What does Yield Guarantee depend on in the context of crop insurance?

Yield Guarantee in the context of crop insurance primarily relies on the Actual Production History (APH) yield per acre and the price percentage. The APH reflects the historical yield of a specific crop on a particular farm over a set number of years, which is then used to determine an insured's yield potential. The price percentage represents the expected market price of that crop. Together, these factors help establish the yield guarantee, which is the insurance company’s commitment to providing financial protection for a specified level of loss based on these evaluated metrics.

Understanding the APH is crucial, as it captures the farmer's past performance under typical conditions, while the price percentage accounts for market fluctuations. Thus, when calculating the yield guarantee, insurers utilize these data points to provide an accurate assessment of coverage for potential revenue loss due to decreased yields. This makes the combined APH yield and price percentage fundamental to determining a crop's yield guarantee within the insurance framework.