The Agriculture Department is considering whether to let cotton growers claim two crop subsidies at the same time to offset a worldwide collapse in the cotton market, said a spokeswoman. The cotton industry wants access to the subsidy programs offered to grain and soybean growers, as well as the separate cotton support program created in the 2014 farm law to resolve a WTO judgement that U.S. cotton subsidies were unfairly generous.
Lawmakers followed the industry’s suggestions in writing the new cotton subsidy program in the 2014 law, which combines revenue insurance coverage with a support price that guarantees a minimum price. Less than two years after President Obama signed the farm law, cotton leaders say the subsidy program is insufficient. China and India offer high subsidies that expanded production and cut the global price of the fiber, they said at a House Agriculture subcommittee hearing. USDA forecasts a season-average price of 59 cents a pound for this year’s crop, the lowest in seven years. The United States grows one-eighth of the world’s cotton.
“We recognize that these are tough times for cotton producers, and are thankful that there is a safety net in place that provides the Stacked Income Protection Program and Supplemental Coverage Option, which Congress created in the 2014 Farm Bill,” said a USDA spokeswoman. “USDA is currently analyzing the complex legal, programmatic and policy issues associated with declaring cotton an oilseed, which would make the crop eligible for additional safety net programs like ARC or PLC.”
ARC is the Agricultural Risk Coverage subsidy, which shields crop revenue from the effect of poor yields and low prices. PLC is the traditionally styled Price Loss Coverage subsidy, which send payments to growers when market prices fall below trigger prices. The cotton industry wants access to subsidies for cottonseed oil as one of the “other oilseeds” in the farm program.
“Farmers know the risks that come with farming, and crop insurance helps in mitigating those risks. But as our witnesses noted today, crop insurance is not designed to protect against the destructive and anti-competitive policies of the governments of China and India,” said House Agriculture chairman Michael Conaway of Texas, the No 1 cotton state. “I fear we are in jeopardy of losing much of the U.S. cotton industry if this dire situation is not addressed.”
Subcommittee chairman Rick Crawford said cotton growers were burdened by low commodity prices and rising production costs. “I am hopeful Secretary Vilsack will use his authority to take administrative action like he has in the past to help cotton farmers,” said Crawford.
About two-thirds of the cotton boll is seed, which is crushed to make cotton oil, used in food and industrial products, and cotton meal. Cotton meal and hulls are used to feed livestock, poultry and fish and as fertilizer.
Roughly three-fourths of U.S. cotton, generally grown in the South and Southwest, is exported. Growers planted a scant 8.5 million acres this year, the smallest area since 1983, because corn, soybean and wheat offered better returns.
“In order to provide timely relief,” USDA should offer cottonseed subsidies beginning with this year’s crop, said Shane Stephens, vice chair of the industry-wide trade group National Cotton Council. The new program will mean additional costs, he said, but it “should be viewed in the same manner as other farm program spending, which is an investment in not only production agriculture but the rural economy.”