South Dakota Crop Insurance Practice Exam

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Which term is used to set the guarantees under Multiperil Crop Insurance (MPCI) plans?

Yield Data
Gross Revenue
APH
RMA

The correct answer is: APH

The term that is used to set the guarantees under Multiperil Crop Insurance (MPCI) plans is the Actual Production History (APH). APH refers to the average yield of a specific crop that an insured farmer has produced over a defined period, typically the last several years. This historical yield data is critical because it forms the basis for calculating the insurance coverage that a farmer can purchase. When a farmer applies for MPCI, the APH is utilized to determine the yield guarantee, which is the amount of production that is insured. The yield guarantee is calculated by taking the APH and multiplying it by a coverage percentage chosen by the farmer, which can range based on the level of risk management the farmer wants. While yield data, gross revenue, and the Risk Management Agency (RMA) are all relevant terms within the context of crop insurance, they do not specifically denote the method used to set guarantees in MPCI plans. Yield data might be part of the information used to calculate APH, but APH is the key term that establishes the insurance coverage levels. Gross revenue pertains to financial aspects but does not specifically set guarantees, and RMA refers to the agency that administers crop insurance programs rather than a term used in calculating coverage levels.