What is the primary purpose of CAT coverage?

The primary purpose of CAT (Catastrophic Risk Protection) coverage is to serve as a safety net for low yields. This type of insurance is designed specifically to protect farmers against significant losses due to unforeseen circumstances that lead to low production levels, such as natural disasters or adverse weather conditions.

CAT coverage provides a minimal level of protection that ensures farmers receive compensation when their yields fall below a certain threshold. By covering low yields, it helps farmers stabilize their income and maintain their operations even in the face of severe setbacks. It also acts as an essential risk management tool for producers, allowing them to recover some of their costs and minimize financial distress resulting from crop failure.

The other options, while they pertain to different aspects of crop insurance, do not align with the fundamental role of CAT coverage. For instance, high-level coverage refers to more comprehensive insurance products, and administrative costs focuses on the operational side of insurance processes rather than the direct support that CAT provides to farmers facing low yields. Enhancing crop market value falls outside the scope of what CAT is designed to do, as it does not directly influence market prices but rather supports farmers through loss protection.