Cotton's Week: December 19, 2008

US Trade Representative (USTR) Ambassador Susan Schwab announced that the United States has requested consultations under the WTO dispute settlement process with China regarding the “Famous Brands” programs. These programs cover textile manufacturing as well as appliances, medical equipment, chemicals and agricultural products. Such programs appear to be prohibited export subsidies and are protectionist industrial policies.

She stated, “We are going to the WTO today because we are determined to use all resources available to fight industrial policies that aim to unfairly promote Chinese branded products at the expense of American workers, farmers, ranchers, manufacturers, and intellectual property owners.”

NCC Chairman Larry McClendon said, “The U.S. cotton industry applauds the efforts of USTR to level the playing field in agricultural product and textile trade. Our domestic textile industry has been decimated by subsidized imports. Our producers need open markets in China as the current economic crisis dampens world demand. The NCC has continually impressed on USTR the importance of market access gains in China throughout the Doha negotiations.”

Working with the National Council of Textile Organizations, the NCC supported the research and development of background materials on many Chinese industrial policies related to textile production and export. These materials were provided to USTR in ’07.

USTR has discovered that China operates a wide range of policies to promote domestic production and export through multiple levels of government using subsidies ranging from cash grants to preferential loans and development funding. Consultations are the initial step in the WTO dispute settlement process. The complete USTR news release can be found at http://www.ustr.gov/.

President-elect Obama announced the nomination of former Iowa Gov. Tom Vilsack as Secretary of Agriculture. Vilsack was elected governor of Iowa in ’98 and re-elected in ’02.

The NCC issued a statement saying that although the cotton industry has not had an occasion to work with Governor Vilsack like our colleagues in the livestock, grain and oilseed industries, we are confident President-elect Obama has nominated a highly qualified individual to serve in this important position and to promote US agriculture.

The statement noted that cotton industry leaders across the country are anxiously awaiting the nomination of individuals to serve in key positions at USDA and other agencies who are familiar with Sunbelt agriculture and who understand the challenges of diverse crop production on commercially viable farms capable of competing in domestic and international markets.

Senate Agriculture Committee Chairman Harkin (D-IA) and ranking member of the Senate Finance Committee Grassley (R-IA) applauded the nomination of fellow Iowan Vilsack and noted his history of support for renewable fuels especially corn based ethanol. Harkin pledged to hold a confirmation hearing in early January shortly after the 11^th Congress convenes on Jan. 6.

President-elect Obama announced his intention to nominate Mary Schapiro to head the Securities and Exchange Commission (SEC); Gary Gensler to chair the Commodities Futures Trading Commission (CFTC); and Daniel Tarullo to fill one of three open seats on the Federal Reserve Board.

Schapiro currently serves as CEO of the Financial Industry Regulatory Authority, the largest non-governmental regulator of US securities firms. Schapiro served as a SEC commissioner from ’88-93 and chaired the CFTC during the Clinton Administration. Her nomination further strengthens speculation that the new Administration may support the merger of the CFTC with the SEC.

Gensler served as under secretary of the Treasury in the Clinton Administration and was a former partner at Goldman Sachs.

In related news, Rep. Xavier Becerra (D-CA) announced he had withdrawn his name from consideration to be US Trade Representative (USTR) so that he could remain in Congress. The likely pick for USTR is now former Dallas, TX, Mayor Ron Kirk.

Former Illinois Rep. Ray LaHood (R-IL) is expected to be the nominee for Secretary of Transportation and Rep. Hilda Solis (D-CA) is expected to be the nominee for Secretary of Labor. President-elect Obama also announced that Colorado Sen. Ken Salazar will lead the Interior Dept. Salazar is a fifth generation Colorado rancher who worked as that state's attorney general before his election to the Senate in ’04 where he serves on the Senate Energy and Natural Resources Committee.

In other announcements, Steven Chu, who won the ’97 Nobel Prize in physics, was selected for Secretary of the Energy Dept. Carol Browner was named to be the climate and energy “czar.” She will coordinate White House policy on energy and climate change among various federal agencies. Browner was the EPA administrator under the Clinton administration. Obama named Lisa Jackson to head the EPA. Jackson was a top EPA enforcement officer for 16 years and the former head of New Jersey’s Environmental Protection Dept. The White House Council on Environmental Quality will be run by Nancy Sutley, a deputy mayor of Los Angeles and, formerly, Browner’s special assistant at EPA.

Senate Majority Leader Reid (D-NV) announced Senate Committee Chairs for the 111^th Congress subject to confirmation of some Senators to Cabinet positions and the resignation of Sen. Biden (D-DE) to become Vice President.

