Cotton's Week: January 16, 2009

Senate Agriculture, Nutrition & Forestry Committee Chairman Harkin (D-IA), following that panel’s confirmation hearing of Tom Vilsack as President Obama’s Agriculture Secretary, said he expected the former Iowa Governor to get unanimous Senate confirmation on Jan. 20.

“He (Vilsack) knows production agriculture and what is needed to promote profitability and a better future, including for beginning farmers and ranchers,” Harkin said. “He gained a lot of experience the hard way — representing farmers in wrenching financial situations as a county seat lawyer during the farm crisis of the 1980s.”

During the hearing, Vilsack said he will do all that is in his power to “administer a robust safety net and create real and meaningful opportunities for U.S. farmers and ranchers to compete” if confirmed. He also pledged to implement the 600 provisions and 15 titles of the ’08 farm bill “promptly and consistent with congressional intent” and to leverage the financial commitment of the farm bill and any stimulus bills to help rural America.

Vilsack said he sees conservation programs as a source of revenue for rural communities and farms that should be treated "almost as a commodity." He said USDA should work with states to promote efficient marketing of ethanol and cited an Iowa tax credit for fuel retailers who sell biofuels as one example of what can be done.

On the issue of farm program payments, Vilsack said it's important that farmers who deserve payments get them and those people who don't deserve payments under the law should not. He said the USDA needs a better data base on program payments, "for us to learn from that data whether we need changes."

House Agriculture Committee Chair Peterson (D-MN) announced that panel’s Members for the 111th Congress. Included are 28 Democrats and 17 Republicans with one Republican seat left vacant.

New Cotton Belt Democrats: Bright (AL), Childers (MS) and Kissell (NC). Returning:  Baca (CA), Cardoza (CA), Costa (CA), Cuellar (TX), Marshall (GA), McIntyre (NC) and Scott (GA).

New Cotton Belt Republicans:  Luetkemeyer (MO) and Roe (TN). Returning: Conaway (TX), Foxx (NC), Goodlatte (VA), Graves (MO), Lucas (OK), Moran (KS), Neugebauer (TX) and Rogers (AL).

Lucas will serve as the committee’s ranking member, as Goodlatte's service as ranking member was term limited according to Republican Caucus rules

The Agriculture Committee has jurisdiction over a wide range of agriculture and rural development issues. These areas include renewable energy, disaster assistance, nutrition, crop insurance, conservation, international trade, futures market regulation, animal and plant health, agricultural research, bioterrorism, forestry, and others.

In its January report, USDA projects a ’08-09 US crop of 13.04 million bales, down 570,000 bales from December’s report (see following table for state estimates).

US mill use dropped 100,000 bales to 4.20 million bales while exports fell to 12.00 million bales from 12.25 million. This generates ’08-09 offtake of 16.20 million bales. Ending stocks for ’08-09 are seen at 6.90 million bales for a stocks-to-use ratio of 42.6%.

USDA’s January report lowers ’08-09 world production estimates 1.72 million bales from December’s report to 109.84 million bales.

World mill use was lowered 1.35 million bales to a projected 115.24 million bales. Consequently, world ending stocks for ’08-09 are projected to be 59.40 million bales for a stocks-to-use ratio of 51.5%. 

USDA issued interim final rules on several conservation programs as well as a request for proposals for an additional program. Rules were issued for the Environmental Quality Incentives Program (EQIP) and the Wetlands Reserve Program (WRP).

EQIP is USDA’s largest conservation program for working agricultural lands. USDA published an interim final rule containing the statutory changes to EQIP in the Federal Register and is seeking public comment on the rule through March 16, ’09. The public comments will be used to finalize the interim final rule. USDA will publish a final rule, which will incorporate statutory changes and establish the program's policy for the life of the ’08 Farm Bill.

The Food, Conservation, and Energy Act of 2008 includes non-industrial private forestland as an eligible land use and provides payments for conservation practices related to organic production or the transition to organic production. It also provides for increased payment rates to historically underserved producers, including limited resource, beginning, and socially disadvantaged farmers and ranchers. It reduced the overall payment limitation from $450,000 to $300,000 for a six-year period, except for environmentally significant projects.

