FCIC Board Approves New Cottonseed
Insurance Pilot For 2010 Growing Season

Friday, July 31, 2009                                 by Shawn Wade

      A yearlong effort by Plains Cotton Growers, Inc. (PCG) to develop an all-new cottonseed insurance program has been approved by the Federal Crop Insurance Corporation (FCIC) Board of Directors.

      The FCIC Board, at its July 30 Board meeting, approved the new cottonseed insurance product for a four-year run as a pilot program available for eligible cotton growers to purchase beginning with the 2010 growing season.

      Officially known as the Cottonseed Pilot Endorsement (CPE), the product will be available as an optional insurance endorsement for producers who purchase a qualifying buy-up policy of insurance on their cotton lint.

      The CPE will be available to growers in every cotton-producing county in the nation during its evaluation by USDA as a pilot program. It should be noted that due to its structure as a companion policy to APH-based buy-up plans of insurance (Multi-Peril, Crop Revenue Coverage and Revenue Assurance), there are no additional record-keeping requirements for participating producers and the CPE will utilize the same coverage level, premium rates and premium subsidies as the underlying cotton lint policy purchased by the grower.

      Following its initial, favorable reception by USDA Risk Management Agency staff and then by the FCIC Board of Directors, who cleared the proposal for expert review last Spring, PCG's effort to develop the CPE navigated a series of 'must-hit' target dates to achieve approval for a 2010 launch.

      "From the start PCG's goal has been to do everything we could to facilitate the development of a cottonseed insurance endorsement that growers could purchase in 2010," says PCG Executive Vice President Steve Verett. "Having reached that goal, it is important to acknowledge the assistance PCG received along the way from organizations like South Texas Cotton and Grain, Rolling Plains Cotton Growers, Southern Rolling Plains Cotton Growers and the Cotton and Grain Producers of the Lower Rio Grande Valley that shared our vision."

      Verett highlighted the efforts of Watts & Associates, the Montana-based insurance consulting firm that worked side-by-side with PCG to flesh out the innumerable technical details that took the original concept of the CPE from idea to reality.

      He added that as the industry stands on the cusp of adding another risk management option to the cotton farmer's risk management toolbox it was important to recognize that even though the initial push for the CPE originated on the High Plains of Texas, it was the cooperation of allied industry partners who provided data and the support of Texas grower organizations, the National Cotton Council and other regional industry groups that helped fit all the pieces together.

      As proposed, the CPE will provide eligible growers the option to purchase yield-based coverage for their cottonseed. The endorsement is designed to be available to growers who purchase individual buy-up coverage under the Multi-Peril Crop Insurance (MPCI), Crop Revenue Coverage (CRC) and Revenue Assurance (RA) plans of insurance for their cotton lint. The endorsement will not be available to growers who purchase CAT, GRIP or GRP cotton policies.

      In the coming weeks and months, PCG will work closely with RMA to finalize the CPE's policy details, including state-based 2010 lint-to-seed conversion factors and the insurance price for 2010 cottonseed. This data will be used in conjunction with a grower's current Actual Production History (APH) yield and coverage level to calculate a 2010 CPE yield guarantee.


FSA Notice DAP-314 Indicates November 2, 2009
Is Target Date For Start Of Manual SURE Sign-up

Tuesday, July 31, 2009                             by Shawn Wade

      The first real hint about USDA's planned rollout for the Supplemental Revenue Assistance (SURE) program arrived last week in the form of FSA notice DAP-314 which projected estimated dates for getting disaster programs authorized by the 2008 Farm Bill underway.

      Of particular interest to cotton producers was the projection of November 2, 2009 as the date that county FSA offices would be able to begin taking manual applications from producers wanting to sign-up for the SURE program.

      In DAP-314 FSA also noted that due to the development of web-based application and payment software, as well as implementing the new direct attribution component provided by the 2008 Act, FSA has experienced a delay in releasing planned automated application and payment software for these programs.

      It is anticipated that a fully functional, automated SURE application system will not be available until after the start of the 2010 calendar year.

      In addition to the November 2 SURE start date, FSA also projected that payments based on manually processed SURE applications could begin as early as December 14, 2009.

      FSA's goal of taking manual SURE applications beginning November 2 seems to indicate the Agency's intent to finalize SURE program regulations relatively soon, but hopefully no later than the end of September.

      Waiting until the end of September would leave only the month of October for FSA personnel to present details of a complicated SURE program to State and County level FSA staff nationwide.

      With a program as new and complex as the SURE program let's hope that FSA will work diligently to provide more than 30 days to educate its county level personnel on this much-anticipated program.

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