Cotton's Week: May 22, 2009

Cotton's Week: May 22, 2009

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Climate Bill Clears House Panel

Climate change legislation (HR 2454, The American Clean Energy and Security Act of 2009) cleared the House Energy and Commerce Committee by a 33-25 vote after four days of debate. The vote was essentially along party lines with four Democrats including Ross (AR), Barrow (GA) and Melancon (LA) voting against the bill and one Republican, Bono (CA), voting yes.

The highly controversial legislation would cap greenhouse gas emissions in ’20 at a level 17% below ’05, 42% lower by ’30 and 83% lower by ’50. The legislation establishes a cap-and-trade system allowing companies that cannot meet their caps to purchase offsets. It would require 15% of the nation’s electricity to come from renewable sources. An additional 5% must come through greater efficiency.

Initially, the legislation required 100% of the emission permits to be auctioned off but to gain support, the principal co-authors, Chairman Waxman (D-CA) and Markey (D-MA), modified earlier proposals to provide free emission allowances to coal-fired utilities, automobile manufacturers who invest in electric vehicles and to trade-sensitive manufacturing industries including steel and cement. The free allowances, which account for almost 85% of the total allowances, phase out by ’25.

During the markup, more than 90 amendments were debated. Most were offered by Republicans who were seeking to soften its economic impact through the addition of circuit breakers that would suspend the provisions if the legislation has an adverse impact on the economy, trade and employment.

Farm groups almost have universally expressed opposition to the bill as it was reported out of the Energy and Commerce Committee because the bill neither includes specifics about agriculture projects which can serve as offsets nor specifies a role for USDA in administering agriculture offset projects. While almost all agriculture groups oppose the current version, some groups ultimately would support a cap-and-trade program provided it does not cap agriculture and provides for agriculture projects to be used as offsets because they are concerned that in the absence of legislation, EPA will establish mandatory caps and controls using authority in the Clean Air Act.

During the Committee’s consideration, Rep. Space (D-OH) offered and withdrew an amendment that would have identified specific agriculture projects that would be eligible for use as credits for reductions in greenhouse gas emissions which could then be sold as offsets to industries unable to meet caps. The bill, as currently written, leaves it to EPA to determine which projects are eligible.

The legislation also raises concern in the agriculture community because the bill: 1) has a limited definition of biomass, 2) authorizes trading of carbon credits which could lead to speculation that could adversely affect commodity markets, and 3) includes provisions allowing up to 50% of offset projects to be outside the United States which could significantly reduce the value of domestic projects.

Agriculture Committee Chairman Peterson (D-MN) has been vocal in his opposition to the Waxman-Markey legislation as currently written until a number of issues are addressed.  Peterson is particularly upset by the EPA’s use of so-called indirect land-use considerations when evaluating ethanol’s benefits. Ranking Member Lucas (R-OK) also has been consistent and vocal in his criticism of the legislation most recently stating “as it becomes clearer the extent of the damage this bill will cause to agriculture without providing any benefits, more and more farm groups are writing to encourage the Members of Congress to oppose this bill.”

It is not entirely clear how future work on the legislation will proceed. Seven committees, including agriculture, have jurisdiction and should be provided an opportunity to review and modify the bill before it is considered by the House. Speaker Pelosi (D-CA) has previously said she would like to schedule floor time during June but with the growing controversy, seven referrals and health care reform next on the agenda, the June-July time frame may not be achievable.



Review Possible on NPDES Rule

On Jan. 7, ’09, the 6th Circuit Court of Appeals issued a decision invalidating a ’06 EPA rule that exempted pesticide applications on or near water from the need to obtain a National Pollutant Discharge Elimination System (NPDES) permit under the Clean Water Act (CWA).

The court’s ruling stated that any pesticide application from which any residue makes its way into the “waters of the U.S.” are required to obtain a NPDES permit.  Because of the broad interpretation of “waters of the U.S.,” this ruling essentially established the requirement for all pesticide applications to be permitted under the CWA. A NPDES permit involves public hearings, fees, reporting, monitoring, and allows for citizen litigation.

Parties of the litigation, including the American Farm Bureau Federation, the American Forest & Paper Assoc. and CropLife America, submitted requests for a full-court rehearing of the case. Lawyers involved in the case believe that, if a review is granted, a different decision is possible because the court did not consider protections in CWA for non-point source pollution and agriculture.

In response to this request, the court had asked the environmental groups involved in the case to respond. The court recently took further action by ordering the federal government to respond by June 3. This action is being viewed favorably as a sign that the court is seriously considering the request for a rehearing although the final outcome is still uncertain.



Bayer Glyphosate Cotton Deregulated

USDA has granted deregulation status for the GlyTol™ cotton technology developed by Bayer CropScience. Cotton varieties with the GlyTol™ trait are tolerant to the herbicide glyphosate. The decision, which follows approval from the US Food and Drug Administration, marks another milestone towards the first commercialization of GlyTolTM cotton.

Bayer CropScience is preparing for a US commercial launch of GlyTolTM in ’10.  The company plans to spend the ’09 season familiarizing US growers with the features and benefits of the new technology and the varieties in which it will be offered at launch. They initially plan to offer two high-yielding, high-quality GlyTol cottonseed varieties that are ideally suited to the Southwest region. Varieties suited to other US cotton-growing regions are expected to be introduced in the coming years.

