Farm Policy
Throughout 2015, the National Cotton Council (NCC) worked to ensure crop insurance and other farm policy elements were not undermined during the Agricultural Act of 2014's implementation.
Those persistent efforts began early in the year when the NCC joined 30 other agriculture, insurance and lending groups on a letter to the House and Senate budget committees opposing the cuts to crop insurance that were included in the President's budget. A coalition of crop insurance supporters, of which the NCC was a member, held briefings in both the House and Senate entitled, "Crop Insurance 101." The purpose was to educate Congressional staff on the basics of crop insurance and its importance and discuss some of the challenges the program would face in Congress ahead of the upcoming budget and appropriations debates.
Later, the NCC united with a wide-ranging group of organizations representing the production agriculture, conservation, credit, rural development, nutrition and energy sectors on a letter to House and Senate budget committees' leadership urging no reductions to the Agricultural Act of 2014. The NCC also contacted Senate Cotton Belt offices prior to House and Senate passage of their respective FY16 budget resolutions requesting their opposition to several amendments filed that would have been extremely damaging to crop insurance and farm programs. Fortunately, none of the amendments were brought up for a vote.
The House and Senate eventually passed the Bipartisan Budget Act (H.R. 1314), which would increase defense and non-defense discretionary spending by lifting the sequester caps and raising the debt limit for two years. However, passage was not certain until both House and Senate leaders pledged to restore cuts to crop insurance that were included in the bill. Late in the year, the NCC signed onto a coalition letter delivered to all Senators thanking those who came to the defense of crop insurance during the budget debate. The coalition also expressed strong support for the agreement to restore the funding for crop insurance during the omnibus appropriations process. The coalition, which urged Senators to uphold the promise to make the crop insurance program whole again without re-opening the farm bill, met with more than 60 House and Senate offices to reinforce that message.
 Early in 2015, NCC Director Ronnie Lee relayed industry concerns about actions and statements focused on eliminating key crop insurance tools during his testimony before the Senate Agriculture, Nutrition & Forestry Committee. |
After the House and Senate passed the FY16 Omnibus Appropriations bill late in the year, the NCC began working with USDA Farm Service Agency (FSA) staff on the implementation of the bill's commodity marketing certificate provision -- which allowed the certificates for marketing loan redemptions beginning with the 2015 crop marketing year. The bill contained a number of other key funding and policy priorities for the industry including: 1) $11.52 million for the joint cotton pest account for eradication activities; 2) $60 million in USDA Farm Service Agency (FSA) loan authorizations for boll weevil eradication loans, 3) level funding for the three USDA Agricultural Research Service (ARS) gin laboratories; 4) full funding for the Market Access Program and Foreign Market Development program, key funding sources for Cotton Council International; and 5) $2.94 billion for USDA Agricultural Research Service programs.
Early in 2015, NCC Producer Director Ronnie Lee relayed industry concerns about actions and statements focused on eliminating key crop insurance tools during his testimony before the Senate Agriculture, Nutrition & Forestry Committee. Lee also stressed that one of the most challenging implementation issues had been the imposition of the payment limit on the marketing loan – as tracking total benefits that have accrued to the limit had proven to be a complex and challenging task for USDA. He stated that the uncertainty created by the limit worked to undermine the marketing loan's effectiveness. With respect to USDA's current rulemaking process on "actively engaged" in farming, Lee urged the Committee to work closely with USDA to make sure that any changes to the provisions did not exceed the farm bill statute's scope.
USDA's Risk Management Agency (RMA) issued an information bulletin to all approved insurance providers and RMA regional offices that outlined modifications to the Stacked Income Protection Plan (STAX) for 2016 – changes that were consistent with the NCC's request. Among those were 1) allowing producers to elect a zero percent coverage range by practice; 2) allowing written agreements that affect insurable acreage to apply to STAX; and 3) making STAX coverage available for cottonseed through an optional endorsement. The NCC continued to work with RMA on the modifications' implementation and sought other modifications to underlying policies such as improved enterprise unit coverage by practice.
 The NCC worked closely with USDA’s Risk Management Agency to improve the 2016 crop year's STAX provisions, including that STAX coverage will be available for cottonseed through an optional endorsement. |
The NCC addressed another major farm policy matter when it conducted a review and analysis of the Farm Service Agency's (FSA) "actively engaged" proposed rule. The NCC then provided industry comments to USDA, noting the proposal went beyond what the law required with potentially serious unintended consequences for some farms.
