Echols: Continued Assistance Needed For Health Ag Sector
NCC Chairman James Echols told NCC Board at its spring meeting in Washington directors he senses that, "Congress recognizes that a viable US agriculture is contingent upon continued government assistance."
He warned, though, that spending authority earmarked for agriculture in this year’s budget resolutions falls short of what is needed to fund kind of farm programs called for by NCC and other commodity organizations.
"So, we have some hard work ahead of us and, in all likelihood, some difficult decisions, too," Memphis merchant said.
He reminded board that NCC distinguishes between need for short-term economic assistance and longer-term farm policy goals. Short-term needs conveyed to Congress include: supplementing existing Agriculture Market Transition Act (AMTA) payments with additional marketing loss payments at highest rates possible; allowing producers to receive supplemental payments on higher of existing crop bases or average of recent planting history, provided adequate funds are available; mitigating impact of limitations on supplemental payments; and reauthorizing cottonseed payments when seed prices are low.
With respect to longer-term farm policy, Echols said NCC has asked Congress to continue cotton’s 3-step competitiveness provisions and marketing loan program, including issuance of marketing certificates. He said industry still is seeking consensus on loan rate but segments are not that far apart. He said NCC supports farm policy that relies on combination of coupled and decoupled payments resulting in improved support levels.
Echols reiterated NCC position that international trade commitments of US, reflected in agreements in World Trade Organization (WTO), must be considered as long-term policy is crafted.
NCC continues to urge elimination of payment limits, or – at minimum – retaining 3-entity rule and provisions for Commodity Credit Corporation loan redemptions with marketing certificates, while providing for separate and reasonable limits for each benefits category.
Echols said NCC also has been actively conveying US cotton’s trade priorities such as need to preserve effective export credit guarantee program and effectively implement regional trade agreements.
NCC Board Resolutions Aimed at Shoring Up US Cotton Industry
Among business considered by were resolutions that: 1) called for elimination of 1.25 cent threshold in computing Step 2 payment rates and inclusion of an exchange rate component in US agricultural policy that helps to: counter adverse effects of strong dollar on US trade balance in agricultural and textile products, support farm income and maintain processing and handling infrastructure; 2) called for appointment of task force to study feasibility of administrative changes that could make Step 2 more effective; and 3) recommended that Farm Service Agency make full use of private sector to expedite establishment of electronic processing and redemption system for Form A cotton.
Board also adopted American Cotton Producers recommendation intended to prevent crop insurance program provisions from conflicting with market signals.
Chambliss Says House Faces Aggressive Farm Bill Schedule
House Agriculture Committee faces aggressive schedule in writing new farm legislation by August recess, but "I am confident that we will get it done in time for consideration by the House in September," General Farm Commodities and Risk Management Subcommittee Chairman Chambliss (R-GA) said in addressing NCC Board.
"I believe we have adequate funding to craft programs that would provide producers with a true safety net for the next several years," he said. "There has been discussion that the committee may look to a 10-year farm bill instead of the traditional 5-year bill, given the funds we have to work with."
Chambliss said committee would have flexibility in how to allocate funds over next 10 years rather than establishing specific budget figure each year. Chambliss will hold series of regional hearings on farm policy during summer (see May 18 Cotton’s Week).
Cochran Reviews Senate Ag Committee Approach
At breakfast meeting during NCC board meeting, Sen. Cochran (R-MS), Appropriations Sub-committee chair, told members that Senate’s approach to new farm policy will be slower and more deliberate than House. Cochran told group that Sen. Lugar (R-IN), Agriculture Committee chair, wants to continue policy review and hold hearings to determine best course of action. He noted that House and Senate budget conferees agreed to increase baseline spending for agriculture by $79 billion for next 11 years. For Congress to make additional response to farm crisis again this year, "we will have our work cut out for us."
Cochran also stated that Sen. Jeffords’ resignation from Republican Party and new Independent status could affect Senate’s position on farm policy.
Board Members, Advisors Briefed on White House Priorities
Administration’s approach to new energy policy, approaches to development of new farm policy and significance of agriculture in trade negotiations were reviewed for NCC Board and advisors in White House briefing during NCC board meeting. Bob McNally of National Economic Council; Dale Moore, chief of staff to Ag Secretary Veneman; and Barbara Chatin, ag negotiator with Office of US Trade Representative, outlined priorities and responded to questions in hour-long session at Old Executive Office Building.
McNally said President is aware that "a sufficient supply of energy is absolutely critical to agriculture" and industry’s needs were fully considered in development of energy plan. "There are no short-term solutions to supply or prices, and the Administration is taking a comprehensive, long-term, balanced approach to solving the energy problems facing the country."
Administration will focus on farm policy concepts and staff analysis as opposed to submitting proposed legislation, Moore said. He believes USDA’s role in farm policy development will be similar to process used in development of ’90 farm bill.
Chatin reviewed status of WTO negotiations, importance to agriculture of trade promotion authority (formerly fast-track) and responded to questions regarding textile trade issues and WTO domestic policy interpretations.
