Cotton's Week: February 15, 2008

The NCC expressed serious reservations regarding the farm bill package announced by House Agricultural Committee Chairman Peterson (D-MN) and Ranking Minority Member Goodlatte (R-VA). In an effort to move the conference process forward, the Peterson-Goodlatte proposal was developed after extensive discussions with the Administration.

The proposal, which covers the ’08-17 crops, sets all target prices at ’07 crop levels. In an effort to save money while preserving the long-term baseline, the proposal eliminates direct payments for ’16 but restores them for ’17.

For cotton, the new proposal excludes the marketing loan changes related to the determination of the Adjusted World Price (AWP), but does include the new methods for determining the loan schedule premiums and discounts. The NCC noted that the proposal reduces cotton loan values by introducing changes to the calculation of Commodity Credit Corp. loan premium and discounts but fails to address associated competitiveness provisions also linked to the loan.

Last spring, the NCC provided Congress with a 14-point package that better aligned the marketing loan with market signals, improved cotton’s price competitiveness, increased the efficiency of cotton flow and permitted accelerated movement of cotton into the marketplace. The NCC demonstrated how these provisions could be accomplished at no net cost and the components of the package were generally included in the both the House and Senate versions of the farm bill.

The NCC also expressed strong concerns that the Peterson-Goodlatte proposal does not include the much-needed economic assistance for the US textile industry, despite the provision being included in both versions of the previously passed House and Senate farm bills. Economic assistance for the manufacturer segment remains a top priority of the industry, and the NCC will urge Congress to include the program in the final farm bill.

The proposal further tightens the Adjusted Gross Income (AGI) means test beyond the levels included in the House-passed farm bill. Under the new proposal, an individual with a three-year average AGI above $900,000 would be ineligible for farm program payments, regardless of income source. Furthermore, the proposal phases in a ‘soft cap’ of $300,000 by ’13 that would deny payments to individuals exceeding this level unless two-thirds of their income comes from farming, ranching or forestry. The NCC noted that these changes in payment eligibility and tightening of the AGI means test fall disproportionately on cotton producers.

The NCC is urging House and Senate agricultural leadership to work within the parameters of their respective bills, which will result in sound cotton policy.

The NCC joined 41 other agricultural associations and farm groups on a letter to the chairmen and ranking members of the House and Senate agriculture committees urging them to immediately initiate a farm bill conference.

The letter noted that a framework proposed by the House committee leadership and the administration is seriously underfunded. A strong safety net for agriculture is required and history shows how quickly good prices can turn to historic lows, as happened between ’96 and ’99. Additionally, the Administration is attempting to insert provisions that were considered and rejected in the deliberations of both the House and Senate committees.

The letter, which also urges the conference negotiations to remain with the boundaries set by the two bills, is on the NCC’s web site at http://www.cotton.org/issues/2008/upload/08farmbillhouseadmindeal.pdf.

NCC Chairman Larry McClendon praised the US Trade Representative’s Office for filing a notice of appeal in the World Trade Organization Brazil–US cotton case.

“We appreciate the action of the Trade Representative’s office and we look forward to working with them to reverse the compliance panel’s ruling against U.S. cotton,” McClendon said. “It is difficult to understand how the United States could be deemed to be depressing world prices of cotton when world prices are rising, U.S. production is declining and expenditures under the cotton loan program have fallen to zero for 2007 and are expected to continue to be small or non-existent.”

McClendon noted that as US production has declined, production and exports from Brazil and India have increased to take its place in the world market and China’s domestic production also has increased – benefiting from trade barriers that keep internal prices high.

“I have trouble with countries blaming the United States for depressing world market prices, while at the same time, they are expanding their production and exports,” he stated.

McClendon said the US cotton industry also hopes this appeal will lead to better clarity in the WTO panel decisions.

Retiring NCC Chairman John Pucheu told delegates at the NCC’s ’08 Annual Meeting that their work at this year’s forum has resulted in the identification of clear priorities and the development of corresponding policies.

“These policies are intended to equip us to successfully address the challenges before us — including final passage and implementation of the farm bill, resolution of the WTO Brazil case, and continued work on Doha negotiations,” he said. “While it is fortunate that both the House and Senate have passed good pieces of legislation that address many of cotton’s priorities and include meaningful reform in payment eligibility provisions, the next task for Congress is to find common ground between the two bills and attempt to put forth legislation that can be signed into law.”

