Making Crop Insurance Simple Again…

Much like Nebraska Football, Margin Protection comes up every fall with much excitement and a reenergized focus/optimism. The goal of this article would be to outlay facts of Margin Protection to help you make informed decisions for your farm. There is no one size fits all decision here. This product will impact each farm very differently depending on many factors.

What is Margin Protection:

1. Margin Protection is an annual, area based plan that uses county yields to protect against an unexpected drop in operating margin.

Basics of Margin Protection:

1. Deadline to sign up for 2025 policy is September 30th.

1. Price discovery period is Aug 16 thru Sept 15, based off the 2025 futures contracts

1. Corn price for 2025: $4.40

2. Soybean price for 2025: $10.42

2. Range of available coverage levels

1. 70% up to 95%

1. And protection factors from 80% up to 120%

Margin Protection and Underlying Base Policy (your regular spring insurance policy):

1. The base policy and the Margin Protection policy must be purchased from the same Approved Insurance Provider (AIP). When an insured buys a base policy, they may receive a credit to their Margin Protection premium because indemnity payments from the base policy are used to offset indemnity payments from the Margin policy. To receive a premium credit, the base policy type and practices must match the type and practices elected on the insured’s MP policy.

Margin Protection Payments:

1. Potential margin losses could be associated with reduced county yields, a decline in commodity futures prices, increased costs of certain inputs, or any combination of these perils. Since Margin Protection uses county-based yields, the indemnity payment is not known until the Final County Yield is determined by RMA as the acre-weighted average yield within the county as provided by insured producers. RMA is expected to publish Final County Yields for corn and soybeans on or before June 16 of the year following the production of the insured crop (ex. June 2026 for the 2025 crop).

2. If losses are significant and your indemnity dips into your base policy (Spring insurance policy), you will receive the higher of the Margin Protection indemnity OR your base policy indemnity. Not both added together. You cannot receive a loss payment on both policies, but are responsible for both premiums. 

Advantages of Margin Protection:

1. Higher coverage levels and protection factors available

2. 44% subsidy from government on premiums

3. Protects against a decline in margin, not just a drop in yield or futures price

4. Provides early discovery period for prices (August 15th – Sep 15th 6 months prior to planting covered crop)

Disadvantages of Margin Protection:

1. Earlier sales closing date of September 30th

2. Additional premium over and above your regular spring insurance policy

3. Not knowing the final indemnity for a 2025 policy until summer of 2026. (21 month gap separate the deadline to sign up for product vs final indemnity amounts being calculated)

4. Your individual farm revenues and input costs are not considered under Margin Protection. Those are figured on a broader scale and may not match up with your individual costs.  All losses are paid on county revenue and are not directly related to your farm revenue. 

5. Cannot purchase SCO/ECO product and Margin Protection

6. Does not protect high cost items like seed, rent or fungicide/insecticide

We’d love to be able to provide you with examples of payment scenarios, but that is next to impossible without knowing all the variable numbers that go into calculating indemnities that we just don’t know today and won’t know until June of 2026. We can run projected/estimated scenarios if you’d like, just need to reach out and we can walk through that.