Legislative Affairs

2008 Farm Legislation

Implementation of the 2008 farm law continued, and the NCC was diligent in providing input for both commodity and conservation programs.

Early in 2009, the NCC joined with other agricultural organizations on a letter to Agriculture Secretary Tom Vilsack expressing strong support for the safety net provided by the 2008 farm law. The NCC also joined with commodity and general farm organizations in requesting a 30-day extension of the deadline for submitting comments on the farm law’s interim final regulation implementing payment eligibility changes. Subsequently, Agriculture Secretary Tom Vilsack extended the comment period for that rule and for the payment limitation regulation. Later, the NCC submitted comments on that interim rule asking USDA to correct deficiencies in the interim rule, which the NCC noted that, in many instances, went beyond the 2008 farm law and in some cases were arguably contrary to existing law.

The NCC’s Conservation Task Force developed recommendations that were included in the NCC’s formal comments on rules pertaining to multiple conservation programs.

The NCC convened its Conservation Task Force (CTF) to review USDA’s interim final rules on the Environmental Quality Incentives Program (EQIP), the Wetlands Reserve Program (WRP), the Wildlife Habitat Incentives Program and other 2008 farm law conservation programs. The task force developed recommendations that were included in the NCC’s formal comments on these rules. The NCC’s comments on EQIP generally focused on proposals regarding irrigation issues and asked for further clarification on several sections. The NCC’s comments also applauded Natural Resource Conservation Services (NRCS) efforts to implement the new valuation rules to determine a fair market value for lands enrolled in the WRP. Later, NCC staff reviewed the interim final rules issued for the Conservation Reserve Program and the Conservation Stewardship Program (CSP), discussed them with its CTF, submitted comments on both and continued to monitor any changes to these programs. The NCC also provided a CSP summary and the self-screening check list on its web site, www.cotton.org, and continued working with the NRCS as a final rule was developed in early 2010.

NCC staff also monitored the development of the supplemental agricultural disaster assistance programs authorized by the 2008 farm law, including the Supplemental Revenue Assistance Payments Program (SURE). Based on available information, a detailed summary of SURE was provided along with farm-level examples of the program. The NCC continues to monitor development of the program’s regulations.

Simultaneously, the NCC worked diligently in preparation for the federal budget debate to convey opposition to farm program cuts included in President Obama’s 2010 budget proposal and any efforts to re-open the 2008 farm law. Specifically, the NCC issued a statement expressing serious concerns that the budget proposal failed to recognize Congress’ work on the Food, Conservation and Energy Act of 2008 and would undermine confidence in a stable farm policy. The statement congratulated Senator Thad Cochran (R-GA) and Representatives Collin Peterson (D-MN) and Frank Lucas (R-OK) for their strong support of the 2008 farm law and their response to that budget proposal.

The NCC wrote to the Appropriations Committee’s Cotton Belt members urging them to reject any efforts to use the FY10 agriculture appropriations bill to amend the farm law. That included such areas as payment limits and eligibility, crop insurance, conservation programs, cotton storage credits and the Market Access Program (MAP). The NCC also joined with 42 commodity, general farm, banking, cooperative, conservation, and crop insurance organizations on a letter urging that Committee’s agriculture appropriations subcommittee not to include farm law-amending provisions – and that panel obliged.

NCC Chairman Jay Hardwick testified that critical parts of the regulations implementing payment limitations and adjusted gross income eligibility tests were inconsistent with the 2008 farm law.

NCC Chairman Jay Hardwick told a House Agriculture Committee subcommittee that critical parts of the regulations implementing payment limitations and adjusted gross income eligibility tests were inconsistent with the Food, Conservation, and Energy Act of 2008 or were unclear – causing uncertainty and concern among producers. He also testified that given these uncertainties and lack of clear direction, it would be patently unfair and unwarranted if oversight agencies mount a massive review of this process sometime in 2010 in an attempt to claim lack of USDA enforcement or widespread program abuses.

In other farm program activity:

The NCC worked with other groups and with Congress and the Obama Administration to overturn a USDA-issued rule that would unilaterally terminate base acres beginning with the 2009 crop on all land owned by the U.S. government, whether or not such land was owned directly by USDA or another agency. That rule later was rescinded by Agriculture Secretary Vilsack.

The NCC Chairman sent a letter to Agriculture Secretary Vilsack requesting that he utilize the authority available under the 2008 farm law to make a partial counter-cyclical payment for 2008 upland cotton available and at the maximum level, effective on January 27. Shortly afterwards, Secretary Vilsack announced that the Commodity Credit Corporation would make $490 million available in partial 2008 Counter-Cyclical Program payments to eligible producers with enrolled upland cotton bases acres in the Direct and Counter-Cyclical Program.

