22-STAX-0021

UNITED STATES DEPARTMENT OF AGRICULTURE

FEDERAL CROP INSURANCE CORPORATION

COMMON CROP INSURANCE POLICY

STACKED INCOME PROTECTION PLAN

COTTON CROP PROVISIONS

The Stacked Income Protection Plan (STAX) provides protection against loss of revenue due to an area level production loss, a

price decline, or a combination of both. STAX is available as a Crop Provision offered under the Common Crop Insurance Policy 

Basic Provisions (CCIP Basic Provisions) (7 C.F.R. § 457.8). STAX may be purchased in conjunction with the Cotton Crop 

Provisions offered under the CCIP Basic Provisions or the Cotton Crop Provisions under Area Risk Protection Insurance Basic 

Provisions (ARPI Basic Provisions) as long as both policies are purchased through us, or it may be purchased as the sole coverage 

for your cotton crop. STAX does not provide payments for replanting or prevented planting. Late planting is not available for 

STAX.

STAX is a revenue plan of insurance, and your projected price and harvest price will be determined in accordance with the 

provisions of the Commodity Exchange Price Provisions (CEPP). 

Terms and Conditions

1. Definitions

Agriculture risk protection (ARC) - A risk management 

program administered by FSA under 7 U.S.C. § 9017.

Area loss trigger - The percentage of expected area

revenue you choose, ranging from 90 percent to 75 

percent, below which an indemnity is paid and which is 

contained in the actuarial documents. 

Companion policy - A cotton policy issued under the 

CCIP Basic Provisions or ARPI Basic Provisions

purchased from us in addition to your STAX policy.

Coverage range - A percentage of not less than 0 percent 

and not more than 20 percent, which represents the 

amount of the expected area revenue covered by STAX

and which is contained in the actuarial documents. 

Expected area revenue - The expected area yield 

multiplied by the projected price. 

Expected area yield - The yield contained in the actuarial 

documents for each type and practice. 

Final area revenue - The revenue determined by 

multiplying the final area yield by the harvest price. The 

final area revenue is used to determine whether an 

indemnity will be due.

Final area yield - The yield for each insured type and 

practice, released by FCIC at a time specified in the 

actuarial documents.

Liability - In lieu of the definition contained in the CCIP 

Basic Provisions, the liability of this policy will be the 

amount used to calculate your premium.

NASS - The National Agricultural Statistics Service, an 

agency within USDA, or its successor.

Payment factor - A factor that represents the production 

area wide loss as compared to your coverage range. 

Planted acreage - In addition to the definition contained 

in the CCIP Basic Provisions, cotton seed broadcast and 

subsequently mechanically incorporated will not be 

considered planted.

Policy protection - The dollar amount of insurance 

provided by this policy for each type and practice. 

Price loss coverage (PLC) - A risk management program 

administered by FSA under 7 U.S.C. § 9016.

Production area - The geographical area that the 

expected and final area yields are based on, designated 

generally as a county, but may be a smaller or larger 

geographical area as specified in the actuarial documents. 

Protection factor - The percentage you choose for each 

type and practice. The protection factor is used to 

calculate your policy protection.

STAX production report - A written record showing your 

annual production in accordance with section 4. The 

report contains yield information for the current year, 

including all planted acreage and crop production. This 

report must be supported by written verifiable records from 

a warehouseman or buyer of the insured crop, by 

measurement of farm-stored production, or by other 

records of production approved by us in accordance with 

FCIC approved procedures.

STAX production reporting date - The date contained in 

the actuarial documents by which you are required to 

submit your STAX production report.

2. Insured Crop

(a) In addition to the provisions contained in section 8 of 

the CCIP Basic Provisions, the insured crop will be all 

upland cotton, in the county for which premium rates 

are provided in the actuarial documents in which you 

have a share; and

(b) STAX will only insure upland cotton that is not (unless 

allowed by the Special Provisions):

(1) Colored cotton lint;

(2) Planted into an established grass or legume; or

(3) Interplanted with another spring planted crop.

3. Insurable Acreage and Unit Division

(a) In addition to section 9 of the CCIP Basic Provisions, 

STAX will only insure acreage that is:

(1) Planted to the insured crop on or before the final 

planting date;

(2) Reported to us by the acreage reporting date; and

(3) Physically located in the county shown on the 

application accepted by us.

