New Supplemental Coverage Option (SCO) For Winter WheatMon, 11 Aug 2014 11:38:52 CDT
Agriculture Policy News is written by Dr. Jody Campiche, OSU Extension Economist.
The new Supplemental Coverage Option (SCO), available through the federal crop insurance program, will be available for corn, cotton, grain sorghum, rice, soybeans, spring barley, spring wheat, and winter wheat in selected counties for the 2015 crop year. The first enrollment deadline is September 30, 2014 for winter wheat. Producers will have the option to purchase SCO through a crop insurance agent along with their underlying individual insurance policy.
SCO is designed to cover county-wide losses and complement a producers' individual insurance policy which is a new concept as producers have not previously been allowed to stack insurance policies for the same crop. To be eligible to purchase SCO, producers must also have an individual policy for the crop enrolled in SCO. The individual policy can be a Revenue Protection (RP) policy, a Revenue Protection with Harvest Price Exclusion (RP-HPE) policy, or a Yield Protection (YP) policy. SCO coverage is tied to the individual yield or revenue insurance policy. So a producer with an individual Yield Protection (YP) policy would only have the option to purchase an SCO yield protection policy (as opposed to a revenue protection policy). SCO will cover losses from 86% minus the coverage level of the producer's individual policy. For example, if a producer has a 70% RP policy, the SCO coverage level would be 16% (86% 70%). As shown in the figure below, SCO is only offered in certain counties/states for 2015 winter wheat and spring wheat crops.
For Oklahoma, the list of counties with 2015 winter wheat coverage and the SCO expected county yields are shown in the listening below.
SCO Expected County Yield
Roger Mills 24.5
Enrollment in the new Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programs through the Farm Service Agency (FSA) are now tied to enrollment in the SCO crop insurance program. The USDA Risk Management Agency (RMA) just released rules/guidelines for the SCO program but the Farm Service Agency (FSA) has not released rules/guidelines for ARC and PLC. Therefore, the information provided in this blog post is based on my current (08/11/2014) understanding of the interaction between these programs and could change once all final program details are released.
Producers who elect to participate in ARC are not eligible for SCO for the crop/farm number participating in ARC. Enrollment in ARC or PLC occurs on an FSA crop/farm number basis. Producers cannot receive benefits for both ARC and SCO on the same acreage/farm number of a crop. SCO is elected on crop/county basis so producers will need to report which acreage/farm numbers are enrolled in SCO and which acreage/farm numbers are enrolled in ARC.
The ARC/PLC decision is a one-time decision that will remain in effect for the life of the farm bill. Producers will likely enroll in ARC/PLC in late 2014 or early 2015. The initial ARC/PLC enrollment is for the 2014 crop year (although it may not take place until 2015). SCO is not available for the 2014 crop year. SCO is available for certain crops/counties for the 2015-2018 crop years. The SCO election will take place each crop year when a producer enrolls in an individual RP, RP-HPE, or YP policy. A producer who enrolls a crop/farm number in ARC will not have the option to purchase SCO for that crop/farm number for any of the 2015-2018 crop years. The deadline to enroll in SCO for winter wheat for the 2015 crop year is September 30, 2014.
For ARC and PLC, producers enroll base acres (with the exception of generic or cotton base acreage) but producers enroll planted acres in SCO. So, a producer could enroll base acreage of one crop in ARC on a particular farm number but plant a different crop on the same farm number and enroll that crop in SCO. For example, assume Producer Jones has 100 base acres of grain sorghum on FSA farm number 1111 and 100 base acres of wheat on FSA farm number 2222:
Click Here to read the different scenarios presented by Dr. Jody Campiche
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