Growing cotton has rarely been a more risky proposition than it is now, which is precisely why cotton farmer Frank Williams is planning to sow his fields with wheat.
From Williams' California fields to the Texas plains, farmers are uprooting cotton -- once the king of U.S. agriculture -- to seed crops that make more money.
Cotton also has lost ground for another reason that became apparent last week as the Senate debated the 2007 farm bill: The U.S.' cotton subsidy program is enmeshed in a global trade battle. Last month, the World Trade Organization ruled subsidies handed out to American cotton farmers broke international trade laws, opening the door for foreign countries to levy billions of dollars in penalties against the United States.
The current bill on the Senate floor leaves those programs virtually intact, despite the threat of further legal complaints and concerns that international sanctions could ultimately cause layoffs and patchy unemployment. The Bush administration has threatened to veto the multibillion-dollar farm package, saying the Senate bill would impair negotiations with the WTO.
For Williams, that risk, coupled with predicted water shortages, is too much to bear.
"We can probably do just as well growing grain with just the same amount of water or less," said Williams, 56, who will uproot all the downy Upland cotton he grows in Firebaugh, along the Central Valley's western edge, leaving in only an organic variety.
This year, cotton acreage nationwide dropped about 29%, hitting a 22-year low at 10.8 million acres, according to the U.S. Department of Agriculture. Acreage dropped roughly 23% in Texas, the national leader, and 19% in California, which ranks fourth in domestic production.
The sharpest declines were in the Southeast and Mississippi Delta regions, where drought has parched fields that grew the crop since before the Civil War.
In Central California, where farmers rely on irrigation pumps to water their furrows, a recent court ruling limiting water pumping to protect a threatened fish species could cut water supplies by as much as two-thirds next planting season.
"There's a lot of worry in the California cotton industry generally, and any assault like this comes at a very difficult time," said Jack King, national public affairs manager for the California Farm Bureau Federation.
As textile mills moved offshore during the last decade to set up shop in countries where labor costs are cheaper, the market for U.S. cotton also shifted abroad. Producers now ship 70% of their bales to foreign markets, often to mills and spinners in India, Pakistan and China.
That means domestic subsidy programs are increasingly prone to international scrutiny. In 2003, bitter arguments over U.S. farm support programs, including cotton subsidies, contributed to the collapse of world trade talks in Cancun, Mexico.
In 2003, the Brazilian government took its case against American cotton to global trade court, claiming a U.S. farm subsidy was driving down the worldwide price of cotton and harming Brazilian farmers. Two years later, the WTO sided with Brazil, an emerging cotton heavyweight, and forced the United States to eliminate that particular cotton payment.
Last month, a WTO compliance panel went a step further, saying the United States had failed to scrap another series of illegal subsidies paid to American cotton growers. But those same programs have been left almost intact in the bill currently under debate, prompting outcry from reformists who want farm policy to support a more diverse produce basket.
"We're telling farmers to go ahead and grow conventional cotton for a market that has come under a WTO cloud," said Kenneth Cook, president of the Environmental Working Group, a nonprofit organization that advocates for farm policy reform. "All that does is get us into trouble with our trading partners."
The panel won't make a final decision until mid-December, and American cotton industry officials said they hoped the WTO would reverse course by that time.
"U.S. cotton production and U.S. acres are all down, and world cotton prices are at some of the highest levels they've been at in the last five years," said Gary Adams, chief economist at the National Cotton Council of America. "I question how they could make a claim as to the U.S. program having any detrimental impact on any other producers."
The threat of billions of dollars in sanctions helped motivate Sens. Richard G. Lugar (R-Ind.), and Frank R. Lautenberg (D-N.J.), to write the Fresh Act, which they plan to introduce on the Senate floor. It would replace cotton, wheat, corn, soybean and rice subsidies with a free insurance program for all farmers, including fruit, nut and vegetable cultivators.
Brazilian diplomats said they weren't optimistic that the proposal would be enough to satisfy their farmers.
"This farm bill will continue the practice of giving subsidies to U.S. producers," said Emerson Kloss, second secretary for agriculture and biofuels at the Brazilian Embassy in Washington. "I can tell you that will be a problem for us."
