1. The conference call & webinar will begin at the top of the hour
2018 Seed Cotton Program Information Conference Call & Webinar Hosted by National Cotton Council
The conference call & webinar will begin at the top of the hour
Please type your questions in the Chat box
Questions will be answered at the end of the presentation
The conference line will be in listen-only mode until time for Q&A
Audio will only be available on the conference line

2. 2018 Seed Cotton Program Information Information based on NCC’s review of the legislative language. Final details are subject to change based on USDA’s interpretation of language and implementation.

3. Seed Cotton Program
Seed Cotton is designated as a covered commodity eligible for Title I Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programs in the 2014 Farm Bill beginning with the 2018 crop
Seed Cotton refers to unginned upland cotton that includes both lint and cottonseed
The Reference Price is set at $0.367 per lb
The Price Floor is at $0.250 per lb

4. Seed Cotton Marketing Year Avg (MYA) Price
Seed Cotton MYA Price - weighted average of the upland cotton lint price and the cottonseed price
= (U.S. Upland Cotton Lint Production * U.S. Upland Cotton Lint MYA Price + U.S. Cottonseed Production * U.S. Cottonseed MYA Price) / (U.S. Upland Cotton Lint Production + U.S. Cottonseed Production)
Lint and cottonseed prices are weighted based on annual shares of production
The MYA Price is not final until the end of the marketing year (Aug. 1 – July 31)
USDA publishes monthly estimates throughout the marketing year

5. 2017/18 Seed Cotton MYA Price Example
U.S. Upland Cotton Lint MYA Price ($/lb) = $0.690
U.S. Cottonseed MYA Price ($/lb) = $0.075 (or $150/ton)
U.S. Upland Cotton Lint Production (lbs)
= 20,570,000 bales * 480 lbs/bale = 9,873,600,000 lbs
U.S. Cottonseed Production (lbs)
= 6,725,000 tons * 2,000 lbs/ton = 13,450,000,000 lbs
Total U.S. Cotton Lint and Cottonseed Production (lbs)
= 9,873,600, ,450,000,000 = 23,323,600,000 lbs

6. 2017/18 Seed Cotton MYA Price Example
Seed Cotton MYA Price ($/lb)
= (9,873,600,000 * $0.690) + (13,450,000,000 * $0.075)
9,873,600, ,450,000,000
23,323,600,000
= 9,873,600,000 * $ ,450,000,000 * $0.075
23,323,600, ,323,600,000
= ( * $0.690) + ( * $0.075) = $0.3353

7. Seed Cotton Prices
$ per Pound

8. Illustration of Seed Cotton Marketing Year Average Price per Pound
Cottonseed MYA Price ($/Ton)
Lint MYA Price
($/Lb)
$140
$150
$160
$170
$180
$190
$200
$210
$220
$230
$240
$250
$260
$0.51
$0.256
$0.259
$0.262
$0.265
$0.268
$0.271
$0.274
$0.276
$0.279
$0.282
$0.285
$0.288
$0.291
$0.53
$0.270
$0.273
$0.294
$0.296
$0.299
$0.55
$0.290
$0.293
$0.302
$0.305
$0.308
$0.57
$0.287
$0.310
$0.313
$0.316
$0.59
$0.307
$0.319
$0.322
$0.325
$0.61
$0.301
$0.304
$0.327
$0.330
$0.333
$0.63
$0.321
$0.324
$0.336
$0.339
$0.342
$0.65
$0.318
$0.341
$0.344
$0.347
$0.350
$0.67
$0.338
$0.353
$0.356
$0.359
$0.69
$0.332
$0.335
$0.358
$0.361
$0.364
$0.367
$0.71
$0.352
$0.355
$0.370
$0.373
$0.376
$0.73
$0.349
$0.372
$0.375
$0.378
$0.381
$0.384
$0.75
$0.366
$0.369
$0.387
$0.390
$0.392
$0.77
$0.386
$0.389
$0.395
$0.398
$0.401

