Tight margins have left many less than optimistic about crop revenue next year, but one piece of good news is that there is a crop insurance option that is now more affordable! Earlier this year USDA announced a change to the subsidy rate for those purchasing the Enhanced Coverage Option (ECO) in the 2025 crop year. In 2024 ECO coverage was subsidized at 44% but in 2025 that will shift to a 65% subsidy. For those who purchase the option, this change will provide significant premium savings over previous years and important coverage during a time of tight margins beyond your Revenue Protection (RP) or Yield Protection (YP) policies.
ECO is an area-based coverage that works in conjunction with your underlying policy to insure a portion of your deductible from 86% up to the 95% level. It uses your underlying production history (APH) to establish the amount of coverage, but claims are triggered based upon area yields and the CBOT discovery month prices for the insured crops. ECO may be purchased with the Supplemental Coverage Option (SCO), but purchasing both is not a requirement. Unlike SCO, ECO may be selected regardless of your FSA farm program election (PLC or ARC).
Indemnities for ECO and SCO coverage require area production to be established from RMA policies. In most cases the defined area refers to the county where the crop is being grown, but in some instances the defined area may include multiple counties. While utilizing RMA data helps make the area coverage more relevant, it does cause a delay in making payments until June of the following year after coverage was purchased. We will not know how the 2024 coverage has performed until RMA releases the area production data in June of 2025. Producers who purchased a 2024 RP policy with the ECO option on soybeans saw a significant decrease in price ($11.55 projected to $10.03 harvest) which will move the trigger bushels higher. While price and yield are both relevant to determine an indemnity, a major decline in prices was also the significant contributing factor that made ECO payments for several Missouri counties in 2023.
While the additional ECO subsidy will help address the cost of the option, some producers have historically been reluctant to purchase because the area-based coverage does not always trigger a claim when you have an individual production loss. For 2025 several approved insurance providers have addressed this with additional policies that work together with ECO protection to add individual shallow loss coverage.
During these tight financial times having the right risk management plan is critical! Contact one of our FCS Financial crop insurance agents today to review your coverage and assist you in making the right decisions for a bright future!
