Cotton's Week: October 1, 2004

The House Agriculture Committee approved the “Specialty Crops Competitiveness Act of 2004,” which was co-authored by Reps. Ose (R-CA) and Dooley (D-CA).

As approved by the Committee, the bill would provide – subject to appropriations – funds for a variety of programs designed to enhance production, marketing, research and promotion programs for specialty crops. It would provide a total of $54 million per year for: block grants to promote specialty crops; funds for USDA’s Animal & Plant Health Inspection Service (APHIS) to expedite review of sanitary and phytosanitary barriers to exports; APHIS emergency response activities related to invasive pests and diseases; research activities; and training programs at a Fredericksburg, VA, facility.

During the markup, Rep. Pence (R-IN) offered an amendment that would have removed the restrictions on planting fruits and vegetables, for processing, on base acres on a farm without a production history as long as payments are reduced on an acre for acre basis. The amendment was withdrawn.

Rep. Dooley expressed his disappointment that the bill being considered by the Committee was significantly less than the version originally introduced and that the funding was not mandatory. He offered an amendment to reduce Direct Payment on an across-the-board basis to generate $220 million annually to fund block grants. The amendment was defeated on a voice vote. He then offered and withdrew an amendment to reduce payment limitations and eliminate certificates - explaining that if funds aren’t made available for specialty crops, their organizations will be forced to organize coalitions which seek to fund programs through amendments like payment limitations or other matters.

The NCC worked with other commodity and farm organizations to urge the Committee members to reject all amendments that would open the current farm law. The bill, as adopted by the Committee, does not shift funds from existing programs nor does it include amendments to current law.

Congressional leaders and the Administration continued to discuss disaster assistance legislation. A final decision is expected the week of Oct. 4 so action can be taken before Congress recesses for elections.

As previously reported in Cotton’s Week, an amendment added to the Senate version of the Homeland Security Funding bill would provide disaster assistance for crop losses suffered in either ’03 or ’04 at the producer’s option. The Administration has submitted its third request for $7.1 billion in funding bringing the total of all requests to $12.1 billion to cover hurricane damage. The request includes an estimate of $400 million for agricultural losses.

Congressional leaders are debating whether to use the Homeland Security bill as a vehicle for funding disaster relief or whether to draft free-standing legislation.  Additionally, Midwestern members are adamant that drought losses should be covered by any disaster assistance package. However, a coalition of conservative House members is insisting the cost of assistance for drought-related losses be offset by reductions in farm program spending.

The NCC has worked closely with Extension services to develop accurate loss estimates and is working with Congressional members and farm organizations to urge approval of a comprehensive disaster assistance program, which covers losses suffered due to weather-related events in ’03 and ’04.

“The National Cotton Council is committed to working with Congress to get the disaster relief to affected cotton producers,” NCC Chairman Woody Anderson said.

While damage from Hurricane Jeanne is still being tallied, preliminary estimates from the first 3 storms obtained by NCC from its members and state Extension personnel show that about 750,000 bales valued at more than $205 million were lost in Georgia, Alabama and Florida. The estimates, which reflect both the lost lint and cottonseed, are:  Alabama, about 275,000 bales valued at $77 million; Georgia, more than 400,000 bales valued at $112 million; and Florida, about 60,000 bales valued at $17 million. The estimates, which do not reflect losses that will be sustained from the quality discounts on cotton that producers do manage to harvest, will be re-assessed as harvest progresses.

Georgia Extension economist Don Shurley said that because Jeanne hit the same areas in Georgia with the same intensity as Frances and because producers in that state were further along in the production process, it is possible they may suffer additional losses.

Textile trade associations from around the world urged the World Trade Organization (WTO) to comprehensively address the impact of the impending Jan. 1, ’05 expiration of clothing and textile quotas on dozens of its member countries. The 147-member WTO convened on Oct. 1. To date, 96 trade associations from 54 countries have called on the WTO to extend quotas for at least 3 years.

The textile associations’ request came as Bangladesh, the Dominican Republic, Fiji, Madagascar, Mauritius, Sri Lanka and Uganda put forward a paper on the quota phase-out impact on the formal agenda of the Oct. 1 WTO Council on Trade in Goods (CTG) meeting. The paper included a proposal calling for: 1) the CTG to conduct a WTO study, to be completed by Jan. 1, that would identify the adjustment-related issues and costs associated with the phase-out, including recommendations on measures to address such issues and (2) establishment of a Work Program with a view to finding solutions to the problems identified.

