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No Ill-Advised Changes

By Mark Lange
NCC President & CEO

The U.S. cotton industry staunchly opposes the cotton policy changes and budget cuts proposed in the Obama Administration’s 2010 budget request.

How was this concern relayed?

First, the National Cotton Council joined 42 commodity, general farm, banking, cooperative, conservation and crop insurance organizations in a letter to the House Appropriations Committee, urging no inclusion of FY10 appropriations bill provisions that would amend the new farm law. The NCC alone wrote that panel’s Cotton Belt Members to remind them that farm programs must be predictable, logical and helpful to producers when prices are low and they most need help. The NCC’s letter noted many of the Administration’s budget recommendations violate these principles and likewise urged them not to use that appropriations bill to amend farm law.

What specifics did the NCC letter ask?

The NCC’s letter urged that the Committee’s Cotton Belt Members reject any efforts, such as those proposed by the Administration, to: impose a $500,000 gross revenue test to determine eligibility for direct payments; establish a $250,000 cap on all program benefits, including the marketing loan; modify the crop insurance program; modify certain conservation programs; terminate cotton storage credits; and cut Market Access Program funding by 20 percent – even though that program is World Trade Organization consistent and central to main- taining and growing U.S. export markets.

Also noted was the Administration’s ill-advised, proposed new cap on total benefits to limit the marketing loan benefits available to producers when prices are low. Marketing loan benefits are critically important to all farmers and provided only when prices are very low – a time when producers most need the assistance. The Administration’s proposal would greatly increase the risk associated with lower prices and could significantly affect a producer’s ability to obtain financing. Likewise, the recommendation to institute a new eligibility test for direct payments based on lower gross revenue – not a net profitability measure – is inconsistent with the new, lower adjusted gross income tests enacted in the 2008 farm law. The proposed gross revenue limit is so low that it will hurt many family farmers even though those operations may lose money or barely break even.

Regarding the proposal to terminate cotton storage credits, the NCC’s letter said that should be rejected because the credits are necessary to promote orderly marketing and discourage cotton forfeitures in years when prices are low. The credits only are provided in years when cotton prices are low. Concerns about the possible loss of storage credits also were conveyed by 16 Cotton Belt congressmen in a letter to the chairman and ranking member of the Agriculture Appropriations Subcommittee. The NCC’s letter also raised specific concerns about the Administration’s proposals to increase the costs that cotton producers must pay for federal crop insurance. In many areas, crop insurance is a prerequisite for securing production financing. The letter emphasized that no changes be made that weaken this important risk management tool’s affordability and effectiveness.

Mark Lange is president and chief executive officer of the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming page.

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