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  • HIP-WI Basics and Trends

    HIP-WI Basics and Trends

    Hurricanes and tropical storms can damage crops through strong winds and excessive rainfall. Yield Protection and Revenue Protection may pay indemnities when covered causes of loss reduce yield or revenue below the policy guarantee, but producers retain a deductible based on their selected coverage level. Hurricane Insurance Protection–Wind Index (HIP-WI) is an optional endorsement covering part of that deductible for an additional premium. For example, producers with a 75% underlying coverage level and no other coverage for the deductible can insure up to 20% of expected crop value—the difference between 75% and 95%. The dollar amount of HIP-WI coverage is called the Hurricane Protection Amount. The 2025 One Big Beautiful Bill Act increased HIP-WI’s premium subsidy from 65% to 80%, reducing the standard producer-paid share of the premium from 35% to 20%.

    This additional protection works differently from the underlying policy: HIP-WI payments depend on county-level weather conditions rather than farm-level losses. For hurricane coverage, USDA’s Risk Management Agency (RMA) uses official wind data to determine whether the insured county or an adjacent county intersects a named hurricane’s designated wind area, defined by sustained winds of at least 64 knots (74 mph). Producers with eligible HIP-WI coverage can receive a payment if this occurs during the coverage period. This means that producers may receive payments with little farm damage or suffer losses without a HIP-WI payment. This potential mismatch is called basis risk.

    Producers can add the Tropical Storm Option to HIP-WI for an additional premium. The option pays half the Hurricane Protection Amount when RMA identifies a qualifying tropical-storm event in the insured county or an adjacent county. To qualify, that county must meet the 34-knot (39 mph) sustained-wind criterion and receive at least 5.9 inches of county-average rainfall during the specified storm window, as determined by RMA using official National Oceanic and Atmospheric Administration (NOAA) data. Combined hurricane and tropical-storm payments cannot exceed the applicable Hurricane Protection Amount. 

    Participation has grown, but indemnity payments have fluctuated. RMA’s Summary of Business shows that the number of policies earning premium roughly doubled from 2020 to 2025, while total premium more than quadrupled from about $107 million to $451 million (Figure 1). The national loss ratio—indemnities divided by total premium—varied across years: it was 1.77 in 2020 and 1.98 in 2024 and remained below 1.0 in the other four years.  

    These six crop years provide only a short history. RMA’s historical workbooks offer a longer perspective by applying its trigger methodology to archived weather data. Figure 2 shows the number of years in which each county would have met the trigger criteria during 1991–2024. Hurricane triggers were most frequent near the Gulf and Atlantic coasts, while tropical-storm triggers extended farther into the lower Mississippi Valley and Southeast. Producers can compare the historical records for their county with storms that caused losses on their farms. Considering this history alongside HIP-WI’s premium and protection amount can help producers assess whether the coverage fits their insurance needs.

    Figure 1. HIP-WI premiums and indemnities, crop years 2020–2025

    Source: USDA RMA Summary of Business.

    Figure 2. Retrospective county trigger indications in Southern Ag Today states, 1991–2024

    Sources: USDA RMA historical trigger data.

    Recommended citation format: Lee, Seunghyun. “HIP-WI Basics and Trends.” Southern Ag Today 6(40.4). October 1, 2026. Permalink

  • The Market Outlook for New Crop Cotton

    The Market Outlook for New Crop Cotton

    The market outlook for cotton is similar to other commodities in that it is influenced by expectations of supply and demand. Cotton’s “new crop” outlook specifically refers to the 2027/28 marketing year, when the 2027 crop will be produced, processed, stored, and sold.  A major supply-related question is how much 2027 acreage will be planted to cotton.  The price of competing crops, relative to cotton prices, is an important consideration to the level of planted cotton acreage. Figure 1 shows a fairly strong relationship between the level of U.S. upland and pima cotton planted (as measured on June 30) and the ratio of December CBOT corn futures and ICE cotton futures during the first quarter of the year.  The higher the ratio, the less cotton is planted. 

