Risk Management Tools Critical in Future Farm Policy
The US cotton industry believes a revenue insurance program that supplements existing insurance products would provide an important and affordable tool -- especially given the weather uncertainties and risks that farmers face.
In testimony before the Senate Agriculture, Nutrition & Forestry Committee in Washington, DC, NCC Chairman Chuck Coley recalled the '10 prolonged drought in Texas and Oklahoma, that year's severe drought in his area of South Georgia as well as the severe flooding in Mississippi and Arkansas.
"We must to have access to crop insurance, risk management tools and even emergency assistance programs to survive and recover from these natural disasters," said Coley, one of several producers testifying at the hearing on risk management and commodity programs held by Committee Chairwoman Stabenow (D-MI). The full testimony is on the NCC website's '12 Farm Bill site at www.cotton.org/issues/members/farmbill/2012/coleysenfarm.cfm.
Coley noted that "the availability of effective risk management tools like crop insurance is important even in so-called normal years because cotton producers need to recover a portion of lost revenues if their crop is damaged after they have invested in the inputs, technology and equipment necessary to produce and market a crop. In those areas where cotton growers have not had access to adequate coverage, we want to continue to work with USDA, the companies and Congress to improve and increase the products that are available to our growers."
Speaking from his experience as a cotton ginner, Coley told the Committee that the increasing volatility of commodity markets, particularly cotton, also has made the risks of marketing a crop incredibly challenging.
Coley also testified that "in the case of cotton, the traditional marketing assistance loan set at levels normally well below the market provides important collateral for production loans with only minimal net costs to the government and no disruption of market signals." He emphasized that the opportunity to use the loan for short periods also provides an opportunity for growers to make rational, market-driven marketing decisions.
"This is very important in volatile markets where market signals at planting may be vastly different by harvest, yet our growers only have a narrow window to make cropping decisions," he noted.
Coley advocated for the industry's STAX proposal which he said makes a significant change in the cotton program structure – but one that is in line with the NCC's commitment to continue working with Congress and the Administration to find a permanent resolution to the longstanding US-Brazil World Trade Organization case. He said the insurance product has been estimated to significantly reduce outlays compared to previous years and is at least a 30% spending reduction compared to extending the existing cotton program.
Ranking Member Roberts (R-KS) complimented the industry's proposal during the hearing noting that the cotton industry was "leading the way."
Coley said the US cotton industry recognizes that future farm policy must fit into ever-shrinking budget parameters, even though the commodity, conservation and crop insurance programs currently account for less than one-tenth of one percent of the total federal budget.
Coley also noted that the farm bill is important to the nation's textile manufacturers who purchase nearly 100% of the cotton they process from US farmers and provide top paying manufacturing jobs in the Southeast, as well as in Louisiana and Texas. He emphasized the importance of the Economic Adjustment Assistance Program to the US textile industry.
Coley said that while farm programs must be easily explained and justified to Americans who enjoy the benefits of US agriculture's ability to produce affordable, high quality food and fiber – he joined with the other commodity and farm groups in respectfully urging the Committee members and their Senate colleagues "to act as expeditiously as possible" on farm bill reauthorization.
Meanwhile, NCC Vice Presidents John Maguire and Gary Adams were panelists in two farm bill forums hosted by Sen. Chambliss (R-GA) in Jesup and Tifton, GA. Other participants included the Southern Peanut Farmers Federation and various Georgia agricultural organizations.
