What is in this article?:
- NCC 2014 annual meeting held in Washington, D.C.
- What economic issues should producers look to in 2014?
- Chinese supply could have major impact on market prices.
New trade deal?
Queried on the potential effects of a Trans-Pacific Partnership deal on U.S. cotton, Adams admitted some concern. “That is an important issue we’re watching. The big question there is what affect it will have on the U.S. textile industry, which still consumes a bit over 3.5 million bales of our production every year.
“Vietnam is one of the countries participating in the Trans-Pacific Partnership. We’re very concerned with the amount of access to the U.S. retail market that Vietnam might get under more relaxed import restrictions.
“We continue to push for what we call the ‘rule-of-origin’ and that the TPP is consistent with NAFTA. That will provide some restraints on the access granted to Vietnam. Without that rule, it will have a negative effect on not only the U.S. textile industry but also the textile industries in other Western Hemisphere countries that are major customers of U.S. cotton and cotton yarn.
“Again, the key is whether a rule of origin will provide the U.S. textile industry some protection.”
Regarding the new farm bill, STAX, and coming programs, Adams said there will be “several enhancements to insurance products available to cotton producers. Those will begin in 2015.
“One of them will be called ‘STAX’ that is designed to be a revenue insurance product that producers can buy to cover the portion of income between 70 and 90 percent — the upper level of risk. Some people prefer to think of it as ‘shallow loss’ insurance.”
The Supplemental Coverage Option (SCO) is a similar concept and could be an alternative for some producers.
“Regardless, risk management is what producers will be looking at in the way of support and to provide a safety net for cotton.
“It is the case that this is a major change because going forward direct payments and counter-cyclical payments that we became accustomed to under past farm bills will be discontinued. Part of that was due to the pressures we faced in trying to resolve the long-standing WTO dispute (with Brazil).”
Adams said the other provision that cotton farmers need to be aware of “is the 2014 transition program since STAX starts in 2015. This year, cotton farmers will bridge the gap through a transition payment that will be based on their 2013 base acres and payment yield.”