RMA Clarifies Double Insurance Guidelines AndProducer Options

Friday, February 13, 2004                          By Shawn Wade

      In aneffort to answer a number of questions raised by insurance providers andproducers about the new double insurance and prevented planting guidelinesgoing into effect in 2004, the USDA Risk Management Agency has issued anexpanded explanation of the new rules.

      Thenew rules are final implementation of double insurance provisions firstapproved by Congress in the Agricultural Risk Protection Act of 2000 (ARPA).The reason for the new rule is to prevent a producer from collecting more thanone crop insurance indemnity payment for crop losses that occur on the sameacre in the same crop year.

      Therule states that a producer who has a loss on their first insured crop may onlyreceive 35 percent of the calculated indemnity (and only pay 35 percent of thefirst crop premium due) if they choose to plant and insure a second crop on thesame ground that incurs an insurable loss.

      If noloss is claimed on the second crop, the producer would receive the remaining 65percent of the first crop indemnity less the remaining 65 percent of the firstcrop premium and 100 percent of the second crop premium due.

      Afterconsiderable work by Plains Cotton Growers and the National Cotton Council, RMAhas developed a revised rule that provides additional options to allow aproducer to retain 100 percent of their first crop premium and opt out ofsecond crop coverage in situations that would have required them to insure thesecond crop in the past.

      Underthe new rules a producer who incurs a loss on their first insured crop hasseveral options that will allow them to retain 100 percent of their first cropindemnity.

      Theycan: 1) Opt not to take insurance on a subsequently planted crop. This option is to be exercised on aunit-by-unit basis and the producer must make their insurance provider aware oftheir decision before the acreage reporting date for the second crop or whenthe claim is signed for the first insured crop; or, 2) Insure the secondcrop, but decline to accept any second crop claim payment. Producers who insure a second cropbut later choose not to accept payment for a second crop claim will receive theremaining 65 percent of their first crop claim less the remaining 65 percent ofthe premium due on the first crop and 100 percent of the premium due on thesecond crop. Producers may decline to accept a second crop indemnity up untilthe time the claim check is cashed.

      RMAalso clarified prevented planting rules as well in the bulletin. Essentially agrower who files a prevented planting claim and subsequently hays, grazes orotherwise harvests a volunteer or cover crop after the final planting date andbefore November 1 will be limited to 35 percent of the applicable preventedplanting guarantee. Haying, grazing or harvesting a volunteer or cover cropafter November 1 will not result in the reduction of prevented plantingpayments.

      TheRMA Managers Bulletin (MGR-04-002) is available for download from the websiteat:



Washington, DC Trip Strengthens PCG Partnership WithRegions Business Leaders

Friday, February 13, 2004                          By Shawn Wade

      Theweek of February 9 found a contingent representing the Lubbock Chamber ofCommerce walking the halls of Congress and Federal Agencies discussing WestTexas issues.

      “Workingon the business and agricultural priorities of West Texas is a task that isbest done together,” says PCG Executive Vice President Steve Verett who traveledto Washington with the Lubbock Chamber group.

      “Sometimesworking together means determining what is best for agriculture and thenprioritize other issues,” adds Verett. “Other times it is more important tofocus on the needs of our region’s business community and push the importantlegislative and regulatory issues that impact them and eventually theagricultural sector.”

      Eitherway, concludes Verett, achieving a positive result is beneficial to bothagricultural producers and the businesses that make up the area’s economy.

      Duringtheir trip the top issue discussed was the importance of Congress completing afully funded Transportation Bill. The road to getting a final Bill has been arough one as budget concerns and partisan politics have slowed development.

      Afully funded Transportation Bill is important to the West Texas region becauseit will provide necessary funds for maintenance of current infrastructure aswell as provide funding for advancement of the Ports-to-Plains Project.

      TheChamber group also focused on a key agricultural issue affecting the cottonindustry when they received a briefing from John Maguire of the National CottonCouncil. Maguire updated the Lubbock group on trade policy issues, specificallythe Central American Free Trade Agreement (CAFTA).

      Maguirereiterated the NCC’s current Board policy on the issue as follows: “TheCouncil’s Board of Directors reaffirms its conviction that a good CAFTA isessential to the economic viability of the US cotton and textile industries andpledges its support for passage of an agreement that fosters benefits forsignatory countries. Inasmuch as the CAFTA agreement in its current form doesnot meet this fundamental objective, the Council (a) opposes passage of thecurrent CAFTA agreement and (b) urges Congress to defer consideration of CAFTAuntil such time as the textile provisions are thoroughly reviewed andsignificantly improved.”

      TheSenate passed its version of the Transportation Bill with a funding level of$318 Billion over 6 years. The Bush Administration has been pushing a muchsmaller funding level.


Seed Cost Calculator Aids 2004 Decisions

Friday, February 13, 2004                          By Shawn Wade

      Withpreparation for the 2004 growing season progressing rapidly, a top agenda itemfor many growers is variety selection.

