Margin Coverage Option (MCO) provides area-based coverage against an unexpected decrease in operating margin (revenue minus input costs) caused by reduced county yields, reduced commodity prices, increased prices of certain inputs, or any combination of these perils. MCO is an area-based (average for an area) plan, so it may not cover you in the event that your individual farming operation experiences a loss.
What crops and coverage levels are available?
In Ohio and Indiana, MCO is available for corn and soybeans from 86%-90% or 86%-95% coverage level. MCO follows the insurance type of your underlying coverage.
What yields and prices are used to determine expected and harvest margin?
MCO uses the same expected and final area yields as other crop insurance area plans. These yields are determined by RMA (the government agency that administers the crop insurance program). Projected crop prices are established from 8/15-9/14 against the following crop year’s November soybean and December corn futures. Final crop prices are established during October of the current crop year against the same futures. This pricing period is identical to the Margin Protection plan of insurance, but differs from other insurance plans, such as YP, RP, RPHPE, ECO and SCO, whose projected prices trade in February against November soybean and December corn futures.
What inputs and input prices are used to determine expected and harvest margin?
Inputs included in expected and harvest margins for corn are: diesel, natural gas (for irrigated crops), diammonium phosphate, urea, potash (fluctuating price). Inputs for soybeans include: diesel, natural gas (for irrigated crops), diammonium phosphate, potash (fluctuating price). The initial trading prices for these inputs are also established during the 8/15-9/14 trading period, with most of the final trading prices established during April of the current crop year against May futures. Potash does not have a trading period, but uses a calculation of other input costs to determine the fluctuating price.
How is a claim triggered?
Your trigger margin is the result of your county’s expected margin x your level of coverage. A payment may be made when the harvest margin for the county is lower than the trigger margin due to a decrease in yield, revenue and/or an increase in input costs.