The Senate proposal to create a subsidy program for cottonseed could carry a pricetag of $420 million or more, according to an analysis by economist Carl Zulauf of Ohio State University. Zulauf did not calculate the figure but estimated 14.08 million acres might be eligible, with payments of $30 an acre, based on USDA payment formulas.
“Revising mandatory farm programs in an appropriations process is unusual,” wrote Zulauf at farmdocDaily. “There are considerable unknowns about the appropriations process at this time, including whether this provision will make it into law.” The cotton industry has pushed for the new support because the STAX program created in the 2014 farm law has provided little shelter from low market prices.
Creation of the cottonseed program “might alleviate some of the (budget) baseline challenges but it depends on how CBO scores the provision,” wrote Zulauf. The proposal “would add baseline to the farm bill for cottonseed but eliminating generic base acres could limit how much is added.”
The STAX program, a revenue insurance plan combined with a minimum price for cotton, was enacted to resolve a WTO ruling against U.S. cotton subsidies as trade-distorting. The case was brought by Brazil and Zulauf noted the possibility that Brazil would object to a new support for cotton growers.