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New USDA Subsidy Program Will Send Hundreds of Millions of Dollars to Cotton Farmers

Thursday, March 8, 2018

A new federal farm subsidy program for cotton growers could cost taxpayers hundreds of millions of dollars. The subsidies will flow even as global demand for U.S. cotton is soaring, with projected higher prices prompting one market analyst to advise farmers to “plant, plant, plant.”

This week the Department of Agriculture announced that payments will be made to cotton farmers in 2018 through the Cotton Ginning Cost Share Program. Each farmer can receive up to $40,000 from this program alone. The last time this program was put in place, in 2016, it cost taxpayers $330 million.

Cotton farmers also already receive hundreds of millions of dollars in subsidies through the Federal Crop Insurance Program. In 2017, cotton growers received over $650 million in premium subsidies.

And just last month Congress made cotton eligible for the Agricultural Risk Coverage, or ARC, and Price Loss Coverage, or PLC, commodity programs. So in 2018, cotton farmers can receive payments from three separate programs, even though their financial outlook is sunny.

This is a grotesque example of double dipping – when farmers receive multiple payments on the same farm for the same loss, but through different programs. In November EWG looked into this double dipping phenomenon and found that farmers of all crops received almost $23.9 billion in 2014 and 2015 for the same declines in crop prices through the crop insurance program, and ARC and PLC.

The new cotton subsidy takes double dipping up a notch to triple dipping, since farmers can receive payments from three programs in 2018. This is more proof that commonsense reform in the 2018 Farm Bill is vital to reducing the huge farm subsidy burden taxpayers bear. 

 

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