The National Cotton Council believes farm legislation has become unbalanced due to the mandated use of biofuels and that it is critical that future policy decisions take into account the effects on the production of each commodity
How has U.S. farm policy evolved?
With the introduction of commodity specific target prices and marketing loans in farm legislation during the 1980s, there were extraordinary efforts to assure balance in the economic signals for each commodity. A comparison of historical support levels relative to a commodity’s costs of production is a prime example of the balance that was achieved. It has long been recognized that significant shifts in acres planted to any crop could be induced if policy instruments were not finely balanced. This balancing effort was redoubled in the work on the 2002 farm legislation. That legislation reintroduced target prices, even though any payment under the counter-cyclical program is decoupled from planting decisions.
The mandated use of biofuels has completely altered the balance achieved in the development of farm policy. With current technologies essentially dictating that ethanol be produced from grain feedstocks, other agricultural commodities find themselves estranged from policy structures now sought by some grain interests.
What about future farm policy?
Farm legislation cannot be developed in a vacuum that ignores the role of energy policy. Doing so results in support mechanisms or structures that fail to adequately serve the interests of everyone from the taxpayer to the commodity producer. Further caught in this set of conflicting signals are all the intermediate players with such operations as drying facilities, warehouses, cotton gins, elevators as well as transportation investments.
The goals of increased energy independence and reduced environmental impacts from energy production are certainly in line with National Cotton Council objectives. In fact, most U.S. cotton producers also grow grains and oilseeds used in the production of biofuels. However, to obtain non-distorting equity across commodities, it is imperative that all forms of support are considered.
When will U.S. cotton’s needs be conveyed?
The NCC will be very active in the development of the 2012 farm bill and will take every opportunity to convey our concerns about the structure and equitability of farm programs. Even though 2012 may seem like a long time into the future, the farm bill process already has begun. In fact, the House Agriculture Committee is holding hearings this spring, and the NCC will seek an opportunity to offer our views, either at hearings in Washington or out in the country.
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.