Cotton's Week: May 28, 2004

Agriculture Secretary Ann Veneman reminds producers they have until June 1, '04, to complete sign-up for the '04-crop Direct and Counter-Cyclical Payment (DCP) program. The '02 Farm Bill requires that producers sign annual contracts through '07 to participate in the DCP program, and sign up for the '04 DCP began on Oct. 1, '03.

Regulations prescribe a $100 late fee for sign up after June 1. To avoid the late fee, producers must contact their local Farm Service Agency (FSA) office prior to the June 1 deadline.

Producers will not be able to sign up for '04 DCP payments after Sept. 30, '04. Producers may opt out of participating in the program any year if they choose. Any farm enrolled in the '04 DCP, however, will retain eligibility for the '05 and subsequent DCP programs. Producers may access the relevant DCP enrollment forms on the FSA web site and then submit them to their local service center. USDA also encourages producers to access their individual Customer Statement on the USDA web site, where they can gain program information and payment history through one online source at http://customerstatement.usda.gov.

In order to insure personal identity, producers must first register online for a USDA eAuthentication Account by creating a user ID and password and confirming their e-mail. The final step requires visiting a local USDA Service Center to complete the eAuthentication process. More information on DCP is available at local FSA offices and on FSA's web site at: www.fsa.usda.gov.

USDAs Farm Service Agency (FSA) recently announced several program refinements to the Conservation Reserve Program (CRP), including important program modifications on enrollment eligibility, new software development, plans for a stakeholders' conference in June and timing of a future general CRP sign-up.

A final rule, published in the May 14 Federal Register, adopted changes made to CRP by the '02 Farm Bill, including the increase in the acreage cap by 2.8 million acres to a total of 39.2 million acres, expanding eligible acreage, extending the farmable wetlands program nationwide and permitting managed haying and grazing of CRP land. More than 16 million acres of CRP contracts will expire in '07 and another 6 million in '08.

In addition, the rule expands the "conserving use" definition to allow cropland previously enrolled in CRP that continues to be maintained as though enrolled in CRP to be considered as "conserving use." This expanded definition allows this land to be eligible for future sign-ups. In addition, the final rule adds certain marginal pasturelands for riparian buffers or similar water quality purposes as eligible land.

Earlier, USDA announced its intention to conduct another general sign-up in early '04. The agency now plans to issue the next general sign-ups details in the summer. More information on CRP is available at local FSA offices and on FSA's web site at: www.fsa.usda.gov.

The US signed a Central American Free Trade Agreement (CAFTA) with 5 countries, Costa Rica, Guatemala, El Salvador, Honduras and Nicaragua, and plans to sign free trade agreement (FTA) with the Dominican Republic in June.

The US also announced completions of negotiations on a FTA with Bahrain and that the signing of a FTA with Morocco has been scheduled for June 11. As previously reported in Cottons Week, the US and Australia signed an FTA on May 18. US Trade Representative Zoellick conceded that Congress will not be asked to vote on CAFTAs implementing legislation prior to the November elections due to time constraints and election year opposition.  He indicated the Administration will ask Congress to approve implementing legislation for the Australian FTA prior to the August Congressional recess. Several House and Senate Democrats have urged the Administration to strengthen labor and environmental provisions in CAFTA before submitting it to Congress.

The FTA with Bahrain is the first trade pact to be negotiated with a member of the Gulf Cooperation Council (GCC). In addition to Bahrain, the US has expressed interest in negotiating FTAs with other GCC countries, including Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates.

The Bahrain FTA would allow textile and apparel trade to become duty-free upon implementation provided yarn and fabrics are of US or Bahraini origin. Unfortunately, the agreement allows products that do not meet these requirements to enter the US duty-free during a transitional period. Bahrains exports to the US in '03 totaled $378 million including apparel, aluminum, fertilizer, chemicals, fuel and oil, plastic, and electrical machinery.

Net export sales for the week ending May 20 were 135,800 bales (480-lb.), resulting in total '03-04 sales of more than 13.7 million bales. Total sales at the same point in the '02-03 marketing year were about 12.3 million. Total new crop ('04-05) sales are 1.6 million bales (480-lb.).

Shipments for the week were 275,500 bales, bringing total exports to date to 10.6 million bales, ahead of the 9.2 million at the comparable point in the '02-03 marketing year.

Assistant US Trade Representative for WTO and Multilateral Affairs Dorothy Dwoskin told Washington representatives, including NCC, that progress is being made in effort to get WTO-Doha Round back on track following breakdown in Cancun last year.

