The Hagstrom Report

Agriculture News As It Happens


Glauber hopes for U.S.-Brazil cotton program agreement

SCOTTSDALE, Ariz. — Agriculture Department Chief Economist Joe Glauber said he hopes that the United States and Brazil reach agreement over the cotton program in the next farm bill so that the United States does not have to go back to the World Trade Organization to resolve the cotton case that Brazil won against the U.S. cotton program.
Joseph Glauber

Joe Glauber
“Ideally you want something on which the United States and Brazil agree,” Glauber said here Wednesday when asked for his reaction to the new cotton proposal included in the farm bill sent to the supercommittee in charge of deficit reduction in December and declared by Brazil to be unacceptable.

“Otherwise you have a nasty battle to go back to the WTO and explains why it meets concerns [raised in the case],” he said at the crop insurance industry annual meeting.

During the time that would take, Brazil could impose retaliatory tariffs, added Glauber, who has served as a U.S. negotiator on the Doha round of world trade talks.

A WTO panel agreed with Brazil that the old U.S. cotton program suppressed world prices and caused “serious prejudice” to the Brazilian cotton industry. Brazil won the right to impose retaliatory tariffs, but has not done so because the United States has agreed to pay $147 million per year on the assumption that the next farm bill will provide an acceptable solution.

The new cotton proposal developed by the National Cotton Council is known as STAX and involves a lower marketing loan and additional crop insurance on top of regular crop insurance.

National Cotton Council President Mark Lange told the crop insurance industry earlier this week that Brazil seems to “trash” everything it does not like, and said his industry wants to equip the Office of the U.S. Trade Representative with arguments to make showing that the new U.S. program would not cause price suppression and therefore would resolve the case.

Glauber, who chairs the Federal Crop Insurance Corporation board, also said he does not think the proposal from Farm Service Agency county employees to turn the crop insurance program over to them to reduce costs is a good idea.

“The whole reason of the ’80 act was to put it in the hands of the crop insurance industry,” he said. “There’s no doubt in my mind we have a viable industry. I don’t know why you would change things. “