The producer has 70 per cent coverage on 100 acres of durum and the long-term individual yield is 25 bushels per acre. This provides the producer with a production guarantee of 1,750 bushels or 17.5 bushels per acre.
25 bu/acre x 70 per cent x 100 acres = 1,750 production guarantee
The producer harvests 1,000 bushels of durum on the 100 acres and the base grade is a #2. The quality of the harvested durum is downgraded to a #5. To determine the quality factor for the #5 durum, the price of the #5 durum is divided by the price for the base grade #2 durum:
$141.45/tonne (#5 CWAD) / $195.07/tonne (#2 CWAD) = Quality factor 0.73
(values are for example purposes only)
To determine the impact of the quality loss on the harvested production, the quality factor is multiplied by the harvested production:
Quality factor 0.73 x 1,000 bushels of production = 730 bushels of production
To calculate the claim, subtract the harvested production, including the adjustment for quality, from the individual production guarantee:
1,750 bushels – 730 bushels = 1,020 bushels production shortfall
The producer is now eligible for compensation for the 1,020 bushels below their production guarantee.