What is in this article?:
- Cottonseed insurance endorsement expands risk management portfolio
- Available Beltwide
- Cottonseed insurance available in 2011
- Available across the belt
- Protects value of crop
A prominent feature of the Cottonseed Endorsement was its establishment as a nationwide pilot program, which means the product will be available for purchase by growers in every cotton-producing county in the United States during its evaluation period.
Premiums for the Cottonseed Endorsement will be calculated using a national cottonseed price (which has been set by USDA RMA at $0.09 per pound, or $180 per ton, for the 2011 growing season) and the premium rate applicable to the growers approved lint yield for Yield coverage under USDA RMA’s Combo Policy provisions. Growers purchasing Revenue coverage on their cotton lint will also have their Cottonseed Endorsement premium calculated based on the rate applicable to Yield only coverage at their approved yield level.
Premiums applicable to the Cottonseed Endorsement will qualify for the same level of federal premium subsidy as the producer’s underlying cotton lint policy.
From an implementation standpoint, the Cottonseed Endorsement is designed to be easy to understand and administer and requires no additional record keeping by participating producers or insurance providers.
To avoid producers having to provide additional cottonseed production records, cottonseed yields used to establish coverage under the endorsement will be calculated using a state-based cottonseed conversion factor multiplied by the producer’s approved cotton lint yield.
The cottonseed production guarantee will then be determined by multiplying the resulting approved cottonseed yield by the coverage level selected by the grower for the cotton lint policy (Yield or Revenue). Multiplying the cottonseed production guarantee by the national cottonseed price established by the USDA RMA will determine the total value of coverage provided under the endorsement.
In the event of a loss, growers incurring losses to their cotton lint sufficient to trigger an indemnity would be paid for the corresponding level of loss on cottonseed. Cottonseed losses will be determined by subtracting the cottonseed production to count (determined by multiplying the total production to count of cotton lint before quality adjustment by the cottonseed conversion factor) from the cottonseed production guarantee.
For additional information about the Cottonseed (Pilot) Endorsement producers are encouraged to contact their insurance agent or crop insurance provider to learn how the endorsement can work for their operation.