South Dakota Crop Insurance Practice Exam

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What is the range for the ARPI protection factor?

60-100%
50-80%
80-120%
40-90%

The correct answer is: 80-120%

The Average Revenue Protection Insurance (ARPI) program is designed to provide financial protection to farmers by insuring their revenue based on past yields and market prices. The protection factor for ARPI is critical as it defines the range of revenue that can be insured. The correct range for the ARPI protection factor is between 80% and 120%. This means that producers can choose a level of coverage that guarantees a revenue floor at 80% of their historic revenue while also allowing for a potential upside of 120%. This range gives insured parties the confidence that they are covered for unforeseen circumstances that may impact their revenue, whether due to price fluctuations or unpredictable crop yields. Understanding this protection factor is essential for making informed decisions regarding risk management practices in agriculture and optimizing the level of insurance that producers elect to take on based on their risk tolerance and market conditions. Other options outside of this range do not reflect the operational parameters of the ARPI regulation, emphasizing why the specified range is critical for producers seeking comprehensive revenue protection.