Texas cotton producer Jimmy Dodson recently told a Farm Foundation forum audience that risk management tools, particularly crop insurance, “are extremely important to cotton producers.” Dodson, chairman of the National Cotton Council’s American Cotton Producers, was a participant in a panel discussion on “The Future Role of the Federal Government in Agricultural Risk Management” held at the National Press Club.
Dodson says that in many parts of the Cotton Belt, “purchasing adequate crop insurance is often a requirement for securing financing for production costs. In today’s environment, we do not see that requirement changing. As such, it is our hope that crop insurance products can be enhanced to further protect producers from events beyond their control.”
Most Acreage Insured
The Texas producer says that in 2010, about 95 percent of upland cotton acres were covered under some type of crop insurance and more than 85 percent of insured acres were covered under “buy-up” insurance. Revenue products also have gained in popularity and are now covering more acres than traditional yield policies. The most common insurance choices among cotton producers are revenue products with coverage levels between 60 and 70 percent. Dodson said that while USDA’s Risk Management Agency (RMA) has made some beneficial changes to crop insurance products, the U.S. cotton industry believes there are areas for improvement.
Expanded Offerings Encouraged
Dodson added that RMA should continue to look for ways to move towards rate-setting procedures that recognize those investments producers make that reduce their individual risk, such as improved irrigation practices and adoption of seed varieties that incorporate crop protection traits.
Regarding RMA’s proposed rule for Area Risk Protection Insurance, Dodson says cotton producers also are very supportive of the Federal Crop Insurance Corporation’s (FCIC) efforts to expand the offering of area-wide insurance products covering revenue and yield losses. These will provide an important risk management tool. Producers also agreed with FCIC’s decision to incorporate their own yield data, as well as other USDA sources – a move that should enhance the yield estimates’ accuracy and reliability.
Dodson expressed appreciation for RMA’s efforts to improve the cotton quality loss adjustment provision, based on the Commodity Credit Corporation’s Loan Premium and Discount schedule and said the industry is continuing to look at further enhancements in quality adjustments.
He urged the reauthorization in the new farm law of a pilot program aimed at encouraging producers to insure enterprise units – insuring all of their acres in a county under one policy.
The National Cotton Council provided information for this report.