9. Seed Cotton Payment Yield
Seed Cotton Yield
= Lint yield + Cottonseed yield
= 2.4 * Lint Yield
Since cottonseed yield is determined as 1.4 * lint yield, consistent with approach in crop insurance
Upland Cotton Lint Payment Yield = Higher of CCP lint yield or updated lint yield
One-time opportunity to update the payment yield for upland cotton based on 90% of the average of actual yields, not counting years in which cotton was not grown

10. Seed Cotton Payment Yield Example
Cotton Lint Yield (lbs/acre) =
Pounds of Cottonseed (lbs/acre)
= 1.4 * 800
= 1,120
Seed Cotton Payment Yield (lbs/acre)
= ,120
= 1,920 or
= 2.4 * 800

11. Seed Cotton PLC Payment Rate
Payment is made when the Reference Price exceeds the higher of the MYA Price and the Price Floor
Seed Cotton PLC Payment Rate ($/lb)
= Reference Price – the higher of (MYA Price, Price Floor)
Seed Cotton Payment Rate = $0 if Seed Cotton MYA Price is greater than $0.367

12. Seed Cotton PLC Payment
Paid on 85% of the farm’s decoupled seed cotton base
Seed Cotton PLC Payment ($/base acre)
= PLC Payment Rate * Payment Yield * 0.85

13. Seed Cotton PLC Payment Example
2017/18 Seed Cotton MYA Price = $0.3353
Seed Cotton PLC Payment Rate ($/lb)
= $0.367 – higher of ($0.3353, $0.250) = $0.0317
Seed Cotton Maximum PLC Payment ($/base acre)
= ($ $0.250) * 1,920 * 0.85 = $190.94
Seed Cotton PLC Payment ($/base acre)
= $ * 1,920 * 0.85 = $51.73

14. Seed Cotton ARC-CO Program
The ARC-CO program provides revenue loss coverage at the county level
ARC-CO payments are issued when the actual county seed cotton revenue is less than the ARC-CO guarantee

15. Seed Cotton ARC Program
ARC-CO Guarantee = 86% * Benchmark Revenue
Benchmark Revenue = U.S. Benchmark Seed Cotton MYA Price * Benchmark Seed Cotton Yield
Benchmark Seed Cotton MYA Price = average of the previous 5 years Seed Cotton MYA price, excluding the years with the highest and lowest price (Olympic Average)
If the MYA price in any of the 5 years is < reference price, the reference price is substituted for the MYA price

16. Seed Cotton ARC Program
Benchmark Seed Cotton Yield = average of the previous 5 years county Seed Cotton Yield, excluding the years with the highest and lowest yield (Olympic Average)
If the county yield in any of the 5 years is < 70% of the county T yield, 70% of the county T yield is substituted

17. Seed Cotton ARC Program
Actual Revenue = U.S. Seed Cotton MYA Price * Seed Cotton Yield
Maximum ARC-CO Payment = 10% * Benchmark Revenue
Revenue Shortfall = ARC-CO Guarantee – Actual Revenue
ARC-CO Payment per Base Acre = minimum of (maximum ARC-CO Payment, Revenue Shortfall) * 0.85

18. ARC-CO Example Calculation
Marketing Year
Seed Cotton MYA Price ($/lb)
County Seed Cotton Yield (lbs/acre)
2012/13
$0.3727
2,280
2013/14
$0.3933
1,920
2014/15
$ $0.3670
1,680
2015/16
$ $0.3670
2,160
2016/17
$ $0.3670
2,040
Olympic Average
$0.3689
2017/18
$0.3353
Benchmark Revenue ($/acre) = $ * 2,040 = $752.57
ARC-CO Guarantee ($/acre) = $ * 0.86 = $647.21

19. ARC-CO Example Calculation
Actual Revenue ($/acre) = $ * 1,920 = $643.87
Maximum ARC-CO Payment ($/acre) = 0.10 * $ = $75.26
Revenue Shortfall ($/acre) = $ – $ = $3.34
ARC-CO Payment ($/base acre)
= minimum of ($75.26, $3.34) * 0.85 = $2.84

