Margin Protection

Margin Protection (MP) provides coverage against an unexpected decrease in operating margin.

Margin Protection Overview

Understanding Margin Protection

Margin Protection (MP) is a risk management tool that provides coverage against unexpected losses due to price, yield or an increase in input costs.

The annual sign-up deadline for MP is September 30.

Watch the video to learn more.

How it works

  • The popular Revenue Protection insurance focuses on the revenue side of your balance sheet, but does not protect you against unexpected increases on the input cost side.

    That’s where Margin Protection comes in.

How it’s calculated

  • While the revenue formula is relatively simple (Yield x Price = Revenue, using the higher of the February or October price average), cost calculations are slightly more complex.
  • Costs are not based on the producer’s own costs; they are calculated by RMA, based on input prices from August 15-September 14. These include:
    • Variable inputs (diesel, NPK, interest rate)
    • Costs that are covered but do not change (seed, lubrication, select crop protection)
  • Note that land, rent and labor are not included.

Revenue and Margin Formula

  • Yield x Price = Revenue - Cost = Margin

Dual-coverage delivers flexibility

  • Combining MP with other coverage options offers added flexibility.
    • You are able to base decisions on price guarantees in September, February and October. MP locks in the futures price in the fall, when the market typically rewards delaying sales.
    • You can purchase MP with either ARC or PLC.
    • MP is based on county yields, prices and inputs. This means indemnities are not paid until after USDA determines county yields – roughly six months or more after harvest.
  • If you have a claim on your individual RP policy, you receive that indemnity more promptly. But – you receive the higher of the two claims. Given a smaller “deductible” with a 95% policy, and the impact of the protection factor, MP may beat RP and you’ll receive the balance of the indemnity later.

Other ways MP and RP work together

  • MP offers higher coverage up to 95%.
  • MP does not cover prevent plant, replanting or quality adjustment; RP does.
  • RP and MP together provide peace of mind and protection for both individual risk protection and area coverage for the expected operating margin.
  • Analysis of history suggests an advantage over the long run to purchasing both.

Available to all qualifying producers regardless of race, color, national origin, religion, sex, disability, age, marital status, family/parental status, income derived from a public assistance program, political beliefs, or reprisal or retaliation for prior civil rights activity, in any program or activity conducted of funded by USDA (not all bases apply to all programs).

Margin Protection Features

buy-land
Area-based plan
Icon of a dollar sign in a circle with arrows going around it
Coverage 70% up to 95% of the trend-adjusted county yield.
Icon of a hand holding a dollar sign within a circle
Protection factors from 0.8 to 1.2. Hence, MP can pay up to $1.20 for every dollar of loss.
Icon of a circle with a dollar sign in the middle above a graph
Highly subsidized premium benefit.
premium-credit
A premium credit is applied to MP when purchased with an underlying policy.
Icon of a calendar with dollar sign in a circle in the lower right
Initial price discovery is August 15 – September 14.
Calendar icon with a green circle on a date
Purchase deadline is September 30.
grain-bin
Uses the same harvest price as RP and Supplemental Coverage Option (SCO).

Why Work With Us for Margin Protection

Icon of a person with a thought could with a leaf in the center
Dedicated Specialists

Our agents are non-commissioned and focus 100% of their time on crop insurance and livestock insurance — every working day of every week in the year. They don’t sell property, casualty or life insurance.

Icon of a shield with three people within it
Highly Trained

Our insurance officers receive annual training on RMA changes to crop insurance and livestock insurance plans and stay informed throughout the year.

Icon of a light bulb and circle with a dollar sign and arrows pointing in a circle
Financial Expertise

As a lender, we understand financial risk and work to protect your working capital, not just your crop or livestock.

Icon of a hand pointing at a browser window with a dollar sign in the middle
Exclusive Tools

Leverage our exclusive policy review and Hail Analyzer tools to receive a personalized insurance plan - maximizing your net indemnity, cash flow, forward market opportunities, and minimizing your premium costs.

Frequently Asked Questions

1

2

3

4

5

6

7

8

9

10

11

12

Farm Credit Services of America customer

Manage Risk With a Team That Understands It.

Our insurance agents are highly trained, dedicated specialists who have the tools to help you make important risk management decisions.

Ready to Get Started

Complete the inquiry form or connect with a local office for more information.