(b) In addition to section 9(a)(2) of the CCIP Basic 

Provisions, STAX will not insure any acreage:

(1) Where the crop was destroyed or put to another 

use during the crop year for the purpose of 

conforming with, or obtaining a payment under, 

any other program administered by the USDA;

(2) Where we determine you have failed to follow 

good farming practices for the insured crop; 
(3) Where the conditions under which the crop is 

planted are not generally recognized for the area; 

(4) Which is insured by a companion policy and:

(i) The type and practice is determined to be

ineligible for STAX coverage, in accordance 

with section 10(b); or

(ii) Is insured under the Supplemental Coverage 

Option, in accordance with section 10(c); 

(5) Physically located in a county for which STAX 

actuarial documents are unavailable, unless 

insurance is allowed by a written agreement; or

(6) On land identified by a FSA farm number that has 

been enrolled in ARC or PLC for seed cotton for the 

crop year as of March 15.

(c) The provisions regarding units and unit division in 

section 34 of the CCIP Basic Provisions are not 

applicable to STAX.

4. Report of Acreage and Production

(a) In addition to the provisions of section 6 of the CCIP 

Basic Provisions, if you have submitted an estimated 

acreage report in accordance with section 6(d)(3) of 

the CCIP Basic Provisions and an acreage 

measurement is not provided to us by the time the 

final area revenue is calculated, we may apply the 

provisions contained in sections 6(d)(3)(ii)(A) or (B) of 

the CCIP Basic Provisions to finalize your claim.

(b) In addition to the provisions in section 6(f) of the CCIP 

Basic Provisions, if we deny liability for unreported 

acreage, no premium will be due on such acreage and 

no indemnity will be paid. 

(c) In lieu of section 3(f) of the CCIP Basic Provisions, 

you must submit a STAX production report to us on 

our form, by type and practice in the county, by the 

STAX production reporting date specified in the 

actuarial documents:

(1) If you have submitted an acceptable production 

report to us for a companion policy prior to the 

STAX production reporting date specified in the 

actuarial documents, we will consider that 

production report to be your STAX production 

report; and

(2) Except as provided by paragraph (1), if you do not 

submit a STAX production report to us by the 

STAX production reporting date, your protection 

factor for your policy in the following crop year will 

be limited to the lowest protection factor 

available.

(d) You must certify the accuracy of the information on 

your STAX production report.

(1) If you fail to accurately report your production you 

will be subject to the provisions in section 4(c)(2) 

unless:

(i) You correct the information on or before the 

STAX production reporting date; or

(ii) The incorrect information was the result of 

our error or the error of someone 

representing USDA.

(2) If you do not have records to support the 

information on your STAX production report, you 

will be subject to the provisions in section 4(c)(2).

(e) If you do not submit a STAX production report, or 

another production report in accordance with (c)(1), or 

you misreported your STAX production report and you 

switch to another plan of insurance in the following 

year: 

(1) If you switch to an individual plan, you will be 

subject to having a yield assigned in accordance 

with FCIC procedures; or

(2) If you switch to an area plan, your protection factor 

for that area plan will be limited to the lowest 

protection factor available.

(f) In addition to section 6(c) of the Basic Provisions, if 

any land of the crop in the county in which you have a 

share has been enrolled, or will be enrolled in ARC or 

PLC, your acreage report must include:

(1) The FSA farm serial numbers assigned to land 

with planted acreage of the crop in which you 

have a share;

(2) Whether such acreage has been enrolled in ARC 

or PLC; and

(3) For acreage with an ARC or PLC enrollment date 

later than the acreage reporting date, your 

intended ARC or PLC enrollment.

(g) If we discover you have incorrectly reported any 

information required by paragraph (a) and the 

information determined to be correct results in: 

(1) Acreage that is insurable under this policy that 

was reported as uninsurable, coverage under this 

policy will not be provided for such acreage; or

(2) Acreage that is uninsurable under this policy that 

was reported as insurable:

(i) Such acreage will be ineligible for any 

indemnity under this policy because acreage 

cannot benefit from STAX and ARC or PLC; 

and

(ii) You will still be required to pay 60 percent of 

the premium due.

5. Protection Factors, Coverage Ranges, and Policy 

Protection

(a) You must choose a protection factor:

(1) From a range of 80 percent to 120 percent, unless 

otherwise specified in the Special Provisions;

(2) As a whole percentage from the range specified

in paragraph (1); and

(3) You may choose a different protection factor for 

each type and practice shown on the actuarial 

documents.

