WASHINGTON, Dec. 9, 2015 – The way some multi-generation cotton producers were talking at a congressional hearing on the state of the cotton industry Wednesday, their generation might be the last to raise a cotton crop if changes aren’t enacted and prices don’t improve.
At a hearing of the House Subcommittee on General Farm Commodities and Risk Management, a spectrum of witnesses representing different aspects of the cotton industry expressed concern about their current state of affairs. Cotton acreage is down in the U.S. and policies in competing markets – mainly China and India – are increasing global supplies and driving down prices.
Cotton producers and some lawmakers are encouraging Agriculture Secretary Tom Vilsack to add cottonseed as an oilseed to qualify it for Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC). Language in the 2014 farm bill allows the Secretary of Agriculture to designate “other oilseeds” that can fall under farm bill programs. Without this designation, Southern Cotton Growers President Kent Wannamaker said he has serious concerns about the long-term viability of cotton in the U.S.
“I think cotton is going to leave the United States if we don’t get this,” he said.
Cotton fiber is not eligible for PLC or ARC, and the revenue insurance plan that was created for cotton in lieu of those programs – the Stacked Income Protection Plan – “is not working as well as we thought it might,” Agriculture Committee Chairman Mike Conaway said recently.
The growers are asking for the change to oilseed coverage last the duration of the farm bill, which is currently set to expire in 2018. As Nathan Reed with the American Cotton Producers put it, they need “some system in place where cotton farming not even becomes profitable, just becomes where we don’t go broke in the short term.”
Reed and other witnesses said that if acreage continues to decline, the cotton industry could begin to lose some of its infrastructure like gins and equipment dealers, making it harder for producers to remain in business.
Subcommittee Chairman Rick Crawford, R-Ark., pointed out in his opening statement that the cotton policy included in the 2014 farm bill “was entirely predicated on a functioning world cotton market. But, a functioning world market is hardly what we have going on today.”
In China, for instance, price support programs pay growers about $1.40 per pound, a much higher price than the 60 cents per pound market average in the U.S. China also is holding an estimated 60 million bales of cotton, well more than half of the 100 million bales or so of stocks worldwide. Price support programs are sometimes allowed under World Trade Organization rules for developing countries, but Crawford argued that China is “a developed economy and should be treated as such. Otherwise, we’ll never be fully able to address these issues.”
Shane Stephens, vice chair of the National Cotton Council, pointed out that cotton prices are “at the mercy of the Chinese government’s decisions with their huge stockpiles.” In his testimony, he noted that U.S. cotton acreage is at its lowest point in 30 years, exports their lowest in 15 years, and prices are seeing lows not witnessed since the 2009 recession.
For their part, Conaway and ranking member Collin Peterson, D-Minn., are circulating a letter for signatures, asking Vilsack to consider adding cottonseed to ARC and PLC for the 2015 crop year.
After the hearing, Conaway told Agri-Pulse that he wants Vilsack and USDA to “gather the facts” and determine factors like potential costs and what a signup period might entail. There isn’t necessarily a “drop-dead date” after which assistance can’t be provided for the 2015 crop year, Conaway said, so a decision could be pushed into 2016.
The letter is expected to be sent to Vilsack by the end of the week.
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