Authors Natalie Graff and Henry Nelson
Program decisions for the 2026 crop year are fast approaching. This article considers the risk management options for cotton producers in light of current price projections and relevant changes in the One Big Beautiful Bill Act (OBBBA) signed into law on July 4, 2025. Given the commodity program and crop insurance changes in OBBBA, producers likely will want to re-evaluate their Title I program and crop insurance decisions for 2026 and beyond.
OBBBA strengthened the Title I programs Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) by raising reference prices and increasing the coverage ARC provides, along with other changes. The Stacked Income Protection Plan (STAX) is an area-wide crop insurance policy exclusively for upland cotton producers, and cotton acres with a STAX policy are not eligible to sign up for ARC or PLC on the upland cotton base acres. In light of the recent improvements to ARC and PLC (and the prohibition on combining coverage with STAX), cotton producers should evaluate potential ARC/PLC payments before making their decision about STAX.
The Supplemental Coverage Option (SCO) is another area-wide supplemental crop insurance policy available for cotton and other major commodities. OBBBA improved SCO in two significant ways.
1) The premium subsidy increased from 65% to 80%, now equal to the STAX premium subsidy.
2) The restriction on ARC and SCO was removed. Prior to OBBBA, producers could combine SCO and PLC, but not SCO and ARC.
Cotton producers, especially those that utilized STAX in the past, may wish to consider SCO for 2026 instead (note that producers cannot have both STAX and SCO for the same crop on the same acres). SCO provides supplemental area-wide coverage – operating similarly to STAX – without causing producers to forgo potential ARC or PLC payments.
As a result, one strategy to consider involves (1) enrolling cotton base in ARC or PLC, (2) purchasing an individual crop insurance policy like Revenue Protection (RP) on your cotton acres, and (3) supplementing the RP policy with an area-wide endorsement like SCO. Producers may also wish to add a supplemental Enhanced Coverage Option (ECO) endorsement as well.
Graff, Natalie, and Henry Nelson. “Producer Decisions for 2026 – STAX or SCO in light of OBBBA Changes.” Southern Ag Today 6(2.4). January 8, 2026. Permalink
