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|Second Challenge Paper Issued|
The chairman of the WTO agricultural negotiations, Crawford Falconer, circulated the second installment of his “challenge” paper. The new text contains his ideas on where members' positions might converge on issues that were not included in his first paper released in late April (see 5/4/07 Cotton’s Week). The papers call for additional reductions on domestic support by the United States while providing loopholes on market access into other countries.
In response to the papers, the NCC joined other agricultural organizations on letters to USTR Ambassador Susan Schwab and Chairman Falconer expressing our deep concern regarding the negotiating landscape put forward by the chairman.
For cotton, the chairman’s latest paper addresses the commitment of duty-free, quota-free market access included in the Hong Kong Ministerial Declaration. The Declaration provides that developed countries should provide duty-free, quota-free access to cotton imports from least-developed countries from the commencement of the implementation period. The chairman raises the question as to whether that declaration should be extended to include cotton from all developing countries.
NCC staff note that extending the current market access to cotton from all developing countries would seem to undermine the original objective of providing benefits targeted to the least-developed countries.
In addition, the new paper addresses such topics as green box payments, special safeguard mechanisms, tropical products, and expectations of the least-developed economies and recently-acceded members. The papers continue to provide sufficient flexibilities that would allow countries such as China to avoid any meaningful commitments on market access.
Press reports have indicated that Chairman Falconer intends to follow the two challenge papers with a draft negotiating text in mid-June.
|Agreement Reached on D&PL Acquisition|
Monsanto announced that it has entered into a consent decree with the US Department of Justice (DOJ) that, if approved by the federal courts, would allow it to complete the proposed acquisition of Delta and Pine Land Company (D&PL). Under the agreement, filed in Federal Court in Washington, DC, Monsanto will be required to divest certain assets including its US-branded cotton seed business. If the consent decree is approved, DOJ will remove its objections to the transaction.
In its news release, Monsanto said it plans to close its acquisition and resulting divestitures as soon as possible following the required approvals from the court and the DOJ. In line with its DOJ agreement, the company announced that:
During the interim period between when the company completes its acquisition and when it completes its divestitures, the D&PL business will operate independently of Monsanto’s other commercial operations. Once the divestiture of the Stoneville and NexGen businesses has been completed, Monsanto will begin working to combine the D&PL business into its business operations.
|Glauber Named to Ag Envoy Post|
Dr. Joe Glauber, formerly deputy chief economist at USDA, has been named special Doha agricultural envoy. As lead US agricultural negotiator in the World Trade Organization’s Doha Development Round, Dr. Glauber replaces Richard Crowder, who stepped down as the US Trade Representative’s chief agriculture negotiator on May 31.
Glauber had served as USDA’s deputy chief economist since ’92. In addition to extensive experience in farm and trade policy, he has been actively involved in the cotton case brought by Brazil in the WTO.
|Cotton Planting Lagging|
As of May 27, USDA reports that cotton plantings stand at 74% complete -- compared to a five-year average of 79%.
While many states are on normal pace for this time of year, four states are reporting noticeable delays. Texas, Oklahoma and Kansas are lagging behind the normal planting pace due primarily to excessively wet conditions. In Texas, 55% of the intended acres were planted, as compared to 71% in ’06 and a five-year average of 66%.
In the Southeast, extreme drought conditions have delayed plantings, and in many cases, plantings have ceased in the absence of adequate soil moisture. Georgia is the most extreme example with only 58% planted. Normally, more than 80% of the state’s acreage would be planted. Based on USDA’s ’07 projected acreage for Georgia, current planting progress suggests that more than 475,000 acres remain to be planted.
Complete state-by-state progress can be found at http://www.cotton.org/econ/cropinfo/progress.cfm.
|DHS May Exempt Farm Chemicals|
As the Dept. of Homeland Security (DHS) prepares to implement its chemical security regulations on June 8, it has indicated that on-farm chemicals will be given a broad exemption from the screening process outlined in the Chemical Facilities Anti-Terrorism Standards (CFATS).
