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Devil’s in the Details

Mark Lange

Mark Lange

National Cotton Council
From November 10 to December 10, the National Cotton Council has been conducting workshops to help cotton producers and others get a better grasp on the provisions of The Agricultural Act of 2014.

How does STAX fit with a producer’s existing insurance policy?

The Stacked Income Protection Plan (STAX) is available in 2015 for upland cotton. At the producer’s choice, it may be purchased standalone or in combination with an underlying crop insurance product. STAX indemnities are triggered over a range of 90 to 70 percent of county revenue. STAX indemnities are triggered when county revenue falls below 90 percent of expected county revenue and continue to trigger until county revenue reaches 70 percent of expected county revenue. At that point, STAX indemnities have reached their maximum. The “stacked” concept envisions that producers have underlying coverage that will cover the deeper losses in individual revenue or yield. Producers also must be aware that the lower coverage level of STAX cannot overlap the coverage level of the underlying policy. For example, if a producer has a 75 percent revenue policy, STAX may be purchased at 75 to 90 percent. If STAX is purchased for the 70 to 90 percent range, the coverage of the underlying policy must be reduced to 70 percent. STAX also carries a premium subsidy of 80 percent, hopefully making it an affordable risk management option for producers. For more information on expected county yields and premium rates, producers can go to USDA’s Risk Management Agency website. That information is at http://webapp.rma.usda.gov/apps/actuarialinformationbrowser2015/Crop-Criteria.aspx.

Increased use of conservation tillage has helped reduce soil loss by 68 percent in the last 30 years.

Increased use of conservation tillage has helped reduce soil loss by 68 percent in the last 30 years.

What are generic base acres and how do they work?

All upland cotton base acres on a farm as of Sept. 30, 2013, are converted to generic base acres under the 2014 farm law. There are no decisions or actions necessary by the producer for this relabeling of base. For 2014-2018, generic base offers flexibility to producers in terms of the payment acres associated with the programs for covered commodities, which includes grains, oilseeds and peanuts. On a farm with generic base, some or all of generic acres can be “attributed” annually to the Agriculture Risk Coverage (ARC)/Price Loss Coverage (PLC) payment acres if an ARC/PLC commodity is planted on that farm. All producers, including owners and operators, with a share of the base acres on a farm must – between Nov. 17, 2014 and March 31, 2015 – make a one-time, unanimous election of: PLC or Agriculture Risk Coverage-County Coverage (ARC-CO) on a covered commodity by covered commodity basis on a farm, or ARCIndividual Coverage (ARC-IC) for all covered
commodities on a farm.

Are there other critical farm law deadlines?
Landowners have between Sept. 29, 2014, and Feb. 27, 2015, to retain or re-allocate covered commodity bases and update payment yields. Annual required signup for the 2014 and 2015 crops is between mid-April 2015 and the summer of 2015. More information on PLC and ARC, on STAX and on other key farm law provisions
is available from the Farm Bill icon on the NCC’s home page, www.cotton.org.

Mark Lange is the president and chief executive officer for the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming page.