More Farm Subsidies Approved For US Cotton

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The US Department of Agriculture announced it's revamping its Ginning Assistance Program.

This comes less than a month after a move by Congress to make cotton-seed eligible for Agriculture Risk Coverage and Price Loss Coverage in the 2018 crop year. The National Cotton Council has described the subsidies as a long-term fix, and now the Ginning Assistance Program as a more short-term fix to the struggles in cotton farming caused mainly by the drop in price.

US Secretary of Agriculture Sonny Perdue announced last weekend that he's helping cotton producers through a Cotton Ginning Cost Share program.

Under the program, which will be administered by the Farm Service Agency, cotton producers may receive a cost share payment based on a producer's 2016 cotton acres reported multiplied by 20% of the average ginning cost for each production region, according to a press release from the USDA.

The sign-up period for the Ginning Assistance Program runs from March 12 to May 11, 2018. It'll be a one-time payment – the payment rate for Texas will be US$ 19.65 per acre, with the same eligibility requirements as the last time this program was available, with a US$ 40,000 producer payment limit. This amount, according to PCG, is anticipated to cover about 20% of the cost to gin an acre of cotton. So in 2018, US cotton farmers can receive payments from three separate programs, even though their financial outlook is sunny.

This is a grotesque example of double dipping – when farmers receive multiple payments on the same farm for the same loss, but through different programs. Farmers of all crops received almost $23.9 billion in 2014 and 2015 for the same declines in crop prices through the crop insurance program, and ARC and PLC.

The new cotton subsidy takes double dipping up a notch to triple dipping, since farmers can receive payments from three programs in 2018. 

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