- Farm groups resigned to deep farm program cuts.
- Most expect direct payments will disappear.
- Groups express concern with gaps in revenue assistance programs.
Gary Adams, vice president, economics and policy analysis, NCC, said a sound farm policy is “essential to the economic viability of the cotton industry. The 2008 program has served the industry well, but looking ahead, the industry faced the challenge of designing the most effective safety net while addressing reduced budget resources and the Brazil WTO dispute.”
He said STAX will provide levels of income protection, similar to GRIP (group risk income protection) plans. “STAX is designed to complement insurance purchase decisions,” Adams said.
For the most part, the program would use county level yields, he said. “But some counties have too little cotton so some grouping will be necessary. The program will provide cotton farmers the opportunity to cover deep losses.
“STAX is on top of a producer’s individual crop insurance but there is no requirement to buy crop insurance coverage. Most will have CAT (catastrophic loss) policies.”
Adams said the program would make “enhancements to GRIP but incorporate what GRIP already offers.”
He said STAX is no “one-size-fits-all” program. “Producers have coverage options. The exact level of coverage is selected by each producer. The program will not pay every year, but an individual producer does not have to suffer a loss. Payment depends on county losses.”
Adams said producers would pay a percentage of the premium for STAX, “similar to existing enterprise unit policies.”
He said NCC is also looking at options to settle the Brazil WTO case, including changes in the marketing loan. “NCC proposes to allow the level of the marketing loan to change based on historical average world price,” he said.
The maximum loan rate would be no higher than 52 cents a pound and the minimum would be 47 cents a pound. “All other aspects of the marketing loan would remain the same. Brazil might push back and charge that it’s only a 5cents per pound adjustment and that the marketing loan is still in place.
“But we believe this meets the (WTO) panel’s definition of a ‘significant change.’ I believe NCC has addressed the budget and the Brazil case.”