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1 1 (August 17, 2022)

handle is hein.crs/goveiat0001 and id is 1 raw text is: Congressional Research Service Informfing Ih legisIative debate since 1914 Farm Bill Primer: Support for Cotton August 17, 2022 Title I of the Agriculture Improvement Act of 2018 (2018 farm bill; P.L. 115-334) reauthorized commodity support for domestic producers of cotton for the 2019-2023 crop years. Titles I and XII of the 2018 farm bill reauthorized support for domestic users of cotton for various periods that do not align with crop years. Although U.S. farm policy has included support for cotton producers since the 1930s, the 2018 farm bill restored certain commodity support previously eliminated in the Agricultural Act of 2014 (2014 farm bill; P.L. 113-179). Since 2002, all enacted farm bills have included support payments for cotton users. The United States is the world's third-largest cotton producer and the leading cotton exporter, accounting for nearly one-third of global trade in raw cotton. Imports constitute less than 1% of domestic textile mill usage. Between 2000 and 2020, U.S. cotton production decreased by more than 15%, and U.S. textile mill usage decreased by more than 80%. Support for Cotton Producers The 2018 farm bill authorizes support for seed cotton-the unginned bolls containing cotton lint and cottonseed-and two types of cotton lint used for fiber manufacturing: upland cotton and extra long staple (ELS) cotton. U.S.- grown ELS cotton is also referred to as Pima cotton. Producers of seed cotton-including upland and ELS types-may be eligible to receive income support from the Price Loss Coverage (PLC) and Agriculture Risk Coverage (ARC) programs. PLC provides payments to producers when annual average market prices decline below the statutory level of $36.70 per hundredweight (cwt.) for seed cotton. ARC payments augment farm revenues during periods of declining crop revenues. PLC cannot be combined with ARC for the same commodity. Payments are proportional to enrolled base acres (i.e., units of production allocated to eligible farms based on historical plantings). Farms with seed cotton base acres enrolled in either program are ineligible to purchase Stacked Income Protection Plan (STAX) coverage through the federal crop insurance program. Producers of cotton lint are eligible to receive support from the Marketing Assistance Loan (MAL) and Loan Deficiency Payment (LDP) programs. The MAL program provides loans to farmers when market prices are typically at harvest-time lows, allowing them to delay the sale of an eligible commodity until more favorable market conditions emerge. The MAL program also provides price support to borrowers when market prices drop below levels specified in statute. The statutory MAL rate for upland cotton is the average of the marketing year average price for the preceding two years, limited to a range of $45 and $52/cwt. The statutory MAL rate for ELS cotton is $95/cwt. The LDP program provides payments in lieu of executing a MAL loan to farmers who are eligible to receive MAL price support. MAL and LDP support for cotton is in addition to ARC and PLC (or STAX) support. MALs and LDPs are available for upland cotton as well as other commodities. However, ELS cotton is eligible only for MALs. Loans for upland cotton may be repaid at the lesser of the loan rate plus interest or the adjusted world price for cotton. The U.S. Department of Agriculture (USDA) determines adjusted world prices. Upland cotton loans may also receive credits for storage costs incurred. Support for Cotton Users The 2018 farm bill authorizes three programs that make payments to cotton users. The Economic Adjustment Assistance for Textile Mills (EAATM) program makes monthly payments to domestic cotton mills, as authorized by the 2018 farm bill in Section 1203(b). The payment rate is $0.03 per pound of cotton used, including U.S.-grown and foreign-grown cotton. Payments must be used for capital investments that contribute to domestic manufacturing of upland cotton. Section 1204 of the 2018 farm bill reauthorizes the ELS Cotton Competitiveness Payment program, which makes payments to mills that use ELS cotton and to exporters of ELS cotton. Payments are triggered when the adjusted world price for ELS cotton is less than the domestic price for four consecutive weeks and the lowest priced comparable foreign-grown cotton is less than 113% of the MAL rate for ELS cotton of $107.35/cwt. The payment rate is the difference between the domestic and adjusted world prices. Section 12602 of the 2018 farm bill reauthorizes the Pima Agriculture Cotton Trust Fund, which provides payments to certain domestic manufacturers that use ELS cotton and to associations that promote the use of ELS cotton. Trust fund payments are intended to compensate domestic ELS cotton manufacturers from economic injuries caused by differences in the tariff rates applied to imports of cotton fabrics and the tariff rates applied to imports of certain apparel articles made from cotton fabrics. Appropriat-ons and Outlays The PLC, ARC, MAL, LDP, EAATM, and ELS Cotton Competitiveness Payment programs receive mandatory authorizations in the farm bill of such sums as necessary and are funded through the Commodity Credit Corporation (CCC). The Pima Agriculture Cotton Trust Fund receives annual transfers from the CCC of $16 million.

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