|Conferees Resolving Farm Bill Issues|
House and Senate conferees, in a marathon late night session on May 1 and 2, reached consensus on all but a few provisions to be included in new farm legislation.
Conference Committee Chairman Harkin (D-IA) indicated that members and staff would continue to work through the weekend to resolve outstanding issues and, if necessary, would meet formally again on the afternoon of May 6. Resolution of several of the outstanding items will depend on Congressional Budget Office (CBO) scores.
During the May 1-2 overnight session, the conferees adopted agreements on the commodity programs that had been hammered out in meetings during the week. An amendment offered by Rep. Moran (R-KS) to restore a proposed 2% reduction in direct payments in ’09-’10-’11 was rejected by House conferees because the savings eliminated by the amendment would have required adjustments in the commodity title provisions.
The cotton title, subject to a final CBO score, retained the base loan at 52 cents, the direct payment (before reduction) at 6.67 cents/lb. and the target price at 71.25 cents/lb.
The cotton title also includes certain adjustments in the calculation of the weekly adjusted world price to make it more market oriented and authorizes a textile competitiveness program that will provide US mills 4 cents/lb. for every pound of cotton consumed beginning Aug. 1, ’08. In ’12, the rate changes to 3 cents/lb.
Two of the unresolved items are the adjusted gross income (AGI) test and beneficial interest. The Administration continues to insist on a $200,000 AGI and on requiring producers to have a cash sale or contract before requesting a loan deficiency payment or redeeming a loan if the redemption price is below the loan.
Conferees discussed an AGI test that would use non-farm income to determine eligibility for commodity and conservation program benefits. The new concept also would have reduced direct payments when farm income rose above a certain level.
During the overnight meeting, members were moving back to a so-called soft cap as provided in the Senate bill, which would deny benefits to high income individuals who derive less than two-thirds of their income from farming, ranching and forestry. The approach would be consistent with the provisions first enacted in ’02.
Members are expected to continue to discuss the AGI and beneficial interest provisions over the weekend. It is unclear whether the provisions agreed to on May 1-2 and modifications of the AGI and beneficial interest will result in a Presidential signature or a veto.
Congress approved and the President signed a two-week extension of current law through May 16.
|Farm Bill Gets ACP Focus|
The American Cotton Producers (ACP), chaired by Georgia producer Chuck Coley, convened their initial ’08 meeting in Little Rock, AR, where the primary focus centered on the ’08 farm bill status.
NCC Chairman Larry McClendon, an Arkansas producer and ginner, welcomed the group and reviewed a number of recent NCC activities. He noted that the NCC, along with its efforts on the farm bill and trade, is working in the areas of federal appropriations and on several important crop protection and biotechnology issues. McClendon also discussed the NCC’s continued cooperative programs with China, including the upcoming leadership exchange being led by NCC Vice Chairman Jay Hardwick, a Louisiana producer.
Reporting by telephone from Washington, DC, NCC Senior Vice President John Maguire said that the House and Senate conferees have made considerable progress on the bill, including agreement on budget offsets for the over-baseline spending and tax reform provisions. He reported details of the cotton title that were near agreement at the staff level and on the latest proposals for adjustments to payment eligibility and limits. He said that discussions were still underway on these and other provisions.
Darryl Earnest, with the USDA Agricultural Marketing Service’s Cotton Division, provided a detailed report on the classing office activities, including the agency's proposal to increase classing fees to $2.00 per bale.
Andy Weil, with Weil Brothers and current American Cotton Shippers Assoc. (ACSA) president, discussed the cotton industry's concerns and reactions regarding the current futures market. He cited ACSA, AMCOT and NCC positions that were conveyed at the recent Commodity Futures Trade Commission forum in Washington, DC.
Representatives from Dow AgroSciences reviewed their intentions to develop an additional herbicide resistant gene to accompany the current glyphosate-resistant gene in most cotton varieties.
Gary Adams, the NCC’s vice president of Economics and Policy Analysis, provided a detailed cotton economic update as well as a status report on the latest trade negotiations.
Adams reiterated concerns that the current World Trade Organization (WTO) draft text developed by agriculture negotiating Chairman Crawford Falconer does not contain an appropriate balance between concessions in domestic support and gains in market access. The commodity-specific limitations on cotton support are not met with equal ambition in market access. In times of low cotton prices, allowed support under the Falconer text would be substantially below historical levels. At the same time, exemptions and loopholes in market access would enable countries such as China to avoid any meaningful liberalization of current quotas and tariffs.