Prior to the CTG session in Geneva, the 54 member Global Alliance for Fair Trade in Textiles (GAFTT) representatives briefed more than a dozen WTO missions in preparation for that meeting. Private meetings were held with other WTO missions and - because of what GAFTT deems is the extraordinary threat that world trade in textiles and apparel faces – it called for the following actions: 1) beginning with its upcoming meeting on Oct. 1, ’04, the WTO must begin a review of the impact of the quota phase-out and of how market distorting trade practices threaten to monopolize trade in this vital sector in the hands of 1 or 2 countries; 2) the WTO must develop new instruments as part of the Doha Round to prevent the textile and clothing sector from being monopolized in the future; 3) governments should immediately and effectively implement the WTO China textile safeguards to prevent China from monopolizing worldwide textile and apparel trade; and 4) governments whose textile and clothing industrial sectors export to the United States and the European Union must let those countries know that they support immediate and effective use of the China textile safeguard. This means that safeguards should be invoked on threat of market disruption rather than waiting for actual market disruption to occur.

GAFTT said world trade in textiles and clothing is at a critical stage and “decisions made over the next several months will determine whether up to 30 million jobs around the world will be lost to China or whether a fair and beneficial trading system for this vital sector will be allowed to develop.” It said the World Bank predicts that China will capture half the world’s apparel trade once quotas are removed and that a recent WTO study has predicted China and India will take a 71% share of the global market.A US textile industry study has shown that after the quota phase-out, millions of jobs - more than 600,000 in the United States – will be lost.

Leaders from 30 apparel manufacturing companies in 6 CBI region countries visited US textile operations to learn how to source US yarns and fabrics.

Cotton Council International (CCI), in cooperation with Cotton Incorporated, hosted the COTTON USA CBI Manufacturers Tour and its participants from Guatemala, El Salvador, Honduras, Costa Rica, Nicaragua, Dominican Republic and Haiti.

Hosts included: Alice Mills, Inc., Easley, SC; American & Efird, Inc., Mount Holly, NC; Ameritex Yarn, LLC, Burlington, NC; Arca Knitting, Inc., Hialeah, FL; Buhler Quality Yarns Corp., Jefferson, GA; Carolina Cotton Works, Inc., Gaffney, SC; Cheraw Yarn Mills, Inc., Cheraw, SC; Four Leaf Textiles, LLC, Shelby, NC; Frontier Spinning Mills, Sanford, NC; National Textiles, LLC, Winston-Salem, NC; Parkdale Mills, Inc., Gastonia, NC; R.L. Stowe Mills, Inc., Belmont, NC; Ramtex, Inc., Ramseur, NC; Spectrum Dyed Yarns, Inc., Kings Mountain, NC; Swift Spinning Mills, Inc., Columbus, GA; Tuscarora Yarns, Inc., Gastonia, NC; and Wellstone Mills, Greenville, SC.

“This is an excellent opportunity for the US cotton textile industry to highlight its commitment to quality and efficiency and to boost its exports into a very important market,” said CCI President Robert W. Norris. “On the eve of the removal of textile quotas, all of these host US textile firms are committed to surviving and thriving as they supply high quality competitive raw materials quickly to the CBI region.”

Prior to the mill visits, the CBI participants - some of the largest knitters and apparel makers in that region - attended a seminar in Atlanta. Research specialists from Cotton Incorporated, North Carolina State U. and TC(2) discussed the production of better knit fabrics knit apparel as well as innovations in dyeing and finishing.

Net export sales for the week ending Sept. 23 were 246,700 bales (480-lb.), resulting in total ’04-05 sales of slightly more than 5.8 million. Total sales at the same point in the ’03-04 marketing year were about 3.8 million bales. Total new crop (’05-06) sales are 170,600 bales.

Shipments for the week were 63,700 bales, bringing total exports to date to 1.1 million bales, below the 1.3 million at the comparable point in the ’03-04 marketing year.

According to the Commerce Department, August (4-week month) total cotton consumption in domestic mills was 241.6 million pounds for a seasonally adjusted annualized rate of 6.51 million (480-lb.) bales. Last year’s August annualized rate was 6.39 million bales.

The July (4-week month) estimate of domestic mill use of cotton was raised by 677,000 pounds to 222.9 million. The revised seasonally adjusted annualized rate of consumption for July is 6.42 million bales. This is lower than last year’s July annualized rate of 6.62 million bales.

Preliminary September domestic cotton mill use and revised August figures will be released by the Commerce Department on Oct. 28.

Discussion between NCC staff and USDA-APHIS has resulted in the creation of the NCC Phytosanitary Accreditation Protocol Task Force. That panel, to be chaired by North Carolina warehouseman Coalter Paxton, III, will work at harmonizing the accreditation processes throughout APHIS.

This is necessary as recent shifts by USDA and Homeland Security have prompted changes in APHIS personnel and procedures affecting phytosanitary inspections and certificates on US raw cotton. These shifts, in concert with increased US cotton exports, have prompted the US cotton industry to focus on procedural efficiencies to ensure US cotton’s continued timely flow into world markets. 

The NCC’s Electronic Documents Task Force, meanwhile, will address a parallel need - the development and implementation of electronic phytosanitary documents. Both panels will report progress on these efforts to the NCC’s Cotton Flow Committee at the ’05 NCC annual meeting.