20. Seed Cotton Base Acres
Established through the conversion of generic base acres
Generic base acres are not in effect beginning with the 2018 crop
For any farms with generic base and no covered commodities (including seed cotton) planted from 2009 through 2016, those generic base acres will become unassigned crop base and ineligible for PLC/ARC

21. Seed Cotton Base Acres
For all other farms with generic base, producers shall choose one of the following options to convert generic base acres to seed cotton and other covered commodity base acres:
Option 1: Seed cotton base equals higher of 2009–12 average seed cotton plantings or 80% of generic base, not to exceed total generic base
any unconverted generic base becomes unassigned crop base and ineligible for PLC/ARC
Option 2: All generic base converted proportionally based on 2009–12 average plantings of seed cotton and other covered commodities

22. Seed Cotton Base Acreage Example - 1
Total Generic Base:
500 acres
average planted acres:
Cotton:
300 acres
Corn:
200 acres
Peanuts:
Soybeans:
100 acres
Total Covered Commodities:
800 acres

23. Seed Cotton Base Acreage Example - 1
Option 1:
Seed cotton base equals the higher of:
average planted cotton acres
= 300
80% * 500 generic base acres
= 400
Seed Cotton Base:
Unassigned Base:
= 100

24. Seed Cotton Base Acreage Example - 1
Option 2:
Allocate 500 acres of generic base to the following crops:
Planted and Considered Planted (P&CP)
Average P&CP
Allocation
Percentage
Allocated
Base Acres
Crop
2009
2010
2011
2012
Cotton
300
250
350
300/800 = 0.375
0.375 * 500 = 187.5
Corn
100
200
200/800 = 0.250
0.250 * 500 = 125.0
Peanuts
Soybeans
150
100/800 = 0.125
0.125 * 500 =
Total
800
1.00
500

25. Seed Cotton Base Acreage Example - 2
Total Generic Base:
500 acres
average planted acres:
Cotton:
200 acres
Corn:
300 acres
Soybeans:
Total Covered Commodities:
800 acres

26. Seed Cotton Base Acreage Example - 2
Option 1:
Seed cotton base equals the higher of:
average planted cotton acres
= 200
80% * 500 generic base acres
= 400
Seed Cotton Base:
Unassigned Base:
= 100 or
Option 2:
Allocate 500 acres of generic base to the following crops:
Seed Cotton:
500 * (200/800)
= 125.0
Corn:
500 * (300/800)
= 187.5
Soybeans: =
Total Allocated Base Acres:
= 500.0

27. Seed Cotton Base Acreage Example - 3
Total Generic Base:
500 acres
average planted acres:
Cotton:
Wheat:
200 acres
Sorghum:
100 acres
Total Covered Commodities:
800 acres

28. Seed Cotton Base Acreage Example - 3
Option 1:
Seed cotton base equals the higher of:
average planted cotton acres
= 500
80% * 500 generic base acres
= 400
Seed Cotton Base:
Unassigned Base:
= 0 or
Option 2:
Allocate 500 acres of generic base to the following crops:
Seed Cotton:
500 * (500/800)
= 312.5
Wheat:
500 * (200/800)
= 125.0
Sorghum:
500 * (100/800) =
Total Allocated Base Acres:
= 500.0

29. Seed Cotton Base Acreage Example - 4
Total Generic Base:
500 acres
average planted acres:
Cotton:
450 acres
Corn:
150 acres
Wheat:
200 acres
Total Covered Commodities:
800 acres

30. Seed Cotton Base Acreage Example - 4
Option 1:
Seed cotton base equals the higher of:
average planted cotton acres
= 450
80% * 500 generic base acres
= 400
Seed Cotton Base:
Unassigned Base:
= 50 or
Option 2:
Allocate 500 acres of generic base to the following crops:
Seed Cotton:
500 * (450/800) =
Corn:
500 * (150/800) =
Wheat:
500 * (200/800) =
Total Allocated Base Acres: =

