South Dakota Crop Insurance Practice Exam

The harvest price for RP cannot exceed what percentage of the projected price?

1. 150%

2. 200%

3. 75%

4. 100%

The correct answer is: 200%

The harvest price for Revenue Protection (RP) insurance is designed to provide producers with a safeguard against price volatility during the growing season. The underlying principle is that the harvest price should accurately reflect the market conditions at the time of harvest and should remain within a reasonable limit compared to the projected price established at the beginning of the growing season. In this context, the correct answer indicates that the harvest price can reach up to 200% of the projected price. This means if the projected price is set at a certain level, the maximum harvest price that can be insured would be double that amount. This provision serves to ensure that producers are adequately protected against significant price increases they might encounter due to market fluctuations or other economic factors by allowing them to secure coverage that reflects the new market realities at the time of harvest. The concept is rooted in providing a balance between risk management and the economic realities facing producers, allowing them flexibility while ensuring adequate protection under the insurance coverage. Consequently, higher harvest prices would allow for potential benefits that align with the market shifts that occur post-planting.