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2003-11-6
WASHINGTON—US cotton mills and exporters in the last decade received an estimated $1.68 billion in government subsidies to buy cotton from American farmers, an environmental group said on Tuesday.
The Environmental Working Group, a critic of large government payments to agricultural interests, said about 100 cotton exporters and millers each received millions of dollars in subsidies under the Agriculture Department’s so-called “Step 2” program.
Under the Step 2 program, US cotton mills and exporters agree to purchase domestic supplies of upland cotton. In return, the USDA will subsidize the industry’s cotton purchases when US prices surpass a certain level over world prices.
Allenberg Cotton Co., based in Cordova, Tennessee, was the top recipient with $106.96 million in cotton payments since 1995, according to the environmental group. The information was based on USDA data.
“It’s eye-opening,” said Ken Cook, the group’s president. “It’s yet another taxpayer cost to cotton subsidies that we haven’t heard much about.”
A USDA spokeswoman said only that the department “implements the program in accordance with the law.”
The National Cotton Council defended the subsidies, saying the USDA program was vital for the industry to compete overseas.
“Despite the presence of the competitiveness program, most foreign growths of cotton still manage to undercut US cotton prices in international markets,” said Bobby Greene, the cotton group’s chairman. “This program better enables our industry to respond to aggressive pricing by our competitors.”
Brazil in February requested the World Trade Organization investigate government subsidies to US cotton producers, including the USDA’s Step 2 program. The WTO in March established a three-member panel to hear the trade dispute.
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