Pressure Builds for USDA to Act to Help U.S. Cotton Farmers

December 17, 2015

In the midst of dire economic conditions, U.S. cotton farmers can find encouragement from a growing chorus of support for a proposal to help mitigate their current financial struggles.

Just this week 100 lawmakers, a major commodity trade association, and the largest farm organization in the country wrote three separate letters to the U.S. Department of Agriculture (USDA) Secretary, Tom Vilsack, expressing support for him to use authority under the 2014 Farm Bill to designate cottonseed as an oilseed. This designation would make cottonseed producers eligible for Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC).

“We encourage USDA to take any policy actions that can have a stabilizing effect on the U.S. cotton industry… Our request specifically concerns cottonseed, as the support for cotton lint has already been determined under the terms of the Farm Bill,” wrote members of the U.S. House of Representatives, including Majority Leader Kevin McCarthy and Majority Whip Steve Scalise. “We view this action as consistent with the intent of Congress in the 2014 Farm Bill.”

In another letter, the American Soybean Association (ASA) acknowledged the stress on a large majority of cotton farmers who are operating with little or no protection against current market forces. This proposed measure, they write, “would offer an improved safety net.”

And, the American Farm Bureau Federation (AFBF) echoed this sentiment in their own letter, “Our cotton producers are experiencing difficult economic conditions that are not sufficiently addressed by the new Farm Bill’s safety net and risk management programs and provisions.”

The effort to persuade USDA to act follows a House Agriculture Committee hearing where representatives from the cotton industry highlighted the extent of the suffering in cotton-growing areas with depressed prices and higher input costs and the broader economic impact if the trend continues.

“Farmers in our part of the country were totally bled out of liquidity by the end of last year,” explained Shawn Holladay, the president of the Plains Cotton Growers. “A great many struggled to get approved for financing for this year with many forced to sell off land, and still others forced to quit.”

Mike Wright, a banker from Texas – the largest cotton producing state – further put it in perspective for the panel, “Losses in cotton area are a tremendous concern for agricultural lenders as this translates into pressure on associated businesses, infrastructure, and rural economies who are also customers.”

Another compelling argument for USDA to act is the fact that U.S. cotton farmers are at a clear disadvantage when trying to compete on the world stage with its foreign counterparts.

“While U.S. support for cotton has been declining in recent years, government intervention in other countries has been increasing,” said Shane Stephens, the vice chairman of the National Cotton Council – a group that represents the cotton industry and the author of the cottonseed proposal request that USDA is considering.

The most egregious example of this is China, which has manipulated world prices by accumulating large cotton stocks while also heavily subsidizing its own production.

“Cotton farmers in the United States cannot survive long on 60 cent cotton as China and other countries subsidize and glut the world market by guaranteeing their farmers $1.40 a pound,” stated Holladay.

Perhaps most striking about this request to USDA and the ensuing support for it is the unifying spirit in which parts of the agriculture community and others have responded to the plight of cotton farmers. Lawmakers of both parties representing states with little to no cotton production have signed onto the effort.

Rep. Tim Walz, the ranking member of the General Farm Commodities and Risk Management Subcommittee, concluded the hearing last week by saying, “Your marching orders to us on action steps to take on oilseed is immediate. It needs to be done.”

While farmers of different commodities have also recognized the merits of sticking together. “All of us in agriculture need to work together to support a safety net that works for all farmers,” commented ASA Chairman Wade Cowan in a press release. “Soybean growers are pleased to work with fellow producers from the cotton belt to make sure such a safety net exists.”

All that is needed now is for USDA to act – and to do so quickly. Looking at the developments of this week, Secretary Vilsack has strong, bipartisan support to move forward. Cotton farmers and a whole host of others are counting on timely relief.