National Cotton Council Chairman Woods Eastland reacted to the proposed budget reconciliation package developed by the U.S. Senate Agriculture Committee, calling it “painful, but equitable. This proposal calls on the U.S. cotton industry to make significant contributions to deficit reduction through cuts aimed at all commodities generally and cuts aimed at cotton specifically. Cotton is clearly doing its part to contribute to deficit reduction in this package. These proposed cuts will be painful to the U.S. cotton industry.”
Eastland also expressed disappointment at the decision to delay markup in the Senate Agriculture committee, adding, “The delay only adds uncertainty to the process. The Senate Agriculture Committee has a difficult task before it. Cutting farm programs is never easy. The Committee has managed to craft a balanced package of cuts that is relatively equitable across all commodities and all programs overseen by the Committee.”
The Committee’s budget proposal would reduce all payments and marketing loan gains that producers receive for all program commodities, including cotton, by 2.5 percent for the 2006 through 2010 crops. The proposal also would bring an early termination to the upland cotton Step 2 provision, ending the program at the conclusion of the current marketing year.
“Even though the U.S. cotton industry remains convinced that the WTO dispute panel’s findings were flawed, the decision to terminate the Step 2 program prior to the conclusion of the current farm bill is an acknowledgement of U.S international obligations,” Eastland noted. “A decision to completely terminate a U.S. farm program in the middle of a farm bill is virtually unprecedented. The loss of the Step 2 program will reduce offtake of U.S. cotton and put additional pressure on prices received by farmers. The elimination of Step 2 and the administrative changes to the export credit programs constitute significant progress in response to the WTO decision on prohibited subsidies. The reduction in benefits from the marketing loan and counter-cyclical payments combined with the elimination of Step 2 address the price suppression and serious prejudice ruling in the Brazil WTO cotton case.”
In noting the proposed reductions in program spending, Eastland said, “They spread the pain across all components of the cotton program, from marketing loans to counter-cyclical payments. This reduction, particularly in the face of rising fuel and fertilizer costs, will be keenly felt. The Senate did what it could to minimize overall negative impacts from this budget-cutting exercise. We look forward to continuing to work with Committee Chairman Chambliss during the rest of the budget process.”
He also stated, “Preparations and planting of the crop currently being harvested were largely complete before the ruling of the WTO appellate body was announced this spring. By ending the Step 2 program at the conclusion of the current marketing year, instead of immediate termination, the Senate Agriculture Committee has managed to limit market disruptions.”