Agriculture secretary tells cotton producers world trade must drive U.S. farm bill

Published 7:18 pm Friday, January 12, 2007

The nation’s farm policy must shift away from only protecting producers’ pocketbooks to withstand international scrutiny now that most U.S. cotton is exported, Agriculture Secretary Mike Johanns said.

Eighty percent of U.S. cotton goes to markets outside the country, and to ignore that when writing the 2007 farm bill could invite further World Trade Organization complaints, Johanns told hundreds of U.S. producers Wednesday at the Beltwide Cotton Conferences.

“We have to grab hold of the issues and craft farm policy the way that leads us to the future and tries to recognize that we have to have a policy that can withstand challenge,” Johanns said. “You have no safety net if close to 80 percent of your market is at risk.”

Sign up for our daily email newsletter

Get the latest news sent to your inbox

Farm support payments have long been a source of contention in trade negotiations between wealthy and developing nations. The disagreement contributed to the collapse of world trade talks in 2003 in Cancun, Mexico.

Bobby Lowrey, a producer from Parma, Mo., said the most recent farm bill, passed in 2002, should be extended until at least after the WTO finalizes its report, probably this summer.

The WTO has been eyeing the U.S. Department of Agriculture’s marketing loan program, which has a $19.1 billion ceiling across all crops. Cotton producers can receive up to about $2 billion of that, officials said.

“It’s working just like they wanted it to,” Lowrey said of the 2002 bill. “It’s been working tremendously.”

The WTO forced the U.S. to eliminate one type of support payment, and many American cotton producers and industry watchers believe that if Congress crafts a new farm bill, other WTO demands will follow.

Congress crafts new farm legislation about every five years to adapt to changes in the agriculture industry. The current bill expires in September.

Beginning last August, subsidies paid to domestic mill users and exporters to compensate them for buying higher priced U.S. cotton were eliminated as a result of a case brought before the WTO by Brazil. The WTO said the subsidies boosted U.S. production and exports while lowering world cotton prices.

The ruling was the first time a country was challenged over its domestic agricultural subsidies, and the first case that looked at the effect of export subsidies on crops.

After his remarks to the conference, Johanns said the 2002 bill doesn’t fit with a global agricultural world.

“The reality is we’re an international market; change is hard,” he said. “You just got to frame these things in a way that recognizes all of the issues that are out there.”

Plains Cotton Growers spokesman Steve Verett said the amount of fluffy fiber produced in the U.S. and exported is about 65 percent, slightly lower than Johanns’ figure. His organization serves a 41-county region in western Texas that is the world’s largest contiguous cotton-growing region.

“Cotton, of all crops, understands about world trade and the need because that’s where our markets are,” Verett said. “We’ve just got to do it in a manner that just doesn’t pull out all the protections and supports that cotton producers rely on.”

On the Net:

Beltwide Cotton Conferences: