Cotton's Week: June 20, 2008

The House and Senate overwhelmingly voted to override the President’s veto of the farm bill which was approved by Congress after a clerical error was made in the version transmitted to the President and vetoed on May 21.

That version (HR 2419) was discovered to have omitted one of the titles, so Congress subsequently passed a replacement – (HR 6124) – which is identical and complete. That version was vetoed on June 18, and the House and Senate acted quickly to override the veto by votes of 306-110 and 80-14 respectively.

USDA has been working to implement the new legislation since 14 titles of the legislation became law on May 22.

Department officials indicated they expect to begin sign-up for the ’08 crop Direct and Counter-Cyclical Payment Program as early as next week. USDA also has released the ’08 crop cotton premium and discount schedule.

NCC members are strongly encouraged to attend one of the NCC’s farm law information meetings during the week of June 23 in the Southeast, Southwest and Far West. The NCC has completed all of its scheduled meetings in the Mid-South region and several meetings in the Southeast.

The purpose is to review key provisions of the new Food, Conservation and Energy Act of 2008. A summary of the provisions is on the NCC’s web site at www.cotton.org/issues/members/07farmbill/final/frmbillsumm.cfm.

The meetings, which include a question and answer period, are open to other industry, media and agribusiness representatives. Meeting dates, locations and times (all times local) are:

Southeast Region:
June 23 -- Belle Mina, AL, 9 am - Tennessee Valley Research & Extension Substation; Prattville, AL, 3 pm - Bass Pro Shops Outdoor World – Conference Room
June 24 -- Atmore, AL, 10 am - Creek Family Restaurant – Weatherford Room
June 25 -- Donalsonville, GA, 10 am - Lions Hall

Southwest Region:
June 23 -- Wellington, KS, 8 am - Raymond Frye Complex; Weslaco, TX, 9 am - TAMU Citrus Center - Richard Hensz Auditorium; Robstown, TX, 3 pm - Nueces County Fair Grounds - Conference Center Ballroom A; Hugoton, KS,  4 pm - Memorial Hall
June 24 -- El Campo, TX, 9 am - Civic Center; Dumas, TX, 10 am - Moore County Community Bldg.; Seagraves, TX, 10 am - Community Bldg.; Victoria, TX, 3 pm - Howard Johnson Hotel – Colorado Room; Plainview, TX, 3 pm - Ollie Liner Center; Midland, TX, 3 pm - Midland County Horseshoe
June 25 -- Uvalde, TX, 10 am - Uvalde Quality Inn – Sage Room; Lubbock, TX, 10 am - Plains Cotton Cooperative Assn.; San Angelo, TX, 10 am - Texas Agri-Life Research & Extension Center;
Lamesa, TX, 2 pm - Dawson County Community Center; Abilene, TX, 3 pm - Abilene Christian University – Cullen Auditorium
June 26 -- El Paso, TX, 10 am - Wyndham Hotel – Theater; Altus, OK, 10 am – Oklahoma Cotton Cooperative Assn.

Western Region:
June 23 -- Dos Palos, CA, 10 am - DES Hall; Coalinga, CA, 2:30 pm - Harris Ranch – Garden Ballroom
June 24 -- Bakersfield, CA, 10 am - Kern Ag Pavilion; Yuma, AZ, 3 pm - Booth Equipment
June 25 -- Maricopa, AZ, 10 am - Maricopa Ag Center – Multipurpose Room; Thatcher, AZ, 3 pm - Eastern Arizona College – Activity Center Meeting Room

A NCC leadership team will visit China June 20-30 to see its cotton industry development and continue building a relationship with US raw cotton’s No. 1 customer.

NCC Vice Chairman Jay Hardwick, a Newellton, LA, producer, will lead the delegation, which will include producers John Lindamood, Tiptonville, TN; C.B. “Chuck” Coley, Vienna, GA; and Eddie Smith, Floydada, TX; along with warehousemen Trent Felton, Marianna, AR, and Dean Church, Lubbock, TX; ginner Sid Brough, Edroy, TX; merchant Cameron Austin, Dallas, TX; and cooperative official Jarral Neeper, Bakersfield, CA. Dr. Gary Adams, NCC’s vice president, Economics & Policy Analysis, will accompany the group.

“This visit continues a healthy dialogue and interaction between the U.S. and Chinese cotton industries,” Hardwick said. “Learning more about China’s cotton infrastructure, its standards, marketing practices, policies and their overall raw cotton needs will be invaluable in helping U.S. cotton continue to supply the type of fiber and service this rapidly growing country requires. Acquiring this in-depth understanding is essential to ensuring our industry’s competitiveness in today’s global marketplace.”

This visit will build on previous China cotton industry familiarization trips by US cotton leaders, including a fact-finding effort in Oct. ’06 and a June ’07 mission in which US cotton leaders and USDA officials updated Chinese cotton industry officials and mill buyers on US cotton quality.

Cotton Council International coordinated the tour.

USDA Farm Service Agency (FSA) Administrator Teresa Lasseter announced that eligible farmers who suffered quality losses to their crops in recent years can enroll in the Crop Disaster Program 2005-2007 (CDP) at local FSA service centers starting June 23, ’08.

