U.S. cotton producers’ safety net was bolstered with Congress’ recent passage of “seed cotton” farm policy — an action the National Cotton Council has diligently sought for more than two years.
What was the basic action taken?
Congress recently enacted the Bipartisan Budget Act of 2018 that contained policy changes making “seed cotton” (upland cotton lint and cottonseed combined) eligible for Agriculture Risk Coverage/Price Loss Coverage (ARC/PLC) policies in Title I of the 2014 farm law beginning with the 2018 crop year.
What key decisions must be made?
To begin with, farm owners and cotton producers must elect coverage for seed cotton in either ARC or PLC. For PLC (likely the preferred option), the reference price is set at $0.367 per pound of seed cotton.
Two other key decisions must be made. First, an option to update payment yields for upland cotton lint yields is provided. Payment yield is used for calculating potential PLC payments for seed cotton. Cotton lint payment yield will begin with the historic counter cyclical program yield associated with previous cotton base acres. This lint yield can be updated based on 90 percent of the average of the 2008-12 crop yields, excluding years in which cotton was not planted. Updated lint yield is then converted to a seed cotton yield using a factor of 2.4. Second, generic base acres will be converted to decoupled, crop-specific bases effective for the 2018 crop. Options for converting generic base acres include: 1) the higher of 2009-12 planted and prevented planted acres of seed cotton or 80 percent of generic base acres, not to exceed total generic base acres on the farm; or 2) convert all generic base acres using proportional average of seed cotton and other covered commodities planted from 2009-2012.
For a farm with generic base acres and no seed cotton or other covered commodities planted or prevented from being planted between 2009-2016, then all the generic base acres are allocated as unassigned base acres and no longer enrolled in ARC or PLC. In addition, any remaining generic base acres under option one that are not converted to seed cotton base acres will be allocated to unassigned base acres and no longer eligible for ARC or PLC.
Payments under the new seed cotton ARC/PLC program for 2018 will be paid after Oct. 1 of the year the marketing year is completed – i.e. October 2019 for any 2018 crop year payments. For the 2018 crop year only, producers who enroll seed cotton base acres in ARC/PLC also may purchase STAX crop insurance on the planted cotton acres. However, beginning in 2019, farms with seed cotton base acres enrolled in ARC/PLC will not be eligible for STAX coverage.
How is this information being disseminated?
The NCC recently conducted educational webinars for producers and other interested stakeholders in all Cotton Belt states. More details will be provided on implementation, Farm Service Agency sign-up timelines and other information as it becomes available. We will continue working closely with USDA and the Congressional agriculture committees on the rulemaking and implementation process.
Gary Adams is president/CEO of the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming magazine page.
Gary Adams is president/CEO of the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming page.