Looking ahead, Pucheu said other challenges also abound for ’08 — such as the elections and resulting changes in Congress, rising production costs, as well as renewable fuels, the competition for acres along with their impact on agriculture’s infrastructure and the overall rural economy.

 Senate Agriculture, Nutrition & Forestry Committee member Lincoln (D-AR), told delegates that there is much work to be done on the farm bill but she will be fighting for Southern farmers.

“The bill continues to be a moving target,” Sen. Lincoln said. “It’s imperative that in the next few weeks that the Conference Committee finalizes the bill with very few changes. I will continue to impress upon Chairman Peterson that the Senate-passed bill contained significant reforms. My hope is that the White House will be rational.”

US Secretary of Agriculture Ed Schafer told delegates that he sees an incredibly strong US agricultural economy including good prices, strong demand and sound farm income. He said US commodity exports are in high demand and “one of my top priorities will be to continue to open markets and help keep those numbers growing.”

The Secretary also said that he firmly believes that free trade has to be fair trade, and “you have my commitment that we will be fighting hard for you to make sure that we provide that level and fair trading field out there.”

In presenting the NCC’s ’08 Economic Outlook, Dr. Gary Adams, the NCC’s vice president, Economics and Policy Analysis, told delegates that US cotton growers are projected to produce 15.4 million bales in ’08 – the smallest since the ’98 crop of 13.9 million bales.

Adams said that this US cotton production estimate of 14.8 million bales of upland and 600,000 bales of extra long staple (ELS) fiber is based on the NCC’s survey that has planting intentions of 9.32 million upland acres and 231,000 ELS acres. He noted that a range of 12-18 million bales is not unrealistic as weather will affect the final production.

The economist said the NCC sees US exports of 14.7 million bales and domestic mill use of 4.4 million bales in ’08-09. Assuming a new farm bill is enacted with the economic assistance program for the US textile industry, he said any ’08 textile mill losses due to a slowdown in the US economy and the elimination of China import safeguards should be tempered.

By July of ’09, he said, US cotton stocks are expected to fall sharply as total offtake exceeds the 15.4 million bale crop.

Regarding world trade, Adams said world production is expected to increase to 122.4 million bales in ’08 as larger crops in China, Brazil, India, Pakistan, Australia and West Africa more than offset lower US production. India, in fact, is now the second largest producer and processor of cotton, devoting more area to cotton production than any other country.

“While their textile industry has been expanding, the most notable development in the Indian market is cotton production that has more than doubled in the last five years, and is estimated at almost 25 million bales in 2007,” Adams said.

On the demand side, Adams said even with slower growth in China mill cotton use, that country’s textile sector still could consume a healthy 57 million bales – 16.6 million bales imported -- in the ’08 marketing year. China also will continue to be the largest export customer of US cotton.

Adams said declining global stocks should continue to be supportive of world prices in ’08, but, “One concern will be the ability to maintain demand growth at higher price levels, particularly in light of concerns about the general economy. In addition, the gaps between cotton prices and yarn prices and polyester prices have widened. So, while the current outlook is supportive of prices, we can not forget the competition from manmade fibers. ”

Additional details of the ’08 Cotton Economic Outlook are at http://www.cotton.org/econ/reports/annual-outlook.cfm.

Net export sales for the week ending Feb. 7 were 228,900 bales (480-lb). This brings total ’07-08 sales to approximately 9.8 million bales. Total sales at the same point in the ’06-07 marketing year were slightly more than 7.6 million bales. Total new crop (’08-09) sales are 363,500 bales (480-lb).

Shipments for the week were 242,300 bales, bringing total exports to date to 6.5 million bales, compared with the 4.2 million bales at the comparable point in the ’06-07 marketing year.

Larry McClendon, a Marianna, AR, ginner, was elected NCC chairman for ’08. McClendon, who is president and manager of McClendon, Mann and Felton Gin Company in Marianna, also operates a cotton and grain farm in Lee County and serves on the board of Staplcotn cooperative.

He is past president of the National Cotton Ginners Assoc., Southern Cotton Ginners Assoc. and the Arkansas Agricultural Council.

McClendon was the ’02 Southern Cotton Ginners Assoc. Ginner of the Year and in ’03, he received the Horace Hayden National Ginner of the Year award. In ’06, he received Cotton Grower magazine’s Achievement Award, in recognition of growers who are outstanding innovators, sound stewards of the environment and leaders in the cotton industry and their communities.

