National Cotton Council and other farm organization leaders are bracing for a donnybrook when House and Senate members return from their August recess and begin debate on the next farm bill.
In the House, members are expected to take up the Farm Security Act of 2001 (H.R. 2464), the bill reported out by the House Agriculture Committee on July 27, shortly after they return on Sept. 5.
In the Senate, Sen. Tom Harkin, D-Iowa, chairman of the Committee on Agriculture and Forestry, reportedly will have a draft farm bill ready for the committee's consideration by the end of August or the first week in September. Republicans on the committee may introduce the House Ag Committee bill.
Most farm organizations are making no secret of the fact that they like what they see in the House bill.
“Chairman Combest and Mr. Stenholm have followed a bipartisan, determined path, and they have reported a bill that meets many of the goals we established at our annual and spring meetings,” said National Cotton Council Chairman James Echols, referring to the chairman and ranking minority member of the House Ag Committee.
“I know every (industry) segment will have its own wish list as we continue to work for the best possible farm bill,” the Memphis merchant said. “Everything I hear suggests that we may have trouble holding what we have in the House bill.”
Speaking at a meeting of the American Cotton Producers, Echols called for the cotton industry to be “both united and persistent” as he listed the Council's priorities for what many hope will be new farm legislation passed in 2001.
“Chairman Harkin has some farm policy ideas that are considerably different than ours,” he noted. “On the positive side, we will be able to work with Senators Cochran, Helms, Lincoln, Hutchinson and Miller.” (Sen. Thad Cochran, R-Miss., Sen. Jesse Helms, R-N.C., Sen. Blanche Lincoln, D-Ark., Sen. Tim Hutchinson, R-Ark., and Sen. Zell Miller, D-Ga.)
While the latter have said they support improving the safety net for farmers through measures similar to those in the House Ag Committee bill, Sen. Harkin and Sen. Richard Lugar, R-Ind., the ranking minority member on the Senate Ag Committee, appear to favor a more conservation payment-oriented approach.”
Echols said one of the Council's highest priorities in the new farm bill will be elimination of the 1.25-cent threshold for the issuance of Step 2 payments under the 1996 farm bill's Three-Step Competitiveness provisions.
“It is an understatement to say that our domestic textile industry is under very serious economic stress,” he said. “We all have a stake in trying to salvage that segment. If we cannot find a way to deliver some significant assistance, we will almost certainly see more bankruptcies and a corresponding sharp reduction in demand for U.S. cotton.”
Other priorities should include permanent cottonseed assistance and freezing the Extra Long Staple (ELS) loan rate. In addition, the NCC continues to seek additional ways to help offset the negative impact on cotton of the strong U.S. dollar.
“Throughout the past two months,” he noted, “we have communicated these objectives to congressional leaders and administration officials, pointing out the destructive impact the strong dollar has had on our industry, the continuing weak prices of cottonseed and the need to ensure that ELS cotton remains a viable choice for Western producers.”
Echols said elimination of the 1.25-cent Step 2 threshold in the cotton competitiveness program may not be enough to help salvage the U.S. textile sector, but would be a start.
“Beyond that, we need to find a way to help the mills offset the devastating impact of the strong dollar,” Echols said.
He said Council economists estimate that if the dollar' value had not risen from its 1995 relationship to other currencies, today's U.S. mill consumption rate would be 12.3 million bales — about 4.5 million bales higher than the current rate. “Think how far that would go toward solving our price and offtake dilemma,” he said.
Echols said exchange rate provisions will cost money and the House already spends all of the $73.5 billion that was authorized for the farm bill. He said the industry may have to consider the possibility that funding for exchange rate adjustments for cotton might have to come from cotton's share of that amount.
Regarding the House Ag Committee farm bill, Echols called it “tailor-made for our industry.” The bill includes:
- Continuation of the marketing loan at current rates;
- Retention of the Three-Step Competitiveness plan;
- Retention of fixed, decoupled payments known as Agricultural Marketing Transition Act (AMTA) payments;
- A new counter-cyclical payment based on the target price system of earlier farm bills;
- An option for growers to update their payment bases;
- Retention of full planting flexibility;
- Maintenance of the extra long staple loan rate and inclusion of the competitiveness provision as an entitlement.
“Although we would have preferred to see payment limits eliminated, the bill does provide for separate and reasonable limits established for each type of payment and continues the availability of marketing certificates,” said Echols. “So, while we didn't get elimination, we did get our backup plan.”