- Budget Resolution Approved in House
- NCC Reviews Farm Policy Position
in Washington Meetings - USDA Planting Report Indicates 15.6 Million Acres
- Prospective '01 US Cotton Plantings
- Export Sales Reach 6.8 Million Bales
- Oilseed Producers Present Farm Policy Recommendations
- Tax Phase-Out Approved by Ways and Means
- Monsanto Petitions EPA for Bollgard II Registration
- Bush Selects Deputy for EPA
- Changes to EPA/NRDC Agreement Fail to Calm Industry
- Effective Mar. 30-April 5, '01
- Five-Day Average
Budget Resolution Approved in House
House, voting primarily along party lines, approved Republican-crafted $1.98 trillion FY02 budget resolution (H. Con. Res. 83) that includes authority for tax cuts of $1.6 trillion over 10 years. As previously reported in Cotton's Week, resolution includes provisions that would authorize Budget Committee chairman to increase spending authority for agriculture by tapping into $90 billion "reserve" fund projected for '01 and $517 billion "reserve" fund for '02-11.
In anticipation of lost income from increasing fuel and fertilizer costs combined with forecasts of low commodity prices, resolution specifically identifies $5.6 billion of $90 billion '01 reserve for assistance later this year for producers of program crops, specialty crops and other critical needs. Budget Committee chairman may increase allocations in FY02 and beyond if Agriculture Committee reports legislation modifying commodity programs by July 11.
House Agriculture Committee Chairman Combest (R-TX) indicated his strong support for resolution and is scheduled to complete hearings during which farm organizations have been allowed to present policy recommendations last week of April or first week of May. Committee could begin considering legislation to modify commodity programs for crop years '02 and beyond.
NCC Reviews Farm Policy Position
in Washington Meetings
NCC Chairman Jim Echols and President and CEO Gaylon Booker returned to Washington week of March 26 to meet with key Cotton Belt members of House and Senate Agriculture and Appropriations committees.
During earlier visit week of March 19, Echols and Booker participated in roundtable discussions with top officials of general farm, livestock and commodity organizations. They met with House Agriculture Committee Chairman Combest (R-TX) and Budget Committee Chairman Nussle (R-IA) to discuss Budget Resolution and farm policy. Agriculture Committee Ranking Member Stenholm (D-TX) briefed group on Blue Dog budget proposal, and Ag Secretary Veneman also met with group.
During visit week of March 26, Echols and Booker had opportunity to talk to members and staff about difficult financial situation faced by most producers and much of industry. They urged members to work to pass legislation which would provide emergency economic assistance at level at least equivalent to that provided for '00 crop. They reviewed NCC recommendations presented to House Agriculture Committee for improved cotton program and outlined NCC priorities for funding in FY02 agriculture appropriations measure.
During sessions at USDA, Echols reviewed NCC policy recommendations and also urged officials to do everything possible to preserve effective export credit guarantee program. Booker met with members of Senate Agriculture Committee staff in session to convey NCC recommendations for economic assistance for '01 crop and proposals for improving cotton program over long term.
USDA Planting Report Indicates 15.6 Million Acres
USDA's Prospective Plantings Report indicated US producers intend to plant 15.4 million acres of upland cotton and 220,000 acres of ELS cotton in '01-02. Total of 15.6 million acres is about 300,000 acres less than NCC's early season planting intentions survey that revealed grower intentions of 15.7 million upland acres and 225,000 ELS acres.
According to USDA, growers in Southeast intend to increase upland plantings 3.5% to 3.7 million acres, largely due to 12.9% increase in North Carolina. In Mid-South, intended plantings of 4.4 million acres represent 10.4% increase, with Arkansas, Louisiana, Mississippi and Tennessee all registering strong gains. USDA report indicates decrease of 5.6% to 6.3 million acres in Southwest because of surprising reduction in upland plantings in Texas. Growers in West indicate 11.4% decrease in upland plantings to 1.0 million acres, in part due to increased plantings of ELS cotton.
