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333014

Consider margin protection for your 2023 crops

Margin Protection (MP) for the ’23 crop provides coverage against an unexpected decrease in operating margin (revenue minus select variable input costs). It is an area-based plan, using both expected and final county yields along with nationally indexed variable input costs. An indemnity payment may be made when the harvest margin falls below the trigger margin due to a decrease in revenue and/or an increase in those input costs. MP coverage is typically an add-on product to a Revenue Protection (RP) or Yield Protection (YP) base policy.

Iowa State University Extension and Outreach has developed a new publication titled Margin Protection (MP) Crop Insurance – A1-53.  The publication can be found on the ISU Extension Ag Decision Maker website.

MP can be bought at up to the 95% coverage level. Since it uses county yield averages, growers should focus on purchasing the higher levels of coverage to have the most benefit for the policy, triggering an indemnity should a margin shortfall occur. The product is subsidized by the federal government in a range of 44% to 59%, depending on the leverage of coverage elected. 

The MP discovery period (mid-August to mid-September) is for both the projected price and those select variable input costs. MP coverage is available for the ‘23 spring planted crops and uses futures price averages for December ’23 corn and November ’23 soybeans. If a grower thinks that these variable costs are going to increase, or futures prices and/or county yields will decline, then MP should be considered.

MP should be considered as an add-on crop insurance product. It best fits for growers whose farm yields track with the county average yields, and they typically buy 80% to 85% Revenue Protection (RP) coverage as a base policy annually before March 15th. Those spring projected prices for RP coverage are not determined until next February.

Growers should begin to discuss with their crop insurance agent the potential benefits of MP coverage and if it is a good fit for their operation. The deadline for purchasing MP is September 30, however, MP premiums will not be known until after the discovery period ends in mid-September.

Steve Johnson is a retired Iowa State University Extension farm management specialist.

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