U.S. Cotton Leaders Resolute in Farm Policy
February 22, 2012 Facing a severe time restriction, difficult budget and trade limitations, U.S. cotton producer leaders boldly guided the development of a dramatically new farm policy. They believed this federal cotton program adjustment would immediately strengthen U.S. cotton producers’ ability to manage risk by making an affordable revenue-based crop insurance program available for purchase. The recommendation was then submitted by NCC to Congress for consideration.
Many cotton industry leaders, along with NCC staff, monitored the political and budgetary environment in our nation’s capitol. An anticipated challenge came with the Budget Control Act of 2011 passage in August. The NCC quickly recognized that baseline spending for the next farm bill debate would be reduced by whatever portion of the $1.4 trillion savings that was assigned to agriculture by the Joint Commission.
Based on that understanding, NCC leaders directed their staff to prepare cotton farm program delivery system options for consideration.
These options were presented to the American Cotton Producers (ACP) Farm Policy Task Force, comprised of producer leaders from each region of the United States.
The task force recognized that simply downsizing the current cotton program structure would likely undermine its effectiveness. They also recognized that the trade-distorting practices identified in the World Trade Organization Brazil case would have to be addressed in policy recommendations.
Going in a New Direction
After extensive analysis and thorough debate, the task force made a unanimous recommendation for a new cotton program direction. It recommended an income safety net that is consistent with crop insurance delivery and complements existing crop insurance programs. This safety net addresses shallow revenue losses on a geographic basis, with producer premiums offset to the maximum extent possible using available cotton program spending authority. They also recommended maintaining an effective marketing loan.
The ACP adopted the recommendations, which later were adopted by the NCC’s Farm Policy Task Force and then the NCC board of directors.
Promoting the STAX Program
Immediately following adoption, NCC’s staff were directed to begin educating congressional members and the administration on the rationale and details of this Stacked Income Protection Program (STAX).
They conveyed that the STAX structure would:
1. best utilize reduced budget resources
2. respond to public criticism by directing benefits to growers who suffer losses resulting from factors beyond their control
3. build on existing crop insurance, thus ensuring no duplication while offering program simplification potential
The industry also believed the cotton program revisions, scheduled to go into effect for the 2013 crop year, would provide confidence to lenders. They ensured it would promote market-oriented production decisions that ultimately serve the long-term financial health of cotton merchandisers and processors, as well as related businesses and rural economies. Simultaneously, legislative language was developed, estimated producer premiums were discussed and a Congressional Budget Office score was obtained.
The development of this farm policy position demonstrated the NCC’s enduring strength in recognizing a difficult challenge and addressing it to the benefit of the entire industry. It also reaffirmed the NCC’s ongoing commitment to ensuring there is a safety net in place for American cotton producers.
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