KETR

Cotton producers await federal decision on new subsidies

Jan 8, 2016

Domestic cotton producers are hoping that a change in federal rules can help give them an added measure of security during a very insecure time for the industry.

If cottonseed were classified as an oilseed, cotton farmers would have access to more federal programs that help producers who suffer losses. Under the current farm bill, it's possible that Secretary of Agriculture Tom Vilsack would have the power to designate cottonseed as an oilseed. Last month, 100 members of Congress sent Vilsack a letter urging him to change cottonseed's status.

The U.S. cotton industry continues to struggle internationally, with inexpensive Chinese and Indian cotton making global cotton prices low.

The delay in determining whether the federal government will classify cottonseed as an oilseed seems to be based mostly on whether Vilsack personally has the authority to make the designation.

Vilsack told reporters on Jan. 6 that he expects to learn "very soon" whether there's "the legal authority to do what has been requested."

Vilsack said when Congress authorized the Stacked Income Protection Plan (STAX) insurance policy for cotton in the farm bill, lawmakers “specifically took out cotton oil seeds from the program, which I think is a pretty significant piece of information as we look at what was intended at the time.”

Vilsack also said he had to consider the long-term cost of the proposal and whether subsidies for cottonseed would have to be offset by cuts elsewhere in his department's budget. The industry news organization Agri-Pulse reported that it obtained internal USDA estimates saying the proposed change would result in subsidies could cost as much as $1 billion a year.

"All these issues are being looked at. The general counsel's office is involved. Foreign Ag Service is  involved. Farm Service Agency folks are involved, so that I get a 360-degree review of this issue, so we can figure what we can do to be as helpful as we can be within the confines of the law," Vilsack said.

Cotton producers have been lobbying for the change since last month.

"With the lowest U.S. cotton acreage in more than 30 years, the smallest exports in 15 years, and cotton prices at their lowest level since the 2009 recession, economic pressure is mounting," National Cotton Council Vice Chairman Shane Stephens said during a Dec. 9 testimonial before Congress. "Cotton demand, 10 percent below the peak observed in 2006, is struggling due to increased competition from synthetic fibers, and government support for international cotton production is increasing. To help address the current economic climate, the cotton industry is urging the designation of cottonseed as an 'other oilseed' for the purpose of participation in the farm safety net."

House Agriculture Committee Chairman Mike Conaway, an East Texas State alumnus, represents the 11th District of Texas in the U.S. House of Representatives. The large district is composed of parts of Central, North and West Texas, including San Angelo and Midland-Odessa.  Conway said that eligibility for the Agricultural Risk Coverage and Price Loss Coverage programs would help cotton producers deal with the current difficult global market.

"America’s farmers are currently experiencing a 55 percent free fall in net farm income, with huge losses due in part to the culprits of natural disasters and the unfair trade practices of foreign countries that use high and rising subsidies, tariffs, and non-tariff trade barriers to elbow U.S. farmers out of world markets,” Conaway said. “Cotton farmers are getting hit the hardest right now and they are doing all they can just to hold on without access to key risk management tools under the Farm Bill. We are deeply concerned that unless the secretary takes action, there will be significant economic consequences."