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This July the USDA Risk Management Agency announced a subsidy increase for 2025 and expanded coverage options that makes ECO more attractive for more farmers.
Below, find excerpts from FMH’s latest InsureCast episode on how ECO performed in 2023 and how the product can be incorporated into risk management plans for 2025.
How ECO Performed in 2023
The USDA RMA released the final county yields for 2023 for all major spring crops in mid-June, including corn and soybeans. Despite high crop yields in some places across the country, low spring prices — especially a 17 percent decrease on corn — triggered a larger-than-average number of ECO payments. “The price was the story for 2023,” said Ryan Benes, FMH Assistant Vice President — Regional Sales Manager. “Essentially, if your county didn’t have at least 115 percent of your expected yield, you would have gotten an ECO payment.”
The protection ECO offers during large price drops makes it an impactful product for those who elect it, according to Benes.
“One of the reasons we love ECO is because of how well it mimics price protection,” he said. “The value you get with it is good.”
Ken Ripley, FMH Assistant Vice President — Regional Sales Manager, pointed out that challenging weather and price conditions proved that ECO was able to provide dependable coverage for farmers. “It’s when you have the combination of the droughts and the big price drops, the area plans provide that protection,” he said.
Subsidy Change for 2025
The ECO subsidy rate for the 2025 crop year is moving from 44 percent to 65 percent — a 21-point increase. The change results in significant premium savings for farmers who elect ECO as part of their risk management plan.
According to Benes, this subsidy change could prompt numerous changes in the number of farmers who choose ECO. “I think it opens up more regions to ECO,” he said. “I think we’ll see it sold and bought more outside of where it’s been bought previously.” He also expects to see more ECO coverage given that the product is available on over 36 crops for 2025.
In addition, ECO is not tied to FSA programs, nor does it require an underlying MPCI policy, giving farmers more flexibility to move their risk strategies toward a higher trigger on a county base.
Benes noted that the subsidy increase will likely mean a shift away from other product options, such as Margin Protection and RAMP. “I do think we’ll see some shift away from Margin Protection because it will not have the advantage of this additional subsidy,” he said.
According to Ripley, the subsidy change could also increase the number of producers who elect the ECO+™ endorsement from FMH, which provides even more top-end coverage on an individual basis. “This year, where producers were hit worse than the county was, ECO+ picked them up where the county stopped, which is what the product’s designed to do,” he said. “It’s no question that ECO+ is going to be a very popular product next spring.”
Impact to 2025 Risk Management Decisions
Both Ripley and Benes noted that the subsidy change could substantially influence producers’ buying decisions for 2025. “With that subsidy level, the value just becomes so significant. It’s hard to ignore,” said Benes. He described the possible savings: “If you went all in and bought ECO at 100 percent last year, it was probably around $30 per acre for a lot of farmers. This next year, that’s going to be $18.75 per acre. It makes it more affordable.”