WASHINGTON — The House, which defeated a comprehensive farm, nutrition and conservation bill in June, passed a scaled-back farm bill on Thursday by a vote of 216 to 208 that has implications for cotton farmers, textile producers and apparel companies.
This story first appeared in the July 12, 2013 issue of WWD. Subscribe Today.
House Republican leaders stripped out food stamp and nutrition programs from the farm legislation in an attempt to win over conservative Republicans who were seeking larger cuts in food stamp programs in the original measure that was defeated.
The revised House bill faces a veto threat from the White House because it eliminates nutrition and food stamp programs and contains “inadequate” commodity and crop insurance reforms. The House measure would have to be reconciled with a comprehensive $955 billion bill the Senate passed in early June.
The five-year legislation would continue federal funding for a program supporting U.S. textile mills that use domestic cotton. It also seeks to resolve a long-standing cotton subsidy dispute with Brazil and bring U.S. cotton programs into line with World Trade Organization requirements.
Under the “Economic Assistance Adjustment” program, the government gives U.S. textile mills 3 cents a pound of domestic or imported upland cotton they use, as long as the money is invested in acquiring, modernizing or expanding land, plants, buildings or equipment.
The House bill mirrors the Senate bill in that it seeks to establish a new insurance program for cotton farmers, with the federal government covering a percentage of a policy’s premium.
It would also eliminate direct payments of about $580 million a year to cotton farmers, end countercyclical payments and modify the export credit guarantee program meant to bring into compliance federal cotton subsidy programs that were found to violate WTO rules in a case brought by Brazil dating back to 2002. Brazil has maintained that U.S. cotton subsidies depress global cotton prices. The WTO sided with Brazil and issued a series of findings between 2005 and 2008.
The U.S. and Brazil reached an agreement in 2011 that averted $800 million in sanctions. The U.S. agreed to make some changes in its cotton export and credit guarantee program, and to work with Brazil to establish a $147.3 million fund to provide technical assistance and capacity building for the Brazilian cotton industry. Brazil has identified a list of U.S. exports it would sanction, including raw cotton, woven fabric, cotton pants and shorts, if the U.S. did not take appropriate actions to change its subsidy programs.