ED092195a: Why "King Cotton" Is Trashing Farm Reform

COMMENTARY Agriculture

ED092195a: Why "King Cotton" Is Trashing Farm Reform

Sep 21st, 1995 3 min read

Senior Fellow and Director of Government Finance Programs


While most folks in Washington fled the summer heat and humidity for the August recess, a little-known special interest stayed behind to plot strategy. And so far it's working like gangbusters.

The National Cotton Council of America lobbies on behalf of cotton producers, ginners, warehousemen, merchants, crushers, cooperatives and manufacturers. During the recess, "King Cotton" declared war on Rep. Pat Roberts, R-Kan., chairman of the House Committee on Agriculture. And last week, it paid off.

The Council's efforts were instrumental in defeating in committee Roberts' attempt to end 60 years of failed New Deal agriculture policies. His farm-reform bill, the "Freedom to Farm Act of 1995," would have ended a special deal cotton producers enjoy. By allowing them to receive federal crop-support payments as three separate entities -- as individuals, corporations and partnerships, for example -- a mile-wide loophole in the current farm program lets cotton producers pull down two-and-a-half times the national average per-capita income.

Roberts' plan was simple: Get the U.S. Department of Agriculture out of the business of deciding what farmers grow on their farms, and instead let individual farmers decide what they want to plant based on what they think they can grow profitably for markets around the world. The bill also would have eliminated the various government-reserve programs that encourage farmers to idle potentially productive farm land.

Of course, since the Roberts bill would have cut off the money spigot for the Cotton Council, an army of lobbyists descended on the capitol. The Council insisted that nothing less than keeping the status quo was "acceptable." In a recent "Action Request," the Council urged its members to tell their congressmen that Roberts' bill "abandons U.S. agriculture, will depress land values and will discourage new investment."

In fact, the American Farm Bureau Federation estimates farmers would have actually gained more than $7 billion extra over seven years as a result of the Roberts bill than they would under the current farm program. This is because the Roberts plan would have provided generous transition payments to help farmers switch from the current system to a free market, and because of increased sales as farmers were freed from federal limits on how much they can plant.

Of course, the battle isn't over -- the House Budget Committee may take up farm reform next. It's members should be interested in a report released earlier this year by the General Accounting Office (GAO), which characterized the cotton program as a costly, complex maze of domestic and international price supports that benefit a small group of wealthy cotton producers. Cost to the taxpayers: more than $12 billion since 1986.

A privileged 300 cotton producers received between $250,000 and $1 million apiece in taxpayer dollars in 1993, and about 2,000 got between $100,000 and $250,000, thanks to the cotton loophole, according to GAO. The rest of the cotton industry's 95,000 participants have little to show from this sweetheart deal with Washington.

In fact, if the majority of America's cotton farmers knew the truth, they would be outraged. It so happens that of the 35 board members who attended the Council's June meeting in Charlotte, N.C. -- the group pushing hardest for the status quo -- only five actually were cotton farmers. The rest were ginners, warehousemen, merchants, crushers, heads of cooperatives, and manufacturers. In other words, 86 percent of the Cotton Council's top leaders don't even grow cotton. The processors and marketers who fill the majority of the board's seats want to keep nearly $1 billion in payments the Roberts bill would give to actual cotton growers to help them transition to a free market.

A simple question needs to be asked: Why does the government even have a price-support program for cotton at all? The argument typically put forward for having agricultural price-support programs is so that America will have "a stable food supply." But cotton isn't food. Besides, worldwide demand for cotton is at record levels. Cotton prices are higher than they have been at any time since the Civil War.

Like so many government programs, the cotton subsidy, originally intended to help small farmers, has turned into another special-interest boondoggle. Pat Roberts took a courageous stand against corporate special interests who have wrapped themselves over the years in federal largesse, and lost.

Now the House Republican leadership should give the Budget Committee a shot at deciding whether American farmers will be set free to compete in world markets, or stay chained to the special interests.

Note: John Frydenlund is former director of the Agricultural Policy Project at The Heritage Foundation, a Washington-based public policy research institute.

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