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Correction to This Article
This story incorrectly stated the date for the international trade agreement limiting cotton subsidies. The correct date is 1994. A corrected version of this story is available here.

An End to Days of High Cotton?

GOP Constituents Caught in Battle Over Subsidies

By Dan Morgan
Washington Post Staff Writer
Tuesday, March 8, 2005; Page A1

A Bush administration proposal that would cut billions of dollars in subsidies to big cotton growers has struck at a core GOP constituency, setting off a battle in Republican congressional ranks that pits budget cutters and prairie-state populists against traditional agricultural interests.

The Bush plan threatens an elaborate government safety net that is the handiwork of such legendary southern Democrats as Lyndon B. Johnson (Tex.) and James O. Eastland (Miss.), as well as a new generation of Republican leaders from the region. The move reflects growing pressure to hold down soaring federal deficits and a recognition that even a business woven deeply into the history, economy and politics of the South must come to terms with dramatic changes underway in global trade.

Underscoring that reality, the World Trade Organization in Geneva ruled Thursday that U.S. cotton subsidies violate global trade rules because they exceed limits agreed to in 1944. If the United States does not correct the situation, Brazil, which brought the complaint, could retaliate against U.S. products.

As part of its 2006 budget proposal, the Bush administration would trim benefits for growers of most staple crops, including wheat, corn and soybeans. But economists and officials say the hardest hit would be the big producers of cotton in Republican strongholds of Texas, Mississippi, Arkansas, Tennessee, Alabama and Georgia. Large-scale operators in California and Arizona would also be affected.

The U.S. Department of Agriculture projects that cotton farmers will gobble up a quarter of farm subsidy payments this year, with most going to a few hundred big growers.

Already, the initiative has scrambled GOP politics in Congress. Senate Finance Committee Chairman Charles E. Grassley (R-Iowa), whose small corn and soybean farm receives federal subsidies, said he strongly backs the president and his willingness to take on "southern agriculture in Washington."

Cotton interests, which have long fielded one of the most effective lobbies here, have begun to move up their big guns. These include Thad Cochran (R-Miss.), chairman of the Senate Appropriations Committee, and Saxby Chambliss (R-Ga.), chairman of the Senate agriculture committee. Both have expressed strong reservations about changes in the current farm program, which does not expire until 2007.

Senate Majority Leader Bill Frist (R-Tenn.), who represents the cotton trading center of Memphis, has yet to spell out his position. Grassley's fellow Iowan, House Budget Committee Chairman Jim Nussle (R), opposes changes in farm subsidies this year.

The president's decision to take on the farm lobby has caught many by surprise. He gave no hint of it during his reelection campaign, which was based on winning the South and most of the upper Midwest farm states. The president himself comes from a major cotton-producing state.

To lobby against the proposals, 17 farm and commodity organizations have hired former representative Larry Combest (R-Tex.), who helped write the existing farm bill while chairing the House Agriculture Committee in 2002. In effect, Combest is returning as a private citizen to prevent the partial dismantling of his principal legislative legacy. Among the organizations in his coalition is the National Cotton Council, now chaired by Eastland's son, Woods E. Eastland.

"It's taken the agricultural community totally by surprise," said Combest, who once owned a Texas cotton farm. He predicted "huge, overwhelming contacts by commodity groups to elected representatives to tell them how unfair they think it is to move forward with this proposal."

Farm subsidies are projected to reach $17.8 billion this year, but would be trimmed in a number of ways that would total $5.7 billion in cuts over 10 years. The top payments to an individual farmer would be capped at $250,000 a year, compared with the current $360,000. Loopholes that enable big farms to easily circumvent the limits through creative accounting, side companies and partnerships would be curbed.

Despite the limits, for example, Colorado River Indian Tribes Farm of Parker, Ariz., collected $2.4 million in payments in 2003 related mainly to cotton production, and Perthshire Farms, a huge Mississippi cotton operation, took in $2.1 million, according to the Environmental Working Group, an advocacy organization that publishes and analyzes USDA data.

The administration also is calling for new limits in what has long been the centerpiece of farm programs: the provision that guarantees farmers will not take a financial hit if they cannot sell their crop for more than a fixed support price -- 52 cents a pound in the case of cotton. Growers can get a government loan against the crop, and if prices do not exceed the support level the government takes over the crop and forgives the loan.

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