For the second time, the Agriculture Department will give cotton growers up to $40,000 each to offset low market prices, with payments keyed to the local cost of separating cotton fiber from its seed. The new cotton ginning cost-share payments will cover the 2016 crop. The USDA offered $300 million in aid for 2015 cotton when the Obama administration created the supposed one-time assistance.
The House could vote on its version of the 2018 farm bill as early as this fall, said Agriculture Committee chairman Michael Conaway at a farm bill "listening session" in his home state of Texas, the No. 1 cotton and cattle producer in the country. After an unsuccessful redesign of the cotton program in the 2014 law, cotton growers repeatedly said their crop must be eligible for the same subsidies as the other major U.S. crops, such as corn, soybeans and wheat.
With a worldwide glut pulling down cotton prices to their lowest level in eight years, Agriculture Secretary Tom Vilsack announced $300 million in one-time assistance to growers, based on ginning costs. The cost-share program is far smaller than the $1-billion-a-year cottonseed subsidy that the industry wanted and that Vilsack said was beyond his power to create.
The USDA is prevented by statute from creating a subsidy program, potentially costing $1 billion a year, for cottonseed, Agriculture Secretary Tom Vilsack said in an essay in Farm Journal. Congress, he says, needs to change the law.
Cotton growers face the third year of low commodity prices, high production costs and financial hardship, says an economic outlook presented at the industry's annual meeting.
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.
Farmers have an additional month, until March 31, to tell the USDA if they want to update their yield and acreage "bases" for crop subsidies. Operators also face a March 31 deadline to select a crop subsidy program - either the shallow-loss Agriculture Risk Coverage or the traditionally structured Price Loss Coverage - for the life of the 2014 farm law. The department announced "a one-time extension" on Friday, the previous yield-and-base deadline; the decision period opened on Sept. 29, 2014.
Low market prices will reduce cotton planting by 6 percent worldwide and result in the smallest harvest in six years, says the International Cotton Advisory Committee.
Growers in the southern Plains and the mid-South express sticker shock at the price of the new Supplemental Coverage Option (SCO), created by the 2014 farm law to allow growers to boost their level of revenue protection, says DTN.
While grain and soybean farmers have to decide which of two crop subsidy programs, cotton growers have a choice all their own - the Supplemental Coverage Option or the Stacked Income Protection Plan known as STAX, says Delta Farm Press.
The new subsidy STAX will be available to upland cotton growers beginning with the 2015 crop, said USDA's Risk Management Agency in a bulletin to insurers and its field offices.