Harvest protection strategies: pre-harvest hedging and insurance

In 2025, farmers will be able to receive a payment under the Area Risk Coverage – County (ARC-CO) or Price Loss Coverage (PLC) program — whichever is greater. To analyze the situation, it is recommended to request the FSA-156EZ Farm Records form or use the Kansas State University resource. Experts also advise taking into account fixed costs per hectare and comparing them with potential hedging of part of the future harvest.

A recent market rally has drawn attention to county margin insurance programs — Margin Protection (MP) and Margin Coverage Option (MCO). Their projected price determination period runs from August 15 to September 14, and the sales deadline falls on September 30. The MP program insures margin taking into account price and yield changes, whereas MCO is a narrower hybrid tool (for 2027 it covers the range from 95% to 90%) which, due to an 80-percent subsidy, costs the producer less.

The article provides calculations for different crops. For example, for corn, the MP-HPO policy costs $66.77 per acre, and MCO-RP costs $8.62 per acre. For soybeans in Atchison County, MP-HPO costs $34.47/acre, and MCO-RP costs $4.18/acre. For wheat in Cass County, the rates are $52.06/acre for MP-HPO and $4.30/acre for MCO-RP. When choosing a suitable tool, farmers are recommended to consider the correlation of a specific farm's performance with county data, as well as to compare insurance premium costs and liquidity management requirements.

Market advisor Andrew, overseeing Illinois and surrounding regions, heads the CODAK Insurance Group division and helps integrate insurance into producers' overall marketing strategies. Experts remind that futures and options trading involves significant risk and recommend consulting with financial professionals before making decisions.