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Securing Stability

How does the bill benefit the industry overall?

gary adams, ncc

Gary Adams

■ The continued safety net is especially crucial as much of the Cotton Belt faced devastating natural disasters during 2018, compounding producers’ financial strains from retaliatory trade tariffs on U.S. cotton.

The bill includes many of our industry’s policy priorities — continuation of the Seed Cotton ARC/PLC program, full access to the marketing loan program, full funding for textile competitiveness programs, effective crop insurance products and no reduction in arbitrary payment limits.

It also addresses overly restrictive family farm eligibility requirements. This adjustment to the “family definition” for farm programs will help resolve the unintended and punitive restrictions that resulted from the “actively engaged” changes made by the 2014 farm law. The bill includes a yield update opportunity for all producers that will better align program yields with current production levels.

What about specific commodity title provisions?

■ A seed cotton reference price was maintained at $0.367 per pound. The title provides a new ARC/PLC election choice beginning with the 2019 crop and in place for 2019 and 2020, with an annual election allowed between ARC and PLC beginning in 2021.

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There was no change in seed cotton base acres and unassigned base, resulting from the conversion of generic base acres.

The title: 1) maintains the current upland loan rate formula based on the two-year moving average of the Adjusted World Price (AWP) but limits any annual decline to 2 percent of the previous year’s loan rate; increases the extra-long staple (ELS) loan rate to $0.95 per pound; and 3) adjusts the maximum price trigger of the ELS competitiveness program from 134 to 113 percent of the ELS loan rate so the loan rate adjustment does not result in the program triggering more often.

The title also maintains 1) the payment rate in the Economic Adjustment Assistance Program at $0.03 per pound and fully funds the program for the 10-year budget baseline period and 2) the Pima Cotton Trust Fund with the eligibility criteria for mill participation updated to include a rolling calendar year basis for determining eligible mill consumption and production of qualifying Pima cotton yarns.

Any other significant provisions?

■ There was no reduction in the $125,000 per person payment limit, and the marketing loan benefits (LDPs and MLGs) do not count toward the $125,000 payment limit. A separate limit was maintained for peanuts.

There was no reduction in the $900,000 adjusted gross income test and no tightening of actively engaged provisions. Included was an expanded definition of family member for actively engaged purposes. Lineal family member now includes nieces, nephews and first cousins. Commodity certificate authorization is maintained for use in redemption of loan commodities.

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Report language encourages the U.S. Department of Agriculture to establish the AWP based on the three lowest Far East quotes. It urges USDA to work with the cotton industry to ensure the annual “average costs to market” survey and the resulting values fully and consistently capture the costs of marketing and provide the industry with advance notice of such changes.

The language also recommends that USDA work with all industry segments to make administrative changes in the cotton warehouse and shipping provisions to improve cotton’s timely flow to the marketplace.

Gary Adams is president/CEO of the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming magazine page.