Cotton's Week: October 8, 2004

Cotton's Week: October 8, 2004


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House Passes Disaster Assistance Package

The House passed a $10.9 billion disaster assistance package including expanded coverage for agriculture losses due to drought and hurricanes.

During debate on the supplemental funding measure, which included disaster assistance for ’04 crop losses due to hurricanes, the House approved by voice vote an amendment co-sponsored by Agriculture Committee Chairman Goodlatte (R-VA) and Rep. Neugebauer (R-TX). The amendment expands disaster assistance to include drought and, if enacted, would allow producers to choose to apply for assistance for ’03 or ’04 weather-related losses. The bill, as amended, stipulates that producers are eligible to receive assistance, including crop insurance and salvaged crops, totaling up to 95% of the crop’s value.

The estimated cost of the expanded coverage is offset by placing a spending cap on the Conservation Security Program (CSP). An amendment co-sponsored by Reps. Stenholm (D-TX), Neugebauer (R-TX) and 33 members to provide expanded assistance without offsets was rejected by the rules committee, which refused to allow it to be made in order to be offered during debate on the supplemental. In a news release, Chairman Goodlatte stated he would have preferred to provide the assistance without offsets, but concluded it would not be accepted by Congressional leaders or the White House.

The NCC joined 23 other commodity and farm organizations in urging Congress not to modify the farm law in order to generate spending offsets. The groups reiterated their longstanding concerns that modifications to the law would jeopardize the fragile coalition that worked for its enactment. Following House approval of the expanded coverage with the offset, the groups urged the Conferees to retain the disaster assistance funding, but to eliminate the offset - noting that the agriculture assistance was the only provision that included an offset.

At press time, Congress, working against a deadline of recessing for the elections, was debating how to proceed on disaster assistance. While the House has approved free-standing legislation, the Senate previously included hurricane and drought relief in the FY05 Homeland Security funding measure. Conferees on that measure had accepted a $2.5 billion dairy amendment extending dairy price supports beyond FY05 and were debating the level of disaster assistance and the need for funding offsets.

If Congress fails to act on disaster relief prior to recessing, the measure could be considered when Congress returns in mid-November.

NCC Comments on CSP

NCC submitted comments to USDA regarding the Interim Final Rule for the Conservation Security Program (CSP), which was created in the ’02 farm law to reward producers for conservation practices on working lands.

Earlier this year, NCC submitted comments and joined other national agricultural organizations to submit comments on the Proposed Rule. The Interim Final Rule corrected many of the issues that NCC raised in its initial comments, including the definition of agricultural operation, defining the control of land and the program’s payment rates.

The Natural Resources Conservation Service (NRCS) conducted the initial CSP sign-up this summer based on the Interim Final Rule. While the number of eligible watersheds that included significant cotton production was limited, discussions with successful applicants and NRCS officials indicate the first signup was a success. There was a high ratio of individuals who applied and were accepted into the program.

NCC’s comments regarding the Interim Final Rule were based largely on what was learned from the initial sign-up. The comments encouraged NRCS to continue to allow state and district conservationist flexibility to address local concerns. NCC also encouraged NRCS to provide more educational efforts to ensure that producers understand the program and what they can do to better position themselves for program enrollment. Because CSP is being implemented based on watersheds, NCC pointed out that these watersheds should be geographically diverse and that NRCS should publish a timetable of when specific watersheds would be program eligible.

Senate Approves Bankruptcy Legislation

The Senate approved legislation that would extend Chapter 12 of the federal bankruptcy code, which provides bankruptcy protections for farmers. The Senate bill (S 2864) would extend Chapter 12 until June 30, ’05, and retroactively to Jan. 1, ’04.

A companion bill has been introduced in the House, but is not expected to be considered before Congress recesses for the elections. The legislation would be considered when Congress returns for a lame-duck session in mid-November.

Export Tax Repeal Bill Passes House

The House approved, on a vote of 280-141, legislation to repeal the US export tax regime and replace it with broad-based tax relief. The current tax, known as FSC/ETI, twice has been ruled illegal by the WTO.

The conference report (H. Rpt. 108-755) was approved by a strong, bipartisan majority.  The Senate was scheduled to begin work on the measure Oct. 8 but may not complete work until returning in a lame-duck session in mid-November. Ultimately, the Senate is expected to pass the measure by a solid majority, but faces a possible delay while some Senators protest the failure to include Food & Drug Administration regulation of tobacco in the buy-out package.

In addition to providing broad-based tax reductions for domestic manufacturers, the legislation became a vehicle for numerous other select provisions including:  elimination of federal tobacco-quotas and in their place a $9.6 billion compensation package for quota owners; tax credits for production of alcohol and bio-diesel fuels, as well as for energy generated from renewable resources; expansion of the current rule allowing deferral of income received for livestock sales due to drought, flood or other weather-related conditions; a host of provisions to reform and simplify the US international tax rules; and a provision to provide more equivalent federal tax treatment for taxpayers in states that impose only a sales tax as opposed to state and local taxes.

According to the Joint Committee on Taxation, the legislation is budget neutral as it contains a number of provisions to raise additional revenues in addition to the revenues generated by eliminating the FSC/ETI regimes.

