Cotton's Week September 7, 2001

Cotton's Week September 7, 2001

Cotton's Week: September 7, 2001

Ag Bill Still on Schedule for House Consideration Sept. 13-14

Agriculture Committee staff advised Washington farm and commodity representatives that HR 2646, The Farm Security Act of ’01, is still on schedule to be considered by House Sept. 13 or 14.

Recent budget projection updates by Office of Management and Budget and Congressional Budget Office (CBO), which show smaller surplus, have led to speculation that Congress might not consider new farm legislation this year. However, committee staff members indicated they are preparing to move legislation forward, as it is fully compliant with budget resolution approved by Congress earlier this year. Resolution included provision providing $73.5 billion for additional ag spending over next 10 years.

As reported by Agriculture Committee, on strong bipartisan basis, HR 2646 would revise and strengthen commodity, conservation, trade promotion, nutrition and rural development programs. Commodity programs would be improved substantially with addition of target price-based counter-cyclical provision to provide important safety net lacking in ’96 legislation. Marketing loan program, 3-step competitiveness program and fixed, decoupled payment for cotton would round-out balanced commodity program that preserves positive aspects of ’96 law and adds target price provision that worked well in previous legislation. Commodity programs would receive additional funding of $49.9 billion under legislation approved by committee. Conservation programs would receive increase of about 75% to $16.6 billion over 10 years.

Some House members are expected to express reservations about approving legislation that increases funding for ag programs in face of dwindling surplus. However, since budget resolution specifically provides funds for farm program restructuring, vote against enhanced farm policy would jeopardize funding for any other programs authorized in budget. Further, HR 2646, according to CBO, only spends additional $1.9 billion in FY02, whereas budget resolution authorized up to $7.35 billion in additional funding in FY02. Because new legislation provides predictable, adequately funded programs and policy, Congress likely will not be required to continue to approve annual ad hoc emergency assistance as has been case in last 3 years.

NCC has sent letter to all Cotton Belt members urging support for HR 2646. Letter is available on NCC web site, Additional fact sheets and background papers will be posted in days leading up to House consideration.

Attempt to Shift Funds to Conservation Expected in Farm Bill Debate

Introduction of amendments that would shift funds from commodity programs to conservation programs are expected during House farm bill debate. Reps. Kind (D-WI) and Gilchrist (R-MD) are expected to offer amendment to triple funding for conservation programs to $6 billion/yr. HR 2646, as approved by Agriculture Committee, continues $2 billion in annual funding for conservation, representing 75% increase over current levels. Although details are not available, Kind-Gilchrist amendment likely will shift funding from target price-based counter-cyclical program to provide additional conservation funds.

Environmental groups are actively promoting approval of amendment and have stimulated significant media coverage in effort to discredit and undermine support for commodity programs. Rep. Kind has indicated he will unveil amendment at Sept. 11 news conference. NCC has joined other commodity and farm organizations in letter urging members of House to reject Kind-Gilchrist and support balanced approach included in Agriculture Committee’s version of legislation.

In related development, Reps. Bonior (D-MI) and Miller (D-CA) are circulating letter urging members to oppose Agriculture Committee bill because conservation title would allow large livestock operators to be eligible for Environmental Quality Incentive Program.

MAP Funds Reduced in International Relations Committee Vote

House International Relations Committee voted to amend food aid and export promotion program provisions of farm bill approved by Agriculture Committee. Committee, which has jurisdiction over international food aid programs, approved amendment that would authorize $300 million global food for education initiative to purchase US agricultural commodities for use in feeding 9 million children in 38 countries.

Committee also reduced funding for Market Access Program (MAP) from $200 million/yr. included in Agriculture Committee trade title to $180 million per year. MAP currently is funded at $90 million annually. Cotton Council International is major cooperator in MAP, with funds supporting COTTON USA market development programs.

Amendment approved by International Relations Committee will be considered by House Rules Committee to determine structure of floor debate on competing trade titles.

Veneman to Review House Ag Bill Trade Implications at Senate Hearing

Ag Secretary Veneman is scheduled to appear before Senate Ag Committee Sept. 13 to deliver Administration’s views on whether pending farm legislation complies with US international trade commitments.

Committee Chairman Harkin (D-IA) and Ranking Member Lugar (R-IN) said in joint statement that review was prompted by concerns that legislation reported by House Ag Committee may cause US to violate existing trade agreements and interfere with efforts to reach new agreements favorable to US farmers.

"As we proceed in the Senate with work on a new farm bill, it is essential that we have the advice and guidance of Secretary Veneman and USDA on how any new legislation fits into our nation's objectives to increase future opportunities for agricultural exports," Harkin said.

Last June’s decision by USDA to report Market Loss Assistance payment as non-exempt domestic support has driven home relationship of US farm assistance policies to nation's commitments under WTO, Harkin said. Sens. Harkin and Lugar requested Secretary Veneman provide USDA estimates of aggregate measurement of domestic support that would be provided under House bill and comparison of that support to US’ WTO commitment to limit certain types of domestic support that may distort production or trade.