The new farm law also established the Agricultural Water Enhancement Program (AWEP) as a component of EQIP. AWEP provides technical and financial assistance to help producers carry out water enhancement activities on private agricultural land for the purpose of conserving surface and ground water and improving water quality. USDA published a Request for Proposals for AWEP in the Federal Register on Jan. 14, ’09.

USDA also announced an interim final rule for the WRP. WRP, administered by USDA's Natural Resources Conservation Service, provides technical and financial assistance to eligible landowners to address wetland, wildlife habitat, soil, water and related natural resource concerns on private agricultural land. The program provides landowners financial incentives to protect, restore, and enhance wetlands on their property. This voluntary program strives to achieve the greatest wetland functions and values and optimize wildlife habitat on every enrolled acre.

Public comments on the WRP rule will be accepted through March 16, ’09. NCC will continue to review these and other rules as they are released in the coming weeks and will formally comment on the programs.

A three-judge panel of the US Court of Appeals for the Sixth Circuit vacated an EPA rule exempting certain applications of pesticides from the requirement for Clean Water Act (CWA) pollution discharge permits (National Cotton Council of America v. EPA, 6th Cir., No. 06-4630).

The case is a consolidated suit involving a number of plaintiffs who were dissatisfied with EPA’s rule concerning its interpretation of the Clean Water Act (CWA). Specifically, the ’06 EPA rule exempted certain pesticide applications on or near water from the requirement under CWA for a National Pollutant Discharge Elimination System (NPDES) permit.

The NCC was one of multiple plaintiffs that sued the EPA to seek to expand the rule to include all pesticide applications.  These petitioners were joined into one lawsuit and the NCC happened to be named on the consolidated case.

The practical reasoning behind the suit was that EPA’s exhaustive risk assessments for pesticide registrations include the possible effects on aquatic species and drinking water, and that if there are minor risk concerns, EPA requires mitigation measures such as buffers. Additionally, the legal requirements for use of a pesticide stated on the label include precautions to minimize drift onto waters. 

The Sixth Circuit said the rule was “not a reasonable interpretation” of the CWA’s permitting requirements and rejected EPA's contention that when pesticides are applied in or over water to control pests, they are not considered pollutants as long as they comply with FIFRA.

The NCC and other groups are analyzing the decision and determining the next steps to take on this issue. The court’s decision is available at http://www.westernlaw.org/files-1/09a0004p-06.pdf.

USDA announced changes in the Extra Long Staple (ELS) Cotton Competitiveness Program by changing the program’s parameters for competing foreign growths. The changes reflect developments in foreign ELS cotton production and marketing that have occurred since the program was established.

The ELS Program, implemented in Oct. ’99, is designed to ensure the marketability of US ELS cotton. The program has, from its inception, based payment rate determinations upon the differences between the US ELS price quote and price quotes of three selected foreign long staple cotton growths—Giza 70, Giza 86 and C. Asia.

The price quotes utilized are those reported daily by Cotlook Ltd. Giza 70, which is no longer produced, is not reported by Cotlook and the C. Asia quote is rarely reported.

The revisions will more closely reflect the changes in foreign ELS cotton production and price quote availability by replacing the Giza 70 quote with a Giza 88 quote and by replacing the C. Asia quote with the long staple cotton quote for Israel.

Effective beginning Friday, Jan. 16, the foreign growths considered in determining payment eligibility and payment rates for the ELS Cotton Competitiveness Program, and their respective quality adjustments in parentheses, are—Giza 86 (14.63 cents), Giza 88 (-4.23 cents) and Israel (4.66 cents).

Net export sales for the week ending Jan. 8 were 128,800 bales (480-lb). This brings total ’08-09 sales to approximately 8.4 million bales. Total sales at the same point in the ’07-08 marketing year were approximately 8.8 million bales. Total new crop (’09-10) sales are 99,600 bales.

Shipments for the week were 206,200 bales, bringing total exports to date to 5.4 million bales, compared with the 5.6 million bales at the comparable point in the ’07-08 marketing year.