U.S. cotton sales to China are substantially below what was expected in the absence of tariffs.
What does this USDA package provide?
■ Producers of cotton and many other crops can sign up for the latest MFP at Farm Service Agency offices through Dec. 6. FSA made the first tranche of payments in August. Two other payment tranches may be made in November and January 2020 if market conditions and trade opportunities dictate.
The MFP 2019 County Per Acre Payment Rates can be found at http://bit.ly/2GvXe1x. Assistance through the MFP is based on a county payment rate multiplied by a farm’s total plantings of MFP-eligible crops in 2019.
Those per-acre payments are not dependent on which of those crops are planted in 2019. County payment rates range from $15-$150 per acre, depending on the trade retaliation impact on crops in that county.
MFP for non-specialty crops such as cotton, peanuts, corn, soybeans, wheat and sorghum are limited to $250,000 per person or legal entity. There is a separate $250,000 limit for MFP payments to certain specialty crops and another $250,000 limit for payments to dairy and hog producers.
However, if a producer is eligible for payments in all three categories, then payments to that individual may not exceed $500,000.
Eligible applicants also must have an average adjusted gross income for tax years 2015, 2016 and 2017 of less than $900,000 or, 75% of the person’s or legal entity’s average AGI for tax years 2015, 2016 and 2017 must have been derived from farming and ranching.
Applicants must comply with the provisions of the Highly Erodible Land and Wetland Conservation regulations. Producers who filed a prevented planting claim and planted an FSA-certified cover crop, with the potential to be harvested, qualify for a $15 per-acre payment.
Recently, a bill signed into law by President Trump makes producers previously deemed ineligible for MFP in 2018 because they had an average AGI level higher than $900,000 – now eligible for 2018 MFP benefits.
Those producers must be able to verify 75% or more of their average AGI was derived from farming and ranching to qualify. This supplemental MFP signup also will run through Dec. 6.
In addition, USDA’s Agricultural Trade Promotion Program allocation to promote cotton and cotton manufactured products will enable Cotton Council International to continue expanding international demand for U.S. cotton fiber, yarn and other cotton products.
How is the situation with China?
■ U.S. cotton sales to China are substantially below what was expected in the absence of tariffs. This past year, there have been significant cancellations and deferrals of sales by China (1.2 million bales). U.S. cotton’s China market share has slid to 17% in the past year from about 44% during the two years leading up to the trade tensions. Much of that share has been lost to Brazil.
Unfortunately, even gains in other markets cannot offset our traditionally significant export level to China. Of further concern is that a decline in total U.S. cotton exports seems inevitable if a trade deal between the world’s two largest economies remains far down the road.
Gary Adams is president/CEO of the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming page.