The 2027 Margin Coverage Option (MCO) Decision

Sep 17, 2026

By Henrique Monaco and Nick Paulson et.al

The Margin Coverage Option (MCO) is an area-based crop insurance endorsement that provides protection against operating margin shortfalls, which can be driven by revenue decreases, cost increases or a combination of both. The decision to buy MCO for crop year 2027 must be done by September 30^th, 2026. For the 2027 crop year, the coverage band of MCO was changed, now providing protection from 95% down to 90%. This change reflects the fact that coverage for Supplemental Coverage Option (SCO) increased to 90% from 86% and Enhanced Coverage Option (ECO) changed to 95% down to 90%. The price discovery period recently ended and projected prices for crops and inputs have been determined, which allows for premium calculations. This article discusses the tradeoffs of using MCO in a farm operation’s insurance portfolios.

MCO Recap

The Margin Coverage Option (MCO) offers area level coverage against operating margin shortfalls. It is based on crop futures prices, county yields, and input futures prices along with calculated input quantities based on expected county yields. MCO is available for corn, soybeans, spring wheat, cotton, rice and grain sorghum in selected counties.

MCO is an endorsement to traditional crop policies (Yield Protection (YP), Revenue Protection (RP), Revenue Protection with Harvest Price Exclusion (RP-HPE) and Area Production History (APH)). Given the coverage band overlap, it cannot be purchased with Enhanced Coverage Option (ECO) but can be used with Supplemental Coverage Option (SCO). Like ECO and SCO, the MCO subsidy rate is also 80%.

In 2026, MCO adoption was modest, with just over 2.3 million acres covered (see farmdoc daily August 26, 2026).

The deadline for MCO purchases for corn and soybeans is September 30^th. The decision is made this fall, for a policy that will be in effect for crop year 2027.

Projected margins for next crop year are determined based on the Risk Management Agency (RMA) expected county yields (same yields as for ECO and SCO), and crop and input futures prices from this fall. Inputs considered for margin calculations are urea (for corn only), diammonium phosphate (DAP), potash, diesel, and natural gas (for irrigated practices only). Input quantities are calculated by multiplying the county expected yield by input specific coefficients.

Source : illinois.edu

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