During the briefing, she reviewed Ambassador Zoellick's efforts to jump-start negotiations and indicated there have been positive signs in preparation for a key meeting of the Trade Negotiating Council in late July. She acknowledged that progress in non-agriculture negotiations will be slow until agriculture talks yield results.

The agriculture negotiating group will meet the week of May 31 in Geneva and there are indications that a framework agreement on agriculture may be completed at that meeting. Negotiators have reportedly made good progress in discussions covering commitments for reductions in trade-distorting domestic subsidies and elimination of export subsidies. The sticking points continue to be market access and special and differential treatment for less developed countries (LDCs). Dwoskin explained that the so-called Singapore issues, which were in large part responsible for the breakdown in Cancun, have been narrowed to accommodate LDC concerns.

She also acknowledged that cotton has been a discussion topic and there seems to be agreement to separate the so-called cotton initiative by West Africa into trade related issues to be addressed in the WTO agriculture negotiations and development related issues to be addressed by the World Bank, USAID and other relevant agencies. She complimented the efforts of the NCC in reaching-out to West African nations to discuss cotton related issues. NCC Chairman Woody Anderson will travel to Burkina Faso in June to participate in a USDA-sponsored technical and marketing conference. NCC also is working with USDA and AID to co-host and organize a Cotton Belt tour by a West African delegation.

US and Turkish textile organizations announced that they have scheduled an international summit of textile and apparel organizations in Brussels June 15-17. The groups will discuss ways to convince the WTO to extend quotas on textiles and apparel scheduled to be eliminated Jan. 1, '05 in accordance with the 94 Uruguay Round agreement.

The National Council of Textile Organizations (NCTO) and American Manufacturing Trade Action Coalition (AMTAC) said 71 trade associations from 38 countries have endorsed the Istanbul Declaration calling for a special WTO session to discuss extending quotas beyond Jan. 1, '05. The groups are concerned that China will capture more than 50% of the world apparel market (according to a World Bank study) if quotas are eliminated as scheduled. NCTO and AMTAC spokesmen estimated the US will lose 75% of its textile and apparel manufacturing sector.

NCTO, AMTAC and other organizations, including NCC, are asking members of Congress to co-sign a letter which asks President Bush to support an emergency WTO meeting to discuss the impact of quota elimination. As of May 27, 77 House members and 13 Senators had signed on.

The NCC is urging its members to vote in the November 04 general election a process that can be made easier by going to http://cotton.helpingamericansvote.org. To register or update your voter registration, select your state from the drop-down menu. A PDF with voter registration information and the necessary form will open. Print the instructions and registration form. Once you complete the form, mail it to the address provided on the site. Members also are encouraged to forward this link to employees, family and friends.

"HelpingAmericansVote.Org" is a non-partisan service that provides information about voter registration, early and absentee voting that will inform you about voting options in your state that can make your participation easier. While the election is months away, it is never too soon to know what options are available. Many states, in fact, already are accepting absentee ballot applications.

NCC Chairman Woody Anderson said it is important that American agriculture be heard in this election.

"Most everyone realizes the diminishing representation of the farming sector and the rural economy, but agriculture is still this nations number one industry," he said.

USDA Under Secretary Rey and Council on Environmental Quality Chairman Connaughton discussed non-road diesel regulations with the news media and farm representatives after EPA announced a non-road diesel rule.

The rule, which requires new pollution controls on diesel engines used in such industries as construction, agriculture and mining, will cut the sulphur content of diesel fuel by as much as 99%. The new standards for engines will take effect between '08 and '15, depending on size. The smallest engines will be subject to the new rules first. The new rules will not require engine retrofits, rather during the phase-in as new equipment is purchased it will be in compliance.

According to Rey and Connaughton, the regulations were developed in consultation with industry and signed without a judicial challenge to application of the Clean Air Act requirements. Under Secretary Rey also explained that EQIP and other incentive-based programs will be available to assist farmers with new equipment purchases particularly in non-attainment areas.

According to the US Commerce Department, April (4-week month) total cotton consumption in domestic mills was 232.9 million pounds for a seasonally adjusted annualized rate of 6.18 million 480-pound bales. Last years April annualized rate was 7.12 million bales.

The March (5-week month) estimate of domestic mill use of cotton was lowered by 1.2 million pounds to 303.6 million. The revised seasonally adjusted annualized rate of consumption for March is 6.30 million 480-pound bales versus last years March annualized rate of 7.30 million bales.

Based on Commerce estimates from Aug. 1, '03, through May 1, '04, projected total pounds consumed during crop year '03-04 would be 3.0 billion pounds or 6.26 million (480-lb.) bales. USDAs latest estimate of '03-04 crop year mill use is 6.3 million bales. Preliminary May domestic mill use of cotton and revised April figures will be released on June 24.