Margin Protection

Margin Protection, also called MP, guarantees you will maintain your desired operating margin. It covers against an unexpected decrease in operating margin (revenue less input costs). Margin Protection provides both yield and price protection meaning lower county yields, reduced commodity prices, increased prices of inputs such as fertilizer can all lower your operating margin enough to cause a payout.

Main Details

Federally Re-Insured
Margin Protection is not a private insurance product. It is subsidized by the federal government by
around 50%.

Area Based Coverage
Margin Protection is based on the county level of expected revenue. This means the coverage payout is not determined by the individual grower’s performance, but by all their neighbors’ combined performance. A well-performing grower can still receive a loss payout under this policy depending on their county.

Stand-Alone Policy
This type of coverage can be bought by itself. Many growers do pair this coverage with a Yield Protection
or Revenue Protection policy.

Must be Bought Before 9/30
The Sales Close Date is 9/30 for Margin Protection.

How is Payout Calculated?

Margin Protection is one of the more complicated coverage options in determining when a payout will be determined. We will look at it from a high level for illustration purposes.

Expected Margin with deductible – Harvest Margin = Margin Loss

Margin Loss X Coverage Protection Factor = Indemnity Payout

Detailed Example of Possible Scenario

Precision Risk Management’s Policy Support Team modeled a potential scenario based on trends from previous crop years to illustrate how a MP policy would work. A grower in South Dakota buys a Margin Protection Policy with 95% coverage level and a 120% protection factor for non-irrigated corn. In this example, the commodity price will drop 22.3% like it did in 2013. The indemnity payout would be $265.21 per acre, in this South Dakota county.


Up to 95% Levels
Coverage starts at 70% up to 95%. This is higher than the maximum 85% of multi-peril policies such as Yield Protection.

Input Coverage
Protects the grower from increased costs outside of the grower’s control.

Create a Floor of Revenue
Depending on the performance of the county, a grower has a safe level of revenue for the crop season. A Margin Protection payout can exceed $1,000 per acre.

Can Lock in Prices Now
When commodity prices are higher than average, a grower can lock in high expected commodity prices when they purchase the policy.

Premium Credit
When a grower purchases a Yield Protection or Revenue Protection policy, there is a discount on the Margin Protection. This is because there are coverage overlaps.


More Premium
The more coverage a policy adds, the more in premium will be owed. It will be up to the individual grower to determine if the premium fits their risk management strategy.

No Catastrophic Level of Coverage is Available

Not all Crops and States/Counties Have Coverage Options
The USDA’s site has a list of all crops and states availability found here.

Your Neighbor’s Situation can be Very Different than Yours
There can be a lot of variability in a county and Margin Protection is area-based.

Margin Protection vs ECO

Margin Protection and Enhanced Coverage Option (ECO) are two add-on policies that look very similar. When determining which one, if any, option is the best for you, please reach out to a Risk Management Advisor.

Download Our MP Product Guide