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NCC's Johnson: Budget cuts should limit damage done

Proposed cuts in government programs by the Bush administration should “do the least possible damage to current farm programs,” a National Cotton Council official says.

“We're working with Congress and the administration in delivering the message that the farm bill is a multi-year contract that provides necessary stability for U.S. agriculture and consumers,” Fred Johnson, vice president of administration and program coordinator for the council, told members of the Southern Cotton Ginners Association at their summer conference at Biloxi, Miss.

Noting that the president's fiscal 2006 budget proposal sought changes in farm programs to save about $5.7 billion over 10 years, he said “elements of that proposal were very severe, and we believe they were unfairly targeted toward Sunbelt crops of cotton, rice, and peanuts.”

The House and Senate developed different budget plans for meeting spending reductions for agriculture programs; the House version would have cut $5.3 billion, the Senate $2.8 billion.

The final budget resolution calls for $3 billion in agriculture spending reductions, and both the House and Senate agriculture committees are developing plans to meet those reductions. Johnson said the council will be providing input to try and hold the line on farm program cuts.

“It will also be necessary to guard against attempts to achieve at least part of the budget savings through further reductions in payment limits and changes to program eligibility rules,” Johnson said.

Fallout from the recent World Trade Organization (WTO) decision in favor of Brazil's complaint about U.S. cotton subsidies may reach well beyond the cotton program, “with the real potential for impact to other commodities,” he said, and the council has been working with other agricultural groups to explore the long-term implications of the ruling, particularly in light of the WTO's ongoing Doha negotiations.

Following the ruling in the Brazil case, Johnson said, the council has been involved in a series of meetings with USDA leaders and officials from the U.S. Trade Representative's office, congressional leaders, and representatives of major agricultural organizations.

Early in July, the USDA submitted to Congress a legislative package to bring the Step 2 and export credit guarantee programs into compliance with the WTO ruling.

“USDA had advised us in early June that its legislative proposal would seek elimination of Step 2, and that it believed its proposed adjustments to Step 2 and export credit programs would address the serious prejudice and prohibited subsidy components of the Brazil ruling.”

The council, Johnson said, informed congressional leaders that “significant market disruption and economic losses” would occur with the USDA proposal.

“We're urging Congress to make a decision on Step 2 in the context of a new farm bill, or at the very least to consider other options instead of the immediate elimination of the program.”

Johnson said the council continues to “take a direct role” in defending the Cotton Research and Promotion Program against “very serious legal challenge.” The producer/importer-supported program provides funding for Cotton Incorporated's extensive research and promotion efforts on behalf of the U.S. cotton industry.

“We were very pleased with the recent Supreme Court ruling in the beef case, which rejected a First Amendment challenge to that program's constitutionality. We were also very encouraged that a cotton importer has withdrawn its administrative petition against the Cotton Research and Promotion Program.”

The council's export promotion arm, Cotton Council International, continues to play a major role in strengthening key export markets for U.S. cotton, Johnson said. Among its programs was last year's Sourcing USA Summit, which brought more than 200 buyers of U.S. cotton from 30 countries to the United States for meetings with industry leaders. The countries collectively import 5 million bales of U.S. cotton annually.

CCI also helped to host a cotton conference in Turkey, which brought together 48 U.S. merchants and 65 Turkish mill executives.

“Turkey's recent purchases of U.S. cotton make it second to China as our largest export customer,” Johnson said.

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