(b) In lieu of section 3(b) of the CCIP Basic Provisions, 

you must select an area loss trigger and coverage 

range from those offered in the actuarial documents 

for each type and practice shown on the actuarial 

documents subject to the limitations contained in 

section 10(b), as applicable. 

(c) You may change the protection factor, area loss 

trigger, or coverage range for the following crop year 

by giving written notice to us not later than the sales 

closing date for the insured crop.

(d) If you do not select a new protection factor and 

coverage range on or before the sales closing date we 

will assign the same protection factor and coverage 

range as the previous year. 

(e) Your policy protection for each type and practice is 

calculated as follows:

(1) For revenue protection:

(i) Multiply the expected area yield by the higher 

of the projected price or harvest price;

(ii) Multiply the result of clause (i) by your 

coverage range; 

(iii) Multiply the result of clause (ii) by your 
protection factor;

(iv) Multiply the result of clause (iii) by the 

number of acres; and

(v) Multiply the result of clause (iv) by your share 

in such acres.

(2) For revenue protection with the Harvest Price 

Exclusion:

(i) Multiply the expected area yield by the 

projected price;

(ii) Multiply the result of clause (i) by your 

coverage range; 

(iii) Multiply the result of clause (ii) by your 

protection factor;

(iv) Multiply the result of clause (iii) by the 

number of acres; and

(v) Multiply the result of clause (iv) by your share 

in such acres. 

(f) In lieu of section 3(c)(5)(i) of the CCIP Basic 

Provisions, if the projected price cannot be calculated 

for the current crop year under the provisions 

contained in the CEPP:

(1) STAX coverage will not be provided;

(2) Notice will be provided on RMA’s website by the 

date specified in the applicable projected price 

definition contained in the CEPP; and

(3) Your coverage will automatically resume the next 

crop year that STAX is available unless you 

cancel your coverage by the cancellation date 

although you may change your coverage range, 

protection factor, or area loss trigger by the sales 

closing date.

6. Annual Premium and Administrative Fee

(a) In lieu of section 7(c) of the CCIP Basic Provisions, 

the annual premium amount is calculated by:

(1) Multiplying the expected area revenue by your 

coverage range;

(2) Multiplying the result of paragraph (1) by your 

protection factor;

(3) Multiplying the result of paragraph (2) by the 

number of acres;

(4) Multiplying the result of paragraph (3) by your 

share in such acres to determine the liability; and

(5) Multiplying the liability by the premium rate and 

any premium adjustment factors that may apply.

(b) A separate administrative fee will be owed for this 

policy and any other policy issued under the authority 

of the Act for the insured crop.

7. Causes of Loss 

(a) In lieu of section 12 of the CCIP Basic Provisions, 

STAX provides protection against widespread loss of 

revenue in a production area due to unavoidable 

naturally occurring events.

(b) Failure to follow good farming practices, or planting or 

producing a crop using a practice that has not been 

widely recognized as used to establish the expected 

area yield, is not an insurable cause of loss under 

STAX.

8. Area Loss Trigger, Payment Factor, and Indemnity 

Calculations

(a) In lieu of section 14 of the CCIP Basic Provisions, 

individual farm revenues are not considered when 

calculating losses under STAX. It is possible that your 

individual farm may experience reduced revenue and 

you do not receive an indemnity under STAX.

(b) An indemnity is due if:

(1) For revenue protection with the harvest price 

exclusion, the final area revenue is less than the 

expected area revenue multiplied by the area loss 

trigger; or

(2) For revenue protection, the final area revenue is 

less than the expected area yield multiplied by the 

higher of the projected price or harvest price and 

by the area loss trigger.

(c) If an indemnity is due, the payment factor is calculated 

by:

(1) For revenue protection with the harvest price 

exclusion:

(i) Dividing the final area revenue by the 

expected area revenue;

(ii) Subtracting clause (i) from the area loss 

trigger; and

(iii) Dividing clause (ii) by the coverage range to 

determine the payment factor. 

(2) For revenue protection:

(i) Multiplying the expected area yield by the 

higher of the projected price or harvest price;

(ii) Dividing the final area revenue by the result 

of (i);

(iii) Subtracting clause (ii) from the area loss 

trigger; and

(iv) Dividing clause (iii) by the coverage range to 

determine the payment factor. 

