Current Farm Law Working Well; Sound Basis for Future Policy

STOCKTON, CA – National Cotton Council Vice Chairman John Pucheu told the House Agriculture Committee that a significant majority of California’s upland and pima cotton producers strongly support current farm law and see it as a sound basis for future farm policy.

Testifying at that panel’s farm policy review hearing here today, the Tranquillity, CA, cotton producer said current farm law must continue to operate without major modification through its scheduled expiration with the 2007 crop because “producers have made substantial long-term investments and cropping and marketing decisions based on current farm law. We are particularly concerned by repeated efforts to further reduce limitations on benefits or limit eligibility to the loan, and we you to continue to oppose these proposals. Current limitations already place most commercially viable California operations at a disadvantage because of our costs and economies of scale.”

He said California cotton producers support using current law as the basis for “future farm policy” noting that: 1) the combination of a marketing loan, counter-cyclical payment when prices are low and a direct payment for stability are a sound foundation, 2) there should not be limits on loan eligibility or on marketing loan gains because it would disrupt orderly marketing and 3) payment limitations, which already unfairly penalize growers in the San Joaquin Valley, in the irrigated West, and across the Sunbelt, should not be reduced any further and current eligibility requirements should be maintained.

Pucheu stressed that it is critically important that farm policy is balanced between commodities because a significant number of California cotton producers also produce specialty crops. “Even slight acreage shifts from row crops to specialty crops will cause market disruption,” he said. The state’s cotton producers do not oppose programs that benefit specialty crops but adequate resources are needed to ensure that there are no significant shifts in funding between program and specialty crops. He also explained that the pima and upland cotton programs must be carefully balanced to ensure there are no unintended, program driven shifts in acreage planted to ELS cotton and upland cotton.

Pucheu pointed out that if the Doha round negotiations do not progress to the point that the impact on future U.S. farm policy is clear, California cotton producers would support continuation of the current farm bill for at least one additional crop year.

“Given our significant financial investment and alternative cropping opportunities, it is imperative for farmers in this area to know what the policy will be well in advance of planting the crop,” he said. “Uncertainty is highly disruptive and costly.”

He said that cotton producers are deeply concerned that the language in the recent Hong Kong Ministerial agreement will be used to single cotton out for special and differential treatment.

“The U.S. cotton industry has supported the Doha round negotiations, but we can not support an agreement that requires cotton to accept deeper and quicker reductions in domestic support; that does not provide meaningful increases in market access or that allows Brazil, China, Pakistan and India to declare themselves less developed for the purpose of evading compliance,” he said.

Pucheu, who also expressed to the Committee the need for science-based regulations and an effective immigration policy, said conservation programs continue to be an important component of farm policy but are not a substitute for the safety net provided by commodity programs. He also testified that because California exports virtually 100 percent of its cotton production, producers strongly support continuation of the successful public-private partnership fostered by the Market Access Program and urge continued funding for the Foreign Market Development program as well as a WTO-compliant export credit guarantee program.

Pucheu added that research and crop insurance also are important to U.S. cotton’s future but noted that “we are disappointed that the Risk Management Agency has been unsuccessful in responding to our need for affordable, higher levels of crop insurance coverage. We need to insure levels of 90 or even 95 percent of our yields in order to have effective risk management. I hope RMA will re-evaluate the products available to us.”

Buttonwillow cotton producer Bill Tracy, a former California Cotton Growers Association chairman, echoed Pucheu’s points and added that farm programs are needed to: 1) defray a portion of the costs California producers face in complying with regulations related to air and water quality, energy usage, and pesticide applications, 2) provide producers with the planting flexibility necessary to react to market signals, 3) deliver benefits in times of low prices without distorting overall planting decisions and 4) enhance producers’ ability to secure financing and help young people get into farming.

“An effective farm program is a necessity for young farmers entering agriculture and not a deterrent,” Tracy said. “USDA’s current program that provides loans for beginning farmers and ranchers should also be used to the maximum extent possible to provide financing opportunities.”