A national price protection program for cotton farmers starts this week. Arizona is one of three states receiving the highest payouts.

The Cotton Ginning Cost Share program, or CGCS runs from March 12 to May 11. Its purpose is to offer a safety net of sorts to farmers when the price of cotton falls below levels that cover expenses.

(Photo by Casey Kuhn - KJZZ)

A cotton farm.

Gregg Norton is district director of Arizona’s Farm Service Agency. He said cotton, which has historically had price protections through the Farm Bill, is not included in the most recent version. The only price protection for cotton has been through federal crop insurance.

Frankly, it hasn’t worked out very well. The federal crop insurance product for cotton has not assisted the farmers the way they had planned on it doing, said Norton.

He said in Arizona the commodities are corn, grain sorghum, wheat, barley and oats. It exists to provide financial assistance to farmers during times when the prices of commodities drop.

"The government sets a reference price for each commodity and when the average market price, national market price, drops below that reference price, then there are payments that can be made," Norton said. 

The cotton ginning cost share program is a program that will pay a producer a portion of the cost to produce finished cotton. It is a one-time payment.  

Ginning is a process where cotton seed is separated from the lint. The cost of ginning in the western U.S. is higher than in other parts of the country, Norton said.

CGCS payment rates are set at 20 percent of USDA’s regional costs of ginning per acre. Western states of Arizona, California and New Mexico have the highest rate of approximately $48, more than twice the rate of southeastern states and 2.5 times the rate of southwestern states.