(3) The payment factor is limited to a maximum of 

1.000.

(d) Indemnities are calculated by multiplying the policy 

protection by the payment factor.

(e) Indemnities are calculated following release of the 

final area yield and harvest price as specified in the 

actuarial documents. 

(f) If an indemnity is due, we issue any payment to you 

not later than 30 days after release of the final area

revenue.

9. Expected and Final Area Yields 

(a) The data source used for the expected and final area

yields will be based on the best available data and will 

be specified in the actuarial documents.

(b) Except as otherwise provided in this section, the data 

source used to establish the expected area yield will 

be used to establish the final area yield.

(c) If the data source used to establish the expected area

yield is not able to provide sufficient data to establish 

the final area yield because the data is no longer 

available, credible, or reflects changes that may have 

occurred after the expected area yield was 

established;

(1) FCIC will determine the final area yield based on 

the most accurate data available from subsection 

(g), as determined by FCIC; or 

(2) To the extent that practices used during the crop 

year change from those upon which the expected 

area yield is based, the final area yield may be 

adjusted to reflect the yield that would have 

resulted but for the change in practice. For 

example, if the production area is traditionally 90 

percent irrigated and 10 percent non-irrigated, but 

this year the production area is now 50 percent 

irrigated and 50 percent non-irrigated, the final 

area yield will be adjusted to an amount as if the 
production area had 90 percent irrigated acreage.

(d) If the final area yield is established from a data source 

other than that used to establish the expected area

yield, FCIC will provide notice of the data source and 

the reason for the change at the time the final area

yield is published. 

(e) If expected and final area yields are based on NASS 

data, the final area yield will be the most current NASS 

yield at the time FCIC determines the final area yield 

in accordance with the actuarial documents.

(f) The final area yield determined by FCIC is considered 

final for the purposes of establishing whether an 

indemnity is due and will not be revised for any 

reason.

(g) Expected and final area yields used under this 

insurance program for a type and practice will be 

based on crop insurance data unless otherwise 

announced by FCIC. If crop insurance data cannot 

be used to establish expected and final area yields 

FCIC may elect to use data collected by NASS

(regardless of whether such data is published or 

unpublished), other USDA data, or other data 

sources. 

10. Other Insurance

(a) In lieu of section 22 of the CCIP Basic Provisions:

(1) You may obtain a companion policy for the 

insured crop provided the companion policy is

obtained through us; and 

(2) You may also obtain coverage under the Whole 

Farm Revenue Protection policy for the insured 

crop.

(b) For a type and practice to be eligible for STAX

coverage when you have a companion policy:

(1) The coverage range you elect for the type and 

practice added to the coverage level you have 

elected for the companion policy must not exceed 

the area loss trigger you elect for the type and 

practice; and

(2) If the companion policy provides coverage on an 

area yield or revenue basis, the coverage range 

you elect for the type and practice must not 

exceed the limit contained in the actuarial 

documents for the protection factor you have 

elected for the companion policy.

(3) If we determine that the area loss trigger and 

coverage range you have elected for a type and 

practice exceeds the limits in paragraphs (1) or 

(2):

(i) We will reduce the coverage range for that 

type or practice, in 5 percent increments, until 

the limits in paragraphs (1) and (2) are 

satisfied; and

(ii) If this reduction would result in a coverage 

range of less than 5 percent, no STAX 

coverage will be provided for that type or 

practice for the crop year.

(c) If you have a companion policy that provides 

coverage on an individual basis for the crop insured 

by STAX, and you have elected the Supplemental 

Coverage Option (SCO) for that policy: 

(1) You must designate which acres of the crop in the 

county will be covered by STAX and which acres 

will be covered by SCO on or before the sales 

closing date (the same acreage cannot be 

covered by both STAX and SCO), as follows:

(i) You must provide a production report for the 

companion policy by the sales closing date;

(ii) You must designate your acres for STAX and 

SCO coverage for each approved APH yield 

for the companion policy; and

(iii) You may designate whether STAX or SCO 

coverage applies for any acres added to your 

operation after the sales closing date.

(2) Any acres insured by the companion policy that 

are not designated for STAX coverage will be 

covered by SCO.

(d) If you have obtained other insurance issued under the 

authority of the Act not specifically authorized by 

section 10(a), this policy will be void and you may be 

subject to the consequences authorized under this 

policy, the Act, or any other applicable statute.

