Cotton, peanuts, sugar dominate 2nd House Ag commodity hearing
April 4, 2017
The problems of cotton, peanut and sugar producers dominated a House Agriculture General Farm Commodities and Risk Management Subcommittee hearing April 4 on the commodity title of the next farm bill.
In an opening statement, Rep. Rick Crawford, R-Ark., said, "While we will hear about is what is and is not working, we will also have the opportunity to hear from a crop that was left out of the commodity title in the last farm bill altogether, and that is cotton."
"We will hear about the effects that this lack of policy has had on the cotton industry and the ripple effect across other crops and rural communities," Crawford said. "While committee leadership at the time warned this could happen, this provides yet another real-world example of why we need sensible farm policies in place for all major commodities."
Ronnie Lee, a Georgia farmer who is chairman of the National Cotton Council, said the combination of the world market, including low polyester prices, and the inadequacy of the Stacked Income Protection Plan (STAX) established under the 2014 farm bill, has put cotton farmers in dire straits. Extremely low prices had rendered revenue assistance from STAX not beneficial enough for a lot of cotton farmers to sign up, Lee said.
Lee noted that the NCC attempted to convince the Obama administration to declare cottonseed an oil seed, which would make it eligible for payments in times of depressed markets, but that Agriculture Secretary Tom Vilsack said USDA lawyers said cottonseed could not be made eligible without congressional action.
While NCC is hoping the Trump administration might decide cottonseed can be declared an oilseed, Lee said the organization has also prepared a proposal for Congress to take that action and to allow the conversion of what's known as generic base acres to be converted to cottonseed base or to other covered crop base.
Lee said NCC may seek to make those changes through the appropriations process.
Cotton was taken out of Title I of the farm bill in order to comply with a World Trade Organization decision that found the U.S. cotton program had resulted in damages to Brazilian cotton growers, but Rep. Jodey Arrington, R-Texas, appealed to his fellow committee members to help him put cotton back in Title I.
"We are sucking air," Arrington said.
Rep. Frank Lucas, R-Okla., who chaired the committee when the 2014 farm bill was written, said the cotton program changes to resolve the WTO case had not turned out as well as hoped, but said he is somewhat optimistic than the Trump administration will do a better job of implementing the program than the Obama administration did.
Tim McMillan of the Southern Peanut Farmers Federation said the Price Loss Coverage program has been vital to the peanut farmers, but that action needs to help other commodities because farmers have been planting peanuts continuously rather than in rotation, and that has led to lower yields and higher costs of weed control. He said his group supports the NCC's request for USDA to approve a cottonseed program for cotton producers.
McMillan also sought to counter impressions that the use of generic acres has made peanut acreage too high and that peanut supply exceeds demand. Peanut acreage is up only 16 percent under the 2014 farm bill compared to the 2002-13 period and both domestic and international demand for peanuts for peanut butter and shelled peanuts has grown, he said.
McMillan said it was "wise" for the House Agriculture decision to insist on a farm bill provision to allow cotton producers to maintain their generic base acres and use them for other covered commodities.
"Without these base acres, the current struggling farm economy would be much worse," McMillan said. He noted that 90 percent of the generic bases acres had been assigned to soybeans, wheat, corn and grain sorghum and that only 8.7 percent of the generic base acres had been assigned to peanuts.
"Generic acres, as part of the safety net, allowed cotton producers, who also grew other commodities like peanuts, corn, soybeans, wheat and rice, to participate in some limited manner and stay on the farm," McMillan said.
"For many farmers, generic base actually made it possible to keep planting cotton on our farms in order to maintain some level of crop rotation. Without this generic acre program, many farmers across the U.S. would have had their farm income, the safety net reduced dramatically. This program has worked at a time when prices were low."
Blake Gerard, an Illinois grower who is chairman of the board of the USA Rice Growers, said that "is clearly not in a great place due to factors far outside of our control."
Gerard said the Price Loss Coverage program "overall … is working the way Congress intended," but a delay in receiving benefits causes "multiple problems." He also said the payment limitation rules that "seemed like a far-fetched problem" in 2014 when prices were high are a serious problem today when farmers are getting close to the payment limits.
Robert Rynning, a Kennedy, Minn., producer who is president of the U.S. Canola Association and also testified on behalf of the National Sunflower Association, said, "USCA and NSA support the continuation of the ARC and PLC programs, with support payments tied to historical crop bases and the ability to choose between the programs by crop."
The USCA and the NSA also support the creation of an "incentive" to include canola and/or sunflowers in cropping rotations to provide habitat for honey bees and wild pollinators, but have been unable to decide if that incentive should be in the commodity title or the conservation title of the farm bill.
Finally, Jack Roney, the director of economics and policy analysis for the American Sugar Alliance, a beet and cane grower group, said the U.S. sugar program would work well if Mexico did not dump subsidized sugar in the U.S.
After the U.S. sugar growers filed antidumping and countervailing duty cases against Mexico in 2014, the U.S. and Mexican governments reached suspension agreements to avoid the imposition of duties on Mexican sugar.
"Unfortunately, the SAs are not working as intended," Roney said.
"Mexico, basically, has sent the U.S. too little raw sugar and too much refined sugar, relative to U.S. market needs," Roney said. "U.S. cane refiners have been starved for raw sugar to process and refined beet sugar prices are so low that loan forfeitures are a serious threat. The U.S. and Mexican governments are working on modifications to the SAs and the U.S. government will need to impose duties on Mexican sugar if the two sides cannot reach a resolution."
Under questioning from Rep. Rick Nolan, D-Minn., the subcommittee ranking member, all the commodity representatives said that the nutrition title should stay in the farm bill.
Lee, the cotton representative said that "as a grower I wonder why sometimes" but "my main thought is that we have got to be able to pass a farm bill."