While a $1 billion-a-year cottonseed subsidy may be off the table, financially strapped cotton growers could be helped through two other federal options. One could pump $150 million into the sector through a cost-share program with cotton ginners and the other would be revival of so-called cotton transition payments. During a House Agriculture Committee hearing, Cotton Belt lawmakers said they wanted USDA to use every tool to help growers and they appealed to Agriculture Secretary Tom Vilsack to override legal advice against the cottonseed payments.
Growers face a third year of low market prices and a worldwide glut of cotton. Low petroleum prices are helping synthetic fibers capture a larger share of the apparel market.
“We have a very serious problem unfolding now in rural America,” said Agriculture chairman Michael Conaway, from the No. 1 cotton state of Texas, in opening the hearing. Republican Trent Kelly of Mississippi, one of the last representatives to question Vilsack two hours later, said “I feel like the whole farm industry of my state is depending on” favorable action by USDA. “You can get to the right answer if you want to.”
USDA is willing to work with the cotton industry on a cotton ginning cost-share program, Vilsack said, that could provide $150 million if the government share was half. “We would go to OMB (the White House budget office) for permission and authority to set this up,” he said. Payments could be made shortly after ginners provide information in the spring, he said. The National Cotton Council, involved in the discussions, declined to describe how a cost-share program might work.
“The cost of cotton ginning is an important concern for producers and ginners,” said a 2013 report that calculated nearly $25 a bale in variable costs of ginning – labor, electricity, repairs, bagging and ties, electricity and dryer fuel. A bale of cotton weighs 480 pounds so the variable costs were slightly more than 5 cents per pound.
Congress approved transition payments to cotton growers as part of the 2014 farm law, which created a new cotton support program. If Congress allows more flexibility to USDA, those payments could be revived, said Vilsack. He said Congress has limited USDA’s ability to provide some types of disaster assistance to cotton growers. Vilsack has suggested removal of the limitations. They were imposed because lawmakers felt the administration unfairly tried to influence a Senate race in Arkansas.
A video of the hearing and Agriculture Committee statements are available here.