Hurst Farm Supply Blog

USDA Cotton Ginning Cost-Sharing Program

Posted by Hurst Farm Supply on Jun 9, 2016 3:45:24 PM
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The U.S. Department of Agriculture (USDA) announced on June 6th the release of the Cotton Ginning Cost Share (CGCS) program. This program will provide cotton producers with an estimated $300 
million in assistance payments to eligible producers. After listening to the growing concerns of 
producers, and understanding the urgent need for a short-term viable solution, the USDA has 
implemented a more streamlined and straightforward application process.

 

Understanding the Basics
Once you meet the eligibility requirements, this one-time payment will be calculated by multiplying the 2015 cotton acres you reported to the FSA by 40% of your specific region's average ginning cost. Regional payment rates per acre are:

Southeast - $47.44
Mid-South- $56.26
Southwest - $36.97
West - $97.41

Eligibility requirements for this assistance program are the same as those used in the 2014 Cotton Transition Assistance Program (CTAP), and include:

  1. $40,000 limit of payment per producer

  2. Actively engaged in farming

  3. Meet conservation compliance

  4. $900,000 limit on adjusted gross income

The application process will begin on June 20th and applications will continue to be taken until August 5th at your local FSA office. Applications will include pre-populated information, existing information from 2015, and your payment will be processed when your application is received, which are expected to begin in July. Producers in Texas can anticipate a payment of $36.97 per acre to assist with costs.

 
Impacting the Industry
Agriculture Secretary Tom Vilsack, who understands the cotton industry's situation, believes this program will provide "meaningful, timely, and targeted assistance" for producers. With this new program, the benefits will reach a broader marketing chain, and provide roughly 60% more on average per farm, and producer, than the CTAP.
 
With the dramatic changes in the cotton fiber markets over recent years, many producers have been forced to liquidate assets, including equipment and land, in order to make ends meet.

Currently, producers are struggling to compete with low prices, weak demand, high input costs, as well as, increasing competition from heavily subsidized foreign producers. This program was ultimately designed to help with cotton ginning costs as producers, and the communities in the rural areas that depend on them, as well as, others associated with the cotton and cottonseed including:

Cotton Gins

Cooperatives

Marketers

Cottonseed Crushers

West Texas cotton producers will produce around 3.7 million cotton bales this year, supplying up to 5% of the world's cotton and cottonseed needs, including everything from T-shirts and bath towels to diapers and U.S. currency.

 
Impacting the Region
Agriculture is the lifeblood of our region, and here in West Texas, cotton is the king. On average, this region plants 3.7 million acres of cotton each year, producing almost one-third of the world's cotton, making Texas the #1 cotton producing state in the nation.

With the CGCS program assistance, you will have the assistance you need to cover necessary ginning costs you incur for the 2016 season. In most cases, this assistance will range from $4,200 to $8,100 or more for producers in the West Texas region. This is a significant increase compared to the 2014 CTAP program which provided an estimated $2,600 per farm and $5,200 per producer.

Plains Cotton Growers (PCG) President, Johnie Reed released a statement in response to the implementation of this program, and expressed his gratitude on behalf of the industry for the assistance and pledges to continue working with Congress in an effort to establish cottonseed and "other oilseed", in order to provide stability in the cotton industry on a long-term basis.
 
 

Topics: Cotton Farming, Industry Insights