Cotton Finds ‘Credible Foundation' in Draft Bill

July 19, 2001

The National Cotton Council told House Agriculture Committee members Wednesday that the farm policies outlined in that panel's concept paper establish a very credible foundation from which to build new farm programs that will contain an effective safety net for farmers and enhance their competitiveness.

Mark Williams, a NCC director, said that, from cotton's perspective, there is little about the paper's concept with which to take issue. In his testimony he commended the committee for its efforts to hold farm policy hearings and to provide a balanced and equitable concept paper. The Farwell, TX, cotton producer said the NCC supports many aspects of the committee's work, including: a marketing loan keyed to the world market price; retention of cotton's three-step competitiveness plan; retention of fixed, decoupled payments; a new counter-cyclical payment program; an option for growers to update their payment bases; and retention of full planting flexibility without mandatory supply controls.

"The proposal offers other provisions that are important to our members," Williams said. "They include marketing certificates, the three-entity rule for payment limitation, separate limits for each category of benefits and improvements in conservation and trade programs. "Given the budget limitations within which you worked, you have done an excellent job to construct a long-term farm policy to help farmers cope with subsidized competition and changing market conditions."

Williams shared some of the NCC's concerns, too. Because cottonseed prices continue to be weak and cotton producers rely on cottonseed revenue for about 13% of their total returns, the NCC supports the continuation of the cottonseed assistance program or the inclusion of cottonseed in the other oilseed programs discussed in the concept paper.

He said it also is becoming increasingly important for some action to be taken to offset the devastating effects of the strong dollar on the U.S. cotton industry, particularly the textile sector. He noted that for each one percent increase in dollar strength, there is a one percent increase in the cotton textile imports rate and a corresponding decrease in U.S. mill consumption of cotton.

NCC has proposed that the 1.25-cent threshold currently used in the formula for computing Step 2 values be eliminated in new farm law as an initial action to help U.S. cotton deal with the stronger dollar's devastating impact.

Williams reiterated the NCC's opposition to payment limits but said if they cannot be eliminated the NCC supports the establishment of a new category of limits for counter-cyclical payments. "Since soybeans would be eligible for the new counter cyclical payment and AMTA payments, cumulative payment limits may have a greater impact on producers with multiple crops than ever before," Williams said. He urged the committee to consider whether these limits should be increased to take soybeans into account.