NCC: Marketing Loan Is Essential Tool; ’02 Farm Law Good Foundation for New Legislation

MEMPHIS – National Cotton Council Chairman John Pucheu, speaking to the Southern Cotton Ginners Association here today, said new farm legislation should be patterned after the basic provisions of the 2002 farm law.

“Continuation of an effective marketing loan that is applicable to all production is the foundation of such a farm policy,” the Tranquillity, Calif., producer said. “A fully functioning marketing loan allows U.S. cotton to remain competitive in domestic and world markets.”

Pucheu told the audience that Secretary of Agriculture Mike Johanns often reminds the U.S. cotton industry that we export 80 percent of our annual production and we need greater market access.

Focusing on trade policy Pucheu stated, “It is interesting to note that quotas and duties are essential components of current domestic biofuels policy. Had the same protection been extended to our domestic textile industry in the past decade, our cotton export picture would look entirely different than it does today. Imagine what U.S. cotton prices would be like if our mills still used 12 million bales of cotton.”

Reiterating the NCC’s position that market access is a critical component of Doha negotiations, Pucheu asked, “Where is China in the Doha negotiations? What is the U.S. seeking in market access commitments from China? The National Cotton Council has made clear that its support for the ambitious U.S. proposal on reductions in domestic support is predicated on commensurate increases in market access. That means credible clear-cut results on China.”

“The Secretary stresses the need for new farm policy to be WTO compliant. All of U.S. agriculture agrees that negotiating from a position of strength in the Doha round is preferable to unilateral disarmament. Writing a weak farm bill today that attempts to meet unknown future disciplines that might arise from negotiations that are currently showing little movement does not seem like a sound strategy.”

Noting the Administration’s recent proposal includes a means test of $200,000 in adjusted gross income limiting program eligibility, Pucheu emphasized, “At a minimum, this proposal introduces significant uncertainty about year-to-year eligibility which undermines the objective of establishing predictable farm policy. Means testing continues to be bad policy. It has no relevance to global competitiveness or WTO compliance and it discriminates against commercial-size operations.”

Pucheu said the first step will be to insure that the agriculture committees have adequate budget authority to write effective farm policy.

“Congress will write the new farm law within the funding guidelines set by the Congressional Budget Office and the Congressional Budget Resolution,” he said. “Without a substantial increase in funding, it will be extremely difficult for Congress to write new legislation that maintains effective commodity programs and responds to calls for enhanced conservation programs, a new specialty crop title, a new renewable energy title, enhanced nutrition programs, additional research, a permanent disaster program, and renewal of the dairy program.”

Despite the NCC’s extensive efforts, Pucheu said the revival of the negotiations this past January has caused a renewed concern about the attempts to single out cotton for inequitable treatment in the WTO.

“As you are aware, the Hong Kong statement of ministers contained language calling for greater reductions in cotton subsidies than would be applicable to the rest of agriculture,” he said. “The Council has yet to formulate its position on the extension of Trade Promotion Authority which expires later this summer. The direction of Doha negotiations and specifically the degree to which cotton is singled out for disproportionate treatment will greatly influence our position.”