November 1, 2001
Contact:
Marjory Walker
(901) 274-9030
MEMPHIS - National Cotton Council (NCC) Chairman James E. Echols and a small delegation of cotton industry representatives met with Secretary of Agriculture Ann Veneman to discuss the development of farm legislation. Echols stated, "we stressed to Secretary Veneman the seriousness of the situation confronting farmers all across America. We urged her to work with Congress to move forward with new farm legislation as expeditiously as possible."
Echols said that Secretary Veneman indicated a willingness to work with the cotton industry in developing policy, but did not commit to a specific time frame.
"Secretary Veneman indicated that USDA believes more time is needed to craft a commodity support delivery system that will coordinate better with the Administration’s trade positions and will slow the capitalization of program benefits in land values," Echols said. "She expressed concern that the House bill would result in overproduction of U.S. agricultural products and encouraged cotton leaders to consider less ‘trade distorting’ delivery mechanisms."
The NCC delegation expressed a willingness to consider alternative delivery mechanisms but pointed to the urgency of Congressional approval of adequate and timely support, noting that many farmers will not be able to get production loans for the 2002 crop unless a better income safety net is forthcoming.
The NCC remains committed to the farm bill process started over two years ago by House Agriculture Committee Chairman Larry Combest (R-TX), said Echols, a Memphis cotton merchant.
"The House has developed and passed legislation that is very beneficial to farmers all across the U.S.," Echols said. "Given the budget situation now confronting the government, it is important for Congress to move forward on agricultural legislation this year. Delay will introduce many additional uncertainties into the process."
The delegation also urged the Secretary to establish loan rates for the 2002 crop of cotton at the same level as the 2001 crop, even though formulas in current law provide discretionary authority for the upland cotton loan to be reduced to 50 cents. Echols indicated the delegation told the Secretary that "by maintaining the loan rate at the 2001 level, the Department of Agriculture has the opportunity to introduce a degree of stability into a very unstable sector. Conversely, a reduction in the loan rate would further undermine an already fragile financial situation."
NCC Vice Chairman Kenneth Hood, a ginner from Gunnison, MS; Tom Smith, NCC Advisor and Past President and CEO of Calcot, Ltd., Bakersfield, CA; Gaylon Booker, NCC President, Memphis; and John Maguire, NCC Vice President of Washington Operations, joined Echols in the meeting.
Echols also voiced concern about the latest farm bill proposal offered by Senate Agriculture Committee Chairman Tom Harkin (D-IA).
"I am glad Senator Harkin has put forth a proposal, and our industry looks forward to working with the committee in developing workable farm policy," said Echols. "Overall, however, the Harkin proposal is not sufficient for cotton producers and would be detrimental to virtually all commercially sized farming operations. The proposal would have a negative impact on the competitiveness of U.S. agriculture and impose unreasonable limitations on farming operations."
Sen. Harkin’s plan modifies two existing program components – fixed, decoupled payments and commodity loans. It would reduce fixed annual payment rates to grain and cotton farms while altering the acreage eligible for those payments. Although the plan increases most loan rates, it imposes new eligibility limits on the overall loan program, causing at least some production on many farms to be ineligible for the CCC loan. Two new programs would be created. One would provide additional money when income falls below predetermined "target" levels - $360 per acre for cotton, $270 for corn, $215 for soybeans and $120 for wheat. The second new program would reward farmers for good environmental practices, such as erosion control, with payments of $20,000 to $50,000 a year.
However, Booker noted that the target income for cotton is computed over a period of both low prices and below-average yields, making it highly unlikely that cotton farms would qualify for any appreciable benefits from this counter cyclical program.
The Senate Agriculture Committee began consideration of the Harkin bill Wednesday, beginning with the credit title. Senate Democrats were to meet Wednesday afternoon for a briefing on other titles, after which the full committee was to be convened on Thursday for a briefing on the bill.
Echols said that Secretary Veneman indicated a willingness to work with the cotton industry in developing policy, but did not commit to a specific time frame.
"Secretary Veneman indicated that USDA believes more time is needed to craft a commodity support delivery system that will coordinate better with the Administration’s trade positions and will slow the capitalization of program benefits in land values," Echols said. "She expressed concern that the House bill would result in overproduction of U.S. agricultural products and encouraged cotton leaders to consider less ‘trade distorting’ delivery mechanisms."
The NCC delegation expressed a willingness to consider alternative delivery mechanisms but pointed to the urgency of Congressional approval of adequate and timely support, noting that many farmers will not be able to get production loans for the 2002 crop unless a better income safety net is forthcoming.
The NCC remains committed to the farm bill process started over two years ago by House Agriculture Committee Chairman Larry Combest (R-TX), said Echols, a Memphis cotton merchant.
"The House has developed and passed legislation that is very beneficial to farmers all across the U.S.," Echols said. "Given the budget situation now confronting the government, it is important for Congress to move forward on agricultural legislation this year. Delay will introduce many additional uncertainties into the process."
The delegation also urged the Secretary to establish loan rates for the 2002 crop of cotton at the same level as the 2001 crop, even though formulas in current law provide discretionary authority for the upland cotton loan to be reduced to 50 cents. Echols indicated the delegation told the Secretary that "by maintaining the loan rate at the 2001 level, the Department of Agriculture has the opportunity to introduce a degree of stability into a very unstable sector. Conversely, a reduction in the loan rate would further undermine an already fragile financial situation."
NCC Vice Chairman Kenneth Hood, a ginner from Gunnison, MS; Tom Smith, NCC Advisor and Past President and CEO of Calcot, Ltd., Bakersfield, CA; Gaylon Booker, NCC President, Memphis; and John Maguire, NCC Vice President of Washington Operations, joined Echols in the meeting.
Echols also voiced concern about the latest farm bill proposal offered by Senate Agriculture Committee Chairman Tom Harkin (D-IA).
"I am glad Senator Harkin has put forth a proposal, and our industry looks forward to working with the committee in developing workable farm policy," said Echols. "Overall, however, the Harkin proposal is not sufficient for cotton producers and would be detrimental to virtually all commercially sized farming operations. The proposal would have a negative impact on the competitiveness of U.S. agriculture and impose unreasonable limitations on farming operations."
Sen. Harkin’s plan modifies two existing program components – fixed, decoupled payments and commodity loans. It would reduce fixed annual payment rates to grain and cotton farms while altering the acreage eligible for those payments. Although the plan increases most loan rates, it imposes new eligibility limits on the overall loan program, causing at least some production on many farms to be ineligible for the CCC loan. Two new programs would be created. One would provide additional money when income falls below predetermined "target" levels - $360 per acre for cotton, $270 for corn, $215 for soybeans and $120 for wheat. The second new program would reward farmers for good environmental practices, such as erosion control, with payments of $20,000 to $50,000 a year.
However, Booker noted that the target income for cotton is computed over a period of both low prices and below-average yields, making it highly unlikely that cotton farms would qualify for any appreciable benefits from this counter cyclical program.
The Senate Agriculture Committee began consideration of the Harkin bill Wednesday, beginning with the credit title. Senate Democrats were to meet Wednesday afternoon for a briefing on other titles, after which the full committee was to be convened on Thursday for a briefing on the bill.
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