Rebuffed by the Obama administration, the cotton industry told a House Agriculture subcommittee that growers need a subsidy on cottonseed to offset low prices for cotton fiber. The novel proposal, with an estimated pricetag of $1 billion a year, is part of an industry push to make cotton eligible for the same subsidies offered to grain and soybean growers.
“We strongly believe we need a cottonseed policy in place to help provide support to our producers as a bridge until the new farm bill is enacted, hopefully before expiration of the current bill in 2018,” said Ronnie Lee, a cotton grower, owner of a cotton gin and chairman of the National Cotton Council, which speaks for growers, ginners, warehouse operators, processors, merchants and textile manufacturers. Lee described the cottonseed subsidy as a short-term effort. “We know that a meaningful safety net must be included in Title I of the farm bill,” he said, referring to the section that governs the farm program.
To satisfy a WTO ruling that U.S. cotton subsidies distorted world trade, the 2014 farm law converted the cotton program, at the industry’s request, to a revenue insurance program with a so-called marketing loan to set a minimum price for cotton. Revenue protection was inadequate during the spate of low market prices, said Lee. The industry will offer more specific ideas later on how supports should be structured in the 2018 farm bill, he said.
In early 2016, then-Agriculture Secretary Tom Vilsack said he lacked the authority and Congress would have to change the law so that cottonseed could qualify as an oilseed eligible for subsidy. The proposal raised questions, including how to pay for the new subsidy and whether other crops would be at a disadvantage if cotton became eligible for two subsidy programs.
During the subcommittee hearing, Lee and Blake Gerard, speaking for the trade group USA Rice, said limits on farm subsidy payments should be relaxed. The rice group asked for a higher reference price for rice, which would trigger payments sooner.
To read statements by rice, sugar, peanuts, cotton and canola groups at the hearing or the opening statement of the subcommittee chairman or to watch a video of the hearing, click here.