Texas cotton producer Woody Anderson said
here today that Congress needs to approve a new farm bill this
year and one that will provide American farmers the key to
long-term viability — effective risk management
opportunities.
A former chairman of and now advisor to the National Cotton Council,
Anderson testified at a House Committee on Agriculture farm bill hearing
that the high costs of seed, fertilizer, fuel and other inputs coupled
with the vagaries of weather has made the risk of producing a crop never
greater.

He pointed to last season when he was unable to harvest a single
acre of cotton due to the prolonged drought in his state – one the Texas
Comptroller indicated has resulted in indirect and direct losses
approaching $9 billion.
”I also urge the committee to complete the farm bill this year – in
advance of the expiration of the current legislation,” Anderson said. “We
need some certainty regarding farm programs as we look at the long-term 
investments necessary to keep our farming operations economically viable.

“
He told the panel it is important that budget constraints and farm program
critics not be allowed to undermine the farm safety net’s effectiveness.
He called for a range of farm programs structured to address the needs of
the different commodities and production regions, saying a
”one-size-fits-all farm program” cannot address the diversity of American
agriculture.
Regarding the cotton program, Anderson said it is very important that the
new farm legislation includes the cotton industry’s proposal of a new
revenue-based crop insurance product, one that will strengthen growers’
ability to manage risk. He said the Stacked Income Protection Plan (STAX)
would complement existing products and provide a tool for growers to
manage that portion of their risks for which affordable options are not
currently available.

“This revenue-based crop insurance safety net would be combined with a
modified marketing loan that is adjusted to satisfy the Brazil WTO case,”
Anderson testified. “Even with modifications, the marketing loan will
remain an important source of cash flow from merchandisers and producers.”
He also emphasized that given the diversity of weather and production
practices, the menu of insurance choices should be diverse and
customizable, thus allowing for maximum participation and the most
effective coverage.

He asked that the enterprise unit pricing option,
introduced in the 2008 farm bill, be maintained and expanded to allow a
producer to apply enterprise unit pricing to acres that are separated by
irrigated and non-irrigated practices.
Anderson conveyed the cotton industry’s concerns regarding scrutiny of
risk management programs being considered for the farm bill. He said
despite the dramatic increase in last year’s indemnities, total crop
insurance indemnities remain below total premiums, and thus, “the program
is operating at a loss ratio less than 1.0.”  He also expressed concern
about a recent General Accountability Office report calling for arbitrary
limits on insurance programs.
”My concern is founded in the fact that crop insurance is a basic safety
net that only indemnifies a grower when he incurs a loss,” Anderson
stated. “Even then, the grower is not made whole and is only compensated
for a portion of his loss. The value of crop insurance coverage is based
directly on the expected market value as determined in the futures market.
For Texas, I can assure this committee that any limits or eligibility
requirements that deny farmers the opportunity to purchase affordable
insurance products will completely undermine the ability to secure
production financing.”

Anderson also called for the continuation of the economic assistance
program for U.S. textile mills that was introduced in the 2008 farm bill
by stating, “we have seen a revitalization of the U.S. textile
manufacturing sector, as evidenced by new investments and additional
jobs.” He also pointed out the need for adequately funded export promotion
programs such as the Market Access Program and the Foreign Market
Development Program.
”Individual farmers and exporters do not have the necessary resources to
operate effective promotion programs which maintain and expand markets,”
Anderson stated, “but the public-private partnerships, using a cost-share
approach, have proven highly effective and have the added advantage of
being WTO-compliant.”

The National Cotton Council of America’s mission is to ensure the ability
of all U.S. cotton industry segments to compete effectively and profitably
in the raw cotton, oilseed and U.S.-manufactured product markets at home
and abroad.

Tags: Cotton Producers, cotton risk managment, National Cotton Council, texas cotton