When the U.S. government was wrapping up the final agreement resolving the WTO case Brazil brought against the U.S. cotton program, a cotton industry leader made the observation that corn and soybean growers might be next.
Three years later, those words are proving to be prophetic. Reports say the federal government of Brazil is gathering evidence for claims the U.S. government is increasing the subsidies it provides to corn and soybean farmers.
Farm organizations will say Congress actually reduced the level of support it provides not only for corn and soybeans but for all commodities when it passed the Agricultural Act of 2014. The new farm bill, they will say, ended direct payments tied to specific crops and instituted new crop-insurance-type programs.
Good luck with that. The National Cotton Council of America worked for years to try to convince a WTO panel that the subsidy figures being cited by the Brazilian government in the case it brought in 2002 no longer applied; that Congress had been reducing support for its cotton farmers since the passage of the 2002 farm bill.
The original WTO panel ruled in favor of Brazil’s claims U.S. subsidies in the late 1990s had violated WTO rules, and a WTO appeal panel issued a similar ruling on the same set of numbers when the U.S. government sought to have the ruling overturned in 2005-06.
Corn and soybeans groups should also be aware the Brazilian government may get some help from unexpected sources. The Brazilians relied on the assistance of Daniel Sumner, the Frank H. Buck Jr. Distinguished Professor of Agricultural and Resource Economics at the University of California, Davis, in preparing their WTO cotton case.
As a result of the WTO rulings, the government of Brazil was, in effect, given veto power over the cotton title of the farm law when Congress began writing it in 2011. One the outcomes was that the U.S. farm program for cotton is a mere shadow of its former self.
In fact, U.S. cotton no longer is no longer a covered commodity and rather than the Agricultural Risk Coverage or ARC or Price Loss Coverage or PLC programs which are available to soybean and grain producers, cotton has the stacked income protection plan or STAX for shallow loss coverage. (Cotton producers also remained eligible for the marketing loan.
A Brazil WTO complaint against the U.S. corn and soybean programs appears to be some ways off, but Brazilian officials are expected to question the spending for those in the WTO agriculture committee. And it may also come up when Brazilian President Dilma Rousseff visits Washington in June.