Cotton's Week: August 26, 2005

Cotton's Week: August 26, 2005

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Sen. Frist Thanked for Hearing Producers

The NCC commended Sen. Frist (R-TN) for listening to W. Tennessee farmers’ concerns at a NCC-sponsored meeting in Brownsville, TN, that was attended by a standing room only gathering of 200-plus.

During the question/answer session that followed Frist’s remarks, Stoney Hargett, an Alamo, TN, producer, thanked the Senate Majority Leader for his work on the ’02 farm law and asked for his help on preserving the integrity of the cotton program in the ’07 farm bill “so our kids can keep farming.”

“Senator, I think you understand the one area we (cotton producers) need for you to stand firm on, and that’s payment limits,” Hargett said.

John Lindamood, a Tiptonville, TN, producer, told Sen. Frist that “we have a farm program that is currently working, that’s fiscally sound, budgetary responsible due to the counter cyclical nature of the program and the access to the non-recourse loan. He said this is unlike the previous program that “left us guessing whether we would have payments, when we would have payments, whether there was going to be ad hoc disaster payments.” He noted that, “the current law provides a constant, perhaps below cost of production floor, but a floor none the less that allowed us to plan into the future, to invest in the infrastructure of agriculture and our communities, to secure financing, and make long term plans for equipment, capital, labor.”

NCC President/CEO Mark Lange expressed appreciation for Sen. Frist’s recognition of cotton and agriculture’s significance to Tennessee’s economy. Lange said the Senator could continue his long-standing support for Tennessee’s farmers by conveying to his Congressional colleagues the importance of: 1) maintaining the current farm law through its scheduled ’07 expiration and 2) preserving a position of strength as the US participates in WTO Doha Round trade negotiations.

“It is vital for the U.S. to maintain a stable and predictable agriculture policy that addresses commodity, nutrition, conservation, risk management and research programs in a balanced manner like the current law,” Lange said. “Mid-term changes to the current farm law, especially further limiting access to the financial safety net when prices are low, are not in the best interest of the rural economy -- an engine for our national economy.

“If current limits on-farm program benefits and eligibility requirements are dramatically changed in the middle of the farm law, commercially viable family farms, particularly those that produce cotton, rice and peanuts, will be particularly hard hit. This constant threat of mid-term changes not only affects farmers’ ability to respond to market signals and make well-founded cropping, marketing and investment decisions, but it also impacts lenders, suppliers and agribusinesses. In short, it is bad for business and the rural economy.”

Lange explained that the current law not only has strict limits and eligibility requirements, the ’02 farm law also added a means test to ensure individuals with high, non-farm income don’t qualify for benefits. He also noted that changes in current limits in program benefits could make it even more difficult for beginning farmers and small operators with limited resources to obtain production financing.

During the Q/A session, Frist acknowledged the producers’ farm law concerns and noted that several made good points. Earlier in his remarks, he told the attendees there was little help in sight on the energy problem, despite the passage of a long-delayed energy bill.

"That's going to give us clean and affordable fuel but it's going to take some time," Sen. Frist said, adding that the country was "dangerously dependent" on foreign oil.

"We thought we were paying a big price at 60, 65 cents (a gallon), and now road diesel is at $2.50," said J.W. Sweat, a Ripley, TN, producer. "That takes a big toll on you. We've got to get some help."

The NCC also presented Sen. Frist with an appreciation letter which also asked for his support for maintaining current law to its scheduled expiration at the ’07 crop year’s end and for his opposition to changes in the current benefits’ limitations.

The letter noted that when Congress returns in September, the agriculture committees will complete work on their portion of the budget reconciliation package by recommending changes to programs under their jurisdiction that the Congressional Budget Office says will reduce outlays by $3.0 billion over 5 years.

“We understand the importance of addressing our budget deficit and appreciate the work you and Chairman Chambliss did to ensure that agriculture was assigned its fair share of the deficit reduction effort,” the letter stated. “We also believe the Committee can achieve its assigned savings and meet the Chairman’s stated objective of preserving the structure of the 2002 farm law, while treating each program, commodity and region fairly. However, we continue to be concerned by the constant thereat of amendments that would deny access to programs when prices are low and they are most needed.”



NCC Leaders Named to Trade Panels

Agriculture Secretary Mike Johanns and US Trade Representative (USTR) Rob Portman announced the appointment of private sector members to the Agricultural Policy Advisory Committee for Trade (APAC) and to the 6 Agricultural Technical Advisory Committees for Trade (ATAC). Members will serve until May ’07.

NCC President/CEO Mark Lange was named to the APAC, which provides the Secretary of Agriculture and the USTR with advice and information on negotiating objectives, bargaining positions and other matters related to the development, implementation and administration of US agricultural trade policy.

The 6 ATACs offer technical advice and information on specific commodities. Named to the Tobacco, Cotton, Peanuts, and Planting Seeds ATAC were: Mississippi producer Kenneth Hood, Texas producers Dale Artho and Kenneth Dierschke, Missouri producer Chuck Earnest, and Alabama merchant Robert Weil, II. Also named were Billy Carter, Jr., North Carolina Cotton Producers Assoc.; Thomas W. Smith, AMCOT; Gary Adams, NCC’s vice president, Economics and Policy Analysis; and Bill Gillon, NCC’s counsel and advisor on trade issues.

