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Farmers struggling to cover increased production costs are taking advantage of reduced premiums on federal crop insurance products that are allowing them to guarantee 95% of their expected revenue.
Interest in one of two types of policy endorsements grew sharply this year and could explode, thanks to increased taxpayer subsidies, according to one preliminary analysis.
“I like that 95% level. I just sleep well at night,” said southwest Minnesota farmer Matt Wolle, talking about why he purchases the Enhanced Coverage Option (ECO) on his crop insurance coverage.
Ross Plucker, who farms southwest of Sioux Falls, South Dakota, expects ECO and a complimentary product, the Supplemental Coverage Option (SCO), to be highly popular with farmers and bankers in his area and thinks the products could potentially eliminate the need for emergency assistance payments from Congress and USDA.
“It’s kind of nice to know that you’ve got coverage on a disaster year or a tough year,” he said. “If you have a good year it’s like health insurance, if you don’t need it, you don’t need.”
ECO and SCO are known as “shallow loss” insurance because they protect against relatively small drops in expected revenue.
Neither product had traditionally gotten a lot of uptake but that’s starting to change. The Biden administration increased the premium subsidy on ECO to 65%, effectively cutting its cost to farmers, and purchases skyrocketed in 2025 as a result.
More than 60 million acres were covered by ECO in 2025, up from about 15 million in 2024. Some 6 million acres of crops in Minnesota, 5.4 million in South Dakota and 8.2 million in North Dakota were covered by ECO last year, according to USDA data.
Then, the One Big Beautiful Bill Act added several new enhancements to SCO. The premium subsidy was increased from 65% to 80%, the top coverage level was increased from 86% to 90% and a restriction was removed that has prevented farmers from buying SCO and also participating in a key farm bill program, Agriculture Risk Coverage.
The new enhancements are being phased in over two years. Under USDA rules this year, the premium subsidy rate for ECO will be increased to 80% to match SCO. The top coverage level for SCO will remain at 86% this year but increase to 90% in 2027.
Economists offer estimates on coverage, government costs
A preliminary analysis by economists at North Dakota State University (NDSU) estimates that interest in ECO, and specifically the 95% coverage option, will explode this year to 179 million acres. Farmers are expected to buy SCO on nearly 19 million acres this year, up from 12.2 million acres in 2025.
Francis Tsiboe (NDSU photo)NDSU economist Francis Tsiboe told Agri-Pulse the increased subsidy is expected to drive the increase in ECO. He cautioned that the estimates are “very preliminary.”
ECO will remain significantly cheaper than SCO because of what they cover. ECO only covers losses below 90% or 95%, depending on the level a farmer chooses, down to 86%. SCO covers a larger band of loss, all the way down to the level of the underlying insurance policy. So even though the premium subsidy for SCO is increasing to 80%, raising the maximum coverage level from 86% to 90% also raises the cost of the product, Tsiboe said.
Some growers who choose ECO but not SCO may leave a significant gap between their underlying insurance coverage and ECO, since it starts at 86%.
The cost to taxpayers from the enhancements is potentially significant. Ohio State economist Carl Zulauf has estimated that the premium subsidy increases for ECO alone will increase total premium subsidies by $13.2 billion over 10 years.
The Congressional Budget Office currently estimates that premium subsidies for crop insurance will total $12.6 billion for fiscal 2026 and $12.9 billion for FY27, rising from $11.3 billion in FY25.
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Zulauf thinks the interest in ECO in particular is driven by farmers’ interest in protecting themselves again price declines. “Revenue insurance at high coverage levels provides nontrivial price risk protection. It is likely no coincidence that use of ECO has more than tripled across large acreage field crops in 2025 following the summer 2024 increase in its subsidy rate to 65%,” he wrote in a July 2025 paper.
Carl Zulauf (OSU photo)The one major downside to these buy-up options, according to farmers and insurance agents, is that the federally subsidized versions only cover losses at the county, rather than individual farm, level as the underlying insurance policies.
Lyle Perman, a long-time crop insurance agent in north central Iowa who recently retired from the business, says the lack of individualized coverage under SCO and ECO has been a significant deterrent to farmers. He said it made more sense for his growers to buy their underlying insurance policy at higher levels than to purchase SCO and ECO.
He also noted that SCO and ECO endorsements don’t cover prevented planting.
For an additional premium some insurance companies offer farmers as an add-on, individualized versions of the USDA-subsidized policy endorsements that go under such names as “ECO+” or “MyECO” or “MySCO.” USDA doesn’t provide data on purchasing of such add-ons.
Premium subsidies lower farmers production costs
Wolle, who farms in Watonwan County, Minnesota, buys the individualized ECO option. He says the buy-up options have lowered his overall insurance costs by eliminating the need to buy separate policies for wind and hail damage.
“Crop insurance is a major part of our input costs and our risk management strategy. I appreciate the federal government giving us cheaper input costs,” he said.
Plucker, who also buys the individualized ECO endorsement, to go with SCO and his underlying insurance, figures that with the additional premium for buy-up coverage his crop insurance premiums will represent about 5% of his total production costs this year. For him, the extra coverage is well worth it to protect his return at current market prices.
“It's going to take a lot of exports and so on to get this corn market back to where it's going to be profitable,” said Plucker.
Iowa State University extension economist Chad Hart also thinks there will be significantly more interest in both ECO and SCO this year.
“The increased subsidy level and higher coverage level do make the coverage more attractive, and it makes sense for farmers to investigate the products,” he said.
