Brazil agrees to resolve subsidy issues in US STAX policy

10 Sep '12

2 min read

Brazil has agreed to find a solution for the cotton subsidy disputes arising due to the US-generated crop insurance program ‘Stacked Income Protection Plan (STAX)’, said Ms. Darci Vetter, the Deputy Undersecretary for Farm and Foreign Agricultural Services at the United States Department of Agriculture (USDA).

Fibre2fashion had earlier reported that the contentious issue between Brazil and the US over subsidies paid to US cotton farmers may be resolved in September.

The STAX proposal was initially criticised by Brazil due to their unfamiliarity with area-wide crop insurance programs and apprehensions against the policy’s potential to make large payments during the time of high prices. But after realizing that it is in fact a loss protection policy and not a prevarication means, they are now willing to resolve the dispute, revealed Ms. Vetter at the National Cotton Council’s mid-year board of directors meeting in Memphis.

She explained that the program aims to deal with income losses on an area-wide basis and the county has been assigned as the area of coverage. The plan has been invented to match the producer’s buy-up coverage and therefore the farmer will not have to procure an individual buy-up policy to purchase a STAX plan.

She further said that the US cotton subsidy policies cannot be held responsible for the production and pricing problems faced by cotton growers worldwide.

She added that the export prohibition laws of India and loose tariff plans of China have affected the global cotton prices and volatility in the market.

The STAX plan, which could become a major constituent in the future US farm bill, would allow cotton producers the opportunity to purchase coverage for income losses ranging between 10 and 30 percent.

Fibre2fashion News Desk - India

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