    Of course, there are other important competing crops as well, e.g., sorghum, soybeans, and peanuts.  There are various other influences, including how dry it is in Texas, the insurance base price, fixed cost influences, and the psychological influence of the preceding growing season.  But the price ratio of corn to cotton appears to capture a lot of these other influences in explaining variations in cotton plantings.

    What does Figure 1 imply for 2027?  As of September 21, the Dec’27 CBOT corn/Dec’27 ICE cotton price ratio was 6.77 (i.e., $5.37 corn divided by 79-cent cotton). Assuming this ratio prevails during Q1 of 2027, it is historically associated with between 10.0 and 11.0 million acres of all cotton.  A simple univariate regression, based on the data underlying Figure 1 and the prices as of September 21, projects a point estimate of 10.3 million acres planted.

    Under what conditions will the 2027 crop be planted? The National Oceanic and Atmospheric Administration’s Climate Prediction Center forecasts a 90% chance of strengthening El Niño conditions during the fall and winter. The latter is associated with wetter weather patterns in some of the drier portions of the Cotton Belt. This increases the possibility of harvesting more planted acreage, particularly dryland acreage in the southern plains region. This has implications for the 2027 production and supply.

    Assuming 10.3 million planted acres of all cotton in 2027, and further assuming modestly below average abandonment (14%) and yield per harvested acre (800 lbs), the result is a healthy crop of 14.76 million bales (Table 1). This combines with NASS’s September 11, 2026, projection of 3.60 million bales of carry-in for an 18.37 million bale supply. Matching this supply against a possible 14.5 million bales of total use, which assumes a modest increase in exports simply from having more exportable surpluses, results in 3.87 million bales of ending stocks of U.S. cotton in 2027/28. That outcome is neutral for prices as it represents static year-over-year ending stocks. 

    Caveats.  Obviously, the analysis above depends on price ratios which may change between now and early 2027.  Furthermore, the price ratio approach to forecasting planted acreage will be replaced by grower survey results, beginning at the Beltwide Conference (January 6) and continuing with the National Cotton Council’s survey release (February 8) and the United States Department of Agriculture’s Prospective Plantings report (March 31) and Acreage report (June 30).

    The other major caveat is the outcome for abandonment.  The 2007 and 2010 crops are examples of unexpectedly low abandonment (e.g., 5%) following El Niño winters. This poses a risk of greater supply and perhaps weaker prices.

    Figure 1. Ratio of Dec Corn:Dec Cotton Futures, 1st Quarter average, vs, June30 Reported Acreage of All Cotton with Linear Trend Line

    Table 1. U.S. All Cotton Balance Sheets for 2025/26, 2026/27, and 2027/28 Marketing Years.

    2025/262026/272027/28
    Area Million Acres
    Planted9.2810.4510.30
    Harvested7.838.168.86
    Pounds
    Yield/Harvested Acre852776800
    Million 480 Pound Bales
    Beginning Stocks4.004.153.60
    Production13.9013.2014.76
    Imports0.000.010.01
         Supply, Total17.9017.3618.37
    Domestic Use1.501.501.50
    Exports, Total12.3012.3013.00
         Use, Total13.8013.8014.50
    Unaccounted-0.05-0.040.00
    Ending Stocks4.153.603.87
    Stocks-to-Use29.4%26.1%26.7%
    Sources: USDA OCE for 2025/26 and 2026/27; 
    Author’s Forecast of 2027/28.
  • Cull Cow Prices Continue Slide

    Cull Cow Prices Continue Slide

    Cull cow prices in the Southern Plains peaked at $187 this past Spring but have steadily declined to about $154 at the end of September.  This 18 percent decline in cow prices is not far off the normal seasonal decline from about June to October of about 24 percent.  Supply factors are important in the normal seasonal cow price decline and they are this year, as well.

