Supplemental Coverage Option: An Expanded Crop Insurance Program For Farmers

Mar 03, 2016

By John Berry

As we enhance our understanding of new risk management tools available to us out of the 2014 Farm Bill, the Supplemental Coverage Option (SCO) is a crop insurance product we should consider.

With SCO the amount of protection and our premium cost is based on the underlying crop insurance policy coverage we choose. With lower underlying coverage, we’ll have greater SCO protection and a higher cost. With higher underlying coverage, we will have a lesser amount of SCO protection and a lower cost. SCO can be thought of as an endorsement to our individual plans of insurance as we must have yield protection or revenue protection crop insurance products in place in order to secure SCO coverage.

Additional features of SCO:

No coverage overlap with traditional crop insurance coverage
Covers all planted acreage of the crop
Increases the level of coverage to 86% of our APH yield
Results in additional premium, and an additional administrative fee
Premium is subsidized at a standard 65%

SCO differs from traditional crop insurance in that it provides coverage based on a county yield loss trigger for losses above the underlying individual plan’s coverage level, and SCO does not provide prevented planted benefits. Also, there is no Notice of Loss for SCO as payment occurs based on county yield data with any indemnity available later than for individual policy because of this need to wait for county summary data to be finalized. If the county yield triggers a loss, an indemnity is triggered for all SCO policies even if the individual farm did not have a loss.

Indemnities will not be paid on acreage that has been determined to have been solely damaged by causes of loss not insured by the underlying policy. Although SCO is a product of the 2014 Farm Bill, it does not have a payment cap or base acre limitations, and there is no waiting for the national average farm price for the marketing year.

Exploring how SCO indemnity is calculated; we see payments begin if County revenue/yield is less than 86% of expected. Our indemnity is then based on our individual crop insurance product coverage with a maximum of 86% (SCO coverage) minus our individual crop insurance coverage level.

To determine which of your crops are eligible for SCO, contact a crop insurance agent (list available at: http://www.rma.usda.gov/tools/agent.html)or the RMA Website. In Pennsylvania all counties have SCO for corn, 47 counties have SCO for soybeans, and 57 counties have SCO for wheat.

Source:psue.edu

Video: Evolution of Beef Cattle Farming

The Clear Conversations podcast took to the road for a special episode recorded in Nashville during CattleCon, bringing listeners straight into the heart of the cattle industry. Host Tracy Sellers welcomed rancher Steve Wooten of Beatty Canyon Ranch in Colorado for a wide-ranging discussion that blended family history and sustainability, particularly as it relates to the future of beef production.

Sustainability emerged as a central theme of the conversation, a word that Wooten acknowledges can mean very different things depending on who you ask. For him, sustainability starts with the soil. Healthy soil produces healthy grass, which supports efficient cattle capable of producing year after year with minimal external inputs. It’s an approach that equally considers vegetation, animal efficiency, and long-term profitability.

That philosophy aligned naturally with Wooten’s involvement in the U.S. Roundtable for Sustainable Beef, where he served as a representative for the Colorado Cattlemen’s Association. The roundtable brings together the entire beef supply chain—from producers to retailers—along with universities, NGOs, and allied industries. Its goal is not regulation, Wooten emphasized, but collaboration, shared learning, and continuous improvement.