Cotton's Week: January 30, 2009

Agriculture Secretary Tom Vilsack said the Commodity Credit Corp. (CCC) will make $490 million available in partial ’08 Counter-Cyclical Program (CCP) payments to eligible producers with enrolled upland cotton base acres in the Direct and Counter-Cyclical Program. The projected partial CCP rate for producers with enrolled upland cotton base acres is 5.03 cents per pound or 40% of the projected total rate of 12.58 cents per pound.

CCC makes partial CCP payments after the completion of 180 days of an applicable crop's marketing year when its effective price falls below its target price. The effective price equals the direct payment rate plus the higher of either: (1) the national average market price received by producers during the marketing year; or (2) the national average loan rate for the commodity. The counter-cyclical payment amount equals the CCP rate, multiplied by 85% of the farm's base acreage, multiplied by the farm's CCP yield.

Previously, NCC Chairman Larry McClendon sent a letter to Secretary Vilsack requesting that he utilize the authority available under the ’08 farm law to make a partial counter-cyclical payment for ’08 upland cotton available and at the maximum level, effective Jan. 27. The letter is at http://www.cotton.org/issues/2009/ccplet09.cfm.

Agriculture Secretary Tom Vilsack said he will extend the comment period for the ’08 farm bill farm program payment limitation and payment eligibility rulemaking process. Vilsack said as part of the regulatory review process outlined by the White House and Office of Management and Budget (OMB), he is directing USDA to extend the comment period for the payment limits rule for an additional 60 days.

"Let's be clear - in no way is this move a signal that we will modify the rules for the 2009 crop year," Vilsack said. "Sign up has begun and it's important that clear and consistent rules remain in place so that producers can prepare for the crop year and manage their risk appropriately."

"In keeping with President Obama's recent pledge to make government more transparent, inclusive, and collaborative, I would like to pursue an extended comment period so that more farmers and other individuals can participate in this rulemaking process," he said. "I'm particularly interested in suggestions that would help the Department target payments to farmers who really need them and ensure that payments are not being provided to ineligible parties for future crop years."

The NCC joined with other commodity and general farm organizations in requesting a 30-day extension of the Jan. 28 comment submission deadline (see 1/23/09 Cotton’s Week).

House Agriculture Committee Chairman Peterson (D-MN) released draft language of the Derivatives Markets Transparency and Accountability Act of 2009. The new bill is similar to ’08 legislation that was approved by the House but was not brought before the Senate. However, the bill, in its current form, would exempt some over-the-counter (OTC) transactions from settlement through a regulated clearing agency.

The bill would require the CFTC to disaggregate and publicize: 1) the number and total value of positions held by index funds, and 2) data on speculative position limits held by bona fide commercial hedgers. The CFTC also would propose a rule defining and classifying index traders and swap dealers for data reporting requirements and setting reporting requirements for transactions in designated contracts markets, derivative transaction execution facilities, foreign boards of trade and electronic trading facilities. The legislation also subjects OTC transactions in all commodities to reporting and recordkeeping requirements.

To handle the new responsibilities and oversight, the CFTC would be allowed to hire at least 200 new full time employees. The legislation is at http://agriculture.house.gov/index.shtml.

Cargill Cotton CEO Gary Taylor is scheduled to testify on behalf of the NCC, American Cotton Shippers Assoc. and AMCOT at a Feb. 4 hearing.

The Senate Agriculture, Nutrition & Forestry Committee’s new members, Sens. Kirsten Gillibrand (D-NY) and Michael Bennet (D-CO), will join other Democratic Committee members: Chairman Tom Harkin (IA), Pat Leahy (VT),  Kent Conrad (ND), Max Baucus (MT), Blanche L. Lincoln (AR), Debbie Stabenow (MI), Ben Nelson (NE), Sherrod Brown (OH), Bob Casey (PA) and Amy Klobuchar (MN). The panel’s Republicans are: Ranking Member Saxby Chambliss (GA), Dick Lugar (IN), Thad Cochran (MS), Mitch McConnell (KY), Pat Roberts (KS), Mike Johanns (NE), Chuck Grassley (IA), John Thune (SD) and a vacancy.

The House Agriculture Committee held its organizational meeting and released lists of subcommittee rosters.

Members of the General Farm Commodities and Risk Management subcommittee are: (Democrats) – Chairman Leonard Boswell (IA), Jim Marshall (GA), Tim Waltz (MN), Kurt Schrader (OR), Stephanie Herseth-Sandlin (SD), Betsy Markey (CO), Larry Kissell (NC), Deborah Halvorson (IL), Earl Pomeroy (ND) and Travis Childers (MS); and (Republicans) – Ranking Member Jerry Moran (KS), Tim Johnson (IL), Sam Graves (MO), Steve King (IA), Mike Conaway (TX), Robert Latta (OH) and Blaine Luetkemeyer (MO).

This subcommittee has jurisdiction over programs and markets related to cotton, cottonseed, wheat, feed grains, soybeans, oilseeds, rice, dry beans, peas, lentils, the Commodity Credit Corp., and risk management, including crop insurance and commodity exchanges.