From Williams' California fields to the Texas plains, farmers are uprooting cotton -- once the king of U.S. agriculture -- to seed crops that make more money.
Cotton also has lost ground for another reason that became apparent last week as the Senate debated the 2007 farm bill: The U.S.' cotton subsidy program is enmeshed in a global trade battle. Last month, the World Trade Organization ruled subsidies handed out to American cotton farmers broke international trade laws, opening the door for foreign countries to levy billions of dollars in penalties against the United States.
The current bill on the Senate floor leaves those programs virtually intact, despite the threat of further legal complaints and concerns that international sanctions could ultimately cause layoffs and patchy unemployment. The Bush administration has threatened to veto the multibillion-dollar farm package, saying the Senate bill would impair negotiations with the WTO.
For Williams, that risk, coupled with predicted water shortages, is too much to bear.
"We can probably do just as well growing grain with just the same amount of water or less," said Williams, 56, who will uproot all the downy Upland cotton he grows in Firebaugh, along the Central Valley's western edge, leaving in only an organic variety.
This year, cotton acreage nationwide dropped about 29%, hitting a 22-year low at 10.8 million acres, according to the U.S. Department of Agriculture. Acreage dropped roughly 23% in Texas, the national leader, and 19% in California, which ranks fourth in domestic production.
The sharpest declines were in the Southeast and Mississippi Delta regions, where drought has parched fields that grew the crop since before the Civil War.
In Central California, where farmers rely on irrigation pumps to water their furrows, a recent court ruling limiting water pumping to protect a threatened fish species could cut water supplies by as much as two-thirds next planting season.
"There's a lot of worry in the California cotton industry generally, and any assault like this comes at a very difficult time," said Jack King, national public affairs manager for the California Farm Bureau Federation.
As textile mills moved offshore during the last decade to set up shop in countries where labor costs are cheaper, the market for U.S. cotton also shifted abroad. Producers now ship 70% of their bales to foreign markets, often to mills and spinners in India, Pakistan and China.
That means domestic subsidy programs are increasingly prone to international scrutiny. In 2003, bitter arguments over U.S. farm support programs, including cotton subsidies, contributed to the collapse of world trade talks in Cancun, Mexico.
In 2003, the Brazilian government took its case against American cotton to global trade court, claiming a U.S. farm subsidy was driving down the worldwide price of cotton and harming Brazilian farmers. Two years later, the WTO sided with Brazil, an emerging cotton heavyweight, and forced the United States to eliminate that particular cotton payment.
Last month, a WTO compliance panel went a step further, saying the United States had failed to scrap another series of illegal subsidies paid to American cotton growers. But those same programs have been left almost intact in the bill currently under debate, prompting outcry from reformists who want farm policy to support a more diverse produce basket.
"We're telling farmers to go ahead and grow conventional cotton for a market that has come under a WTO cloud," said Kenneth Cook, president of the Environmental Working Group, a nonprofit organization that advocates for farm policy reform. "All that does is get us into trouble with our trading partners."
The panel won't make a final decision until mid-December, and American cotton industry officials said they hoped the WTO would reverse course by that time.
"U.S. cotton production and U.S. acres are all down, and world cotton prices are at some of the highest levels they've been at in the last five years," said Gary Adams, chief economist at the National Cotton Council of America. "I question how they could make a claim as to the U.S. program having any detrimental impact on any other producers."
The threat of billions of dollars in sanctions helped motivate Sens. Richard G. Lugar (R-Ind.), and Frank R. Lautenberg (D-N.J.), to write the Fresh Act, which they plan to introduce on the Senate floor. It would replace cotton, wheat, corn, soybean and rice subsidies with a free insurance program for all farmers, including fruit, nut and vegetable cultivators.
Brazilian diplomats said they weren't optimistic that the proposal would be enough to satisfy their farmers.
"This farm bill will continue the practice of giving subsidies to U.S. producers," said Emerson Kloss, second secretary for agriculture and biofuels at the Brazilian Embassy in Washington. "I can tell you that will be a problem for us."
