NCC Calls For Preservation of Successful Farm Law

NCC is urging Congress to keep the 2002 farm law intact for the remainder of its term.

May 21, 2004
Contact: Marjory Walker
(901) 274-9030

WASHINGTON – The National Cotton Council (NCC) is urging Congress to keep the 2002 farm law intact for the remainder of its term, a move that will provide stability in production, financing, and marketing and enable producers to react to market signals.

In testimony Thursday before the House Agriculture Subcommittee on General Farm Commodities and Risk Management, NCC Chairman Woody Anderson said the NCC is pleased to be able to say that the farm law is a success and “remains vital to the structure and stability of the U.S. cotton industry and U.S. agriculture as a whole.”

The hearing was a mid-term review of the 2002 Farm Security and Rural Investment Act and included a review of policies within the legislation as well as the programs’ performance. Testimony was offered from USDA officials and other national farm and commodity organization representatives.

Anderson told the panel that it is important to correct a widely-voiced misconception.

“Contrary to what many claim, the farm bill does not represent a significant increase in U.S. agricultural subsidization,” he said. “In fact, it has become a very responsible entitlement with an enviable track record on spending. To date, budget outlays are much lower than projected by the Congressional Budget Office during the farm bill debate.”

The Texas producer noted that for the FY02-04 period, total spending will be approximately $17 billion less than originally projected, and the counter-cyclical payment provisions of the farm bill assure that spending will decline as market prices recover.

“As Congress addresses the budget deficit in the future,” he testified, “we strongly encourage you to take into consideration the responsible track record of the 2002 farm bill and not allow agriculture to be penalized by its previously achieved savings.”

Other points Anderson noted regarding the 2002 farm law’s performance to date included:

1.) The decoupled direct and counter-cyclical payments provide an effective financial safety net with minimal impacts on overall production and prices; and the decoupled nature of support allows for market signals to play a prominent role in acreage decisions. “Over the past few years, relative market price expectations have been the single largest factor determining year-to-year changes in U.S cotton acreage,” he said. “The current planting season provides further evidence of the flexibility afforded under the farm bill. For the first time since the late 1990’s, we are in a situation where several commodities are actively competing for available acreage.”

2.) The NCC agrees with the conclusion of the 2002 farm law’s payment limit commission that “more restrictive payment limits would have a negative effect on U.S. agriculture and cause instability in that sector’s production, financing and marketing segments.” Anderson urged the panel to reject efforts by certain Congressional members to push for more restrictive payment limits or eligibility requirements.

3.) The current farm law’s feature that enabled producers to update base acreages and yields for the purpose of determining decoupled payments. “This has been an important feature for our members because it gave growers the opportunity for base acreage to more accurately reflect recent planting history,” he said.

4.) The NCC supports maintaining the farm law’s equitable balance between funding for commodity, conservation and nutrition programs. He specifically pointed to the Conservation Security Program, promising that once the final CSP rule is published, the NCC will work closely with producers and state offices in the selected watersheds to ensure that the program is workable to eligible growers. “We also support resolving the issue of funding for adequate technical support for all conservation programs,” Anderson said. “Resolution of this issue is critical to effective implementation of the CSP, EQIP and other important programs.”

5.) The Market Access Program (MAP) and the Foreign Market Development (FMD) Program continue to be critical components of an effective cotton trade policy. The combined investment of private and public funds, coupled with industry marketing expertise, he said, results in innovative, forward-looking programs that leverage money into high impact campaigns and promotional efforts. “We must continue to support and fully fund crucial U.S. export programs if we are to fairly compete effectively in today’s global marketplace,” he noted.