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FARM BILL INCLUDES HIKE IN SUBSIDIES FOR YARN SPINNERS

Byline: Joanna Ramey

WASHINGTON — Domestic yarn spinners will get additional federal subsidies for buying U.S. cotton under terms of a House-Senate plan expected to be formally unveiled today.
The extra textile cotton payments, which could amount to $100 million over two years, are part of a broader $171 billion, 10-year plan to help prop up farmers of most crops in the face of falling global commodity prices.
Yarn spinners already receive federal payments for buying U.S. cotton, an amount that fluctuates with the global price of cotton and is based on a formula. Last year, mills received $136 million in cotton subsidies and in 2000 they were $286.6 million. This year’s subsidies for the federal fiscal year that began Oct. 1 have not been determined.
The extra cotton funds for mills would begin kicking in when the President signs into law the farm bill House and Senate negotiators completed late Friday. A vote on the compromise plan by both chambers is anticipated in the next few weeks. The legislation is expected to reach the White House sometime in June. Details of the compromise were made available by cotton industry officials close to the negotiations.
The extra textile cotton funds will come by eliminating a 1.25-cent per-pound surcharge now added to the formula used to calculate the existing cotton subsidies. The domestic textile industry, which maintains that cotton subsidies benefit the entire textile supply chain, had sought to eliminate the surcharge, also called a threshold, over the life of the 10-year farm bill.
But under the compromise, elimination of the threshold will last through July 31, 2004. However, mill officials are thankful for the short-term additional help.
“Elimination of the 1.25-cent threshold+will be extremely helpful to the U.S. textile industry in its efforts to recover from unprecedented economic stress due in large measure to a strong dollar and surging Asian textile imports,” W. Duke Kimbrell, vice president of the National Cotton Council and chairman of the largest U.S. cotton user, Parkdale Mills of Gastonia, N.C., said in a statement.
Yarn spinners are part of the cotton industry subsidy plan because they are cotton farmers’ largest customers. By law, the cotton needs of mills are met by U.S. cotton farmers, except under tight availability when cotton can be imported.
An American Textile Manufacturers Institute spokesman said: “The threshold requirement has given foreign mills an unfair advantage and its elimination will help U.S. textile companies become more competitive. This is a win-win for both the textile industry and our suppliers in the U.S. cotton industry.”

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