ARC-CO or PLC – which is the best way to go?

The decision as to which farm program to sign up for is fast approaching as is the crop insurance deadline. They are both March 15 and one of the reasons is that they can be tied together.

If one wants to buy higher levels of insurance using the Supplemental Coverage Option (SCO) endorsement or Enhanced Coverage Option (ECO it may impact which Farm Program that you can select. There isn't a fee to enroll in the 2024 Farm Program but the costs for insurance vary by the type, level, and location as well as the "insurance units" that you chose. The Supplemental Coverage Option (SCO) endorsement begins to pay when county-based loss falls below 86 percent of its expected level. SCO differs from the underlying policy in how a loss payment is triggered. The underlying policy pays when loss at the farm-level occurs, either due to a loss in yield or revenue. The SCO indemnity is triggered only when county-based losses fall below 86 percent.

The Enhanced Coverage Option (ECO) is a crop insurance endorsement product introduced in 2021. It provides additional county-based coverage for a portion of the underlying crop insurance policy deductible. ECO offers the insured a choice of 90 percent or 95 percent trigger levels. Trigger means the percentage of expected county-based yield or revenue at which a loss becomes payable. The ECO endorsement begins to pay when county yield or revenue falls below 95 percent (or 90 percent, if that is the trigger level elected).

The full amount of the ECO coverage is paid out when the county average revenue falls to 86 percent.

You can only purchase SCO coverage if you elect Price Loss Coverage as your Farm Program choice. For more information check out the Ad Decision Maker home page where there is a link to the 2024 Farm Bill Decisions and several articles about crop insurance as well. There is a spreadsheet that you can download and run various price and yield combinations to see what the results would be.

It also includes a sensitivity table to illustrate a range of prices and yields as well as a summary of historical county yields used in the formulas. Now is the time to meet with your crop insurance agent and get a better understanding of how the crop insurance and Farm Programs can work together as well as the opportunities that the county based products provide to manage risk at the county level.