    Total cow slaughter typically declines from the first of the year until about mid-year.  Cow slaughter from both the dairy and beef cow herds typically declines during the first half of the year.  On the dairy side, culling declines as milk production increases during the “Spring flush” and the cow herd expands.  Beef cow slaughter declines as calving season ramps up.  In the second half of the year, dairy culling increases and beef cow culling hits its peak as calves are weaned and sold.  This year is not much of an exception to the normal pattern.  Weekly dairy cow culling has been increasing since May and is at a faster pace than last year.  More dairy cows are going to market largely because the dairy cow herd is the largest since the early 1990s.  Weekly beef cow culling has remained well below last year and hit a multi-year low in August and has been climbing since then.  

    As cow culling increases cow beef, or non-fed beef, production increases boosting ground beef supplies.  The wholesale price for 90 percent lean beef has declined from $4.49 to $4.11 per pound over the last 4 weeks as increasing supplies hit the market.  

    Other supplies are likely beginning to have an impact on prices.  The U.S. was already importing a record amount of beef, the majority of which is lean beef trimmings for ground beef, when the announcement was made that relaxing the tariff rate quota allowing more of this beef into the country with no tariff.  Some beef, above already expected imports, is likely starting to enter the country based on the latest weekly customs data.  

    Increasing cow culling over the next 2 months should continue to pressure prices lower.  But, while lower cow prices should remain at historically high levels.

    Recommended citation format: Anderson, David. “Cull Cow Prices Continue Slide.” Southern Ag Today 6(40.2). September 29, 2026. Permalink

  • Broiler Grower Revenue Risks Can Come from Many Directions

    Broiler Grower Revenue Risks Can Come from Many Directions

    Highly pathogenic avian influenza (HPAI) has received significant attention in recent years because of its devastating impact on poultry operations. A confirmed outbreak typically requires rapid depopulation to prevent the virus from spreading to neighboring farms. However, disease outbreaks are only one of many risks that can affect grower income. In reality, some of the costliest revenue losses stem from everyday equipment failure.

    A recent example from a broiler farm highlights this risk. The farm experienced a failure in a water line connection, causing extensive flooding in one house. Approximately 15,000 birds, or about 65% of the flock in that house, were lost overnight. With less than a week remaining before harvest, the loss represented more than 100,000 pounds of marketable live weight, approximately a 17% production loss for the flock.

    Based on the example farm’s historical settlement data, the lost pounds reduced flock gross revenue by approximately $7,854. However, the financial impact did not end there. Feed consumed by the birds that were lost remained in the production expense calculations, but those costs were spread over fewer pounds delivered. As a result, the farm’s cost of production increased, likely lowering its ranking within the tournament settlement system and pushing incentive pay from a bonus to a penalty.

    The combined effect is an estimated gross revenue loss of $9,778. Under typical assumptions, with loan obligations equal to 50% of gross revenue and operating expenses representing 30% of gross revenue, an average flock would have generated about $9,115 in net return. Instead, the affected flock produced an estimated net loss of $663 (Table 1).

    The consequences may extend beyond a single flock. Excess moisture from the flooding could require the affected house to remain empty for an entire flock cycle to allow the house’s dirt pad to dry properly. If so, the operation could lose roughly 25% of its gross revenue from the next flock while continuing to make full loan payments. This could result in an annual loss of over $12,000 in net return for this farm with 2 out of 5 flocks being affected. Even with lender flexibility, recovering from a loss of this magnitude could take years.

    Many insurance policies would not cover this type of income loss because it resulted from a plumbing failure rather than a covered peril event. This example illustrates why poultry growers should include contingency reserves in their financial planning. It also highlights the need to explore risk-management tools and insurance products designed to address the unique revenue risks faced by contract poultry growers, even though they do not own the birds they raise.

    Table 1. Estimated Financial Impact of a Water Line Failure on a Broiler Farm

    ScenarioPounds DeliveredFinal Pay ($/lb.)Total Gross RevenueTotal ExpensesNet Return
    Average Flock595,734$0.0765$45,574$36,459$9,115
    Catastrophe Flock493,734$0.0725$35,796$36,459-$663

    The event reduced flock gross revenue from an estimated $45,574 for an average flock to $35,796, a decline of more than 21%, demonstrating how a single event can significantly affect farm profitability.

