Analysis of the STAX and SCO Programs for Cotton Producers

Abstract

Both the House and Senate farm bills include changes to Title I commodity programs and crop insurance programs, including a new shallow loss revenue protection program, a price protection program, and two supplemental crop insurance programs. A key change in the new farm bill is that the Title I shallow loss revenue protection and price protection programs would not be available to cotton producers. Instead, cotton producers would have the option to enroll in either the Supplemental Coverage Option (SCO) or the Stacked Income Protection Plan (STAX). Both products are similar to the Group Risk Income Protection (GRIP) crop insurance policy and would cover county-wide losses. The products are designed to complement a producers’ individual insurance policy. Understanding the differences in payments from Title I programs as compared to potential payments from the STAX or SCO programs will be important for cotton producers. For this study, average direct payments and counter-cyclical payments over the 2002–2011 time period were compared to potential STAX and SCO payments for several Oklahoma and Texas counties.