National Cotton Council leaders are having to learn to deal with more uncertainty given the federal budget crisis and the need to revisit the nation’s four- or five-year farm legislation in the midst of a presidential election year.
That’s basically what NCC Chairman Chuck Coley said when he spoke to the opening session of the 60th annual Mid-South Farm and Gin Show in Memphis, Tenn. The incoming chairman of the Council traditionally gives the first speech at the “Gin Show’s” Friday-morning educational seminar.
Coley, a cotton producer and ginner from Vienna, Ga., said one of the biggest uncertainties is the ongoing effort to rein in the federal budget deficit through cuts to farm programs and to the U.S. Department of Agriculture’s budget.
“There will be proposals to increase agriculture’s budget cuts,” he said. “Recall that the agriculture committees recommended to the Joint Select Committee on Deficit Reduction a $23 billion reduction over 10 years. In contrast, the administration’s budget, released last month, calls for cuts in agriculture of $32 billion over 10 years, including elimination of direct payments and a sharp reduction in crop insurance funding.”
Similarly troubling will be the probable push from other agricultural organizations for a “one size fits all” approach instead of a package of options tailored to fit each commodity covered in the next farm bill.
The Council unveiled its own farm policy position last summer and then re-affirmed the language at its annual meeting in Ft. Worth, Texas last month. The proposal is called the Stacked Income Protection Program or STAX — an area-wide crop insurance-based, shallow loss risk management program, along with adjustments to the marketing loan.
The Council was successful in including STAX in the House and Senate agriculture committees’ proposal to the Joint Committee on Deficit Reductions last November. The Select Committee was unable to put together a deficit-reduction plan, creating even more uncertainty for the next budget cycle.
“Even though the Joint Committee failed to produce a deficit reduction plan by the congressionally-mandated deadline, we will be working for adoption of STAX during the 2012 farm bill re-authorization,” said Coley.
House and Senate agriculture committee leaders have announced a new round of hearings over the next few weeks that appear to be aimed at drafting new farm bill language, possibly as early as the beginning of April.
The National Cotton Council will also be seeking adjustments to the marketing loan for cotton, in part, to address the ongoing fallout from the WTO case Brazil brought against the U.S. cotton program in 2006.
“Of course, cotton has its own specific challenge with the WTO Brazil case and the need to negotiate a settlement,” Coley said. “That said, we are convinced that the STAX and the marketing loan changes offer the most effective proposals to satisfy the WTO Brazil case in spite of the initial criticism included in the Brazilian government letter.”
The letter was sent by the Brazilian government in response to the renewed efforts to reopen the farm bill debate; a debate that many had thought might be postponed to 2013 due to the presidential election. Coley said the Council has developed some strong counter-points to the Brazil letter and shared these with Congress, USDA and the U.S. Trade Representative.
“Unfortunately, some have interpreted Brazil’s letter as an endorsement of current farm policy — when in fact, Brazil only views current policy as less objectionable than the farm bill options they criticized — because with current policy, payments are capped, de-coupled and based on historic production,” said Coley.
“Throughout this process, it is absolutely critical that the cotton industry remain united behind our proposal, while understanding the continuing need for discussions with our membership the reasoning for our farm bill position.”
Depending on the timing of the 2012 farm bill debate, Coley said the Council may have to develop recommendations on how to transition to the STAX program in 2014, if USDA is unable to implement it for the 2013 crop due to insurance deadlines.
“If that is the case, the Council will count on the leadership of the American Cotton Producers and its Farm Policy Task Force to begin the process which will culminate in the development of recommendations that will ultimately be considered by the Council’s Board,” he noted.
“As a final word on farm bill challenges, these are going to require patience and flexibility by the industry’s leadership, as we work our way through the farm bill debate. Without doubt, we will be counting on the support of our friends in Congress, including the industry’s good friends in the Mid-South’s Congressional delegation.