{"id":459,"date":"2017-08-03T09:00:17","date_gmt":"2017-08-03T13:00:17","guid":{"rendered":"http:\/\/site.extension.uga.edu\/plowpoints\/?p=459"},"modified":"2017-08-01T13:52:12","modified_gmt":"2017-08-01T17:52:12","slug":"ag-economics-recent-cotton-policy-developments-by-don-shurley","status":"publish","type":"post","link":"https:\/\/site.extension.uga.edu\/plowpoints\/2017\/08\/ag-economics-recent-cotton-policy-developments-by-don-shurley\/","title":{"rendered":"AG Economics Recent Cotton Policy Developments by Don Shurley"},"content":{"rendered":"

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Background and Summary of Recent Cotton Policy Developments<\/strong><\/p>\n

\u00a0<\/strong>Don Shurley – Cotton Economist\/Professor Emeritus of Cotton Economics<\/p>\n

Under the 2014 farm bill, cotton is not a \u201ccovered commodity\u201d and not eligible for the ARC and PLC programs. Cotton\u2019s \u201csafety net\u201d is STAX but STAX has not been as well utilized and accepted by growers as expected.<\/p>\n

One objective of the farm bill is to provide an income safety net for production agriculture. The provisions of this \u201csafety net\u201d are spelled out mostly in what we call the Title I portion of the farm bill legislation.\u00a0 Cotton, with exception of the Marketing Loan, is no longer included in Title I and, compared to covered commodities like corn, soybeans, and peanuts, is at a risk management disadvantage.<\/p>\n

One of the things that the 2014 farm bill did do was to convert the cotton base on a farm to Generic Base. If a farm has Generic Base, acres planted to covered commodities on that farm can be \u201cassigned\u201d to the Generic Base for that year and become temporary base acres of that covered commodity in addition to the permanent base of covered commodities on that farm.\u00a0 So, this gave value to the cotton base on a farm and acres planted and earning temporary base are eligible for any ARC or PLC payment\u2014but this did nothing for cotton specifically.<\/p>\n

The current farm bill is now in its 4th year and will expire with the 2018 crop year unless extended.\u00a0 Over the past several years, cotton\u2019s unfavorable policy position has been at the forefront and industry leadership has sought ways to improve the income safety net for cotton producers.\u00a0 Policy options have included interim measures to bridge the gap until a new farm bill is in place and also efforts to get cotton back in Title I of the next farm bill.<\/p>\n

A major industry emphasis has been including and designating cottonseed as an \u201cOther Oilseed\u201d within Title I of the current farm bill and thus making it eligible for PLC.\u00a0 Such an attempt was unsuccessful last year when then Secretary of Agriculture Tom Vilsack concluded that he lacked authority to make such a designation under the 2014 farm bill and that other provisions of the farm bill also made such a designation unworkable.<\/p>\n

An industry, legislative, and administrative effort that has provided some relief was the Cotton Ginning Cost Share Program (CGCS). A 1-time lump sum payment was made to producers in 2016 based on 2015 cotton acres planted as reported to FSA.\u00a0 This payment was equal to an estimated 40% of the average cost of ginning by region.\u00a0 The payment to Georgia producers was $47.44 per acre and subject to a limit of $40,000 per person or legal entity.\u00a0 This payment was not subject to a budget sequestration reduction.<\/p>\n

Cotton leadership has continued to push both the cottonseed proposal and additional years of the CGCS Program. I believe these attempts have been aimed at searching for ways to get a cottonseed deal done and get cotton producers some help now rather than risk that in a new farm bill which is still 2 years down the road.<\/p>\n

In May, however, efforts to get a cottonseed policy included in the FY17 Omnibus spending bill fell short and cottonseed was not included. That bill did, however, direct USDA to within 60 days come up with solutions to help cotton producers.<\/p>\n

Recent developments have been more positive and encouraging. On July 12th, the House Appropriations Committee approved its FY18 Ag Appropriations bill which included language encouraging USDA to provide for a cottonseed program and\/or operate the CGCS Program for 2016 and future years.\u00a0 On July 20th, the Senate Appropriations Committee approved its FY18 Ag Appropriations bill that also included language supporting a cottonseed policy beginning with the 2018 crop.<\/p>\n

On July 18th, 2 bipartisan Congressional letters from the House (109 members signed) and the Senate (26 members signed) were sent to President Trump requesting his Administration use the authority and through USDA to reinstate the CGCS Program for the 2016 crop and to continue it in an on-going basis for the 2017 and 2018 crops until a new farm bill is in place.\u00a0 On July 17th, a letter was sent to President Trump signed by over 1,600 lenders, agribusinesses, and rural businesses urging him to support the CGCS Program.<\/p>\n

No legislation has been enacted at this time nor any decision made by the Administration yet. These industry and Congressional efforts are ongoing.\u00a0 The CGCS Program is seen as providing an important \u201cbridge\u201d to help cotton producers, their families, and rural communities until the cotton policy situation can be addressed in a longer term manner within the next farm bill.\u00a0 A cottonseed policy is seen as a possible way to get cotton back into Title I under the current farm bill, improve the safety net for the cotton enterprise, and strengthen cotton\u2019s position and support going into the next farm bill.<\/p>\n

Discussion surrounding a cottonseed policy, and cotton in general, and the benefits of a cottonseed policy will depend on many things including:<\/p>\n