During its mid-year board meeting in Albuquerque, the NCC’s board of directors’ voted to recommend an adjustment to the current farm program to include a new revenue-based crop insurance program and a modified marketing loan that would be adjusted to satisfy the Brazil WTO case.

The new crop insurance program, which has been labeled STAX for Stacked Income Protection Plan, would address “shallow” revenue losses on a county-wide or area-wide basis with producer premiums offset to the maximum extent possible using available cotton program spending authority.

Under the Congressional Budget Office’s current projections, spending for the cotton program would drop from slightly more than $800 million in fiscal year 2011 to slightly more than $600 million if the deficit reduction target was implementing. (That’s compared to $1.2 billion for marketing loan/loan deficiency, ACRE, Counter-cyclical and direct payments in the March 2010 baseline.)

The NCC proposes that Congress would use the upland cotton, CCP, DP and ACRE baseline to fund a program that would integrate with the federal crop insurance and be delivered by the USDA Risk Management Agency.

In a presentation to the Delta Council’s Farm Policy Committee in late August, NCC staffers noted that the current revenue-based crop insurance programs offer opportunities to cover deep losses but not those that occur when prices or crop yields fall below the long-term trend yields. With today’s high input costs, such shallow losses can put a grower out of business.

The STAX program would be designed to help bridge the gap between the deep losses that can ruin a farmer and the more shallow losses that can hamper his ability to repay his crop loan or build equity in his operation.

Following two-and-a-half hours of discussion, the Delta Council committee voted to endorse the STAX concept, according to Dan Branton, the Farm Policy Committee chairman.

“This new proposal is a significant departure from current policy, but it was the view of the vast majority of those in attendance that we should move to the STAX approach to gain support for a federal cotton policy which will meet the risk management challenges that accompany the rising input costs that are required in order to be a cotton farmer.”

For more information on the Delta Council discussion, go to www.deltacouncil.org.

The revenue-based crop insurance safety net would be complemented by a modified marketing loan that would be adjusted to meet the requirements of the Brazil WTO case.

“In the opinion of the U.S. cotton industry, this structure will best utilize reduced budget resources, respond to public criticism by directing benefits to growers who suffer losses resulting from factors beyond their control and build on the existing crop insurance program,” the NCC said.

“The industry also believes the revisions will provide confidence to lenders and ensure market-oriented production decisions that ultimately serve the long-term financial health of merchandizers, processors, related businesses and rural economies.”

For more information on the National Cotton Council and its position on farm policy, go to http://www.cotton.org.

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