Cotton's Week: August 7, 2009

The Office of the US Trade Representative (USTR) was notified that the Arbitration Panel’s findings in the Brazil case would not be released until Aug. 31, ’09.

The World Trade Organization (WTO) previously had announced that findings, originally expected in mid-May, would be announced Aug. 14. This is the third announced delay by the WTO in the release of the findings.

Brazil has requested damages of $1.3 billion from the operation of the GSM program, $1 billion associated with the upland cotton program and $350 million from the operation of Step 2. The United States has countered that the GSM program had undergone substantial change and operates at no government cost; the Step 2 program was ended on July 31, ’06; and by using the Brazil economic model, no more than $30 million in serious prejudice damage could be claimed by Brazil.

The US Chamber of Commerce delivered a letter to the chairmen and ranking members of the Senate Finance and Senate Agriculture Committees regarding the Brazilian dispute of the US GSM and upland cotton programs. The letter contained substantial inaccuracies and flawed presumptions for a US response to any arbitration finding.

The NCC responded with a letter to the Chamber and will meet with Chamber officials during the week of Aug. 10 to discuss case aspects.

Copies of the Chamber letter and the NCC response are in the Members Only Issues area of the NCC’s website, www.cotton.org.

According to reliable media reports, US Trade Representative Kirk has advised representatives attending the African Growth and Opportunity Act (AGOA) forum in Kenya that they should focus on expanding trade rather than concentrating on whether AGOA will be extended when it expires in five years.

During meetings, both Ambassador Kirk and Secretary of State Clinton have consistently called on African nations to address challenges associated with poor infrastructure, tariff barriers, government reform and corruption in order to expand trade and attract investment. They also have urged these countries to expand trade with each other and countries other than the United States in order to expand exports and attract investment.

Ambassador Kirk also directly addressed criticism by the so-called cotton four, or C4, countries (Mali, Benin, Burkina Faso and Chad) who continue to complain that in order to attack poverty, the United States must scrap cotton subsidies "that are choking poor farmers" in the C4.

Prior to his departure for the forum, Ambassador Kirk said he expected to hear from the C4 and that he already has made it clear to the countries that their concerns will best be resolved as part of a complete Doha deal. He is reported to have told representatives for those countries at the forum that ... "I welcome and understand those in Africa, particularly about cotton subsidies, but I've invited them to be as forceful in pressing other members of the WTO to engage energetically in goods and services, in non-agriculture manufacturing so that we can bring this issue to some resolution.” He reportedly said it was unfair that the completion of the trade talks depends on the issue of subsidies.

"It was a horrible decision to single out one industry in one country and say, 'We'll hold our feet on everything else, so we won't proceed'...but for one country, one industry only," Kirk said.

According to media reports, Memphis-based Dunavant Enterprises could be sold to Allenberg Cotton Co. by the end of August. Allenberg, a division of Louis Dreyfus Commodities, an international commodity trading firm, is based in Cordova, TN. Dunavant Enterprises, with ties to the cotton business for four generations, maintains offices in most major cotton-producing countries.

The Sixth Circuit Court of Appeals announced that it is denying an industry petition for a full-court review of National Cotton Council v. EPA.

In January ’09, a three-judge panel of this court issued a ruling that invalidated an EPA rule which exempted certain pesticide spraying activities from Clean Water Act (CWA) permit requirements if they were applied according to the FIFIRA label. The NCC and other agricultural groups were concerned that this decision could be interpreted to include pesticide applications in production agriculture.

”If the court's decision stands, agricultural producers will be required to obtain a permit for an estimated 5.6 million pesticide applications annually," the National Assoc. of State Departments of Agriculture said in a May statement.

A coalition of 22 farm organizations, including the NCC, sought a full court review of the decision in the case. These groups believed that a similar request from EPA was crucial for a favorable decision from the court.

Agriculture Secretary Tom Vilsack, ranking members of both House and Senate Agriculture Committees, and California Governor Arnold Schwarzenegger urged EPA to seek a rehearing in the case. In a March letter to EPA Administrator Lisa Jackson, Vilsack urged the agency to consider the "significant adverse effect" of the court's decision on farmers and USDA's own pest control activities. "The Sixth Circuit's decision encumbers the American farmers' and the agencies' ability to do business, while reaping little or no environmental benefit in exchange," Vilsack wrote.

In April, EPA rebuffed these pleas and instead asked for a two-year stay of the mandate, indicating that it needed time to develop a permitting process that could comply with the court's ruling.  The court in June granted the motion to stay the decision until April 9, ’11.

