Why would a producer continue to take Production Insurance when they could participate in CAIS?
There are several reasons why a cash crop producer would continue to participate in Production Insurance (PI): • There is a linkage between CAIS and PI. Premium adjustments are paid when a separate calculation for participants who received PI benefits relating to the program year determines that the participant is entitled to additional benefits as a result of participating in both CAIS and PI. • CAIS will not cover negative margins for crop losses that could have been covered by PI. For example, a producer that has reduced corn yields but did not take PI would not receive negative margin coverage. • PI counts as income when calculating the reference margin, which prevents the reference margin from declining due to years with reduced yields. For example, producers who had PI in 2003 or 2004 will have a much higher reference margin for CAIS than if they had not had PI. • Because PI is quantity-based it still provides a valuable tool to assist producers in using marketing techniques such
Related Questions
- Can the producer put more production in a storage structure than is harvested from the unit without notifying the insurance provider?
- Why would a producer continue to take Production Insurance when they could participate in CAIS?
- Why does the CAIS program include Production Insurance payments as income?
