Cotton's Week: January 24,2003

Cotton's Week: January 24,2003


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Senate Incorporates Disaster Assistance in Appropriations Bill

The Senate completed work on an omnibus FY03 Appropriations bill, approving a measure, 69-29, that includes $3.1 billion in disaster assistance for farmers and ranchers. The Agricultural Assistance Act of ’03 was incorporated in the measure when the Senate approved (59-35) an amendment offered by Senate Agriculture Committee Chairman Cochran (R-MS).

Under provisions approved by the Senate, the Secretary of Agriculture is authorized to make payments to producers, as soon as practicable, if the farm is located in a county declared a disaster area during calendar year ’01 or ’02; or if producers incurred a qualifying loss for the ’01 or ’02 crop due to disastrous weather or related conditions; and producers are eligible for direct payments for the ’02 crops of covered commodities or peanuts.

Payment shall be 42% of the direct payment producers are eligible to receive for ’02 crops under terms of the new farm law. Producers receiving payments under this provision must purchase at least catastrophic risk protection coverage for each insurable commodity on the farm for the next 2 crop years.

The legislation also provides $50 million in assistance to producers and first handlers of the ’02 crop of cottonseed. NCC estimates the payment rate will be approximately $3 per running bale based on ’02 production projections. The legislation also authorizes additional disaster assistance be made available to certain livestock producers; waives the 25% reduction in Conservation Reserve Program (CRP) rental rates for producers using CRP for emergency haying and grazing in the summer and fall of ’02; replenishes Section 32 funds; provides $100 million for grants to states to assist fruit and vegetable producers; and provides assistance for tobacco, sugarbeets and sugarcane.

Although the amendment is projected by the Congressional Budget Office to cost $3.1 billion, it is written in a way that would provide full payment to all qualifying producers. There would, therefore, be no proration of benefits to covered commodities and peanuts.

The bill will now go to a Conference Committee to resolve differences between the House and Senate, with a Conference report then presented to the House and Senate for final approval. Congressional leaders have indicated they would like to complete work quickly and indicate the legislation could be completed by the first week of February. The Secretary of Agriculture and the White House have indicated the legislation passed by the Senate includes acceptable spending levels and offsets. There is concern among House appropriators about the use of across-the-board cuts to offset funding for disaster assistance, so the issue of spending offsets may be revisited before the legislation is finalized.

NCC Requests 2nd Partial CCP Payment

With US cotton producers facing a 4th consecutive year with market prices well below the average cost of production, the NCC urged the Secretary of Agriculture to make a 2nd partial counter-cyclical payment (CCP) of 35% available beginning Feb. 1 as authorized by the farm law.

In a letter to Secretary Veneman, NCC Chairman Kenneth Hood pointed out the critical need for the payment and asked that an announcement be made as soon as possible to maximize the benefits to producers and lenders. An initial advance CCP for the ’02 crop at the maximum allowable rate of 4.81 cents/lb. was announced by USDA in September.

"For those producers in Virginia, North Carolina, South Carolina, Georgia, Alabama, Louisiana, Mississippi and Texas who are suffering significant crop losses (yield and quality), the advance will assist with production financing," Hood said. "For producers suffering the effects of substantial low prices, the maximum CCP will also provide an important boost to cash flow."

NCC producer-ginner member Chuck Coley of Vienna, GA, underscored the need for the advance payment in a personal request to Secretary Veneman during a Georgia Department of Agriculture meeting in Atlanta.

NCC Policy Target Is Industry Stability, Profitability

Delegates will develop policies and programs under a theme of "Vision, Strategy, Results" at the NCC’s ’03 Annual Meeting, Feb. 6-10, at the Tampa Marriott Waterside.

"The NCC continues to fight to hold onto essential farm bill provisions and to get fair and equitable trade policies," NCC Chairman Kenneth Hood said. "We must help our textile industry members to make sure the trade agreements do not hurt them as they have in the past. One of the key ingredients to the Council’s success in these arenas will be the 7 segments’ ability to develop sound policy and to go to Congress and the Administration with a unified voice."

