Cotton Producers Already Clamoring for Farm Bill Subsidies

In preparation for the next farm bill expected to hit Congress in 2018, the House Committee on Agriculture held a hearing to examine some of the programs authorized in the previous bill passed in 2014. Historically the farm bill debate centers on how the federal government should prop up the industry rather than reforming government regulations that undermine farmers and put taxpayers on the hook.

Unfortunately, this latest hearing arguably consisted of the same old special interests clamoring for subsides. Testimony from the National Cotton Council (NCC) highlights the issue at stake. NCC Chairman Ronnie Lee, mentioned two programs – Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) – in the last farm bill and cited them as key to “help[ing] producers withstand prolonged period of prices declines.”

These programs shield farmers from losses, via government payments, when commodity prices fall below a predetermined level (PLC) or when a commodity’s revenue fall below a set threshold (ARC). As it stands now, products like corn, soybeans, and wheat qualify as covered commodities for both programs. Citing volatility in the market, the  NCC spent the hearing lobbying that cotton should join the ranks of covered commodities.

Programs like these and many others contained in the farm bill, work off of the mistaken assumption that big-agriculture needs government insulation from any risk. In reality this supposed agricultural “safety net” introduces moral hazard into the market as subsidises drive farming decisions rather than consumers; all the while leaving taxpayers responsible to clean up the mess

Instead of adding cotton to the list of covered commodities, Congress should eliminate these subsidies that crowd out competition, raise prices, and distort market demand. Congress should let market forces work their way back into agricultural markets while providing disaster assistance for catastrophic losses.

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