NCC: Stable Farm Policy Vital for Healthy U.S. Cotton Industry

WASHINGTON – The National Cotton Council told a House Agriculture Committee subcommittee here today that stable farm policy is essential for the U.S. cotton industry.

In testimony before the Subcommittee on General Farm Commodities and Risk Management, NCC Chairman Eddie Smith stressed that sound farm policy should provide an effective financial safety net for producers while abiding by our trade policy commitments.

In summarizing 2008 farm law key aspects, the Floydada, Texas producer said that the NCC continues to support that law's cotton program components: the marketing loan, and direct and counter-cyclical payments. Each component, he stated, serves a distinct purpose that is beneficial to U.S. farmers and the industry, as a whole.

Smith said the 2008 farm bill also made historic changes to payment limitations and program eligibility. Limitations were made more restrictive by eliminating the three-entity rule, applying direct attributions, and the adjusted gross income test was substantially tightened.

“Unfortunately, USDA went beyond the statute by modifying actively engaged rules, complicating spousal eligibility and requiring producers to authorize IRS to release information to USDA in implementing key payment eligibility provisions,” Smith testified. “For cotton growers, good farm policy is of little value if commercial-size farming operations are ineligible for benefits. Frankly, the statutory changes combined with overzealous regulations have pushed us to the brink and we will strongly oppose any further restrictions.”

Looking ahead to future policy, Smith acknowledged that the 2012 farm bill debate will take place with several new and increased points of pressure, including the record budget deficits.

“The WTO Brazil case puts cotton's marketing loan and counter-cyclical programs under special scrutiny,” he noted. “While we are relieved that U.S. negotiators have been able to put together an interim agreement that has convinced Brazil to suspend retaliation against nearly $1 billion in U.S. exports, we know there are expectations about modifications to the cotton program as part of the 2012 farm bill.”

Smith stated that the U.S. cotton industry has initiated internal policy deliberations with the appointment of a farm policy task force and is prepared to work with Congress to address the challenges faced in the writing of the 2012 farm bill.

He also noted that development of the 2012 farm bill must consider the competitive balance between commodities due to both farm and energy policies.

The NCC’s full testimony is available at the NCC website’s home page, www.cotton.org.