Agricultural and Food Policy
 Agri Outlook
Radio
Number 88
Policy: Part 1. Rice and Cotton Sector Considerations As the Senate Debates the New Farm Bill (4:46 minutes)
Audio/Video Script:
Dr. Bobby Coats
Extension Economist
University of Arkansas, Division of Agriculture
Part 1, rice and cotton sector considerations as the Senate debates the new
farm bill. I’m Bobby Coats Extension Economist University of Arkansas Division
of Agriculture.
Change including consolidation is happening at an accelerated pace on U.S.
rice and cotton farms.
Today, under current farm legislation change is occurring at the fastest
pace in our producers’ lifetime.
New farm legislation that further accelerates structural change and
reduces our producer’s ability to cash flow is not advised since the
consequences are not understood. The consequences are not understood to the
producers, to the sector, or to rural America.
Only time will give a clear picture of the consequences of the
accelerated change taking place as rice and cotton farms transition through
this dynamic and fluid period in their sector’s history.
Today’s mindset about the rice and cotton economic setting mirrors the
mindset that existed during the 1996 farm bill debate.
The belief then as today was current strong global growth coupled with
strong or expected strong food and fiber commodity prices will finally allow
for significant shifts or radical shifts away from traditional farm policy.
This is a false belief because now as in the 1996 period the global
economic setting remains very unstable and unpredictable. This global instability produces very dangerous and volatile
swings in rice and cotton prices.
Today’s rice and cotton farm business setting has changed radically from the
past, due to the following:
- The instability of the new global economy
- Government program support is not indexed
- Huge production cost increases since 2002
- Repeated damaging drought events of the past several years
- The increasing trend in U.S. agricultural policy for our producers to
produce for the global market without a global trade agreement
- Food and fiber protectionism in country after country around the world.
Therefore consider the following; under current farm legislation, given the current economic, farm
and trade policy setting, change and reform to the U.S. rice and
cotton sector is occurring at a very dangerous pace. The
consequences of this rapid change is unknown; therefore policy that
accelerates change is not advisable since the financial and
structural consequences to producers, supporting infrastructure and
regions is not known.
Why do we not know the consequence?
- The global economy is currently very robust, but very unstable and this
is yielding commodity price volatility (extreme lows to extreme highs),
accelerated input price inflation, and export market uncertainty.
- A global trade agreement does not exist, which limits export market
access and creates an uncertain trade future.
- The trend in U.S. farm policy is for producers to produce for the global
market, but our producers are facing a sea of global protectionism.
- Modeling globalization’s impact on U.S. rice and cotton producers and sectors
is speculative at best, given such a limited history of the globalization
movement. Therefore the consequences of change that is occurring and the
consequences of change that could exist with changes to the farm bill are
difficult to quantify.
- The reality is the rice and cotton farm business environment is far more
dynamic, fluid, and fragile than is understood. This is why the new farm
bill debate has become very strained and confrontational. The unknowns rice
and cotton producers face far exceed knowns. For this reason Senators and
Representatives are in a far better position to speak for their constituents
than is realized.
This has been Bobby Coats Extension Economist University of Arkansas Division
of Agriculture.
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