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DFP-RonSmith-trade.jpg Ron Smith
USDA trade assistance will help cotton farmers who have seen prices drop 30 cents a pound since tariffs were imposed last year.

Cotton Council applauds timely trade package

USDA Announces $16 billion in trade assistance

The National Cotton Council conveyed its appreciation of the Trump Administration for recognizing the economic pressures caused by the trade tensions with China and providing support to assist American farmers.

This follows USDA’s announcement today of a $16 billion package through the Market Facilitation Program (MFP), Food Purchase and Distribution Program (FPDP), and Agricultural Trade Promotion Program (ATP).

NCC Chairman Mike Tate, an Alabama cotton producer, said this assistance is timely as U.S. cotton’s economic health is deteriorating. He noted cotton futures prices have fallen by 30 cents per pound since summer 2018. That equates to about $250 less revenue per acre for a producer with average yields.

“No doubt that this downward price pressure is due in large part to cotton sales to China being substantially below the level that was expected in absence of tariffs,” Tate said. “On top of that, U.S. cotton has lost market share in China to Brazil and Australia, and pressure is building in the distribution chain as U.S. cotton exports lag and stocks build.”

Tate said that over the course of the past year, there have been significant cancellations and deferrals of U.S. cotton sales to China (1.2 million 480 lb. bales). He said that although there have been press reports of recent possible cotton purchases by China, the reported quantities are insufficient given the rising stocks and exportable supplies expected for the 2019 U.S. cotton crop.

“We realize that President Trump is working to address long-standing market access barriers and structural concerns, but we encourage the Administration to look at all options to increase U.S. cotton’s global competitiveness,” Tate said.

USDA’s news release (http://bit.ly/2MeUqd2) noted that MFP signup at local FSA offices will run from Monday, July 29 through Friday, December 6, 2019, with the intention to begin making the first tranche of payments in mid-to-late August followed by the second and third tranches likely to be made in November and January. However, this schedule will be evaluated as market conditions and trade opportunities dictate. USDA’s fact sheet at www.farmers.gov/manage/mfp has more information.

The MFP 2019 County Per Acre Payment Rate can be found at www.farmers.gov/sites/default/files/documents/PaymentRates.pdf. Assistance through the MFP is based on a single county payment rate multiplied by a farm’s total plantings of MFP-eligible crops in aggregate in 2019. Those per-acre payments are not dependent on which of those crops are planted in 2019. County payment rates range from $15 to $150 per acre, depending on the impact of unjustified trade retaliation on crops in that county.

Tate said the U.S. cotton industry also is grateful to the Administration for its allocation under the ATP to promote cotton and cotton manufactured products.

“This allocation will enable the NCC’s export promotions arm, Cotton Council International, to continue positioning U.S. cotton as the “The Cotton the World Trusts” and expand international demand for U.S. cotton fiber, yarn and other cotton products.”

 

TAGS: Trade
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