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The CEPP (Commodity Exchange Price Provisions) serve as a complementary tool to either the Basic Provisions of the Common Crop Insurance Policy or the Area Risk Protection Insurance Basic Provisions, in addition to the Crop Provisions. These provisions outline the methods and timing for determining the Projected and Harvest prices for various crops such as barley, canola/rapeseed, corn, cotton, grain sorghum, rice, soybeans, sunflowers, and wheat.
Understanding the Projected Price and Harvest Price is crucial when it comes to Federal Crop Insurance. These prices play a significant role in the Commodity Exchange Price Provisions (CEPP), which you can access through this link.
The CEPP incorporates a range of commodity exchanges, contract months, and price discovery periods specific to each crop. In the context of this article, let’s consider Winter Wheat in Cascade County, Montana as an example to illustrate these principles.
Projected Price (PP)
The projected price represents the average daily settlement price of the pre-harvest year, specifically during the projected price discovery period for the futures contract of the upcoming harvest year. This value, which is rounded to the nearest whole cent, can be found in the table provided below. It’s important to note that the projected price will be made available within three business days after the projected price discovery period concludes.
Harvest Price (HP)
The harvest price corresponds to the average daily settlement price during the harvest price discovery period of the futures contract for the current harvest year. This value, rounded to the nearest whole cent, can be found in the provided table (below). It is important to note that the harvest price will be made available no later than three business days after the conclusion of the harvest price discovery period.
The table above provides a clear overview of the settlement period for the harvest price of both Winter and Spring Wheat, which occurs in the month of August. In contrast, the projected price for Spring Wheat is established in the month of February, while for Winter Wheat, it is determined between August 15th and September 15th.
Both the harvest price and projected price play a vital role in determining your coverages and losses, depending on the specific program you have enrolled in, whether it is Revenue Protection or Yield Protection. In our upcoming article, we will delve into the significant distinctions between these two programs, providing you with a comprehensive understanding of their unique features.
Please note that the information provided here is not exhaustive and should be regarded as general guidelines for educational purposes. For more comprehensive details, we recommend referring to the crop provisions, consulting the Crop Insurance Handbook (CIH) or Loss Adjustment Manual (LAM), or reaching out to your crop insurance agent for further assistance. These additional resources can offer more specific and in-depth information based on your individual circumstances.
There are a lot of rules behind this program, so the above information is very high level. You will want to take a deeper dive into understanding the program before making a purchasing decision. Keep in mind the above information is for informational purposes only, and does not replace anything found in the Crop Insurance Handbook, Loss Adjustment Manual, RMA’s website, etc. Always consult the Crop Insurance Handbook, Loss Adjustment Manual, RMA’s website, etc. before making a purchasing decision. Any discrepancy between the above information and the policy is not intended. The information provided in this article does not supersede policy and procedure. Any changes to the policy and procedures may make this material obsolete.