Analysis of the Supplemental Coverage Option

The proposed Supplemental Coverage Option (SCO) crop insurance program is included in both the House and Senate farm bills. We develop a county level model to analyze program indemnities. The FAPRI-MU stochastic U.S. model is used to estimate market effects of the program. We find the net 10-year fiscal cost of SCO to be about $9.8 billion and $5.8 billion for the House and Senate bills, respectively. While corn and peanuts have the largest absolute payments per acre, wheat and peanuts have the highest relative effects in area and farm price. However, the market impacts of SCO are quite small.