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Impact of Crop Insurance Provisions on Cotton Planting Decisions in the Texas Coastal Bend

Impact of Crop Insurance Provisions on Cotton Planting Decisions in the Texas Coastal Bend. Lawrence Falconer and Luis Ribera Texas Cooperative Extension. Impact of Crop Insurance Provisions on Cotton Planting Decisions in the Texas Coastal Bend.

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Impact of Crop Insurance Provisions on Cotton Planting Decisions in the Texas Coastal Bend

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  1. Impact of Crop Insurance Provisions on Cotton Planting Decisions in the Texas Coastal Bend Lawrence Falconer and Luis Ribera Texas Cooperative Extension

  2. Impact of Crop Insurance Provisions on Cotton Planting Decisions in the Texas Coastal Bend • Cotton Planted Acres – Selected Counties and Coastal Bend Total • Weather Conditions in Spring 2006 • Crop Insurance Planting Alternative Analysis Spreadsheet • Results and Conclusion

  3. Cotton Planted Acres – Selected Counties and Coastal Bend Total Average cotton planted for 2001-2005 period was 532,740. Trend for 2006 would be expected to be 563,940. Source: Texas Agricultural Statistics for 2001-2005, with FSA certified acreage for 2006.

  4. Crop Insurance Planting Alternative Analysis Spreadsheet • This decision support aid was created to help producers analyze the choice between opting for prevented planting payments for crop insurance or planting the crop in question. The spreadsheet calculates the projected maximum indemnity payments from both the prevented planting and planting with a subsequent failed crop scenario. • These calculations should be based on each individual producer’s data for the specific crop. The data required for the calculations include information from the producer’s crop insurance policy as well as direct cost information at both the pre-plant and planting stage of production. The spreadsheet has the capability to calculate payments in the case of crop share land tenure arrangements, including the flexibility to specify different percentages for all revenue and relevant input cost items.

  5. Crop Insurance Planting Alternative Analysis Spreadsheet (continued)

  6. Crop Insurance Planting Alternative Analysis Spreadsheet (continued)

  7. Crop Insurance Planting Alternative Analysis Spreadsheet (continued)

  8. Crop Insurance Planting Alternative Analysis Spreadsheet (continued)

  9. Results for 65% Yield Guarantee

  10. Conclusions • Cotton plantings in the Texas Coastal Bend were 22.6% above the 2001-2005 average, and 15.9% above the 2001-2005 trend. • Given extremely poor pre-plant weather conditions, analysis indicates that over a relevant range of APH yields, the choice to plant cotton dominates the choices of selecting prevented planting of cotton, from a low of $28 per acre to a high of $67 per acre or feed grain planting by $37 to $114 per acre in the Texas Coastal Bend.

  11. Conclusions (continued) • Please note that these calculations are only comparisons between expected prevented planting and crop failure results. • A situation where a crop was planted and taken to harvest with a reduced yield can be analyzed using budget spreadsheets for the specific producer’ values for that crop that are available from TCE.

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