Hood will cover the industry’s standing at the general session Feb. 10. That session also includes Dr. Larry Sabato, professor and political analyst, who will provide his view of the President’s and Congress’ agendas and commentary on today’s political and legislative environments, and J. Berrye Worsham, III, president and chief executive officer of Cotton Incorporated.

Other key sessions include the NCC’s Policy Advisory Committee on Trade, CCI’s board of directors and the American Cotton Producers. On Feb. 8, the NCC will present its economic outlook report to a joint session of the NCC’s 6 program committees, and the National Cotton Ginners Assn. will conduct its annual meeting.

Report Shows Need for Government Support of Textile Action Plan

In a year-end trade and economic report, the American Textile Manufacturers Institute (ATMI) reported that activity in the US textile industry continued downward with few bright spots in ’02 as the crisis in the industry wore on.

ATMI noted that despite modestly improved economic conditions in the first half of ’02, activity stagnated during the 2nd half of the year. As a result, textile mill shipments fell for the 7th consecutive year as the overvalued US dollar enabled textile imports from Asia to continue to increase their share of the domestic market and hampered US exports.

ATMI Chairman Van May, Plains Cotton Cooperative Assn., reacted to the year-end report by saying, "The American textile industry’s ongoing economic crisis clearly indicates that our government must take steps to restore equitable conditions of competition for US textile manufacturers and our 425,000 workers. The 8-Point ‘Textile Action Plan for Growth,’ released by ATMI, should serve as a playbook for the Bush Administration and Congress.

"Our country is facing serious challenges in the war on terrorism, and our elected officials must take the steps we have recommended to enable the American textile industry – an absolutely critical part of our nation’s defense industrial base – to remain competitive and thus able to continue to support our homeland security."

Among other information, the annual review detailed the following: The US dollar continued to be extremely overvalued, particularly concerning Asian currencies; imports to the US of yarn, fabric and made-ups jumped 20% in ’02 after a marginal decline during the previous year; US textile exports fell marginally last year, the 2nd decline in a row; textile mill employment continued its long-term contraction, with a 10% decline (slightly more than the percentage decrease the industry experienced in ’01); textile mill shipments fell for the 7th year in a row. The full report is available at ATMI’s web site -

Counterpart Regulations for Endangered Species Proposed

An Advance Notice of Proposed Rulemaking (ANPR) on "Endangered Species and Pesticide Regulation" was published jointly by the EPA, the Fish and Wildlife Service and the National Marine Fisheries Service in the Federal Register. The notice is available at EPA's web site -

Environmental groups filed a series of lawsuits against EPA, citing failure to consult with these agencies on the possible effects of pesticide uses on endangered species. Favorable reviews of the lawsuits in court are prompting additional litigation.

The proposed rules will lay out an agreed-upon process to involve all agencies in compliance regarding the Endangered Species Act and pesticide registrations.

Export Sales Off for Week Ending Jan. 16

Net export sales of 216,300 bales (480 lbs.) for the week ending Jan. 16 brought total ’02-03 sales to almost 8 million bales. Sales in the most recent week were down 27% from the previous week. Total sales at the same point in the ’01-02 marketing year were approximately 9.8 million bales. Total new crop (’03-04) sales are 519,600.

Shipments for the week were 199,600 bales, bringing total exports to date to almost 4 million bales, down from 4.6 million at the comparable point in the ’01-02 marketing year.

Prices Effective January 24-30, 2003

Adjusted World Price, SLM 1 1/16          43.55 cents*
Coarse Count Adjustment                    0.00 cents
Current Step 2 Certificate Value           4.89 cents
Marketing Loan Gain Value                  8.45 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       56.66 cents
Forward 3135 c.i.f. Northern Europe          No Quote
Coarse Count c.i.f. Northern Europe       52.85 cents
Current US c.i.f. Northern Europe         61.55 cents
Forward US c.i.f. Northern Europe            No Quote

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