WASHINGTON, Feb. 3, 2016 - Agriculture Secretary Tom Vilsack has notified lawmakers he lacks the legal authority to provide subsidies for cottonseed, a blow to growers reeling from a plunge in global cotton prices.
The industry had asked Vilsack to make cottonseed an eligible commodity under the new Price Loss Coverage and Agriculture Risk Coverage programs that were created by the 2014 farm bill.
Vilsack told reporters Wednesday that Congress would not only have to authorize coverage of cottonseed but also find a way to pay the estimated cost of the subsidies, about $1 billion a year. Later in the day Vilsack's office released a letter to the House Agriculture Committee explaining his decision to deny the industry request.
Vilsack said there were other options for helping the industry, including lifting restrictions on USDA’s use of the Commodity Credit Corp. to provide emergency assistance or to provide aid to cotton ginners. Since fiscal 2012, Congress has prohibited USDA from using CCC funds to provide emergency disaster assistance to farmers.
“We want to help. We understand the challenge, but right now we’re a bit stymied by the barriers,” Vilsack said on the sidelines of the National Association of State Departments of Agriculture annual winter meeting.
“The question is whether or not there is any desire on the part of Congress to remove the barrier within the farm bill or to remove the barrier within CCC.”
House Agriculture Chairman Mike Conaway, whom Vilsack had informed of his decision earlier, continues to insist that USDA has adequate authority to help cotton growers either through the farm programs or through CCC. Conaway told Agri-Pulse he was enlisting the help of some Democrats to help persuade Vilsack to reconsider.
Congressional action along the lines Vilsack suggested would amount to reopening the farm bill, Conaway said.
“He sees the hurt the cotton guys are going through. We just keep working and trying to make our case,” Conaway said.
Conaway noted that Vilsack is currently using CCC to fund the installation of ethanol blender pumps.
Vilsack’s comments Wednesday were not a surprise. He outlined his thinking to reporters nearly a month ago when he first publicly raised the issue of his legal authority. Vilsack noted then, and repeated in the letter, that cottonseeds were excluded from coverage under the new Stacked Income Protection Plan (STAX), a revenue insurance policy that the farm bill authorized as a replacement for direct payments. Vilsack pointed out in the letter that cotton growers uniquely received special transition payments after direct payment system was abolished in favor of the ARC and PLC options sought by growers of other commodities.
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Conaway argues that the Congress left the door open to include cottonseed as an eligible oilseed under PLC and ARC programs. Under the 2014 farm bill, USDA oilseeds not specified in the law receive a PLC price guarantee, or “reference price,” of $20.15 per hundredweight, which is well above recent market prices.
Cotton growers say China's manipulation of cotton supplies drove cotton prices to levels that are unsustainable for U.S. producers.
A representative of the National Cotton Council told Conaway’s committee in December that U.S. cotton acreage is at its lowest point in 30 years, exports their lowest in 15 years, and prices are seeing lows not witnessed since the 2009 recession. Another witness said cotton production would leave the United States if the industry’s request was not approved.
The cotton council issued a statement Wednesday saying it was “extremely disappointed” in Vilsack’s position. “We continue to believe, like a broad group of members of Congress, that USDA clearly has this authority as described in the current farm bill,” the group said.
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