OPTIONS TO A BASIC APPLE INSURANCE POLICY

1. OPTIONS TO A BASIC APPLE INSURANCE POLICY Adding additional quality based coverage to your apple policy

2. Perils Excluded From the Basic Policy • Size • Color • Shape • Russeting • These perils are insured causes of loss when a producer adds the quality endorsement.

3. Breakdown by Varietal Group • Varietal Group A: Fuji, Braeburn, Gala, Jonagold, Crispin, Pink Lady, Cameo, Honeycrisp, Sommerfeld, Royal Gala, and Macoun • Varietal Group B: All varieties not listed in Group A • Processing Group: Varieties grown for processing only can be excluded from the quality option and insured as processing apples at the same level of coverage.

4. Separate Database Records • Separate APH must be available for each varietal group. A maximum of 5 years is included to determine average production • Separate annual packout percentages by varietal group are averaged for 4 years. Most recent year is not included in the average to determine historical packout percentage.

5. Insuring For More Than Bushels • Producers insure for a combination of bushels and Fancy or better grade apples. • Coverage is calculated using the producer’s APH and historical packout percentage. • Each varietal group will be insured independently, but both must be insured at the same level of coverage. • Available for any buyup level from 50% to 75%.

6. Price Elections for 2003

7. Calculating $’s of Coverage • The Producer’s APH x Level of Coverage x Historical Packout % for Fancy is multiplied by the Price Election for the Varietal Group • PLUS • The Producer’s APH x Level of Coverage x Historical Packout % for All Other is multiplied by the All Other Price Election

8. $’s of Coverage Example • For Varietal Group A, the producer has a 500 bu APH, a 60% Historical Packout and chooses 65% coverage level 500 x 65% x 60% x $12.20 = $2379 PLUS 500 x 65% x 40% x $1.85 = $241 TOTAL of $2620 per acre

9. Separate Units • Each variety is not insured separately, BUT • Each Varietal Group is a separate unit when calculating $’s of coverage • Same calculations as shown previously would be done to determine $’s of coverage for Varietal Group B • Optional: Processing apples can be insured without the quality option as a separate unit.

10. Grade Appraisal at Harvest • VERY IMPORTANT: A grade appraisal must be performed by an insurance adjuster before any harvested apples are placed in storage. • Failure to meet this requirement will result in all apples not graded being counted as U.S. Fancy.

11. Loss Calculations • A combination of loss in production and/or reduced packout percentage can trigger a loss. • Cull apples are not considered in the value of production to count unless sold. • Cull apples sold are included in the value at the net value received.

12. Quality Factors

13. Loss Calculation ExamplePoor Yield, Good Quality • Using 500 bu APH, 60% historical packout, and 65% level of coverage = $2620/acre • Harvested 250 bushel with 75% packout 250 x 75% x $12.20 = $2288 PLUS 250 x 25% x $1.85 = $116 = Total of $2404 Indemnity Payment of $216/acre

14. Loss CalculationAvg Yield, Poor Quality • Using 500 bu APH, 60% historical packout, and 65% level of coverage = $2620/acre • Harvested 450 bu with 30% packout 450 x 30% = 135 less 54 bushel (Quality Factor of .60) = 81 bushel x $12.20 = $988 PLUS 450 X 70% = 315 plus 54 bushel (from Quality Factor reduction) = 369 x $1.85 = $683 $2620 - $1671 = $949 Indemnity Payment

15. Premium Costs • Premium is calculated based on the APH, Packout Percent, Level of Coverage, and Varietal Group • The higher the Historical Packout – The higher the premium per acre – The higher the $’s of coverage

16. Premium Example – Kent County, 500 bu APH, 60% Packout, 35 acres Group A, 65 acres Group B

17. Premium Comparison

18. Interested? Contact a Crop Insurance Agent At Spartan Insurance 800 888-2767 Or Call Your Local GreenStone Farm Credit Services branch office