Based on 5-year ('96-00) average abandonment and yields, expected crop would be about 18.6 million bales (480-lb.), with upland production of slightly less than 18.2 million bales and ELS production of 470,000 bales.
Prospective '01 US Cotton Plantings
'00 Actual (Thou.) |
'01 Intended (Thou.) |
Percent Change | |
SOUTHEAST |
3,560 |
3,685 |
3.5% |
Alabama |
590 |
600 |
1.7% |
Florida |
130 |
120 |
-7.7% |
Georgia |
1,500 |
1,500 |
0.0% |
North Carolina |
930 |
1,050 |
12.9% |
South Carolina |
300 |
310 |
3.3% |
Virginia |
110 |
105 |
-4.5% |
MID-SOUTH |
3,940 |
4,350 |
10.4% |
Arkansas |
960 |
1,050 |
9.4% |
Louisiana |
710 |
800 |
12.7% |
Mississippi |
1,300 |
1,500 |
15.4% |
Missouri |
400 |
400 |
0.0% |
Tennessee |
570 |
600 |
5.3% |
SOUTHWEST |
6,720 |
6,344 |
-5.6% |
Kansas |
40 |
44 |
10.0% |
Oklahoma |
280 |
300 |
7.1% |
Texas |
6,400 |
6,000 |
-6.3% |
WEST |
1,145 |
1,015 |
-11.4% |
Arizona |
280 |
280 |
0.0% |
California |
775 |
660 |
-14.8% |
New Mexico |
90 |
75 |
-16.7% |
TOTAL UPLAND |
15,365 |
15,394 |
0.2% |
TOTAL ELS |
172 |
220 |
28.3% |
Arizona |
6.0 |
7.0 |
16.7% |
California |
145 |
190 |
31.0% |
New Mexico |
4.5 |
7.0 |
55.6% |
Texas |
16 |
16 |
0.0% |
ALL COTTON |
15,537 |
15,614 |
0.5% |
Export Sales Reach 6.8 Million Bales
Net export sales for week ending March 22 were over 166,000 bales (480-lb.), bringing total '00-01 commitments to over 6.8 million. Shipments for week were over 167,000 bales, raising total '00-01 exports to over 3.8 million.
Oilseed Producers Present Farm Policy Recommendations
Soybean and other oilseed groups presented farm policy proposal to House Ag Committee that would include oilseeds in expanded fixed-payment program (Production Flexibility Contract). Proposal also would establish current loan rate as floor, with authority for Ag Secretary to set loan rate at level between floor and Olympic average if Olympic average of prices received in 3 of 5 years is higher.
Addition of counter-cyclical payment program was proposed, triggered by shortfall in current year national gross return per acre for crop as compared to Olympic average of gross return per acre during '93-97 period. Counter cyclical payment would be made on 85% of harvested acres in current year.
Groups expressed opposition to payment limitations and recommended increase in agriculture spending authority by about $1.7 billion to accommodate adding oilseeds to Agriculture Market Transition Act-like program.
Tax Phase-Out Approved by Ways and Means
Ways and Means Committee approved legislation (HR 8) that would phase out estate, gift and generation-skipping transfer taxes by '11 at "cost" of $192.8 billion. House may consider bill as early as week of April 2.
Legislation approved by committee was modification of bill introduced earlier by Reps. Tanner (D-TN) and Dunn (R-WA). Committee-approved bill would "allow a step-up in basis to fair market value for $1.3 million in assets transferred upon death, and an additional step-up in basis for $3 million in assets transferred upon death of a decedent to a surviving spouse." Any assets above those amounts would be subject to a carryover in basis. In effect, this exempts up to $1.3 million in increased value from capital gains tax, and a surviving spouse could exempt up to $4.3 million.
