The cotton industry and a leading ally on Capitol Hill are pressing to make cottonseed eligible for crop subsidies despite the USDA’s conclusion that it lacks the authority to do so. Payments could total $1 billion a year, according to an estimate by university economists.
Faced by a worldwide cotton glut and the lowest market prices in six years, the cotton industry says it needs help beyond the STAX program created by the 2014 farm law. “Discussions are still ongoing at this time,” said a spokeswoman for House Agriculture chairman Michael Conaway, who hails from Texas, the No. 1 cotton state.
A spokeswoman for Agriculture Secretary Tom Vilsack said, “We do not have further developments at this time but as he [Vilsack] has said, USDA is willing to work with Congress to help cotton farmers as quickly as possible.”
Conaway disagrees with the USDA’s contention that it lacks authority to act. The 2014 farm law replaced the long-time cotton program with STAX, a combination of a revenue insurance coverage and guaranteed minimum prices for cotton fiber. Less than a quarter of U.S. cotton plantings were enrolled in STAX last year.
Congress severed links between cotton and the subsidies offered to other crops when it shifted cotton to an insurance program in 2014 and it limited the USDA’s ability to act on its own, Vilsack said earlier this month.
At a House Appropriations hearing last week, Rep. Steven Palazzo, a Mississippi Republican, noted that the USDA invoked its discretion to offer financial assistance for installation of blender pumps at service stations, and asked why cottonseed was off limits. Vilsack pointed to the 2014 restrictions on USDA initiatives. He also said the farm law, in allowing the agency to designate “other oilseeds” as eligible for crop subsidies, was intended for new or emerging oilseeds.
Cottonseed is harvested from the boll along with cotton lint. It is used as a livestock feed and in food and industrial products. Traditionally, it has been a minor source of revenue for growers. It would be a significant step for the government to make two parts of the same plant eligible for subsidies under different programs.
Growers indicated in a National Cotton Council survey that they intend to expand plantings 6 percent this year, despite prospects of the third challenging year economically. An NCC economist says expected revenue from cotton was unlikely to improve, but that prices have weakened for alternative crops such as wheat, soybeans, corn, peanuts and sorghum.