A New Area-Based Crop Insurance Product: MCO (Margin Coverage Option)

By Henrique Monaco and Gary Schnitkey et.al

For the 2026 crop year, a new crop insurance endorsement called Margin Coverage Option (MCO) is available. MCO is an area-based product protecting against operating margin declines driven by falling output prices, rising input costs, or both. In Illinois, corn and soybeans are eligible crops to purchase MCO. The sales closing date for MCO coverage for the 2026 crop year is September 30^th 2025. This article provides an overview of this new policy and discusses considerations in assessing its purchase.

Program Description

The Margin Coverage Option (MCO) offers coverage of expected operating margin based on futures prices, county yields, and the dollar cost of predetermined input quantities. County yields are the same as used for other county products, such as the Supplemental Coverage Option (SCO) or Enhanced Coverage Option (ECO), see farmdoc daily November 24, 2020, February 27, 2014, and April 24, 2014. Futures prices are used for both crop and input prices.

MCO’s coverage band is from 90% or 95% down to 86% and it must be purchased as an endorsement to an underlying policy that provides individual farm coverage (Yield Protection (YP), Revenue Protection (RP), Revenue Protection with Harvest Price Exclusion (RP-HPE) or Actual Production History (APH)). The eligibility for MCO is independent of Title I programs, so it can be used to insure acres enrolled in Price Loss Coverage (PLC) or Agriculture Risk Coverage (ARC). MCO can be paired with SCO, but not with ECO. From an insurance product perspective, MCO and ECO are alternatives.

For crop year 2026, the sales ending period for purchase in Illinois is September 30^th of 2025. Therefore, farmers need to make this decision prior to choosing their underlying policy, though final MCO premiums and payments will depend on underlying policy choices that will not be made until March of 2026.