The March 15 deadline is fast approaching for farmers to decide what crop insurance they need for the upcoming growing season. Things can get complicated quickly when looking through all the various options. Should you pay more on insurance for peace of mind? Or does saving money on insurance to invest elsewhere make more sense?
The ground rules have changed some, thanks to last summer’s budget reconciliation package (aka the One Big Beautiful Bill Act). Federal premium support has increased between 3% and 5% for all insurance coverage levels. The maximum coverage level for area-based insurance plans now stands at 95%.
Support for beginning famers has changed as well, starting with the definition of “beginning farmer” itself.
USDA will now provide additional premium assistance for 10 years — double what it was before. That support level begins with an extra 15% subsidy for the first two crop years. The support then drops to 13% and 11% in years three and four, respectively. After that, the level remains at 10% for the next five years.
As for the Supplemental Coverage Option, most farmers will now only pay 20% of the full SCO cost. Supplement plans such as SCO and the Enhanced Coverage Option allow farmers to choose an individual or area-wide insurance product to add on top of their base options.
Extra coverage worth it?
One of the most vexing choices for farmers to consider is if adding an SCO or ECO plan make sense for their operation? Those plans provide coverage for losses not covered by their base insurance.
“Is it worth buying down at the individual level to add an SCO policy on top of that?” asked Jonathan Coppess, an ag policy and law professor from the University of Illinois. “That’s a trade-off question. You are trading that specific insurance policy for an area-wide plan, so some of it depends on how your farm relates to the county.”
For example, a farmer with a 75% revenue protection individual policy may also buy an SCO plan that would cover from 90% of the county revenue down to the individual 75% level, with 80% of the cost of the policy covered by federal premium subsidy.
In that scenario, countylevel losses would be covered after the first 10%, down to 75%. Individual losses would only be covered once they exceed 25%.
With all that information, what’s a farmer to do?
“As in any insurance situation, you’re comparing what’s the cost of the policy to what your risk management situation look like,” Coppess said. “And then with crop insurance, obviously, it gets a little bit odd or different because you have all the subsidies built into the pricing mechanism.”
Coppess recently worked with his University of Illinois colleagues to build a new online crop insurance tool. It is available at farmdoc.illinois.edu, allowing farmers to compare across different policies with different provisions.
ARC, PLC enrollment delayed
After a one-year reprieve in 2025, farmers must now again choose between Price Loss Coverage or Agriculture Risk Coverage. However, they won’t be able to make that decision any time soon.
In January, USDA announced that enrollment for ARC and PLC will be significantly delayed. This was due in part to USDA increasing its base acres allocations by 30 million. How the agency intends to allocate those new acres remains unknown.
According to many analysts, the ARC-PLC delay will probably end up being a good thing for farmers. That’s because they should have a good feel for their production yields, county yields and potentially market-year average prices before the new enrollment deadline.
PLC is designed to protect farmers from commodity price downturns. When prices fall below the effective reference price, farmers receive a payment. Notably, references prices were increased for all commodities in the 2025 budget reconciliation package.
ARC provides coverage for revenue losses compared to historical data. Farmers may choose ARC to be based on their individual situation or in comparison to countywide data.
Typically, those decisions must be made by farmers in March. Now, producers should have much more information at their disposal to make the best decision for their operations.