Last week we discussed using computer based decision aids to help a producer make farm bill decisions. This week we will discuss another recently released tool by USDA-RMA that helps a producer make a better informed decision about using the two new crop insurance programs, SCO and STAX. The tool can be found on our homepage by clicking the RMA link on the right-hand side.
Below are a few screenshots I took using the tool, they are a little blurry so I’ll explain each example below. All of the examples are for educational purposes and may not reflect the yields or prices experienced on a actual farm. Area selected is Houston County, Georgia. Crop is irrigated cotton. Program is STAX with no underlying insurance policy (not a requirement for STAX but an underlying policy is a requirement for SCO).
Example 1 has an APH of 800lbs, project price of $0.70, expected county yield of 800lbs, STAX protection factor of 100% (can range from 80-120%), actual yield of 800, with a harvest price of $0.64. This yields a maximum STAX payment of $112 if actual county yields fall below 608lbs. At an actual county yield of 736lbs, a $33 STAX payment is triggered.
Example 2 has an APH or 900lbs, projected price of $0.70, expected county yield of 750, STAX protection factor at 120%, actual yield of 900lbs, and harvest price of $0.64. Max STAX payment is $126 if actual county yields are 570lbs or below. At 690lb actual county yield, STAX payment is $37.
Example 3 has an APH of 700lbs, project price $0.70, expected county yield of 800lbs, STAX protection factor at 120%, actual yield of 700 lbs, and harvest price of $0.64. Max STAX payment is $134 triggered when actual county yield is below 608 lbs. At 736lbs, STAX payment is $40.
My advice to anyone who is thinking about buying either STAX or SCO is to go to our webpage, click on the RMA Crop Insurance Tool icon, and take about an hour or two going through different scenarios on a farm to see how these programs will work on a real operation.