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Changes on horizon for cotton quality insurance provisions for farmers

Claire White, left, an economist with USDA’s Risk Management Agency, discusses changes to the quality provisions of cotton crop insurance with Sonny Davis, a Cottondale, Fla. cotton farmer and Matthew Mitchell, chief of loss adjustment standards with RMA.
USDA RMA is working with the National Cotton Council to make changes to cotton crop insurance for farmers who suffer quality losses but not yield losses.

USDA’S Risk Management Agency is working with the National Cotton Council to make changes to cotton crop insurance for farmers who suffer quality losses but not yield losses.

The need for the change in quality adjustment provisions was sparked by severe weather in the past two years in Southeast that hampered cotton quality but did not impact yield as much. The Council and RMA are working on change recommendations that should be in place for the 2018 crop.

“I feel we do have a path forward that can put something in place in 2018; that’s the timeline we’re targeting,” said Gary Adams, president of the National Cotton Council at the annual meeting of the Southern Cotton Growers and Southeastern Cotton Ginners in Charlotte. He said changes will move forward that will enhance the quality provisions of cotton crop insurance.

At the meeting, Claire White, an economist with RMA in Kansas City, outlined changes to the quality provisions, including:

  • Eliminate 15 percent deduction and keep 15 percent trigger
  • Eliminate 15 percent deductible and reduce trigger to 5 percent or 10 percent
  • Eliminate quality adjustment from base policy and add it as an endorsement
  • Leave base policy unchanged and add an endorsement for trigger options.

Craig Brown, vice president of producer affairs for the National Cotton Council, said the task now is to evaluate these options and determine which is the most feasible plan forward for changes to be in place by 2018.

Brown said it will be a pilot endorsement with the goal of being approved at the Council’s annual meeting in Dallas in February. “Procedurally, that’s the quickest way of getting something done. It has it’s risks, but the reward from the bureaucracy standpoint is that it is probably the clearest path forward for a positive change for the 2018 crop,” he said.

Brown said the Council will likely recommend a 5 percent trigger. He said cotton farmers can then decide if they want to buy crop insurance or not, depending on what the rate is.

“That’s the safest thing for now,” he said. “This will allow cotton farmers to evaluate the product and take advantage of it or not with or without changing the base policy,” he said.

TAGS: Harvest
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