The NCC also worked closely with USDA on the agency's process to timely inform producers and marketing entities on timely basis of the payment status relative to the payment limit. USDA did announce a new process for electronically transmitting data regarding marketing loan gains and loan deficiency payments. Later in the year, FSA issued notice CMA-138 regarding the process and instructions for FSA county offices, cooperative marketing associations, loan servicing agents and designated marketing associations to conduct an interim reconciliation of marketing loan gains and loan deficiency payments attributed to the $125,000 per person payment limit. The NCC's Payment Limit Working Group had worked with FSA to help establish an attribution and reconciliation process so cotton producers, marketing cooperatives and merchants know a producer's status relative to the $125,000 per person payment limit established by the 2014 farm law.
Late in the year, the NCC pursued a cottonseed policy. Support was sought by securing as many signatures as possible on a letter that House Agriculture Committee Chairman Mike Conaway (R-TX) and Ranking Member Collin Peterson (D-MN) circulated to their House colleagues across the Cotton Belt. The letter to Secretary of Agriculture Tom Vilsack urged him to take all policy actions available to provide assistance to the U.S. cotton industry, and specifically called for USDA to utilize its existing authority in the 2014 farm law to designate cottonseed as an "other oilseed." Senator John Boozman (R-AR) also gained the signatures of 18 of his Cotton Belt colleagues on a letter addressed to Secretary Vilsack that urged the designation.
The NCC and other U.S. cotton industry organizations also had asked that the Secretary use this authority to help stabilize the industry. That need was reinforced in the testimonies of five U.S. cotton industry leaders and an agricultural lender witnesses before a "cotton crisis" hearing of the House Agriculture Committee's General Farm Commodities and Risk Management Subcommittee.
In other farm policy activity, the NCC:
- commented on RMA's proposed changes to Section 508(h) of the Federal Crop Insurance Act, which allows private parties to 1) develop insurance products that are in the best interests of producers, 2) follow sound insurance principles that are actuarially appropriate and 3) then submit them to the Federal Crop Insurance Corporation board for approval or rejection.
- joined more than 40 agriculture, lending, crop insurance and conservation groups on comments regarding USDA's interim rule on conservation compliance. Included was the notation that simple differences such as the use of a personal tax identification number versus a business tax identification number could potentially flag a producer for additional taxes.
- coalesced with other national commodity organizations on joint comments to USDA on its Conservation Reserve Program (CRP) final rule that made changes required from 2014 farm law passage. The comments noted that the organizations looked forward to continued work with the FSA to implement CRP conservation practices.
 The need for USDA to utilize its existing authority in the 2014 farm law to designate cottonseed as an “other oilseed” was emphasized at the House Agriculture Committee subcommittee’s “cotton crisis” hearing by from left to right: NCC Vice Chairman Shane Stephens, a warehouser; producers -- Nathan Reed, Shawn Holladay, Kent Wannamaker and Cannon Michael; and Mike Wright, a banker. |
Legislative Affairs
Budget
The NCC submitted testimony through identical letters to the House and Senate agriculture appropriations subcommittees in support of the U.S. cotton industry's FY16 funding priorities. Those included USDA's 1) Animal and Plant Health Inspection Service for conducting boll weevil and pink bollworm eradication activities; 2) Agricultural Research Service (ARS) to fully operate the three ginning laboratories and to continue agronomic, post-harvest, fiber quality, and textile research; and 3) Market Access Program and Foreign Market Development program for export market promotion activities. The NCC also urged sufficient funding for USDA agencies that administer important cotton industry programs. That included resources for the Risk Management Agency, Farm Service Agency, Foreign Agricultural Service, National Agricultural Statistics Service (NASS) and Economic Research Service.
The NCC and other agricultural organizations and companies cosigned and submitted comments to leadership of the House and Senate agriculture appropriations subcommittees expressing support for increases in the President's FY16 budget for honey bee research activities. The increases included $7 million to ARS' budget for the Pollinator Health Initiative and $500,000 for the NASS to further analyze honey bee colony losses and pollination costs for that Initiative.
Tax Reform
Prior to House passage of the America's Small Business Tax Relief Act of 2015 (H.R. 636), the NCC had joined on to a multi-industry letter to Representatives Pat Tiberi (R-OH) and Ron Kind (D-WI) noting those organizations' strong support of the bill which restores the tax code's Section 179 expensing to $500,000 and permanently indexes the level to inflation. In addition, the NCC had joined 33 other agricultural organizations on a letter to then Speaker John Boehner (R-OH) and Minority Leader Nancy Pelosi (D-CA) encouraging the House to approve H.R. 636.
