February 12, 2002
Dear Senator:
As the Senate proceeds towards a final vote on new farm legislation, this is to communicate the cotton industry’s extraordinary concern about the negative implications of the Grassley-Dorgan amendment on the legislation under consideration.
The Grassley-Dorgan amendment, as adopted by the Senate on February 6, dramatically changes the potentially positive impact the Senate Agriculture committee’s bill could have on many of the United States most productive, commercially viable farmers and ranchers. If these provisions are eventually signed into law, our analysis leads us to conclude that the majority of commercial-size cotton farms across the United States cannot survive.
Before the Grassley/Dorgan amendment was approved, the bill being considered by the Senate would have provided a substantially improved income safety net for all farmers. As amended, the average cotton farmer will be worse off than under current law. The amendment essentially destroys the non-recourse, marketing loan – a longstanding mainstay of farm policy that is important to producers of all loan-eligible commodities. We believe many Senators who voted for the amendment were unaware of these implications. Taking away the nonrecourse loan effectively removes this last viable safety net for Sunbelt farms large enough to sustain a family without other sources of income.
NCC analysis indicates that the Grassley/Dorgan amendment puts such severe limitations on marketing loan gains and fixed and counter-cyclical payments that production financing will be out of the question for most Sunbelt farmers. With current commodity prices, many farms cannot cash flow, even with current restrictions on payments. An unintended consequence of the amendment is that it will drive farmers to increase production of oilseeds and grains as well as specialty crops, regardless of market signals, disrupting the sensitive supply/demand situation.
It is unfortunate that some Senators used payment limits to essentially gut an otherwise good farm bill and to divide farmers by region and by size on emotion rather than facts. We believe the stringent Dorgan/Grassley payment limitations actually hit family farms hardest, which is the same group the amendment purports to help. The result is a unilateral disarmament of our farmers just ahead of resumption of another round of World Trade Organization (WTO) negotiations. If these provisions survive in a final farm bill, our negotiators will have little hope of convincing the rest of the world to reduce farm subsidies. It has been our contention that farm subsidy reductions should be done under the auspices of the WTO and in a way that is fair and equitable for American agriculture – not at their expense.
Sunbelt farmers desperately need an improved farm bill for the 2002 crop and urge your leadership in taking the necessary steps to ensure that the highly destructive provisions of the Grassley/Dorgan amendment do not survive in the measure finally signed into law.
Sincerely,
Kenneth B. Hood
Chairman