Congress established the advisory committees in ’74 to ensure a private sector voice in establishing US agricultural trade policy objectives to reflect US commercial and economic interests. USDA and USTR jointly manage the committees.



Chambliss Applauds Presidential Nomination

Sen. Chambliss (R-GA), chairman of the Senate Committee on Agriculture, Nutrition and Forestry, praised President Bush’s nomination of James M. Andrew of Waynesboro, GA, to be the Administrator of Rural Utilities Service at USDA.

The federal agency provides utilities assistance including electricity, water and telecommunications. Andrew currently serves as a consultant for BAS, Inc., in Waynesboro.



Africans Finish Entomology Training

Entomologists from Mali, Burkino Faso, Benin and Chad completed 2 weeks of classroom lectures and visits to farms and research locations as part of entomology training.

The third of 4 such training projects in cooperation with these countries was funded by NCC and the US Agency for International Development (USAID), and Tuskegee U. served as a contractor.

Program development was done cooperatively with NCC and Tuskegee staff. The program stressed biotechnology’s importance as a means of 1) improving insect control, yields and farmer income and 2) decreasing chemical use, hand labor inputs, and improving quality of life in the participating countries. The African contingent visited farms in Georgia, the Mississippi research facilities of USDA-ARS, Monsanto, and Delta & Pine Land companies, and Louisiana State U.’s Northeast Research Station in St. Joseph to learn about biotech cotton.

In addition to the entomology program, projects in cotton classing and soil fertility were conducted earlier in the summer. A ginning program is scheduled in the future.


Congressional Staffers Tour Western Cotton Operations

Legislative assistants representing 11 key House and Senate offices visited the Lubbock and Phoenix areas where they met local grower leaders and toured USDA research facilities including the ARS gin lab and plant breeding facility in Lubbock and the Pink Bollworm rearing and aflatoxin facilities in Phoenix.

In Lubbock, the group was briefed on local issues and crop conditions by the Plains Cotton Growers, received a progress report on the Texas Boll Weevil Eradication Program, and toured the PYCO Oil Mill, Farmers Coop Compress, and the American Cotton Growers denim mill. In Phoenix, the group met with representatives of the Arizona Cotton Growers Assoc., Arizona Cotton Ginners Assoc., and Supima, and toured USDA and Arizona Cotton Improvement facilities. They also toured the Hoover Dam as guests of the US Dept. of Interior where they learned more about the role of the Bureau of Reclamation in delivering irrigation water to agricultural lands.

The annual orientation and education programs for Congressional staff are made possible by a grant from Monsanto to The Cotton Foundation.


Mill Cotton Use Declines Some

According to the Commerce Dept., July (4-week month) total cotton consumption in domestic mills was 220.7 million pounds for a seasonally adjusted annualized rate of 6.40 million (480-lb) bales. Last year’s July annualized rate was 6.63 million. The June (5-week month) estimate of domestic mill cotton use was raised by 1.6 million pounds to 289.6 million. The revised seasonally adjusted annualized rate of consumption for June is 6.27 million bales. This is lower than last year’s June annualized rate of 6.30 million.

Commerce’s estimate of both upland and ELS consumption of cotton by US mills, when adjusted to represent the complete ’04-05 crop year, is 6.27 million bales. This mill use level, when combined with an export number of 14.0 million bales, would imply ending stocks of 6.43 million bales for the ’04-05 crop year, which is in line with USDA’s August WASDE estimate of 6.5 million bales. However, this is higher than Commerce’s estimate of 5.5 million bales for stocks on hand as of July 31, ’05.

Both USDA and Commerce estimates for ending stocks are still subject to review. USDA’s next supply and demand estimates are scheduled to be released on Sept. 12. Preliminary August domestic mill use of cotton and revised July figures will be released by Commerce on Sept. 29.



Sales, Shipments Stay Healthy

Net export sales for the week ending Aug. 18, ’05 were 422,300 bales (480-lb). This brings total ’05-06 sales to about 5.2 million. Total sales at the same point in the ’04-05 marketing year were slightly more than 5.0 million bales. Total new crop (’06-07) sales are 106,900 bales.

Shipments for the week were 328,400 bales, bringing total exports to date to 932,800 bales, compared with the 601,900 bales at the comparable point in the ’04-05 marketing year.



Prices Effective Aug. 26-Sept. 1, 2005

Adjusted World Price, SLM 11/16

37.43 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

2.69 cents

Marketing Loan Gain Value

14.57 cents

Import Quotas Open

 0

Step 3 Quotas (480-lb. bales)

 0

ELS Payment Rate

0.00

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

52.91 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

50.97 cents

Current US c.i.f. Northern Europe

55.60 cents

Forward US c.i.f. Northern Europe

No Quote

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

42.84 cents

**

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

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