The insurance-like cotton subsidy program of the 2014 farm law is a failure, U.S. lawmakers, lenders and cotton groups said in four coordinated letters to President Trump. They asked him to keep in operation the cotton ginning cost-share program created as a one-time, $300 million payment last year. In a show of support, letters were sent by 109 representatives, 26 senators, 82 cotton groups and 1,600 lenders and rural businesses.
All four letters contained a sentence similar to this, from the letter signed by one-fourth of the members of the U.S. House: “This cost share program was operated by the previous administration for the 2015 crop year and is an effective and efficient means of providing economic relief to America’s cotton farming families.”
The Obama administration instituted the cost-share program to help growers through the third year of low market prices. Payment per grower was based on plantings in 2015 and 40 percent of the cost of ginning, which separates cotton fiber from the seed. Collectively, ginning costs around $800 million a year. The cotton industry wanted a $1 billion-a-year cottonseed subsidy but Agriculture Secretary Tom Vilsack said he did not have the statutory power to provide it.
To settle a WTO decision against U.S. cotton supports, Congress followed the cotton industry’s suggestion of a new program called STAX that combined revenue insurance with a floor price for cotton. It attracted little participation; some in the industry said the floor price was too low. As an alternative, the industry proposed that cottonseed be declared eligible for the subsidies offered to grain and soybean farmers. Critics said it would be unfair to give cotton two bites at the subsidy apple – insurance and crop subsidies.
Along with approving the $150 billion USDA-FDA funding bill last week, the House Appropriations Committee approved non-binding language that encouraged USDA to make money available “for the purposes of providing assistance to the cotton sector” in fiscal 2018. The assistance could include cotton ginning cost-share payments or other methods, it said. “The committee further supports the inclusion of cottonseed as an oilseed,” which would open the cotton to crop subsidies.
Over 60 percent of the weight of the cotton boll, the protective casing that contains cotton fiber and seed, is the seed itself, which can be used as a livestock feed and in making margarine, lotion, lipstick and shampoo.