Farm Progress is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Serving: East

Payment limits: Unintended consequences

While much of the testimony on payment limitations during a June 17 workshop focused on the impact on payment recipients, programs of non-program crops could feel the sting of tighter restrictions as well, California cotton producers and merchants said.

“In Fresno County, the typical cotton grower could hit the payment limits at around 400 acres if tighter restrictions were applied,” said John F. Bennett, a Fresno producer. “Those growers will be forced to go to other crops and will hurt those as well.”

Bennett said it’s not just farmers who would feel the impact of more restrictive limits. “My family members would lose, but, in our operation, you would have 50 other people, our employees, and their families losing

Several producers and cotton merchants talked about the issue of changing the payment regulations two years into the seven-year Farm Security and Rural Investment Act of 2002.

“Most California cotton producers are already impacted by payment limits,” said Bruce Allbright, president of Fresno-based Allbright Cotton Co. “Many have made substantial investments based on the current farm bill. California agriculture is already on the wane, and changing the payment limit rules would do even more harm.”

Riverdale, Calif., cotton producer Mark McKean said the uncertainty over the passage of the 2002 farm bill caused him to delay the purchase of a new GPS system for his farming operation for two years.

“I finally bought the system last winter because I could figure in the payments under the new farm bill,” he noted. “I won’t have the opportunity to go back and refigure the payments on that system if the payment limit regulations are changed.”

Responding to comments by economists that farmers might be able rent out part of their land to reduce the sting of tighter payment regulations, McKean said such reductions would wipe out the efficiencies that producers have tried to build into their operations and make them less able to compete with cotton producers in countries like Uzbekistan and Australia.

“It would also be difficult to explain to your banker why you were suddenly planning to take 2,000 acres out of your operation,” he noted.

Trying to sell lenders on making loans under tighter payment limits could definitely be a challenge, said Ernie Schroeder Jr., of Jess Smith & Sons Cotton Co. LLC, in Bakersfield, Calif.

“We provide financing as part of our service to our cotton producers,” said Schroeder. “Tighter payment limits would definitely have an impact on our ability to make loans, and we tend to be more ‘farmer friendly’ than some non-agriculturally oriented lending institutions.”

Cotton producer Tom Teixeira told the Commission members that his San Joaquin Valley farming operation has more payment limits because of the involvement of his two brothers and his father, but that they still “max out at around 400 acres per person.”

“Each of my partners and I are taking a huge financial risk by continuing to farm,” he noted. “We need higher limits, not lower limits if we are to continue taking those types of risks.”

e-mail: [email protected]

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.