Congress passed and President Donald Trump signed Feb. 9 a supplemental disaster bill that includes critically needed policy that restores eligibility for cotton in the Title I Agriculture Risk Coverage/Price Loss Coverage programs of the farm bill.
The legislation also includes important agricultural disaster assistance, plus additional support to dairy producers.
Senate Appropriations Committee Chairman Thad Cochran, R-MS, said in a statement, “The cotton and dairy provisions are the outcome of months of joint efforts with my friend, Vice Chairman Patrick Leahy, D-VT, to help cotton and dairy producers overcome economic hardships that threaten their livelihoods.”
National Cotton Council Chairman Ronnie Lee said in a statement, “This measure will provide cotton producers and lenders some certainty as they prepare for the 2018 growing season. The new policy will help ease the financial burden as producers struggle to cover total costs.”
The Georgia cotton producer said the United States cotton industry is very appreciative of Cochran’s support along with that of House Agriculture Committee Chairman (Mike) Conaway, R-TX, which made it possible to advance this important policy through the House and Senate.
Lee said the industry also is very grateful for the key support of several representatives.
“Our industry is also thankful for the strong support and commitment to this issue by the Cotton Belt Members in the House and Senate and the recognition by Congressional leadership that this situation had to be addressed,” Lee said. “These members recognized the need for cotton policy that could stabilize our industry. They are keenly aware of the challenging financial situation that American cotton producers and their families have faced and continue to face.”
Lee said the council has worked for more than two years to get stabilizing policy in place in advance of the next farm bill.
“And we will continue to work with Congress and the administration to get a new farm bill enacted that will enable America’s farmers and ranchers to continue producing the abundant and affordable food and fiber our nation and world has come to expect.”
More money available
Besides providing immediate assistance to producers, the provisions would mean, under arcane score-keeping rules, that farm-state lawmakers can spend more money on cotton in the 2018 farm bill than is available now.
Debbie Stabenow of Michigan, and the senior Democrat on the Senate Agriculture Committee, announced the budget package “contains significant improvements for cotton and dairy producers who say the insurance-like supports created in the 2014 farm law have been woefully inadequate.
The cotton subsidy, called STAX, has attracted relatively few growers and “due to lower cotton prices, it has provided lower revenue than producers expected at the time of the bill’s passage,” said Secretary of Agriculture Sonny Perdue.
The 2014 law created STAX, a revenue insurance program with a guaranteed minimum price for the fiber, to resolve a World Trade Organization ruling against the longtime U.S. cotton program. Growers have suggested various ways to make their crop eligible for the same subsidies available to grain and soybean farmers, such as declaring that cottonseed is a vegetable oil crop or creating a support for “seed cotton, ” that is, unginned cotton with lint still attached to the seed.
Jody Campiche, the NCC’s vice president for economics and policy analysis, said cotton was removed as a cover commodity under the 2014 farm bill and STAX was designed for additional crop protection since cotton no longer was placed under the Title I (Commodity) provisions of the bill.
“STAX is based on countywide losses but it doesn’t necessarily cover individual losses,” Campiche said. “A producer could have a loss, the county wouldn’t have a loss and the producer wouldn’t get a payment.
In the old program, cotton lint was covered. But now, seed cotton is a combination of cotton lint and cottonseed. STAX provides protection if the price of lint falls or the price of cottonseed falls, as those two prices don’t always move together. The theory is that STAX will stabilize the industry, get cotton back on equal footing with other commodities and add protection in times of low prices.
U.S. cotton producers intend to plant 13.1 million cotton acres this spring, up 3.7 percent from 2017, according to the National Cotton Council’s 37th Annual Early Season Planting Intentions Survey Feb. 10. Upland cotton intentions are 12.8 million acres, up 3.8 percent from 2017, while extra-long staple intentions of 254,000 acres represent a 1 percent increase.
“Planted acreage is just one of the factors that will determine supplies of cotton and cottonseed. Ultimately, weather, insect pressures and agronomic conditions play a significant role in determining crop size,” Campiche said.
With abandonment assumed at approximately 15 percent for the U.S., Cotton Belt harvested area totals 11.1 million acres. Using an average U.S. yield per harvested acre of 842 pounds generates a cotton crop of 19.4 million bales, with 18.7 million upland bales and 744,000 ELS bales, Campiche said.
More competition for cotton
The NCC questionnaire, mailed in mid-December 2017 to producers across the 17-state Cotton Belt, asked producers for the number of acres devoted to cotton and other crops in 2017 and the acres planned for the upcoming season. Survey responses were collected through mid-January.
Campiche noted, “History has shown that U.S. farmers respond to relative prices when making planting decisions. During the survey period, cotton futures prices were stronger relative to competing crops. The price ratios of cotton to corn and soybeans are more favorable than in 2017.
“However, soybeans are expected to provide competition for available acres in 2018, due in part to the lower production costs relative to cotton. While cotton prices have improved relative to other crops, cottonseed prices are at the lowest level since the 2006 marketing year, thus increasing the net costs of ginning, he said.
Southwest growers intend to plant 8 million acres of cotton, an increase of 5.7 percent. Increases in cotton area are expected in each of the three states.
In Kansas, producers intend to plant 55.3 percent more cotton acres, along with more wheat and “other crops,” likely sorghum. Kansas growers intend to plant less corn and soybeans.
In Oklahoma, a 21 percent increase in cotton acreage is expected as wheat acreage declines. Oklahoma respondents report a small increase in “other crops.”
Texas acreage is expected to increase by 3.7 percent. Texas respondents expect to plant more wheat acres and less corn and “other crops.”
Larry Dreiling can be reached at 785-628-1117 or [email protected].