Cotton's Week October 5, 2001

Cotton's Week October 5, 2001

Cotton's Week: October 5, 2001
House Approves New Farm Legislation

Determined leadership of House Ag Committee Chairman Combest (R-TX), with support of Ranking Member Stenholm (D-TX) and vast majority of committee members – Republicans and Democrats – led to House passage of H.R. 2646, "The Farm Security Act of ’01." Legislation, which passed on 291-120 vote, is culmination of 2 years of hearings and development, during which Combest and committee heard recommendations from virtually every ag interest group in country.

During floor debate, members narrowly rejected (200-226) amendment by Reps. Boehlert (R-NY), Kind (D-WI), Gilcrest (R-MD) and Dingle (D-MI) that would have shifted $1.9 billion/yr. from commodity programs to conservation programs. Passage of amendment would have meant that in ’02 farmers eligible to receive more than $12,500 in fixed, decoupled payments would have had benefits reduced by two-thirds.

House also rejected amendment offered by Rep. Smith (R-MI), member of Agriculture Committee, which would have limited combination of marketing loan gains, loan deficiency payments and loan forfeitures to $150,000. Effect of amendment, rejected 187-238, would have been to essentially eliminate non-recourse loan program.

Beginning with ’02 crop, bill maintains marketing loan and cotton’s 3-step competitiveness provisions; establishes stable fixed payments for 10-year life of bill amounting to approximately 6.7 cents/lb. for cotton; allows producers to opt for modified payment acre base; maintains 3-entity rule; increases payment limit on fixed payments to $50,000; provides price-based counter-cyclical program, with cotton’s target price at 73.6 cents/lb.; sets limits of $75,000 for counter-cyclical payment and $150,000 for marketing loan gain payment; continues certificate redemption of loan collateral; and establishes loan eligbility for program crops grown on non-eligible farms.

Administration Raises Late Opposition to Farm Bill

With House debate on new farm legislation under way, Administration issued Statement of Administrative Policy (SAP) through Office of Management and Budget (OMB) stating "…the Administration does not support H.R. 2646 and urges the House of Representatives to defer action on the bill."

SAP contended that "consideration of large new financial commitments that do not require immediate action are not timely. As drafted, H.R. 2646 misses the opportunity to modernize the nation’s farm programs through market-oriented tools, innovative environmental programs, including extending benefits to working lands, and aid programs that are consistent with our trade agenda." Document went on to outline objections to bill, including assertion that it encourages overproduction when prices are low; fails to help farmers most in need; jeopardizes critical markets abroad; and boosts federal spending at time of uncertainty.

Agriculture Committee Chairman Combest (R-TX), Budget Committee Chairman Nussle (R-IA) and others expressed disappointment that Administration would wait until last minute to offer criticism of legislation that has been in development over 2 years and which is in compliance with budget resolution currently in effect. Agriculture groups, including NCC, expressed support for H.R. 2646 as written.

Many House members, noting that agriculture sector of US economy is among hardest hit, and, in view of discussion concerning economic assistance to jump-start economy, expressed disappointment that Administration chose to criticize and attempt to delay legislation carefully designed to assist US agriculture’s economic recovery. Action also troubled many who pointed out that Administration is actively seeking support for Trade Promotion Authority (TPA) in order to facilitate negotiation of new trade agreements but is unwilling to support legislation that would strengthen sector and provide US with stronger position from which to negotiate.

Ways and Means Votes to Extend Andean Trade Agreement

House Ways and Means Committee postponed consideration of legislation authorizing Trade Promotion Authority (TPA) until Oct. 9 and approved legislation, introduced late on Oct. 3, which renews and expands benefits under Andean Trade Preferences Agreement (ATPA).

In addition to extending ATPA, which is scheduled to expire this year, legislation would expand duty-free, quota-free benefits under ATPA to include apparel products assembled in Andean region using fabrics manufactured in US or Andean countries. Preferential treatment for apparel products containing fabrics manufactured in region would be capped at 3% of total annual US apparel imports in ’02, growing in equal annual increments to 6% by ’06.

Legislation requires reports on impact on US industry and consumers as well as report by Labor Department on impact on US employment; penalties for transshipment violations; provisions which would double cap on apparel products containing regional fabrics imported from Africa under AGOA; and clarification of interim customs regulations defining eligibility for preferential treatment, under Caribbean Basin Initiative (CBI) and African Growth and Opportunity Act (AGOA), of knit-to-shape apparel products and apparel products containing fabrics cut in multiple countries.

Committee approved amendment by Chairman Thomas (R-CA) to increase existing caps on apparel products assembled in CBI region using regional knit fabrics formed with US yarn and limit on t-shirts.

Early Hotel Reservation Deadline for Beltwide Nears

Deadline for NCC members to make early hotel reservations for ’02 Beltwide Production Conferences in Atlanta is Oct. 15. Two options are available for making reservations. For fastest service, log-in to Member Services area of NCC web site,, and complete reservation form on-line. Other option is to complete form that was mailed to NCC members and FAX to 866-277-2946. Multiple room reservations require separate form for each room and cannot be made in same individual’s name.

