The Agricultural Act of 2014, commonly referred to as the 2014 Farm Bill, strengthened crop insurance by adding new products and expanding coverage to previously underserved crops, areas, and to new types of coverage, which increased Federal crop insurance’s role as a key component of the farm safety net.

The Supplemental Coverage Option, or SCO, provides certain crop farmers with the option to purchase additional coverage for a portion of the  underlying individual policy or plan of insurance policy deductible, making payments based on area coverage triggered by a county level loss in yield. SCO indemnities are triggered if area losses exceed 14 percent of expected county yield or revenue levels and pays the full amount when the county average yield or revenue falls equal to the coverage level of the underlying policy. SCO coverage is not available for crops enrolled in the Agriculture Risk Coverage protection or acreage that is enrolled in the Stacked Income Protection Plan.

The Stacked Income Protection Plan, or STAX, is another new program designed for upland cotton acreage only as it is not a covered commodity for assistance under other parts of the farm bill. STAX is an area revenue plan that a cotton farmer may use alone or in combination with an underlying policy or plan of insurance, which is similar in design to the existing Area Revenue Protection plan of insurance.

The 2014 Farm Bill also required the Risk Management Agency (RMA) to develop a product that addressed the needs of diversified farms.  RMA was already developing a new product called Whole Farm Revenue Protection (WFRP) prior to the enactment of the farm bill and policies were available for sale beginning with the 2015 crop year.  WFRP can be particularly attractive to growers of specialty and organic crops, and those marketing to local, regional, or direct markets because it enables them to cover all farm revenue under one policy.  It also allows for other buy-up Federal crop insurance policies to be purchased on individual commodities significant to the farm operation.

Additionally, a new Peanut Revenue policy now provides farmers the ability to manage risk for both yield and revenue losses.

The 2014 Farm Bill also resulted in several new crop insurance products coming to market. One new type of product authorized for commodities, Margin Protection, (MP) became available in the 2016 crop year, for corn, rice, soybeans, and wheat in select states and counties. MP provides coverage against an unexpected decrease in a farmer’s operating margin (revenue less input costs). It is area-based, using county-level estimates of average revenue and input costs to establish the amount of coverage and indemnity payments.

New product priorities were also placed on policies that increase participation by farmers of other underserved agricultural commodities, including sweet sorghum, biomass sorghum, sugarcane, alfalfa, pennycress, dedicated energy crops, and specialty crops.  In addition, a yield exclusion option was provided for producers so they could elect to exclude a low or very poor yield from their actual production history.  A per planted acre yield that is at least 50 percent below the county’s 10-year simple average yield may be excluded from the yield history in determining the guarantee.  In return, the farmer must pay additional premium for the increased coverage so the policy remains actuarially appropriate.

The 2014 farm bill also sought to increase participation among new and beginning farmers by providing an additional 10 points of premium, exempting the payment of any fees that may be due, allowing the use of production history from other operations that the new or beginning farmer was previously involved with, and providing for a higher substitute yield, from 60 to 80 percent, when electing to improve their actual production history by replacing a previous low or poor yield for the crop .

Finally, the farm bill also linked crop conservation practices to insurance participation by requiring farmers to adhere to an approved conservation plan intended to protect highly erodible land and wetlands in order to be eligible for the premium subsidy provided by the government.

* As of April 2020