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USDA announces cotton ginning cost-share programme

27 Jun '16
2 min read

The US department of agriculture (USDA) has recently announced the Cotton Ginning Cost-Share (CGCS) programme, which will provide an estimated $300 million in cost-share assistance payments to cotton producers for their ginning costs based on their 2015 cotton plantings.

The CGCS programme has been established under the statutory authority of the Commodity Credit Corporation Charter Act and is under the administration of USDA's Farm Service Agency (FSA).

The CGCS programme only applies to producers who have reported 2015 cotton acres to USDA/FSA. In addition, producers must be actively engaged in farming and also comply with conservation compliance provisions. Further, a producer's 3-year average adjusted gross income may not exceed $900,000 to be eligible.

Under the programme, the cost-share payments are capped at $40,000 per individual or entity and do not count against 2014 Farm Act payment limitations. Through the programme, eligible producers can receive a one-time cost share payment, which is based on a producer's 2015 cotton acres reported to FSA multiplied by 40 percent of the average ginning cost for each production region.

The regional payment rates are $47.44 for the Southeast, $56.26 for the Mid-South, $36.97 for the Southwest and $97.41 for the West. The average assistance to cotton producers from the programme is estimated to be about $4,200 per farm or $8,100 per producer on average.

In recent years, cotton producers in the US are facing economic uncertainty due to poor US market conditions for cotton, and, in part, as a result of a large amount of excess stocks of cotton held in China. This has led many producers to having lost equity and have been forced to liquidate equipment and land to repay loans. The ginning of cotton is necessary prior to marketing the lint for fibre or the seed for oil or feed.

“While the CGCS programme makes payments to cotton producers for anticipated cotton ginning costs, the benefits of the programme will be felt by the broader marketing chain associated with cotton and cottonseed, including cotton gins, cooperatives, marketers and cottonseed crushers and the rural communities that depend on them,” the USDA said.

Signing up for the programme is ongoing and will run through August 5, 2016 at local FSA offices. Payments will be processed as applications are received and are expected to begin in July, USDA said. (RKS)

Fibre2Fashion News Desk – India

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