Cotton's Week: January 3, 2003

The Farm Service Agency (FSA) provided instructions to state and county offices (Notice CP-551) on granting equitable relief. The new farm law authorizes relief for participants in certain cases and certain programs.

The relief applies to cases in which the applicant took action based on incorrect information from USDA officials or acted in good faith but failed to fully comply with program requirements. Relief provisions apply to commodity price support programs, market loss assistance and conservation but do not include credit or crop insurance. The Secretary of Agriculture may grant relief and may condition the relief on the participant agreeing to remedy failure to meet program requirements.

The law also allows State Directors of FSA and State Conservationists of the Natural Resources Conservation Service to grant relief with certain limitations in cases in which the amount of loans, payments and benefits is less than $20,000; when the total amount of loans, payments and benefits previously provided a participant under this authority is not more than $5,000; and when the total amount of loans, payments and benefits for which relief to similarly selected participants is not more than $1,000,000. The state executive director’s decision can be reversed only by the Secretary and does not apply to payment limitations, conservation programs administered by the Secretary or to highly erodible land and wetland conservation requirements. USDA has also determined that application of the new provisions will apply prospectively only.

Farm Service Agency (FSA) Notices PL-111 and DCP-58 provide FSA offices with instructions on how individuals and entities can certify adjusted gross income (AGI) to receive advance ’03 direct and counter-cyclical program (DCP) payments. The new farm law provides that an individual or entity shall not be eligible to receive certain payments and benefits if the most recent 3-year average AGI of the individual or entity exceeds $2.5 million and less than 75% of the average AGI was derived from farming, ranching or forestry operations.

Notice PL-111 acknowledges that a proposed rule was published Oct. 28 and that certain procedures could be modified based on publication of a final rule (see the Farm Bill section of the NCC web site for the regulation and industry comments). Until publication of the final rule, DCP-58 will be followed.

Under procedures in PL-111, AGI certification can be accomplished by submitting either a form CCC-526 or a statement of AGI compliance with supporting documentation from a certified public accountant or an attorney that is acceptable to FSA. Each entity and individual requesting payments or benefits subject to the AGI provision must provide a certification. For entities such as corporations with stockholders, a limited liability company or a trust, both the entity and each individual stockholder or interest holder must certify as to compliance with the AGI provision regardless of the interest held. A producer will be required to submit only one AGI certification.

All multi-year contracts and agreements approved and effective before Oct. 1, ’02, will not be subject to AGI requirements for payment eligibility. For ’03 crop DCP payments, the AGI or equivalent amounts reported for ’00, ’01 and ’02 will be used. Any year in which the AGI or equivalent was "zero" or there was no taxable income will be excluded in the determination of AGI.

According to the Commerce Department, November (4-week month) total cotton consumption in domestic mills was 270.5 million pounds for a seasonally adjusted annualized rate of 7.6 million 480-pound bales. Last year’s November annualized rate was 7.2 million bales.

Commerce raised the October (4-week month) estimate of domestic mill use of cotton 4.7 million pounds to 291.1 million. The revised seasonally adjusted annualized rate of consumption for October is 7.5 million bales.

Data from Commodity Credit Corp. filings for Step 2 payments indicate a higher level of consumption of cotton by domestic mills for the month of November than the level reported by Commerce. Step 2 data indicate that domestic mills used 297.5 million pounds of upland cotton from Oct. 25 to Nov. 21. Step 2 only applies to upland cotton. Step 2 data generate a seasonally adjusted annualized rate of 8.3 million bales.

Preliminary December domestic mill use of cotton and revised November figures will be released Jan. 29.

The chairman of the American Textile Manufacturers Institute (ATMI) issued a call for Congress and the Bush Administration to support an 8-point "Textile Action Plan for Growth" in ’03, which he said is needed to ensure the revitalization of the American textile industry.

Van May said the US government must honor its promises to make sure that the American textile industry is not traded away and has a fair chance to compete. He called on textile and fiber supporters in Congress to work with ATMI and the Administration in supporting the plan.

The plan includes a call for the US to address in the World Trade Organization’s Doha Round negotiations the barriers that currently exist in textile and apparel trade. Specifically, May said, the US should insist that all countries immediately eliminate their non-tariff barriers to textile and apparel imports.

ATMI positions on a sound dollar policy, rejection of non-reciprocal trade expansion, free trade agreements, trade with China and Vietnam and effective custom enforcement make up the 8-point plan. Complete details of the plan are available at www.atmi.org.

May said the US must avoid using the American textile industry as a bargaining chip in the war on terrorism, including keeping its commitment to the industry not to accelerate or change the WTO textile quota phase-out for any nation or granting additional duty-free benefits for any nation.

Monsanto announced that it has received full US regulatory clearance for its Bollgard II insect-protected cotton. The announcement means that US cotton producers will have access to cottonseed containing this technology for the ’03 planting season.

