Cotton's Week: December 7, 2007

Cotton's Week: December 7, 2007

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Farm Bill Re-Start Pact Reached

The Senate reached agreement to re-start debate on the farm bill following a five-week delay.

Negotiations between Senate leaders in advance of a second cloture vote scheduled for Dec. 7 yielded an agreement that up to 40 amendments could be considered with 20 to be offered by each side of the aisle. Debate on amendments would begin on Dec. 7 and continue on Dec. 10, but votes would not be scheduled until Dec. 11. Under the agreement, amendments to be offered would have to be selected from those that were filed by Nov. 14.

An amendment authored by Sens. Grassley (R-IA) and Dorgan (D-ND) [see related story] to reduce payment limits, effectively eliminate the non-recourse feature of the marketing assistance loan, and rewrite actively-engaged-in-farming rules probably will be one of the first to be considered. The Grassley-Dorgan amendment does not include modifications to the adjusted income test included in the Committee’s bill, but Sen. Klobuchar (D-MN) is expected to offer an amendment that would deny all commodity program benefits to individuals who have a three-year average adjusted income greater than $750,000 regardless of the source of the income.

Sens. Lugar (R-IN) and Lautenberg (D-NJ) are expected to offer an amendment that would eliminate the non-recourse marketing assistance loan and target price and phase-out direct payments. The savings would be used to establish a federally-funded revenue insurance program and to increase funding for conservation and research programs. That amendment is virtually identical to one offered by Reps. Flake (R-AZ) and Kind (D-WI) during the House debate, and which was overwhelmingly defeated.



Senate to Consider Payment Amendments

The Senate is considering two amendments to modify payment limitations and adjusted gross income (AGI) provisions, which were unanimously approved by the Senate agriculture committee.

Even though the committee included significant reforms to payment limitations in the legislation it unanimously approved and sent to the full Senate, Sens. Grassley (R-IA), Dorgan (D-ND) and others have again offered an amendment to make even more draconian changes to payment limitations and eligibility rules. Sen. Klobuchar (D-MN) has offered an amendment to modify the Committee’s adjusted gross income test.

Virtually every commodity and general farm organization, as well as agri-businesses, have joined the NCC in urging the Senate to reject the Grassley-Dorgan and Klobuchar amendments because the Committee included reforms in its bill which address criticisms of current rules and regulations in a responsible manner.

The Grassley-Dorgan amendment would eliminate the three-entity rule and establish limits of $20,000 for all direct payments; $30,000 for all counter-cyclical payments and $75,000 for all marketing loan gains (MLG) and loan deficiency payments including MLGs on forfeited commodities. The amendment would eliminate separate limits for peanuts, retain the spousal joinder provision and significantly modify actively-engaged-in-farming rules to mandate specific hours of labor and management to be contributed and require the contributions be made on-site. According to the authors, the previously enumerated limits could be doubled for natural persons farming as single entities.

Senator Klobuchar’s amendment would deny all commodity program benefits to any person whose three-year average adjusted gross income exceeds $750,000 regardless of the source of the income.

NCC Chairman John Pucheu has urged Cotton Belt Senators to reject the Grassley-Dorgan and Klobuchar amendments and to support the Committee’s bill.

“The Dorgan-Grassley and Klobuchar amendments are unnecessary in light of the reforms made by the Committee,” Pucheu said. “These amendments, if adopted, would disproportionately impact diversified operations, make production financing even more difficult in times of sky-rocketing input costs and completely eliminate the value of the marketing loan as an orderly marketing and financing tool. The unintended consequences will include cropping shifts which will cause excess production and lower prices and force landlords to shift to cash rent which will undermine the ability of young and limited resource farms to obtain financing. The uncertainty of adopting a new AGI test which disregards the source of income will undermine the predictability of farm programs in times of low prices.”

The NCC has renewed an “Action Alert” encouraging cotton industry member contacts with Cotton Belt Senators to urge support for the committee’s farm legislation and to oppose the Grassley-Dorgan payment limit amendment and opposition to other damaging amendments.  Senator contact information is available from the NCC’s home page “07 Farm Bill” icon.


Ag Organizations Urge GSM Funding

The NCC joined with other ag organizations on a letter to the House Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Chairman DeLauro D-CT), the Senate Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies Chairman Kohl (D-WI) and the ranking members of those panels, Rep. Kingston (R-GA) and Sen. Bennett (R-UT).

The letter, on the NCC’s web site at www.cotton.org/issues/index.cfm, urged the Congressional leaders to provide for the FY08 funding of three critical USDA export programs: the GSM-102 Export Credit Guarantee Program, the Foreign Market Development (FMD) Program, and Market Access Program (MAP).

The letter stated, “Our request is driven by the continued refusal on the part of the Office of Management and Budget (OMB) to carry out its ministerial duty to apportion funds for these programs. OMB acknowledges that USDA has the authority to operate these programs under the Agricultural Trade Act of 1978 and the Commodity Credit Corporation Charter Act. Despite this clear statutory authority, OMB has declined to apportion FY08 funds for the three programs, thereby interrupting their operation at the expense of U.S. agricultural exports.”

The letter also pointed out that GSM-102 program allocations for the current fiscal year were to have been announced by Oct. 1, ’07. The lack of availability of GSM-102 Credit Guarantees reduces US agricultural export competitiveness and results in long-term damage to buyer confidence in USDA programming and access to US supply.

