Budget
The National Cotton Council quickly responded to the Bush Administration’s proposed 2007 budget. The NCC noted the harm that would be done to U.S. cotton from that budget’s proposed: 1) closing of USDA cotton ginning laboratories in Lubbock, TX, and Las Cruces, NM, and 2) cuts to USDA Agricultural Research Service studies at other Cotton Belt facilities.
The NCC later conveyed its funding priorities in letters to the chairmen of the respective House and Senate appropriations committees. Strong support was expressed for the 2002 farm law and opposition to re-opening it in order to further restrict farm program benefits. The letters asked for the funding necessary for successful completion of the boll weevil eradication program, full implementation of the pink bollworm eradication effort and new technology developed through research. The letters reiterated concern with the Administration’s proposal to eliminate USDA-ARS projects and close the two ginning laboratories. The letter also conveyed the need for continuation of demand-building export programs, including the Market Access, Foreign Market Development and GSM credit programs.
Farm Policy
NCC Chairman Allen Helms, NCC Vice Chairman John Pucheu, NCC Director Rickey Bearden and American Cotton Producers (ACP) Vice Chairman Chuck Coley were among the many NCC leaders who testified at numerous farm law reauthorization field hearings. The Congressional hearings were held across the nation, including many of the Cotton Belt states.
Producer witnesses championed the 2002 farm law and urged Congress to work for adequate spending authority for new farm program legislation.
NCC testimony was consistent regarding farm policy, and included the organization’s support for using current law as the basis for “future farm policy.” The testimony repeatedly called for: 1) maintaining the solid foundation of the combination of a marketing loan, counter-cyclical payment (when prices are low) and a direct payment; 2) no limits on loan eligibility or on marketing loan gains, which would disrupt orderly marketing; 3) no further reduction of payment limitations, which already unfairly penalize growers; and 4) maintaining current eligibility requirements.The witnesses also stated that while conservation programs would be an important component of new law, these programs should continue to be operated on a voluntary, cost-share basis as a complement to, and not a substitute for, commodity programs. They pressed for continuation of: the successful public-private partnership fostered by the Market Access Program, funding for the Foreign Market Development program, and a World Trade Organization (WTO) compliant export credit guarantee program. They urged solid support for agricultural research and the successful
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| NCC Chairman Allen Helms, left, and ACP Vice Chairman Chuck Coley were among several producer leaders who testified at farm law reauthorization hearings in 2006. |
At a hearing of the Senate Committee on Agriculture, Nutrition & Forestry Committee in Missouri, NCC Chairman Helms said that U.S. cotton was prepared to continue working with all interests to develop and support the continuation of a balanced and effective policy for all of U.S. agriculture. He told Committee Chairman Saxby Chambliss (R-GA) that most cotton producers, and a majority of the industry, would be satisfied with a 2002 farm law extension, as envisioned in legislation authored by Senators Jim Talent (R-MO) and Blanche Lincoln (D-AR) that would extend the 2002 law until new WTO trading rules were in place. Helms also thanked Senators Chambliss, Lincoln and Talent for resisting efforts to dramatically reduce current payment limitations to levels that would be intolerable for cotton and rice producers.
The NCC chairman reiterated the NCC’s position before the House Committee on Agriculture. At that Washington, DC, hearing, Helms: 1) restated U.S. cotton producers’ deep concern about the decline of their longstanding and valued customer, the U.S. textile industry, and how the loss of Step 2 had compounded that sector’s fragile financial conditions and 2) noted that the remaining manufacturers indicated strong interest in revising Step 3 import policy and developing a possible WTO-compliant alternative to Step 2.
Helms also told the Committee that as policy is developed, any impact on markets for cottonseed be carefully considered and mitigated if necessary and appropriate. He noted that cottonseed accounts for 15 percent of farm-gate value with the feed market becoming increasingly important for cottonseed.
Later in the year, the NCC’s Farm Policy Development Task Force, chaired by Texas producer Woody Anderson, met to begin consensus-building on future farm policy. The group reviewed background information similar to that considered by the ACP’s Farm Policy Committee, chaired by Jimmy Dodson, another Texas producer.
| “The financial safety net provided by our farm policy has never been more critical and must be preserved. The combination of direct and counter-cyclical payments with the marketing loan provides an effective means of income support.” ... NCC Director Rickey Bearden |
USDA’s actions had greater than usual impact on the U.S. cotton industry.