      Growersacross the High Plains region are working hard to make sense of a number ofchanges that make figuring seed costs for the 2004 crop more of a challenge.

      In aneffort to ease the workload of producers making variety selection and seedingrate plans for 2004, Plains Cotton Growers has developed a Seed Cost Calculatorthat will quickly provide a comparison of the actual cost per acre to plantdifferent varieties of transgenic cotton.

      Amongthe differences the calculator tries to address are the overall cost effects ofseed price increases, technology fee increases and new seed packaging methodsthat have been adopted by some companies.

      Probablythe most noticeable change for 2004 is the decision of Delta & Pine Landand Stoneville to move away from 50-pound seed bags to a uniform seed countpackaging system. D&PL will package all 2004 varieties at an average250,000 seeds per bag. Stoneville Pedigreed Seed Company has decided to use a230,000 average seed count bag for 2004.

      Thatmeans that growers will have to use a sharper pencil when comparing varietiesand determining how many bags of seed will be required to achieve their targetseeding rate across the field. In some cases the change adopted by Deltapineand Stoneville will make it easier for the grower to calculate seedrequirements.

      Thereis the potential for confusion among growers who want to compare varieties fromcompanies that have decided to stay with the traditional 50 pound seed bag to aDeltapine or Stoneville variety that is packaged based on a standard seedcount. The PCG Seed Cost Calculator will be especially beneficial to growers inthis situation.

      Anotherarea where growers may encounter confusion is in determining how their chemicaluse decision will ultimately be reflected in their production expenses.

      Forgrowers who plant Roundup Ready cotton seed, Monsanto is offering a revisedRoundup Rewards program that can cap the technology fee they pay in exchangefor a grower commitment to purchase and use Monsanto branded Roundup on theiracres for pre-plant and in-season weed control.

      Underthe program growers will still pay the full amount of the Roundup Readytechnology fee on their acres, but possibly earn a cash refund equal to theamount of paid technology fees above the applicable cap. Monsanto has set theRoundup Ready technology fee cap at $9 per acre on “stripper” cotton varietiesand $13 per acre on “picker” cotton varieties.

      TheRoundup Rewards Technology Cap program is also extended to stacked genevarieties as follows: For Bollgard/Roundup varieties the technology cap is $20per acre for “stripper” varieties and $29 for “picker” varieties. The same $29per acre technology fee cap is also extended to all Bollgard II/Roundup Ready“picker” varieties in 2004.

      Eligibilityfor the Monsanto Roundup Rewards Technology Cap program is contingent ongrowers operating under the terms set forth by Monsanto. To determine if youqualify, contact a Monsanto sales representative in your area.

      The 2004Monsanto Crop Loss/Replant Program for Texas has been finalized. Detailsinclude an enhanced crop loss provision that should be of interest to allproducers who utilize Roundup Ready and/or Bollgard technology on at least 70percent of their acreage.

      Thereplant program will work much like past years in that if a grower chooses toreplant with an eligible Monsanto technology they will receive a refund of 100percent of the first crop technology fee plus $17 per bag directly fromMonsanto that can be applied toward the purchase of eligible seed from anycompany they choose.

      Ifthe crop is lost beyond the date where replanting is feasible and before August31, 2004, Monsanto will only refund one hundred percent of the technology feepaid on the lost acreage.

      Thenewest addition to the program for Texas producers is a provision that willprovide a 100 percent technology fee refund through December 1 to growers whoseappraised or actual production averages less than 150 pounds per acre.

      Refundswill be issued on a field-by-field basis when the field averages less than 150pounds of lint production per acre and the grower complies with the eligibilityterms set forth by Monsanto. All claims under the extended refund program mustbe submitted before December 1, 2004.

      Replantprograms offered by the various seed companies are another area that isgathering considerable interest among growers. Since their inception severalyears ago, crop loss/crop destruct program have proven to become a valuablerisk-sharing partnership between the grower, seed company and technologyprovider.

      Withthe rising cost of cotton seed, crop loss programs are critical and become afactor to consider when making planting seed decisions.

      Todate only Bayer CropScience and Beltwide Cotton Genetics, outside of Monsanto,have announced any 2004 crop loss/replant program details.

      BeltwideCotton Genetics (BCG) has announced a 100 percent replant program that willrefund up to $51.50 per bag for growers that replant with a BCG variety.

      BayerCropScience has announced a new program called the FiberMax/Temik 15G SouthwestShared Risk Program. Under the FiberMax program, any producer who plants aFiberMax variety and applies a minimum 3.5 pound rate of Temik 15G will receive100 percent of the cost of replanting and Temik retreatment (less the $17 perbag refund from Monsanto) when they utilize a FiberMax variety and Temik.Contact should contact their seed dealer for program details and conditions.

      Currently,Bayer has not announced the details of a FiberMax Cotton Seed replant programfor growers that do not use Temik at planting.

      Announcementsfrom other seed companies regarding 2004 replant programs are also stillpending, although almost all the companies contacted indicated that announcementswould likely be made in the near future.