OPEN SESSION - 11am, Thursday, April 23, 2015, in the Cypress room.
Presenting is Cindy Sanders - of FSA College Station.
Biographical: Cindy Sanders joined the Texas State FSA Office staff as an Agriculture Program Specialist in the Common Management and Price Support Division in 2010. Cindy is responsible for cotton and peanut price support programs. She served twenty-six years in the Robertson County FSA Office as Lead PT. She is married to Larry Sanders. They have 3 children and 3 grandchildren. Cindy lives on a farm near Ridge.
Texas Cotton and the Farm Service Agency; Exploring Changes in 2014 Farm Bill
By Texas Farm Service Agency Public Affairs
Texas produces more cotton than anywhere else in the world. The Farm Service Agency (FSA) and the Texas Cotton Association (TCA) have both played important roles in the legacy of Texas cotton.
With the implementation of the Agriculture Act of 2014 – better known as the “2014 Farm Bill” -- Texas producers and landowners have had to make new decisions about the best safety-net programs for their farms.
The new Farm Bill brought several changes to cotton programs that have impacted the way farmers plan for the future and participate with FSA. Direct payments for cotton were eliminated, as was the inclusion of cotton as a covered commodity under the new Agricultural Risk Coverage (ARC) and Price Loss Coverage (PLC) programs.
Although upland cotton is no longer considered a covered commodity for ARC and PLC, and upland cotton base acres on the farm were renamed “generic” base acres, producers may receive payments on generic base acres if these acres are planted to a covered commodity.
The Cotton Transition Assistance Program (CTAP) was authorized by the 2014 Farm Bill as a first step as the Risk Management Agency (RMA) began set-up for its new Stacked Income Protection Plan (STAX) program. CTAP provided assistance to producers farming cotton as of September 30, 2013, and was subject to adjustments for conservation measures. CTAP was initially authorized for the 2014 crop year, but was extended for the 2015 crop year in some counties. Texas CTAP payments totaled $146 million.
STAX is a new crop insurance product for upland cotton that provides coverage for a portion of the expected revenue for a producer’s area. STAX may be purchased on its own or in conjunction with another policy including Yield Protection, Revenue Protection, Revenue Protection with the Harvest Price Exclusion, or any of the Area Risk Protection Insurance policies. STAX is implemented and administered by the RMA and information on the program can be found on the RMA website (www.rma.usda.gov).
The Marketing Assistance Loan (MAL) and Loan Deficiency Payment (LDP) programs continue mostly unchanged, except payments are now subject to limitations and eligibility due to “actively engaged” and cash-rent tenant rules.
One significant change is a funding limit. The maximum amount that can be received annually by a person or legal entity is $125,000 for all PLC, ARC, LDP, and Marketing Loan Gain payments for all commodities other than peanuts. Producers who market their cotton using either the option to purchase or equity contracts may realize a market gain that applies to their payment limitation. These producers may never see the actual market loan gain as the cotton was redeemed by a merchant using a CCC-605, “Authorization and Designation of Agent – Cotton” form. In these cases, the amount applied to the producer’s payment limitation will be the producer’s direct or indirect share of the market gain.
Texas FSA made over $653 million Cotton MALs on over 2.5 million bales of cotton during the 2014 crop year. Producers have already realized $50.6 million in market loan gains and FSA paid producers LDPs of over $78.6 million on an additional 3 million bales of cotton.
The addition of the “actively engaged” requirements and payment limitation on market loan gains and LDPs adds a significant layer of complexity to a producer’s decision on how to market cotton.
Changes brought about by the 2014 Farm Bill may prompt open discussions between Texas cotton producers and merchants about the impact on each farming operation. Merchants with questions on how the 2014 Farm Bill impacts cotton are encouraged to contact Texas FSA’s Common Management and Price Support Division at 979-680-5191.