Some of the new and returning chairs include:  Agriculture – Harkin (D-IA); Appropriations – Inouye (D-HI); Banking – Dodd (D-CT); Budget – Conrad (ND); Commerce – Rockefeller (D-WV); Energy and Natural Resources – Bingaman (D-NM); Environment and Public Works – Boxer (D-CA); Finance – Baucus (D-MT); Health, Education, Labor and Pensions – Kennedy (D-MA); Homeland Security – Lieberman (I-CT); Judiciary – Leahy (D-VT); Small Business – Landrieu (D-LA); and Foreign Relations – Kerry (D-MA).

The NCC has joined commodity and farm organizations in a letter urging Congress to eliminate or suspend the $5.5 billion cap on export credit guarantees. The cap was included in the ’08 farm law as a budget offset.

Previously, the statute required USDA to make up to $5.5 billion in export credit guarantees available annually. The letter explains that demand and prices skyrocketed earlier this year placing unanticipated demands on the GSM-102 program. As an example, when USDA announced availability of $3.5 billion in guarantees earlier this year, applications totaled $8 billion. The letter notes that export projections for FY09 recently have been reduced due in part to the lack of adequate export credit guarantees. The letter also notes that the budget impact of waiving or eliminating the cap is negligible.

In a related development, USDA published an Advance Notice of Proposed Rulemaking (ANPR) on Dec. 17 inviting comments on improvements and changes to be made in the implementation and operation of the GSM-102 programs with the intent of improving the program’s effectiveness, efficiency and to lower costs. The ANPR can be found in the Dec. 17 issue of the Federal Register pgs. 76568-76569. The NCC will work with a coalition of interested organizations to submit comments by the Feb. 2, ’09 deadline.

With little fanfare, USDA's Farm Service Agency (FSA) has implemented a significant change in the way it makes payments to farmers.

Lynn Tjeerdsma, FSA assistant deputy administrator for farm programs, says producers who want to receive farm program payments in calendar year ’08 must contact their county office immediately.

Apparently, all checks come from Kansas City and some county offices are far more efficient at processing loan requests and other paperwork. The result is a vast disparity in timing for producers. For example, producers in Hale County, TX, have been told a loan must be requested by close of business on Monday, Dec. 22 in order for a check to have a ’08 date.  However, producers in Floyd County, TX, have until close of business on Monday, Dec 29.

Tjeerdsma recommends producers check their bank accounts to make sure the money has been deposited. For more details, go to Agri-Pulse Communications website at http://agri-pulse.com and click on the News Network tab.

Among Cotton Production Conference workshops offered on Jan. 6-7 at the Beltwide Cotton Conferences will be a focus on precision agriculture, irrigation, spider mite management, pest resistance, best management practices, recordkeeping, options hedging, foliar pathogen management, cotton specialists working group, new developments from industry, cotton utilization, an economic outlook, Extension specialists’ outlook and producer roundtables.

Bill Robertson, NCC’s manager, Agronomy, Soils and Physiology and coordinator of BWCC programming, said another unique workshop, “BMP Scorecard,” will enable participants using eInstruction Classroom Performance System clickers to actively engage anonymously in an exercise to evaluate their use of best management prac­tices during the first 40 days after planting.

“This workshop increases even more the interaction we want between cotton producers and researchers, Extension specialists, consultants and others at the Beltwide,” Robertson said. “We want attendees not only asking questions and listening but sharing what they’ve learned.”

Robertson said he also anticipates solid attendance at the second annual Cotton Consultants Conference. That session, to be held on the afternoon of Jan. 5, will focus on agronomics and pest management. Crop consultants, county Extension agents, dealer and distributor field reps, industry field and tech reps, and producers who desire technical information are encouraged to RSVP for this conference before Dec. 29.

The Cotton Foundation exhibits will be open on Jan. 6-7, and the 11 Technical Conferences will convene on Jan. 7-8.

The ’09 Beltwide is being held on Jan. 5-8 at the Marriott Rivercenter/Riverwalk Complex in San Antonio. Programming, event schedules and other information can be found at https://www.cotton.org/beltwide.

A Cotton Council International (CCI) study shows that sourcing from the Western Hemisphere remains competitive with Asia.

The study, completed by Charles Gilbert Associates on behalf of CCI, updated cost data for manufacturing several knit products in Central America vs. Asia and found that with the duty advantage of the DR-CAFTA, sourcing there remains competitive with Asia.

The study was presented to the US mills participating in the COTTON USA Sourcing Program by conference call. The previous study was done in ’01.

Net export sales for the week ending Dec. 11 were 80,500 bales (480-lb). This brings total ’08-09 sales to slightly more than 7.8 million bales. Total sales at the same point in the ’07-08 marketing year were approximately 8.0 million bales. Total new crop (’09-10) sales are 98,600 bales.

Shipments for the week were 187,300 bales, bringing total exports to date to 4.6 million bales, compared with the 4.9 million bales at the comparable point in the ’07-08 marketing year.

Cotton’s Week will not be published on Dec. 26. The Jan. 2 edition will be distributed electronically only (via email). All editions are accessible on the NCC’s website at http://www.cotton.org/news/cweek/index.cfm.