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|NCC Issues Action Alert|
NCC Chairman John Pucheu issued an Action Alert asking NCC members to contact their Congressional members and urge opposition to the Kind amendment, which likely is to be offered during the expected ’07 farm bill debate in the House Agriculture Committee on July 17-19 or on the House floor.
The NCC supports Chairman Peterson's (D-MN) proposed bill which addresses many of cotton's policy priorities. If the Committee acts, it is possible that the Kind amendment could be considered by the House prior to its adjournment for the August recess. The “Kind Amendment” (Reps. Kind (D-WI) and Flake (R-AZ)) would dramatically slash farm programs, crippling Chairman Peterson's bill and seriously harming cotton and other commodities.
The Kind Amendment would:
A detailed summary of the Kind Amendment is the “07 Farm Bill” section of the NCC’s web site at http://www.cotton.org/issues/members/07farmbill/index.cfm.
|China Tour Deemed Effective|
The recent 12-day mission to China by a team of NCC leaders and USDA officials was deemed a success (see 6/29 Cotton’s Week). The NCC Quality Team, led by Larry McClendon, a Marianna, AR, producer/ginner, saw the classing/grading of Chinese and imported cotton; learned more about the needs of this important US raw cotton customer; and updated Chinese cotton industry officials and mill buyers regarding US cotton quality.
The group conducted high level meetings with the China Cotton Assoc. (CCA) in Beijing, as well as China’s cotton import inspection authority, AQSIQ, in Beijing and provincial CIQ offices in Shanghai and Qingdao—where most US cotton is inspected as it comes into the country. The team also visited some of China’s largest users of US cotton—including Sunvim, Lanyan, Taifeng, Esquel, Anhui Huamao, Shadong Lutai, Black Peony and China Resources—to discuss quality issues and how the US cotton industry can better service its largest customers’ needs. The team also participated in CCA’s China Cotton Conference in Xinjiang.
McClendon said in the meetings, “the team emphasized various activities in which the U.S. cotton industry is working diligently to preserve and improve its fiber quality and to improve upon services to its textile customers.”
Representatives from both countries involved in the meetings agreed to maintain continued direct dialogue to ensure outstanding issues would be resolved and that Chinese customers would be able to enjoy more comprehensive benefits of using US cotton.
The Quality Team visit was a follow-up to the successful NCC Leadership Exchange in Oct. ’06, as well as the Nov. ’06 signing in Memphis of a “Memorandum of Understanding” (MOU) between the NCC and the CCA that promised cooperation between the countries’ cotton industries. A CCA leadership delegation is scheduled to visit the United States in September to follow up on various topics and to discuss further programs under that MOU.
|Farm Bill Proposal Support Conveyed|
NCC Chairman Pucheu sent a letter to House Agriculture Committee Chairman Peterson (D-MN) conveying the NCC’s support for the cotton provisions in the Chairman’s mark released on July 6.
Pucheu stated, “We are also pleased to note the continuation of the three components of the farm safety net that have served production agriculture so well for the past five years. Reauthorization of the direct and counter-cyclical programs in conjunction with the marketing loan provides a fiscally responsible safety net with minimal market disruption. Further, the continuation of cropping flexibility is vitally important as evidenced by acreage responses this year. In addition, the provisions related to conservation, rural development, trade, research and nutrition are vital for the economic and social stability of rural and urban America.”
The letter also expressed special appreciation for the inclusion of cotton program modifications designed to make that program more efficient and even more market oriented.
“The U.S. cotton industry remains concerned about limitations on eligibility for and availability of program support,” Pucheu said. “Limits hit producers hardest when prices are low and the safety net is critical to maintaining infrastructure. We appreciate your sensitivity to this issue and your efforts to ensure any modifications do not have a disproportionate impact on crops or regions.”
The letter’s full text is at http://www.cotton.org/issues/members/2007/petlet.cfm.
|Pucheu Provides WTO Update|
In a report at the Cottonseed and Feed Assoc. annual meeting in New Orleans, NCC Chairman John Pucheu reiterated thatUS actions taken to comply with the WTO Panel ruling have had a significant impact on the US cotton industry.
“But as these changes began to negatively impact the U.S.,” he said, “India was undercutting world prices by as much as five cents per pound; Brazil was instituting new subsidies to aid the export of cotton; and China was using its variable levy system to increase internal prices and stimulate production.”
Pucheu said it cannot be credibly argued that the US cotton program is causing any country serious prejudice in ’07 - the first year of its operation without Step 2.
