{ "id": "RL32442", "type": "CRS Report", "typeId": "REPORTS", "number": "RL32442", "active": false, "source": "EveryCRSReport.com", "versions": [ { "source": "EveryCRSReport.com", "id": 104381, "date": "2004-06-24", "retrieved": "2016-04-07T20:13:21.978879", "title": "Cotton Production and Support in the United States", "summary": "While cotton, along with other major crops, has been subsidized by the U.S. federal government\nsince the 1930s, cotton subsidies are now in the focus of an international spotlight. The nature and\nextent of these subsidies have become a roadblock in negotiating multilateral and bilateral trade\nagreements. Sharp criticism came from the West and Central African countries during various Doha\nRound meetings. Also, efforts to create a Free Trade Area of the Americas (FAA) foundered at least\npartially over U.S. cotton subsidies. Now, Congress is watching to see if the United States will be\nrequired by the World Trade Organization (WTO) to revise its cotton subsidies in response to a\ndispute lodged by Brazil.\n One reason the international spotlight is on U.S. cotton subsidies, in contrast to other\nsubsidizing nations, is the sheer size of U.S. cotton production and exports. The United States is the\nsecond-largest producer of cotton in the world, and the largest exporter. Therefore, U.S. cotton\nsubsidies have global repercussions. Domestically, what happens to cotton subsidies is important\nto a broad group of interests because grains, oilseeds, and peanuts receive similar support.\n U.S. cotton production and export subsidies provide comprehensive support for producers. \nFarmers with a history of cotton production are eligible for direct and counter-cyclical payments. \nOn their actual production, farmers may utilize the marketing loans and loan deficiency payments. \nProtection against low yields is available through subsidized crop insurance, and in some years\nCongress has approved additional disaster payments. When U.S. market prices rise, and there is a\nrisk that competitors might capture more of the world export market and even deliver to U.S. yarn\nand fabric mills, so-called Step 2 user payments are made to U.S. exporters and mills if they\npurchase U.S. cotton.\n From 1991 through 2003 farm subsidies for cotton production have cost $1.76 billion per year,\non average. This is the annual equivalent of $0.21/lb. of U.S. production. While the United States\nis not alone in subsidizing cotton, this level of support is nearly the highest in the world, according\nto the International Cotton Advisory Committee.\n When the $0.21/lb. average crop year farm subsidy is added to the $0.57/lb. average market\nprice, it has given producers an average revenue of $0.78/lb. from 1991 through 2003. This level\nof revenue is more than enough to cover average variable cash costs of $0.50/lb., and just enough\nto cover average total economic costs of $0.78/lb. According to the International Cotton Advisory\nCommittee, variable cash costs of some of the competing cotton exporting nations are about half\nthose of the United States.\n This report will not be updated.", "type": "CRS Report", "typeId": "REPORTS", "active": false, "formats": [ { "format": "HTML", "encoding": "utf-8", "url": "http://www.crs.gov/Reports/RL32442", "sha1": "bf0852efc22e7f9f449d8ecd6d9343cd91fc7ca8", "filename": "files/20040624_RL32442_bf0852efc22e7f9f449d8ecd6d9343cd91fc7ca8.html", "images": null }, { "format": "PDF", "encoding": null, "url": "http://www.crs.gov/Reports/pdf/RL32442", "sha1": "3734b9edbbf3c4fad451903099858792bb907346", "filename": "files/20040624_RL32442_3734b9edbbf3c4fad451903099858792bb907346.pdf", "images": null } ], "topics": [] } ], "topics": [] }