Lots Of Discussion, Little Action On 2013 Farm Bill

Cotton has always played a critical role in the development of the United States, especially during the pre-Civil War era, when the young country was just starting to find its way in the world. Although no one expects that to change at any time in the near future, cotton’s standing in the U.S. agriculture industry is in a state of flux, largely due to competition from food crops and the uncertainty of the 2013 Farm Bill.

Bill May, senior vice president of the American Cotton Shippers Assn., sees a complex U.S. cotton industry as he looks to the future, with those topics and many others to be explored at the association’s upcoming national convention, to be held May 8-10 in New Orleans at the Windsor Court Hotel.

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According to May, acreage is a major issue facing the U.S. cotton industry today – and losing it to competing grain crops such as soybeans and corn is the crux of it. Other issues are competition from synthetics and the use of seed modifications. In terms of cotton’s growth in acreage in the next five to 10 years, May said the issue remains uncertain, and it all comes down to pricing. “With competing crops, it’s all price-driven,” he said.

A major issue facing the U.S. cotton industry is the status of the 2013 Farm Bill, which hangs in the balance of a storm of American political posturing.

The bill, most recently modified in 2008, was extended in the most recent U.S. fiscal deal until Sept. 30, 2013. The U.S. Senate and the U.S. Committee on Agriculture passed a version in the summer of 2012, but it never made it to the U.S. House of Representatives. According to a recent report from the U.S. Congressional Budget Office, the current Farm Bill programs hanging in limbo now would cost $976 billion over the next decade rather than the $969 billion forecasted in 2012.

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In a letter dated March 13, 2013, the CBO said the major reasons for the increases over the 2012 figures include:

•  “CBO now estimates that spending on commodity programs under title I of the legislation would cost $1.1 billion more over the next  10 years than we estimated in 2012 because: lower milk prices decrease feed cost margins for dairy producers; and, it is now clear that the recent drought conditions would increase the estimated cost of the livestock disaster assistance program benefits for 2012 and 2013”; and

• “CBO now estimates that spending on conservation programs under title II of the legislation would cost $1.7 billion more over the next 10 years than we estimated in 2012 because recent lower enrollment in the Conservation Reserve Program will eliminate some of the savings we previously expected from the proposal to cap enrollment in the program.”

Right now, little has happened on the Farm Bill. “It all depends on the House and Senate getting back together at the end of April and into May; right now there is no movement,” May said. “A lot of discussion but no action, so farmers likely will be planting before the issue is settled.”

A final issue facing the industry is global challenges in the cotton trade. These include contract sanctity, competition with synthetics, and China’s continuing practice of outsourcing as labor costs continue to rise. “Maintaining markets and honoring contracts is going to be an issue,” May said.

Guest speakers abound

The ACSA’s 89th Annual Convention in New Orleans features a group of guest speakers, each with a keen bent on the issues facing the industry. According to the ACSA, here is who to expect at the show and their background:

• Steven Gallagher, Chief U.S. Economist, Société Générale. Gallagher is responsible for the firm’s North American economic and financial market research. An active member of professional organizations including the New York Forecasting Club, the Bank Economist Group and the National Association for Business Economists. Gallagher figures to supply depth on the issues facing the U.S. cotton industry. He was awarded the National Association for Business Economics’ top forecaster of the year award in 2005 based on forecasts for interest rates in a macroeconomic model.

• Mark Wejten CFTC Commissioner.  Before being sworn into his position for the U.S. Commodity Futures Trading Commission, Wejten served for seven years in the U.S. Senate.  He was a leader on all financial-services matters, with highlights including the Dodd-Frank Wall Street Reform and Consumer Act of 2010. Expected to provide some insight into the commodities market and cotton’s role, Wejten was in private legal practice prior to his stint in the U.S. Senate.
• Julia Reed, Writer on Food, Politics and the South. Reed, a multi-faceted journalist, is a contributor to Newsweek magazine who covers New Orleans politics and the magazine’s “Food and Drink” column. So for ACSA’s annual convention, Reed should provide insight on many relative topics. She’s been writing for Vogue since 1988 and has profiled notable political figures including Al Gore and Condoleezza Rice. She also contributes to the New York Times and makes regular appearances on MSNBC and CNN.

• James Carville, Political Commentator and Media Personality. Carville is a noted U.S. political commentator and was a solid cog in the Democratic Party as a strategist for former U.S. President Bill Clinton. He is married to Republican political strategist Mary Matalin. He was a co-host of CNN’s television debate forum “Crossfire” and now can be seen on its “The Situation Room.”  He also hosts a program on XM Radio titled “60/20 Sports.”

A fleet of guest speakers awaits attendees, as well as a full schedule of meetings and seminars. In addition, historic New Orleans is rich in heritage for its flavor of Europe, the Caribbean and Africa. Attendees can stroll the French Quarter, catch a jazz show, or indulge in the city’s world-famous restaurants and pubs.

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