Margin Protection plan of insurance

Margin Protection (MP) is an area-based insurance plan that provides coverage against an unexpected decrease in operating margin (revenue less input costs), caused by reduced county yields, reduced commodity prices, increased prices of certain inputs, or any combination of these perils. Since Margin Protection is area-based (average for a county), an individual farm may have a decrease in its margin, but may not receive an indemnity or vice-versa.

Other Insurance

Margin Protection can be purchased by itself or in conjunction with a Yield Protection (YP) or a Revenue Protection (RP) policy. Growers who purchase a YP or RP policy get a premium credit on the Margin Protection premium and receive the greater of the Margin Protection or RP indemnity in the fall. MPCI base YP or RP policy MUST be with the SAME Approved Insurance Provider. The credit is the actuarially determined value of the expected overlapping indemnities between Margin Protection and RP at the time of RP sales closing.

Coverage Availability

Margin Protection is available in select counties for rice, corn, soybeans, and wheat in states listed below. The MP county lists by crop are available at www.marginprotection.com. Scroll down the page until you see the section titled “Downloadable Content”. You can also reference RMA’s Actuarial Information Browser. 

Margin Protection Basics

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

Expected Margin = Expected Revenue ˗ Expected Costs, 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
The deductible is 1.00 minus the coverage level multiplied by the expected revenue.

Margin Protection offers coverage levels from 70% to 95% and protection factors from 0.80 to 1.20.

Margin Protection can be purchased 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.

Margin Protection Concepts

Prior to the SCD, RMA releases in the actuarial documents for each county:

• Expected County Yield (ECY)

• Projected Price

• Expected Cost

• Expected Margin is calculated

After Harvest, RMA releases in the actuarial documents for each county:

• Final County Yield (FY)

• Harvest Price

• Harvest Cost

• Harvest Margin is calculated

Expected Costs

When determining the margin, two types of inputs are considered:

1. Those not subject to price change (i.e. fixed from planting to harvest); and

2. Inputs subject to price changes.

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 Protection provisions and include the following:

Note: The Margin Harvest Price will not be greater than the Margin Projected Price multiplied by 2.00.

Payments

Any indemnities owed will be paid when final county yields are available, in the spring of the following year.

Training Materials

• NAU Country Connection: 2022 Margin Protection - A Great Opportunity

• Margin Protection Training PPT (in PDF format)

For more information on our crop insurance policies, please contact us at (641) 732-4682 or e-mail us at mausins@osage.net. We are here for you. Grow your future.