Cotton Council disputes KSU study on trade aid payments
The National Cotton Council has issued a paper that disputes the conclusion of a Kansas State University study that said the cotton industry was overcompensated in the Trump administration’s trade aid program.
The paper said that “a further look at actual price and trade data confirms that cotton producers have not been overcompensated for the trade damages.”
NCC said, “The following analysis provides a more detailed explanation, but as demonstrated in the following summary points, the MFP assistance has only partially compensated cotton producers for the loss in market revenue.”
▪ “USDA’s methodology of determining trade damage was consistent across all commodities.
▪ “The author’s implication of overcompensation was based on a comparison of USDA’s model with other modeling approaches. In the case of cotton, the other studies acknowledged that their results were preliminary in nature and did not have the benefit of actual trade data.
▪ “Cotton producers did not receive USDA’s estimated trade damage of 26 cents on all bales produced. USDA’s county‐level methodology produced a weighted average payment of $99 across all 2019 cotton acres. With a yield of 805 pounds per acre, the average per‐pound compensation for cotton was 12 cents, not 26 cents.
▪ “Between June 2018 and January 2020, the market value of an average acre of cotton fell by $197. MFP assistance compensated just 50% of that decline.”