Cotton's Week December 21, 2001

Cotton's Week December 21, 2001

Senate Fails to Agree to Set Time Limit on Farm Bill Debate

Following 3rd effort to convince 60 Senators to end debate (cloture) and set time certain for debate on amendments and final passage of new farm legislation, Senate Majority Leader Daschle (D-SD) said, "We will pick up where we left off…. I have no doubt we will complete our work."

Congress returns from recess Jan. 23 to begin second session of 107th Congress. Farm legislation approved in October by House (HR 2646) remains intact, and Senate leaders have option of picking up where debate left off on S. 1731 or developing new package for consideration by Senate.

During debate week of Dec. 17, Senate rejected proposal to limit time for debate by vote of 54-43 on Dec. 18 and by vote of 54-43 on Dec. 19 (60 votes needed). Earlier cloture motion failed on vote of 53-45. Senate rejected substitute offered by Sen. Lugar (R-IN); Roberts (R-KS)-Cochran (R-MS) substitute backed by White House; and Hutchinson (R-AR)-Sessions (R-AL) substitute based on House-passed legislation. Debate on S. 1731, as reported by Agriculture Committee, became unusually partisan and divisive, with White House initially urging Senate to delay consideration then expressing support for Roberts-Cochran substitute. Republican Senators argued they were being denied opportunities to fully debate legislation, while Democrats argued that it was important to promptly move legislation to preserve $73.5 billion in new funding provided in FY02 budget resolution.

While clearly partisan political considerations were evident, policy debate focused on loan rates, counter-cyclical programs and World Trade Organization compliance. Media reports generated by Environmental Working Group were cited as evidence that farm program benefits flow to large farmers and that programs need to be distributed on more diverse basis.

In somewhat unusual confluence of diverse interests, Sens. Dorgan (D-ND), Nickles (R-OK) and Grassley (R-IA) all indicated intention to offer amendments that would have placed more stringent limitations on farm program benefits. Reportedly, amendments eliminated marketing certificates, placed limit on marketing loan gains and loan deficiency payments, after which outstanding loans would convert to recourse once limit triggers; 3-entity rule; and made further reduction in limits on fixed and counter-cyclical payments.

It is clear Senate faces challenges to restart efforts to successfully craft and pass new farm legislation in time for ’02 crop. Further, there is increasing concern about funding available for new, improved legislation. Technically, $73.5 billion in FY02 budget resolution is available until new budget resolution is approved in April. President’s budget proposal and new Office of Management and Budget and Congressional Budget Office estimates will also influence debate and development of new farm legislation.

Quick Resumption of Farm Bill Deliberations ‘Absolutely Essential’

"Members of the NCC appreciate the efforts of members and leaders of the Senate to fashion new farm legislation that holds promise for restoring economic viability to American agriculture," NCC Chairman James E. Echols of Memphis said in letter to Senate leaders and Cotton Belt members. "However, we are now extremely discouraged that deliberations have stalled. Unless new farm law is enacted promptly, many farmers simply will not be able to secure production financing for the new season."

Echols’ comments came shortly after Senate failed for 3rd time to reach agreement on time limit for debate and final passage of new farm legislation that could be sent to conference with House.

NCC members had urged Senate to complete work on farm bill before recessing for holidays. Following adjournment Dec. 21, Senate will not return to session until Jan. 23.

"There has not been a time since the Great Depression when American agriculture was under greater economic stress and in greater need for new farm policy that provides a better income safety net while facilitating international competitiveness," Echols’ letter stated.

"Our membership, from producer to textile manufacturer, joins unanimously in urging the Senate to resume deliberations as quickly as possible to finalize legislation that is absolutely essential to the restoration of economic viability for American agriculture."

Assistance Not Jeopardized, Says Veneman

In statement following Senate action on farm legislation, Ag Secretary Veneman stated, "This in no way jeopardizes the assistance that farmers can expect next year. We remain committed to working with the Congress to complete a farm bill quickly and expect this can be accomplished soon after the Congress returns. We must work together to complete a farm bill that is fair, responsible and helps a broader range of farmers and ranchers."

Secretary said there is "a new opportunity to come together to develop a truly bipartisan farm bill that provides adequate funding and producer certainty. The Administration will continue to work with Congress to achieve this important goal."

Secretary Responds to NCC Chairman’s Letter

In October letter to Ag Secretary Veneman, NCC Chairman James E. Echols urged that loan rate for ’02 upland cotton crop not be reduced below 51.92 cents per pound. In letter and discussions, Echols reminded Secretary of serious financial situation in cotton industry with escalating production costs, weak demand, depressed prices and difficulty with production financing. Echols reminded Secretary that previous Administration chose not to reduce loan when faced with similar circumstance.

