Cotton producers are receiving, on average, 16 percentage points less revenue for their crop compared to growers who plant corn, soybeans, wheat, rice and peanuts, a National Cotton Council analysis indicates.
NCC leaders and the organization’s members have been criticized in some circles for seeking changes in the 2018 farm bill, including restoring cotton to its decades-old status as a program crop in the law’s commodity title.
The NCC analysis, which is being circulated among members of Congress, helps explain how cotton producers, whose crop was removed from the commodity title due, in part, to the adverse ruling in the WTO cotton case brought by Brazil, are getting the short end of the farm safety net stick under the 2014 farm bill.
“This is looking at total costs of production for cotton, and the bottom line here is just the market returns from cotton and cottonseed,” says Reece Langley, vice president, Washington operations for the Council. “This top line is if you add in any farm bill support.
“What this represents for cotton is that if between 2014 and 2016 you take our market revenue and that little bit of farm bill support that covered only 83 percent of our total cost of production on cotton. When we look at an average for the other major crops in the farm bill – corn, soybeans, wheat, rice and peanuts – the market revenue plus farm bill support for those five crops is about 99 percent of their cost of production.”
‘Hole we’re in for cotton’
Langley, speaking at the Southern Cotton Ginners Association’s summer meeting in Lafayette, La., said “That’s the discrepancy or the hole we’re in with cotton that we need to try to balance in this next farm bill.”
The chart he displayed at the Southern Cotton Ginners meeting showed a narrowing of the gap between the costs and returns for cotton in 2016. That was because of the $330 million provided cotton farmers through the Cotton Ginning Cost Share Program set up then-Agriculture Secretary Tom Vilsack.
The National Cotton Council is seeking a renewal of the cost-share program in 2017 for the 2016 crop. It and members of Congress are trying to persuade the White House Office of Management and Budget to approve the funding, which would probably exceed last year’s $330 million due to the increase in acres in 2016 over 2015.
Beyond that, the industry has a laundry list of objectives for the new farm bill ranging from finding funding for the farm bill to increasing market access funding for cotton exports. Langley outlined the Council’s efforts to get new farm bill language for such topics as generic base acres, payment limits, cottonseed as an oilseed and efforts to split the Supplemental Nutrition Assistance Program or food stamps from the farm bill.
Langley said a new method of calculating the Commodity Credit Corp. marketing loan rate caused the latter to dip to 49.5 cents per pound in recent months, one of the changes the NCC would like to see in the next farm bill.
Brazil case in WTO
“This dip is due to the change in the formula for calculating the loan rate that came about because of the Brazil WTO case,” he noted. “The AWP (adjusted world price) for cotton in 2015 was significantly lower and dropped the loan rate for 2017 to 49.5 cents. We expect it to bounce back to 52 cents for the 18 crop because of higher prices, but we may need to address that in the new farm bill.”
The administration has begun the process of renegotiating the North American Free Trade Agreement, a move which has raised concerns among many commodity organizations, including cotton, and the American Farm Bureau Federation.
“I mentioned earlier the new administration is going to be much more defensive in their trade posture and trade enforcement,” he noted. “While that could be helpful to us, it’s also something we have to be mindful of and hope they don’t go too far and jeopardize our markets. Five countries – Vietnam, China, Turkey, Indonesia and Mexico – represent about 60 percent of all our exports so they are critically important.”
For more on Langley’s comments, visit http://www.deltafarmpress.com/cotton/cotton-industry-seeking-repeat-ginning-cost-share-program and http://www.deltafarmpress.com/cotton/cotton-facing-hard-day-s-night-2018-farm-bill