Revenue Protection and Yield Protection are two federal crop insurance plans available to many U.S. grain producers. Both can protect a farm when an insured natural event reduces production, but they do not provide the same type of financial protection.
Yield Protection, or YP, primarily protects the producer against a decline in harvested production. Revenue Protection, or RP, can respond to a yield loss, an adverse price change or a combination of both.
The best choice is not automatically the policy with the broadest coverage. Producers should compare premiums, marketing practices, debt obligations, crop prices and the farm’s ability to absorb losses before selecting a plan.
Key Takeaways
- Yield Protection covers qualifying production losses but does not protect against a decline in the harvest price.
- Revenue Protection covers qualifying revenue losses caused by production changes, price changes or both.
- YP uses the projected price to value both the production guarantee and production to count.
- RP generally uses the higher of the projected price or harvest price to establish the guarantee.
- Production under RP is valued using the harvest price when determining the loss.
- RP may increase the guarantee when the harvest price rises, helping producers who lose yield in a rising market.
- RP generally costs more than comparable YP coverage because it protects against additional price risk.
- Both plans still depend on approved yield, coverage level, insured acreage, share and policy provisions.
- Neither plan guarantees farm profit or covers every reduction in actual sales revenue.
What Is Yield Protection Crop Insurance?
Yield Protection is a federal crop insurance plan designed to protect against a qualifying production loss.
The USDA Risk Management Agency defines YP as a plan that provides protection only against production loss. It is available for crops for which Revenue Protection is also offered.
A producer’s production guarantee is generally calculated as:
Approved yield × Coverage level = Production guarantee
The dollar value of that guarantee is then calculated using the projected price and the selected percentage of that price.
The projected price is established under the applicable Commodity Exchange Price Provisions using settlement prices from designated futures contracts. It is determined before the insurance period and does not change based on the price the farmer eventually receives from a buyer.
According to the USDA Risk Management Agency’s insurance plan overview, producers selecting YP may choose to insure between 55% and 100% of the applicable projected price.
What Does Yield Protection Cover?
Subject to the applicable policy and crop provisions, YP may cover unavoidable production losses caused by natural events such as:
- Drought
- Excessive moisture
- Hail
- Wind
- Frost or freeze
- Flood
- Certain plant diseases
- Certain insect damage
- Other causes listed in the policy
Coverage only applies when the producer follows recognized good farming practices and meets all policy requirements.
The production loss must also be large enough to reduce production to count below the insured production guarantee.
What Does Yield Protection Not Cover?
Yield Protection does not compensate the farmer simply because commodity prices decline.
If the producer harvests the guaranteed number of bushels or more, a lower market price generally does not create a YP indemnity.
YP also does not normally cover:
- Poor management decisions
- Failure to follow good farming practices
- Uninsured causes of loss
- Price declines without sufficient yield loss
- Differences between local cash prices and the projected price
- Marketing losses
- Lost contracts
- Reduced profit margins
- Higher input costs
What Is Revenue Protection Crop Insurance?
Revenue Protection is a federal crop insurance plan designed to protect a revenue guarantee rather than only a production guarantee.
The USDA’s Common Crop Insurance Policy Basic Provisions define RP as protection against a revenue loss caused by a production loss, a price decline or increase, or a combination of these factors.
RP uses two important prices:
- Projected price: Established before the growing season.
- Harvest price: Established near harvest using the applicable Commodity Exchange Price Provisions.
The initial revenue guarantee is based on the projected price. If the harvest price is higher, standard RP generally recalculates the guarantee using the higher harvest price.
The basic guarantee formula is:
Approved yield × Coverage level × Higher of projected or harvest price
The value of production to count is generally:
Production to count × Harvest price
An indemnity may be triggered when the value of production to count is lower than the final revenue guarantee.
Revenue Protection vs Yield Protection: Main Differences
| Feature | Revenue Protection | Yield Protection |
|---|---|---|
| Primary protection | Revenue loss | Production loss |
| Yield loss coverage | Yes | Yes |
| Harvest price decline protection | Yes, when large enough to reduce insured revenue | No |
| Rising harvest price adjustment | Standard RP can increase the guarantee | No |
| Guarantee price | Higher of projected or harvest price | Projected price |
| Production valuation | Harvest price | Projected price |
| Price percentage | Generally 100% of applicable projected and harvest prices | Producer may select an available percentage of projected price |
| Premium | Usually higher | Usually lower |
| Best suited for | Farms exposed to both price and yield risk | Farms primarily concerned with yield risk |
| Marketing support | Can help protect replacement-cost exposure | Does not adjust for rising replacement prices |
The comparison assumes the same crop, approved yield, coverage level, unit structure, share and acreage.
How Yield Protection Claims Are Calculated
Consider a simplified corn example:
- Approved yield: 180 bushels per acre
- Coverage level: 80%
- Projected price: $4.50 per bushel
- Actual production: 130 bushels per acre
- Insured share: 100%
First calculate the production guarantee:
180 bushels × 80% = 144 bushels per acre
The actual yield is 14 bushels below the guarantee:
144 guaranteed bushels − 130 actual bushels = 14-bushel loss
At 100% of the projected price, the estimated indemnity is:
14 bushels × $4.50 = $63 per acre
This example excludes premium, acreage adjustments, quality adjustments, appraised production, unit-level calculations and other policy factors.
Under YP, the harvest price does not change this basic result. The projected price values both the guarantee and production to count.