Bayer requested the GlyTol deregulation in ’06. Although the technical issues had been completed by USDA staff, the final signoff on the release had been delayed at the political level of the transitioning department.

NCC staff contacted the Agriculture Secretary’s office to express concern for the delay and impending planting potential. NCC was pleased that its request was met in a matter of days and the final signatures will allow for this new cotton variety to be planted in ’09.



New AMS Administrator Named

Rayne Pegg, deputy secretary of Legislation and Policy for the California Dept. of Food and Agriculture, has been named administrator of USDA’s Agricultural Marketing Service (AMS). The Cotton Division of AMS operates cotton classing services and administers the cotton research and promotion program.



Uses of Monitor on Cotton Cancelled

Under the Food Quality Protection Act reassessment on April 7, ’02, EPA signed the Interim Re-registration Eligibility Decision (IRED) for methamidophos (Monitor) which specified risk mitigation measures including a five-year phase out of use on cotton. In accordance with the IRED, Bayer CropScience has submitted a request to voluntarily terminate all cotton uses of the methamidophos products effective Sept. 30, ’09. Its use on cotton has been declining but still is an important crop protectant in the Southeast for resistance control of the western flower thrip.

Provisions for the sale, disposition and use of existing stocks of methamidophos products include the following: 1) all sale or distribution by the registrant of existing stocks labeled for use on cotton is prohibited after Sept. 30, ’09, unless that sale or distribution is solely for the purpose of facilitating disposal or export of the product; 2) existing stocks labeled for use on cotton may be sold and distributed by persons other than the registrant until July 31, ’10; and 3) existing stocks labeled for use on cotton may be used until Sept. 30, ’10, provided that such use complies with the EPA-approved label and product labeling.



Carbofuran Process Scrutinized

EPA Administrator Lisa Jackson said she will review the agency's decision to revoke tolerances for carbofuran (Furadan) residues in food before revoking the pesticide's registration, following industry criticism and Congressional concerns that EPA is going at the process backward.

Jackson told the House Appropriations Subcommittee on Interior and Environment that she was aware of the criticism and would look into the concerns. She emphasized in a press briefing after her testimony that she will review the process by which EPA is moving toward ending carbofuran use, not the goal of cancelling the remaining carbofuran registrations and licenses.

Earlier, EPA has said it will revoke regulations permitting residual amounts of the insecticide carbofuran in food. The agency said in a notice published in the Federal Register that it has determined that aggregate exposure to residues of carbofuran under EPA-approved tolerances does not meet the safety standard of the Federal Food, Drug, and Cosmetic Act.

The decision seemed “out of sequence,” Rep. Simpson (R-ID), the Subcommittee's ranking member, told Jackson. It also precludes further study of the pesticide's benefits, he said.

According to CropLife America, “EPA's announcement that it will proceed with revocation of carbofuran tolerances before resolving the U.S. registered label uses of the product is completely out of phase with traditional regulatory process.”



Applicants Sought For Stoneville School

Registration continues for the ’09 Stoneville Ginners School in Stoneville, MS, on June 9-11. Registration can be completed at http://ncga.cotton.org, where a full description of the three coursework levels also can be found.

National Cotton Ginners Assoc. (NCGA) Executive Vice President Harrison Ashley said the school’s aim is to train gin employees on the proper operation of ginning equipment with a focus on maximizing fiber quality, ginning efficiencies and safety in the gin.

In addition to Level I, II and III courses, the school will feature a two-day Continuing Education (CE) course. Day one will include a session on properly matching gin equipment capacities to optimize efficiencies and equipment performance. The CE’s second day will focus on fiber quality from harvesting to ginning, with an emphasis on ginning and maximizing quality.

School cooperators include the NCGA, NCGA member associations, USDA-ARS, the NCC, Cotton Incorporated, gin machinery/equipment manufacturers/suppliers, Cooperative State Research, Education and Extension Service, and select land grant universities.



Sales Steady, Shipments Surge

Net export sales for the week ending May 14 were 153,700 bales (480-lb). This brings total ’08-09 sales to about 13.2 million bales. Total sales at the same point in the ’07-08 marketing year were about 14.1 million bales.

Total new crop (’09-10) sales are 725,300 bales.

Shipments for the week were 459,400 bales – a marketing year high – bringing total exports to date to 9.8 million bales, compared with the 10.2 million bales at the comparable point in the ’07-08 marketing year.



Prices Effective May 22-28, '09

Adjusted World Price, SLM 11/16

44.59 cents

*

Fine Count Adjustment ('07 Crop)

 1.01 cents


Fine Count Adjustment ('08 Crop)

  0.61 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 7.41 cents


Import Quotas Open

3


Limited Global Import Quota (480-lb bales)

188,930


ELS Payment Rate

  7.23 cents


*No Adjustment Made Under Step I

 

Five-Day Average

 

Current 5 Lowest 3135 CFR Far East

61.36 cents


Forward 5 Lowest 3135 CFR Far East

NA


Coarse Count CFR Far East

62.59 cents


Current US CFR Far East

64.25 cents


Forward US CFR Far East

NA


 

'08-09 Weighted Marketing-Year Average Farm Price  
 

Year-to-date (Aug.-March)

49.74 cents

**

** Aug.-July average price used in determination of counter-cyclical payment 

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