Evaluating Crop Insurance Options for Cotton-STAX vs. SCO Decision

Plains Cotton Growers, Inc., has developed a new resource for cotton producers currently evaluating crop insurance options for 2019. With the addition of Seed Cotton as a Title One covered commodity starting in 2018 and continuing under the 2018 Farm Bill, cotton producers throughout the United States have a new dynamic to consider when determining how to structure their risk management portfolios beginning with the 2019 crop year.

A major part of this process, which involves evaluating the potential integration of multiple coverage enhancing options available through the federal crop insurance program, is the decision between the Stacked Income Protection Plan (STAX) or the Supplemental Coverage Option (SCO). PCG’s new resource focuses on this decision.

For cotton producers with Seed Cotton base acres on their farms, the Title One/crop insurance integration decision involves determining how to build their insurance coverage around the Title One protection provided by either the Price Loss Coverage (PLC) or Agriculture Risk Coverage (ARC) programs administered through the USDA Farm Service Agency. It is important to note that the 2018 Farm Bill imposes several restrictions, some new and some carried over from the 2014 Farm Bill, on the purchase of STAX and SCO policy endorsements on farms planted to cotton.

Beginning with the 2019 crop year STAX coverage will only be available for purchase on farms that are not enrolled in either the PLC or ARC programs for seed cotton through USDA FSA.

That means STAX can only be purchased on farm(s) (identified by FSA farm number) that either have ZERO Seed Cotton base or on a farm(s) where the producer decides NOT TO ENROLL seed cotton base and participate in either PLC or ARC for that production year. Because STAX is a cotton only product the combination ARC/PLC STAX restriction only applies to farms with seed cotton base eligible to participate in those programs.

Unlike STAX, SCO is only available on farms enrolled in the PLC program with an underlying insurance policy. Any producer enrolled in the Price Loss Coverage (PLC) program for an insured crop, including cotton, can purchase an SCO endorsement.

For new cotton producers or growers who have little or no farm program base for Seed Cotton, the STAX vs. SCO decision will strongly hinge on whether or not an additional layer of insurance protection is needed and which of the available insurance options best fit their risk management needs.

“We hope that this handout will help address questions our growers may have about STAX and SCO and which may be best for their operation as they evaluate their crop insurance options,” PCG Executive Vice President Steve Verett said. “We encourage growers to carefully consider the differences between the two programs and work with their crop insurance agent to make these important decisions.”

Source: is Plains Cotton Growers, which is solely responsible for the information provided and is wholly owned by the source. Informa Business Media and all its subsidiaries are not responsible for any of the content contained in this information asset.

Source: Southwest Farm Press 

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