Margin Protection
September 15, 2023

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. Because MP is area-based (average for a county), an individual farm may have a decrease in its margin but not receive an indemnity or vice-versa.

MP is available for corn, rice, soybeans, and wheat in select states and counties, as follows:

• Rice: Select counties in Arkansas, California, Louisiana, Mississippi, Missouri, and Texas;
• Corn: Select counties in all states except Alaska and Hawaii;
• Soybeans: Select counties in Alabama, Arkansas, Colorado, Delaware, Florida, Georgia, Illinois, Indiana, Iowa, Kansas, Kentucky, Louisiana, Maryland, Michigan, Minnesota, Mississippi, Missouri, Montana, Nebraska, New Jersey, New York, North Carolina, North Dakota, Ohio, Oklahoma, Pennsylvania, South Carolina, South Dakota, Tennessee, Texas, Vermont, Virginia, West Virginia, and Wisconsin; and
• Spring Wheat: Select counties in Minnesota, Montana, North Dakota, and South Dakota.

County lists by crop are available at “www.marginprotection.com“ at the section titled “Downloadable Content”.

MP is available for purchase from your local crop insurance agent. You can find a crop insurance agent using the Agent Locator tool on the Risk Management Agency (RMA) website at www.rma.usda.gov/Information-Tools/Agent-Locator-Page.

Spring wheat (type 012) is the only type presently insurable under MP.

You can buy MP and also buy a Yield Protection policy or a Revenue Protection policy (denoted as a base policy) on the same acreage. The base policy and the MP policy must be purchased from the same Approved Insurance Provider; however, the base policy and the MP policy may be purchased from a different insurance agent or insurance agency. If you buy a base policy, you will receive a credit to your MP premium because indemnity payments from the base policy are used to offset indemnity payments from the MP policy. To receive a premium credit, the base policy type and practices must match the type and practices elected on the MP Policy.

Yes. MP does not restrict you from purchasing any private crop insurance policy that FCIC does not reinsure such as crop-hail, a non-reinsured supplemental policy, or similar non-Federal offerings. Any payments from these programs are NOT counted in the determination of indemnity under the MP plan.

No. Losses are determined separately. You may have a loss under your base policy but not under your MP policy, a loss under your MP policy but not your base policy, a loss under both, or no loss under either policy. If you receive an indemnity for a yield or revenue loss under your base policy, this will be considered in determining the amount of your MP indemnity owed.

You must complete the proper documentation to transfer your base policy on or before the sales closing date for MP. The transfer needs to be effective for the same crop year as your MP policy. For example, assume you have a Revenue Protection policy issued by Provider A on your corn crop for the 2017 crop year. You purchase MP from Provider B for the 2018 crop year on or before the MP sales closing date, which is September 30, 2017. The MP policy will be effective for the 2018 crop year. You must complete the form to transfer your Revenue Protection policy to the new Provider B on or before September 30, 2017. The transfer will be effective for the 2018 crop year. Provider A will continue to service your corn policy for the 2017 crop year.

If you fail to complete the required transfer in a timely manner, you must cancel your Revenue Protection policy (or other policy) on or before the sales closing date for MP. Otherwise, you will be deemed to have duplicate coverage on your crop. Your agent can help you make the transfer effective or to cancel the other policy. Make sure your agent is aware that you do have insurance policies with another crop insurance company.

Yes. An administrative fee applies to both policies.

MP offers the same premium subsidies as other existing area-based plans, which vary by coverage level, as follows:

• For 70 percent coverage, The subsidy factor is 0.59;
• For 75 percent and 80 percent coverage, the subsidy factor is 0.55;
• For 85 percent coverage, the subsidy factor is 0.49; and
• For 90 and 95 percent coverage, the subsidy factor is 0.44.

No. MP does not provide coverage for replanting. However, you may buy a Yield Protection or Revenue Protection plan, which provides replanting coverage.

No. Written agreements are not allowed under MP. However, any written agreement authorized under the terms of your base policy can be issued and modifies the terms of your base policy coverage only.

Consistent with the ARPI program, coverage under MP is extended only for the types listed in the AIB. For 2018, Seed Corn and Silage types are listed in counties where these practices are insurable under APRI. Popcorn is not insurable under MP at the current time.

Two types of production inputs are specified, those subject to price changes and those that are not subject to price change.

Inputs subject to price changes are, for example, diesel fuel, interest, and certain fertilizers for which projected and harvest prices can be obtained from third-party markets. Price changes for these inputs, along with county yield changes and changes in the price of the commodity, determine whether an indemnity is paid. Inputs subject to price change by crop are:

Fixed-price inputs are seed, machinery operating costs (other than fuel), and similar expenses. These inputs affect the amount of insurance coverage, but do not directly determine whether an indemnity is paid. Price inputs not subject to price change by crop are:

The determination of these values is dictated by the terms of the Margin Price Provisions. During price discovery, these prices will be published on a daily basis at www.marginprotection.com.

