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Marketing loan program still paying off for U.S. cotton producers

Joe Nicosia says U.S. cotton producers should be glad they decided to enact a program that would help them ship cotton rather than store it 30 years ago.

That’s what the U.S. cotton marketing loan has done ever since it became part of the 1985 farm bill – allowed shippers to sell cotton at market-clearing levels, according to Nicosia, executive vice president, Louis Dreyfus Commodities and a speaker at the Mid-South Farm and Gin Show.

When a congressional staff member – Wayne Boutwell – first brought up the idea of the marketing loan, other commodity groups shied away from it. But cotton merchants quickly grasped its potential, and pushed for it in what became the Food Security Act of 1985.

Nicosia said other countries continue to learn the fallacy of trying to store their crops rather than pushing them into the marketplace – often at considerable expense. He cited the case of Thailand, which reportedly spent $21 billion on a program designed to hold rice off the market in 2013 and 2014.

“These countries spent a lot of money, and now they have nothing to show for it,” he said. “We could have 10 million bales in ending stocks for cotton (vs. the 4.2 million projected for the end of the 2014-15 marketing year).

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