Growers in the southern Plains and the mid-South express sticker shock at the price of the new Supplemental Coverage Option (SCO), created by the 2014 farm law to allow growers to boost their level of revenue protection, says DTN. SCO is available to grain and oilseed growers who option for the traditionally structured Price Loss Coverage subsidy program. DTN quotes a central Texas grower as saying the SCO premium is too costly. It would make more sense to buy higher coverage through revenue insurance, he said. The Texas grower and a Tennessee insurance agent told DTN that growers also believe SCO, which is triggered by county yields, will not be as much help as a revenue policy based on an individual farm’s yields.
There also is concern about a potential gap between SCO coverage and the levels of revenue coverage popular in higher-risk regions, says DTN, in the range of 50-65 percent of average crop revenue. SCO makes payment when revenue is from 75-86 percent of normal.
In its agricultural baseline, CBO forecast SCO outlays of $210 million a year, a small part of crop insurance outlays expected to average $9 billion annually. So-called STAX coverage for cotton, another new insurance policy created by the farm law, is forecast to cost $290 million a year.