Risk-Splitting Benefits
is indemnity based on a subset of production for a given agricultural product.
Can you elaborate on what this means, and perhaps provide an example?
Which of the BRM programs is this relevant to? What is the indemnity for?
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is indemnity based on a subset of production for a given agricultural product.
Can you elaborate on what this means, and perhaps provide an example?
Which of the BRM programs is this relevant to? What is the indemnity for?
Comments
Under a risk splitting plan, a farmer’s crop production can be divided into certain subsets:
*Different geographical areas or fields
*Different crop types or varieties
*Different stages of production
etc.
Each subset is insured independently, allowing the farmer to receive payouts if a specific subset experiences a loss, even if the overall farm production is unaffected or less affected. This provides more targeted and specific risk protection and potentially higher benefits in cases where certain portions of the farm are at higher risk of loss.
For example, a farmer grows two types of potatoes. Instead of insuring the entire potato production as a single unit, the farmer opts for a risk splitting plan and insures yukon gold and white potatoes separately.
If a drought severely impacts only yukon gold, the farmer will receive an indemnity payment based on the loss in yukon gold production, even though the white potato production may still be healthy and unaffected.
Without risk splitting, the insurance payout would consider the total potato production. The healthy white potato yield might offset the yukon gold loss, resulting in a lower or no indemnity payment.
Risk splitting allows the farmer to secure more specific coverage that better reflects the unique risks of different parts of their production
Could maybe lead to higher and more specific indemnity payments.
Probably agriinsurance and agristability