Category: Farm Management

  • Cotton Crop Insurance: Navigating Planting Dates Deadline Variations Across Regions

    Cotton Crop Insurance: Navigating Planting Dates Deadline Variations Across Regions

    Timely planting is crucial for crop insurance coverage, ensuring producers remain eligible for their selected yield or revenue guarantee. Producers should monitor three key crop insurance planting dates: Earliest Planting Date, Final Planting Date, and End of Late Planting Period Date. These dates determine coverage eligibility and can impact insurance claims. While crop insurance planting dates typically remain consistent from year to year, they may occasionally be reviewed and adjusted by the U.S. Department of Agriculture – Risk Management Agency when necessary. Any changes to these crop insurance planting dates involve a thorough process, including stakeholder input and consultation with Extension specialists and experts.

    Earliest Planting Date is the earliest date producers may plant an insured agricultural commodity (e.g., rice, corn, soybeans, and peanuts) and qualify for a replanting payment if the crop is damaged by an insurable cause of loss and such payment is available for the crop. However, cotton does not have a designated Earliest Planting Date. Since cotton planting depends on soil moisture and temperature, which vary annually, a fixed Earliest Planting Date is impractical. Additionally, because the cotton crop insurance program does not include replant payment coverage, an Earliest Planting Date is unnecessary for determining replant eligibility.

    Final Planting Date is the deadline by which acres must be planted to receive the full production guarantee selected by the producer. Acres planted after this date will have a reduced guarantee for crop insurance products with a Late Planting Period. Any unplanted acres as of this date must be reported to the insurance agent within three days. 

    Late Planting Period for cotton crop insurance begins the day after the Final Planting Date and lasts for 5, 7, 10, or 15 days, depending on the location. Late Planting Period ends on the End of Late Planting Period Date. This period applies only to cotton crop insurance products that include a Late Planting Period. The specific length of the late planting period varies by location:

    • 15 days: Counties in Arizona, Arkansas, California, Kansas, Louisiana, Missouri, and Tennessee.
    • 10 days: Counties in Alabama, Georgia, and South Carolina.
    • 7 days: Counties in New Mexico, Oklahoma, and Texas.
    • 5 days: Counties in North Carolina and Virginia.
    • For Florida, only Nassau County has a 10-day late planting period, while all other counties have 15 days.
    • For Mississippi, 10 counties in the southern part of the state have a 10-day late planting period, while the rest of the counties have 15 days.

    For acreage planted during the Late Planting Period, the crop insurance guarantee decreases by 1% for each day after the Final Planting Date until the End of Late Planting Period Date, while the producer’s insurance premium remains unchanged. Acres planted after the End of Late Planting Period Date are generally uninsurable, except in cases where prevented planting coverage applies.

    Our previous article in Southern Ag Today provided a detailed overview of all crop insurance products available to cotton producers. Cotton insured under Yield Protection (YP) or Revenue Protection (RP) plans, with related Supplemental Coverage Option (SCO), Enhanced Coverage Option (ECO), and Hurricane Insurance Protection – Wind Index (HIP-WI) options and endorsements, all follow the same Final Planting Dates, Late Planting Periods, and End of Late Planting Period Dates. The Final Planting Dates for these plans are illustrated in Figure 1.

    Cotton insured under Area Risk Protection Insurance (ARPI) and Stacked Income Protection (STAX) does not have a Late Planting Period, thus no End of Late Planting Period Date. Additionally, even though ARPI and STAX policies have the Final Planting Dates, they differ from those of other crop insurance plans. This distinction exists because STAX and ARPI are area-based plans, where coverage and indemnities are determined by county-wide expected and final yields/revenue rather than individual producer’s farm yields or revenue. Since a producer’s specific planting date has a minimal impact on county-wide yield/revenue risk, late planting does not lead to a reduction in coverage under these plans. As a result, the Final Plant Dates for STAX and ARPI align with the End of Late Planting Period Date used for other crop insurance plans.

