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Cotton and Dairy Ride on Senate Budget Package

The budget agreement written by Senate leaders includes more than $1 billion for dairy supports as well as larger subsidies for cotton growers, who have pursued aid that could cost as much as the dairy enhancements. Besides providing immediate assistance to producers, the provisions would mean, under arcane score-keeping rules, that farm-state lawmakers can spend more money on cotton and dairy in the 2018 farm bill than is available now.

Michigan Senator Debbie Stabenow, the senior Democrat on the Senate Agriculture Committee, announced that the budget package “contains significant improvements for both commodities — including more than $1 billion for our struggling dairy farmers.” Cotton and dairy producers say the insurance-like supports created in the 2014 farm law have been woefully inadequate.

When the USDA gave dairy farmers the chance last fall to drop out of the so-called Margin Protection Program (MPP), enrollment dropped by 75%. The cotton subsidy, called STAX, has attracted relatively few growers and “due to lower cotton prices, it has provided lower revenue than producers expected at the time of the bill’s passage,” said Agriculture Secretary Sonny Perdue this week.

Senate Democratic Leader Charles Schumer said the dairy provision in the budget agreement will “fix problems with the old MPP and provide a pathway to new, customizable insurance tools in the future.”

In a release, Schumer said the dairy proposal would “invest over $1 billion into the dairy safety net for family dairy farmers” with steps that reduce premiums by up to 80% for small- and medium-size operators; waive fees for beginning, veteran, and underserved farmers; “make the program more responsive to drops in prices and increases in feed costs, and trigger payments more quickly; and allow farmers to enroll for 2018 coverage or change their coverage level.” The provision would also remove a $20 million limit on USDA spending on livestock insurance policies, “allowing for the creation of customizable dairy risk-management tools.”

The 2014 law created STAX, a revenue insurance program with a guaranteed minimum price for the fiber, to resolve a World Trade Organization ruling against the longtime U.S. cotton program. Growers have suggested various ways to make their crop eligible for the same subsidies available to grain and soybean farmers, such as declaring that cottonseed is a vegetable oil crop or creating a support for “seed cotton” — unginned cotton with lint still attached to the seed. The American Enterprise Institute, a free-market think tank, says the plans could cost from $630 million to as much as $1.5 billion a year.

The budget accord would allow hundreds of billions of dollars in military and domestic spending over the next two years, said the New York Times. The package “would effectively negate” President Trump’s proposals for major increases in military spending on one hand and sweeping cuts to domestic programs on the other. The White House is scheduled to release its fiscal 2019 budget proposal on Monday, “but the deal — championed by the top congressional leaders from his own party — amounts to an unequivocal rebuke of many of the budgetary demands he has put forth,” said the Times. The Senate was to vote on the bill on Thursday, with the House to follow.

Produced with FERN, non-profit reporting on food, agriculture, and environmental health.
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