Cotton Farmers Catch a $300 Million Break

June 8, 2016 01:04 PM
 
COTTON-BOLL

With relatively low commodity prices, a worldwide oversupply and a reduction in American cotton gins, U.S. cotton farmers are well aware of their current struggles. That makes a new cost-share assistance program from the USDA Farm Service Agency (FSA) all the more welcome.

The FSA recently announced the Cotton Ginning Cost-Share program, which will provide an estimated $300 million in total assistance payments. Agriculture Secretary Tom Vilsack says the program will offer “meaningful, timely and targeted assistance” to help farmers with their ginning costs.

“The program will provide, on average, approximately 60%more assistance per farm and per producer than the 2014 program that provided cotton transition assistance,” he says.

The new program has the same eligibility requirements as the 2015 Cotton Transition Assistance Program. This includes a $40,000 per producer payment limit. Participants must be actively engaged in farming and meet conservation compliances.

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Texas cotton farmer Johnie Reed, president of Plains Cotton Growers, says growers are grateful for this opportunity.

“We greatly appreciate U.S. Secretary of Agriculture Tom Vilsack and the USDA for listening to the concerns of cotton producers and coming up with a viable short-term solution that will help us face some of our challenges,” he says. “We had hoped for some flexibility in the payment limit, but we are grateful for the assistance, because our producers certainly need it. We recognize that this is a program for the near term, and we remain committed to working with Congress and others in trying to establish cottonseed as an ‘other oilseed’ under Title I of the 2014 Farm Bill, which would provide long-term stability for our industry.”

American Cotton Producers chairman Mike Tate says the program will help stabilize the seven sector industry that employs around 125,000 Americans and pumps more than $75 billion annually into the nation’s economy.

“[We appreciate] efforts in providing marketing assistance to a commodity that is suffering a serious decline in market revenue partly due to heavily-subsidized foreign competition, with no signs of the commodity prices reaching the level needed to offset their production costs,” he says. “The industry will continue to work with Congress and USDA to seek long-term policy solutions that will provide stability for the cotton industry.”

The number of U.S. cotton gins is on a downward slope, decreasing from around 700 in 2010 to 560 in operation last year. Even so, according to the National Cotton Council, even with fewer gins, there is more than enough unused capacity to handle increased production. Generally, smaller gins with little or none of the newest technologies available represent the typical closures.

The rapid adoption of newer module pickers have added efficiencies within the cotton industries. Round cotton modules are more easily shipped because they can be loaded onto flatbed trucks and hauled via Interstate highways.

Farmers can sign up between June 20 and Aug. 5. For more information about the Cotton Ginning Cost-Share program, visit www.fsa.usda.gov/cgcs

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