“It is worth noting that those who are calling for special reform of the cotton program are not paying attention to the steps this industry has already taken,” he said. “The step 2 program was eliminated and the export credit guarantee program has been made largely ineffectual. These changes contributed greatly to the difficult 2006 marketing season we faced. They contributed to a dramatic decline in exports; they contributed to low equity offers; they contributed to a 28 percent drop in upland cotton acreage for 2007; and they are largely responsible for a decline in U.S. exports into China.”
|Environmental Impact Discussed|
EPA held its first National Dialogue on Agriculture to bring together agricultural organizations to discuss agriculture’s future and how changes in that industry will affect environmental challenges. This is part of EPA’s “National Strategy for Agriculture,” which is designed to improve the agency’s capabilities in positively reaching out to producers.
The NCC, along with other national agricultural organizations, participated in the roundtable discussion with EPA Administrator Steve Johnson and Jon Scholl, counselor to the Administrator for Agricultural Policy. The discussion centered on the environmental issues facing agriculture in the next 10 years, how the changing face of agriculture will affect the environment and how EPA can improve its relationship with agricultural producers.
Also, as part of the “National Strategy for Agriculture,” EPA has created a permanent Cross Media Ag Team to better coordinate regulatory issues across the agency nationwide. EPA and USDA will improve coordination on agricultural research that targets environmental protection.
|’07 DCP Sign-Up Deadline Near|
USDA Farm Service Agency (FSA) Administrator Teresa Lasseter announced that farmers and other landowners with base acres and yields have until Aug. 3, ’07, to enroll in the ’07 Direct and Counter-cyclical Payment Program (DCP).
"I encourage all eligible producers to enroll in DCP before the Aug. 3 deadline to avoid paying the late fee," Lasseter said.
In March ’07, FSA extended the DCP sign-up deadline to Aug. 3 from the original June 1 deadline. Producers failing to sign up by Aug. 3, but before Sept. 30, ’07 (final date to enroll in the ’07 DCP), will pay a late-file fee of $100. Enrollment in DCP for the ’07 contract period began Oct. 1, ’06.
DCP provides payments to eligible producers on farms enrolled for the ’02 through ’07 crop years. There are two types of DCP payments - direct payments and counter-cyclical payments. USDA computes payments using the base acres and payment yields established for the farm.
The Farm Security and Rural Investment Act of ’02 authorized DCP. More information about DCP is available in the program fact sheet found online at: http://www.fsa.usda.gov/Internet/FSA_File/dcp06.pdf.
|’07-08 Export Estimate Lowered|
In its July report, USDA gauged US ’06-07 cotton production at 21.59 million bales. Both mill use and exports remained unchanged at 4.90 million bales and 13.00 million bales, respectively. The estimated total offtake now stands at 17.90 million bales, generating ending stocks of 9.80 million bales. The estimated stocks-to-use ratio is 54.7%.
For the ’07-08 crop, USDA projects a US crop of 17.50 million bales. Mill use was unchanged from the previous month at 4.40 million bales. However, exports were lowered 500,000 bales to 17.00 million bales. The estimated total offtake stands at 21.40 million bales, resulting in ending stocks of 5.90 million bales. The estimated stocks-to-use ratio is 27.6%.
USDA’s report sees ’06-07 world production raised 1.65 million bales from the June report to 118.36 million. Beginning stocks were raised 1.03 million bales from the previous month to 57.67 million. Estimated world mill use was lowered 210,000 bales to 122.33 million. The projected world ending stocks on July 31, ’07 is now pegged at 57.32 million bales. This has a corresponding stocks-to-use ratio of 46.9%.
For the ’07-08 marketing year, USDA projected world production of 115.79 million bales, down 100,000 bales from the June report. World mill use was lowered 250,000 bales from the June report to a projected 127.16 million bales. Though lower than the June report, the current estimate represents a record level of mill consumption. Consequently, world ending stocks for ’07-08 are projected to be 50.78 million bales, for a stocks-to-use ratio of 39.9%.USDA announced in its July report that China’s production was raised for four years from ’04-05 through ’07-08. The change was made due to information from government and industry sources within China that indicates that estimates from China’s National Bureau of Statistics have understated production in the Xinjiang Autonomous Region. A detailed explanation of the China production changes can be found at http://www.fas.usda.gov/psdonline/circulars/cotton.pdf.
|Sales Slip, Shipments Strong|
Net export sales for the week ending July 5 were 59,400 bales (480-lb). This brings total ’06-07 sales to approximately 14.5 million bales. Total sales at the same point in the ’05-06 marketing year were approximately 18.3 million bales. Total new crop (’07-08) sales are 1.1 million bales.
Shipments for the week were 408,600 bales, bringing total exports to date to 11.3 million bales, compared with the 15.6 million bales at the comparable point in the ’05-06 marketing year. For upland shipments, China was the largest destination, followed by Turkey, Pakistan and Mexico.
With less than one month remaining in the marketing year, weekly shipments must average roughly 485,700 bales to reach the USDA projection of 13.0 million bales.
|Prices Effective July 13-19, '07|