What does Revenue Protection (RP) insurance primarily protect against?

Revenue Protection (RP) insurance is designed to safeguard farmers against a combination of low prices and low yields, making it a comprehensive option for managing financial risk. This type of insurance provides coverage for the revenue earned from a crop by ensuring that if either the price of the crop falls below a certain level or if the yield is lower than expected, the farmer will receive a payout to make up the difference.

The emphasis on both price and yield is crucial because the agricultural market can be affected by various factors. For instance, a good yield may not be enough if market prices collapse, and conversely, a solid price may not compensate for poor yields. By covering both aspects, RP insurance allows farmers to stabilize their income under fluctuating market conditions and unpredictable agricultural results, thus providing a more secure financial framework. This is particularly valuable in the volatile environment of agriculture, where both price and yield can be impacted by numerous factors including climate change, globalization, and market demand shifts.

In the context of the other choices, protecting against only low prices would not address losses incurred from a poor harvest. Similarly, exclusive protection against low yields would not account for market price drops. Coverage limited to natural disasters fails to encompass the broader risks of revenue loss due to price