What is in this article?:
- Racing the calendar for cotton programs in the new farm bill
- Addressing trade pressures
“The later we go into the year, the more difficult it will become to implement crop insurance and other cotton programs in the new farm bill,” says Gary Adams, National Cotton Council vice president of economic and policy analysis. “We’re now well beyond two years since the passage of the Budget Control Act kicked this farm bill debate into high gear, and we still don’t have a bill,” he said at the annual meeting of the Mississippi Agricultural Economics Association at Mississippi State University.
GARY ADAMS, right, National Cotton Council vice president of economic and policy analysis, Memphis, visits with Dave Sites, left, Mississippi State University Extension agricultural economics research associate, and John Johnsey, MSU agricultural economics network administrator, at the annual meeting of the Mississippi Agricultural Economics Association.
With the number of legislative days in 2013 rapidly dwindling for Congress, National Cotton Council’s Gary Adams succinctly summarizes the situation: “We need a farm bill. The further we go toward year’s end, the more potential problems we face for cotton — and agriculture in general.
“We’re now well beyond two years since the passage of the Budget Control Act kicked this farm bill debate into high gear, and we still don’t have a bill,” he said at the annual meeting of the Mississippi Agricultural Economics Association at Mississippi State University.
Adams, NCC’s vice president of economic and policy analysis, says the race against the calendar becomes increasingly critical for cotton. “The later we go into the year, the more difficult it will become to implement programs in the legislation.”
The new farm bill — whether the Senate version or House version, or some combination of the two — “essentially makes crop insurance the delivery mechanism of a safety net for cotton producers, except for the marketing loan. There are no other Title 1 programs.
“This raises issues of implementation. We’re too late in the year now for STAX (Stacked Income Protection Plan) to be ready for 2014. There will also be challenges for the crop insurance industry with program changes, and it will put a tremendous burden on FSA as well when these big changes hit late in the year.”
STAX was developed, Adams says, in keeping with the cotton sector’s goal of policy changes that would address three pressures: spending less money, not relying on the existing farm program structure of direct payments and target prices, and addressing the longstanding trade dispute with Brazil.
“STAX is a shallow loss revenue insurance product designed to be stacked on top of a producer’s individual crop insurance coverage,” he says. “It addresses the level of risk beyond a producer’s crop insurance coverage, and does it as an insurance product that we believe will make it more acceptable from a trade standpoint.
“With direct payments and target prices going away, we believe STAX is a product that will help producers manage this area of risk. “
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STAX is included in both the House and Senate bills, Adams notes. “It’s not as we originally proposed, but it’s very similar. It uses a lot of features of existing crop insurance products and has similarities to existing area-wide products offered by the Risk Management Agency.”
In moving to an insurance-based farm program, there are some differences between the House and Senate bills that will have to be worked out in conference, he says.
“There is a specific implementation process that the Risk Management Agency will go through. The House was concerned that STAX might not be fully operational in 2014, or maybe even in 2015, and they included transition payments in their bill. The Senate bill doesn’t have similar provision.
“There are crop insurance changes that not only apply to cotton, but to other crops as well, that our industry will find very beneficial. Overall, there are a lot of things to like. There are some differences to work out, but from cotton’s standpoint, I don’t think they’re insurmountable.”
Some changes were also made to the marketing loan program, which he says “has been one of the foundations of the farm program for the cotton industry. But it was also one of the programs found to be at fault in the WTO Brazil case. We feel we’ve addressed that problem with a formula where the marketing loan rate can adjust, depending on the moving average of a price.”