    Recommended citation format: Brothers, Dennis. “Broiler Grower Revenue Risks Can Come from Many Directions.” Southern Ag Today 6(40.1). September 28, 2026. Permalink

  • A New Way to See Agricultural Bankruptcy Trends

    A New Way to See Agricultural Bankruptcy Trends

    Agricultural financial distress can be easy to see but difficult to quantify. Chapter 12 bankruptcy, specifically designed for family farmers and fishermen, has traditionally been used as the sole measurement of that stress in the legal system.

    However, agricultural businesses who do not qualify for Chapter 12 may instead file under Chapter 11.  For example, many farm families rely on income from outside the farm to keep their operation afloat, potentially disqualifying them from Chapter 12 eligibility. Other families, given the high cost of agricultural inputs and equipment, exceed the amount of debt that is allowable in that chapter. In circumstances like these, filing for Chapter 11 allows the farm to continue operating while developing a plan to restructure and repay its debts.

    Until now, the number of farms filing under Chapter 11 has been unknown, and those additional indicators of financial stress unrecognized.  The National Agricultural Law Center, together with the National Association of State Departments of Agriculture, worked together to identify many of those operations.  The result is the Data on Economic and Bankruptcy Trends, or “DEBT” project.

    The DEBT project features an interactive map that allows users to explore ag related Chapter 11 & Chapter 12 bankruptcy filings between January 2021 and June 2026. Information can be filtered and viewed by bankruptcy chapter, year, and quarter, allowing users to examine where and when agricultural bankruptcy filings have occurred and identify trends over time. Users can select locations on the map to view individual cases and access additional information, including links to corresponding federal court records.  The page also includes access to the underlying dataset.

    It was completed in conjunction with SAS, an advanced analytics company that turns data into usable information. Using Public Access to Court Electronic Records (PACER), an online system providing access to federal court files and case dockets, SAS developed an automated process to cross-reference bankruptcy records with publicly available data from the USDA Farm Service Agency. When an entity appeared in both a bankruptcy filing and FSA program recipient list, it was an indicator that the entity was an agricultural operation. 

    It is not a perfect indicator.  Not all farmers facing significant financial stress file for bankruptcy, not all farm bankruptcies filed were tracked in this new set of data, and alternatives such as Chapter 7 and Chapter 13 are also available, but as of yet uncounted in the current DEBT dataset.  But the project and interactive map is a good first step to better recognizing the farm financial stress issue. 

     Through this project 1,401 agricultural bankruptcies were identified. The majority of those- 1,200- were filed under Chapter 12. However, 201 additional bankruptcies with an agricultural connection were filed under the requirements of Chapter 11.  In other words, agricultural bankruptcies over the past 5 years are at least 16% higher than anyone had previously realized.

    The information gathered in the DEBT project has also given us more data to forecast 2026 possibilities.  In the first half of 2026, there have been at least 208 agricultural bankruptcies: 177 filed under Chapter 12 and 31 under Chapter 11.  To compare with last year’s data; at the halfway point of 2026, agricultural bankruptcies reached 61% of the total number recorded in all of 2025.  If filings continue at this pace, 2026 would see approximately 416 agricultural bankruptcies- about 22% higher than 2025.

    While this project does not solve the problems of farm financial stress, it provides a more comprehensive view of trends across the agricultural sector. The data can help identify changes over time, geographic patterns, and emerging financial challenges affecting agricultural operations. When considered more broadly, these filings offer valuable information for farmers, attorneys, policymakers, researchers, lenders, and others seeking to understand the economic conditions affecting agriculture.

    Recommended citation format: Rumley, Elizabeth. “A New Way to See Agricultural Bankruptcy Trends.” Southern Ag Today 6(39.5). September 25, 2026. Permalink