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Ensuring Effectiveness

Gary Adams

Gary Adams

The National Cotton Council: 1) sought useful risk management tools for inclusion in the new farm law; 2) educated its members on that law’s cotton and other provisions; and 3) continues to press for the law’s proper implementation.

How is implementation proceeding?
The NCC is working with the House and Senate agriculture committees and USDA to address any shortcomings or unintended consequences on implementing the Agricultural Act of 2014. That includes a major focus on correct implementation of the crop insurance provisions and on ensuring the Federal Crop Insurance Act is maintained. For example, the NCC will seek to expand Stacked Income Protection Plan (STAX) coverage for all cotton-producing counties in 2016 and provide additional flexibility by allowing producers’ STAX purchases to be completely independent for irrigated and non-irrigated practices . STAX, to be available on more than 99 percent of cotton acres in 2015, is designed to work in concert with other insurance products to provide upland cotton producers an effective safety net. The NCC also strongly supported other crop insurance enhancements such as enterprise units and different coverage levels by practice – as well as the Actual Production History (APH) yield exclusion option that is especially needed in areas with multiyear drought conditions.

Another concern is the application of payment limits in the new farm law. The limits are an impediment to the marketing loan – an important tool for multiple industry sectors to effectively market cotton and provide cash flow for producers. NCC Board member Ronnie Lee recently told the Senate Agriculture, Nutrition & Forestry Committee that because producers market their cotton and other crops through multiple channels such as coops, merchants and direct marketing, the complexity of tracking these benefits has proven to be a challenging task for USDA. The Georgia producer/ginner also testified that it’s likely that some cotton will be placed in the marketing loan and forfeited to USDA, rather than being forward contracted or actively marketed during the year. This could lead to cotton being locked in the loan, disrupting cotton flow to the market and to end users, and potentially result in greater government costs. He asked the Committee to work with USDA in finding a workable solution – one that would minimize the forfeiture of commodities and encourage redemptions.

With respect to USDA’s rulemaking process on “actively engaged” in farming, the NCC urged the Committee to work with USDA to ensure any changes to those provisions do not exceed the farm law’s scope.

Would federal budget reductions undermine proper implementation?
Yes. The Committee was informed that it would be highly disruptive and punitive to make adverse policy changes or budget reductions. With cotton’s safety net now comprised solely by the marketing loan program and crop insurance, we are especially concerned by the recent actions and statements focused on eliminating key crop insurance tools. Farm policy generally, and cotton policy specifically, were substantially reformed, funding reduced and market orientation increased in the 2014 farm law, so now is not the time for further changes that would undermine production agriculture’s risk management foundation.

Gary Adams was elevated to president/chief executive officer of the National Cotton Council in February 2015. He and other NCC leaders contribute to this Cotton Farming magazine page.