Cotton's Week: April 16, 2004

Cotton's Week: April 16, 2004

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ACP Leaders Updated on USDA E-Gov Efforts

John Johnson, deputy administrator for Farm Programs with USDA’s Farm Service Agency, briefed the American Cotton Producers (ACP) on the agency’s latest efforts at moving toward electronic participation in government programs. He discussed 4 main programs that are in various stages of development including electronic crop reporting, USDA program customer statements for individual growers, electronic LDP application and centralized cotton redemption.  NCC staff and leadership have been directly involved with USDA officials in the centralized loan redemption project.

Norma Mc Dill, deputy administrator, USDA, AMS, provided an update on USDA cotton classing operations.

In other business, ACP leaders heard a detailed report from NCC President Mark Lange on his recent trip to China where he spoke at a global cotton forum, met with US and Chinese government officials regarding trade issues and participated in a new Cotton Council International promotion campaign kickoff. Lange also discussed the status of the Central American Free Trade agreement negotiations between the textile, cotton and Central American interests.

NCC Vice President Gary Adams updated the ACP on the status of the Brazil WTO case against the US cotton program and presented a cotton economic report. NCC Senior Vice President John Maguire reported on various Washington activities including the status of the Budget Resolution and cotton appropriation priorities for ’05. NCC Chairman Woody Anderson reviewed several key NCC priority initiatives and discussed his recent trip to Washington, DC. ACP Chairman John Pucheu, a California producer, provided an update on the status of the legal challenges to the Cotton Research and Promotion Program.

The ACP approved and recommended for NCC Board consideration a 2-tier membership plan that rewards states with high levels of NCC membership participation with added ACP and NCC representation.





New USTR Office Created for Growing China Trade

A new office has been created under the US Trade Representative (USTR) to handle the country's growing trade relationship with China. USTR Robert Zoellick said creation of an Office of China Affairs was part of a reorganization of his agency designed to focus on increasingly important trade issues.

As part of the reorganization, Congress gave the USTR $2 million in extra money to hire more attorneys and trade experts, who will focus on China's manufacturing policies and other issues. In a recent report about countries that have erected the most harmful trade barriers to American exports, the administration devoted 39 pages, the most for any country, to detailing what it contended were China's unfair trade practices. That report reviewed efforts the administration has made to get China to live up to commitments it made to lower trade barriers when it joined the WTO in ’01.

Zoellick announced the new USTR office will be headed by Charles Freeman, who has been handling China issues as a deputy assistant U.S. trade representative. Zoellick said Freeman had played a major role in conducting the country's trade policies with China during its first 2 years of WTO membership. "As our trade relationship with China grows, Charles will lead USTR's effort to make sure the United States has fair and open access to China's markets," Zoellick said. The China office will be responsible for trade issues with China, Taiwan, Hong Kong, Macau and Mongolia.

As part of the reorganization, Wendy Cutler, an assistant US trade representative, will head a new office overseeing trade relations with Japan and South Korea.





Beneficial CAFTA Needed

In a report to the North Carolina World Trade Center seminar in Durham, NC, Gaylon Booker, a consultant to the NCC, said the organization is spearheading efforts to develop a consensus on recommended changes that would prompt U.S. cotton to support ratification of a Central American Free Trade Agreement (CAFTA). He said if CAFTA is to provide any benefit to the U.S. textile and fiber industries, two fundamental things have to happen: 1) a CAFTA that includes incentives to use US fabrics and yarns and 2) the US government must demonstrate a resolve to do something about the non-market behavior of China. 

“I’m optimistic that agreement can be reached on changes (textiles) that would be mutually beneficial to U.S. and Central American leaders,” Booker said. “If we don’t find that consensus, there will be further losses of textile jobs in North Carolina and other textile states, and Central American apparel manufacturers will not enjoy the benefits they expect from a CAFTA. Asia will dominate the U.S. apparel market, and all our regional and bilateral efforts on trade agreements will be for naught.”

Booker reiterated that the NCC believes it is critically important to establish a trading platform in the Western Hemisphere that can help the US cotton textile industry compete with textile products from Asian sources, especially China. He said NCC wants a CAFTA but not the one that has been negotiated and noted that: 1) the CAFTA that has been negotiated has not yet been ratified; 2) it is highly unlikely that it will be ratified prior to the November elections; and 3) there is no assurance that it will be ratified even after the elections.

“Congress appears to be concerned about the continual exporting of American jobs; there is a sense that trade agreements are largely responsible for U.S. bankruptcies and job losses; and there is a reluctance to ratify trade agreements that could lead to further losses,” he said. “A very few votes will determine whether we have a CAFTA. Therefore, the future of CAFTA may very well hinge on whether some changes are made in its textile provisions.”





Gin Schools Continue Successful Run

The success of the USDA/National Cotton Ginners Association (NCGA) jointly sponsored Gin Schools was evidenced by the recent 3-day school held in Lubbock, TX, that was attended by 103 gin employees from 9 states. Upcoming schools will be held at Mesilla Park, NM, May 25-27 and at Stoneville, MS, June 15-17.

For gin employees who have completed the school courses and are in the NCGA certified ginner program, a special topics course is available. This year, the course focuses on safety topics for a day, air measurement techniques for a day and a half, and a review of developing technologies at the respective gin lab for a half day. For more information and registration, visit the NCGA website, http://ncga.cotton.org.





