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Amid High Prices and Strong Demand, Do Cotton Farmers Need 'Relief?'

Thursday, May 18, 2017

Some legislators say cotton farmers need more federal financial support. Is this true?

Cotton prices have reached their highest levels since 2014 – the result of tight global supplies and strong demand. U.S. cotton exports recently reached a key target. And demand for American cotton by China and Vietnam is rising.

U.S. strength on the export market caused the price of cotton futures to surge again on Monday. Futures options jumped for the second straight session.

It should come as no surprise that, according to the U.S. Department of Agriculture, cotton acres are increasing. Farmers have planted 12.2 million acres of cotton this year – a 21 percent increase over last year. As cotton production is growing, investments to expand cotton gins are increasing as well.

So, were legislators “reckless” when they declined to increase cotton subsidies in a recent spending bill, which would have invited a new trade war? Were they “stabbing cotton farmers in back,” as one legislator charged?

Federal support for cotton farmers remains generous, including $484 million through the Cotton Transition Assistance Program, $329 million in marketing loan gains and loan deficiency payments, and $314 million that goes to cotton gins.

That doesn’t even include the unlimited subsidies provided to cotton farmers through a super-charged crop insurance program. A recent report from four leading agricultural economists found that cotton farmers are getting their fair share of farm subsidies. 

 

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