In recent weeks, Adams noted, the talks have focused on technical details of market access such as the treatment of so-called “sensitive” products and tropical products. He said Chairman Falconer has indicated that further discussions are necessary before a possible release of a revised text during the week of May 12 at the earliest.
Once the revised text is released, Adams said, WTO officials are aiming for a ministerial meeting in coming weeks. Press reports indicate that a ministerial could be targeted for late June or July.
|New Bale Transfer Protocol Noted|
USDA is asking cotton merchants to send all requests to terminate transfers of loan bales to each of the following: Gene Rosera, email@example.com (202-720-8481); Shanita Hines, firstname.lastname@example.org (202-720-9888); Shannon Fulghem, email@example.com (816-926-1533); and Fred Gustafsen, firstname.lastname@example.org (816-926-2137).
USDA said simultaneous notification of all of these individuals will help insure expeditious processing of transfer termination requests.
|Sales Surge, Shipments Steady|
Net export sales for the week ending April 24 were 669,400 bales (480-lb) – a marketing-year high. This brings total ’07-08 sales to approximately 13.1 million bales. Total sales at the same point in the ’06-07 marketing year were roughly 12.1 million bales. Total new crop (’08-09) sales are 585,200 bales.
Shipments for the week were 203,400 bales, bringing total exports to date to 9.3 million bales, compared with the 7.2 million bales at the comparable point in the ’06-07 marketing year.
|Cotton Logistics Issue Monitored|
A number of transportation issues threaten cotton flow, including concerns over container availability, rail access and squeezes placed on agricultural exports by a shortage of cargo ships.
The container/vessel space crisis has taken center stage in recent weeks, along with Congressional hearings on legislation to end the exemption from antitrust law for railroads.
The Agriculture Transportation Coalition (AgTC) held an emergency meeting recently to address the container and vessel space shortage crisis. The agricultural community is considering a number of options for addressing the shortages.
The House Judiciary Committee recently approved a bill that would eliminate the railroad industry’s exemption from antitrust law. Shippers, especially those who use only one rail line, have long complained about inadequate competition and unfair rates. The measure, sponsored by Rep. Baldwin (D-WI), would allow private parties and state attorneys general to seek injunctions against railroad carriers for anti-competitive actions.
Cotton Belt co-sponsors of the House bill include Reps. Alexander (R-LA), Baker (R-LA), Berry (D-AR), Bonner (R-AL), Boren (D-OK), Grijalva (D-AZ), Inglis (R-SC), Renzi (R-AZ), Ross (D-AR), Snyder (D-AR) and Wamp (R-TN).
The Senate companion bill was sponsored by Sen. Kohl (D-WI) and includes Cotton Belt co-sponsors Sens. Lincoln (D-AR) and Vitter (R-LA).
The bill also would clarify that antitrust enforcement is not limited to the Surface Transportation Board. The Justice Dept. and the Federal Trade Commission also would have jurisdiction over railroad mergers. The bill would strike all antitrust exemptions for mergers, acquisitions, collective rate-making and coordination among railroads.
NCC and US cotton industry representatives plan to attend the AgTC annual meeting in San Francisco on June 12-13.
|Contamination Information Sought|
The NCC has initiated an online survey to increase the US cotton industry’s understanding of issues related to lint contamination and bale packaging material performance. The survey is directed to US textile mills.
A letter from NCC Chairman Larry McClendon is being sent to NCC mill members encouraging their participation. The letter notes that the “KeepItClean” survey is in response to NCC policy and is being conducted in cooperation with the NCC and National Council of Textile Organizations.
The questionnaire, which is on the NCC’s web site at http://www.cotton.org/survey/08keepitclean, needs to be completed by July 11. Survey results will be available on the NCC’s web site and at the NCC’s ’08 Mid-Year meeting in August.
|Cotton Business Generated in Peru|
Through its COTTON USA Sourcing Program, Cotton Council International promoted US cotton yarn and fabrics during the Peru Moda trade show. The Sourcing Program brought US mills Buhler Quality Yarns Corp., Clovertex, Frontier Spinning and Parkdale, to visit 30 Peruvian companies while in Lima.
The show enabled Peruvian and US companies to take advantage of new business opportunities available under the Peruvian Free Trade Agreement (PFTA). In addition, the COTTON USA Sourcing Program hosted a conference for textile industry managers on implementing the PFTA with the United States.
|Prices Effective May 2-8, '08|