4 November 2003

Cotton receives double subsidy

WASHINGTON -- Hidden in plain sight, a federal farm subsidy program is paying nearly $1.7 billion to U.S. agribusiness and manufacturers to buy U.S. cotton that is already one of the highest subsidized crops in the world, according to figures compiled by the program's critics.

The plan, which is the equivalent of paying Kellogg's to buy U.S. corn, is known as the upland cotton marketing certificate program, and was started in 1990 when U.S. cotton was selling at a much higher price than foreign cotton. Under it, U.S. cotton is, in essence, subsidized twice, with payments going to companies that purchase the cotton from farmers. The farmers themselves also receive subsidies from growing the cotton. The program is drawing increased criticism from foreign cotton producers.

A senior agricultural official said the program was intended to temporarily make up the difference between high U.S. prices and world cotton prices. But, he said, the cotton industry has fought to keep the program in place because it 'hasn't wanted to adjust to the world market; it would be too painful for them.'

Some of the largest recipients of these subsidies over the last seven years include the Allenberg Cotton Co. of Cordova, Tenn., which received $106.9 million; Dunavant Enterprises of Fresno, Calif., and Memphis, Tenn., which received $102 million; and Cargill Cotton, also of Cordova, Tenn., $87 million.

These companies declined requests to comment on the subsidies they received.

The Environmental Working Group, a nonprofit research organization that has been critical of U.S. farm subsidies, obtained the data on the cotton program through requests under the Freedom of Information Act and assembled a database on its Web site that will be released to the public today.

I wonder how much use the Australian side in the FTA negotiations will make of this database.

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