Department of Agriculture
Risk Management Agency Fact Sheet
Washington National Office — Washington,DC
Margin Protection for Federal Crop Insurance
- Margin Protection
Margin Protection provides coverage against an unexpected decrease in operating margin (revenue less input costs). Margin Protection is area-based, using county-level estimates of average revenue and input costs to establish the amount of coverage and indemnity payments. Because Margin Protection is area-based (average for a county), it may not reflect your individual experience. A payment may be made when the harvest margin for the county is lower than the trigger margin due to a decrease in revenue and/or an increase in input costs. Margin Protection will cover a portion of that shortfall.
- Coverage Availability
Margin Protection is available in select counties for corn, rice, soybeans, and wheat in the states listed below.
Rice Corn and Soybeans Wheat Arkansas Illinois Minnesota California Indiana Montana Louisiana Iowa North Dakota Mississippi Kansas South Dakota Missouri Michigan
- Eligible Insurance Plans
Margin Protection can be purchased by itself, or in conjunction with a Yield Protection or Revenue Protection policy purchased from the same Approved Insurance Provider that issued the Margin Protection policy. If you buy a Yield Protection or Revenue Protection policy, you will receive a Margin Protection premium credit to reflect that indemnity payments from one policy can offset payments from the other.
- Important Dates
Sales Closing Date
Corn, Soybeans, and Spring Wheat ........................... September 30
Rice ...................................................... Varies by State and County
- Coverage Levels and Premium Subsidies
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, where the deductible is 1.00 minus the coverage level multiplied by the expected revenue.
Coverage levels are offered from 70 to 95%. A higher level of coverage will have a higher premium rate. You may also choose to purchase Margin Protection 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.
- Loss Payments
A loss may be paid if the harvest margin is less than the trigger margin. If there is a loss paid under your Yield Protection or Revenue Protection policy, the indemnity amount from that policy will be subtracted from any loss under your Margin Protection policy.
- Determining the Margin
When determining the margin, two types of inputs are considered: those subject to price changes as listed below, and those not subject to price change (i.e. fixed from planting to harvest). 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 Provisions and include the following:
Crop Allowed Inputs Subject to Price Change Corn Diesel, Urea, Diammonium Phosphate price (DAP), Potash, Interest Corn Diesel, DAP, Potash, Interest Rice Diesel, Urea, DAP, Potash, Interest Wheat Diesel, Urea, Monoammonium Phos-phate (MAP), Potash, Interest
Any indemnities owed will be paid when final county yields are available, in the spring of the following year.
- Insurable Types and Practices
All types and practices that are insurable for corn, rice, soybeans, and spring wheat in the respective county is listed in the Margin Protection actuarial documents.
- Where to Buy Crop Insurance
All Federal reinsured crop insurance policies, including Margin Protection policies, are available from authorized crop insurance agents. The purchase must be made before the Margin Protection sales closing date, which for most MP crops is earlier than traditional spring crop insurance policy sales closing dates. A list of crop insurance agents is available at all USDA service centers and on the RMA website at Agent Locator.
- Download Copies from the Web
Visit our online fact sheets page.
This fact sheet gives only a general overview of the crop insurance program and is not a complete policy. For further information and an evaluation of your risk management needs, contact a crop insurance agent
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