Posted on 03/08/2005 5:26:35 PM PST by WKB
A Bush administration proposal that would cut billions of dollars in subsidies to big cotton growers has struck at a core GOP constituency, setting off a battle in Republican congressional ranks that pits budget cutters and prairie-state populists against traditional agricultural interests.
The Bush plan threatens an elaborate government safety net that is the handiwork of such legendary southern Democrats as Lyndon B. Johnson (Tex.) and James O. Eastland (Miss.), as well as a new generation of Republican leaders from the region. The move reflects growing pressure to hold down soaring federal deficits and a recognition that even a business woven deeply into the history, economy and politics of the South must come to terms with dramatic changes underway in global trade.
Underscoring that reality, the World Trade Organization (news - web sites) in Geneva ruled Thursday that U.S. cotton subsidies violate global trade rules because they exceed limits agreed to in 1944. If the United States does not correct the situation, Brazil, which brought the complaint, could retaliate against U.S. products.
As part of its 2006 budget proposal, the Bush administration would trim benefits for growers of most staple crops, including wheat, corn and soybeans. But economists and officials say the hardest hit would be the big producers of cotton in Republican strongholds of Texas, Mississippi, Arkansas, Tennessee, Alabama and Georgia. Large-scale operators in California and Arizona would also be affected.
The U.S. Department of Agriculture (news - web sites) projects that cotton farmers will gobble up a quarter of farm subsidy payments this year, with most going to a few hundred big growers.
Already, the initiative has scrambled GOP politics in Congress. Senate Finance Committee Chairman Charles E. Grassley (R-Iowa), whose small corn and soybean farm receives federal subsidies, said he strongly backs the president and his willingness to take on "southern agriculture in Washington."
Cotton interests, which have long fielded one of the most effective lobbies here, have begun to move up their big guns. These include Thad Cochran (R-Miss.), chairman of the Senate Appropriations Committee, and Saxby Chambliss (R-Ga.), chairman of the Senate agriculture committee. Both have expressed strong reservations about changes in the current farm program, which does not expire until 2007.
Senate Majority Leader Bill Frist (R-Tenn.), who represents the cotton trading center of Memphis, has yet to spell out his position. Grassley's fellow Iowan, House Budget Committee Chairman Jim Nussle (R), opposes changes in farm subsidies this year.
The president's decision to take on the farm lobby has caught many by surprise. He gave no hint of it during his reelection campaign, which was based on winning the South and most of the upper Midwest farm states. The president himself comes from a major cotton-producing state.
To lobby against the proposals, 17 farm and commodity organizations have hired former representative Larry Combest (R-Tex.), who helped write the existing farm bill while chairing the House Agriculture Committee in 2002. In effect, Combest is returning as a private citizen to prevent the partial dismantling of his principal legislative legacy. Among the organizations in his coalition is the National Cotton Council, now chaired by Eastland's son, Woods E. Eastland.
"It's taken the agricultural community totally by surprise," said Combest, who once owned a Texas cotton farm. He predicted "huge, overwhelming contacts by commodity groups to elected representatives to tell them how unfair they think it is to move forward with this proposal."
Farm subsidies are projected to reach $17.8 billion this year, but would be trimmed in a number of ways that would total $5.7 billion in cuts over 10 years. The top payments to an individual farmer would be capped at $250,000 a year, compared with the current $360,000. Loopholes that enable big farms to easily circumvent the limits through creative accounting, side companies and partnerships would be curbed.
Despite the limits, for example, Colorado River Indian Tribes Farm of Parker, Ariz., collected $2.4 million in payments in 2003 related mainly to cotton production, and Perthshire Farms, a huge Mississippi cotton operation, took in $2.1 million, according to the Environmental Working Group, an advocacy organization that publishes and analyzes USDA data.
The administration also is calling for new limits in what has long been the centerpiece of farm programs: the provision that guarantees farmers will not take a financial hit if they cannot sell their crop for more than a fixed support price -- 52 cents a pound in the case of cotton. Growers can get a government loan against the crop, and if prices do not exceed the support level the government takes over the crop and forgives the loan.
Efforts to pare back agricultural subsidies generally have gone nowhere because of the farm lobby's immense grass-roots influence.
But this year, strong pressure for change is coming from fiscal conservatives at the White House and in Congress, who insist that the farm sector contribute to deficit reduction.
An even bigger factor may be free traders in the business community and the administration who view farm subsidies as an impediment to new trade deals benefiting U.S. companies abroad. Developing countries contend that bloated U.S. farm subsidies encourage agricultural surpluses and depress prices for farmers, such as struggling cotton producers in poor West African nations. They are demanding changes in U.S. farm policy as a condition for a new round of trade agreements.
Oxfam, a global antipoverty organization, has endorsed Grassley's push for subsidy cuts. "We speak for folks who live on less than a dollar a day," said Charles Moore, an Oxfam official.
