National Cotton Council producer leaders exhibited insight and determination in getting producer agreement on a cotton program adjustment for consideration in the 2012 farm bill – one they believe will strengthen producers’ risk management.
Who were the primary leaders being tasked with this challenge?
American Cotton Producers (ACP) Chairman Jimmy Dodson, ACP Farm Policy Task Force Chairman Shawn Holladay, NCC Chairman Charles Parker, NCC Vice Chairman Chuck Coley and NCC Farm Policy Committee Chairman Woody Anderson. The farm policy development process and debate also included a display of unity from ACP regional directors Bowen Flowers from Mississippi and Clyde Sharp from Arizona.
How did the NCC initiate this farm policy development process?
First of all, leadership was alert to the nation’s political and budgetary environments, including an anticipated challenge that came with the August passage of the Budget Control Act of 2011. They quickly recognized that baseline spending for the next farm bill debate would be reduced by whatever portion of the $1.4 trillion savings amount that was assigned to agriculture by the Joint Commission. They realized that 1) simply downsizing the current cotton program structure would likely undermine its effectiveness and 2) the provisions identified as trade distorting in the World Trade Organization (WTO) Brazil case (counter-cyclical payments and the marketing loan) would have to be addressed.
Short on time and faced with these budget and trade limitations, the leaders directed NCC staff to prepare cotton farm program delivery system options for consideration. These leaders showed strong resolve in getting their respective panels to adopt a dramatically different farm policy recommendation – the “Stacked Income Protection Program” (STAX). The leaders also recommended maintaining an effective marketing loan, with modifications to address the WTO Brazil case. This rapid adoption enabled our staff to quickly begin explaining the recommendation’s specifics and rationale to Congressional Members and the Administration. In addition, legislative language was developed, estimated producer premiums were discussed and a Congressional Budget Office score was obtained.
What about STAX?
STAX is an income safety net that would make available for purchase an affordable revenue-based crop insurance program consistent with crop insurance delivery and complementary of existing crop insurance programs. Specifically, STAX would address shallow revenue losses on an area-wide basis with producer premiums subsidized to the maximum extent possible using available cotton program spending authority.
The NCC believes that the STAX structure would: 1) best utilize reduced budget resources, 2) respond to public criticism by directing benefits to growers who suffer losses resulting from factors beyond their control and 3) build on existing crop insurance – thus ensuring no duplication while offering program simplification potential. We believe these cotton program revisions, which would go into effect for the 2013 crop year, would provide confidence to lenders. And, we believe this new policy will ensure market-oriented production decisions that ultimately serve the long-term financial health of cotton merchandisers and processors as well as related businesses and rural economies.
Mark Lange is president and chief executive officer for the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming page.