31. Seed Cotton Base Acreage Example - 5
Total Generic Base:
500 acres
average planted acres:
Cotton:
600 acres
Corn:
200 acres
Total Covered Commodities:
800 acres

32. Seed Cotton Base Acreage Example - 5
Option 1:
Seed cotton base equals the higher of:
average planted cotton acres
= 600
80% * 500 generic base acres
= 400
Seed Cotton Base:
= 500
Unassigned Base:
= 0
**Seed cotton base cannot be greater than generic base** or
Option 2:
Allocate 500 acres of generic base to the following crops:
Seed Cotton:
500 * (600/800)
= 375
Corn:
500 * (200/800)
= 125
Total Allocated Base Acres:

33. Seed Cotton Base Acreage Example - 6
Total Generic Base:
500 acres
average planted acres:
Cotton:
100 acres
Corn:
Alfalfa (non-covered crop):
600 acres
Total Covered Commodities:
200 acres

34. Seed Cotton Base Acreage Example - 6
Option 1:
Seed cotton base equals the higher of:
average planted cotton acres
= 100
80% * 500 generic base acres
= 400
Seed Cotton Base:
Unassigned Base: or
Option 2:
Allocate 500 acres of generic base to the following crops:
Seed Cotton:
500 * (100/200)
= 250
Corn:
Total Allocated Base Acres:
= 500

35. 500 Illustration of Seed Cotton PLC Payment per Base Acre
Reference Price
$0.367
Lint Pymt Yield
500
Seed Cotton Pymt Yield
1,200
Seed Cotton Floor
$0.25
Cottonseed MYA Price ($/Ton)
Lint MYA Price ($/Lb)
$140
$150
$160
$170
$180
$190
$200
$210
$220
$230
$240
$250
$260
$0.51
$113
$110
$107
$104
$101
$98
$95
$92
$89
$86
$84
$81
$78
$0.53
$96
$93
$90
$87
$75
$72
$69
$0.55
$66
$63
$60
$0.57
$64
$61
$58
$55
$52
$0.59
$73
$70
$67
$49
$46
$43
$0.61
$40
$37
$34
$0.63
$44
$41
$38
$35
$32
$29
$26
$0.65
$53
$50
$47
$23
$20
$17
$0.67
$14
$12 $9
$0.69
$21
$18
$15 $6 $3 $0
$0.71
$27
$24
$0.73
$0.75 $1
$0.77

36. 600 Illustration of Seed Cotton PLC Payment per Base Acre
Reference Price
$0.367
Lint Pymt Yield
600
Seed Cotton Pymt Yield
1,440
Seed Cotton Floor
$0.25
Cottonseed MYA Price ($/Ton)
Lint MYA Price ($/Lb)
$140
$150
$160
$170
$180
$190
$200
$210
$220
$230
$240
$250
$260
$0.51
$136
$132
$128
$125
$121
$118
$114
$111
$107
$104
$100
$97
$93
$0.53
$122
$115
$108
$90
$86
$83
$0.55
$101
$94
$87
$80
$76
$72
$0.57
$73
$69
$66
$62
$0.59
$91
$84
$59
$55
$52
$0.61
$77
$70
$63
$56
$48
$45
$41
$0.63
$49
$42
$38
$35
$31
$0.65
$28
$24
$21
$0.67
$53
$46
$39
$17
$14
$10
$0.69
$32
$25
$18
$11 $7 $3 $0
$0.71 $4
$0.73
$22
$15
$0.75 $8 $1
$0.77

