COTTON POLICIES

Things to Consider

Open Boll Policy (private) and Replant (private)
STAX/SCO
RP
Seed cotton
Advantage on your farm
Seed Endorsement

In the 2018 farm bill cotton was reintroduced as a covered commodity through the programs that are administered by the Farm Service Agency. Seed Cotton is now eligible for PLC or ARC elections. The election the farmer makes at the FSA office will effect the options that they can choose through federal crop insurance. Our role is to educate the growers that we work with to ensure that they are considering all options available at both the FSA and RMA and how each decision effects the farms risk management plan.

Building Policy Unit Structure

Optional Units

It is important to consider geography and wildlife pressure when selecting unit structure. Cotton that is planted in smaller fields surrounded by wooded areas are typically more susceptible to deer and hog pressure. In many locations hurricanes are a real risk during defoliation and it is sometimes beneficial to have optional units when a hurricane comes during the middle of harvest or defoliation.

Enterprise Units

This is a more cost effective way to insure because this policy groups all of the cotton production produced in the county together. When there is expected price risk in the market we think a higher level enterprise unit structure could be a better option to insure cotton. Also, the county STAX or SCO yield play a factor in how we advise on unit structure for cotton.

Enterprise by Practice

In order to keep non irrigated production and irrigated production separate this unit structure needs to be selected. If a hurricane happens during the middle of cotton harvest and you can only harvest your irrigated cotton and not your non irrigated cotton before the storm hits, it is beneficial to have each practice's production contained separately.

Multi-County Enterprise Unit

This allows a grower to enterprise production across county lines and it is the best way to manage premium cost if there is only one farm number in a separate county.

Important options to elect

Yield Exclusion

Optional Units

When 50% of the acres grown in the county yield below the county t-yield that production year can be excluded from the 10 year actual production history (APH). This is election can be the most important election made in certain areas and on certain crops.

Trend Adjustment

Over a 10 year APH database corn varieties and genetics have improved. Each yield in the 10 year APH database is adjusted upward by the trend adjustment factor, times the number of years that have passed since the yield was recorded.

Level by Practice

This allows a grower to elect a coverage level for non irrigated corn and a different level of coverage for irrigated corn. Irrigated corn may have less or different risk than non irrigated corn and this option gives you flexibility on how to manage these risks separately.

SCO vs ARC

If ARC is elected through the FSA programs on corn then that makes a grower ineligible for SCO through crop insurance. It is important to compare the county yield for both SCO and ARC as well as the market conditions when making a decision to participate in the SCO endorsement.

Yield Adjustment

Allows 60% of the t-yield to replace the actual yield when the actual yield comes in below the benchmark.

Yield Cup

This option prevents the approved actual production history yield on a database from dropping more than 10% from the previous years approved APH yield.

Seed Endorsement

When the grower has a yield loss this endorsement adds additional cents per pound to account for the loss associated with cottonseed. The amount is set by the RMA for each crop year. We advise on the seed endorsement on a year to year basis.

Private Products to pay attention to

Price Flex/Select

These private products help us establish a higher planting price guarantee when the market is volatile and shows better opportunities outside of the standard price discovery windows.

Open Boll Policy

This product extends coverage to unharvested cotton while in the open boll stage for direct loss caused by wind. We think of this product as a good way to protect the top end pounds above your APH guarantee. In certain areas that is susceptible to frequent hurricanes during harvest this can be a valuable risk management tool that will increase the farms bottom line during a hurricane.

Hail and Wind Coverage

This is an additional product that can be bought along with your MPCI insurance coverage that protects against hail and wind in most areas. We typically like to see this on irrigated corn but it is also a fit for non irrigated corn in many areas.