Bollgard II is the 2nd generation of insect-protected cotton developed by Monsanto and contains 2 insect-control genes compared to a single insect-control gene in its predecessor, Bollgard.

"Bollgard II cotton is expected to provide growers with additional benefits, including a broader spectrum of insect control, and increased defense against insect resistance as well as similar agronomic advantages as … Bollgard cotton," said Dr. Robb Fraley, Monsanto’s chief technology officer. "(This includes) increased yield and lint potential, improved insect control, reduction in input costs, savings in time and reduced pesticide sprayings."

As part of the registration conditions, EPA will require the same insect resistance management programs that growers now follow. NCC has agreed to continue its commitment to insure that growers understand the importance of insect resistance management for Bt cotton.

USDA and the Food and Drug Administration confirmed the food, feed and environmental safety of this technology in ’02.

The clearance of Bollgard II follows the successful completion of regulatory reviews by the Australian government. In September, Australia’s Office of Gene Technology Regulator approved the commercial use of Bollgard II in growing regions of New South Wales and South Queensland.

Monsanto’s original Bollgard cotton product, first marketed in ’96, is being sold commercially in the US, China, India, Mexico, Australia, Argentina, Colombia, South Africa and Indonesia. An estimated 16.8 million acres of biotech cotton were planted in ’01, an increase of 28% from ’00.

Robbie Minnich, a North Carolina native and graduate of North Carolina State U., joined the NCC’s Washington office as Senior Government Relations Representative. Minnich most recently served as legislative assistant to Sen. Hutchinson (R-AR), working extensively on agriculture issues and development of the new farm bill. Prior to joining Sen. Hutchinson’s staff, Minnich interned with Rep. Hayes (R-NC).

Minnich replaces Ben Noble, who joined the USA Rice Federation as vice president for Government Affairs.

EPA announced plans to finalize an interim program designed to protect threatened and endangered species from pesticide use. In a Dec. 2 Federal Register notice, EPA’s Office of Pesticide Programs (OPP) said it will complete and upgrade county bulletins that list local endangered species and pesticides that may cause harm to these species. EPA also plans to amend pesticide labels to reference county bulletins and improve monitoring of pesticide impacts on endangered species.

According to EPA, the proposal is based on 2 goals - to provide appropriate protection to listed species and avoid unnecessary burden on pesticide users and agriculture.

Section 7(a)(2) of the Endangered Species Act requires federal agencies to ensure that their actions are not likely to jeopardize endangered or threatened species. Within EPA, this section pertains to pesticide registrations. In ’88, EPA established an interim Endangered Species Protection Program that relied on voluntary participation and use of pamphlets that identified species and potentially harmful pesticides. EPA plans to convert the pamphlets to county bulletins after updating information to include the most recent biological opinions. County bulletins will provide a description of measures pesticide users should take to protect species and a map detailing where those measures should be applied. Bulletins and maps would be available on a web site and possibly from regional offices, state pesticide programs and local dealers.

EPA also is asking for comments on generic label language that would read: "This product may have effects on federally listed threatened and endangered species or critical habitat in some counties. When using this product, you must follow measures contained in County Bulletin for the county in which you are applying pesticide."

More information on this proposal is available at http://www.epa.gov/oppfead1/endanger/effects.

USDA announced that competitiveness provisions triggered a Step 3 quota based on price conditions for the week ending Jan. 2. The quota is for 142,207 bales, equal to one week of mill use based on the most recent 3 months’ seasonally adjusted data (September-November). The quota will be established as of Jan. 9 and applies to upland cotton purchased no later than April 8 and entered into the US no later than July 7.

Net export sales for the week ending Dec. 26 were 195,200 bales (480 lbs.), approximately 6% lower than the previous week, resulting in total ’02-03 sales of slightly over 7.3 million bales. Total sales at the same point in the ’01-02 marketing year were approximately 9.4 million bales. Total new crop (’03-04) sales are 503,100 bales (480-lb.).

Shipments for the week were 176,300 bales, bringing total exports to date to 3.2 million bales, down from 3.9 million at the comparable point in the ’01-02 marketing year.

Adjusted World Price, SLM 1 1/16             43.31 cents*
Coarse Count Adjustment                       0.32 cents
Current Step 2 Certificate Value              5.88 cents
Marketing Loan Gain Value                     8.69 cents
Import Quotas Open                                     4
Step 3 Quotas as of 1/9(480-lb. bales)           588,712
* No Adjustment Made Under Step I

Five-Day Average

Current 3135 c.i.f. Northern Europe          56.50 cents
Forward 3135 c.i.f. Northern Europe             No Quote
Coarse Count c.i.f. Northern Europe          50.63 cents
Current US c.i.f. Northern Europe            62.38 cents
Forward US c.i.f. Northern Europe               No Quote