A U. of Arkansas graduate, Larry is a deacon of First Baptist Church of Marianna and currently is serving on the Board of Trustees for Baptist Hospital Systems in Memphis. He and his wife, Betty Jo, reside in Marianna and have a daughter and a son.

The NCC’s vice chairman for 2008 is Jon W. Hardwick, a Newellton, LA, cotton producer.

NCC staff officers for ’08 include: Dr. Mark Lange, NCC president/chief executive officer; John Maguire, senior vice president, Washington Operations; Allen Terhaar, vice president, Foreign Affairs; Dr. Gary Adams, vice president, Economics and Policy Analysis; Craig Brown, vice president, Producer Affairs; Dr. Bill Norman, vice president, Technical Services; Harrison Ashley, vice president, Ginner Services; and Fred Johnson, vice president, Administration and Program Coordination.

Elected to the NCC Board during segment caucuses were:

Producers – Chuck Lee, Pembroke, GA; C.B. “Chuck” Coley, Vienna, GA; Bowen Flowers, Tunica, MS; Rickey L. Bearden, Plains, TX; and Donald J. Cameron, Helm, CA.

Ginners – H. Burt Rickenbaker Jr., Davis Station, SC; Sledge Taylor, Como, MS; Chris W. Breedlove, Olton, TX; Stanley R. Creelman, Tulare, CA; and Gary D. Feist, Anthony, KS.

Warehousemen – Dane Jones, Bakersfield, CA; Robert Snodgrass, Taylor, TX; W. Coalter Paxton, III, Wilson, NC; Rick Willis, Brownfield, TX; and Jay T. Cowart, Altus, OK.

Merchants – Andy Weil, III, Montgomery, AL; Dale Grounds, Richardson, TX; Manfred Schiefer, Lubbock, TX; Gary W. Taylor, Cordova, TN; and G.W. Winburne, Phoenix, AZ.

Cottonseed – John C. Fricke, Pine Bluff, AR; Edgar H. Lawton, III, Darlington, SC; J. Scott Middleton, Jonestown, MS; Robert L. Lacy, Jr., Lubbock, TX; and John Walth, Fresno, CA.

Cooperatives – Meredith B. Allen, Greenwood, MS; Wallace L. Darneille, Lubbock, TX; Kirby O. Powell, Jackson, TN;  Jarral Neeper, Bakersfield, CA; and Michael Quinn, Garner, NC.

Manufacturers – Robert H. Chapman III, Inman, SC; W. Anderson D. Warlick, Gastonia, NC; Werner Bieri, Jefferson, GA; TX; Vernon C. Tyson, Jr., Winston-Salem, NC; and Malloy Evans, Cheraw, SC.

Robert S. Weil II, a Montgomery, AL, merchant, is Cotton Council International’s ’08 president. He was elected during CCI’s board of directors meeting in Memphis and succeeds Michael M. Adams, a Greenwood, MS, cooperative official who became CCI board chairman.

Weil is CEO of Weil Brothers-Cotton, Inc. He is a NCC vice president and serves on the NCC’s International Trade Policy Committee and Farm Policy Development Task Force, among others. He also served as president of the American Cotton Shippers Assoc. in ’03-04 and president of the Atlantic Cotton Assoc. in ’92. He earned a BS degree at Dartmouth College and completed an advanced management program at Harvard Business School.

Other CCI officers elected for ’08 are: first vice president, Clyde T. Sharp, producer, Roll, AZ; second vice president, Wallace L. Darneille, cooperative, Lubbock, TX; and treasurer, John D. Mitchell, merchant, Cordova, TN. Mark D. Lange of Memphis, TN, was re-elected secretary and Allen A. Terhaar of Washington, DC, was re-elected assistant secretary.

CCI elected three new directors for ’08: Werner Bieri, manufacturer, Jefferson, GA; T. Jordan Lea, merchant, Greenville, SC; and Rickey L. Bearden, producer, Plains, TX.

C.B. “Chuck” Coley, a producer from Vienna, GA, was elected chairman of the American Cotton Producers (ACP) for ’08. Coley has served on numerous ACP and NCC committees, among them the ACP’s Payment Limit Eligibility Task Force and the NCC’s Marketing Loan Working Group. He currently serves on the NCC’s Farm Policy Working Group and its Doha Strategy Task Force.

