COTTON SHIPPERS GROUP TO IRON OUT LOAN PLAN

COTTON SHIPPERS GROUP TO IRON OUT LOAN PLAN

The current marketing loan plan for U.S. cotton is expected to come under fire this week during the annual meeting here of the American Cotton Shippers Association.

The association is slated to consider a proposal to discontinue the non- recourse loan and replace it with an interest-bearing recourse loan that would mature at the beginning of each marketing year and could not be extended.A non-recourse loan is one which a producer has a right to forfeit his cotton to the government at the end of the loan as payment, with no charges, while under a recourse loan he must repay the loan.

The proposal, which was approved by the Atlantic Cotton Association, also recommends lifting restrictions on cotton planting and production; targeting production incentive payments to acreage allotments rather than to individuals; and basing the loan on a uniform price, regardless of quality, with the loan no greater than the variable cost of production.

The plan also would apply separate target prices, loan values, prices received by farmers, and cost of production to various production areas or cotton types - such as San Joaquin Valley, California/Arizona, Texas/Oklahoma, Midsouth and Southeast.

The current 10-month loan and its eight-month extension have been an ongoing source of disagreement between cotton merchants and cotton producers. Merchants maintain the loan extension keeps cotton off the market, while producers argue the extension is necessary to keep them from having to market one crop as the next crop is being harvested.

The Atlantic Cotton Association is a regional association representing southeastern cotton merchants. While other regional groups offered recommendations on the 1990 farm bill, those positions tended to more closely correspond with the existing cotton program or with ACSA's current position, industry officials said.

The ACSA position supports the marketing loan concept, with price support loan rates low enough to keep U.S. cotton competitive on the world market. The ACSA also supports the idea of a 10-month recourse loan and opposes acreage reduction programs.

While proposals similar to that favored by the Atlantic shippers have been discussed in the past, this year marks the first time the ACSA will consider the plans formally.

Industry officials had mixed views about how much support there was for the proposal.

''We think it's a good starting point. It's time for some changes," one Texas merchant said.

Others were not so certain the time was right for overhauling the cotton program.

''The producers aren't going to be very happy with most of this. Even if ACSA approves it, it may not go much farther. After all, this is an election year and the producers have more votes," a Delta merchant said.