Written
by M. Sean High
On
October 20, 2015, the U.S. Department of Agriculture’s (USDA) Risk Management
Agency (RMA) announced an expansion of the federal government’s crop insurance program. According to RMA, beginning with the 2016 crop year, the crop
insurance program’s Supplemental Coverage Option (SCO) will now be made
available in select counties “for buckwheat, sweet corn, extra-long staple
cotton, cucumbers, processing beans, dry beans, flax, silage sorghum, green
peas, various hybrid seeds, millet, mustard, peanuts, popcorn, pumpkins,
sesame, sunflowers, and sugar beets.” The inclusion of these newly eligible crops
is in addition to the thirty-three crops previously approved for SCO protection
for the 2016 crop year.
SCO
is a crop insurance option that is intended to provide agricultural producers
with an extra layer of risk management protection by providing coverage for a
portion of an underlying crop insurance policy deductible. When available, SCO may be purchased as an
endorsement to a crop insurance policy for Yield Protection, Revenue
Protection, Revenue Protection with the Harvest Price Exclusion, or Actual
Production History.
Accordingto UDSA, “[t]the amount of SCO coverage depends on the liability, coverage
level, and approved yields for your underlying policy.” Importantly, USDA notes that “SCO differs
from the underlying policy in how a loss payment is triggered. The underlying policy pays a loss on an
individual basis and an indemnity is triggered when you have an individual loss
in yield or revenue. SCO pays a loss on
an area basis, and an indemnity is triggered when there is a county level loss
in yield or revenue.”
Interested
agricultural producers must select SCO “by the sales closing date… [of] the
underlying crop insurance policy” and may only purchase the additional coverage
from the same company providing the underlying crop insurance policy. Significantly, if selected as part of a
federal crop insurance policy, “[t]he Federal Government [will pay] 65 percent
of the premium cost for SCO.”
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