Administration’s FY11 Budget Proposal Undermines Farm Safety Net

MEMPHIS, Tenn. – The National Cotton Council said today that President Obama’s FY2011 USDA budget ignores the extensive changes to production agriculture support that were embodied in the Food, Conservation, and Energy Act of 2008. In addition, the NCC noted, USDA already has announced unwarranted restrictions in program eligibility during the legislation’s implementation. 

NCC Chairman Jay Hardwick, a Louisiana cotton producer, said, “The President’s proposal on phasing down direct payments and limiting total payments affects the farms that produce more than three-fourths of all agricultural products marketed in the United States. The safety net for America’s farm families must be maintained. Congress spoke clearly to ensure sound agricultural policy that is fiscally responsible in the passage of the last farm law. Direct payments are compliant with the direction being taken in the World Trade Organization to reduce trade distorting support. The financing demands of commercial agriculture require a high level confidence by lenders in program availability. In the midst of a credit crisis, it makes no sense to threaten a vital component of the borrower’s cash flow.”

The 2008 farm law includes provisions for the Commodity Credit Corporation (CCC) to pay a portion of the storage costs during periods of low prices. These provisions’ costs were completely offset by changes in the upland cotton counter-cyclical target price.

The NCC emphasized that the Administration’s proposal to eliminate the upland cotton storage credits is a failure to discern critical differences between commodities.

“Baled upland cotton lint is an identity-preserved commodity that requires off-farm storage in facilities approved by CCC while under loan,” Hardwick said. “Further, loan eligible cotton must comply with a number of CCC regulations stipulating bale wrapping and packaging.”

The NCC also is truly puzzled by the proposed reduction in Market Access Program (MAP) funding.

“While the Department of Commerce is announcing new programs for export promotion and job creation, the Administration proposes to cut support for agricultural export promotion,” Hardwick stated.  “Foreign sales account for one-third of U.S. agricultural production’s total value. Solid export performance is essential for the economic health of rural America and agricultural exports warrant aggressive support.”