Crop Insurance

As corn and soybean prices have continued to fall, expectations for potential indemnification from crop insurance revenue-based products rise. While Supplemental and Enhanced Coverage Option (SCO and ECO) policies are not nearly as widely used as the Revenue Protection (RP) crop insurance policies, they can provide additional coverage, especially in years when prices fall significantly from Spring to Fall. 

SCO and ECO policies supplement a producer’s underlying individual coverage with additional area-based coverage.  At current futures price levels, payments from ECO seem likely for 2024, particularly if county yields are not too far above trend yields.  Area (usually county) yields at or above expected levels would negate payments from SCO at current price levels.

Background

  • SCO provides county-based coverage with an 86% coverage level.  The coverage range extends from 86% down to the coverage level of the farmer’s underlying individual plan.  For example, SCO combined with an 80% Revenue Protection (RP) policy would provide protection against area (usually county) revenue declines from 86% to 80%, or a maximum band of coverage for 6% of expected area revenue. SCO can only be used on acres that are...