    If planting by these deadlines is not possible, farmers should keep detailed records documenting the cause. If farmers anticipate being unable to complete planting by the Final Planting Date or during the Late Planting Period, they should contact their crop insurance agent as soon as possible to discuss their options.

    Figure 1. Regional Variations in Final Planting Dates for Cotton Crop Insurance: YP, RP, SCO, ECO, and HIP-WI Policies

    Reference: 

    Chong, Fayu, Yangxuan Liu, and Hunter Biram. “Exploring Diverse Crop Insurance Options for Cotton Producers.” Southern Ag Today 3(51.3). December 20, 2023. 


    Yangxaun, Liu, Hunter Biram, and Faygu Chong. “Cotton Crop Insurance: Navigating Planting Dates Deadline Variations Across Regions.Southern Ag Today 5(13.1). March 24, 2025. Permalink

  • Understanding Patronage Distribution of Farm Credit System Association

    Understanding Patronage Distribution of Farm Credit System Association

    Introduction

    When producers need to borrow money, they have several options, including commercial banks, insurance companies, and machinery/equipment financing companies. The Farm Credit System (FCS) has historically been one of the largest agricultural lenders in terms of loan volume, representing 40% of farm production loans and 49% of farmland real estate loans. 

    FCS distinguishes itself from other types of lenders by providing more flexible loan terms that align with seasonal cash flows and the expertise of loan officers who possess deep knowledge of local agricultural markets. One of the largest differences is their patronage refund system, which effectively reduces borrowing costs for its members.

    Patronage Distribution of FCS and Recent Trends

    As cooperatives, FCS associations distribute a portion of their earnings back to their members through patronage dividends. Producers who borrowed money from the FCS receive a portion of the lender’s profits back through patronage distribution. This can take the form of cash payments, allocated equity, or a combination of both. 

    For example, suppose you take out a loan with an 8.5% interest rate from a local FCS association. At a designated time of the year, your lender distributes patronage, and you receive a 1% refund. Your effective interest rate is now 7.5%, after factoring in the refund. This process effectively lowers borrowing costs, strengthens member relationships, and reinforces the cooperative model by ensuring that profits benefit the borrowers who generate them.

    In recent years, several FCS associations have significantly increased their patronage distributions mostly driven by increased loan volume, setting new records for returning earnings to members. For instance, Farm Credit East announced a record $140 million patronage distribution for 2024, effectively reducing borrowers’ interest rates by 1.25%. Similarly, Farm Credit Mid-America plans to return $260 million in 2025, marking the largest distribution in its history and bringing its total patronage returned since 2016 to over $1.5 billion. Other associations, such as AgTrust Farm Credit and Farm Credit Services of America, have also expanded their patronage programs, ensuring that a greater portion of earnings is reinvested into the agricultural economy through member returns.

    The Impact of Patronage on Agricultural Borrowers

    While patronage distribution is a significant benefit, they are not guaranteed, and other loan terms beyond patronage should be considered when evaluating loan options. However, the patronage distribution of local FCS associations should not be overlooked. By reducing effective interest rates, these distributions ease financial burdens on farmers and agribusinesses, allowing them to reinvest savings into operations, expansion, and innovation.

    Additionally, strong patronage programs reinforce borrower loyalty and trust in the cooperative model, distinguishing FCS institutions from traditional lenders. As patronage remains a key component of the FCS structure, its continued growth will play a vital role in supporting American agriculture in an increasingly competitive economic landscape.


    Gladney, Heather, and Kevin Kim. “Understanding Patronage Distribution of Farm Credit System Association.” Southern Ag Today 5(12.1). March 17, 2025. Permalink

  • Price Risk Always Exists, Even in a Bull Market

    Price Risk Always Exists, Even in a Bull Market

    I doubt many would take issue with me calling the last couple of years a “bull market” for cattle. The combination of tight supplies and strong demand has resulted in cattle markets tracing an upward trajectory over the last couple of years. As an illustration, the chart below tracks the daily nearby CME© feeder cattle futures price over the last 26 months. In January 2023, the nearby feeder cattle futures price was in the $180’s. As I write this article, the nearby feeder cattle futures price is in the $260’s.

