WASHINGTON, August 26 – In anticipation of a severe reduction in funding for Direct Payments, the National Cotton Council (NCC) announced Friday it will ask Congress to enact a revenue-based crop insurance safety net in the next farm bill.
NCC said it’s clear that future deficit reduction efforts will place “unprecedented” pressure on the safety net structure of the 2008 Farm Bill consisting of Direct Payments (DPs), Counter-cyclical payments and marketing loans.
“Deficit reduction will lower the baseline funds available to upland cotton, and simply downsizing the current program structure would likely undermine the effectiveness of the programs to the extent that alternatives must be evaluated,” NCC, the umbrella organization for the U.S. cotton industry, said in a statement released at the conclusion of its annual mid-year Board of Directors meeting in Santa Fe, N.M.
The group’s support for a risk management safety net anchored by crop insurance is viewed as a potential game-changer for the upcoming debate on new farm legislation, and likely will be applauded by critics of DPs, currently funded at about $5 billion annually and distributed to growers of cotton, corn, soybeans, wheat, rice and other “program” crops regardless of market prices.
Under the terms of the deficit reduction agreement, “we face the very real possibility of effectively establishing the provisions for the next farm bill in the coming weeks,” NCC Chairman Charles Parker explained Friday afternoon in a message to industry members.
An “affordable” revenue-based crop insurance program that enables producers to better manage risk should be complimented by a modified marketing loan program that is adjusted to satisfy the Brazil WTO cotton case, NCC said.
“[T]his structure will best utilize reduced budget resources (and) respond to public criticism by directing benefits to growers who suffer losses resulting from factors beyond their control,” NCC argued.
It added that it believes the revisions will provide confidence to lenders and ensure market-oriented planting decisions.

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