Digging Into The Details

05-14CFcvrWhile conducting 49 education meetings on The Agricultural Act of 2014 (new farm bill) across the Cotton Belt, National Cotton Council staff encountered plenty of questions about implementation and key decisions to be made.

How will cotton transition payments be paid?
This was a popular question raised at the education meetings. Due to the late passage of new farm legislation and necessary implementation timelines, new insurance products will not be available until the 2015 crop. To bridge the gap, upland cotton will have a transition payment for the 2014 crop. The payment equates to 5.4 cents/pound paid on all 2013 base acres and direct payment yield. The payment extends to 2015 at a reduced rate for any counties for which the Stacked Income Protection Plan (STAX) is not available. Payments are subject to a separate limit of $40,000 per legal entity. Sign-up for the cotton transition payments will occur late this summer so that cotton transition payments for the 2014 crop will occur on/after Oct. 1, 2014. For programs for other crops, rules likely will be published in the fall with sign-up late this year and early 2015. For new insurance products such as STAX, details will emerge in late summer and early fall.

What key decisions must be made?
Producers will have to make some important choices over the next year. For 2014, producers of crops other than cotton will have to decide between the Price Loss Coverage (PLC) and county Agriculture Risk Coverage (ARC) on a commodity-by-commodity basis or place all covered commodities in a farm-level ARC. If PLC is chosen, they must decide whether to update payment yields. If ARC is chosen, producers are not eligible to purchase Supplemental Coverage Option (SCO) beginning in 2015. They must decide whether to retain or reallocate covered commodity bases.

Key producer decisions for 2015 include: a range of new insurance products from which to choose (for cotton, either STAX or SCO); the appropriate level, if any, of individual insurance to pair with STAX (or SCO) must be decided. The possible choices will be based on availability and implementation. At some point, the choices will include different coverage levels for irrigated and non-irrigated practices; enterprise units by practice; and an option to update actual production history yields.

Are there ways to learn more?
NCC producer members and others are encouraged to seek out educational opportunities on the new farm law. That can include investigating reliable decision/calculator tools; inquiring, at the appropriate time, about program details from local Farm Service Agency officials; and asking questions of insurance agents regarding the new products and coverage options. In addition, the NCC-prepared farm bill overview and Q&A documents, along with other information, are available from the Farm Bill icon on the NCCÊs home page, www.cotton.org. Answers in the Q&A document are based on NCCÊs initial interpretation of the legislative language. Final answers could change based on USDAÊs farm bill interpretation and implementation.

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.

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