Agriculture Secretary Tom Vilsack said he is looking at every factor, including trade rules and budgetary effects, in the cotton industry’s request that he declare cottonseed oil eligible for the same subsidies offered to grains and soybeans. Congress created a new, and separate, cotton subsidy program in the 2014 farm law to resolve a WTO decision against U.S. supports, but few growers participate in it. “I’ve not made a decision, one is forthcoming very soon,” Vilsack told reporters. Asked about factors going into the decision, Vilsack said, “First and foremost is whether there is the legal authority to do what has been requested.”
The cotton industry says Vilsack has the power to designate cottonseed oil as one of the “other oilseeds” covered by the insurance-like Agriculture Risk Coverage and traditionally styled Price Loss Coverage subsidies. The subsidies could cost as much as $1 billion a year, according to unofficial estimates. Market prices for cotton are in a slump. U.S. crop subsidies traditionally have been tied to cotton fiber. It would be a novelty to make different parts of the cotton plant eligible for different subsidies.
In a brief session with reporters, Vilsack said the proposal “is a very complicated issue” considering that Congress, in writing a new subsidy program that reflected industry wishes, “specifically took out cotton oil seeds from the program, which I think is a pretty significant piece of information as we look at what was intended at the time.” When asked if a cottonseed oil subsidy would violate a U.S. agreement with Brazil over subsidies, Vilsack said, “I think you have to look at every factor. That’s why it takes time.” Among the questions, said Vilsack, is whether the USDA would have to cut other programs to offset the cost of a cottonseed oil subsidy.
The cotton industry has a record as one of the more successful farm groups because it speaks with a unified voice through the National Cotton Council, employs persuasive lobbyists and doggedly pursues its goals. Cotton Belt senators sent a letter to Vilsack this week in support of the proposal. A similar letter was signed by 100 representatives last month. The Cotton Council says the two largest U.S. farm groups, the American Farm Bureau Federation and National Farmers Union, as well as the major soybean, sugar, rice and peanut groups are on board, too.
“There still exists an ability and opportunity to provide support for a major co-product of cotton — cottonseed,” said Shane Stephens, vice chair of the Cotton Council, at a House Agriculture subcommittee hearing on Dec. 9. The WTO decision, he said, was aimed at U.S. export-credit programs. A few days later, an NCC official told the website Fibre2Fashion, “We’re looking at seed as an alternative that doesn’t raise those trade concerns.” However, a former senior-level USDA official says a cottonseed oil subsidy might draw suspicion in Brazil of being a new U.S. subsidy despite its vows to reform.
The industry says the USDA could use “generic base” acres to calculate payments to growers for 2015 production. A more comprehensive set of rules could be developed in time for the 2016 harvest, it says. A large part of the cotton boll is seed, which can be crushed for oil that is used in salad dressings or meal for livestock feed, while the lint is used in textiles.