Countdown to Budget Cuts

Congressional committees have until Friday to make recommendations regarding cuts to their programs. The National Cotton Council offers a pencil to the House Agricultural Committee.

Published on: Oct 11, 2011

The template for the 2012 Farm Bill could come as soon as Nov. 23, the date the Select Committee of 12 unveils its recommendations for trimming the budget, says an official of the National Cotton Council.

"It's going to be a little different process this time around," says Gary Adams, NCC vice president of economics. "So much of this farm bill process could be dictated by this committee."

The Select Committee of 12 representatives and senators comes from passage of the compromise on the Budget Control Act of 2011.

Congressional ag committees have until Friday to provide comments to the Super Committee.

"Ultimately, the joint committee could make the final determination on new farm policy," Adams says.

President Barack Obama's recommendations to the committee include eliminating direct payments and reducing crop insurance premium subsides. The president also recommends reducing crop insurance subsidies.

Farm groups are looking at the elimination of direct payments as almost a given. The President has called for a $8.3 billion reduction in crop insurance premium subsidies.

The National Cotton Council and other commodity groups were already looking at alternatives direct payments as Congress debated the compromise bill.

NCC delegates voted at their summer meeting to take a different route in the farm debate.

"It's clear that future deficit reduction efforts will place unprecedented pressure on the existing structure," the NCC says. "Deficit reduction will lower the baseline funds available to upland cotton and simply downsizing the current program structure would likely undermine the effectiveness of the programs to the extent that alternatives must be evaluated to ensure growers have access to the most effective safety net."

Those alternatives include a "shallow loss revenue program to manage risks," Adams says.

Such a program, in theory, would "lay on top of a traditional crop insurance plan," Adams says.

In addition to budget constraints shaping the farm policy debate, the cotton industry faces a uniquechallenge in the Brazil WTO cotton case.  In order to resolve the case, the cotton industry is working

with Congress and the administration while developing new farm legislation. In order to make modifications to the program that will lead to a resolution of the Brazil case, the NCC recommends strengthening "the growers ability to manage risk … through a revenue-based crop insurance program," Adams says.

In policy discussions, cotton farmers recognized the political pressure, Brazil case and less money available for farm programs would make the current policy unsustainable.

Adams noted that the 2008 farm bill continues to serve the industry well. However, a program that focuses on risk management rather than direct payments "would be more defendable in the current political environment," Adam says. "The Budget Control Act and efforts to reduce the deficit have put an additional urgency into the farm bill effort," Adams says.

While there still are a lot of unknowns, this farm bill will "be written under unprecedented circumstances" that will could change farm policy for the next generation.