Mark Lange Outlines 2014 Farm Bill and Challenges for Cotton FarmersWed, 28 Jan 2015 16:13:22 CST
Cotton is treated very different from other crops in the 2014 Farm Bill. National Cotton Council President and Chief Executive Officer Dr. Mark Lange said cotton farmers can’t enroll their cotton acres in the Agricultural Risk Coverage (ARC) or Price Loss Coverage (PLC) programs. The safety net for cotton revolves around the Stacked Income Protection Plan, mostly commonly referred to as STAX. This is an insurance product sold by private insurance companies. Lange said STAX has an 80 percent premium subsidy and it is a shallow loss program that growers can buy on top of their coverage.
This is a new type of safety net for U.S. cotton farmers. Lange said this approach is a direct result of a suit filed by Brazil with the World Trade Organization in 2009, claiming target prices were trade distortive and demanded target prices should be removed. This past summer, Brazil signed an agreement that they would not challenge the 2014 Farm Bill policy for cotton, but the peace clause in the agreement allows Brazil to reserve the right to challenge the next Farm Bill, especially if Congress restores target prices.
Radio Oklahoma Network Farm Director Ron Hays is covering the Red River Crops Conference in Childress, Texas, where he caught up with Lange. Click or tap on the LISTENBAR below to listen to the full interview.
As the 2014 Farm Bill is being implemented for the 2015 growing season, Lange sees several problems with the policy as cotton does not have the same price protection as the other crops. The 2014 Farm Bill also has payment limitations, which could become a significant factor facing growers.
“Our growers turn their cotton over to a cooperative or to a merchant and they have no idea what kind of marketing loan accumulation is being charged against their payment limit,” Lange said. “USDA today can’t tell them and in my view that is a critical flaw.”
The National Cotton Council has been talking with USDA on this issue, but progress has been slow. Lange said growers need to know by October where they stand, so they don’t get an overpayment on ARC or PLC on other crops, and then they find out they need to return money to the government.
The 2014 Farm Bill also directed the U.S. Ag Secretary to update the definition for “active personnel management”, which allow individuals to qualify in being actively engaged in farming. Lange said just because someone is not living on a farm, that does not mean they are not making significant contributions in pricing inputs and marketing commodities, which may determine if there is a profit or loss on that farm. Additionally, Lange said USDA needs to get those rules out well in advance of any sign up so people understand the rules of which governs their eligibility for program benefits. Even if the comment period started, program sign up is underway and he doesn’t think it is reasonable for USDA to think they get something out and have it apply to the 2015 growing season.
In looking at the state of the cotton industry, Lange said we are moving into a period of extraordinary uncertainty with a lot of strength. He believes there is strength in the cotton organizations with sound leadership, but he is concerned about the change the Farm Policy with no target price protection and no safety net like other crops. In moving into a time with weaker commodity prices, he said this has everyone very nervous. Lange is concerned farmers could be hurt with low prices, below the cost of production.
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