|NCC Supports ’02 Law’s Structure|
NCC Chairman John Pucheu participated in a farm bill hearing conducted by the House Agriculture General Farm Commodities and Risk Management Subcommittee. Chaired by Rep. Etheridge (D-NC), the Subcommittee heard farm policy proposals by commodity groups and their reaction to the Administration’s proposal.
Following the hearing, Chairman Etheridge summarized the testimony … “today we heard in detail from major commodity groups about what their members would like to see in the next Farm Bill and what they think of other proposals being offered. In general, the framework of the current farm safety net for program crops enjoys strong support in farm country.”
Chairman Etheridge cautioned that the declining budget baseline will require a bi-partisan approach in developing future policy in order to successfully build on the strong fundamental structure of current law.
In his testimony, Pucheu said NCC leaders have reaffirmed support for a farm bill which includes a marketing loan to facilitate orderly marketing and direct and counter-cyclical payments which provide a safety net when prices are low. His testimony expressed support for cropping flexibility and strong opposition to payment limits and overly-restrictive eligibility requirements.
Pucheu told the subcommittee the NCC was pleased that the Administration’s proposal retained the components of current law, but is concerned by provisions which would result in a precipitous drop in the loan rate. He also said the NCC’s members strongly oppose the proposal to modify the existing adjusted gross income (AGI) test to $200,000 and to eliminate the exemption for individuals who generate more than 75% of their income from family, ranching and/or forestry. He also expressed concern about the proposal to eliminate the 3-entity rule, which has been in effect since ’89. The Administration also coupled the termination of the 3-entity rule with proposed increases in payment limits.
The Tranquillity, CA, producer urged subcommittee members to press the Administration not to make further concessions in the Doha round. He also advised them that the cotton industry is concerned by unusually high loan stocks and that US exports to China are running 78% behind last year.
Other organizations, including wheat, oilseeds and rice, expressed support for the structure of the current law, but asked for increases in their loan rates and target prices. The National Corn Growers proposed replacing commodity programs with revenue insurance.
In addition to participating in the hearing while in Washington, Pucheu visited a number of General Farm Commodities Subcommittee members, California delegation members and staff leaders of the House and Senate Agriculture committees.
|Pucheu Provides Update to USDA|
NCC Chairman Pucheu was joined by NCC President/CEO Mark Lange and Senior Vice President John Maguire in a meeting with USDA Secretary Mike Johanns. Accompanying the Secretary were Deputy Secretary Chuck Conner, Under Secretary Mark Keenum, Deputy Under Secretary Floyd Gaibler and Chief Economist Keith Collins.
Pucheu thanked the Secretary for his staff’s efforts in the Brazil WTO case and his willingness to have USDA staff participate in the NCC’s Marketing Loan Work Group. He noted the increased importance of the Foreign Agricultural Service’s interaction with Cotton Council International and NCC as US cotton exports grow.
Pucheu told the group that in response to the changing nature of US cotton trade, the NCC was undertaking a complete review of cotton flow and all facets of the marketing loan. This work should be completed in time to incorporate industry recommendations into the new farm legislation.Assessing current market conditions, Pucheu observed that beyond its tariff rate quota, China has maintained tight restrictions on cotton imports -- keeping its internal prices 15 or more cents above world prices and placing downward pressure on world cotton prices. While the US likely would build stocks this crop year, he noted that the expectation of lower cotton acreage in response to high grain and oilseed prices would result in a stocks reduction for the ’07 crop.
|Supplemental Spending Bill Approved|
The Senate approved a supplemental spending bill after rejecting an amendment to stop the disaster assistance program.
During debate on the measure, which primarily is designed to provide funding for the war, Senators rejected proposals to stop several domestic spending provisions including the provision providing disaster assistance to producers who suffered crop losses due to drought in ’05 or ’06 as well as assistance to specialty crop producers for losses due to freezing weather.The House and Senate will convene a conference committee to resolve differences. The President has announced his intention to veto any measure that includes a requirement to withdraw troops from Iraq. It is expected that the conference report will be sent to the President as soon as Congress returns April 16 and will be vetoed and then negotiations will begin in earnest.
|House Approves Budget Resolution|
The House approved the FY08 budget resolution 216-200 along mostly party-lines. The blueprint is projected to result in a surplus by ’12.
