South Dakota Crop Insurance Practice Exam

APH crop insurance is exclusively available for which type of commodities?

1. Traded commodities

2. Non-traded commodities

3. Organic commodities

4. Perishable commodities

The correct answer is: Non-traded commodities

APH (Average Actual Production History) crop insurance is specifically designed for non-traded commodities. This type of insurance is a critical risk management tool offered to farmers to protect them against losses due to various risks such as disease, pest outbreaks, and adverse weather conditions affecting their crop yields. Non-traded commodities typically refer to crops that are not frequently bought and sold on commodity exchanges and may include products like corn, soybeans, and wheat, which are instead significantly impacted by local and regional growing conditions rather than by global market dynamics. This distinction is important because APH insurance relies on historical production data to determine coverage levels, which aligns more with the needs and realities of production farming for non-traded crops. This type of insurance is not typically applied to traded commodities, which tend to have more established markets and pricing mechanisms. Organic and perishable commodities may also have additional considerations for insurance purposes, but APH is fundamentally tailored to non-traded commodities where individual yield history is crucial for establishing coverage.