Please read the open letter below from David Ruppenicker with the Southern Cotton Growers to his leadership yesterday. It sheds some light on what has been going on behind the scenes.
Dear Industry Leader,
I had the opportunity to travel to Washington, DC this week to attend a forum that was hosted by The Farm Foundation regarding conservation provisions contained in the farm bill. Ronnie Lee of Bronwood, Georgia was one of the panelists and did an excellent job of laying out concerns with existing programs and ways to make improvements in the next farm bill. One of the participants was with the Environmental Working Group and was basically in the attack mode against the farm bill throughout his comments. I actually did not think those guys made public appearances and after a whole lot of whoop ass was bestowed upon him by the rest of the speakers, I look for him to become a recluse once again.
I went up a day early to visit a number of key Congressional offices regarding matters of importance to agriculture but more specifically, the farm bill. Before I proceed any further, you need to understand that this process is very fluid in every regard.
– The “group of 4” which is composed of the Chairman and Vice-Chairman from both the Senate and House Ag Committees are basically meeting behind closed doors drafting a comprehensive farm bill for consideration by the Joint Committee on Deficit Reduction better know as the “Super Committee or Gang of 12.” After talking to a number of folks including Council staff, I’ve come to accept the fact that this very unorthodox method for drafting a new farm bill is in our overall best interest. My number one reason for this belief is that more money can be captured at this very moment for writing a new act than would be by waiting until 2012. Also, having to deal with 435 House members and 100 Senators debating the farm bill on their respective floors under an open rule process (no limits on amendments offered from the floor) would be a daunting task. By the way, the “group of 4” have self imposed a deadline of Friday, November 18th to complete work on the farm bill and turn the legislative language over to the Super Committee. However, there is the possibility the Super Committee could reject the proposal all together. Whether or not the Super Committee is able to complete their Congressional mandate by the drop dead date of December 23rd is also suspect. Regardless, I think it is in our best interests for the “group of 4” to be successful in completing this comprehensive framework so that it would be the benchmark for beginning debate in 2012.
– House Ag Committee Chairman Frank Lucas (R-OK) and his staff have been real champions and defenders of Southern commodity interests throughout this process. It is my understanding that Senator Chambliss has struck an accord with Senate Ag Committee Chairwomen Stabenow that he will now have more input regarding Southern commodities on the Senate side. Ironically, I have been told that ranking minority member Senator Pat Roberts (R-KS) and his staff have been totally incognito in these deliberations. Seems pretty strange but they have been a non-player to date.
– As for cotton, STAX will be the only option (please refer to earlier correspondence on STAX). The only difference to date is that shallow loss protection will begin at 90% instead of the original 95%. This change was made for budgetary reasons. For all other farm program commodities, the producer will have a one time choice for the duration of the 5-years farm bill to choose between an “enhanced counter-cyclical program” and a “revenue program.” One of the main differences between STAX and the other revenue program is that STAX is not subject to a means test or payment limits. You will remember that one of the findings in response to the WTO/Brazil case against cotton was that the counter-cyclical program for cotton would be eliminated in the next farm bill.
The only past history that will apply under this new approach for all commodities will be historic planted acres. In other words, which crop(s) planted on your historic base will have no bearing. However, you will be assigned a history of “total planted acres” on a farm. For example, my historic plantings are 1K acres. If I choose to plant 500 acres of cotton, 300 acres of peanuts and 200 acres of corn in 2013, I will have STAX for cotton and a choice between the enhanced CCP and the revenue program for the two others. Once that choice is made however, I am locked in for the duration of the farm bill. It in 2014 I choose to plant 600 acres of soybeans and 400 acres of corn, I am locked in with my choice for corn but I would need to choose between the two options for soybeans. In 2014, if I were to mix up my planted acres among these 4-crops, my choices for a program are already locked in. To be eligible for any program benefits whatsoever, you will have to actually plant the crop. Here again, current program crop bases and/or payment yields will not apply under this approach whatsoever.
There is talk about a $125,000 per person payment limit for CCP or the other revenue program. All commodities would retain their respective marketing loan programs with no payment limits. Here again, you need to understand that this is all subject to change. There will no doubt also be attempts to require a means test and payment limit for the STAX program too. I think most have resolved to the fact that the next farm bill will have a $1 million means test or AGI regardless of where the income comes from. This is in response to the Senate voting 84 to 14 mandate in favor of the $1 million AGI for program eligibility in the 2012 Ag Appropriations bill. It is our hope that this limit will be struck in conference and not apply until 2013.
I could go a lot further into the weeds with these ongoing deliberations but these are the main points. I will attempt to keep you apprised of any further developments as they become available. Please contact me should you have any questions or comments. Thanks
David Ruppenicker, CEO
Southern Cotton Growers, Inc.
139 Prominence Court, Ste. 110
Dawsonville, GA 30534