The NCC joined other agricultural organizations on a letter to the Senate Finance Committee leadership to comment on several tax provisions important to the agricultural industry. Some of these provisions included: the importance of continuing cash accounting for farms and ranches; the restoration of Section 179 small business expensing to $500,000 indexed for inflation as it previously set for 2014; recommending that there be no limitation on the amount of property values that can be reduced to reflect use valuation for estate tax purposes under Section 2032A; and discouraging any increase to the capital gains rates.
The Senate Finance Committee eventually passed a tax extenders bill that extends for two years numerous tax credits and deductions, including Section 179 expensing and bonus depreciation. Prior to passage, the NCC joined other agricultural organizations on a letter to Committee Chairman Orrin Hatch (R-UT) and Ranking Member Ron Wyden (D-OR) supporting these important provisions' extension. Later, the NCC joined more than 2,000 other agriculture, business and manufacturing groups on a letter to all Congressional Members urging swift action on a multiyear or permanent extension of these expired and expiring tax provisions, including appropriate enhancements. Another letter urged swift House and Senate leadership action in addressing the tax code's numerous provisions (i.e., tax extenders) that expired on December 31, 2014. The letter outlined the importance of renewing certain areas of the expired tax code with specific focus on Section 179 small business expensing and bonus depreciation.
Regarding estate tax, the NCC joined other agricultural organizations on a letter to Representatives Kevin Brady (R-TX) and Sanford Bishop (D-GA) in support of the Death Tax Repeal Act of 2015 (H.R. 1105), which the House later passed. The letter noted that the estate tax is a disservice to agriculture because it is a land-based, capital-intensive industry with few options for paying estate taxes when they come due.
Multi-Year Surface Transportation
Prior to Senate passage of the "Developing a Reliable and Innovative Vision for the Economy (DRIVE) Act" (S. 1647), the NCC joined with other agricultural organizations on a letter to all Senators in support of the six-year surface transportation bill that includes three years of guaranteed funding. Later in the year, the NCC joined with numerous other agricultural organizations in urging the House to reauthorize important provisions in multi-year surface transportation legislation – commonly referred to as the "Highway Bill" as it was set to expire on October 29, 2015.
Prior to the early November House passage of a six-year Surface Transportation bill, which also revived the U.S. Export-Import Bank, the NCC cosigned a letter with other agricultural organizations that conveyed support for the bill. The letter also urged House Members to add amendments to: 1) increase weight limitations for certain vehicles, 2) create a hazardous materials endorsement exemption for hauling diesel fuel and 3) create a Commercial Driver's License pilot program. In addition, the NCC joined with numerous agricultural, agribusiness, transportation and other organizations in a separate letter to House Members in support of an amendment to include the "Port Performance Act" in the bill as a means to gain visibility into how U.S. ports are operating, to identify key congestion issues and to ensure commerce continues flowing efficiently. Soon after, the NCC joined onto a letter to House and Senate conferees expressing support for prompt enactment of the multi-year surface transportation legislation -- as the extension of existing law expired on November 20. Late in the year, the NCC joined other agricultural organizations on a letter to all House and Senate Members supporting passage of the Fixing America's Surface Transportation (FAST) Act. Congress later approved that legislation and at year's end it awaited the President's signature.
Berry Amendment
The NCC, along with six other organizations representing the textile and manufacturing sectors, sent a letter to the leaders of the House Armed Services Committee in advance of consideration of the FY16 National Defense Authorization Act (NDAA). The letter raised concerns regarding a provision to increase the value of contracts that are exempt from the Berry Amendment -- a longstanding policy that requires the Department of Defense to purchase textiles and apparel that are made with 100 percent U.S. fiber and labor, thereby ensuring these products' domestic sourcing. As part of the Berry Amendment coalition, the NCC, the National Council of Textile Organizations and a number of other textile and apparel interests also worked to amend the NDAA bill during House consideration to restore the Berry provision threshold to $150,000. A letter from nine cotton, textile and apparel associations was sent to all House offices during the debate on the NDAA bill highlighting the importance of restoring the Berry threshold. Representative Jim McGovern's (D-MA) amendment to restore the original threshold was accepted prior to House passage of the NDAA bill.
The coalition also sent a letter to all Senate Armed Services Committee members outlining the industry's concerns with the increase in the Berry Amendment threshold. The final NDAA bill was to be developed by a House-Senate conference committee. Later, a letter was sent by the NCC and other textile and manufacturing associations to Senators in support of two amendments filed by Senator Kelly Ayotte (R-NH) that would preserve the Amendment's integrity.
