Is Margin Protection Right For You?

Every producer wants to protect their crops. From fertilizers and fungicides to herbicides, farmers do their best to ensure a healthy crop from seed to harvest. Some things are out of one’s control like flooding, fires or even poor growing conditions. That’s where crop insurance comes in - to help protect the farmer.

The deadline to add margin protection to your crop insurance is September 30, 2023.

What is Margin Protection?

There is a product offered by the RMA that can help above and beyond in some circumstances. Margin protection federal crop insurance provides you coverage against an unexpected decrease in your operating margin (revenue less input costs). Margin protection is location-based, using estimates of average revenue and input cost on a county-level to establish the amount of coverage and potential payments.

Eligible Insurance Plans

Margin Protection can be purchased by itself or in conjunction with a Yield Protection or Revenue Protection policy purchased from the same Approved Insurance Provider that issued the Margin Protection policy. If you buy a Yield Protection or Revenue Protection policy, you will receive a Margin Protection premium credit to reflect that indemnity payments from one policy can offset payments from the other. You may buy any optional coverages or endorsements available for the base policy, except the Supplemental Coverage Option and Enhanced Coverage Option are not allowed on the crop if you purchase Margin Protection.

Coverage Levels and Premium Subsidies

Margin Protection provides coverage that is based on an expected margin for each applicable crop, type, and practice.

Expected Margin = Expected Revenue – Expected Cost, where:

Expected Revenue (per acre) is the expected county yield multiplied by a projected commodity price; and

Expected Cost (per acre) is the dollar amount determined by multiplying the quantity of each allowed input by the input’s projected price.

Trigger Margin = Expected Margin – Deductible, where the deductible is 1.00 minus the coverage level multiplied by the expected revenue.

Coverage levels are offered from 70 to 95%. A higher level of coverage will have a higher premium rate. You may also choose to purchase Margin Protection with the Harvest Price Option (MP-HPO). Under MP-HPO, if the harvest price exceeds the projected price, the expected revenue used in setting trigger margins is reset based on the harvest price.

Loss Payments

If the trigger margin is higher than the harvest margin, a loss may be paid. If there is a loss paid under your Yield Protection or Revenue Protection policy, the indemnity amount from that policy will be subtracted from any loss under your Margin Protection policy.

Are you eligible?

Possibly! Contact an UnCommon Farms crop insurance expert to learn more and discuss your options. Contact information is provided below.

Margin Protection Availability by Location

Rice

Corn 

All States Except Alaska and Hawaii

Wheat

Soybeans

Determining the Margin

When determining the margin, two types of inputs are considered: those subject to price change as listed below, and those not subject to price change (i.e., fixed from planting to harvest). Inputs not subject to price change are not specifically identified, but include seed, machinery, operating costs (other than fuel), and similar expenses. Inputs subject to price change are identified in the Margin Provisions and include the following:

Want to learn more about margin protection and if it is an option for your farming operation? Talk to one of our crop insurance agents today. Our crop insurance experts can help you navigate Margin Protection and your other crop insurance needs.