Premium Costs of Supplemental Coverage Option Compared to Enterprise Unit Premium

Supplemental Coverage Option (SCO) is a new crop insurance product available this year when producers do not choose to receive 2014 Farm Bill payments through Agricultural Risk Coverage (ARC). We compare Revenue Protection (RP) farmer-paid premiums to RP+SCO premiums. In northern and central Illinois, RP+SCO premiums often exceed RP premiums at the 80% coverage level. Sometimes, RP+SCO premiums are lower than 80% RP premiums in southern Illinois. Overall, use of SCO as a means to reduce farmer-paid premium costs is questionable, particularly in northern and central Illinois. Furthermore, additional protection offered by SCO is limited when 85% coverage level products are available in the COMBO product. These factors suggest that commodity program decisions between ARC and Price Loss Coverage (PLC) should be based on the merits of those commodity programs rather than on the availability of SCO.