What is in this article?:
- Risk management tools critical in future farm policy
- STAX proposal
- The cotton industry believes a revenue insurance program that supplements existing insurance products would provide an important and affordable tool.
- STAX has been estimated to significantly reduce outlays compared to previous years and is at least a 30 percent spending reduction compared to extending the existing cotton program.
The US cotton industry believes a revenue insurance program that supplements existing insurance products would provide an important and affordable tool -- especially given the weather uncertainties and risks that farmers face.
In testimony before the Senate Agriculture, Nutrition & Forestry Committee in Washington, D.C., NCC Chairman Chuck Coley recalled the 2010 prolonged drought in Texas and Oklahoma, that year’s severe drought in his area of South Georgia as well as the severe flooding in Mississippi and Arkansas.
“We must have access to crop insurance, risk management tools and even emergency assistance programs to survive and recover from these natural disasters,” said Coley, one of several producers testifying at the hearing on risk management and commodity programs held by Committee Chairwoman Stabenow (D-MI). The full testimony is on the NCC website’s 2012 Farm Bill site at www.cotton.org/issues/members/farmbill/2012/coleysenfarm.cfm.
Coley noted that “the availability of effective risk management tools like crop insurance is important even in so-called normal years because cotton producers need to recover a portion of lost revenues if their crop is damaged after they have invested in the inputs, technology and equipment necessary to produce and market a crop. In those areas where cotton growers have not had access to adequate coverage, we want to continue to work with USDA, the companies and Congress to improve and increase the products that are available to our growers.”
Speaking from his experience as a cotton ginner, Coley told the Committee that the increasing volatility of commodity markets, particularly cotton, also has made the risks of marketing a crop incredibly challenging.
Coley also testified that “in the case of cotton, the traditional marketing assistance loan set at levels normally well below the market provides important collateral for production loans with only minimal net costs to the government and no disruption of market signals.” He emphasized that the opportunity to use the loan for short periods also provides an opportunity for growers to make rational, market-driven marketing decisions.
“This is very important in volatile markets where market signals at planting may be vastly different by harvest, yet our growers only have a narrow window to make cropping decisions,” he noted.