House Ratifies Vietnam Trade Agreement Resolution

House approved by voice vote resolution ratifying bilateral trade agreement with Vietnam, which, if approved by Senate, would extend Normal Trade Relations (NTR) status to Vietnam subject to annual review. House also approved separate legislation that caps non-humanitarian assistance to Vietnamese government until it meets certain human rights benchmarks.

US and Vietnam concluded trade agreement July 13, ’00. Agreement was sent to Congress June 8, ’01, to be considered under expedited procedure, with maximum of 15 days in both houses of Congress. Trade agreement contains 5 sections, including provisions on market access for industrial and agricultural products.

During debate, some members expressed disappointment at lack of labor standards in agreement. Members of House and Senate had written US Trade Representative Zoellick in July, urging inclusion of labor standards and separate textile and apparel agreement with Vietnam, similar to those in Cambodian and Jordanian agreements.

NCC also had written Ambassador Zoellick, expressing opposition to pact with Vietnam unless separate agreement on textile and apparel trade was concluded prior to Congressional consideration of legislation. In August response to NCC Chairman Echols, Ambassador Zoellick said, "…we are aware of the difficult conditions in the US textile industry and understand the National Cotton Council’s support for a bilateral textile agreement with Vietnam. We are presently considering the timing of negotiating such an agreement, and will certainly take your comments into account."

NCC Comments Support TMDL Delay

NCC will submit comments supporting delay of effective date of regulations issued by EPA in July ’00 (non-point sources rule) that would have subjected agricultural operations to mandatory controls under Clean Water Act (CWA).

In comments, NCC states that EPA’s non-point sources rule exceeded statutory authority under section 303(d) of CWA, as Congress never intended EPA to use Total Maximum Daily Load (TMDL) as tool to control non-point source pollution. Other provisions of CWA address non-point sources through entirely separate non-TMDL scheme.

NCC is participating in lawsuit challenging earlier regulation and arguing that agency's planned regulatory scheme would subject agricultural producers to "unconscionable, unsupportable, unworkable and illegal mandatory management standards through TMDL program." Due to lawsuit and other significant opposition to non-point sources rule, EPA is seeking to address many concerns raised by NCC and other parties to litigation and has asked for stay in proceedings. NCC also urges agency to engage non-point source stakeholders, such as agricultural producers, states, Congress and USDA, early in review process. Consultation with these groups should aid EPA in developing approach to non-point sources of water pollution that is consistent with law, workable for states and producers and is based on accurate and supportable data.

NCC Posts Crop Insurance Calculation Info

Concerns about yield/quality losses due to recent heavy rains in East Texas and parts of Mid-South prompted NCC to include information about multi-peril crop insurance calculations on web site. Information and example of how to calculate for insurance purposes is included in Economic News section at

Mature white upland cotton damaged by insured causes may be adjusted for quality if price quotation for affected bale is less than 85% of price quotation for bale of base quality in applicable growth area. Quality adjustments are made by reducing grower's production to count (assessed yield). For policyholder to be indemnified, producer’s total production to count across insured unit must fall below production guarantee (APH times level of coverage). Base qualities for individual counties are located on USDA's Risk Management Agency web site,

Meanwhile, US Cotton Ginning Lab Research Leader W. Stanley Anthony, Stoneville, MS, has developed set of recommendations he suggests be considered for harvesting open bolls exposed to excessive moisture. Recommendations are available at NCC web site,

Hubbard Succeeds Conner as AYSA EVP

Michael S. Hubbard was elected executive vice president and secretary of American Yarn Spinners Assn. (AYSA) at organization’s annual meeting. He replaces Jim Conner, who is retiring but remains with AYSA as advisor.

South Carolina native, Hubbard has extensive legislative experience at both state and national level, having served on staffs of former Senator Coats (R-IN) and Representative Cubin (R-WY). Prior to joining AYSA year ago, he worked in South Carolina Senate as director of research for Senate General Committee.

Cotton Sales Fall Slightly in Most Recent Week

Net export sales for week ending Aug. 30 were 143,200 bales (480-lb.), approximately 5% lower than previous week’s sales of 152,000 bales, raising total ’01-02 sales to almost 5.8 million. Total sales at same point in ’00-01 marketing year were nearly 3.3 million bales.

Shipments for week were 205,000 bales, bringing total exports to date to approximately 847,400 bales, up from approximately 496,800 at comparable point in ’00-01 marketing year.

Effective Sept. 7-13, ’01

Adjusted World Price, SLM 1 1/16 28.39 cents*
Coarse Count Adjustment           0.00 cents
Current Step 2 Certificate Value  5.51 cents
Marketing Loan Gain Value        23.53 cents
*No Adjustment Made Under Step I

Five-Day Average

Current 3135 c.i.f. N. Europe 42.44 cents
Forward 3135 c.i.f. N. Europe No Quote
Coarse Count c.i.f. N. Europe 40.73 cents
Current US c.i.f. N. Europe   49.20 cents
Forward US c.i.f. N. Europe   No Quote