In Dec. 17 response, Secretary said, "USDA is firmly committed to completing a new farm bill before next September, and we believe that there is sufficient time to ensure a thoughtful, thorough approach to developing a farm bill that best assists all our farmers, ranchers and producers to compete in the global marketplace."

Letter went on to state, "USDA expects to make a decision on national loan rates in the near future."

Chinese ’01 Crop Estimate Raised

China’s National Statistical Bureau pegged ’01 Chinese cotton crop at 24.4 million bales, up 900,000 bales from latest USDA estimate, in report released Dec. 19. Crop now is estimated to be 20.4% larger than last year’s crop due to increased acreage and yield. However, current Chinese cotton procurement price is 31% below previous year’s level, and most industry observers expect reduction in Chinese acreage devoted to cotton for ‘02 crop year.

EPA Proposes Strict New Rules for Pesticide Drift

EPA published proposal to impose strict new regulations for all outdoor pesticide uses applied as sprays or dusts encompassing agricultural crops, forestry, rights-of-way, recreational areas, lawns and home gardens.

New rules would establish zero tolerance for drift by requiring label to read: "Do not allow spray to drift from application site and contact people, structures people occupy at any time and associated property, parks and recreation areas, non-target crops, aquatic and wetland areas, woodlands, pastures, rangelands or animals."

Regulations would further specify boom height, require wind speed measurement, restrict aerial boom width, specify droplet sizes and mandate buffer as much as 450 feet around entire fields.

Public comments are due by Jan. 19.

US Cotton Price ‘Competitive’ in World Market

Quote for US cotton delivered Northern Europe (USNE) continues to be judged competitive (within 1.25 cents per pound to "A" Index). Step 2 payments cannot be started earlier than Jan.18, ’02. Latest 5-day average shows USNE at 44 cents compared to "A" Index of 42.88 cents.

On daily basis USNE for Dec. 21 was 43.5 cents and "A" Index was 43 cents. High quote in "A" Index is African at 43.25 cents; low quote is Brazilian at 42.75 cents. Spread between high and low quotes is much narrower than earlier in marketing year.

USNE is now just 0.75 cents from lowest quoted cotton in "A" Index. Price relationship should continue to support US cotton export sales.

Export Sales Exceed 9.1 Million Bales

Net export sales for week ending Dec. 13 were 192,600 bales (480 lb.), approximately 25% lower than previous week’s sales of 257,100 bales, raising total ’01-02 sales to slightly over 9.1 million. Total sales at same point in ’00-01 marketing year were almost 4.9 million bales.

Shipments for week were 172,500 bales, bringing total exports to date to approximately 3.5 million bales, up from 1.8 million at comparable point in ’00-01 marketing year.

Two New Cotton Foundation Reference Books Available

Now available are volumes 5 and 6 of Cotton Foundation Reference Book Series. No. 5 is Cotton Harvest Management: Use and Influence of Harvest Aids and No. 6 is Boll Weevil Eradication in the United States Through 1999.

Harvest management book, edited by Drs. James Supak and Charles E. Snipes, contains 11 chapters dealing with various aspects of cotton defoliation.

Weevil eradication history, edited by Bill Dickerson, Lanny Brashear, Jim Brumley, Frank Carter and Aubrey Harris, contains 26 chapters and chronicles arrival, spread and problems created by boll weevil. Book describes role of producers, USDA and Congress in planning, operation and coordination of eradication programs. Chapter 3, written by Frank Carter, Cotton Nelson, Andy Jordan and Ritchie Smith, documents role of NCC and producer leadership in boll weevil program. Each state developed chapter describing boll weevil activities.

Both volumes can be ordered from Cotton Foundation y at (901) 274-9030. Weevil book also is available from Southeastern Boll Weevil Eradication Foundation office in Montgomery, AL (334-223-7532).

Other cotton reference series volumes focus on physiology, weeds, insects/mites and vegetable oils/agrichemicals. All books except Cotton Physiology are still available from Foundation.

Prices Effective Dec. 21-27, 2001

Adjusted World Price, SLM 1 1/16     28.81 cents*
Coarse Count Adjustment               0.00 cents
Current Step 2 Certificate Value      0.00 cents
Marketing Loan Gain Value            23.11 cents

* No Adjustment Made Under Step I

Five-Day Average

Current 3135 c.i.f. Northern Europe  42.88 cents
Forward 3135 c.i.f. Northern Europe     No Quote
Coarse Count c.i.f. Northern Europe  39.47 cents
Current US c.i.f. Northern Europe    44.00 cents
Forward US c.i.f. Northern Europe       No Quote