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Cotton Program: Costly and Complex Government Program Needs to Be Reassessed

RCED-95-107 Published: Jun 20, 1995. Publicly Released: Jul 20, 1995.
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Highlights

Pursuant to a congressional request, GAO reviewed the Department of Agriculture's (USDA) cotton program, focusing on the program's: (1) cost and complexity; (2) distribution of payments; (3) effects on producers' costs and returns; and (4) effectiveness in enhancing U.S. cotton exports.

Recommendations

Matter for Congressional Consideration

Matter Status Comments
Congress may wish to consider whether benefits from the cotton program are worth its costs and whether the program should be continued.
Closed – Implemented
Through the Federal Agriculture Improvement and Reform Act of 1996, the 104th Congress replaced deficiency payments to cotton producers with a 7-year declining market transition payment. Because the fixed payment is not linked to prices, cotton farmers are expected to produce for the market.
If the cotton program is eliminated, Congress may wish to consider options to give producers and other affected parties time to make adjustments in their investment decisions. Congress could, for example, reduce or phase out payments over a number of years, perhaps over the life of the next farm bill.
Closed – Implemented
Through the Federal Agriculture Improvement and Reform Act of 1996, the 104th Congress replaced deficiency payments to cotton producers with a 7-year declining market transition payment. Because the fixed payment is not linked to prices, cotton farmers are expected to produce for the market.

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