Rick Bransford, Lonoke, AR, was elected as a vice chairman. Re-elected as vice chairmen were Clyde T. Sharp, Roll, AZ; and Danny Davis, Elk City, OK.  Chuck Lee, Pembroke, GA, was elected as the Southeast regional director. Re-elected as regional directors for the ACP are: Bowen Flowers, Clarksdale, MS, representing the Mid-South; Don Cameron, Helm, CA, representing the West; and Rickey L. Bearden, Plains, TX, representing the Southwest. Coley also will serve as the at-large director.

Serving as state producer chairmen for the ACP in 2008 will be: Alabama – Neal Isbell, Muscle Shoals, and Walter L. Corcoran, Jr., Eufaula; Arizona – Paco Ollerton, Casa Grande, and Greg Wuertz, Casa Grande; Arkansas – Joe Burns, Rector; California – Ted Sheely, Lemoore, and Tom Teixeira, Dos Palos; Florida – B. E. “Sonny” Davis, Cottondale; Georgia – James L. Webb, Leary, and Ronald C. Lee, Bronwood; Kansas – Robert H. Miller, Wellington; Louisiana – Boyd Holley, Bastrop, and Thomas A. Parker, Lake Providence; Mississippi – Dan Branton, Leland; Missouri/Illinois – Steve Droke, Hornersville, MO; New Mexico – Martin K. Sweetser, Deming; North Carolina – David M. Dunlow, Gaston, and Ronald Burleson, Richfield; Oklahoma – Danny Robbins, Altus, and Joe D. White, Frederick; South Carolina – Roy Baxley, Dillon, and Frank B. Rogers III, Bennettsville; Tennessee/Kentucky – Hedrick Shoaf, Milan, TN; Texas – James F. Dodson, Robstown; Doyle K. Schniers, San Angelo; Shawn L. Holladay, Lamesa; and Michael J. Alexander, Colorado City; and Virginia – Larry Darden, Carrsville.

NCC state unit officers elected for ’08 were: chairmen, vice-chairmen and secretaries, respectively: Alabama – Walter Corcoran, Jr., producer, Eufaula; Neal Isbell, producer, Muscle Shoals; and Dan Ellis, ginner, Eufaula. Arizona – Clyde T. Sharp, producer, Roll; Russell L. Kuhnhenn, ginner, Glendale; and Bill Brackett, ginner, Buckeye. Arkansas– Stewart Weaver, Jr., producer, Edmondson; Thad R. Freeland, ginner, Tillar; and Curtis H. Stewart, ginner, Dumas. California – Kevin M. Long, cooperative, Bakersfield; Robert J. Crume, warehouser, Bakersfield; and Stanley R. Creelman, ginner, Tulare. Florida - Jerry H. Davis, producer, Jay; B.E. Davis, Jr., producer, Cottondale; and Keith Pendergrass, ginner, Donalsonville, GA. Georgia – Louie Perry Jr., producer, Moultrie; Ben Evans, ginner, Douglas; and Don E. Daily, ginner, Dexter. Kansas – Robert H. Miller, producer, Wellington; Thomas L. Lahey, producer, Moscow; and Gary D. Feist, ginner, Anthony. Louisiana – Thomas A. Parker, producer, Lake Providence; Ted Schneider, producer, Lake Providence; and Larry Sayes, producer, Vick. Mississippi – J. Scott Middleton, Jr., cottonseed, Jonestown; David Cochran, ginner, Avon; and Meredith B. Allen, cooperative, Greenwood. Missouri/Illinois – Steven C. Droke, producer, Hornersville, MO; Stephen Harris, ginner, Senath, MO; and Allen Williams, ginner, Cardwell, MO. New Mexico – Martin K. Sweetser, producer, Deming; Ramon Alvarez, ginner, Anthony; and Nathan Jurva, producer, Carlsbad. North Carolina – Taylor Slade, producer, Williamston; David M. Dunlow, producer, Gaston; and Jerry L. Hamill, producer, Enfield. Oklahoma – Jay T. Cowart, warehouser, Altus; Sam Vinyard, producer, Altus; and Daniel M. Davis, producer, Elk City. South Carolina – Frank. B. Rogers, III, producer, Bennettsville; Roy Baxley, Dillon; and Malloy Evans, manufacturer, Cheraw. Tennessee/Kentucky – Hedrick Shoaf, producer, Milan, TN; Kirby Powell, cooperative, Jackson, TN; and Jeffery W. Hill, producer, Gates, TN. Texas – Doyle K. Schniers, producer, San Angelo; Jim Bradford, ginner, Dimmitt; and Rick Willis, warehouser, Brownfield. Virginia – Carlton Butler, producer, Carrsville; Lance Everett, cooperative, Stony Creek; and Randy Everett, producer, Stony Creek.

