Margin Coverage Option (MCO)

MCO helps protect your Profit Margin, not just your yield or price. It works by comparing your Expected Margin (revenue minus input costs) to your Actual Margin at harvest. If your margin drops below a certain threshold, MCO pays you the difference up to your selected coverage level. Since MCO is an area-based (average for an area) option, it may not reflect your individual experience.

Benefits of Margin Coverage Option

MCO

Helps protect against declines in crop profit margins caused by changing market conditions.

Provides an additional layer of protection when paired with an underlying crop insurance policy.

Accounts for changes in commodity prices and key input costs.

Supports more stable farm income by helping manage margin-related financial risk.

Coverage Availability

MCO is available in select counties for corn, cotton, grain sorghum, rice, soybeans, and spring wheat in the states listed below.

Corn and Soybeans: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, and Wisconsin
Cotton: Kansas, Oklahoma, and Texas
Grain Sorghum: Kansas, Oklahoma, and Texas
Rice: Arkansas, California, Louisiana, Mississippi, Missouri, and Texas
Spring Wheat: California, Idaho, Minnesota, Montana, North Dakota, Oregon, South Dakota, and Washington

Eligible Insurance Plans

MCO must be purchased as an endorsement to a Yield Protection (YP), Revenue Protection (RP), Revenue Protection with the Harvest Price Exclusion (RP-HPE), or Actual Production History (APH) plan of insurance under the Common Crop Insurance Policy (CCIP), Basic Provisions. 

Insurable Types and Practices

You may choose any coverage level shown on the actuarial documents for each crop and irrigated or non-irrigated practice. 

 

Determining the Margin

MCO is area-based*, using county-level data to determine:

  • Expected Margin (EM):
    Expected Area Revenue - Expected Input Costs = EM
  • Harvest Margin (HM):
    Area Revenue - Final Input Costs = HM
If the Harvest Margin falls below the Trigger Margin, a payment is made based on the loss within the selected coverage band.


When determining the margin, the following inputs are included:

Corn: diesel, natural gas, diammonium phosphate, urea, and potash
Cotton: diesel, natural gas, diammonium phosphate, urea, and potash
Grain Sorghum: diesel, natural gas, diammonium phosphate, urea, and potash
Soybeans: diesel, natural gas, diammonium phosphate, and potash
Rice: diesel, natural gas, urea, diammonium phosphate, and potash
Wheat: diesel, natural gas, urea, diammonium phosphate, and potash

*Margin Coverage Option is based on Production Area, which many times is equivalent to the county. However, it is important to remember that they can differ.

Loss Payments
  • MCO begins to pay (triggers) when area margin falls below 95% of the Expected Margin.
  • The Trigger Margin is calculated by subtracting the deductible of 5% of the Expected Area Revenue from the Expected Area Margin.
  • The amount of area margin loss is calculated by subtracting the Harvest Margin from the Trigger Margin.
  • A payment factor is calculated by dividing the amount of Area Margin loss by the band of area coverage value.
  • The payment factor ranges from 0.50 to 1.00. The MCO protection is then multiplied by the payment factor to get the indemnity.
  • Coverage levels cannot vary by type.
Important Dates


Sales Closing Date:

  • Corn, Cotton, Grain Sorghum, Soybeans, and Spring Wheat: September 30
  • Rice: Follows the underlying policy

Indemnity Payments

Indemnity payments are issued after the Final County Yields are published in the summer of the following year.

Contact an NAU Country Representative today about signing up!