USDA Introduces Margin Coverage Option for Row Crops in Select States

USDA introduces Margin Coverage Option (MCO) as a crop insurance endorsement for corn, cotton, grain sorghum, rice, soybeans, and spring wheat in select states. MCO provides area-based coverage against unexpected decreases in operating margin caused by reduced yields, lower commodity prices, or increased input costs. Coverage ranges from 86% to 95% of expected crop value, with indemnities paid in the spring following the crop year. MCO is available for six crops in select counties in Illinois, Indiana, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, Oklahoma, South Dakota, Texas, and Wisconsin.

The United States Department of Agriculture (USDA) has introduced a new Margin Coverage Option (MCO) for select crops, effective from the 2026 crop year. This insurance endorsement aims to protect farmers against revenue shortfalls caused by yield drops, falling prices, or rising input costs. MCO is available for corn, cotton, grain sorghum, rice, soybeans, and spring wheat in select counties across major producing regions in the Midwest, South, and Pacific Northwest [1].

The MCO provides area-based coverage, with bands ranging from 86% to 95% of expected crop value. It can be purchased alongside other insurance programs such as SCO (Shallow Loss Coverage) or STAX (Stacked Income Protection), but not with ECO (Earnings Coverage), MP (Margin Protection), or HIP-WI (Harvest Price Insurance for Wheat) [1]. Indemnities are paid in the spring following the crop year, helping farmers manage risk and mitigate the impact of adverse conditions.

The introduction of MCO addresses producer concerns over input cost volatility and aligns with the USDA’s broader risk management strategy. It is offered as an endorsement to existing insurance plans, providing an additional layer of protection for farmers [1].

The current weather conditions, as reported by the National Agricultural Statistics Service (NASS), indicate that the 2025 corn, soybean, and spring wheat crops are benefiting from recent rainfall, which is likely to improve their real conditions [2]. Despite the availability of these crop condition numbers, the actual yield potential remains uncertain, as market fundamentals, such as futures spreads, continue to guide the commercial side of the market [2].

In summary, the USDA’s introduction of the Margin Coverage Option represents a significant step in enhancing risk management for select crops. By providing area-based coverage against unexpected decreases in operating margin, MCO aims to support farmers in navigating the challenges posed by fluctuating yields, prices, and input costs.

References:
[1] https://www.allagnews.com/new-margin-coverage-option-announced-for-2026-crops/
[2] https://www.barchart.com/story/news/33405255/how-about-those-crop-condition-numbers-for-corn-and-soybeans