Cotton industry leaders were between a rock and a hard place when it came to writing the 2014 farm bill – the rock being the loss of the Brazil WTO cotton case and the hard place being spending cuts mandated by Congress.
The result – shallow loss insurance coverage or STAX and no real cotton program for the first time in decades – was being criticized by cotton farmers almost before the ink dried on President Obama’s signature on the bill in February 2014.
Leaders in both Houses are now considering writing a new farm bill to replace the current one and passing it a year before the Agricultural Act of 2014 is scheduled to expire, according to Bill Bridgforth, senior partner, Ramsay, Bridgforth, Robinson, Raley LLP, and a recognized expert on agricultural law.
“The principal concern is with the failure of the cotton program and with the problems in the dairy industry,” said Bridgforth, speaking at the USA Rice Outlook Conference in Memphis, Tenn., Friday (Dec. 9). “But there are a lot of issues that they are looking at changing it a year early.”
Bridgforth said he had met with Rep. Collin Peterson, D-Minn., the ranking member of the House Agriculture Committee, and staff members of the Senate Committee on Agriculture, Nutrition and Forestry, the day before the Rice Outlook Conference.
Repeal the 2014 law
“Congressman Peterson said that from his standpoint – even though Chairman Conaway has not given an indication yet – he and Rep. Frank Lucas, R-Okla., (former chairman of the House Ag Committee) are going to introduce a bill in this session to repeal the 2014 farm bill and have the new bill go into place in 2018,” Bridgforth said.
“He (Rep. Peterson) also said Sen. Pat Roberts, R-Kansas, (chairman of the Senate Agriculture Committee) has indicated he is giving consideration to introducing a new farm bill” in the coming year.
When commodity prices fell nearly 40 percent in 2014, cotton did not have the Price Loss Coverage or Agricultural Risk Coverage programs that producers of other crops had to help soften the blow. Many cotton farmers had difficulty obtaining financing in 2016, a task which could prove to be even more challenging in 2017.
National Cotton Council leaders asked Agriculture Secretary Tom Vilsack to designate cottonseed as an “other” oilseed under the 2014 farm bill, a move that would have made the PLC or ARC programs available to cotton growers. Vilsack said he didn’t have the authority to grant the request. (Vilsack did win approval for a Cotton Ginning Cost Share program that provided $400 million in assistance last summer.)
Bridgforth said the generic acres created in the 2014 farm bill are also a “huge” concern in the eyes of some members of Congress along with the “extreme” payments some growers are receiving under the 2014 law’s Price Loss Coverage program.
High PLC payments
“In Georgia, Alabama and North and South Carolina where they have very high peanut base, the average payment under the PLC program for peanuts this year will be about $328 an acre,” Bridgforth said.
In states such as Florida, for example, where growers would like to plant more peanuts for their rotation, the lack of base acres puts them at a competitive disadvantage. Growers in Georgia, Alabama and the Carolinas, where PLC payments could be even higher in 2017, meanwhile, have increased plantings to where stocks have become burdensome.
“In peanuts, they estimate the overproduction this year is going to result in 52 percent excess peanuts over any place they have to go with them,” Bridgforth noted. “So that’s driving the price of peanuts down, and if you don’t have a peanut base you can’t afford to plant peanuts anymore.”
Congressman Peterson is also planning to have the calculation of payments based on planted acres as opposed to base acres, Bridgforth said. “That’s how we got generic acres – the House wanted planted acres and the Senate base acres. So they came up with generic acres to deal with this issue.”
Farm-state congressmen are also under pressure to make changes in the Agricultural Risk Coverage or ARC program. Many Midwest corn growers choose ARC when they signed up for the 2014 farm bill programs because the guarantee was based on the $7-per-bushel-corn prices that were prevalent in 2012 and 2013.
No ARC payment
“Now those $7 and $8 per bushel prices are being replaced in the calculations for ARC with $3.50 corn prices, and the Midwest growers are faced with the prospects of not receiving a payment in 2017,” said Bridgforth.
National Cotton Council leaders had hoped to find a legislative vehicle for their cottonseed-as-an-other-oilseed proposal to win passage in the lame duck session of Congress that followed the Nov. 8 elections.
But the House and Senate leadership decided the Continuing Resolution that was needed to fund the federal government beginning on Dec. 10 through April 28 of next year could not be used to add unrelated authorization provisions other than a “few limited exceptions that had to be addressed immediately,” according to the NCC.
The Council said it was preparing modifications that might be needed to the proposals so that it would be ready for passage in 2017.
Bridgforth quoted Peterson as saying his bill would do away with the ARC program and raise the target price for PLC so that when prices are high as they were in 2011 through 2013, a small payment or no payment would be made.
“In those years like now, when prices are devastating and so many farmers are in trouble, as is the case in rice now, they would have an opportunity for a more significant payment,” said Bridgforth.
For more information, visit http://www.agriculture.senate.gov/issues/farm-bill?