37. 700 Illustration of Seed Cotton PLC Payment per Base Acre
Reference Price
$0.367
Lint Pymt Yield
700
Seed Cotton Pymt Yield
1,680
Seed Cotton Floor
$0.25
Cottonseed MYA Price ($/Ton)
Lint MYA Price ($/Lb)
$140
$150
$160
$170
$180
$190
$200
$210
$220
$230
$240
$250
$260
$0.51
$158
$154
$146
$142
$138
$133
$129
$125
$121
$117
$113
$109
$0.53
$134
$130
$105
$101
$97
$0.55
$126
$122
$93
$89
$85
$0.57
$118
$114
$110
$81
$77
$72
$0.59
$106
$102
$73
$69
$64
$60
$0.61
$98
$94
$65
$61
$57
$52
$48
$0.63
$86
$53
$49
$44
$40
$36
$0.65
$74
$45
$41
$32
$28
$24
$0.67
$37
$33
$20
$16
$12
$0.69
$29
$25
$21 $8 $4 $0
$0.71
$17
$13
$0.73 $9 $5
$0.75 $1
$0.77

38. 800 $52 Illustration of Seed Cotton PLC Payment per Base Acre
Reference Price
$0.367
Lint Pymt Yield
800
Seed Cotton Pymt Yield
1,920
Seed Cotton Floor
$0.25
Cottonseed MYA Price ($/Ton)
Lint MYA Price ($/Lb)
$140
$150
$160
$170
$180
$190
$200
$210
$220
$230
$240
$250
$260
$0.51
$181
$176
$171
$167
$162
$157
$153
$148
$143
$138
$134
$129
$124
$0.53
$158
$139
$125
$120
$115
$110
$0.55
$144
$130
$111
$106
$101
$97
$0.57
$135
$116
$102
$92
$88
$83
$0.59
$121
$107
$93
$78
$74
$69
$0.61
$112
$98
$79
$65
$60
$55
$0.63
$84
$70
$51
$46
$41
$0.65
$75
$56
$42
$37
$32
$28
$0.67
$66
$61
$47
$33
$23
$18
$14
$0.69
$52
$38
$19 $9 $5 $0
$0.71
$43
$24
$10
$0.73
$29
$15 $1
$0.75 $6
$0.77

39. 900 Illustration of Seed Cotton PLC Payment per Base Acre
Reference Price
$0.367
Lint Pymt Yield
900
Seed Cotton Pymt Yield
2,160
Seed Cotton Floor
$0.25
Cottonseed MYA Price ($/Ton)
Lint MYA Price ($/Lb)
$140
$150
$160
$170
$180
$190
$200
$210
$220
$230
$240
$250
$260
$0.51
$203
$198
$193
$187
$182
$177
$172
$166
$161
$156
$145
$0.53
$188
$167
$151
$135
$130
$124
$0.55
$162
$146
$125
$119
$114
$109
$0.57
$157
$141
$136
$120
$104
$98
$93
$0.59
$131
$115
$99
$94
$88
$83
$78
$0.61
$126
$110
$89
$73
$67
$62
$0.63
$105
$84
$68
$57
$52
$47
$0.65
$95
$79
$63
$42
$36
$31
$0.67
$74
$58
$53
$37
$26
$21
$15
$0.69
$48
$32
$16
$11 $5 $0
$0.71
$43
$27 $6
$0.73
$22 $1
$0.75
$17
$12
$0.77

40. 1,000 $65 Illustration of Seed Cotton PLC Payment per Base Acre
Reference Price
$0.367
Lint Pymt Yield
1,000
Seed Cotton Pymt Yield
2,400
Seed Cotton Floor
$0.25
Cottonseed MYA Price ($/Ton)
Lint MYA Price ($/Lb)
$140
$150
$160
$170
$180
$190
$200
$210
$220
$230
$240
$250
$260
$0.51
$226
$214
$208
$202
$197
$191
$185
$179
$173
$167
$161
$155
$0.53
$209
$203
$162
$156
$144
$138
$0.55
$186
$174
$168
$133
$127
$121
$0.57
$151
$145
$139
$115
$109
$104
$0.59
$157
$122
$116
$110
$98
$92
$86
$0.61
$134
$128
$93
$87
$81
$75
$69
$0.63
$111
$105
$99
$63
$58
$52
$0.65
$82
$76
$70
$64
$46
$40
$34
$0.67
$88
$47
$41
$35
$29
$23
$17
$0.69
$65
$59
$53
$18
$12 $6 $0
$0.71
$36
$30
$24
$0.73 $7 $1
$0.75
$19
$13
$0.77