Legislation phases in repeal of estate, gift and generation-skipping transfer taxes beginning in '02 by converting unified credit to exemption; repealing 5% "bubble" that phases out lower rates; repealing rates in excess of 53% in '02; repealing rates in excess of 50% in '03; reducing all rates by 1% per year in '04-06; reducing all rates by 2% per year in '07-10; and repealing all these taxes beginning in '11. Carryover basis applies to transfers of assets fully owned by decedents, except as stated above, at death after Dec. 31, '10.
Under current law, first $675,000 that is inherited is exempt from estate tax. Under committee's plan, that would rise to $1 million by '06. Bill phases out tax beginning in '02, slowly reducing top rates. By '10, top rate would be 38% (currently rate begins at 37% and rises to 55% on transfers of more than $3 million). In '11, tax would be repealed. After repeal, those who inherited assets would pay capital gains tax on increase in value of property that occurred before death. Legislation also expands availability of Estate Tax Exclusion for Conservation Easements.
Monsanto Petitions EPA for Bollgard II Registration
EPA published in March 21 Federal Register Monsanto's request for "full commercial registration on cotton" of Bollgard II. In addition to Cry1Ac Bt gene of Bollgard, Bollgard II will have additional Cry2Ab Bt protein, with 2nd Bt gene providing wider spectrum of control and reducing risk of resistance within budworm and bollworm populations. Bollgard II is expected to be commercially available in '03.
Bush Selects Deputy for EPA
President Bush intends to nominate Linda J. Fisher as Deputy Administrator of EPA. Most recently, she was Vice President of Government Affairs for Monsanto Co. Fisher served in several positions over 8-year career at EPA, including as Assistant Administrator for Office of Prevention, Pesticides and Toxic Substances from '89 to '93; as Assistant Administrator for Office of Policy, Planning and Evaluation at EPA from '88 to '89; and as Chief of Staff from '85 to '88.
EPA Administrator Whitman also announced that agency will revive its USDA liaison position. She hopes move will result in increased cooperation between federal agencies and enhance sharing of data. Whitman said that reinstating this position, which was eliminated during Clinton Administration, would help improve communications between EPA and USDA.
Renewal of liaison is part of larger effort underway within Bush Administration to better coordinate regulatory efforts that affect both environment and other interests. Whitman said that she, Agriculture Secretary Veneman and Interior Secretary Norton all meet regularly to discuss activities in their respective departments to ensure regulatory policy is closely coordinated.
Changes to EPA/NRDC Agreement Fail to Calm Industry
As part of settlement in lawsuit filed by Natural Resources Defense Council, EPA submitted amended consent decree to federal District Court in California that did not deal with deadlines as outlined in settlement. Instead, amended consent decree outlines steps to pesticide program to make its regulatory processes more participatory and transparent.
In its agreement, EPA was to establish deadlines under Food Quality Protection Act for assessments of 11 individual pesticides. Also, agency agreed to issue preliminary risk assessment by Dec 1 for cumulative effects of all 39 organophosphate pesticides.
EPA's legal counsel advised Administrator Whitman that agency had limited flexibility to change or withdraw from consent decree. Amendments to agreement have not calmed concerns of registrants and ag groups. Some have filed suit in federal court seeking to overturn original agreement.
Lawyers for industry plan to petition court on April 6 as interveners in case to subject revised agreement to public comment so court can take into account widespread opposition.
"In amended agreement, there is still a set of deadlines that will force EPA to assess risks posed by pesticides without sound science," said one industry source. "If we don't have science, we have to rely on default assumptions, and farmers will lose, as the variety of pesticides approved for use becomes limited."
Effective Mar. 30-April 5, '01
Adj. World Price, SLM 11/16........38.12 cents* Coarse Count Adjustment............0.00 cents Current Step 2 Certificate Value...1.98 cents Marketing Loan Gain Value.........13.80 cents *No Adjustment Made Under Step I
Five-Day Average
Current 3135 c.i.f. N. Eur........51.97 cents Forward 3135 c.i.f. N. Eur........53.14 cents Coarse Count c.i.f. N. Eur........49.55 cents Current US c.i.f. N. Eur..........55.20 cents Forward US c.i.f. N. Eur.............No Quote