Margin protection availability in North Dakota has been expanded to include wheat, corn, and soybeans for most counties. The policy provides coverage against an unexpected decrease in operating margin due to production loss, commodity price decline, or input cost increases. Margin protection is an area-based coverage that uses estimates of expected revenue, input costs, and yields for each county to establish coverage.
The calculation that is used to establish prices for margin protection is:
- Expected revenue – Expected costs = Expected margin
- Expected revenue is the expected county yield multiplied by a margin projected price.
- Expected costs are determined by multiplying the quantity of an allowed input by the input’s projected price.
- Inputs are set by RMA and vary by crop. Prices for those inputs are set by tracking and averaging prices during two timeframes: August 15 – September 14 and February 1 – 28.
- Inputs that are allowed and tracked include:
Margin protection can be added to an underlying revenue or yield protection policy or can stand alone without underlying coverage. If purchased in conjunction with an underlying base policy, there may be a premium credit calculated for the underlying policy. Indemnities are paid once area-based policy yields are available in the summer of the following year. If paired with an underlying base policy, any loss from a Yield Protection or Revenue Protection policy will be subtracted from the loss on the Margin Protection Policy.
Margin protection must be elected by September 30, 2023, for the 2024 crop year. If SCO or ECO is elected on your current underlying base policy, those options must be cancelled by that date as well.
If you are interested in more information or a quote, please contact your local Farm Credit Services of Mandan Insurance Representative today.