in market prices over the year.

When determining the guarantee, ARP aims to offer farmers a safety net against revenue loss due to reduced prices at harvest compared to projected prices set at the beginning of the coverage period. By using the greater of these two prices, the insurance effectively protects farmers in scenarios where market conditions lead to higher prices during the growing season, ensuring they are compensated adequately for their crops.

In contrast, the other options focus on fixed parameters or lower price points, which would not provide as robust a safety net against revenue fluctuations as the approach taken by ARP. This distinction is essential in understanding how agricultural revenue protection works and highlights the importance of market dynamics in the insurance framework.