Keep important deadlines and changes in mind (Choice Voice)
(Editor’s note: Paul Goeringer is a University of Maryland Extension legal specialist in agricultural and resource economics. This column should not be interpreted as legal or financial advice for the reader.)
As we move forward into 2021, many of you might not have started considering your risk management plans for the upcoming year, but many of the deadlines for spring-planted crops are fast approaching in March.
Simultaneously, a new option, the Enhanced Coverage Option (ECO), will be available on several spring-planted crops.
ECO offers a trigger of either 90 percent or 95 percent to the 86 percent level.
But whether you are just looking at the same coverage as in the past or adding in additional coverage that ECO would provide, you must take time to go out and talk to your crop insurance agent before the sales closing dates.
Keep in mind that several spring-planted crops with crop insurance coverage in Maryland will have sales closing dates coming up in February and March.
Green peas will be on Feb. 15. Whole-Farm Revenue Protection will be on March 15.
For corn, soybeans, grain sorghum, lima beans, snap beans, sweet corn, tomatoes, and machine-harvested pickling cucumbers, the deadline will be on March 15.
New in 2021 for 31 spring-planted crops, including corn, soybean, wheat, and barley, producers want to consider is the Enhanced Coverage Option (ECO).
ECO is an additional area-based coverage endorsement of your underlying coverage, such as revenue protection or yield protection.
For example, if you have Yield Protection, then ECO would cover yield loss.
Unlike Supplemental Coverage Option (SCO), ECO will be unaffected by participating in Agriculture Risk Coverage (ARC) for the same crops.
The government will subsidize the premium like other crop insurance products. The premium level will depend on the underlying coverage option.
The subsidy will be 51 percent for yield-based, and for revenue-based, the subsidy will be 44 percent.
ECO will provide additional coverage levels from the 86 percent level to either the 90 percent or 95 percent level.
If the reduction in yield or revenue exceeds the 86 percent level, the producer will receive an indemnity equal to the full insured liability.
To get an idea of how this operates, let us look at an example. Suppose you purchase 75 percent revenue coverage at $750 per acre on corn and the ECO coverage up to the 95 percent coverage level.
The underlying coverage would protect up to $562.50 (75 percent of $750) and leave unprotected $187.50.
ECO would provide additional coverage from the 86 percent level to the 95 percent level if the county revenue drops below the 95 percent level.
In this example, ECO would provide an additional 9 percent level of coverage or $67.50/acre in coverage.
If you are curious about if ECO is available for spring-planted crops you are growing or what the additional coverage would look like in your situation, talk to your crop insurance agent before the sales closing date of March 15.