The Bush administration’s farm bill proposals have attracted a considerable amount of attention from the national media and environmental groups. But farm organizations haven’t had much to say about them – until now, at least.
National Cotton Council Chairman John Pucheu fired what might be the opening shot in the war over the 2007 farm bill in a room filled with farmers attending the 55th annual Mid-South Farm and Gin Show in Memphis, Tenn.
Pucheu, a cotton producer from Tranquillity, Calif., said most growers have heard Agriculture Secretary Mike Johanns say that because the U.S. cotton industry exports 80 percent of its annual production growers should “clearly see the value of a farm bill that complies with all international agreements.”
But Johanns’ comments about cotton’s dependency on exports raise some critical points for discussion, Pucheu said during one of the Gin Show’s Ag Update sessions.
One of those: The need for U.S. producers to export such a large percentage because of the damage done to the U.S. textile and apparel industry following the ratification of the Uruguay Round agreement in the 1980s.
“Our textile industry was left largely unprotected by the language of the Uruguay Round agreement,” said Pucheu, who was elected the NCC’s chairman at its annual meeting in Austin, Texas, last month. “No domestic quotas and very low tariffs are now U.S. policy and our domestic textile industry has been decimated.”
In contrast, Pucheu noted, the fledgling U.S. bio-fuels industry has quotas and duties that protect U.S. ethanol and biodiesel producers from imports from Brazil and other countries. “Had the same protection been extended to our domestic textile industry, our cotton export picture would look entirely different than it does today.”
It’s also interesting to note, he said, that the country that takes the largest portion of U.S. raw cotton exports – China – has been able to exclude itself from the intense scrutiny that U.S. farm programs have attracted during the Doha Round negotiations.
“The National Cotton Council has made clear that its support for the ambitious U.S. proposal on reductions in domestic support is predicated on commensurate increases in market access,” said Pucheu. “That means credible clear-cut results on China.”
Secretary Johanns has also said U.S. commodity programs must be WTO-compliant and beyond challenge in such cases as that brought by the government of Brazil against the U.S. cotton program in 2004.
“What international agreement would Secretary Johanns have us meet?” asked Pucheu. “All of U.S. agriculture agrees that negotiating from a position of strength in the Doha round is preferable to unilateral disarmament. Writing a weak farm bill today that attempts to meet unknown future disciplines that might arise from negotiations that are currently showing little movement does not seem like a sound strategy.”
Carl Brothers, senior vice president of Riceland Foods, expressed similar concerns during the Ag Update session, saying he had told Deputy U.S. Trade Representative Richard Crowder that the United States must obtain more guarantees of increased market access before making any more proposals to reduce farm subsidies.
Loan rate concerns
Pucheu said National Cotton Council leaders are concerned about the Bush administration’s desire to significantly lower loan rates and impose additional constraints on program benefit eligibility.
In announcing the proposals on Jan. 31, Johanns said USDA believes loan rates should be adjusted to reflect a five-year Olympic price average and the adjusted gross income eligibility limit reduced from $2.5 million to $200,000. (For cotton, under the proposal, the loan rate would decline from 52 cents to 45.7 cents per pound.)
“The administration’s inclusion of a means test for program eligibility of $200,000 in adjusted gross income is difficult to understand,” said Pucheu. “At a minimum, this proposal introduces significant uncertainty about year-to-year eligibility which undermines the objective of establishing predictable farm policy.
“Means testing continues to be bad policy. It has no relevance to global competitiveness or WTO compliance and it discriminates against commercial-size operations. The administration’s proposal greatly expands the intent of Congress which imposed a $2.5 million AGI means test in the current farm bill aimed primarily at eligibility of those with substantial non-farm income.”
He said the Cotton Council will work diligently with congressional leaders to promote cotton’s farm policy priorities, including insuring that the agriculture committees have adequate budget authority to write effective farm policy.
Congress will write the new farm law within the funding guidelines set by the Congressional Budget Office and the Congressional Budget Resolution, which is expected to be passed later this spring.
Analysts have said the Congressional Budget Office could announce a baseline that would be $41 billion that projected for the 2002 farm bill because of the reduced spending on farm programs in the last two years. House Agriculture Committee Chairman Collin Peterson has asked the House Budget Committee for a significant funding increase for farm program spending.
Hard to maintain
“Without a substantial increase in funding, it will be extremely difficult for Congress to write new legislation that maintains effective commodity programs and responds to calls for enhanced conservation programs, a new specialty crop title, a new renewable energy title, enhanced nutrition programs, additional research, a permanent disaster program, and renewal of the dairy program,” said Pucheu.
“The budget not only impacts mandatory spending programs such as the farm bill. We will also continue to advocate adequate appropriations for the continuation of such vital programs as completing boll weevil eradication, support for important cotton production and processing research and funding for USDA Gin Labs.”
The increased dependency on cotton exports means Congress must also maintain funding for the Market Access Program which funds U.S. cotton promotion abroad administered by Cotton Council International, he said.