Federal aid going to cotton farmers
ANTONIO — The U.S. Department of Agriculture is doling out $300 million in federal aid to American cotton farmers, struggling to survive against deep foreign subsidies and the loss of their own government support, the agency announced Monday.
“The Cotton Ginning Cost Share program will offer meaningful, timely and targeted assistance to cotton growers to help with their anticipated ginning costs and to facilitate marketing,” Secretary Tom Vilsack said in a news release.
The U.S. cotton farmer has been under tremendous strain since lawmakers stripped them of most federal subsidies in the 2014 farm bill — a move designed to appease Brazil in trade talks. The new program doesn’t directly pay farmers based on crop
production, which put off Brazil.
The fresh aid is categorized “marketing assistance” and provides 40 percent of a farmer’s ginning costs in a one-time payment based on their 2015 acreage reported to the Farm Service Agency.
“The economic challenges facing cotton producers in our area are significant, and when farmers are in trouble, the whole community is affected,” said U.S. Rep. Randy Neugebauer, a Republican from Lubbock.
Farmers can sign up at their local Farm Service Agency offices between June 20 and Aug. 5, with payments expected to start going out in July. For farmers in Texas, the nation’s leading cotton-producing state, the payout comes to $36.97 per acre.
Industry representatives cheered the announcement, which comes as cotton growers are betting on double-bale crops just to break even.
“Our producers appreciate Secretary Vilsack’s efforts in providing marketing assistance to a commodity that is suffering a serious decline in market revenue partly due to heavily subsidized foreign competition, with no signs of commodity prices reaching the level needed to offset their production costs,” said Shane Stephens, a Mississippi cotton warehouse operator who is chairman of the Tennessee-based National Cotton Council.
Steve Verett of the Lubbock-based Plains Cotton Growers said the shortterm assistance will provide some “well-needed relief.”
“We had hoped for more, but we’re certainly appreciative of the USDA doing this,” he said.
Cotton has been selling for 64 cents per pound, compared with highs of about $2 per pound in 2011. Growers say the market is skewed thanks to high payouts to farmers overseas by foreign governments such as China, which has paid cotton farmers as much as $1.45 per pound.
Before the 2014 farm bill, federal crop payments would have kicked in once the base price fell below of 72 cents a pound.
Direct payments to cotton farmers were phased out beginning in 2014 under the farm bill to resolve a World Trade Organization dispute with Brazil, which contended the U.S. was unfairly shoring up the U.S. cotton price. Cotton was excluded from replacement support deals such as the agriculture risk coverage and price loss coverage programs beginning this year, but still eligible for marketing assistance loans and crop insurance coverage.
The industry earlier this year thought it had a solution. Cotton is processed as both fiber and oil. By reclassifying cotton as an oilseed, as had been done with soybeans in the 2002 farm bill, cotton could once again be designated a program crop eligible for the safety net.
House Agriculture Committee Chairman Mike Conaway, R-Midland, joined more than 100 representatives in formally requesting Vilsack make that designation.
Vilsack said he lacked the legal authority. Critics of the request said such a redesignation would cost taxpayers $10 billion in payments.
Neugebauer, whose district in Lubbock sits in the heart of the nation’s largest cotton patch, praised the announcement.
“I am pleased to see the department put some assistance in place,” he said. “This is not producers’ first choice for how USDA could have addressed the downturn in cotton, and I agree that more could have been done by designating cotton as an eligible oilseed.”
Jeff Nunley, executive director of the South Texas Cotton and Grain Association, said that while the industry hadn’t given up on the oilseed designation, the cost-sharing announcement was welcome news.
“I’ve had a couple of producers call me, and they’re like, ‘Well, I don’t know if this is going to be enough to really get us out of the trouble we’re in, but it’s hard to complain ’cause it’s better than a sharp stick in the eye.’ ”
Matt Huie, a cotton grower in Beeville, said the one-time payment was a needed boost but far from a solution.
“If you want a quote from me, it’s going to be mejor que nada,” he said, meaning better than nothing.
“We still have the potential out there to make a really big crop, but the short version is that at today’s prices, it takes a really good crop just to break even,” he said. “Although the secretary’s designation here helps, that’s based on the 2015 crop, and there’s still nothing in place for the 2016 crop, which is what we are currently growing. And the risks are pretty huge.”