Margin Protection is an area based crop insurance product with a coverage limit up to 95%.

The policy works fairly similar to the federal crop insurance product, Revenue Protection, which many of you carry. First, you obtain an expected margin based on price, yield, and operating costs. Next you elect a coverage level, 70- 95% of the expected margin. Then at the end of the season, a harvest margin is determined based on price, final county yield, and operating costs. If the harvest margin is less than the trigger margin, you get paid.

 

Calculation definitions:

 

Expected Margin = Expected Revenue – Expected Costs

Expected Revenue = Expected County Yield x Projected Commodity Price

Expected County Yields for 2021: Hardin 200.4 – Franklin 203.0 – Butler 200.2 – Grundy 219.60

Projected Commodity Price is discovered from August 15 to September 14.

Expected Costs: fixed and variable. The fixed costs include seed, machinery, ect. The variable costs for corn include diesel, urea, DAP, potash, and interest.

 

Margin Loss = Trigger Margin – Harvest Margin 

Harvest Margin =  Final County Yield x Harvest Price.

Harvest Price is determined in the month of October.

***When combining Margin Protection with Revenue Protection, you only receive the higher of the two payments.

 

Example

 

Expected County Yield 195 x Margin Projected Price $3.77 = Expected Revenue $735.15

Expected Revenue $735.15 – Expected Costs $320 = Expected Margin $415.15

Expected Margin $415.15 – Margin Deductible $36.75 (Expected Revenue $735.15 x (1- Coverage level 95%) = $36.75) = Margin Trigger $378.40

 

Final County Yield 195 x Harvest Price $3.30 = Harvest Revenue $643.50

Harvest Revenue $643.50 – Harvest Cost $320 = Harvest Margin $323.50

 

Margin Trigger $378.40 – Harvest Margin $323.50 = $54.90 

***When combining Margin Protection with Revenue Protection, you only receive the higher of the two payments.