The Cottonseed (Pilot) Endorsement does not require the producer to maintain records on cottonseed yield to establish coverage levels, according to Falconer.  Instead, a conversion factor provided in the special provisions of insurance is applied to lint yield records. For the 2011 crop year in Nueces County, the conversion factor is established at 1.447 pounds of cottonseed per cotton lint. Premiums for the Cottonseed (Pilot) Endorsement will be calculated using a national cottonseed price (set at $0.09 per pound, or $180 per ton, for the 2011 growing season) and the premium rate applicable to the grower’s APH of cotton lint.

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 (actual lint yield times conversion factor) from the cottonseed production guarantee (APH lint yield times conversion factor).

Given the current high prices for cotton lint and cottonseed and increasing production costs, producers are encouraged to contact their crop insurance agent for further details as to how this new insurance product might fit into their risk management program.