By Scout Nelson
Crop insurance remains one of the most important tools available to help farmers manage risk and protect their income. In South Dakota, the interest in endorsements has grown as producers look for additional security in uncertain market conditions. While traditional crop insurance remains the foundation of many risk management plans, endorsements now play a larger role in protecting farm revenue and profitability.
Research by Matthew Diersen, Griffith Endowed Professor and SDSU Extension Risk and Business Management Specialist, along with Sarah Sellars highlighted how endorsement use has changed over time. Their work examines historical adoption trends and factors influencing producer decisions as insurance programs continue to evolve.
The most common farm-level insurance option continues to be Revenue Protection (RP). This coverage remains the foundation of many crop insurance programs and is commonly selected at the 75% yield-election level. While RP remains the primary choice, several endorsements now provide additional protection for producers.
One of the earliest endorsement options is the Supplemental Coverage Option (SCO), which has been available since 2015. SCO provides county-level protection for losses occurring between farm-level coverage and normal production levels. Because it protects a limited range of losses, it is often called “shallow loss” protection.
Another endorsement, the Enhanced Coverage Option (ECO), became available in 2021. ECO covers a narrow band of losses above SCO coverage levels. The Margin Coverage Option (MCO) was introduced in 2026 and offers protection based on county-level margins. In addition, Margin Protection (MP) has been available since 2015 and protects against changes in crop prices, yields, and input costs.
Farmer participation in these programs has changed over time. SCO use remained limited from 2015 through 2020, while ECO participation has increased steadily since 2021. Acres covered by SCO and ECO expanded from 2021 through 2024, although liability growth remained relatively small because these endorsements only cover limited portions of potential losses.
Margin Protection followed a different pattern. Participation remained low from 2018 through 2021. However, expected corn margins rose sharply in 2023, reaching nearly $600 per acre. Producers responded by adding MP coverage on more than 500,000 acres, creating almost $600 million in liability protection.
Government subsidies have also encouraged endorsement adoption. Historically, SCO received strong subsidy support. For the 2025 crop year, subsidy levels increased for ECO, leading to a major increase in enrollment. Producers added ECO protection to nearly 2.8 million corn acres. Because ECO is shallow-loss coverage, total liability remained below $200 million.
Further changes occurred during 2026. Subsidies increased for SCO and ECO, while MCO entered the market with a high subsidy level. Subsidies for MP remained unchanged. These incentives encouraged many producers to add endorsement coverage. As a result, acres covered by ECO or MCO approached total insured acreage levels.
From 2021 through 2026, farm-level insurance policies covered approximately 6.0 to 6.7 million acres of corn. During this period, about 70 percent of corn revenue was insured. Farm-level liability ranged from $3.3 billion to $4.5 billion, while endorsement liability ranged from $0.1 billion to $0.6 billion. In 2026, endorsement liability reached $0.5 billion.
Looking ahead to the 2027 crop year, producers continue evaluating their options. The deadline to add MCO or MP coverage for corn and soybeans is September 30, 2026. Producers choosing ECO or SCO for corn in South Dakota have until March 15, 2027.
Coverage changes may affect demand. The coverage range for ECO and MCO narrows in 2027, which may reduce interest. At the same time, SCO coverage expands, which may encourage greater adoption. Subsidy levels remain high for SCO, ECO, and MCO, while MP continues to receive a lower subsidy rate.
Current estimates suggest that margins eligible for MP coverage may be similar to levels seen in 2022 and 2024, although lower than the unusually strong levels recorded in 2023. Strong December 2027 corn futures prices continue supporting expected margins.
Input costs for DAP, diesel, potash, urea, and interest remain higher than last year and are second only to 2023 levels. During the 2023 crop year, DAP, diesel, and urea prices declined from fall 2022 into spring 2023.
An important feature of MP is that it remains the only crop insurance product providing interest rate risk protection.
Photo Credit: gettyimages-nes
Categories: South Dakota, Crops, Corn