Transcript Cotton Industry’s Interest(s) in New Farm Law

Cotton Industry’s Interest(s)
in
New Farm Law
presented to
the
Cotton Economics and Marketing Conference
January 11, 2002
Atlanta, GA
COTTON INDUSTRY’S
INTERESTS/OBJECTIVES
• predictable/effective income safety-net
– marketing loan with AWP and competitiveness provisions
– combination of fixed, de-coupled payments and target price
– no discrimination based on size, revenue, organizational
structure or crop mix
– WTO compliant
• equitable treatment with other crops
• preserve industry infrastructure
• adequately funded conservation, trade and research
programs
Situation
•
•
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•
•
•
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3 emergency assistance packages
depressed prices
weak demand
escalating cost of production
strong dollar (undervalued Asian currencies)
federal budget surplus
more emergency assistance or new farm law
Early 2001
• FY02 Budget resolution
– $5.5 billion FY01
– $7.35 billion FY 02
– $66.15 billion FY03-11
• Emergency Assistance Package 2001
Crop
– $5.5 billion
– $2.0 billion retained for new farm bill
New Farm Legislation
House
• Key decisions
– funding allocation ($49.9 billion
commodity title)
– loan rate levels and marketing loan
– fixed, de-coupled payments continued
– counter-cyclical provision= target price
– yields frozen
– bases-modified choice; 85% payment
base
New Farm Legislation
House
– payment limitations increased; 3-entity
and certs retained
– soybeans become program crop
– peanut program modified
– conservation programs enhanced and
funding increased
New Farm Legislation-Senate
• Control shifts from Republicans to
Democrats
• Emergency assistance package stymied in
July
• September 11; then anthrax closes Hart
• Concept paper released, then modified
• Committee mark-ups
• Floor debate (Dec. 5-19)
– 3 substitutes rejected
– 3 cloture votes fail
New Farm Legislation- Senate
• Concept Paper I
– higher loan rates with limitation on loan
eligibility
– de-coupled payment continued
– counter-cyclical = revenue/acre target
– payment limits
• $100,000 combined
• no authority for certificates
• eliminate 3-entity
– up-date base and yields; 100% payment base
– allocation of funds to conservation (CSA)
New Farm Legislation
Senate
• Concept Paper II
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–
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–
–
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higher loan rate without limit on volume eligible
increased fixed, de-coupled payment
counter-cyclical = target price
payment limits = $100,000 and current law
choice to up-date bases* and yields**
allocation of funds to commodities increased
• Final Modifications
– 1.25 threshold eliminated to July, 2003
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New Farm Legislation
Administration
New administration-House already at work
Concept paper released end of September
SAP strongly criticizes HR 2646
Select farm groups invited to White Houseurged to delay
• Endorse Lugar proposal
• Senate Committee mark-up scheduledSecretary urges delay
– Chuck Conner appointed WH liaison
– Secy. endorses Roberts-Cochran proposal
New Farm Legislation
Administration
• President speaks Nov. 28--ok’s proceeding
• SAP strongly criticizes S1731, endorses
Roberts-Cochran substitute
• 3 cloture votes fail, consideration suspended
Dec. 19; Daschle promises to bring-up when
Senate returns Jan. 23
• Secy. Veneman calls for bi-partisanship
• OMB Director confirms $73.5 bil available
New Farm Legislation
Provisions
House
S1731
R-C
Loan Rate
51.92
55.00
51.92
Mkt. Loan
Yes
Yes
Yes
3-Step
Yes
Yes (1.25 out Yes (1.25 out)
thru 7/03)
Fixed pay.
6.70
13/6.5/3.25
14.18
New Farm Legislation
Provisions
House
S1731
R-C
Countercyclical
Target price
73.6
Target Price
68.0
N/A
FARM Acct.
Base Acres
Choice
Choice +
Choice +
Yield
Frozen
Pay. Base
85%
Choice- if up- Frozen
date base
100%
85%
New Farm Legislation
Provisions
House
S1731
R-C
Pay. Ltds.
$50/75/150
$100/150
$80/75 & 10
3-entity &
certs
Yes
Yes
Yes
Plant. Flex.
Current law
Current law
Current law
Conservation Current law
compliance
Current law
Current law
WTO
Compliance
Secretary
adjusts
Fixed and
FARM are
green box
Secretary
adjusts
New Farm Legislation
Policy Issues
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Loan rates
Counter-cyclical program -TP vs FARM
WTO compliance
Dairy
Benefit distribution-crops and operations
• Conservation funding-working lands program
• Concentration/competition
New Farm Legislation-Politics
• Daschle vs Republicans
– Jeffords
• 2002 Senate elections
– Johnson-Thune (SD)
– Harkin-Ganske (IA)
– Cottonbelt
• Hutchinson, Cleland, Landrieu, Cochran,
Sessions, Carnahan, Gramm, Helms, Thurmond
• Leverage
– Economic Stimulus Package
– Trade Promotion Authority
– Energy policy
New Farm LegislationSchedule
• Key dates
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Congress returns Jan. 23
Budget submitted; new CBO baseline Feb. 20
FY03 Budget Resolution April 15
Latest date for implementation for ‘02 crops
Transition to advocating emergency pkg
• Process
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Senate action completed
Conference committee
Conference Cmte Rpt apprvd by House and Senate
President’s signature
Cotton Industry’s Message
• Need improved farm law in place in time to
finance ‘02 crop and to retain $73.5 billion
in new budget authority
• OR
• need timely and adequately funded
emergency assistance package for ‘02 crop
and new farm legislation in place for ‘03
crop