The NCC is closely monitoring the debate because when the House considered the agricultural appropriations bill earlier this year, there were proposed amendments to: (1) reduce annual payment limitations to $125,000 per legal entity and include marketing loan gains and LDPs, (2) reduce the Adjusted Gross Income (AGI) used to determine program eligibility to $250,000; (3) eliminate funding for the Market Access Program; and (4) prohibit the transfer of funds to Brazil, as agreed to by the U.S. and Brazilian governments as a way to head-off retaliation against U.S. exports as authorized in the Brazil WTO case. All failed except the amendment to terminate the transfer of funds to Brazil.

Given current price levels, a reduction in limitations that also re-establishes the limit on marketing loan gains or reducing the AGI eligibility test might not seem as critical as in the past but a significant amount of cotton is processed through the loan and the AGI test is used to determine eligibility for loans and for direct payments.

Thus, a change in the AGI test could seriously disrupt marketing practices and financing.

If an amendment to terminate the transfer of funds to Brazil is approved by the Senate, it will be difficult to keep out of the final bill because the House already has approved the same amendment.

If the prohibition is enacted, the United States would be in violation of the U.S.-Brazil Framework Agreement and Brazil could immediately retaliate by applying prohibitively high tariffs to a wide variety of U.S. products. That would re-activate the Chamber of Commerce, National Association of Manufacturers, the pharmaceutical industry and others who would insist on a modification of the cotton program to resolve the Brazil case.

During the Senate committee mark-up, none of the above listed amendments were offered and the NCC is not aware of any Senators circulating similar amendments at this time.

However, the announcement to schedule floor action was only recently announced so amendments could emerge prior to or even during floor consideration, which will last several days.