Although the Bush administration defended U.S. cotton subsidies before the WTO appeal board in Geneva, Thursday's decision could strengthen the administration's hand in Congress. But trade officials say that even if Congress adopted the Bush recommendations, subsidies would not be cut to the level needed to meet the WTO's ruling.
Another force behind reducing farm subsidies is the Republican Party's small but potent populist wing in Congress that has been fighting for revisions to channel more of the subsidy money to smaller farms and conservation programs.
"I think the measure of the seriousness is this: The president is willing to take it on. This is real stuff," said Grassley, who has introduced payment-limit legislation with Sen. Chuck Hagel (news, bio, voting record) (R-Neb.).
Agriculture Secretary Mike Johanns, former governor of the major farm state of Nebraska, said one reason the administration came to believe that subsidies should be limited is that "very large sums of money were going to a very few."
Two-thirds of the nation's 2.1 million farmers receive no subsidies, either because the crops they grow are not eligible or because they are too small and marginal to qualify. In the case of cotton, the proportion of federal aid going to large operators is unusually lopsided. One percent of those receiving subsidies collected 28 percent of the money paid out between 1995 and 2003, according to the Environmental Working Group. In Mississippi, seven farms out of 10 receive no subsidies.
Nevertheless, large cotton farmers say they need the aid to cover high costs and compensate for depressed world prices.
About $16 billion of the $103 billion in farm subsidies paid out between 1995 and 2004 went to cotton growers, according to the Environmental Working Group. But in the past several years, the cotton industry has become the largest recipient, according to USDA figures, because the aid increases as world prices drop.
"It would put us out of business not to have these subsidies because the price is so low the farmer can't get a fair return," said Ellington F. Massey, a third-generation Mississippi farmer who grows cotton on 7.3 square miles of rich Delta soil east of the Mississippi River. "We're always one year away from going broke," he said of his 4,500-acre spread.
The decline of the U.S. textile industry has forced cotton farmers and merchants to find buyers abroad for two-thirds of their annual production. That puts them in direct competition with lower-cost growers in developing nations, including some of the poorest in Africa.
It costs an average 65 cents for a farmer in the United States to produce a pound of cotton; the adjusted world price in late February ran less than 40 cents. This has made U.S. cotton growers unusually dependent on the government. A program called "Step 2" essentially subsidizes cotton exports and protects home producers from foreign competition.
Step 2, which has cost taxpayers more than $2 billion since 1990, pays a rebate to textile mills that buy U.S. cotton when foreign cotton is cheaper. Brokers who sell U.S. cotton abroad for less than what they paid at home can get the government to reimburse them for the difference.
By taking advantage of a raft of federal subsidies and legal loopholes, cotton farmers can boost their income to more than 70 cents a pound -- double the recent world price. Given this dependence, the stakes for the cotton industry in the coming battle are high. Without the safety net, some analysts contend, many of the 25,000 U.S. cotton growers would switch to crops such as soybeans or vegetables or quit farming.
Cotton's benefits, however, are actively defended in Washington. The political fund of the National Cotton Council distributed $332,000 to a mix of 124 Democratic and Republican congressional candidates in the recent election.
The council, which says it represents a "dirt to shirt" coalition of 443,000 farmers, gins, merchants, textile mills and warehouse operators, has a long history of prevailing on Capitol Hill. Cotton interests helped block a tough payment limitation in 2002. They were led by A. John Maguire, the top Washington lobbyist for the National Cotton Council, who Combest said "has been a key player in every farm bill I've been associated with over the last 20 years."
But Grassley has made clear that cotton lobbyists have a tough fight this year.
"We have a farm program for two reasons, and cotton doesn't fall into either. One is food security for the American people and the other is national defense," Grassley said. "Napoleon said an army moves on its stomach. I can't eat cotton."
Missippy Ping
Good. Government does not exist so that a cotton farmer can be guaranteed an income. All the mumbo-jumbo about "security" is an evasion of this basic fact.
Is this 500?
As a matter of fact it is
"Not just an income but a New 4WD truck, great big house, new Letsgetlaid Cadillac for the wife, new sports cars for the kids, etc....income."
LOL!
500 What? If it's any of my bus. and not private - Just curious.
This is his 500th thread posted.
I'd say that's pretty public. ;o)
growing cotton in california, arizona and texas is a WASTE of water.
cotton is water intensive.
Hemp grows in the same places as cotton. Plant hemp instead.
This makes 500 threads I have posted.
Not many for some but a good milestone for me.
Thanks. That's what I suspected. Addictive isn't it.
"Addictive isn't it"
I've heard there's a 12 step program.
But, I don't need that.
No siree...I don't. ;o)
Thanks. That's what I suspected. Addictive isn't it.
Highly
It's so addictive I expect the Gov't to tax it any day now.
LOL!
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