Cotton's Week: June 3, 2005

Cotton's Week: June 3, 2005

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Administration Proposes Response to Brazil WTO Cotton Case

Senior officials of the Dept. of Agriculture, including Deputy Secretary, Chuck Conner and Under Secretary J.B. Penn, met with NCC Chairman Woods Eastland and indicated that the Administration will soon submit legislation to Congress necessary to comply with the recent World Trade Organization (WTO) ruling against the US cotton program.

The officials speculated that such legislation likely would be included in a budget reconciliation package that is widely expected to be enacted in the fall of ’05.

In a separate meeting with a broad group of agricultural interest organizations involved with the Export Credit Working Group (ECWG), Administration officials indicated their intentions regarding bringing the export credit guarantee program into compliance with the WTO ruling. The officials stated that they planned to seek legislation making adjustments in the program in order to ensure the program was linked to the risk associated with sales into specific markets.

The officials stated that in their opinion, if the adjustments they propose for the Step 2 and export credit programs are taken, the United States would have addressed the prohibited subsidy component of the ruling and also would have taken the necessary steps to address the ruling concerning serious prejudice. Additionally, they noted their intent to make the proposal public following discussions with Congress and Brazilian officials.

NCC Chairman Eastland stated, “We have committed to working with the Administration and Congress to develop a proper response to the WTO ruling. The proposals being discussed by the Department of Agriculture will have a significant and profound impact on the U.S. cotton industry. The National Cotton Council’s farm policy task force will review and evaluate these recommendations as soon as possible.”

(The NCC's web site, www.cotton.org, will carry updates to this story as they are made available.)



Cotton Leadership Program ’05-06 Application Deadline Near

July 1 is the deadline for industry members to apply for the ’05-06 Cotton Leadership Class. Applicants are encouraged to visit http://leadership.cotton.org to review program curriculum, eligibility requirements and download the application. Contact NCC’s Member Services at 901-274-9030 or your local Member Services Representative for additional information.

The Cotton Leadership Program strives to identify potential industry leaders and provide them developmental training during 5 week-long sessions across the Cotton Belt. The class, comprised of 4 producers and a participant from each of the other 6 industry segments, visits with industry leaders and observes production, processing and research facilities. They also meet with lawmakers and government agency representatives during a visit to Washington, DC, and attend the NCC’s annual meeting and its mid-year board of directors meeting.

The program, initiated in ’83, is supported by a grant to The Cotton Foundation from DuPont Crop Protection.



Industry Leaders Conveying CAFTA Benefits

On May 27, NCC Vice Chairman Allen Helms, Jr. participated in a press conference regarding the benefits of the Dominican Republic – Central American Free Trade Agreement (DR-CAFTA) to the US cotton industry. The Little Rock, AR, event, sponsored by the Arkansas Farm Bureau Federation, was attended by Secretary of Agriculture Mike Johanns, and also featured representatives from Wal-Mart, Tyson Foods and other Arkansas agricultural and business interests.

In his remarks, Helms, a Clarkedale, AR, producer/ginner, reiterated the NCC’s support for the current DR-CAFTA and explained why the NCC stands with Secretary Johanns and the Administration in urging Congress to endorse the DR-CAFTA.

“This agreement will provide the U.S. the best opportunity for supplying apparel manufacturers and other end-use manufacturing industries in the Western Hemisphere with U.S. cotton fiber and U.S.-produced cotton textile products,” Helms said.

He noted that the DR-CAFTA market, which is comprised of Costa Rica, El Salvador, Guatemala, Honduras, Nicaragua and the Dominican Republic, imports 13% of the US cotton crop or 2.7 million US bales. That is a combination of 200,000 bales of raw cotton and 2.5 million bale equivalents purchased as yarn and fabric manufactured by the US textile industry.

Prior to the panel discussion, Secretary Johanns had met with rice and cotton farmers in the state about the federal budget and the need for sound farm policy. Helms reminded the Secretary that America’s cotton producers as well as all farmers need a strong financial safety net which the farm bill provides to cope with vagrancies such as price and weather.