    While it is hard to dispute the overall strength of the recent cattle market, it is also important to note that during the last 26 months there have been multiple times when markets saw significant downward swings. The most recent of these occurred since the end of January and was likely sparked by the resumption of live cattle imports from Mexico, continued talk of trade disruptions, Avian Influenza, and any number of other factors. The market also fell by more than $40 per cwt from September to December 2023 and more than $30 per cwt from late May to early September 2024. For producers who sold cattle during those pullbacks, the impact on returns was significant.

    There are a lot of potential strategies to manage price risk, and the simplest one may be a forward contract. By forward contracting cattle, price risk is largely eliminated as the seller and buyer agree on a purchase price prior to delivery of the cattle. A similar strategy would be selling cattle through an internet auction and specifying delivery at a later time. In both cases, the seller entering the forward contract still has production risk as they must meet the specifications of the contract (weight, quality, etc.), but market swings are no longer a concern.

    Futures and options markets are also common tools for price risk management. Short futures positions allow producers to capitalize on the expectation of cattle prices in the future that are manifested in CME© futures prices. When utilizing a short futures position to offset potential decreases in cattle prices, farmers are essentially exchanging price risk for basis risk. Producers utilizing short futures positions also need to plan for potential margin calls if markets move substantially higher. Put options give producers the right to sell a future contract if they choose, and they pay a premium for this flexibility. This effectively sets a price floor for cattle as the strike price on the put option and the premium paid sets a minimum price for the cattle being sold.

    Finally, I have talked more about Livestock Risk Protection (LRP) insurance than any other risk management strategy recently. It works almost exactly like a put option but is much simpler and has the advantage of flexibility on scale. Unlike several other price risk management tools, LRP insurance can be purchased on any number of head, which is much easier for smaller operations to utilize. LRP has been made more attractive over the last several years through increased premium subsidies and allowing producers to pay premiums after the ending date of the policy.

    The specific tool or strategy that cattle producers utilize to manage price risk is less important than their overall risk management plan. I encourage producers to know what risk management tools are available to them, understand how changes in sale price impact their profits, and plan to cover themselves from downside price risk. I still feel good about the fundamentals of the cattle market, but I think the first couple weeks of February have been a good reminder that price risk always exists, even in a bull market!

    Burdine, Kenny. “Price Risk Always Exists, even in a Bull Market.Southern Ag Today 5(11.1). March 10, 2025. Permalink

  • Death and …

    Death and …

    Several articles have been written for Southern Ag Today on how farms can manage their tax obligations. This time of year, farm management specialists begin to receive questions of all kinds regarding taxes, especially for farms that try to meet the March 1 filing deadline available for qualifying farmers. Tax management is only one part of managing a farm but can be crucial. We wanted to relay a handful of resources that producers and other agribusiness specialists may find useful this time of year.

    The Internal Revenue Service (IRS) website, www.IRS.gov, is often the first and best place to begin looking for information. The site contains a vast amount of information and resources, which can also make it a bit daunting. You can find copies of individual tax forms, form instructions, news updates, and educational resources such as Publication 225 – Farmers Tax Guide. The Interactive Tax Assistant (ITA) is designed to answer many basic questions that a taxpayer may have. It includes basic tax return information like filing status, dependents, due dates, and so on, but it can also answer questions regarding tax deductions, credits, income, and payment-related questions. Typically, the assistant will ask questions related to your situation that will help determine which rules may impact you. 

    The other section of the IRS website that farm owners may find helpful is the Small Business Self-Employed Tax Center. This section provides information for self-employed individuals with Schedule C (small business) and/or Schedule F (farming) activities relevant for most farm owners. One of the best sections is the IRS Video Portal and Small Business Virtual Tax Workshop, which includes short video explanations on various tax rules. Other tools within the IRS website help taxpayers and preparers, including free filing options, year-to-date withholding amounts, payment options, and finding transcripts of a taxpayer’s account.

