According to Cole Patrick, director of insurance strategies at Compeer Financial, farmers need to take a serious look at their crop insurance strategies before the 2025 deadline because last year’s coverage isn’t going to cut it.
“This is not a “set it and forget it” year - it’s not the year to renew without considering changes to your coverage options,” Patrick explained during a Compeer Financial webinar in January. “Last year’s coverage might not be adequate for the cost of production, and coverage might not have the same effect it did last year or even two years ago.”
Patrick provides this example:
- In 2023, 75% revenue protection (RP) with 230 average production history (APH) and a $5.91 corn price equaled $1,019 in liability.
- In 2024, using a corn price of $4.66, that came to $804 in liability.
- In 2025, using a corn price of $4.40, that only supplies $760 in liability.
Data from Farmdoc at the University of Illinois estimates total expenses for a farmer in northern Illinois would average about $1,000 per acre - making it important for liability to come closer to 2023 numbers.
“Many don’t want to increase costs by increasing coverage, but they also maybe can’t afford to leave hundreds of dollars at risk,” says Brandon Pezanoski, state insurance product officer with Compeer Financial. “There are a couple of different routes to get this number closer to $1,000 an acre of coverage.”
Look Beyond Base Coverage
Expanding on base coverage, there are two sets of options.
- Title 1 through FSA: Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC)
- Stacked: Supplemental Coverage Option (SCO) and Enhanced Coverage Option (ECO)
Patrick shares four main differences for farmers to consider:
- ARC/PLC cover base acres, while SCO/ECO are planted acres.
- ARC/PLC have no premium.
- ARC/PLC pay in Oct. 2026, and SCO/ECO pay in June 2026.
- ARC and SCO cannot be combined, but a combination of SCO and/or ECO can be added to PLC.
“In the past few years, we’ve largely seen preference toward ARC - which is typically more favorable when you have a few years of high prices in that 5-year Olympic average. Because PLC uses a statutory reference price, that hasn’t been as attractive,” Patrick says.
When To Use ECO
In 2025, he expects ECO to gain in popularity.
“We think this is going to be hugely advantageous for producers out there,” Patrick says. “It’s a very effective shallow loss coverage tool.”
ECO is an optional, area-based policy endorsement with a coverage band that goes from 85% to 95%. It is available regardless of your ARC or PLC election and can be purchased with or without SCO. However, it does need to be purchased at the same time as your underlying multi-peril crop insurance (MCPI).
“Most of the products we have that are 95% coverage are private product, not subsidized and simply cost a 2:1 or 3:1 ratio,” Pezanoski says. “Here we’re looking at a 5:1 ratio, and there’s no ARC conflict.”
Patrick adds that if crop insurance prices fall more than 5% between the spring and the fall, you’re in ECO territory.
“In the last 10 years for corn, that price has dropped from the spring to the fall price seven times, and six out of those seven times it was greater than 5%,” he says. “If I’m just playing my odds, and I think the price is going to drop more than 5% between 60% to 70% of the time, those are pretty good odds.”
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