Meanwhile, the NCC urges industry leaders to continue contacting their Congressional members to express their support for CAFTA. State fact sheets outlining CAFTA benefits for cotton are available at www.cotton.org/issues/2005/stateecon.cfm where there also is a link to USDA’s CAFTA fact sheets for all commodities. The NCC also is distributing releases to daily and weekly newspapers pointing out both the cotton industry’s and the CAFTA’s economic contributions to the individual Cotton Belt states.

On Tuesday, former NCC Chairman Robert McLendon, a Leary, GA, producer, will testify about the CAFTA benefits at a Senate Agriculture Committee hearing.



Importer Requests Withdrawal of Promotion Petition Before USDA

Citetac, an importer of cotton apparel, requested that it be allowed to withdraw its administrative petition attacking the constitutionality of the Cotton Research and Promotion Program. The withdrawal of this petition ends one of the recent attacks on the Cotton Research and Promotion Program. Another suit against the program is still pending in the US Court of International Trade.

John Pucheu, chairman of the American Cotton Producers, stated, "This announcement is great news for the U.S. cotton industry and our very successful promotion program. The decision to withdraw the petition is reflective of the recent Supreme Court case which ruled in favor of the beef promotion program. I hope that other challenges to the promotion programs are also withdrawn."



NCC Testifies at China Trade Hearing

NCC Director Tom Stallings testified before a joint subcommittee hearing in the House Small Business Committee at the invitation of Rep. Barrow (D-GA). The subcommittee heard testimony from business and agriculture representatives about trade with China.

Stallings told the subcommittee that there are few trading relationships more complex than that between the US cotton industry and China. He explained that China is an important customer for US cotton exports, but Chinese textile and apparel exports have grown at a rate that has seriously injured the US textile industry. He explained that an artificially weakened currency, tax rebates to stimulate exports, non-performing loans that provide capital at virtually no cost, and unchecked piracy of trademarks and brands provide Chinese exporters a significant unfair advantage in world markets.

Stallings also explained that while China is importing significant volumes of US cotton, there continue to be problems with the Administration of tariff rate quotas, contractual issues and concerns about standards.

He noted that the US cotton industry: 1) continues to work closely with USDA, the US Trade Representative’s office, and Chinese government and private sector officials to address these concerns, 2) supports US efforts to encourage China to allow her currency to be valued by the market instead of artificially pegged to the US dollar and 3) supports the use of textile safeguards consistent with the WTO accession agreement.

The subcommittee also heard from manufacturers who expressed grave concern about Chinese firms’ piracy of US technology and a variety of trade practices that place US manufacturers at a significant disadvantage.



NCC Participates in WTO Conference

Speaking before a New Orleans, LA, conference on “WTO Impacts on U.S. Farm Policy,” NCC Vice President Gary Adams said that the implications of the Brazilian cotton case bear on many facets of the current Doha round of talks.

He noted it is imperative that some type of shield from claims of serious prejudice be contained in any future agricultural agreement. If the US is to agree to negotiated reductions in domestic agricultural support how can it also be subject to claims of serious prejudice, he pointed out.

Dr. Adams stressed the importance of maintaining the comprehensive approach to the agricultural talks and that attempts to single out commodities only would bog down the negotiations. Finally, Dr. Adams reported that the application of the non-agricultural subsidies code to agricultural programs, as conducted by the recent panel, was inappropriate and protection from such action in the future was necessary.



Sales, Shipments Steady

Net export sales for the week ending May 26 were 116,500 bales (480-lb). This brings total ’04-05 sales to almost 14.6 million bales. Total sales at the same point in the ’03-04 marketing year were about 13.8 million. Total new crop (’05-06) sales are 1.0 million bales.

Shipments for the week were 266,700 bales, bringing total exports to date to 10.4 million bales, compared with the 10.9 million at the comparable point in the ’03-04 marketing year.


Prices Effective June 3-9, 2005

Adjusted World Price, SLM 11/16

41.24 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

 2.84 cents

Marketing Loan Gain Value

10.76 cents

Import Quotas Open

 2

Step 3 Quotas (480-lb. bales)

 240,286

ELS Payment Rate

77.74 cents

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

54.35 cents

Forward 3135 c.i.f. Northern Europe

56.44 cents

Coarse Count c.i.f. Northern Europe

54.90 cents

Current US c.i.f. Northern Europe

57.19 cents

Forward US c.i.f. Northern Europe

58.81 cents

 
2004-05 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-April)

42.83 cents

**

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

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