July 5, 2012
Chairman Frank Lucas & Ranking Member Collin Peterson
House Committee on Agriculture
1301 Longworth House Office Building
Washington, DC 20515
Dear Chairman Lucas and Ranking Member Peterson:
The National Cotton Council (NCC), the central organization of the U.S. cotton industry, is writing to express our appreciation to the leadership of the House Committee on Agriculture for introducing farm legislation that includes provisions supported by the cotton industry. We encourage members of the Agriculture Committee to pass the bill as introduced in the Chairman's mark. Passage of the Chairman's mark would be an important step to providing some certainty and predictability for farm programs, thus allowing the long-term investments necessary for maintaining our productivity and economic viability.
Given the diversity of U.S. agriculture, we are pleased that the range of programs included in the Chairman's mark provides choices that offer a balanced safety net across commodities and regions. The challenge of maintaining a reasonable safety net is even more daunting given the budget constraints facing the Committee. The proposed legislation makes significant but necessary reductions in commodity spending. We strongly urge that no further cuts to commodity spending be adopted as the farm legislation moves forward.
By including the Stacked Income Protection Plan (STAX), along with other enhancements to insurance programs, U.S. cotton producers have access to important risk management tools that can provide support when conditions occur beyond the farmers' control. The structure of STAX in the proposed language follows very closely with the features and design advocated by the NCC. In addition to STAX, the availability of the Supplemental Coverage Option (SCO) provides an attractive alternative for some cotton producers. We are also encouraged to see the continuation of enterprise unit pricing for insurance products, and also allowing the enterprise units to be separated by irrigated and non-irrigated practices. Since being introduced in the 2008 farm bill, enterprise unit pricing has allowed farmers to afford greater risk protection through their insurance purchases.
For upland cotton, we commend the Chairman and Ranking Member for addressing the two remaining provisions of current cotton policy that were found to be at fault in the World Trade Organization (WTO) dispute with Brazil, namely the target price and the marketing loan. While both programs have been integral parts of the upland cotton safety net, we understand the difficult challenges posed by the findings of the WTO panel.
The U.S. cotton industry has long viewed the marketing loan as the cornerstone of the program. The importance of the marketing loan extends beyond simply providing financial collateral for growers. The loan is critical to orderly marketing and quality preservation by linking loan eligibility to industry practices such as acceptable bale moisture and approved packaging materials. However, the industry has accepted that some changes to the marketing loan are inevitable in order to resolve the long-standing dispute. In our opinion, a marketing loan modified consistent with industry recommendations, when coupled with improved risk management options, provides a safety net for upland cotton that offers a clear path to resolution of the Brazil case.
Western cotton growers are pleased to see the extension of the extra-long staple cotton loan and competitiveness provisions. The U.S. textile industry welcomes the continuation of the
Economic Adjustment Assistance Program at $0.03 per pound, which is consistent with the rate authorized in the final year of the 2008 farm bill. This program is boosting the U.S. textile manufacturing sector and adding jobs to the U.S. economy.
The NCC understands the very difficult political climate that exists regarding payment limits and income means tests for farm programs. The cotton industry remains opposed to any payment limitations or income means tests. However, in the current political and budget environment, we understand that such restrictions are an inevitable feature of farm legislation. We appreciate the reasonable approach taken by the Chairman and Ranking Member. We are also encouraged to see no limits placed on marketing loan benefits. In addition, the industry shares the Chairman's view that no limitations or means tests be placed on insurance products.
Other positives of the Chairman's mark are the continuation and streamlining of conservation programs and ongoing support of the Market Access Program and Foreign Market Development Program, two important trade titles that undergird U.S. cotton exports.
Passage of this bill by the Agriculture Committee is an important step in the farm bill process. We look forward to working with the leadership of the Committee as the bill moves forward.
National Cotton Council