What are all those letters and numbers on my crop insurance?

The difference between adjusted yield and approved yield in crop insurance policies comes down to whether or not certain modifications, like trend adjustments and yield exclusions, are applied when calculating the yield.

1. Adjusted Yield:

Definition: This is also known as the APH (Actual Production History) without trend adjustment or yield exclusions. It's the straightforward average of all recorded yields in the APH database for a given crop or farm.

How it's calculated: It takes into account all the historical yields from past years and averages them without applying any additional adjustments or exclusions.

When it’s used: This simpler calculation is used when no optional adjustments, like trend adjustment or yield exclusions, are chosen by the producer. It's more of a "raw" or unmodified yield calculation.

2. Approved Yield:

Definition: This is the APH with adjustments like trend adjustments and yield exclusions included, as applicable.

How it’s calculated: It incorporates trend-adjusted yields (which consider regional or county yield trends over time) and yield exclusions (which allow producers to exclude particularly poor yield years from the calculation if certain criteria are met).

Benefit: With trend adjustment, the approved yield tends to be higher because it accounts for expected improvements in crop production due to advancements in farming practices, genetics, or technology that align with local trends. This can help farmers secure better coverage levels without paying higher premiums for higher coverage.

3. Key Differences:

Adjusted Yield is a simple historical average.

Approved Yield uses trend adjustments and exclusions to reflect a more favorable (and often higher) average.

4. Trend Adjustment:

This is a particularly beneficial option for farmers. It adjusts historical yields to reflect the improvement in yields over time based on local or county data.

Farmers who opt for trend adjustment can use a lower level of insurance coverage but still benefit from a higher level of coverage due to the adjusted yield.

5. Yield Exclusions:

Yield exclusions allow farmers to exclude certain poor yield years (due to extreme events like droughts) from their APH calculation. This helps prevent lower yields from dragging down the average, allowing for a more accurate reflection of typical production.

When trend adjustments and yield exclusions are not used, the approved yield equals the adjusted yield. However, when used, they can lead to a more favorable yield calculation and better insurance outcomes for farmers.

Happy Farming!