In April, DHS published a list of chemicals that could be used by terrorists as explosive devices or contaminants. According to the rule, if any facility housed a certain chemical quantity, DHS would require a screening of that facility. Because the requirement would encompass nearly all US farms, the agricultural community urged DHS to revise the list of chemicals and thresholds.
In a May 9 letter to DHS from NCC Chairman John Pucheu, NCC sought the removal of certain chemicals from the list such as ammonia fertilizers and propane. (See 5/11/07 Cotton’s Week.) NCC also requested an increase in allowable quantities, or a 30-day application period for producers to procure and apply certain products as these chemicals would not be stored for a long period of time.
In a meeting with the Chemical Sector Coordinating Council, DHS said there will be changes to the list which should be issued in revised form after the June 8 implementation of CFATS. A broad exemption for agricultural chemicals bought and used within 30 days is expected. Propane tanks of a certain size may be exempted and thresholds for ammonia could be raised to a range of 20,000-50,000 lbs. per site. Thus, farms with chemicals “scheduled to be applied to fields,” would not have to submit inventory information to DHS.
|Misshapened Bales Concern Addressed|
A letter to state and regional gin and warehouse associations from the NCC and the National Cotton Ginners Assoc. describes the problems of misshapened bales at warehouses and urges gins to accept the challenge of producing well-packaged bales of uniform size, shape and density that enhance the image of US cotton.
The letter, which points out the increased handling time per bale and loss of storage space caused by misshapened bales, also asks the associations to remind their member gins to take time to perform needed repairs and adjustments during the off season in order to help ensure safety at gins and warehouses during the active season when time and space are at a premium.
NCC staff will be addressing the misshapened bales issue at various cotton warehouse association meetings, including the Cotton Growers Warehouse Assoc. meeting June 2-5 in Colorado.The topic also will be discussed at the NCGAStonevilleGinnersSchool, June 12-14 in Stoneville, MS. In that session, “Keeping Your Customers Satisfied: Bale Shape And Uniformity,” ginners’ awareness will be raised on: 1) the necessity of seeing that the components of their bale packaging systems are properly constructed, balanced and maintained and 2) better understanding the interaction that occurs between different parts of gins’ bale packaging systems.
|’07 Classing Fees Same as ’06|
USDA’s Agricultural Marketing Service (AMS) has published a schedule of ’07 crop classing fees. The annual base fee is calculated in accordance with a formula included in the Uniform Cotton Classing Fees Act of 1987.
For the ’07 crop cotton, the fee is $1.85 per bale which was the same base fee for the ’06 crop cotton. The fees, according to the formula, are established at a level sufficient to cover the costs of providing the classification services including administrative costs.Darryl Earnest, deputy administrator of the AMS Cotton Division, had reviewed the fee proposal for the ’07 crop during the April meeting of NCC’s American Cotton Producers in Dallas.
|Staffers Tour North Carolina Operations|
Legislative assistants representing six key House and Senate offices visited cotton operations in North Carolina.
The group’s first stop included a tour and orientation at Cotton Incorporated’s research facilities in Cary. The group also toured Frontier Spinning Mills Inc. in Sanford and received a briefing on cotton textile issues by company executives. In Goldsboro, they visited Coastal Plains Gin and later traveled to Benson to tour Denning Farms, a diversified operation including cotton, soybean, tobacco and poultry production. Following the farm tour, the group met with representatives of North Carolina Cotton Producers Assn. and Monsanto.
The annual orientation and education programs for Congressional staff are made possible by a grant from Monsanto to The Cotton Foundation.
|Sales, Shipments Continue Strong|
Net export sales for the week ending May 24 were 279,600 bales (480-lb). This brings total ’06-07 sales to approximately 13.6 million. Total sales at the same point in the ’05-06 marketing year were approximately 17.1 million bales. Total new crop (’07-08) sales are 814,100 bales.
Shipments for the week were 340,200 bales, bringing total exports to date to 8.7 million bales, compared with the 13.2 million bales at the comparable point in the ‘05-06 marketing year. With a little more than two months remaining in the marketing year, weekly shipments must average roughly 481,000 bales to reach the USDA projection of 13.25 million bales.
|Prices Effective June 1-7, 2007|