 NCC Chairman Sledge Taylor, right, met with House Agriculture Committee Ranking Member Collin Peterson (D-MN)) and other key lawmakers in our nation’s capital to discuss issues affecting U.S. cotton’s health. |
Other Legislative Activity
The NCC coalesced with a group of 33 organizations on a letter to House Agriculture Committee members and other Representatives in support of the Commodity End-User Relief Act (H.R. 2289) – which the House eventually passed.
The NCC united with 16 other agricultural organizations on a letter to President Obama regarding the open position for a democratic commissioner on the Commodity Futures Trading Commission. The letter urged the nomination of an individual that has knowledge of agricultural commodity markets and the issues that affect agriculture's ability to use those markets as risk management tools.
The NCC joined a broad cross section of agriculture on a letter to the House leadership to express and explain the coalition's strong opposition to the Legal Workforce Act (H.R. 1147). It was noted that mandatory E-Verify would have a devastating impact on U.S. agriculture in the absence of a legislative solution for agriculture's labor needs and Congress was called on to 1) pass a solution for agriculture that addressed both the current agricultural workforce and 2) create a new guest worker program to meet future needs before any mandatory E-Verify program implementation.
The House Agriculture Committee held a hearing on the innovation and implications of "big data" within the agricultural industry. Witnesses included representatives from agricultural technology providers (ATPs) as well as producers, including Billy Tiller, a Lubbock cotton and grain producer. Earlier in the year, the NCC had officially signed on to the privacy and security principles released in late 2014 by a coalition of farm, commodity and technology providers related to precision agriculture data sharing. The principles were meant to provide a measure of certainty to farmers regarding their data's use and protection.
The NCC signed on to a letter with other agricultural organizations to the House and Senate judiciary committees' leadership urging Congress to be cautious as they considered changes to the U.S. patent system. The letter specifically raised concerns about the Innovation Act (H.R. 9) and how the bill, as currently drafted, would discourage investment in modern agricultural tools by making patent rights more difficult to enforce and by making it more challenging to cross-license agricultural technologies.
Late in the year, the NCC, along with 44 other agricultural organizations, sent a letter to House and Senate leadership urging them to include language in the omnibus appropriations bill that addresses the patchwork of state genetically modified organisms labeling laws. The letter explained that this patchwork approach not only would drive up prices for consumers ($500 increase per year for a family of four), but exacerbate consumer confusion.
Senators Michael Crapo (R-ID) and Claire McCaskill (D-MO) were thanked by the NCC for their introduction of bipartisan legislation (S. 1500) meant to clarify Congressional intent regarding the use of pesticides in or near navigable waters. The NCC also conveyed appreciation to the 12 other original bill co-sponsors, including the following Cotton Belt Members: Senators John Boozman (R-AR), James Inhofe (R-OK), Jerry Moran (R-KS), Pat Roberts (R-KS) and Thom Tillis (R-NC) and worked to gain additional bill co-sponsors.
 NCC Producer Director Cannon Michael, a California producer, testified before the Senate Committee on Energy & Natural Resources regarding the severe drought and water shortages in his state and the NCC asked USDA’s Risk Management Agency to help expedite the claim process for producers affected by late summer/early fall floods and excessive rains in the Southeast. |
NCC Producer Director Cannon Michael, a California producer, testified before the Senate Committee on Energy & Natural Resources regarding the severe drought and water shortages in his state and the impact on his farming operation. Later, the House approved the Western Water and American Food Security Act (H.R. 2898). Prior to its passage, the NCC conveyed support on a letter to Representative David Valadao (R-CA) who introduced the legislation, and to its co-sponsors. The bill would require federal agencies to use current and reliable data when making regulatory decisions. Additionally, the legislation will provide federal regulators with flexibility to capture water during wet years and will cut red tape holding back major water storage projects.
Joining with the North Carolina Cotton Producers Association, South Carolina Cotton Board and Southern Cotton Growers, the NCC co-signed a letter to the RMA asking it to implement emergency loss adjustment procedures to help expedite the claim process for producers affected by late summer/early fall floods and excessive rains in the Southeast. The NCC also sent a letter to RMA Administrator Brandon Willis asking that producers who had not been able to destroy their crops due to moisture, be given the opportunity to pledge to destroy the crop at the earliest date possible or provide documentation at a later date that the crop was destroyed -- but allow for indemnity payments to be made prior to crop destruction. That letter also emphasized that the need for timely reporting of actual yields by the Approved Insurance Providers not only affects the Southeast but the entire Cotton Belt.