The CDP provides benefits to farmers who suffered losses to their ’05-07 crops from natural disasters and related conditions. Producers who incurred qualifying quantity or quality losses in ’05, ’06 or ’07 may receive benefits for only one of these years. However, producers may apply for benefits for losses to multiple crops as long as the losses occurred in the same crop year.

Only producers who obtained crop insurance coverage or coverage under the Noninsured Crop Disaster Assistance Program (NAP) for the year of loss will be eligible for CDP benefits. Producers must have suffered quality losses of at least 25% to be eligible for CDP Quality Loss. The payment rate is set at 65% of the amount of the affected crop multiplied by 42% of the per-unit average market value in the year in which the loss occurred.

Producers may receive assistance for both quantity and quality losses. However, the total quantity and quality assistance, together with any crop insurance or NAP payment received for the same crop and the value of the crop production not lost, must not exceed 95% of the total value of the crop absent the disaster.

More CDP Quality Loss details are at http://www.fsa.usda.gov/Internet/FSA_File/cdpqlty08.pdf. For more information about CDP and other disaster programs implemented by FSA, visit http://disaster.fsa.usda.gov.

NCC staff attended the Agriculture Transportation Coalition’s (AgTC) ’08 Annual Conference to get an update on shipping container availability and other issues affecting cotton flow.

AgTC Executive Director Peter Friedmann told attendees that small- and mid-size agricultural shippers are facing incredibly long waits, sometimes months, just to receive a slot on an outbound vessel. He said an imbalance in imports to exports, especially in a system designed to maximize import traffic, has only exacerbated inefficiencies on the export side – prompting AgTC to urge exporters to book space as far as 12 weeks ahead.

Friedmann says the real solution is for shipping lines to begin talking to their export customers.

“We could export a good 20 percent more in domestic agricultural products if there was the (ocean carrier) capacity to handle it," he said. “When are the carriers going to realize that the balance of trade has shifted, and exporters are the new revenue drivers for this industry. There is a shortage of space in all areas of shipping, including both reefer and dry bulk. This is not a temporary blip in world trade … it’s an ongoing and long-term phenomenon.”

Drewry Supply Chain Advisers' Analyst Philip Damas told the audience that his firm's latest research highlights that shippers across the board were caught unaware by the ocean carriers' redeployment of vessel capacity from the transpacific routes to the Asia/Europe routes. He said that because imports have driven the West Coast shipping markets for so long, the entire system was built up around the demands and needs of importers, while the needs of exporters were long ignored.

“As a consequence, there are a number of mismatches between import delivery locations and outbound depots,” Damas noted. “And as we all know, that means a substantial reduction in the availability of empty boxes.”

Cotton representatives told attendees that the volume of exports of non-cotton commodities is making it very difficult to secure equipment and vessel space. They also stressed the need for assistance from carriers, ports and terminal operators. Those interests were urged to introduce the efficiencies from their overseas operations into their US operations.

Members of the ’07-08 Cotton Leadership Class completed the Washington portion of their year-long program.

During their visit, the class met key members of Congress, including Sen. Chambliss (R-GA) and Rep. Conaway (R-TX), Congressional staff and top USDA officials, including Under Secretary Mark Keenum. They also visited the White House, and met officials at EPA and Department of State.

The class discussed the development and implementation of farm policy, recent developments in trade policy and the regulatory agenda at USDA and EPA. They were briefed on NCC and Cotton Council International and accompanied by NCC staff during their meetings on Capitol Hill and with various agencies.

Mid-South cotton producers will see innovative production practices in Arizona and California on June 23-26 during the initial ’08 Cotton Foundation Producer Information Exchange (PIE) Program tour.

Now in its 20^th year, PIE is supported by a grant from Bayer CropScience. The program’s overall goal is helping participants improve yield/fiber quality by introducing them to different and efficient methods of land preparation, planting, fertilization, pest control, irrigation and harvesting from peers in the Cotton Belt’s four major production regions.

Tour participants are Mississippi producers Marc Archer, Greenwood; Brian Vanlandingham, Greenville; Justin Jefcoat, Itta Bena; and Darrington Seward, Yazoo City; along with Louisiana producers John Carroll, Gilbert; Robbie Duncan, III, Pineville; and Stephen Logan, Gilliam.

The P.I.E. Program is facilitated by the NCC’s Member Services staff in cooperation with local producer associations in the regions. Southwest producers will travel to North Carolina on July 20-25; Far Western producers will visit Arkansas, Mississippi and Tennessee on Aug. 10-15; and Southeastern producers will visit Texas on Aug. 17-22. After these tours, the PIE program will have exchanged more than 850 individual US cotton producers.

Net export sales for the week ending June 12 were 44,800 bales (480-lb). This brings total ’07-08 sales to approximately 15.3 million bales. Total sales at the same point in the ’06-07 marketing year were roughly 14.1 million bales. Total new crop (’08-09) sales are 906,700 bales.

Shipments for the week were 311,900 bales, bringing total exports to date to 11.4 million bales, compared with the 10.0 million bales at the comparable point in the ’06-07 marketing year.

With approximately two months remaining in the marketing year, weekly shipments must average roughly 360,000 bales to reach the USDA projection of 13.90 million bales.