The New Farm Bill Will Be Good for Cotton – Beginning in 2015

Capitol HillAfter three years of working on farm bill policy analysis with Congress, Joe Outlaw admits to a bit of farm bill fatigue. But he’s also optimistic that passage of the long-overdue legislation is near.

Outlaw, professor and Extension economist and co-director of the Agricultural and Food Policy Center at Texas A&M University, shared his thoughts on the farm bill at the Cotton Grower SoundOFF Luncheon, held during the 2014 Beltwide Cotton Conferences in New Orleans.

“The bill is basically done,” he said. “I truly believe it will be completed and be in place for the 2014 crop for basically every crop except cotton. Because of the transition to the STAX program, which is an insurance-based program, the cotton program will be delayed for one year, and there will be a partial direct payment for 2014.”

Even after three years in development, there is still a sense of urgency attached to the legislation. Outlaw explained that the Congressional Budget Office traditionally does a January baseline, which is released in February.

“There’s going to be intense pressure to get this legislation done quickly before that new round of budget estimates comes out,” he stated.

Because cotton will be moving to an insurance program, growers will no longer receive Title I benefits for anything other than the loan program under the new legislation.

“The cotton industry uses the loan program more than any other commodity for marketing purposes,” said Outlaw. “A safety net will be in place when this bill is finished, but it will be less than what growers have had in the past. Congress is spending less money. There’s no way to provide more support with less money.”

Outlaw fully believes the STAX program will work for the cotton industry. But he also reminds growers that there are no floors in an insurance program. When the price goes down, so does the level of protection.

“Growers will have to protect their prices in a different mechanism,” he pointed out. “It’s going to be a new world for cotton, and I believe it will work and provide some support. But there’s not going to be the price protection that has been there in the past.”

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