Web site access and FAX number for reservations will be discontinued after Oct. 15 deadline.

EPA Re-Registers Bollgard

EPA signed and finalized agreement with Monsanto Co. for 5-year conditional registration of Bollgard, only commercially available Bt cotton to date. Use of 95/5 unsprayed option will be allowed for another 3 years, after which EPA will re-evaluate further use. All other refuge options under registration extension conditions (’01 season) will continue to be available. Growers are required to sign technology agreement in which they agree to abide by these insect resistance management (IRM) requirements in order to purchase Bollgard seed.

In preparation for Bollgard re-registration, agency completed risk assessment for Bt cotton concluding "there are no unreasonable adverse effects from these products."

Under agreements made with EPA, Monsanto will conduct 3rd-party phone compliance monitoring program. Growers will be contacted to confirm that they are meeting requirements of IRM plans. Company also will submit additional data on alternative hosts for bollworm and budworm and effects of over-spraying Bollgard for bollworm; these data will be important in refining genetic models used to estimate resistance development. Monsanto will further provide funding for enhanced resistance monitoring conducted by USDA and states.

EPA has been under considerable political pressure from activist groups, including organic farming community, to require more stringent IRM plans. Because of output from models designed to predict development of insect resistance and of doubts regarding agronomic management practices, some EPA staff members were hesitant to extend use of 95/5 unsprayed option. EPA considered recommendations of cotton industry and Federal Insecticide, Fungicide and Rodenticide Act Scientific Advisory Panel and National Academy of Sciences report on "Genetically Modified Pest-Protected Plants."

Eradication Program Could Cover 10.9 Million Acres in ’02

NCC Boll Weevil Action Committee (BWAC) met Oct. 3 to coordinate plans for coming year and to review program progress. Assuming all expansion zones pass referenda, total program cost for ’02 season will be $255 million for up to 10.9 million acres in active eradication.

Committee reached agreement on recommendation for USDA-APHIS on allocation of federal cost-sharing funds. With appropriations incomplete, assumptions were made on plan that would meet each state’s needs and equitably share available funds.

Committee voted to support development of federal quarantine as means to provide both state and national levels of protection against re-introduction of weevils. Committee agreed that BWAC should have central role after eradication to ensure investment is protected. Subcommittee will be appointed to develop proposal for post-eradication structure.

CPSC Begins Rulemaking on Mattresses

Consumer Product Safety Commission (CPSC) voted unanimously to issue Advance Notice of Proposed Rulemaking (ANPR) to develop flammability standard to reduce hazard of open flame ignition of mattress/bedding. Federal standard requiring mattresses to be resistant to cigarette ignition already exists.

Since ’98, CPSC has researched options for addressing mattress fire hazards from open flames. Sleep Products Safety Council, NCC and American Textile Manufacturers Institute are sponsoring research at National Institute of Standards and Technology (NIST) to develop effective performance. NIST is developing small-scale screening test with CPSC support.

Children’s Coalition for Fire-Safe Mattresses (CCFSM) had petitioned CPSC to adopt standard for residential mattresses to pass 2 specific open-flame tests. CPSC in this vote granted 2 CCFSM petitions, which will be considered in rulemaking. CCFSM also was responsible for California bill (AB 603) passed in September requiring California Bureau of Home Furnishings and Thermal Insulation (CBHFTI) to develop open-flame standard for mattress/bedding by Jan. 1, ’04, if federal standard was not already in place. In letter to CBHFTI, California Assemblyman Dutra clarified that sheets, blankets or other non-stuffed products were never intent of bill’s provisions and that at issue is "polyurethane foam, an extremely flammable substance used to stuff mattresses, box springs and bedding."

In addition, National Assn. of State Fire Marshals is expected soon to petition CPSC to set flammability standard for stuffed bedding products and is developing federal legislation requiring CPSC to issue standard for mattress/bedding.

Export Sales Climb 31%

Net export sales for week ending Sept. 27 were 154,400 bales (480-lb.), approximately 31% higher than previous week’s sales of 117,900 bales, raising total ’01-02 sales to almost 6.3 million. Total sales at same point in ’00-01 marketing year were nearly 3.6 million bales.

Shipments for week were 146,800 bales, bringing total exports to date to slightly over 1.5 million bales, up from approximately 809,900 at comparable point in ’00-01 marketing year.

Effective Oct. 5-11, ’01
Adjusted World Price, SLM 1 /16   25.69 cents*
Coarse Count Adjustment            0.00 cents
Current Step 2 Certificate Value   1.89 cents
Marketing Loan Gain Value         26.23 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 3135 c.i.f. N.Europe      39.76 cents
Forward 3135 c.i.f. N.Europe         No Quote
Coarse Count c.i.f. N.Europe      37.45 cents
Current US c.i.f. N.Europe        42.90 cents
Forward US c.i.f. N.Europe           No Quote