Chinese Safeguard Petition Filed

A petition was filed requesting safeguards on cotton trousers imported from China. The petition, filed on behalf of the National Council of Textile Organizations, the American Manufacturing Trade Action Committee, the National Textile Association, an apparel association and a union, asks the Committee for the Implementation of Textile Agreements (CITA) to determine that the lifting of quotas in Jan. ’05, along with an expected surge in imports of the product from China at that time, threaten the US market for cotton trousers with market disruption, warranting the imposition of import restrictions.

The action is taken in accordance with the US-China WTO Accession Agreement, which authorizes special textile safeguards in the event Chinese imports threaten the orderly development of trade due to market disruption.

If CITA accepts the petition and determines that Chinese cotton trouser imports do threaten the US market with market disruption, then Chinese product imports can be restrained for 1 year at a level that limits growth to 7.5% above current import levels. CITA has 15 days to determine whether to accept the petition for investigation. If CITA accepts the petition, it will initiate a public comment period on whether the import restraints should be imposed.

The petition demonstrates that China is increasing its textile and apparel production capacity at unprecedented rates. China's ability to disrupt the US market is clearly evident from recent experience. In virtually every apparel category where quotas were removed in ’02, China has increased its imports to the US substantially, while dramatically cutting prices. Special textile safeguards are limited to the specific product categories for which they are filed and they are temporary in nature.

Quota Phase-Out Review Sought

Following the Council on Trade in Goods (CTG) session in Geneva on Oct. 1 (see 10/1 Cotton’s Week), the Global Alliance for Fair Textile Trade (GAFTT) issued the following, “Today was an historic day for millions of textile and apparel workers around the world whose livelihoods are threatened by countries that use unfair trade practices in order to monopolize world trade in textiles and apparel. According to reports, governments from nearly 30 countries around the world demanded that the World Trade Organization undertake an urgent review of the impact of the (Jan. 1, ’05) quota phase-out and propose solutions to prevent the impending crisis.”

GAFTT said this dramatic breakthrough came after the CTG devoted 7 hours to hear from countries that fear that tens of millions of jobs may be lost in the global textile sector following the quotas phase-out.

While GAFTT is pleased that the WTO has agreed to address the concerns of member countries on the quota expiration issue, there also must be effective action to prevent a few countries from overwhelming the marketplace while the WTO reviews a comprehensive solution to the textile crisis. GAFFT urges that major importing countries recognize the need to employ the special textile safeguard in recognition of the concerns expressed by so many countries. Given the fact that quotas will expire in 3 months time, GAFTT urges the WTO to place this issue on the CTG’s permanent agenda and move quickly to propose realistic and effective solutions to this global crisis.

WideStrikeTM Gets Full EPA Registration

Dow AgroSciences LLC has received full registration for WideStrikeTM Insect Protection from the EPA, clearing the new cotton trait for market introduction in ’05.

WideStrike is a stacked insect-protection trait that expresses 2 Bacillus thuringiensis (Bt) proteins – Cry1F and Cry1Ac – in cotton plants, providing season-long protection from a broad spectrum of destructive cotton pests. Results from more than 3 years of field trials – including work conducted under EPA Experimental Use Permits in ’03 and ’04 – show that WideStrike offers control of worm pests such as cotton bollworm, tobacco budworm, beet armyworm, fall armyworm, soybean loopers, cabbage loopers and pink bollworm.

In ’05, WideStrikeTM Insect Protection will be available in 3 new cotton varieties from PhytoGen Seed Company - alone and also stacked with the Roundup Ready® technology.

’05 Beltwide Pre-Registration Begins

Pre-registration has begun for the ’05 Beltwide Cotton Conferences, Jan. 4-7 at the New Orleans Marriott and Sheraton New Orleans hotels. Pre-register online by going to the Beltwide web site at The Beltwide site also includes a tentative schedule, housing information and more.

A ’05 Beltwide Cotton Conferences information booklet is being mailed to previous and potential forum attendees.

Exports Continue Strong Pace

Net export sales for the week ending Sept. 30 were 150,300 bales (480-lb.), resulting in total ’04-05 sales of almost 6.0 million. Total sales at the same point in the ’03-04 marketing year were about 4.2 million bales. Total new crop (’05-06) sales are 170,600 bales.

Shipments for the week were 106,800 bales, bringing total exports to date to 1.2 million bales, below the 1.5 million bales at the comparable point in the ’03-04 marketing year.

Let Your Voice Be Heard: Vote!

Prices Effective October 8-14, 2004

Adjusted World Price, SLM 1 1/16

38.42 cents


Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

0.00 cents

Marketing Loan Gain Value

13.58 cents

Import Quotas Open


Step 3 Quotas (480-lb. bales)


ELS Payment Rate

28.88 cents

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

53.48 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

 50.67 cents

Current US c.i.f. Northern Europe

 53.50 cents

Forward US c.i.f. Northern Europe

 No Quote

2003-04 Weighted Marketing-Year Average Farm Price  
Year-to-Date (August-July)

62.23 cents


**August-July average price used in determination of counter-cyclical payment. Preliminary price. Final MYA Farm Price scheduled to be released later this month.

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