The Farm Services Agency announced changes as a result of the Deficit Reduction Act of 2005. The Act repealed Upland Cotton User Marketing Certificate Program (Step 2) payments to domestic users and exporters of upland cotton, which became effective on August 1, 2006. The Act also reduced the maximum advance direct payment percentage for the 2006 crop year from 50 percent to 40 percent and reduced the maximum advance direct payment percentage for the 2007 crop year to 22 percent.
USDA, in compliance with a 2002 farm law provision, created a database of farm program conservation and commodity payments. The database can be used to track payments to individuals, including those who directly receive payments and those who receive payments as members of larger entities.
Later, USDA extended until May 1, 2006 the deadline for temporary use of outside storage of cotton pledged as collateral for Commodity Credit Corporation marketing assistance loans.
After consulting industry interest organizations and through deliberations of the NCC’s Performance and Standards and Bale Moisture task forces, the NCC commented on USDA Commodity Credit Corporation’s proposed rules, affecting 2006 and subsequent crop-year marketing assistance loan programs. The rulemaking sought comments on a wide range of quality, storage and congestion issues affecting cotton flow. The Performance and Standards Task Force, chaired by Alabama ginner Robert Greene, developed a comprehensive set of recommendations addressing the CCC-proposed rule. Kenneth Hood, chairman of the NCC’s Bale Moisture Task Force, joined Greene and NCC staff in briefing USDA officials on the NCC’s position.
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| The NCC helped communicate USDA-announced rules and sign-up period for the 2005 crop cottonseed disaster assistance program. |
Helms and ACP Chairman Jay Hardwick met with Congressional members and their staffs to discuss the need for assistance. Shortly after, Helms and Danny Robbins, an Oklahoma producer, outlined the significant weather-related Cotton Belt crop losses in testimony before the House Agriculture Committee and subcommittee hearings. The Senate failed to approve comprehensive disaster assistance legislation before its Christmas recess leaving any relief in the hands of the 110th Congress when it convened in early 2007.
The NCC helped communicate USDA-announced rules and sign-up period for the 2005 crop cottonseed disaster assistance program and provided a map of eligible counties on the NCC web site. Congress provided $15 million in assistance to producers and first-handlers of the 2005 cottonseed crop in counties affected by Hurricanes Katrina, Ophelia, Rita and Wilma, or a county contiguous to such a county. The funding was included in the 2006 Emergency Agricultural Disaster Assistance Act.
Crop Insurance
The NCC presented its views to USDA’s Risk Management Agency (RMA) in its cotton policy review. NCC Director Rickey Bearden presented comments to a Federal Crop Insurance Corporation’s (FCIC) directors meeting where he stated that the U.S. cotton industry supports a viable federal crop insurance program but does not support it as a delivery system for farm program benefits. The NCC also communicated the dates and locations of RMA listening sessions aimed at gathering input on crop insurance from producers in the four cotton-production regions.
The FCIC later issued a proposed rule regarding changes in the Common Crop Insurance Regulations. The major change was that a producer will be able to elect either yield protection or revenue protection for barley, canola, corn, cotton, grain sorghum, rapeseed, rice, soybeans and wheat. The NCC, after consultation with its Crop Insurance Task Force and other interested parties, submitted comments supporting the overall concept but pointed to a number of specific concerns, including burdens placed on producers who plant cover crops prior to dry-land cotton and numerous provisions allowing RMA to withdraw price protection or outright deny coverage. The recommendations were to be considered for regulations effective for 2009 fall crops with a June 30, 2008 contract change date.
In other key legislative activities, the NCC:
- Joined the Southeastern Cotton Ginners Association to get an extension on the sign-up for the 2004 Cottonseed Payment Program.
- Urged USDA Secretary Mike Johanns to make the final 2005-crop counter-cyclical payment (CCP) for upland cotton as soon as possible. Johanns, in turn, announced an accelerated CCP delivery of $700 million in late August.
- Asked Secretary Johanns to authorize the initial advance CCP for the 2006 crop at the maximum allowable rate.
- Monitored a Senate-passed immigration reform bill that would set wages for undocumented farm workers and create an earned path of citizenship for them and the 40,000-plus legal guest farm workers on H-2A visas.
- Responded to a Federal Register notice saying that a USDA confirmation referendum to continue the amendments to the U.S. Cotton Research and Promotion Program was unwarranted. NCC Chairman Helms noted the program enjoys overwhelming support from cotton producers.