Agricorp presents….AgriStability Video Shorts
Understanding elements of the program
This video short focuses on How payments are calculated
AgriStability protects you when your net income falls below 70% of your recent average income
So how are payments calculated? It's simpler than you might think
But before we get into that, it's good to know AgriStability actually works a lot like other insurance you may have
- You insure something valuable
- you have a coverage level or deductible
- and you get a payment if a loss triggers it.
What's unique about AgriStability?
Instead of covering 1 commodity at a time, AgriStability helps cover income loss of the whole farm, when disasters happen.
When you compare AgriStability to another program you may know, Production Insurance you'll see they share the same insurance basics.
Now that we see AgriStability works a lot like other insurance, let’s get back to our original question…
How do payments work?
What you’re insuring is your average net income (reference margin)
- Your coverage level is 70%
- When shortfalls trigger payments
- Your payment trigger is your coverage level
- You have this year’s net income (production margin)
- And an income shortfall (margin decline)
- Your payment is your shortfall x the compensation rate
The compensation rate is 10% higher!
Sidebar: if you know Production Insurance
Showing the same insurance basics at work
What you’re insuring is your average yield
Suppose you have a coverage level of 70%
When shortfalls trigger payments
You have a payment trigger (guaranteed production)
If this year’s yield has a yield shortfall, your payment is your shortfall x the claim price
Let's add example numbers
Average net income: $200,000
Payment trigger: $140,000
This year's net income: $100,000
Net income shortfall: $40,000
$40,000 shortfall X
80% compensation rate
Payment of $32,000
Starting with the 2023 program year, the government increased the compensation rate to 80%
So that’s how payments are calculated and how AgriStability can help protect your farm's income
Farming is a complex business
Every farm is unique
For questions specific to your farm, contact Agricorp...
and read the AgriStability publications on agricorp.com
We’re here to help