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<p class=MsoNormal><b><font size=3 face="Times New Roman"><span
style='font-size:12.0pt;font-weight:bold'>With most of Trinity’s water
going to Westlands Water District, and that District planting 32 percent –
down from 38 percent a few years ago – of its land to cotton, several
have asked how cotton subsidies play out.<o:p></o:p></span></font></b></p>
<p class=MsoNormal><b><font size=3 face="Times New Roman"><span
style='font-size:12.0pt;font-weight:bold'><o:p> </o:p></span></font></b></p>
<p class=MsoNormal><b><font size=3 face="Times New Roman"><span
style='font-size:12.0pt;font-weight:bold'>Cotton Subsidies - a hypothetical
example – year 2000 figures <u>not including water and electricity
subsidies</u> for South of SF Bay Delta growers...<o:p></o:p></span></font></b></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Suppose I have a cotton ranch. <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>I plant my cotton crop and harvest it.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>After harvest I can go to the Farm Service Agency (USDA agency) and get
a short-term loan based upon my harvest and the prevailing government loan
rate. The loan rate for cotton is 52 cents a pound. Say my harvest
was 1.92 million pounds of cotton, I could get a $1 million loan using my harvest
as the collateral for that loan (i.e. $0.52 x 1.92 million = 1 million).<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Unfortunately, the world market price for cotton is only 38 cents a
pound, thus even if I sell my entire crop I'm still $270K short of being able
to repay my loan (actually more including interest).<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Since I know I'm not going to be able to repay my loan by selling my
cotton, I don't sell it. Instead I forfeit it to the government.
All of my cotton goes to a government warehouse and I'm even with the
government. In essence, I've sold to the government for 52 cents
a pound, cotton that's worth 38 cents a pound.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Now the government doesn't like paying warehouse rent to keep my
cotton, so if I want to, I can buy my cotton back from the government at the
world market price of 38 cents a pound (using the infamous commodity
certificates). This is a cool deal because the government is selling to
me for 38 cents what I already sold to them for 52 cents and now my original
$270,000 loan default becomes a $270,000 "market gain" that goes into
my bank account. <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Thus, I now have my cotton back plus an extra $270,000 in the bank just
for playing this little game with the government. Now that I've got my
cotton back (and a fatter wallet), I can sell the cotton or hang on to it
waiting for a better world market price. <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Whoa!! Just a minute, my $270,000 loan default can't be turned to gold
at a 1:1 ratio because someone with half a brain put a $75,000 cap on the
profit I could make by buying back my cotton from the government. Thus,
in this case I could only get enough certificates to buy back about a
half-million of my 1.92 million pounds of cotton because at a 14 cents a pound
(52 minus 38) profit (subsidy), buying back a half-million pounds would result
in $75,000 (the limit) in my bank account. Then, someone raised the limit
to $150,000 (which still prevents me from turning my entire $270,000 failure
into a success story).<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Now someone has decided there shouldn't be any limit!!! So now
the bigger you fail the bigger you win... without limit!! I now get to
buy my entire crop back and put the full $270,000 in my bank. <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>You think that's good? Well, my neighbor, a larger grower,
defaulted on his government loan big time, coming up millions of dollars short
because of the bad cotton market. Guess what? Now he's even richer
than me because instead of all of us having to be happy with a $150,000 scam,
the big guys now can work a multi-million dollar scam and in the process the
large grower is becoming so strong financially that I expect someday soon he'll
be buying me out so that he can fail on an even bigger scale and get even
stronger.<o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'>Oh wait, I don't have a cotton ranch (damn), but if I did it wouldn't
be big enough to fail big enough to compete with my large grower neighbor.
At least now we know how all the small cotton farmers in <st1:State w:st="on">Mississippi</st1:State>
and <st1:place w:st="on"><st1:State w:st="on">Alabama</st1:State></st1:place>
went extinct... they just couldn't fail enough to survive. This says
nothing about the rampant and widespread poverty and famine we’ve created
in <st1:place w:st="on">Africa</st1:place> by devastating through cotton
subsidies and price supports a major source of income in that area –
cotton. <o:p></o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
<p class=MsoNormal><st1:PersonName w:st="on"><em><i><font size=3 color=gray
face="Times New Roman"><span style='font-size:12.0pt;color:gray'>Byron
Leydecker</span></font></i></em></st1:PersonName><em><i><font color=gray
face="Times New Roman"><span style='color:gray'>, </span></font></i></em><o:p></o:p></p>
<p class=MsoNormal><em><i><font size=3 color=gray face="Times New Roman"><span
style='font-size:12.0pt;color:gray'>Chair, Friends of <st1:place w:st="on">Trinity
River</st1:place></span></font></i></em><o:p></o:p></p>
<p class=MsoNormal><em><i><font size=3 color=gray face="Times New Roman"><span
style='font-size:12.0pt;color:gray'>Consultant, California Trout, Inc.</span></font></i></em><o:p></o:p></p>
<p class=MsoNormal><st1:address w:st="on"><st1:Street w:st="on"><em><i><font
size=3 color=gray face="Times New Roman"><span style='font-size:12.0pt;
color:gray'>PO Box</span></font></i></em></st1:Street><em><i><font
color=gray face="Times New Roman"><span style='color:gray'> 2327</span></font></i></em></st1:address><o:p></o:p></p>
<p class=MsoNormal><st1:place w:st="on"><st1:City w:st="on"><em><i><font
size=3 color=gray face="Times New Roman"><span style='font-size:12.0pt;
color:gray'>Mill Valley</span></font></i></em></st1:City><em><i><font
color=gray face="Times New Roman"><span style='color:gray'>, <st1:State w:st="on">CA</st1:State>
<st1:PostalCode w:st="on">94942-2327</st1:PostalCode></span></font></i></em></st1:place><o:p></o:p></p>
<p class=MsoNormal><em><i><font size=3 color=gray face="Times New Roman"><span
style='font-size:12.0pt;color:gray'>415 383 4810 ph</span></font></i></em><o:p></o:p></p>
<p class=MsoNormal><em><i><font size=3 color=gray face="Times New Roman"><span
style='font-size:12.0pt;color:gray'>415 383 9562 fx</span></font></i></em><o:p></o:p></p>
<p class=MsoNormal><em><i><u><font size=3 color=blue face="Times New Roman"><span
style='font-size:12.0pt;color:blue'><a href="mailto:bwl3@comcast.net">bwl3@comcast.net</a></span></font></u></i></em><o:p></o:p></p>
<p class=MsoNormal><em><i><font size=3 color=blue face="Times New Roman"><span
style='font-size:12.0pt;color:blue'><a
href="mailto:bleydecker@stanfordalumni.org">bleydecker@stanfordalumni.org</a><u>
</u></span></font><font color=gray><span style='color:gray'>(secondary)</span></font></i></em><o:p></o:p></p>
<p class=MsoNormal><em><i><font size=3 face="Times New Roman"><span
style='font-size:12.0pt'><a href="http://www.fotr.org">http://www.fotr.org</a></span></font></i></em><o:p></o:p></p>
<p class=MsoNormal><em><i><font size=3 color=blue face="Times New Roman"><span
style='font-size:12.0pt;color:blue'><a href="http://caltrout.org">http://caltrout.org</a></span></font></i></em><o:p></o:p></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'> </span><o:p></o:p></font></p>
<p class=MsoNormal><font size=3 face="Times New Roman"><span style='font-size:
12.0pt'><o:p> </o:p></span></font></p>
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