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Abstract

The Agricultural Act of 2014 introduced two new crop insurance programs for upland cotton: the Supplemental Coverage Option (SCO) and the Stacked Income Protection Plan (STAX). SCO and STAX are known as “shallow loss” programs because they typically have lower deductibles and do not compensate for the bigger losses that other Federal crop insurance programs cover. This report examines the structures of SCO and STAX and how these programs interact with Revenue Protection, a preexisting crop insurance policy. It provides estimates of the contribution of SCO and STAX to revenue and downside risk reduction for upland cotton producers in various counties, revealing how risk reduction differs across counties with different inherent revenue risk caused by regional variations in yield. The report describes 2015 enrollment in STAX and SCO and finds that STAX enrollment is tied to the market share of cotton in a given county.

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