Cotton's Week: December 28, 2007

Cotton's Week: December 28, 2007

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Letter Urges Farm Bill Conference

The NCC joined with other 31 other agricultural organizations on a letter to the Senate and House agriculture committee chairmen and ranking members, urging a convening of a House-Senate conference committee to negotiate farm legislation as quickly as possible.

The letter to Sens. Harkin (D-IA) and Chambliss (R-GA) and Reps. Peterson (D-MN) and Goodlatte (R-VA) thanked them for their strong leadership in successfully passing their versions of the ’07 farm legislation – bills that “not only work to provide a strong safety net for our nation's farm and ranch families, but also meet the critical new needs in the areas of conservation, nutrition, rural development, and renewable energy.” 

The groups, while also offering appreciation for the three month extension of current law which will preserve the budget baseline and avoid disruption, urged completion of a farm bill conference report by no later than late January or early February.

“As you know,” the letter stated, “this is the time of year when farm and ranch families, along with their lenders, need to make serious financial decisions for the upcoming crop year. Some farm families actually expect to head into the fields in just two months and, of course, fall-planted crops are already in the ground. So, we cannot overstate the critical importance of completing the Farm Bill and having a safety net in place by late January or early February.”        

The groups also stated that based upon the exceptional work of both the House and the Senate, “we are confident that a strong new Farm Bill can be approved by Congress and signed into law by the President early next year.”

The letter can be found on the NCC’s web site (members only) at http://www.cotton.org/issues/members/07farmbill/conference/conflet.cfm.


Appropriations Measure Approved

President Bush signed a $555 billion omnibus FY08 appropriations measure (HR 2764) which provides funding for USDA and its programs, an expansion of disaster assistance, and a short-term extension of the farm bill.

The legislation provides funding for programs and agencies for the remainder of FY08, which ends Sept. 30. The legislation was approved by the House and Senate after a showdown over domestic discretionary spending limits and whether Congress would place conditions on funding needed to continue the wars in Iraq and Afghanistan. The final legislation included increased funding for some domestic programs targeted by Democrats, but overall spending levels were held to the President’s proposal.

The $70 billion for Iraq and Afghanistan is projected to cover operations through March and is substantially less than the $194.4 billion requested by the White House, meaning a supplemental appropriations request will have to be made in early ’08. The legislation includes $11.2 billion in “emergency” funding for veterans’ programs, border security and drought relief. The funds for drought relief will allow USDA to expand disaster assistance to include all crop year ’07 losses.

A disaster assistance program approved earlier in the year provided coverage for losses in crop years ’05, ’06 or for ’07 provided crops were planted prior to Feb. 28, ’07.  USDA now will amend sign-up procedures to allow producers to apply for assistance for losses that occurred in one of following years:  ’05, ’06 or ’07.

The agriculture provisions also include cost-share funding for boll weevil and pink bollworm eradication through a “cotton pests” account funded at $37.269 million for the remainder of FY08. The legislation also includes a short-term extension of provisions of the ’02 farm law through March 15, ’08. The extension was necessary: 1) to preserve the budget baseline while Congress completes work on the new farm law and 2) because the Office of Management & Budget (OMB) has refused to approve funding to operate on-going programs including GSM-102 export credit guarantees, Market Access Program and Foreign Market Development program.

Recently, OMB refused to release funds for the ELS cotton competitiveness program even though the statute clearly authorizes the program for the ’07 crop. Immediately after the omnibus legislation was passed, Sens. Harkin (D-IA), Chambliss (R-GA), Kohl (D-WI) and Bennett (R-UT) wrote OMB Director Nussle urging him to release funds for ongoing agriculture programs.

The Omnibus Appropriations measure becomes effective Jan. 1, ’08 when the current Continuing Resolution, which funds programs and agencies at last year’s levels, expires.


Emergency Assistance Rules Published

USDA published final rules governing operations of emergency agricultural assistance.

The regulation published on Dec. 21, ’07 implements provisions of the ’07 Emergency Supplemental enacted May 25, ’07. That legislation authorized the Secretary to provide disaster assistance for losses which occurred due to damaging weather for the ’05, ’06 or ’07 crops.

Prior to enactment of the Omnibus FY08 Appropriations bill (see previous story), losses for crop year ’07 were eligible only if the crop was planted prior to Feb. 28, ’07.  The Omnibus includes authority to expand coverage to include all ’07 crop losses and the regulation and sign-up procedures will be modified to reflect that change.

Producers will be eligible to receive assistance for one of the three crop years.  Eligible producers must have purchased federal crop insurance coverage for the year in which coverage for the crop losses is requested. The payment limitation will be $80,000 per program per person and a $2.5 million adjusted gross income test will apply based on the average of AGIs for the three previous tax years preceding the tax year for which disaster assistance is being requested. Any year the AGI was zero will be excluded.  Benefits may not exceed 95% of the expected value of production. The payment rate will be 42% of the established price on yield losses exceeding 35% of the APH.