Legislative Affairs

The NCC joined other organizations representing American farmers, processors and related agri-businesses in expressing strong support for the prompt passage of legislation to provide funding for emergency disaster assistance. In their letter, the groups thanked a group of Senators for their efforts to deliver much-needed financial assistance to producers and rural communities to assist them in recovering from devastating losses caused by hurricanes, excessive rain during planting and harvest and other weather-related natural disasters that have affected growers in the Mid-South, Southwest and neighboring states. The NCC also mobilized its members to urge their Senators to join onto legislation that was introduced by Senators Thad Cochran (R-MS), Blanche Lincoln (D-AR) and Roger Wicker (R-MS).

The NCC issued a statement regarding the American Clean Energy and Security Act saying it commended Chairman Collin Peterson’s (D-MN) amendments but that it could not support the bill as proposed because the higher costs of energy and other production inputs for every U.S. cotton sector would far outweigh any benefits resulting from offsets in a cap-and-trade program.

The NCC also responded to a global warming questionnaire by House Agriculture Committee Chairman Collin Peterson (D-MN) in preparation for imminent global warming legislation and monitored climate change legislation moving through the Senate.

The NCC urged the House Agriculture Committee’s Subcommittee on General Farm Commodities and Risk Management to continue its oversight of risk management, including the federal crop insurance program, to ensure a meaningful tool is available for producers.

Rickey Bearden, the chairman of the NCC’s Crop Insurance Task Force testified twice before that panel. Among the concerns conveyed: 1) crop insurance must be developed, delivered and administered as an effective risk management tool and innovative policies must be developed to make crop insurance more useful in various and ever-changing production conditions and 2) there is a need for higher coverage at affordable rates. The NCC’s support of conducting a Cottonseed Pilot Endorsement program – likely in 2011 - that would offer yield coverage for cottonseed as an optional endorsement, applicable to buy-up cotton insurance policies, was also noted.

In general, the NCC urged that any changes made to the crop insurance not hamper a company’s ability to offer policies throughout the Cotton Belt or hamper a company’s ability to fully service the producers.

The National Cotton Ginners Association submitted comments on the Department of Labor’s proposed changes to the H2-A Program. The comments stated that the proposed rule would suspend the recently implemented 2008 Rule and revert back to past burdensome and punitive provisions.

Cargill Cotton CEO Gary Taylor testified on behalf of the NCC, the American Cotton Shippers Association and AMCOT at a hearing to review the Derivatives Markets Transparency and Accountability Act of 2009.

Market Volatility

Cargill Cotton CEO Gary Taylor testified on behalf of the NCC, the American Cotton Shippers Association and AMCOT at a House Agriculture Committee hearing to review the Derivatives Markets Transparency and Accountability Act of 2009. Taylor conveyed the industry’s support for that bill – which later passed the House – and stressed the severe financial strain placed on the U.S. cotton industry due to the unpredictable risk caused by a dysfunctional futures market.

Later, NCC Chairman Jay Hardwick wrote Commodity Futures Trading Commission (CFTC) Chairman Gary Gensler asking the CFTC to publish the findings of their investigation into the events which occurred in March 2008 in the cotton futures market. The letter reiterated that a transparent and functional futures market is critical to the economic health of U.S. cotton industry members.

In other legislative activity, the NCC:

• joined a large group of farm and ranch organizations in calling for estate tax legislation that preserves a stepped-up basis, provides the lowest possible rate with the highest possible exemption and exempt certain farm land from estate taxes.
• combined with the California Cotton Growers and Ginners Associations and other California-based crop organizations in urging the Senate to approve an amendment to the Interior Appropriations bill aimed at ending the regulatory drought, which has idled thousands of highly productive acres.
• sought cost share funding in the House agriculture appropriations bill to support the pink bollworm and boll weevil eradication programs and to support cotton ginning research at the USDA-ARS laboratory in Lubbock.
• signed onto a letter with textile and apparel manufacturing trade associations and labor unions urging House members’ support of the Kissell amendment to the House’s American Recovery and Reinvestment Act – one that would mandate that any textile and apparel products purchased by the Department of Homeland Security’s Transportation Security Administration be made with 100 percent U.S. content.
• urged its producer members to participate in a USDA referendum and vote for a provision which added Kansas, Virginia and Florida as separate states in the definition of “cotton-producing state” as defined in the Cotton Research and Promotion Act.