Every year has its challenges. Some are dry like 1980; some wet like 2014; some memorable because of programs like payment-in-kind in 1983; and others because of dollar-plus cotton.
Cotton industry leaders hope 2016 won’t become the year of the “washout” when large numbers of growers simply could not continue to battle low prices, high input costs and herbicide-resistant weeds like Palmer amaranth.
These are difficult times for all producers. Commodity prices are depressed with some half where they were two years ago. Most years one or two crops are priced more attractively than others. In 2016, all are depressed.
The outlook is more challenging for cotton producers and their communities because of changes to the farm bill. Cotton is no longer a program crop after Brazil won a case challenging U.S. cotton subsidies before the World Trade Organization.
Cotton is no longer a program crop after Brazil complained to the World Trade Organization the U.S. was illegally subsidizing its cotton producers.
Cotton growers cannot participate in the agricultural risk coverage (ARC) or price loss coverage (PLC) programs other producers enjoy. They have the Stacked Income Protection Plan, which is a voluntary, crop-insurance-based program. STAX does not convey a universal level of protection. If you don’t buy it, you can’t benefit if it doesn’t trigger.
The irony is U.S. prices could be higher if China and India were not subsidizing their cotton producers much more heavily than the U.S. did. The WTO has turned a blind eye to those because China and India are “developing” countries even though China now has the second largest economy in the world.
Another irony is the low cotton prices continue to push many southern growers into corn, soybeans and now grain sorghum, helping create surpluses in those crops, which keep their prices depressed.
National Cotton Council leaders have a novel approach for providing assistance to growers and rural communities. Cotton is also a food crop, and they’ve asked Agriculture Secretary Tom Vilsack to declare cottonseed “an other oilseed,” making producers eligible for the farm bill’s oilseed program.
Cottonseed competes with soy, rapeseed and other oilseeds both in the vegetable oil and protein markets. So there’s linkage between them.
The question now is whether the secretary will help these farmers or let them be washed out of farming in what promises to be a very difficult year.
For more on cotton as an oilseed go to www.cotton.org.