CornAs price declines continue for corn and soybeans, return expectations are coming into focus and are expected to also be lower for the 2024 crop year. This will likely increase payments to farmers participating in crop insurance and commodity programs. This includes two increasingly popular coverage options: the Supplemental Coverage Option (SCO) and the Enhanced Coverage Option (ECO).

We’ll first define each coverage option and then summarize payment scenarios projected by the analysts at farmdoc daily.

The Enhanced Coverage Option (ECO) is area-based (generally county-level) with options to choose a 90% or 95% coverage level. The coverage range extends down to 86%, giving a maximum coverage band of 4% at the 90% coverage or 9% at the 95% coverage level. ECO coverage follows the coverage of the underlying policy. It cannot be used with an underlying area plan of insurance (i.e., Area Risk Protection Insurance (APRI) or Margin Protection). ECO mimics the coverage type of the underlying product. The subsidy rate for ECO has recently been increased.

The Supplemental Coverage Option (SCO) also provides county-based coverage with an 86% coverage level. The coverage range extends from 86% down to the coverage level of the farmer’s underlying individual plan. Like ECO, if a farmer chooses Yield Protection or a yield-based policy, SCO covers yield loss. If a farmer chooses a revenue protection policy, then SCO would cover revenue losses. The underlying plan of insurance also determines whether SCO offers harvest price protection or if it is excluded. SCO can only be issued on acres enrolled in the PLC commodity program. Acres enrolled in ARC are ineligible for SCO coverage.

Farmdoc daily analysts project that the current futures prices may reach levels sufficient to trigger loss payments for those covered through ECO in certain areas (given the 90-95% coverage levels), with the potential for smaller payments from SCO because area yields are at expected levels.

Read more analysis of payment projections from Farmdoc Daily. (Paulson, N., G. Schnitkey and C. Zulauf. “SCO and ECO Payment Prospects for 2024.” farmdoc daily (14):153, Department of Agricultural and Consumer Economics, University of Illinois at Urbana-Champaign, August 20, 2024.)

For supplemental protection for your farm, read more in this article about how farmers can pair ECO with the power of AIM coverage (Added Individual Modifier).