Quality losses are covered if losses exceed 25% of the value that all affected production of the crop would have had if the crop had not suffered quality loss. The payment for quality losses will be based on 65% of the quantity of the crop affected by the quality loss, not to exceed expected production based on harvested acres, multiplied by 42% of the per unit average market value based on percentage of quality loss for the crop as determined by the Deputy Administrator.



New WTO Working Papers Posted

On Dec. 21, Ambassador Crawford Falconer, chairperson of the WTO agriculture negotiations, circulated four new working documents on domestic support.

The papers focus on the overall reduction of trade-distorting support: a tiered formula; final bound total AMS: a tiered formula; de minimis; and Blue Box. The papers include a more aggressive implementation timeline for developed countries in achieving disciplines on domestic support while offering developing countries more time to meet any commitments. The papers may be accessed at: http://www.wto.org/english/tratop_e/agric_e/chair_workdoc_nov07_e.htm.


DHS Rule May Affect Industry Operations

The Dept. of Homeland Security published the final Appendix A of the Chemical Facilities Anti-Terrorism Standard (CFATS). With the publication of a final Appendix A, all provisions of 6 CFR Part 27, including §27.210(a)(1)(i), are operative and in effect. The deadline in the CFATS interim final rule for the submission of “Top Screens” is Jan. 22, ’08.

A complete list of chemicals is at www.dhs.gov/chemicalsecurity (click on the “Appendix A List” in the box). Additional information about the final rule also is available at that site.

Key changes in the final rule include:

1)    Propane is covered in the final rule. The screening quantity is 60,000 lbs (14,285 gal), and individual tanks of less than 10,000 lbs do NOT need to be counted.

2)    Chlorine is still on the list, but the quantity has been adjusted upwards to 2,500 lbs. In addition, small containers must be counted if there are more than five in a location, due to possible use as an improvised explosive device multiplier.

3)    Ammonia, including anhydrous, has been adjusted to the Risk Management Program (RMP) threshold quantity of 10,000 lbs.

4)    Ammonium nitrate with a concentration of at least 23% in quantities of 2,000 lbs or greater will need to be reported.

5)    Urea and acetone have both been removed from the Appendix A list and will not need to be reported.

6)    Other chemicals on the list have been generally adjusted to the RMP quantity. In addition, those chemicals that were listed as “any quantity” now have a specific amount that will generally exclude “small” quantities used for lab or research purposes.

7)    Farm crop protection chemicals are not included in Appendix A. 

Appendix A contains the list of chemicals and thresholds subject to the DHS “Top Screen” process. The Top Screen process, which analyzes the security threat of a facility based on several parameters, can be completed on the DHS web site.

Earlier (see May 11 ’07 Cotton’s Week), the NCC submitted comments in response to proposed regulations issued in April. Among other comments, the NCC urged DHS to reconsider and revise the chemical of interest list and thresholds in Appendix A to reflect real chemical security risks.


Heartland Series Continues in ’08

America’s Heartland, the weekly television series celebrating American agriculture that NCC has supported since the series premiere in ’05, will continue in ’08. The series has told agriculture’s stories in all 50 states.

Each episode of America’s Heartland is seen by more than a million PBS viewers, and the program is carried on 82% of the PBS stations. Viewership of season three’s premiere episodes is up 12% over season two. America’s Heartland is airing in eight of the top 10 television markets, including New York, Los Angeles, Chicago, Philadelphia, San Francisco, Boston, Washington, DC and Houston. Another 250,000 viewers watch the show weekly on RFD-TV, which is now offered by a growing number of cable providers, as well as Dish and DirectTV satellite systems.

Series episodes are at: www.americasheartland.org. Viewers also can find the program in their areaby calling 877-4-AG-ON-TV (877-424-6688).


Mill Cotton Use Declines

According to the Commerce Dept., November (four-week month) total cotton consumption in domestic mills was 171.1 million pounds for a seasonally adjusted annualized rate of 4.81 million bales (480-lb). Last year’s November annualized rate was estimated at 5.00 million bales.

The October (four-week month) estimate of domestic mill cotton use was raised 621,000 pounds to 182.0 million pounds. The revised seasonally adjusted annualized rate of consumption for October is 4.75 million bales. This is lower than last year’s October annualized rate of 5.09 million bales.

Preliminary December domestic mill use of cotton and revised November figures will be released by Commerce on Jan. 24.


Sales Slip, Shipments Steady

Net export sales for the week ending Dec. 20 were 151,800 bales (480-lb). This brings total ’07-08 sales to slightly more than 8.1 million bales. Total sales at the same point in the ’06-07 marketing year were approximately 6.2 million bales. Total new crop (’08-09) sales are 222,500 bales.

Shipments for the week were 191,500 bales, bringing total exports to date to 5.1 million bales, compared with the 2.9 million bales at the comparable point in the ’06-07 marketing year.


Prices Effective Dec. 28, '07-Jan. 3, '08

Adjusted World Price, SLM 11/16

55.13 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

10.39 cents

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

71.65 cents

Forward 3135 c.i.f. Northern Europe

NA

Coarse Count c.i.f. Northern Europe

NA

Current US c.i.f. Northern Europe

72.50 cents

Forward US c.i.f. Northern Europe

NA

 
'07-08 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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