STAX Appeal?

The Stacked Income Protection Plan (STAX) county-level insurance product is analyzed for cotton producers in Texas. In contrast to studies based on representative farms, this analysis uses actual farm-level yield data, which allows one to observe the heterogeneity of STAX effectiveness across farms in a county. The findings indicate that, for most farms, STAX is not a very effective alternative to farm-level crop insurance. However, contrary to observed behavior, the findings suggest that many cotton producers in Texas would benefit from using STAX as a complement to their farm-level crop insurance.