Cotton and agriculture face serious challenges as the 112th Congress looks to trim budgets and farm interests compete for a piece of a smaller pie. A lot of newcomers on key committees, especially the House Ag committee, could make the chore even more challenging.

The budget will be the key, said John Maguire, National Cotton Council Senior vice president for Washington Operations.

“Preserving the budget baseline for the 2010 farm bill will be an issue,” for both the House and Senate Agriculture Committees, Maguire said during the opening session of the Beltwide Cotton Conferences in Atlanta.

Both Houses have new leadership. Rep. Frank Lucas, R-Okla., is chairman of the House Ag Committee following Republican gains in November elections. Debbie Stabenow, D-Mich., is Senate Ag Committee chair, taking over from Blanche Lincoln who was defeated.

Agriculture lost a lot of rural, conservative, Blue Dog Democrats, Maguire said. “Of 28 Democrat members (of the House Ag Committee) from the 111th Congress, 16 were defeated. And six of the remaining members have cotton. Of the 25 Republicans on the House Ag Committee, 16 are freshmen and 10 have cotton.”

Maguire said the House Republican agenda will focus on the budget deficit, banning earmarks, regulatory review and trade. Possible cuts to agriculture programs include a $10 billion reduction from direct payments, conservation and export enhancement programs. “Budget reconciliation may require adjustments to current law,” he said.

On the plus side for agriculture, farm programs account for less than 1 percent of the total federal budget. “Agriculture has contributed $4 billion to deficit reduction and current farm bill costs are well below projections and are declining.”

A target for House Republicans, Maguire said, is to reduce discretionary spending by 21 percent. Defense, Homeland Security and Veterans programs are the only programs exempt. “New House rules will require a constitutional basis for all legislation, no earmarks and Paygo (all spending increases must be offset). A separate vote will be required to raise the debt limit.”

Regulatory review will include EPA. Also on the agenda are financial market reform and food safety implementation.

Trade issues include free trade agreement action with Korea, Columbia and Panama. Transportation and immigration are also possible targets for the 112th Congress.

Maguire said House Ag Committee chairman Lucas does not see 2011 as a deadline for developing a new farm bill. “He also says it’s not necessary to completely rewrite the current law, but prefers to identify and fix what isn’t working.”

Ag programs without baselines are in jeopardy and “38 programs are unfunded and will require $8 billion to reauthorize,” Maguire said. “Commodities, conservation, nutrition and specialty crop programs will be in intense competition for funds.”

The Brazil WTO ruling continues to pose a challenge for cotton. In a framework agreement Brazil agreed not to retaliate if certain changes are made to the cotton program in the 2012 farm bill. If that agreement falls through, retaliation “against U.S. products, services and intellectual property is authorized.”

Also of concern is language in the Doha round of trade talks, specifically the “Hong Kong text requiring a ‘more expeditious and more ambitious’ outcome for cotton.”

But cotton also has opportunities, Maguire said, including “remaining a reliable supplier of quality fiber, completing the boll weevil and pink bollworm programs, continuing to develop and adopt technology and maintaining highly successful research and promotion programs.”

Maguire said the National Cotton Council is deeply involved in efforts to work with Congress, educate newcomers and represent the interests of the U.S. cotton industry in Washington.