Farmers today know better than most how unpredictable agriculture can be, from drastic market swings to the ever-changing weather forecast. Using insurance products like Margin Protection (MP) can mitigate risk and bring producers peace of mind in the dynamic world of agriculture.
What is Margin Protection?
MP is a subsidized risk mitigation tool that is used to provide coverage against any unexpected losses due to changes in input costs, market prices, or county yields. It can be used in conjunction with a Yield Protection or Revenue Protection policy.
This product is an area-based protection plan, which uses county-based estimates for input costs and revenue to help establish coverage levels. An individual’s farm may have a decrease in its margin but not receive an indemnity due to the county performing as expected or above. Alternatively, an individual’s operation could outperform the county and not have an individual loss but could still receive an indemnity if the county average is below the expected value.
The Mechanics of a Margin Protection Policy
There are multiple ways an indemnity can be triggered with an MP policy. Increase cost of inputs, decline in market prices, and loss in county yields are all factors that could contribute to an indemnity on an MP policy. Coverage is available in Minnesota, North Dakota, South Dakota, and Wisconsin in a select number of counties for non-organic corn, soybeans, and wheat. Coverage levels range from 70% to 95% with protection factors ranging from 80% to 120%. Producers with MP will not be eligible to purchase other area-based plans known as Enhanced Cover Option (ECO) and Supplemental Coverage Option (SCO).
There are a few different calculations we must consider when discussing MP. Liability is based on:
Expected Margin = Expected Revenue – Expected Costs
Expected Revenue = Expected County Yield x Projected Commodity Price
Expected Cost = Quantity of Allowed Input x Input’s Projected Price
Inputs fall into two categories when we determine margin: inputs that are subject to changes in price (those listed in the chart below), and those that are not subject to changes in price i.e. machinery, seed, and other operating costs (excluding fuel). These input prices are tracked during two-time frames—August 15 through September 14 and February 1 through February 28. An average is then determined between the two periods by the Risk Management Agency.
Inputs tracked for Margin Protection:
| Corn | Soybeans | Wheat | |
| Diesel | X | X | X |
| Urea | X | X | |
| DAP | X | X | |
| MAP | X | ||
| Potash | X | X | X |
| Interest Rates | X | X | X |
FAQs
We often receive questions about area-based products. Here are some FAQs about MP:
What is the sales closing date for Margin Protection?
MP sales closing date for corn, soybeans, and wheat is September 30 of the calendar year prior to the insured crop year. I.e. sales closing for crop 2025 is September 30, 2024.
When are losses paid?
MP uses county-based estimates. This means indemnities cannot be paid until after the USDA determines the final county yields, which is typically six months after the completion of harvest.
As a beginning farmer or rancher am I eligible for an additional subsidy for MP?
Yes, the subsidy for qualifying beginning farmer and ranchers gives an additional 10% of premium subsidy to additional coverage policies, including MP.
What are the premium subsidies for Margin Protection?
Below is a chart that shows the corresponding subsidy factor for each coverage level.
| Coverage Level | 70% | 75% | 80% | 85% | 90% | 95% |
| Subsidy Factors | 59% | 55% | 55% | 49% | 44% | 44% |
