Cotton growers have a choice between the Stacked Income Protection Plan (STAX) and the Supplemental Coverage Option (SCO) in the 2014 farm bill's cotton program. While the options are clear-cut, arriving at which to choose could pose a challenge.
According to National Cotton Council Senior Governmental Relations Representative Robbie Minnich, cotton growers can use online decision tools and input from their crop insurance agent, county Extension agent, Farm Service Agency (FSA) office and other advisors to help them make the right choice for their farms.
"In the past a lot of these decisions have been fairly 'cookie-cutter,'" said Minnich, who reviewed the farm bill's commodity programs in a Nov. 19 meeting at the University of Georgia's Tifton Campus. "Now they're highly detailed, there's a lot of dials and levers that can be moved and so I think one of the things we're going to have to do is look at some of these resources that are out there."
The meeting in Tifton was one of two in Georgia and 25 information sessions across the Cotton Belt conducted by the NCC.
The STAX program, administered by the USDA's Risk Management Agency (RMA), will be available in 95 percent of the U.S.' cotton-producing counties. To be eligible as a stand-alone county, a county must have at least 10 years of cotton production history, 10,000 or more acres in the past five years and 20 or more producers in the past five years. Minnich said about 80 percent of cotton-producing counties meet this criteria. Counties that do not meet this criteria may be combined with a bordering stand-alone county or a group of counties surrounding a stand-alone county in order to achieve eligibility.
STAX, which is designed to complement existing coverage, may be purchased as the only insurance policy covering cotton acres. It covers losses between 10 and 30 percent based on county level revenue and yield statistics, minimizing losses that are not covered by individual crop insurance policies. Farmers can tailor the STAX portion of their insurance portfolio to meet their farm's needs. They may choose the coverage level in five-percent increments in that 10 percent - 30 percent band. Growers have the opportunity to include the Harvest Price Option, which bases indemnity payments on the harvest price if it is higher than the expected price in cases where payments are triggered by yield losses.
Farmers who enroll in STAX also must choose a protection factor, which is used to calculate the level of coverage. The protection factor will be between 80 and 120 percent. The higher the percentage, the higher the premium payment will be. Premium payments are subsidized under the STAX program.
SCO, which provides coverage for a portion of the producer's deductible, must be purchased with an underlying policy and cannot be purchased on acres covered by STAX.
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