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NCC leadership updates Beltwide on farm bill progressBy Jennifer M. Latzke John Maguire, senior vice president, Washington Operations for the National Cotton Council updated Beltwide attendees on the farm bill process during the opening Production Conference session the morning of Jan. 9. NCC Chairman John Pucheu alluded to the difficulties cotton faced during the recent farm bill debates in the U.S. House and Senate during his remarks earlier. Maguire expanded on just how difficult the process was for cotton interests. Reform was the word, Maguire said. The cotton program was criticized for its high cost and that it is "out of balance" with other commodity programs, as well as its international challenges in the trade arena. In addition, the budget baseline for commodities was 42 percent below 2002, further strengthening the calls for reform of payment limitations. The farm bill also needed to find new funds for specialty crops, an energy title and a permanent disaster program, Maguire said. Clearly, with the emphasis on payment limitations and budget concerns cotton had to find a reasonable alternative to protect what payments it could so that farmers wouldn't be unduly penalized and the safety net of the farm bill would not be undermined, Maguire said. The House bill, as passed in July, maintains the current program structure with market loans, target prices and direct payments. But, it also offers farmers the chance to choose a revenue option or target price. Specifically for cotton, the House bill left unchanged the base loan rate, direct payments and base and included most of the industry's 14-point proposal for mill assistance. It also extended the authority for storage credits until the 2011 crop. The House version includes payment limit provisions, that eliminate the three-entity rule and apply direct attribution. The limit for direct payments is capped at $60,000 and the limit for counter-cyclical payments is at $65,000. While it eliminates certificate redemptions, there are no limits on marketing loan gains and loan deficiency payments. The House bill also includes an Adjusted Gross Income provision that looks at the three-year average for applicants and enhances the definition of farming, ranching and forestry income. On the Senate side, Maguire said, the farm bill it passed, in a 79 to 14 vote, maintains the structure of the current program with market loans, target prices and direct payments. It also includes a revenue plan, the ACR, as an option for farmers starting in 2010. For cotton, the bill leaves the base loan rate, direct payment, base and yield unchanged. However, costs are off-set by lowering the target price; modifying calculation of premiums and discounts' and eliminating location differentials. It also offers some assistance for domestic textile manufacturers and mandates storage credits. The Senate version includes is own payment limit provisions, eliminating the three-entity rule and applying direct attribution, but it maintains a cap of $40,000 for direct payments and reduces counter-cyclical payments to a limit of $60,000. It's all up to the conference committee now. Some of the things left to be ironed out in conference will be establishing a budget baseline, and looking at the savings that have been created through adjustments in timing of payments and the allocations between programs. Another issue is just how much reform of payment limitations the conference will be ready to implement, finding a balance between the House and Senate packages. The committee will also have to discuss revenue plans and options, a permanent disaster program, and specialty crop funding. The President has stated that he will veto any bill that does not have true payment limit reform or has the current tax and "savings" provisions. A veto would set back the process, and the current law expires March 15. Winter wheat and spring crops will need to be planted and farmers need to have a bill on the books before then. Maguire listed several challenges to cotton in 2008, including the economy, the presidential election, China and India's impacts on world commodity markets and the value of the U.S. dollar. Most importantly, cotton is facing competition for acres from corn and soybeans due to increased renewable fuel production, and that will have an affect on infrastructure and rural economies, he said.
Jennifer M. Latzke can be reached by phone at 620-227-1807, or by e-mail at jlatzke@hpj.com . 2/4/08 Date: 1/31/08
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