The House adopted by voice vote an amendment offered by Rep. Kissell (D-NC) to H.R. 1 -- the American Recovery and Reinvestment Act -- that would mandate that any textile and apparel products purchased by the Dept. of Homeland Security’s (DHS) Transportation Security Administration (TSA) be made with 100% US content.

The amendment extends the current Berry Amendment program to the DHS but only would cover prospective procurement of uniforms and other textile product for TSA workers by the US government. The Berry Amendment requires the Defense Dept. to buy certain products, judged essential to military readiness, with 100% US content and labor. These products include clothing and other textile items, specialty steel and food.

The US textile and apparel sector has been hit particularly hard by the economic downturn with 60,000 jobs lost during the past 12 months. In the past year, 44 textile plants have closed, including 14 in North Carolina, 10 in South Carolina, four in Georgia, and seven in both Alabama and Virginia.

“We would like to thank Congressman Kissell in particular for offering this amendment which has been long sought after by the textile industry,” National Council of Textile Organizations Chairman Anderson Warlick said. “The Kissell Amendment will provide an important stimulus to the U.S. textile and apparel manufacturing sector, which employs almost 470,000 workers in the United States.”

 NCC Chairman Larry McClendon noted that the Kissell Amendment was carefully crafted so as not to violate any US trade agreements or obligations.

The NCC earlier had joined onto a letter with industry trade associations and labor unions urging Representatives’ support of the Kissell Amendment. The letter, at http://www.cotton.org/upload/09KissellAmendmentletter.pdf, pointed out that like other sectors of the economy, the US textile and apparel industry has been battered by a flood of unfairly subsidized imports in recent years and since Dec. ’00, the United States has run a cumulative $575 billion trade deficit in textiles and apparel and suffered through the destruction of 587,000 million middle-class American textile and apparel manufacturing jobs.

On Jan. 16, ’09, registrants signed an agreement with EPA which permits the continued use of MSMA. EPA has decided that MSMA use on cotton is eligible for re-registration and will amend the Re-Registration Eligibility Decision of Aug. 10, ’06, accordingly.

The label use of MSMA products on cotton will be revised to allow one annual application of 2 lbs/acre with one additional application when required. Pre-plant application no longer will be permitted and 50-foot buffer strips will be required on fields bordering permanent water bodies.

EPA has requested that all registrants of MSMA provide data confirming that no detectable residues of inorganic arsenic are present in meat or milk of cows due to consumption of by-products from cotton treated with MSMA. To prevent restrictions on rotation of cotton with edible crops, the registrants will provide EPA with information on uptake of MSMA by food crops grown in rotation with cotton.

EPA has extended until Nov. 20, ’13 the compliance date for farms that meet the qualified facilities criteria to prepare or amend their Spill Prevention, Control, and Countermeasure (SPCC) plans and implement those plans under the SPCC rule.

The rule is a component of EPA’s multi-phased strategy to address concerns with the current regulation. A farm will meet the qualified facility criteria if it: has an aggregate above-ground storage capacity of 10,000 US gallons or less; and has had no single discharge exceeding 1,000 US gallons or no two discharges exceeding 42 US gallons within any 12-month period in the three years prior to the SPCC Plan certification date, or since becoming subject to this rule if the facility has been in operation for less than three years.

An EPA fact sheet is at http://www.epa.gov/oem/docs/oil/spcc/SPCCFactsheet_Compliance_Jan09.pdf.

According to the Commerce Dept., December (5-week month) total cotton consumption in domestic mills was 116.5 million pounds, for a seasonally adjusted annualized rate of 3.07 million bales (480-lb). Last year’s December annualized rate was 4.74 million bales.

The November (four-week month) estimate of domestic mill use of cotton was lowered by 152,000 pounds to 142.1 million. The revised seasonally adjusted annualized rate of consumption for November is 4.00 million bales. This is lower than last year’s November annualized rate of 4.81 million bales.

Using the latest Commerce figures, calendar ’08 mill use is estimated to be 2.09 billion pounds or 4.36 million bales. This is lower than calendar year ’07’s use of 4.82 million bales. Preliminary January domestic mill use of cotton and revised December figures will be released by Commerce on Feb. 26.

Net export sales for the week ending Jan. 22 were 113,800 bales (480-lb). This brings total ’08-09 sales to approximately 9.0 million bales. Total sales at the same point in the ’07-08 marketing year were approximately 9.3 million bales. Total new crop (’09-10) sales are 122,800 bales.

Shipments were 142,600 bales, bringing total exports to date to 5.7 million bales, compared with the 6.0 million bales at the comparable point in the ’07-08 marketing year.

Recipients of a Farm and Ranch Irrigation Survey questionnaire mailed to 35,000 producers nationwide are required to complete and return their forms by Feb. 17. Like all National Agricultural Statistics Service (NASS) surveys, NASS safeguards the confidentiality of all responses, ensuring that no individual producer or operation can be identified.

Information will be collected on irrigation water use during ’08, including application methods, equipment, facilities, expenditures, and crop acreage and yield.

This is used by industry, government, and producers themselves, aiding in the development of improved technology, better equipment, more efficient water use practices, and sound programs and policies.

For more information on the survey, call (888) 424-7828 or visit www.agcensus.usda.gov. Survey results will be available on Nov. 30, ’09 online at www.nass.usda.gov.