Coverages | MPCI | Malting Barley

MPCI for Malting Barley

Multiple Peril Crop Insurance (MPCI) provides comprehensive protection with a yield and quality guarantee. The perils covered are weather related and certain other unavoidable causes of loss. Coverage levels are available from 50 to 75% in increments of 5% (80 and 85% coverage levels available in limited areas) of the Actual Production History (APH). Malt barley is first insured as feed barley (optional units available) through the small grains provisions. Then a value added endorsement is selected at the time of application to insure malt barley as a separate single unit1. The malting barley endorsement provides additional price and quality coverage for approved malting barley varieties.

Options A and B

Option A is for non-contracted or partially contracted malt barley producers. Option B is designed for producers who grow malting barley under contract. The added value price election cannot exceed $.70 per bushel under Option A. For Option B, the added value price will be established by using the contracted price minus the maximum price election for feed barley (not to exceed $2.00 per bushel).

Eligibility

The acreage must be planted to an approved malting variety and Option A or B must be selected by the sales closing date. Option A requires acceptable records of malting barley sold and number of acres planted to malting varieties for at least four crop years prior to the most recent crop year. Option B requires that a copy of an acceptable malting barley contract2 be provided by the acreage reporting date.

Guarantee

The guarantee for malt barley is: Option A - the lesser of the guarantee established for malt barley or the guarantee established for feed barley. Option B - the lesser of the guarantee established for feed barley or the number of bushels obtained by dividing the number of contracted bushels by the number of acres multiplied by the coverage level.

Production to Count

The production to count is the total production plus any appraisals meeting the quality criteria in the endorsement.

Loss Payment (indemnity)

To calculate the amount of loss payable, subtract the production to count from the guarantee. Multiply the result by the elected additional value price, the insured acreage, and the ownership share.

How It Works (illustration)

The total acreage of barley is guaranteed at 3,000 bushels. Production is only 1,500 bushels. The production does not meet malting barley quality standards as stated in the endorsement, so it is sold as feed barley. Thus, it is eligible for loss payment on the total guarantee. The following example assumes 100% ownership of the crop under Option B.

	Guarantee	Production to Count	Bu. Loss	Price Election	Loss Payment
Feed Barley	3,000 Bu. -	1,500 Bu. =	1,500 Bu.×	$1.80 =	$2,700
Malt Barley	3,000 Bu. -	0 Bu. =	3,000 Bu.×	$1.00 =	$3,000
Total Loss Payment					$5,700

Benefits

1. Can help to improve profits in good and bad years.
2. Stability for long-term business plans.
3. Improved risk and financial management.
4. Cash flow safety net.
5. Provides loan collateral.
6. U.S. D.A. shares in premium costs.

Availability

This coverage is available in Colorado, Idaho, Minnesota, Montana, Nebraska, North Dakota, Oregon, South Dakota, Washington, and Wyoming. MPCI is also available for over 50 crops nationwide in most commercial areas.

1 Insurance Unit: All the insurable acreage of approved malting varieties in the county on the date coverage begins for the crop year.

2 Malting Barley Contract: An agreement in writing between the producer and a brewery or a business enterprise that produces or sells malt or processed mash to a brewery, or a business enterprise owned by such brewery or business that contains the amount of contracted production, the purchase price, or a method to determine such price, and other such terms that establish the obligations of each party to the agreement.

03/21/01 --- 11/04

Note: This summary is for general illustration only. See policy for program details.