(e) Nothing in this section prevents you from obtaining 

other insurance not authorized under the Act.

11. Program Dates

(a) In addition to the definitions contained in the CCIP 

Basic Provisions, the cancellation and termination 

dates for this policy are specified in the actuarial 

documents.

(b) In accordance with section 4 of the CCIP Basic 

Provisions, the contract change date is November 30 

preceding the cancellation date.

12. Written Agreements

(a) Written agreements are available for STAX policies 

only for determining insurable acreage in accordance 

with section 9 of the CCIP Basic Provisions and 

section 3 of this policy.

(b) If the written agreement is for a county in which STAX 

is otherwise unavailable, all variable terms of the 

contract must match those of the county used to 

establish the terms of the written agreement.

13. Examples

The following are examples of the calculation of the 

premium, policy protection and indemnity of STAX for each 

plan of insurance. Your information will likely be different 

and you should consult the actuarial documents in your 

county and the policy information. The following facts are 

for illustration purposes only and apply to each of the 

examples.

Producer A farms 100 acres in county X and has a 100 

percent share in those acres. The actuarial documents in 

county X show that the expected area yield is 525 pounds

per acre, the projected price is $0.72, and the expected 

area revenue is $378.00. From the actuarial documents in 

county X, Producer A elects a 90 percent area loss trigger 

and a 20 percent coverage range. Producer A selects a 

protection factor of 110 percent. 

The premium rate is based on the published volatility factor 

and for this example is 0.3584 for revenue protection, and 

0.2816 for revenue protection with the Harvest Price 

Exclusion. The subsidy factor for STAX is 0.80. 

At the end of the insurance period, for county X, FCIC 

releases a harvest price of $0.77, a final area yield for 

county X of 399 pounds, and a final area revenue for 

county X of $307.23. 

Examples for revenue protection:

Step 1: Calculate the Policy Protection

Formula: Expected area yield times the higher of the 

projected price or harvest price times coverage range 
times protection factor times acres times share equals 

policy protection

525 pounds x $0.77 x 0.20 x 1.10 x 100 x 1.00 = 

$8,894 policy protection

Step 2: Calculate the Total Premium

Formula: Expected area revenue times coverage 

range times protection factor times acres times share

times premium rate equals total premium

$378.00 x 0.20 x 1.10 x 100 x 1.00 x 0.3584 = $2,980 

total premium

Step 3: Calculate the Subsidy amount

Formula: Total premium times subsidy factor equals 

subsidy

$2,980 x 0.80 = $2,384 subsidy

Step 4: Calculate the Producer Premium

Formula: Total premium minus subsidy equals 

producer premium

$2,980 - $2,384 = $596 producer premium

Step 5: Calculate the Payment Factor

Formula: (Area loss trigger minus (final area revenue 

divided by (expected area yield times the higher of the 

projected price or harvest price))) divided by coverage 

range equals payment factor

(0.90 – ($307.23 ÷ (525 x $0.77))) ÷ 0.20 = 0.700

Step 6: Calculate the Indemnity

Formula: Policy protection times payment factor 

equals indemnity

$8,894 times 0.700 = $6,226 indemnity

Examples for revenue protection with the Harvest Price 

Exclusion:

Step 1: Calculate the Policy Protection

Formula: Expected area yield times projected price 

times coverage range times protection factor times 

acres times share equals policy protection

525 pounds x $0.72 x 0.20 x 1.10 x 100 x 1.00 = 

$8,316 policy protection

Step 2: Calculate the Total Premium

Formula: Expected area revenue times coverage 

range times protection factor times acres times share

times premium rate equals total premium

$378.00 x 0.20 x 1.10 x 100 x 1.00 x 0.2816 = $2,342

total premium

Step 3: Calculate the Subsidy amount

Formula: Total premium times subsidy factor equals 

subsidy

$2,342 x 0.80 = $1,874

Step 4: Calculate the Producer Premium

Formula: Total premium minus subsidy equals 

producer premium

$2,342 - $1,874 = $468

Step 5: Calculate the Payment Factor

Formula: (Area loss trigger minus (final area revenue 

divided by expected area revenue)) divided by 

coverage range equals payment factor

(0.90 – ($307.23 ÷ $378.00)) ÷ 0.20 = 0.436

Step 6: Calculate the Indemnity

Formula: Policy protection times payment factor 

equals indemnity

$8,316 times 0.436 = $3,626 indemnity