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Federal Crop Insurance Options for Upland Cotton Farmers and Their Revenue Effects

Author

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  • Hungerford, Ashley
  • O'Donoghue, Erik

Abstract

The Agricultural Act of 2014 introduced two new crop insurance programs for upland cotton: the Supplemental Coverage Option (SCO) and the Stacked Income Protection Plan (STAX). SCO and STAX are known as “shallow loss” programs because they typically have lower deductibles and do not compensate for the bigger losses that other Federal crop insurance programs cover. This report examines the structures of SCO and STAX and how these programs interact with Revenue Protection, a preexisting crop insurance policy. It provides estimates of the contribution of SCO and STAX to revenue and downside risk reduction for upland cotton producers in various counties, revealing how risk reduction differs across counties with different inherent revenue risk caused by regional variations in yield. The report describes 2015 enrollment in STAX and SCO and finds that STAX enrollment is tied to the market share of cotton in a given county.

Suggested Citation

  • Hungerford, Ashley & O'Donoghue, Erik, 2016. "Federal Crop Insurance Options for Upland Cotton Farmers and Their Revenue Effects," Economic Research Report 249774, United States Department of Agriculture, Economic Research Service.
    • Handle: RePEc:ags:uersrr:249774
    DOI: 10.22004/ag.econ.249774
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    File URL: https://ageconsearch.umn.edu/record/249774/files/err-218.pdf
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    References listed on IDEAS

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    1. Keith H. Coble & Robert Dismukes, 2008. "Distributional and Risk Reduction Effects of Commodity Revenue Program Design," Review of Agricultural Economics, Agricultural and Applied Economics Association, vol. 30(3), pages 543-553.
    2. Cooper, Joseph C., 2009. "Economic Aspects of Revenue-Based Commodity Support," Economic Research Report 55838, United States Department of Agriculture, Economic Research Service.
    3. Dismukes, Robert & Arriola, Christine & Coble, Keith H., 2010. "ACRE Program Payments and Risk Reduction: An Analysis Based on Simulations of Crop Revenue Variability," Economic Research Report 262248, United States Department of Agriculture, Economic Research Service.
    4. Cooper, Joseph & Delbecq, Benoît, 2014. "A multi-region approach to assessing fiscal and farm level consequences of government support for farm risk management," Bio-based and Applied Economics Journal, Italian Association of Agricultural and Applied Economics (AIEAA), vol. 3(3), pages 1-23, December.
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    Cited by:

    1. Beckman, Jayson & Dyck, John & Heerman, Kari, 2017. "The Global Landscape of Agricultural Trade, 1995-2014," Economic Information Bulletin 265270, United States Department of Agriculture, Economic Research Service.
    2. Motamed, Mesbah & Hungerford, Ashley & Rosch, Stephanie & O’Donoghue, Erik & MacLachlan, Matthew & Astill, Gregory & Cessna, Jerry & Joseph Cooper, 2018. "Federal Risk Management Tools for Agricultural Producers: An Overview," Economic Research Report 276229, United States Department of Agriculture, Economic Research Service.
    3. Turner, Dylan & Tsiboe, Francis & Baldwin, Katherine & Williams, Brian & Dohlman, Erik & Astill, Gregory & Skorbiansky, Sharon Raszap & Abadam, Vidalina & Yeh, D. Adeline & Knight, Russell, 2023. "Federal Programs for Agricultural Risk Management," Economic Information Bulletin 340216, United States Department of Agriculture, Economic Research Service.

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    Keywords

    Agribusiness; Agricultural and Food Policy; Agricultural Finance; Crop Production/Industries; Financial Economics; Risk and Uncertainty;
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