WASHINGTON — Southern lawmakers are pushing back against a proposal in President Barack Obama's budget that ends compensation to cotton and peanut farmers for storage costs when they hold back on selling crops until they can net better market rates.
"The credits allow producers to store their cotton and peanuts at the government's cost until prices rise. Therefore, storage credits have a negative impact on the amount of commodities on the market," said a White House Office of Management and Budget analysis released earlier this month.
"Because storage is covered by the government, producers may store their commodities for longer than necessary," according to the analysis. "There is no reason the government should be paying for the storage of cotton or peanuts, particularly since it does not provide this assistance for other commodities."
Cotton and peanuts — crops that contribute heavily to the Southern economy — are the only commodities that receive such subsidies. Southern lawmakers have long sought to insert the subsidies into federal farm bills, with mixed results.
Storage compensation to cotton and peanut farmers was negotiated as part of the 2008 farm bill.
"To come back and have to fight that after the cotton and peanut industry took big hits in the farm bill is unconscionable," said Rep. Sanford Bishop, D-Ga., who sits on the House Appropriations agriculture subcommittee. "When you pull the rug out from under farmers at the beginning of a new farm bill, when they've made plans based on issues resolved in the farm bill, it's unfair."
The Obama administration likely will face an uphill battle in trying to maintain the cuts. The administration made little headway last year on similar attempts, and President George W. Bush was unsuccessful in his attempts to uphold his veto of the 2008 farm bill, which included subsidies, including the cotton and peanut compensation, to which the Bush administration objected.
"As with last year, the administration unfairly targets farmers and ranchers to achieve savings and fund Washington-based programs," said Georgia Sen. Saxby Chambliss, the ranking Republican on the Senate Agriculture Committee.
The Obama administration says that the cotton and peanut storage credit cuts will save $2 million over the next decade, and that broader farm subsidy cuts could net more than $2.3 billion over the next 10 years.
The National Cotton Council, which represents cotton growers, says the administration's proposal to cut the cotton storage credits "is a failure to discern critical differences between commodities."
Unlike many other crops, most cotton "requires off-farm storage" in facilities approved by the Commodity Credit Corp. — the government-owned and operated entity created during the Great Depression to stabilize and protect farm income and prices — in order for growers to receive U.S. Department of Agriculture loans, said National Cotton Council chairman Jay Hardwick. "Further, loan eligible cotton must comply with a number of CCC regulations stipulating bale wrapping and packaging."
Peanuts, growers claim, also require storage as farmers await better prices.
Southern lawmakers say balancing the budget shouldn't come at the expense of the region's farmers.
"We've had this battle over and over again that people from other parts of the country who set agricultural policy are not fully familiar with the nuances of Southeastern agriculture," said Bishop, the Georgia Democrat. "While I do support the efforts of the president, I do not believe the costs should be borne on the back of our farmers."
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