The National Cotton Ginners Assoc. (NCGA) elected its officers for ’08 at its annual meeting.

The officers include: president, Chris W. Breedlove, who is manager of the Olton Coop Gin in Olton, TX; first vice president, Sledge Taylor, Como, MS; second vice president, Kirk Gilkey, Corcoran, CA; third vice president, Kent Fountain, Surrency, GA; and chairman, Van Murphy, Quitman, GA. Harrison Ashley of Memphis serves as NCGA’s executive vice president.

Curtis Griffith of Morton, TX, was named the ’07 Horace Hayden National Cotton Ginner of the Year. Since ’92, he has served as president and general manager of a four-gin consortium - Southwest Gin of Texas. He also is the chairman of Module Truck Systems, which manufactures and services cotton module trucks.

In ’00, Griffith was the recipient of the Gerald W. Thomas Outstanding Agriculturist Award in Agribusiness from Texas Tech College of Agricultural Sciences and Natural Resources, and in ’98 was recognized as Distinguished Alumnus from the university’s Department of Agricultural and Applied Economics.

Dr. Bill Norman, NCC vice president, Technical Services and executive director of The Cotton Foundation, is the recipient of NCGA’s ’07-08 Distinguished Service Award. Norman joined the NCC in ’01 as director of Ginner Services and was later promoted to vice president, Ginner Services. Simultaneously, he served as NCGA executive vice president.

Former NCC President Kenneth Hood received the ’07 Harry S. Baker Distinguished Service Award for Cotton. The award, named for the late California industry leader and NCC President Harry S. Baker, is presented annually to a deserving individual who has provided extraordinary service, leadership and dedication to the US cotton industry.

Since 1962, Hood has been a partner in Perthshire Farms, a 12,000 acre cotton, soybean, peanut, grain sorghum and wheat operation in the Mississippi Delta community of Gunnison. He also is involved in H.B. Hood and Sons Gins, Hood Equipment Co., and InTime Inc., an aerial imagery-based precision farming service.

Reaching well beyond his operations, Hood’s resume is a profile of exceptional leadership and dedicated service to agriculture. He was NCC chairman in ’02, and is a past president of the National Cotton Ginners Assoc., Southern Cotton Ginners Assoc. and the Delta Council.

Others also have acknowledged Kenneth Hood’s outstanding leadership qualities. In ’88, he received Cotton Farming Magazine’s Farmer of the Year award. The New York Cotton Exchange named him the Cotton Marketer of the Year in ’92. In ’94, he received Progressive Farmer’s Man of the Year in Service to Mississippi Agriculture. He was named the National Cotton Ginner of the Year in ’97, and was recognized in ’00 as the Delta Council’s Outstanding Conservation Farmer of the Year.

The late Lon Mann, a former NCC president, is the recipient of the ’07 Oscar Johnston Lifetime Achievement Award.

The annual award is presented to an individual, now deceased, who served the cotton industry, through the NCC, over a significant period of his or her active business career. Recognizing more than office or position held, the award honors someone who, like Oscar Johnston, exerted a positive influence on the industry and who demonstrated character and integrity as well as perseverance and maturation during that service.

Mann, who was a partner in McClendon, Mann & Felton Gin Company in Marianna, AR, was a graduate of the University of Arkansas and third generation ginner and farmer who was involved in the ginning business his entire adult life. He was a leader in the re-vitalization of the National Cotton Ginners Assoc. and was a past president of that organization as well as the Southern Cotton Ginners Assoc. and the Arkansas Agricultural Council. He served as the NCC’s 27^th president in ’78 – only the third ginner at that point to hold the top NCC post. He also was a key player in the Cotton Producers Institute, the predecessor to Cotton Incorporated and served on the Cotton Board for more than 12 years.

Among the many awards Mr. Mann received during his lifetime was the NCC’s Harry S. Baker Distinguished Service Award and the NCGA’s Horace Hayden National Cotton Ginner of the Year Award.