USDA Provides Farm Policy Vision
Acting USDA Deputy Undersecretary Hunt Shipman provided department’s short-and long-term vision at NCC board meeting.
He said Farm Policy Working Group has been established to develop policies and priorities for new farm bill. Group will take broad view of food and fiber chain to ensure that agriculture moves forward with rest of economy in global trade environment. Group, consisting of J.B. Penn, Keith Collins, Dale Moore, Jim Mosley and Hunt Shipman, will ensure that specific ag areas are not discounted in policy process and that department keeps pace with Congress’ agenda. Department’s long-term legislative items include work with FAS on trade promotion authority and preparation for November WTO rounds. While premature to discuss solutions, Shipman stated that department recognized problem with payment limits and indicated that issue of exchange rates would be carefully considered when discussing trade policy.
Producers Looking at Further Price Slide
Dr. Mark Lange, NCC vice president of policy analysis and program coordinator, told NCC directors that, "all sectors of the U.S. cotton industry are suffering from losses, and, other than government assistance checks, there is no short-term relief," he said.
Lange said that for ’00 crop year, it appears growers are realizing average return some 5.4 cents below ’99 crop. Looking ahead, based on futures values today, growers could suffer another slide of almost 6 cents for payment-eligible production.
"This presumes that Congress delivers the $5.5 billion in additional funds earmarked by the budget resolution for another supplemental AMTA (market loss assistance) payment," he noted.
Lange reported that ’01 US mill use of cotton is now projected at 9.2 million bales, and USDA is expected to lower ’01 use further (see mill consumption story).
"Despite productivity increases only surpassed by the electronics and high tech industries, with increased market access, lower tariff protection and a strengthening dollar, the US textile industry has been unable to blunt the onslaught of foreign textile products," he said.
Lange said USDA puts ’01 exports at 9 million bales, which is achievable but may be "somewhat of a stretch for the industry."
Jeffords Defection Could Impact Farm Policy
Decision of Sen. Jeffords (VT) to leave Republican party and caucus with Democrats after Memorial Day recess could have dramatic impact on farm policy in Senate. Current ranking minority members of significant committees could gain chairmanship. These include: Sen. Harkin (D-IA) on Agriculture Committee; Sen. Byrd on Appropriations Committee; Sen. Kohl (D-WI) on Agriculture Appropriations Subcommittee; Sen. Conrad (D-ND) on Budget Committee; Sen. Baucus (D-MT) on Finance Committee; and Sen. Daschle (D-SD) as majority leader. Sens. Lincoln (D-AR) and Miller (D-GA) are only southern Democrats on Agriculture Committee
Veneman Pushes Bush Agenda on Mid-South Trip
Energy plan developed by President Bush is both comprehensive and forward looking, according to USDA Secretary Ann Veneman speaking to town hall crowd in Memphis and at Cleveland, MS, meeting of Delta Council.
"The fact of the matter is that we have an energy problem in this country," Veneman said. "Demand is outstripping supply and all projections are that it will continue to do so. We have to have a long-term strategy to deal with the energy demands and needs for the future." She said some solutions could be biofuels such as ethanol, soy diesel or others, and there are tremendous opportunities for agriculture as a renewable, clean resource, to be part of energy solution.
At Delta Council meeting, Secretary Veneman addressed economic conditions facing production agriculture and pledged that USDA would offer recommendations to address crisis, but must be certain that new proposals help improve situation and do not become part of problem.
Mill Consumption Estimate Lowered
US Department of Commerce revised March (5-week month) estimate of domestic mill use of cotton down to 416.42 million pounds, approximately 3.1 million pounds below previous estimate of 419.52 million. Seasonally adjusted annualized rate of consumption for March is 8.71 million 480-pound bales, 1.62 million below last March’s estimate.
Estimate for April (4-week month) mill use was 316.77 million pounds for seasonally adjusted annualized rate of 8.34 million bales, significantly below last year’s April annualized rate of 10.29 million bales.
Preliminary May domestic mill use of cotton and revised April figures will be released on June 27, ‘01.
Cotton Sales Less than Half Previous Week
Net export sales for week ending May 17 were approximately 65,600 bales (480-lb.), less than half previous week’s sales, raising total ’00-01 sales to slightly more than 7.8 million. Total sales at same point in ’99-00 marketing year were about 7.42 million bales. Shipments for week were more than 182,000 bales, bringing total exports to date to approximately 5.03 million bales, down from 5.54 million at comparable point in ‘99-00 marketing year.
Effective May 25 - 31, '01
Adjusted World Price, SLM 1 1/16 36.14 cents*
Coarse Count Adjustment 0.00 cents
Current Step 2 Certificate Value 0.81 cents
Marketing Loan Gain Value 15.78 cents
*No Adjustment Made Under Step 1
Five-Day Average
Current 3135 c.i.f. Northern Europe 49.78 cents
Forward 3135 c.i.f. Northern Europe 49.92 cents
Coarse Count c.i.f. Northern Europe 48.24 cents
Current US c.i.f. Northern Europe 51.55 cents
Forward US c.i.f. Northern Europe 55.00 cents