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March 2, 2001
NCC shares farm policy proposal
By Lana Robinson
Field Editor
The first commodity group to accept House Agriculture Committee Chairman Larry Combest's challenge to provide detailed policy proposals for future national farm policy in hearings last month was the National Cotton Council (NCC).
NCC Executive Committee Chairman Robert E. McLendon testified that his organization's farm policy concepts are full-production programs that provide a reasonable level of support for farmers, while indirectly underpinning cotton's processing and handling infrastructure.
"Our goal is income support from programs and the market that will provide cotton producers with a return equivalent to what they have received in recent years from all sources, including emergency assistance," McLendon testified. "With the sharp jump in input and production costs we have seen recently, it is even more important that we craft an improved safety net for cotton farmers.
"The National Cotton Council remains opposed to payment limits in any form," he continued. "They are both counterproductive and discriminatory. Limiting farm program benefits on the basis of size tends to disadvantage the larger, more efficient farming units, causing them to be broken up into smaller units that are less efficient and less capable of surviving in a global market when, and if, subsidies are discontinued."
Among its recommendations: for upland cotton, a continuation of a marketing loan keyed to the world market price, continuation of the 3-step competitiveness program and retention of as much cropping flexibility as possible; for extra long staple cotton, retention of the current non-recourse loan without change, establishing a competitiveness program and implementing a countercyclical payment to help ensure returns of approximately $1 per pound.
TFB observations, comments
"In testimony, NCC hasn't changed their policy about loan rates. They want a benchmark for cotton to be accomplished in three different ways: loan rates, decoupled AMTA-type payments, and a countercyclical payment," said George Caldwell, Texas Farm Bureau's associate director of Commodity and Regulatory Activities. "Our current policy is to re-evaluate loan rates and raise cotton to a level equal to what soybeans are now. I think the difference is our producers would rather see more of a counter-cyclical type protection instead of a guarantee. Our producers would rather see that kick in when prices are low, but not necessarily be there when they're not."
Caldwell pointed out that specific limits under the World Trade Agreement (WTO) restrict direct support.
"The concern is how you can structure a program that will benefit producers without violating our WTO commitments," he said.
TFB Cotton Advisory Committee member David Stratta, who grows 2,000 acres of cotton in the Brazos bottom near Hearne in Robertson County, noted that Texas Farm Bureau would like to have seen more set aside acres in a new farm bill, but the American Farm Bureau Federation delegates disagreed with that position. In assessing the NCC plan, Stratta said, "I think NCC's recommendations for the farm bill are pretty close to what we've got except we (Farm Bureau) want to rely less on government and increase our markets. They seem to be pushing for more government payments. They are not in favor of insurance. They want the incentives in there to make sure the crop is grown and harvested so they will get the bales and to maintain the industry infrastructure."
Texas Ag Forum perspectives
TFB Director of Commodity and Regulatory Activities Ned Meister, who attended the Texas Agricultural Forum in Lubbock, Feb. 19, came away with a broader view of what Texas cotton producers would like to see in future farm policy. High on the list is additional federal funding earmarked for program commodities — an entitlement up to $25 billion instead of the current $4 billion baseline.
"We may not use it, but we would have that authority if, indeed, we have catastrophic problems. That way, we don't need to go into the supplemental appropriations. Producers want it fixed upfront," said Meister.
Exchange rate impacts noted
According to Meister, a significant part of the discussion in the session conducted by Ed Smith and Abner Womack, economists for Texas A&M University's Agriculture Food Policy Center, concerned the currency exchange rate and its impacts on trade.
"They were really getting into that issue," said Meister. "They were saying what that does is it creates a 30 to 35 percent penalty for U.S. products to be shipped abroad. Without doing anything, you have that limitation built in that's not being dealt with.
"The `amber box' has restrictions on how much direct inputs can be allowed for under WTO," he continued. You're taking an automatic 30 to 35 percent hit, and that's having an impact against you. That is not being balanced out in that $19.1 billion limit," he explained.
Dan Pustejovsky of Hillsboro, who serves on TFB's Cotton Advisory Committee, was also present at the Texas Agricultural Forum. Pustejovsky suggested that Congress has not been taking into consideration sufficiently the cost of production when formulating farm policy.
"Things like the cost of pumping water, fuel costs, the costs of the transgenic crop, the loss of arsenic acid — these are eating us more than the prices. This is something Congress flat needs to know about. They don't have the other side of the equation," said Pustejovsky.
