Mid-South cotton farmers struggling with the possibility of having to pay CCC loan storage fees on their 2006 crop could face another financial burden on storage charges, leaders of Mississippi’s largest farm organizations say.

The Mississippi Farm Bureau Federation and the Delta Council have written a letter to the Mississippi congressional delegation asking them to help retain warehouse storage credits for the cotton marketing loan program for the 2008 fiscal year.

The Bush administration’s annual budget submission contains a proposal to withhold funds for implementing cotton warehouse storage credits for the 2008 fiscal year. Currently, the Commodity Credit Corp. pays interest and storage charges in cotton loan redemptions when the adjusted world price or AWP is below the loan rate.

“We feel any action to eliminate cotton storage credits would be most untimely, and a significant setback to the effectiveness of the marketing loan,” said the letter signed by Farm Bureau President David Waide and Delta Council President Tom Gary. “Such an action would definitely make U.S. cotton less competitive.”

Last September, USDA announced new rules that will require farmers to pay storage charges above $2.60 per bale per bale and bill farmers for unpaid compression charges that can run as high as $7 per bale.

With cotton prices stagnant in recent months, growers have put more cotton in the CCC loan from the 2006 crop than in recent years. The rules change has created a situation in which farmers could be required to pay 3 cents to 4 cents per pound in storage charges if they forfeit loan cotton to the government.

The administration proposal would eliminate any government payments for storage on loan cotton beginning in October 2007.

“These warehouse storage credits are vital to the effectiveness of the cotton marketing loan program,” said Rob Farmer, chair of Mississippi Farm Bureau’s Cotton Advisory Committee. “It appears producers might have to bear the burden of pre-payment of storage for their cotton in the loan. With the current market price of cotton, this would be detrimental to the producer.”

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