More Farm Subsidies Approved For US Cotton

Natural Fibers

More Farm Subsidies Approved For US Cotton

The US Department of Agriculture announced it's revamping its Ginning Assistance Program.

This comes less than a month after a move by Congress to make cotton-seed eligible for Agriculture Risk Coverage and Price Loss Coverage in the 2018 crop year. The National Cotton Council has described the subsidies as a long-term fix, and now the Ginning Assistance Program as a more short-term fix to the struggles in cotton farming caused mainly by the drop in price.

US Secretary of Agriculture Sonny Perdue announced last weekend that he's helping cotton producers through a Cotton Ginning Cost Share program.

Under the program, which will be administered by the Farm Service Agency, cotton producers may receive a cost share payment based on a producer's 2016 cotton acres reported multiplied by 20% of the average ginning cost for each production region, according to a press release from the USDA.

The sign-up period for the Ginning Assistance Program runs from March 12 to May 11, 2018. It'll be a one-time payment - the payment rate for Texas will be US$ 19.65 per acre, with the same eligibility requirements as the last time this program was available, with a US$ 40,000 producer payment limit. This amount, according to PCG, is anticipated to cover about 20% of the cost to gin an acre of cotton. So in 2018, US cotton farmers can receive payments from three separate programs, even though their financial outlook is sunny.

This is a grotesque example of double dipping – when farmers receive multiple payments on the same farm for the same loss, but through different programs. Farmers of all crops received almost $23.9 billion in 2014 and 2015 for the same declines in crop prices through the crop insurance program, and ARC and PLC.

The new cotton subsidy takes double dipping up a notch to triple dipping, since farmers can receive payments from three programs in 2018.