EU Tracing/Labeling Law Coming

The European Union’s Traceability and Labeling law is set to take effect on April 18. The law requires any food product made from a biotech component to be labeled as containing the biotech ingredient in question, and to establish documentation that states each genetic event (a genetic engineering transformation) used and produced. This labeling system will affect the cotton industry’s non-fiber uses including cottonseed oil, cottonseed used for feed, and products such as preservatives or other chemicals produced from cotton linters used in food.

The law is based on the European consumer’s right to know what they will be purchasing and not on any identified human health or environmental risk. Products made with biotech ingredients (such as with biotech enzymes) are exempt from this regulation. Pharmaceuticals and mass caterers (restaurants) also are exempt from the legislation.

The NCC continues to work with industry to evaluate options, which does not preclude a WTO case.





Ron DeHaven to Head APHIS

USDA announced this week that Ron DeHaven would replace outgoing director Bobby Acord as APHIS head. DeHaven, who led the US investigation of a BSE outbreak in Washington state, will assume the top job in protecting American livestock, plants and food supplies. He served as deputy administrator of APHIS for Veterinary Services, acting as the nation’s chief veterinary official since April ’02, and served as deputy administrator for the Animal Care unit of APHIS from ’96 to ’01.





White House Ag Liaison Named

Christopher Smith, a Lawrenceville, GA, native with an agricultural background, has joined the White House Office of Public Liaison as associate director focusing on agriculture, the environment and related issues. Smith, who is familiar with US cotton issues, came from USDA’s Office of Congressional Relations and previously served as a district director for the late Sen. Coverdell (R-GA).





Texas Panhandle Votes for Eradication

Producers voted in favor of establishing an eradication zone in the 13 Texas counties that comprise the Panhandle Zone. Referendum ballots, canvassed and certified by the Texas Department of Agriculture (TDA), show that 92.86% of those voting, representing 18,500 acres or 73.93% of the zone’s acres, favored setting up an eradication zone and slightly more voted in favor of the $4 per acre assessment.

Keith Watson of Dumas was overwhelmingly elected as the director to represent the new zone on the Texas Boll Weevil Eradication Foundation’s Board.

Meanwhile, cotton producers and landowners with cotton production in the proposed St. Lawrence Boll Weevil Eradication Zone had until today to get their votes in the mail to the TDA in a referendum that will determine whether to establish a boll weevil eradication program in that 4-county zone that contains about 157,000 cotton acres. Eligible voters also will decide whether to set a maximum annual assessment of $6 per land acre of irrigated cotton and $2 per land acre of dryland cotton and will elect a zone board member to serve on the Texas Boll Weevil Eradication Foundation Board.





Cotton Incorporated Launches New TV Ad Campaign

Cotton Incorporated’s new television advertising campaign, "Floating Cotton" and "Mannequins," is targeting the organization’s key audience - women in the 18-34 age group.

"We’re very excited about this new TV campaign," says J. Berrye Worsham, Cotton Incorporated president/CEO. "The focus of the new commercials celebrates women’s passion for shopping and for clothes, and demonstrates the important role cotton plays in both."

The campaign, which replaces "The Fabric of Our Lives," will have commercials airing on 16 TV networks and 2 of the 7 new TV ads began airing April 14 on WB, Fox, Bravo, HGTV, Lifetime, TBS, TNT, Nick at Nite, The Learning Channel, VH1, E! and Oxygen.

"The new cotton ads playfully and positively acknowledge that an important part of being a woman is enjoying your clothes, wanting more clothes, and finding great pleasure in shopping for them," says Lee Garfinkle, chairman/CEO of New York’s DDB agency, which created the ads.

More than 100 different wardrobe selections are featured in the TV commercials — all made of cotton and cotton-rich fabrics. Viewers can identify specific wardrobe items by going to Cotton Incorporated’s consumer Web site, TheFabricofOurLives.com, which will continue to operate under that name.

In addition to the TV ads, DDB is charged with developing an integrated media campaign for Cotton Incorporated that will include print, the Internet and sales promotions.





Export Sales, Shipments Surge

Net export sales for the week ending April 8 were 195,400 bales (480-lb.), resulting in total ’03-04 sales of almost 13.0 million. Total sales at the same point in the ’02-03 marketing year were about 11.4 million bales. Total new crop (’04-05) sales are 996,100 bales. Shipments for the week were 498,900 bales, bringing total exports to date to 8.8 million bales, ahead of the 7.4 million at the comparable point in the ’02-03 marketing year.


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Prices Effective April 16-22, 2004

Adjusted World Price, SLM 1 1/16

54.57 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

 0.00 cents

Marketing Loan Gain Value

 0.00 cents

Import Quotas Open

1

Step 3 Quotas (480-lb. bales)

 124,941

ELS Payment Rate

23.01 cents

*No Adjustment Made Under Step I
 
Five-Day Average
 
Current 3135 c.i.f. Northern Europe

68.84 cents

Forward 3135 c.i.f. Northern Europe

 69.78 cents

Coarse Count c.i.f. Northern Europe

 65.85 cents

Current US c.i.f. Northern Europe

 67.17 cents

Forward US c.i.f. Northern Europe

 70.33 cents

 
'03-04 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-February)

 62.79 cents

**

**August-July average price used in determination of counter-cyclical payment



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