Margin Protection

Margin Protection offers coverage for unforeseen drops in operating margin, calculated as revenue minus input costs. This program is based on county-level data from the RMA Actuarials, using average revenue and input costs to determine coverage amounts and indemnity payments. Find your Expected Yield, Expected Price and Expected Costs for your county here: AIB Landing Page.

Since Margin Protection relies on area averages, it may not accurately represent your personal situation.

Payments may be issued when the Harvest Margin for the county falls below the Trigger Margin, which can happen due to reduced revenue or increased input costs. Margin Protection will cover a part of that deficit.

More Info

Margin Protection Highlights

Purpose

Shields against unforeseen price drops, yield reductions, and input cost fluctuations.

Coverage

Comprehensive protection based only on county level actuarial data. Input costs include diesel, nitrogen, phosphorus, potassium, interest, and fixed costs.

Range

Offers coverage from 70% to 95%.

Exclusions

Cannot be purchased with SCO or ECO.

Credit

If you have a Base Policy, a credit applies to the MP Premium.

Deduction

Indemnity from Base Policy is subtracted from the indemnity from Margin Protection Policy.

Protection Factor

Ranges from 80% to 120% to assist with premium costs.

Subsidies

Vary from 44% to 59%, decreasing as coverage levels increase.

How It's Calculated:

EXPECTED MARGIN

TRIGGER MARGIN

HARVEST MARGIN

Expected County Yield x Projected Price = Expected Revenue.

You then take your Expected Revenue - Expected Costs = Expected Margin.

First, take 1 - Coverage Level. For example, if you had a 95% Coverage Level, you would take 1-95% = 5%

Take your Expected Revenue x Deductible = Margin Deductible.

Then take Expected Margin - Margin Deductible = Trigger Margin

Harvest Yield x Harvest Price - Harvest Costs.

Take your Trigger Margin - Harvest Margin to see if you qualify for a loss.

Take indemnity x Protection Factor

EXAMPLE

167 x $4.56 = $761.52 (Expected Revenue)

$761.52 - $123.23 = $638.29 (Expected Margin)

First, take 1 - Coverage Level.
For example, if you had a 95% Coverage Level, you would take 1-95% = 5%

$761.52 x (.05) = $38.08 (Margin Deductible)

$638.29 - $38.08 = $600.21 (Trigger Margin)

168 x $4.35 - $140 = $590.80

Trigger Margin = $600.21

$600.21 - $590.80 = $9.41

$9.41 x 1.2 (Protection Factor) = $11.29 / acre

Margin Protection Cycle

Aug 15 - Sept 14

Margin Protection Prices, Yields, and Input Costs determined.

Sept. 30th

Sales Closing Date.

April 1 - 30th

Harvest Input Costs determined.

Oct 1 - 31st

Harvest Prices are determined.

April

Final Yields are determined to see if there is an indemnity due.