Don’t Push Your Limits

It’s not news that we’re enjoying some of the highest cotton prices in some time. It’s been a long time since dollar cotton has been in our vocabulary. Add to that a lot of farmers are now hauling their own cotton to the gin, and we’re in a lot less control over where and how cotton is staged in the fields. This is a set-up for potential problems.

Gin’s coverage of cotton in the field or on the yard normally have block or grouping limits and often a yard limit as well. With cotton being well over a dollar, it takes a lot fewer modules than it did previously to hit those limits. Limits often vary from policy to policy and gin to gin and can be bought up depending on the company. For example, some companies start at $50,000 for a limit for in-field storage but most are in the $75,000 range. That’s about 30–40 round modules at $600 per bale ($1.20/lb cotton). How in field cotton is valued and the limits you have will give you an exact number to stay under.

You have similar situation on your yard. You have block limits and separation minimums between blocks. There is also normally a yard maximum as well. All of those limits can be bought up most of the time but may come with other contingencies that you have to agree to.

The point of all of this is that we recently heard about a significant in-field loss that occurred late last week. It occurred to us that as farmers stage their own cotton for hauling to the gin or for the gin to come get, it would be prudent to remind them as to the limits on coverage and separation requirements. It would also be a good idea to review your own coverages and the way your yard is laid out to make sure your blocks aren’t exceeding your limits.

Please take some time to review these issues in your own policy and stay in contact with your insurance agent to make absolutely sure you know what your limits are and are in communication with your producers so they don’t put undue risk out there. Just a few things to add to this season’s complications.