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By Lana Robinson
Field Editor
Early claims by the press that U.S. farm program payments would be slashed by 20 percent in the first year if the World Trade Organization (WTO) approves the latest Doha Round framework agreement are being disputed by cotton industry leaders. National Cotton Council of America (NCC) officials have been working hard to set the record straight with regard to "misconstrued and misreported" requirements.
"References to various boxes and de minimis allocations provide ample opportunity for misunderstanding," said Mark Lange, NCC president and CEO. "However, statements from Ambassadors Robert Zoellick and Allen Johnson, together with a review by the NCC, suggest that there is sufficient structural flexibility in the way cuts can be made to maintain an effective farm program."
Although the agreement does indeed call for a 20 percent reduction, Lange said it does not pertain to the $19.1 billion amber box ceiling that applies to U.S. farm programs. Instead, Lange said the relevant number for the 20 percent reduction is pegged at $49 billion, which is a combination of amber box payments, product-specific and non-product-specific de minimis and blue box payments.
Woody Anderson of Colorado City, a cotton farmer who serves as the current NCC chairman, said the WTO framework text merely provides the basis for further negotiations under the Doha Development Round. The document, he said, includes general concepts in key areas such as agriculture and industrial market access. Further negotiations in the Doha Round will develop specific policy changes consistent with the framework text.
"The framework agreement is just the very beginning of a long negotiation process, a tool to keep the process moving forward. Still, the U.S. cotton industry had some concerns about specific references to cotton in the framework agreement," Anderson told Curt Lancaster, Texas Farm Bureau Network director of radio services, in a recent interview. "We're glad to see that cotton is going to be addressed in the overall agriculture negotiations. However, we are concerned that cotton was named specifically and none of the other commodities were."
The Mitchell County producer also disagreed with claims that the U.S. program has significantly affected world cotton prices.
"Studies by FAO (Food and Agriculture Organization of the United Nations), Texas Tech University and the IMF (International Monetary Fund) all report that the U.S. cotton program affects world prices by only 1 to 3 percent. Some of these other groups are talking numbers in the 25 to 30 percent range We are trying to set the record straight using independent economic analysis to tell the true story. I think we are beginning to have some effect getting the word out," Anderson said.
Anderson, who is also chairman of the Texas Boll Weevil Eradication Foundation and an advisory committee chairman of the Texas Agriculture Policy Board, said the rhetoric blaming the United States for oversupply and overproduction of cotton is inaccurate. According to Anderson, the world share of cotton production grown in the United States for the last 30 years is virtually unchanged at about 20 percent.
"If you look back over the last four to five years, production has remained stable at around 17 to 18 million bales. We use between 22 to 24 million bales, so we are a net importer of cotton. Last year, China was a purchaser of U.S. cotton and we anticipate selling additional cotton to China this year," he said. "The U.S. has less than one-fifth of the world's cotton production. If you throw in synthetics and other fibers, the U.S. represents less than 7 percent of the fiber market in the world."
Anderson said the recent statement issued by the G-90 group of less developed countries unfairly targets the U.S. cotton program as the cause of declining cotton prices.
Anderson argues that factors outside the U.S., such as surging production in China and Brazil, are to blame. He said that Brazil's and China's combined production has increased by 8.6 million bales since 2001, which is twice as much as the annual production of West Africa. He suggested that is preventing a strengthening of world market prices.
"In addition to that, nobody's talked much about what's happening with synthetics' effect, especially use of polyester, on fiber markets around the world," he said.
Anderson believes promoting cotton to consumers is the answer to increasing demand. He said the U.S. industry had done a great job over the past 20 to 30 years of raising the level of awareness and use of cotton in the U.S., as well as around the world, through effective checkoff programs.
"As we move farther and farther into world market to sell our cotton products, we have to do a better job of showing the benefit to the consumer about buying cotton apparel. The U.S. has done a good job of that, and we hope to carry that forward as we work through some of these trade agreements," he said.
Although cotton has been singled out in the framework agreement, Anderson said everyone involved in agriculture should pay attention.
"They just decided to use cotton as a starting point. I assure you if they continue down this track on cotton, other commodities and ag programs are not far behind," Anderson warned. "I think agriculture has this issue in all of their interests to see that cotton is treated fairly, because ultimately it will affect all of us."