A similar letter was sent to OMB urging it to comply with statutory authority and apportion funds for the GSM-102 export credit guarantee program. (see 11/16 Cotton’s Week).


Senate Approves Peru FTA Bill

The Senate approved (77-18) legislation necessary to implement the US-Peru free trade agreement (FTA). The earlier approval by the House and approval by the Senate came after the Administration agreed to strengthen labor and environmental provisions in four trade agreements.

When the FTA becomes effective, 60% of Peruvian tariffs on US farm products will be immediately eliminated. The FTA also includes a yarn forward rule-of-origin for textile and apparel products in order for them to receive preferential access to the US market.

The NCC joined other agriculture, textile, apparel, retail and business organizations in urging the Senate to approve the legislation. Letters to Congressional leaders are on the NCC’s web site at www.cotton.org/issues/index.cfm.

The NCC also joined those organizations in urging Congress to expeditiously approve the Colombian free trade agreement and to act to ensure that the provisions of the Andean Trade Preference program are extended beyond the scheduled expiration Feb. 29 to ensure that trade between the US and the region is not disrupted.



House Passes Energy Bill

The House passed (235-181) an energy bill in spite of an Administration veto threat.

The legislation includes new fuel economy standards for cars and trucks, a five-fold increase in required use of renewable fuels to 36 billion gallons by ’22, with two-thirds to be cellulosic-based ethanol, and accelerated rules for federal energy efficiency standards for appliances and energy efficiency measures for federal and commercial buildings.

The legislation faces opposition in the Senate over the inclusion of a $21 billion tax package that repeals $13.5 billion in tax breaks previously provided to oil companies and a requirement that public utilities meet a 15% renewable fuels mandate using wind, solar or biomass to generate electricity. The latter provision is strongly opposed by utilities in the South which contend it would substantially increase the cost of generating electricity in the region. On Dec. 7, the Senate voted against limiting debate, a move which likely will result in Senate leaders modifying the legislation and sending it back to the House.


BWCC Targets Cotton Consultants

The NCC is urging cotton consultants to attend the ’08 Beltwide Cotton Conferences – and a new Cotton Consultants Conference is being added to the forum, set for Jan. 8-11 at the Gaylord Opryland Resort and Convention Center in Nashville.

The half-day consultants conference will be held Tuesday, Jan. 8, from 1 pm-5:30 pm, and is open to all attendees. An overview on variety selection, insect management and weed management will be offered followed by eight breakout interactive discussions led by Extension specialists and covering: agronomics/tillage, defoliation/spray technology; fertility; insect management; irrigation/water management; nematodes/diseases; variety selection/planting; and weed management.

Bill Robertson, NCC’s manager, Agronomy, Soils and Physiology and coordinator of BWCC programming, said the consultants conference will have experts focusing on best management practices in these disciplines with the overall objective of helping consultants fine-tune their recommendations to their producer clients.

The next two days, Jan. 9-10, will feature the annual Beltwide Cotton Production Conference. The general session will open with a welcome from Tennessee Dept. of Agriculture Commissioner Ken Givens and feature updates from the NCC and Cotton Incorporated on the farm bill, cotton research and promotion, variety improvement and other important issues. The general session also will include a focus on herbicide resistance management; new harvesting technology, including onboard moduling systems; the new eXtension web site; current/future challenges and opportunities for cotton producers; and lessons learned from the ’07 growing season.

Robertson said one of those ’07 production season lessons involves crop rotation. Steve Stevens, a Tillar, AR, producer, will join researchers and Extension on the ’07 lessons learned panel for a discussion of the benefits/drawbacks of a corn/cotton rotation and how he manages the many variables involved in crop rotation.

The Production Conference also will offer workshops and seminars covering plant bug management, root rot, nematode management, new harvesting equipment, the new eXtension web site launch, record-keeping, options/hedging, and an economic outlook. Another workshop will feature a cotton specialists working group sharing the results of two Cotton Belt studies – one on seed/in-furrow treatments and one on plant growth regulators. 

A hard copy of the ’08 Beltwide Cotton Conferences final program will be available at the meeting’s registration desk. In the meantime, the program can be viewed and a PDF file downloaded at www.cotton.org/beltwide.


Sales, Shipments Steady

Net export sales for the week ending Nov. 29 were 236,200 bales (480-lb). This brings total ’07-08 sales to slightly more than 7.4 million bales. Total sales at the same point in the ’06-07 marketing year were approximately 5.5 million bales. Total new crop (’08-09) sales are 202,300 bales.

Shipments were 240,900 bales, bringing total exports to date to 4.4 million bales, compared with the 2.4 million bales at the comparable point in the ’06-07 marketing year.


Prices Effective Dec. 7-13, '07

Adjusted World Price, SLM 11/16

52.75 cents

*

Coarse Count Adjustment

0.00 cents

Marketing Loan Gain Value

0.00 cents

Import Quotas Open

 NA

Step 3 Quotas (480-lb. bales)

 NA

ELS Payment Rate

12.19 cents

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

69.27 cents

Forward 3135 c.i.f. Northern Europe

NA

Coarse Count c.i.f. Northern Europe

 NA

Current US c.i.f. Northern Europe

68.80 cents

Forward US c.i.f. Northern Europe

NA

 
2007-08 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-October)

48.93 cents

**

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

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