Date: 1987-07-27
Speaker: DE LA GARZA (democrat)
Chamber: H

Mr. Speaker. I yield myself such time as I may consume. Mr. Speaker. H.R. 2971. as amended. will allow the Department of Agriculture to continue to collect fees from agricultural producers for cotton classing services. The bill will also allow these fees to be increased. when needed. to cover the costs of providing cotton classing services. Mr. Speaker. this bill is needed to maintain the financial integrity of the cotton classing cost recovery mechanism provided in current law. I urge my colleagues to support passage of this important legislation. Mr. Speaker. in the way of background. I would like to inform the House that cotton classing services are currently performed in 20 classing offices located in 12 States across the Cotton Belt by 109 fulltime personnel and 1.450 seasonal personnel. The classification of cotton by the Agricultural Marketing Service of the Department of Agriculture is critical to cotton producers and the U.S. cotton industry because the grade assigned to each bale of cotton is used to establish its jury 27. .98 eligibility for the Federal loan program and the loan value. The assigned grade is also frequently used in establishing the value of cotton.in various commercial transactions from producer through to the enduser. Because Agricultural Marketing Service classification is considered to provide an extremely reliable measure of cotton quality. the U.S. cotton producer. cooperative. and merchant enjoy a valuable marketing tool. In 1937. the Smith Doxey amendment to the Cotton Statistics and Estimates Act provided for free cotton classing services to producers. Participation in this program increased steadily until by 1960 more than 95 percent of the crop was classed annually at no cost to producers. Until 1981. cotton classing was provided free of charge. However. other similar grading and inspection services of the Department of Agriculture were financed almost wholly from fees paid by the users of the services. On October 1. 1981. pursuant to authority contained in the Omnibus Budget Reconciliation Act of 1981. the Department of Agriculture began charging fees to producers for cotton classing services. including administrative and supervisory costs. To help reduce pressure on the Federal budget. special benefit services were placed on a selfsupporting basis to the extent practicable. About twothirds of the cost of classing for producers was financed by user fees during fiscal year 1982 and fiscal year 1983 at established rates of 60 and 67 cents per bale. respectively. The balance of the cost in these years was financed by appropriated funds and proceeds from the sale of cotton samples accumulated by the Department of Agriculture. In fiscal year 1984. the Department of Agriculture began full cost recovery for the cotton classing program through institution of a fee of $1.15 per bale. This action put all agricultural commodity grading services of the Department of Agriculture on a comparable and full cost recovery basis. In fiscal year 1985 and fiscal year 1986. the fee was reduced to $1.05 per bale. For fiscal year 1987. the classing fee has been estimated to be $1.08 per bale. a level that would cause the estimated expenditure for the year to exceed estimated income by as much as $2.5 million dollars. This financial shortfall Is the result of the combined effect of three elements: a statutory provision that restricts fee increases. a small 1986 crop. and a negative cashflow that occurs because classing fees are not paid at the time of service. H.R. 2971 would revise and extend the authority of the Secretary of Agriculture to collect uniform fees for cotton classing services through 1992. Classing fees -would be established each year by adjusting the base for the previous year. for Inflation with the option to further adjust the fee by a percentage factor based on the size of the crop. Mr. Speaker. I hope you will join me in supporting the bill to help maintain the financial Integrity of our Department of Agriculture cotton classing service. Mr. Speaker. I reserve the balance of my time.