The budget plan includes a reserve fund of $20 billion for use by the Agriculture Committee, but to use the funds the Committee will have to identify spending cuts in other programs which can be used as offsets. The Senate budget has a similar reserve account of $15 billion. When Congress returns from the Easter recess, a conference committee is expected to begin work to resolve differences between the House and Senate plans.The budget is important not only because of the influences on farm and tax policy, it also sets limits on discretionary spending in the annual appropriations measure.
|USDA Biotech Panel Convenes|
USDA’s Advisory Committee on Biotechnology and 21st Century Agriculture received an update on regulatory issues by the Department officials..
Other Committee sessions focused on the current state of genetically modified (GM) crops in relation (“coexistence”) to the production, processing and marketing of non-GM crops. The panel continues drafting an analysis of the relationship between (GM, conventional and organic crops. If consensus is reached, the document will be submitted to Secretary of Agriculture Mike Johanns.USDA believes an examination by stakeholders of these sectors provides insight into the well-being of the food and fiber supply chain. Because approximately 85% of US cotton is GM to resist insects and tolerate certain herbicides, the cotton industry remains engaged in the development of policies concerning the agricultural biotech market. Bowen Flowers, a Clarksdale, MS, producer/ginner and NCC director, is a Committee member.
|USDA Sees 12.15 Million Cotton Acres|
USDA’s March Prospective Plantings Report indicates US producers intend to plant 12.15 million acres of cotton in ’07/08, down 20.5% from the previous year. Upland area is projected to be 11.86 million acres, down 20.7% from ’06/07 while extra long staple (ELS) area is projected at 292,000 acres, a 10.4% decline.
The NCC’s planting intention survey, released in early February, indicated US producers intend to plant 13.19 million acres in ’07/08, 12.83 million acres to upland cotton and 361,000 acres of ELS cotton.
Projected upland area in the Southeast of 2.55 million acres represents a decrease of 24.1% from the previous year. In the Mid-South, projected plantings of 2.91 million acres represent a decline of 31.3%, with all states in the region showing at least a 20.0% decline in planted acres. A decrease of 12.7% is indicated for the Southwest, withall states expected to plant fewer acres. Prospective upland plantings in the West are seen declining 18.1%, with the largest decline projected for California at 26.3%. The greatest ELS declines are expected in Arizonaand New Mexico, down 57.1% and 30.8%, respectively.
|China Buyers Tour a Success|
The CCI COTTON USA Buyers Tour to China attracted record participation, which enabled key US and European buyers to establish trading relationships with US cotton’s important customers in China. Representatives from 19 key retailers and brands – with a combined annual turnover of $20 billion – came to Shanghai to meet suppliers of pure cotton woven textiles.
China is the largest importer of US cotton with 9.0 million bales in ’05/06. China also is the world’s largest cotton consumer at the mill level.
The Tour attracted participants from huge global brands and retailers including: International Textile Group’s Burlington division, Haggar, J. Crew and Nordstrom from the United States; Mothercare from the UK; Intersport from France; Ahlers Pionier Sportif, Brühl, Bueltel and S. Oliver from Germany; Cizmeciler from Turkey; Lee/Wrangler, Nautica and Tough Jeans from Hong Kong; Marubeni, Mitsubishi, Toyoshima and Uny from Japan; and representatives from the Shanghai buying offices of GAP (USA), Lacoste/Devanlay (France), and NEXT (UK).During the four-day tour, the executives met with 36 mills and manufacturers during a COTTON USA mini trade fair, and visited four Chinese mills and manufacturers in Wuxi. Mills from across China and Hong Kong were selected to participate based on their high quality US cotton products and ability to work in export markets. Early evaluations indicate that virtually all participants placed sample orders for US cotton-rich products with new suppliers.
|Sales Surge, Shipments Steady|
Net export sales for the week ending March 22 were 470,300 bales (480-lb). This brings total ’06-07 sales to approximately 9.5 million. Total sales at the same point in the ’05-06 marketing year were approximately 15.0 million bales. Total new crop (’07-08) sales are 476,500 bales.Shipments for the week were 247,600 bales, bringing total exports to date to 5.6 million bales, compared with the 9.2 million bales at the comparable point in the ‘05-06 marketing year.
|Prices Effective: March 30-April 5, '07|