Cotton and the 2018 Farm Bill

(Photo by Everett Brazil, III)

By Everett Brazil, III

United States cotton producers were dealt a big hit under the 2014 Farm Bill, when cotton was eliminated as a Title 1 Crop due to a World Trade Organization lawsuit. However, with a new United States Department of Agriculture secretary, Sonny Perdue, there is hope that cotton producers will be able to regain those benefits, as Congress seeks to provide new protection for the growers.

Title 1 Crops, under the 2014 Farm Bill, are eligible for USDA payments, including Agriculture Risk Coverage (ARC) and Price Loss Coverage (PLC).

United States cotton producers were eliminated from the programs due to a lawsuit filed by Brazil, which argued U.S. Farm Bill provision gave U.S. cotton an advantage in foreign trade. The WTO sided with Brazil, forcing Congress to delay the Farm Bill from 2012 to 2014 to meet the demands of the lawsuit.

“Brazil had filed a lawsuit against the United States when the Farm Bill was being developed, and [cotton] was dropped as a Title 1 Commodity,” said Stan Wright, Great Plains Insurance, Hollis, Okla. “However, cotton has always been eligible for the Federal Crop Insurance Program.”

The price of cotton fell, leading cotton industry representatives as well as Congress, to petition the USDA, including former agriculture secretary Tom Vilsack, to relabel cotton as an oilseed crop, as opposed to a fiber crop, which could potentially reinstate cotton as a Title 1 crop. Many industry representatives promoted the move, but Vilsack ultimately opposed it, arguing the USDA did not have the authority to make the change. There is optimism that cotton will be relabeled as an oilseed, which will further help it receive the Title 1 status it previously had.

“The Secretary of Agriculture does have the power to relabel cotton as an oilseed crop, so our new [USDA] secretary, Sonny Perdue, if Congress doesn’t get it in the Farm Bill as a Title 1 crop, he will make it an oilseed crop, which will make it a Title 1 Crop,” Wright said.

With a new administration and USDA Secretary, many within the industry are hopeful of the future of cotton under the 2018 Farm Bill.

The National Cotton Council is working with Congress, including the House and Senate Agriculture committees, to help stabilize the industry. Jodi Campiche is the NCC Vice President of Economics and Policy Analysis, and has been working to place cotton back into the next Farm Bill, which they anticipate within the next year. Currently, Congress is only in the drafting session, which includes deciding which crops will qualify for the Farm bill.

“For the next Farm Bill, the Agriculture committees have been holding listening sessions. What we heard is the committees will likely have a Farm Bill late this year, or early 2018,” she said. “The NCC has been working with the committees to develop the Farm Bill. There is no indication of what that will look like.”

In addition to inclusion as a Title 1 Crop, the NCC is also looking at other options for the Farm Bill. One is a permanent placement of the Cotton Ginning Cost Share program, which was created in 2015.

“What is being worked on in the next Farm Bill is permanent ginning assistance. Congress did an ‘emergency’ relief, and to help the farmers out, they paid so many cents a bale for ginning,” Wright said. “They did it to comply with the WTO. It is currently Mike Conaway’s goal to make it a permanent payment, if the price is below a certain amount.”

Conaway (R-Texas) is the current chair of the House Agriculture Committee.

The biggest concern, however, is whether it will ultimately be included as a Title 1 Crop, and the industry is cheering a recent move within the Senate Agriculture Committee, which is a first step in reinstating cotton in the Farm Bill.

“The Senate Agriculture committee approved a bill that included cottonseed as a Title 1 commodity program crop. We’re hoping to know about that within the next month or so,” Campiche said.