How Revenue Protection Claims Are Calculated
Using the same farm information:
- Approved yield: 180 bushels per acre
- Coverage level: 80%
- Projected price: $4.50 per bushel
- Actual production: 130 bushels per acre
- Insured share: 100%
The guaranteed yield remains:
180 bushels × 80% = 144 bushels per acre
What changes is the price used to calculate the guarantee and production value.
Scenario 1: Harvest Price Falls
Assume the harvest price falls to $3.80 per bushel.
Because the projected price is higher, the RP guarantee uses $4.50:
144 bushels × $4.50 = $648 revenue guarantee per acre
Actual production is valued at the harvest price:
130 bushels × $3.80 = $494 production value per acre
The estimated indemnity is:
$648 − $494 = $154 per acre
Under the same simplified facts, YP produced an estimated payment of $63 per acre, while RP produced $154 because RP recognized both the yield reduction and lower harvest price.
Scenario 2: Harvest Price Rises
Assume the harvest price increases to $5.20 per bushel.
Standard RP uses the higher harvest price to recalculate the guarantee:
144 bushels × $5.20 = $748.80 revenue guarantee per acre
Actual production is also valued at $5.20:
130 bushels × $5.20 = $676 production value per acre
The estimated indemnity is:
$748.80 − $676 = $72.80 per acre
This feature can be valuable when a widespread production problem causes market prices to rise. A farmer with reduced production may need to replace undelivered bushels at a higher market price.
YP would continue using the original $4.50 projected price in its calculation.
Can Revenue Protection Pay Without a Yield Loss?
Revenue Protection may produce an indemnity without a yield loss if the harvest price declines far enough to reduce the calculated revenue below the guarantee.
Using the previous example:
- Approved yield: 180 bushels
- Coverage level: 80%
- Projected price: $4.50
- Actual yield: 180 bushels
- Harvest price: $3.50
The revenue guarantee is:
180 × 80% × $4.50 = $648 per acre
The value of actual production is:
180 × $3.50 = $630 per acre
The estimated RP payment is:
$648 − $630 = $18 per acre
YP would not pay in this scenario because the actual yield of 180 bushels is above the 144-bushel production guarantee.
A moderate price decline may still produce no RP indemnity. The decline must be large enough for the calculated value of production to fall below the insured revenue guarantee.
What Is the Harvest Price Option?
Standard Revenue Protection includes what is commonly called the harvest price feature. When the harvest price exceeds the projected price, the higher price is used to recalculate the revenue guarantee.
This does not mean the producer receives a payment merely because prices increased. Actual production is also valued at the higher harvest price.
The benefit primarily appears when the farm has an insured production loss during a rising-price year.
For example, a producer who forward-contracted grain before planting may be unable to deliver all contracted bushels after a drought. If market prices rise, replacing those missing bushels may be expensive. The increased RP guarantee can help address part of that exposure.
The policy does not directly insure a grain contract, margin call or specific replacement purchase. It applies its own revenue formula.
What Is Revenue Protection With Harvest Price Exclusion?
Revenue Protection with Harvest Price Exclusion, or RP-HPE, is a separate alternative.
RP-HPE protects against qualifying production losses, price declines or a combination of the two. However, the guarantee does not increase when the harvest price rises above the projected price.
The guarantee remains based on the projected price:
Approved yield × Coverage level × Projected price
Production to count is still valued using the harvest price.
RP-HPE may cost less than standard RP, but it removes the higher-guarantee protection that can be important during a short crop and rising market.
It should not be confused with Yield Protection. RP-HPE can still protect against a harvest-price decline, while YP protects only against production loss.
Do RP and YP Use the Same Approved Yield?
Both plans generally rely on an approved yield established through the farm’s Actual Production History, or APH, records.
The approved yield can be influenced by:
- Reported historical yields
- Transitional yields
- Yield substitutions
- Yield exclusions
- Trend adjustments
- Added land procedures
- New-producer rules
- Beginning farmer and rancher provisions
- Available endorsements
- Quality-adjusted production
Selecting RP instead of YP does not automatically change the approved yield. However, an inaccurate APH database can affect the guarantee under either plan.
Producers should review their production records and APH databases before the production reporting deadline.
Coverage Level and Deductible
The selected coverage level determines the percentage of approved yield protected by the policy.
If a farm has an approved yield of 180 bushels:
| Coverage level | Production guarantee | Uninsured portion |
| 65% | 117 bushels | 35% |
| 70% | 126 bushels | 30% |
| 75% | 135 bushels | 25% |
| 80% | 144 bushels | 20% |
| 85% | 153 bushels | 15% |
Availability varies by crop, county, practice and actuarial documents.
The uninsured portion is often described as the deductible. At an 80% coverage level, the farm retains the first 20% of the approved-yield exposure before other policy calculations are applied.
Increasing the coverage level normally increases both the guarantee and premium.
Which Plan Usually Costs More?
Revenue Protection generally costs more than comparable Yield Protection because RP covers price risk in addition to production risk and may increase the guarantee when the harvest price rises.
However, the exact difference depends on:
- Crop
- County
- Approved yield
- Coverage level
- Unit structure
- Irrigated or non-irrigated practice
- Projected price
- Volatility factor
- Premium subsidy
- Enterprise, optional or basic units
- Available endorsements and options
A producer should obtain quotes for all relevant plans using the same farm information. Comparing an 80% RP enterprise-unit quote with a 70% YP optional-unit quote would not isolate the cost