The dollar amount of insurance per acre is the amount determined by multiplying the expected revenue by the coverage level you chose and by the protection factor you chose. For example, if the expected county yield is 175 bushels per acre, the projected price is $4.00 per bushel, and you chose a coverage level of 90 percent and a protection factor of 1.100, the dollar amount of insurance per acre is 175 × $4.00 × 0.90 × 1.100 = $693.

The protection factor used to “scale” the dollar amount of insurance per acre must be at least 0.80 (80 percent) but less than or equal to 1.200 (120 percent). This allows you to better personalize the insurance amount relative to the county average. The protection factor may vary by each type and practice.

If you choose the Harvest Price Option (MP-HPO), the dollar amount of insurance per acre will be recalculated to be higher if the harvest price is greater than the projected price.

The liability establishes an upper limit on the MP indemnity payments. Growers may elect productivity factors to adjust liability based on their own individual risk management needs.

Example:

Assume a 500 acre unit with a county expected yield of 150 bushels per acre, a productivity factor of 1.10 at a 100-percent share. The liability is:

Then

First, the expected margin (per acre) must be determined. This amount is published in the actuarial documents so neither you nor your agent is required to calculate it. But, to illustrate how it is determined, the expected margin is the result of subtracting the expected cost (per acre) from the expected revenue (per acre). Next, the deductible is determined (see below). The trigger margin is the expected margin less the deductible. The trigger margin is determined on an area basis and not an individual producer level. Therefore, all acres in a county have the same trigger margin for a given coverage level, crop, type, and practice (i.e., same expected county yield and the same expected revenue).

Example of how MP expected margin is determined. First, determine the expected revenue. Assume the MP projected price for corn is $4.00 per bushel. The expected county yield for corn of the insured type and practice is 150 bushels per acre.

The expected revenue per acre = 150 bushels x $4.00 = $600.00

Next, determine the expected costs. Assume the following information has been developed for this county and crop. For most crops, there will be more than two inputs subject to price change.

Projected input prices are $3.50 per gallon for diesel fuel and $1.00 per pound for nitrogen.

The expected margin per acre = $600.00 expected revenue - $476.25 expected costs = $123.75 per acre. This amount is published in the actuarial documents.

The trigger margin is the expected margin minus expected revenue multiplied by (1.00 - the coverage level percent you elected). Assume the coverage level elected is 90 percent.

Trigger margin = expected margin - expected revenue × (1.00 - 0.90) Trigger margin = $123.75 - ($600.00 × (1.00 - 0.90)) = $63.75

A loss is payable if the harvest margin is less than the trigger margin.

If you elect the Harvest Price Option, the trigger margin will be recalculated using the same costs and the harvest price if it is higher than the projected price.

Generally, any indemnity payments made for the base policy will occur first, with any remaining MP indemnity payments occurring later (the following spring) after final area yields become available. The indemnity from the base policy, and any endorsement, is subtracted from the MP indemnity. If the MP indemnity is larger than the base policy indemnity, the amount of the MP indemnity paid will be the difference between the MP indemnity and the base policy indemnity, but not to exceed the total liability under MP. If the MP indemnity is smaller than the indemnity for the base policy, then no additional indemnity will be paid for the MP policy. Payments received for replanting or prevented planting from a base policy, and any acreage insured under the base policy that is not eligible for MP will not be considered.

Assume the following outcomes occur for the crop year:

The harvest revenue is 140.0 bushels x $4.00 per bushel = $560 per acre.

The harvest cost is:

The harvest margin is:
$560.00 - $517.50 = $42.50 per acre

The indemnity is (see MP Provisions):

The liability for MP coverage is $594.00 × 500.0 acres × 1.10 productivity factor × 1.000 share = $297,000. The indemnity calculated with or without a base policy is less than this amount; so, the amount calculated is payable. If the calculated indemnity amounts were greater than $297,000, the indemnity would be limited to $297,000.

MP losses are paid when final area yields are available. Wheat is in the spring of the following year. Corn, rice, and soybeans are in the summer of the following year. This is the same timing as Area Risk Protection Insurance, Supplemental Coverage Option, and Enhanced Coverage Option.

For wheat, the final county revenues and final county yields are determined by May 15 following the crop year. If an indemnity is due, the Approved Insurance Provider will issue the payment no more than 30 days after the date the final county yield is determined.

For corn, rice and soybeans, the final county revenues and final county yields are determined by June 16 following the crop year. If an indemnity is due, the Approved Insurance Provider will issue the payment no more than 30 days after the date the final county yield is determined.

If the margin projected price cannot be calculated by the procedures outlined in the Margin Price Provisions, the margin projected price will be determined by RMA and released by the date specified in the applicable projected price definition in the Margin Price Provisions. The margin harvest price is set equal to the margin projected price RMA establishes. The expected revenue is then calculated by multiplying the expected county yield (by crop, unit, type, and practice) by RMA’s determined projected price. The harvest revenue would be calculated by multiplying the final county yield (by crop, unit, type, and practice) by the same RMA determined price.