Sen. Tommy Tuberville continued his push for Alabama’s farmers and agricultural interests at a Senate Agriculture, Nutrition, and Forestry Committee hearing Tuesday.
The hearing was about commodity programs and farm safety nets. Tuberville (R-Auburn) questioned Patrick Johnson of the National Cotton Council on financial protection programs and Karla Baker Thompson of the U.S. Peanut Federation, as well as Johnson on support for peanut and cotton producers.
“Mr. Johnson, during 2022 in Alabama, there were over 221,000 acres enrolled in PLC and nearly 100,000 acres enrolled in STAX (Stacked Income Protection Plan),” Tuberville said. “Due to eligibility limitations, only 23% of my producers were enrolled in STAX. If producers were permitted to enroll in ARC or PLC (Agriculture Risk and Price Loss Coverage), plus STAX, instead of having to choose, do you think there would be a significant increase in STAX participation?”
“The short answer is ‘Yes’,” said Johnson. “Before 2018, cotton was not a covered commodity. We had the STAX program, which is an area-wide revenue insurance program and that works well.”
Tuberville then highlighted the need for increased flexibility for farmers in choosing programs to join.
“When seed cotton was added in 2018, there was a prohibition of participating in STAX and ARC/PLC at the same time,” he said. “It would definitely be helpful if we could remove that, and give growers the flexibility to participate in both.”
The next topic discussed was loan repayment rate calculation.
“Mr. Johnson, America’s cotton producers export over 80% of U.S. grown cotton, yet the marketing assistance loan (MAL) rate has not been increased in over 20 years,” Tuberville said. “I’ve been hearing a lot about this. Could you explain how changes to the loan repayment rate calculation would allow cotton to move more efficiently through (global) markets?”
Johnson responded.
“Firstly, the fact that the payment rate hasn’t been changed in such a long time — we’d like to see that raised a little bit more — even though it’s nowhere close to production costs, that would be helpful from a cashflow standpoint,” he said. “The other provisions that we’re suggesting in regard to the marketing loan create a little more value for the producer when prices fall below the loan price and ensure that cotton moves smoothly and efficiently through the supply chain and that we don’t give any incentive for cotton to stagnate in the loan.”
“That’s the goal of the changes we are proposing.”
Tuberville then highlighted the importance of peanut production in the Yellowhammer State.
“Ms. Thompson, in my home state, over 558.9 million pounds of peanuts are produced annually,” he said. “If the peanut reference price is too low and the cost of production is approximately $668 per ton, why are some growers signing contracts for less than $600 per ton?”
Thompson cited crop rotation as a reason for the decreased value of contracts relating to peanut production within Alabama.
“One of the reasons why is our crop rotation. Crop rotation is vitally important for the health of our land, and so many of the planting decisions are governed by that,” she said. “We may have to sign a contract for peanuts at a certain price we don’t like in order to protect the health of our land because that’s what we need to grow that year. We have some farmers that may need to take an operating loan to farm that year. The bank will require a contract before giving us the loan, so there’s not a lot of negotiating power there.
“A lot of us hope high yields will offset low prices, but of course that doesn’t always happen. And then finally, there are a lot of members, like myself, that are members of grower-owned shelling co-ops, and we receive the loan value of the peanuts at harvest. We are hoping to capture a profit on peanuts as they are shelled and sold to manufacturers later on.”
Austen Shipley is a staff writer for Yellowhammer News.
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