41. 1,200 $78 Illustration of Seed Cotton PLC Payment per Base Acre
Reference Price
$0.367
Lint Pymt Yield
1,200
Seed Cotton Pymt Yield
2,880
Seed Cotton Floor
$0.25
Cottonseed MYA Price ($/Ton)
Lint MYA Price ($/Lb)
$140
$150
$160
$170
$180
$190
$200
$210
$220
$230
$240
$250
$260
$0.51
$271
$264
$257
$243
$236
$229
$222
$215
$208
$201
$193
$186
$0.53
$194
$187
$173
$166
$0.55
$223
$216
$159
$152
$145
$0.57
$209
$202
$195
$188
$181
$174
$167
$138
$131
$124
$0.59
$153
$146
$139
$132
$125
$118
$111
$104
$0.61
$97
$90
$83
$0.63
$147
$133
$126
$119
$76
$69
$62
$0.65
$112
$105
$98
$91
$84
$77
$70
$63
$55
$48
$41
$0.67
$56
$49
$42
$35
$28
$21
$0.69
$85
$78
$14 $7 $0
$0.71
$64
$57
$50
$43
$36
$29
$22
$0.73
$15 $8 $1
$0.75
$0.77 $2

42. 1,500 $97 Illustration of Seed Cotton PLC Payment per Base Acre
Reference Price
$0.367
Lint Pymt Yield
1,500
Seed Cotton Pymt Yield
3,600
Seed Cotton Floor
$0.25
Cottonseed MYA Price ($/Ton)
Lint MYA Price ($/Lb)
$140
$150
$160
$170
$180
$190
$200
$210
$220
$230
$240
$250
$260
$0.51
$339
$330
$321
$312
$304
$295
$286
$277
$268
$259
$251
$242
$233
$0.53
$313
$287
$278
$269
$234
$225
$216
$207
$0.55
$261
$252
$243
$208
$199
$181
$0.57
$244
$235
$226
$217
$191
$182
$173
$164
$155
$0.59
$218
$209
$174
$165
$156
$147
$138
$129
$0.61
$201
$192
$183
$148
$139
$130
$121
$112
$103
$0.63
$175
$166
$157
$131
$122
$113
$104
$95
$86
$78
$0.65
$158
$149
$105
$96
$87
$69
$60
$52
$0.67
$132
$123
$114
$88
$79
$70
$61
$43
$35
$26
$0.69
$106
$97
$62
$53
$44
$18 $9 $0
$0.71
$80
$71
$45
$36
$27
$0.73
$54
$19
$10 $1
$0.75
$28 $2
$0.77

43. Other Details
For the 2018 crop, the STAX insurance product MAY be purchased for acres of upland cotton planted on a farm enrolled in the seed cotton PLC/ARC program
STAX must be purchased prior to the sales closing date
Restrictions apply in subsequent crop years
The non-recourse marketing assistance loan for upland cotton lint remains unchanged in the 2014 Farm Bill with an upland cotton loan rate of $0.52/lb for the 2018 crop
PLC/ARC payments for seed cotton are subject to the payment limit of $125,000 applicable to covered commodities (other than peanuts)

44. Producer/Landowner Decisions
Landowners
Update payment yields (if updated yield > CCP yield)
Choose between base update options
Producers
Choose PLC or ARC
Producers will make a PLC/ARC Election for the 2018 crop year on each farm with seed cotton base
If all producers on a farm fail to make a unanimous election for PLC/ARC, the farm will be assumed to choose PLC for seed cotton

45. Next Steps
Gather similar information used during implementation of ‘14 farm bill
Yield records from
Planting history from
At the appropriate time, check with your local FSA office for additional information
FSA has not announced a sign-up date
Stay informed – check for updated information

46. Thank you for participating in the webinar & your support of the National Cotton Council Questions?