    Outside of the IRS, there are several other sources of information. The USDA website, www.farmers.gov, has a section specifically on tax education. On this website, you will find webinars on timely topics, frequently asked questions regarding farm taxation, and other resources to help farmers (especially newer farmers) navigate some of these issues. 

    Another site, www.RuralTax.org, is maintained by land-grant university professionals throughout the country who work in farm management and tax education. There are dozens of articles available on newer, timely topics, as well as archived information and a small farms tax guide producers may find helpful. Other sources of local help include lenders, fellow producers, your local Extension office, and certainly a designated tax professional. If you need to find a tax preparer, there are guides available through the IRS and Rural Tax. This article is not intended as professional tax advice but general knowledge for agricultural businesses who may benefit by having a bit more information and resources at their disposal. We encourage you to work with a professional who knows you and your farm and can best advise you on your situation.


    Burkett, Kevin. “Death and …Southern Ag Today 5(10.1). March 3, 2025. Permalink

  • Wheat Alternatives: Maximizing Profitability in a Tough Market

    Wheat Alternatives: Maximizing Profitability in a Tough Market

    With cash wheat prices falling, farmers in many regions of the South are once again facing difficult decisions in their efforts to maximize returns on their crops. As prices dip below the breakeven threshold, alternative uses for wheat, such as grazing or baling, may offer improved profitability.

    What follows is an example of a Wheat and Small Grains Decision Aid tool designed to help farmers analyze whether it is more beneficial to use wheat for grain, grazing, or hay. Evaluating the available alternatives is always prudent based on the relative prices of grazing, wheat hay, and grain, as well as the expected yields, production costs, and the availability and cost of harvesting or baling equipment. For this analysis, we assume that harvesting and baling equipment is custom-hired. However, from a cash cost perspective, owning your harvesting or baling equipment will influence the comparison of these two alternatives.

    In contrast to last year, the hay alternative demonstrates higher profitability under similar production conditions in the Rolling Plains region of Texas. To estimate potential hay production, we assume grain yield corresponds to 40% of total biomass production. Thus, a wheat yield of 45 bushels per acre would produce a total biomass of approximately 3.1 tons per acre. Further, we assume that harvest and baling will yield 76% of this total biomass or about 2.3 tons per acre[1]. Estimating both grain and hay yield potential is essential when comparing these options.

    The grazing option also appears more favorable, provided there is sufficient water, forage production, and livestock to maximize beef production. 

    Another way to approach this information is to determine at what price we must sell our hay (or grazing) to achieve a profit margin similar to that of wheat grain. The Decision Aid tool will use your data and costs to calculate hay and grazing breakeven prices (Graphs 1 and 2).


    [1] (according to “Wheat Hay vs. Grain: A Comparison of Economic Opportunity” by Reagan Noland, Bill Thompson, and Clark Neely).

    Graph 1. Break-Even Hay Prices

    You might consider baling wheat if you can sell the hay above the breakeven price for hay given an expected grain price and yield. For example, with an estimated yield of 45 bushels per acre and a price of $5 per bushel, baling wheat would be more profitable if the net price per ton of hay exceeds $121 (assuming production of 76% of the total estimated biomass 2.3 tons per acre can be achieved). 

    Graph 2. Break-Even Grazing Prices 

    Similarly, for an estimated yield of 45 bushels per acre and a price of $5 per bushel, you would consider grazing out wheat if the grazing price exceeds $0.73 per pound of gain. 

    With weak wheat prices, exploring alternatives like grazing or hay may lead to improved financial outcomes in many areas of the South. The Wheat and Small Grain Decision Aids (Link) serves as an economic and financial tool to assist every farmer in making informed decisions. Using your own data, yields, prices, and costs is essential for effectively analyzing these alternatives. These examples reflect the current wheat conditions and expectations in the Texas Rolling Plains. Please let us know if you need assistance in using this decision aid to help you make better choices for your farm.


    Abello, Pancho. “Wheat Alternatives: Maximizing Profitability in a Tough Market.Southern Ag Today 5(9.1). February 24, 2025. Permalink