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Cotton’s Challenges Communicated

The National Cotton Council recently seized an opportunity to tell a key Congressional panel about the dire economic and regulatory challenges facing the U.S. cotton industry.

What was the venue?
The early December hearing was conducted by the House Agriculture Committee’s General Farm Commodities and Risk Management Subcommittee. Testifying were: NCC Vice Chairman Shane Stephens, a Greenwood, Miss., warehouser; NCC Producer Directors Shawn Holladay, Lubbock, Texas; and Cannon Michael, Los Banos, Calif.; and two other producer leaders: Kent Wannamaker, president, Southern Cotton Growers, Saint Matthews, S.C.; and Nathan Reed, Arkansas state chairman, American Cotton Producers, Marianna. They were joined by Mike Wright, executive vice president, Agricultural Lending for City Bank, Lubbock.

Testifying about the “cotton crisis” before a House Agriculture Committee subcommittee were, from left: Shane Stephens, a warehouser; cotton producers: Nathan Reed, Shawn Holladay, Kent Wannamaker and Cannon Michael; and Mike Wright, a banker.

Testifying about the “cotton crisis” before a House Agriculture Committee subcommittee were, from left: Shane Stephens, a warehouser; cotton producers: Nathan Reed, Shawn Holladay, Kent Wannamaker and Cannon Michael; and Mike Wright, a banker.

Where do the challenges lie?
Vice Chairman Stephens detailed the current economic conditions characterized by reduced acreage, struggling cotton demand and the lowest prices since 1989. Providing an agricultural lender perspective, Wright painted a bleak picture for the Subcommittee saying that with margins getting tighter every year due to higher production costs and lower commodity prices – producers need above-average yields just to break even. There is no doubt, he stated, that some cotton farmers will not qualify for financing next year, and the ability to obtain financing will become increasingly more difficult as crop prices remain low. Wright’s testimony was reinforced by Reed who testified that production costs in the Mid-South have risen continually over the past decade and he feared that region is at a tipping point. Reed cautioned that once the infrastructure of gins, warehouses and related businesses are gone, they are not likely to return.

Producers Holladay and Wannamaker conveyed the importance of a sound federal crop insurance program as a critical risk management tool and the need for the Agriculture Secretary to designate cottonseed as an “other oilseed” and be eligible for Agricultural Risk Coverage and Price Loss Coverage. They emphasized that providing price support for cottonseed is desperately needed to provide stability in the cotton industry. They also called for the marketing loan program to be operated as it did prior to the 2008 farm bill noting that for producers of multiple crops, the implications of the unified payment limit will be particularly harmful as a portion or all of a producer’s payment limit could be used for marketing loan benefits as the crop is marketed throughout the year. Another concern conveyed was USDA’s rulemaking to determine whether an individual is “actively engaged” in a farming operation and eligible to participate in farm programs. The Subcommittee was urged to work closely with USDA to ensure any changes to “actively engaged” provisions adhere to the intent of the farm bill.

California producer Michael conveyed that the water situation in California is a result of both prolonged drought conditions as well as misguided and inflexible regulatory constraints. The producers also described numerous regulatory concerns, ranging from weed resistance management and the availability of crop protection products to biotech traits.

Gary Adams

Gary Adams

Gary Adams is president/chief executive officer of the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming magazine page.