Environmental groups hailed the decision to let the panel’s ruling stand. EPA now has until April ’11 to construct a permitting plan which will encompass 365,000 applicators and up to 5.6 million applications. Currently under the CWA, 50,000 permits are issued annually.

NCC and other agricultural organizations have initiated discussions with EPA’s Office of Water to provide input on the development of the permits. Officials have identified nine scenarios which will require NPDES permitting. Four of these categories will affect cotton production – insecticides used in wide-area suppression programs and herbicides used in lakes and ponds, in irrigation systems, and other waterways, and along ditch banks in agricultural drainage systems. EPA is planning to release “discussion drafts” for general permits of three of these categories later this month and will be asking for public input.

The general permits developed by EPA will be directly applicable in MA, ID, NH and NM, as well as territories, tribal lands, and certain federal lands. The remaining 46 states are authorized to issue their own permits under EPA guidelines.

USDA announced that it will begin continuous sign-up for the new Conservation Stewardship Program (CSP) on Aug. 10 with the first signup period cutoff scheduled for Sept. 30. CSP is a voluntary program that encourages agricultural and forestry producers to maintain existing conservation activities and adopt additional ones on their operations.

The ’08 farm law renamed and revamped the former Conservation Security Program to improve its availability and appeal to producers. Eligible lands include cropland, grassland, prairie, improved pastureland, rangeland and non-industrial private forestland -- a new land use for the program.

To apply for the newly revamped CSP, potential participants are encouraged to first use a self-screening checklist to determine whether the new program is suitable for them or their operation. It is available on Natural Resources Conservation Service (NRCS) websites and at NRCS field offices. After self-screening, the producer's current and proposed conservation practices are entered in the conservation measurement tool (CMT). This tool estimates the level of environmental performance to be achieved by a producer implementing and maintaining conservation activity. The conservation performance estimated by the CMT will be used to rank applications. States will determine their own priority resource concerns, one of the criteria that will be used to rank applications. States will establish ranking pools to rank applications with similar resource concerns.

NRCS field staff also will conduct on-site field verifications of applicant information obtained from the CMT. Once the potential participant has been field verified and approved for funding, the producer must develop a conservation stewardship plan.

The NCC’s Conservation Task Force will meet on Aug. 12 prior to the American Cotton Producers/Cotton Foundation joint meeting for an in-depth review of USDA’s conservation programs.  The task force also will thoroughly review the interim final rule for CSP to develop comments regarding the program’s applicability to cotton producers. The interim final rule is open for comment through Sept. 28.

For information about CSP, including eligibility requirements, producers can visit www.nrcs.usda.gov/new_csp or visit their local NRCS field office. A summary of the CSP also is available in the Members Only Issues area of the NCC’s website, www.cotton.org.

Net export sales for the week ending July 30 were 59,700 bales (480-lb). This brings total ’08-09 sales to approximately 14.4 million bales. Total sales at the same point in the ’07-08 marketing year were approximately 13.5 million bales.

Total new crop (‘09-10) sales are 1.3 million bales (480-lb.).

Shipments for the week were 321,200, bringing total exports to date to 13.2 million bales, compared with the 13.5 million bales at the comparable point in the ’07-08 marketing year.

The NCC-coordinated ’10 Beltwide Cotton Conferences (BWCC) is set for Jan. 4-7 at the New Orleans Marriott and Sheraton New Orleans hotels.

Bill Robertson, the NCC’s manager, Agronomy, Soils and Physiology, said among topics being considered for the Beltwide Cotton Production Conference are:  1) a producer panel discussing weed resistance management efforts, 2) energy management, including fertilization, 3) a farm law update with an emphasis on the conservation programs, 4) US cotton’s sustainability and other environmental issues such as climate change, cap and trade, and clean water legislation, 5) rotation benefits and 6) new transgenics role in today’s production.

Robertson said the BWCC Steering Committee, chaired by Mississippi producer Kenneth Hood, also agreed to continue offering multiple, hands-on Production Conference workshops to give producers in-depth information on such key concerns as pest and resistance management, irrigation and precision agriculture.

The Cotton Consultants Conference also will be offered for the third consecutive year, and likely will include updates on pest management strategies and new product evaluation.

Early ’10 BWCC registration begins Sept. 22 and runs through Dec. 7. Instructions for meeting registration/housing reservations, programming and other information will be posted later at the Beltwide website, www.cotton.org/beltwide. That information also can be accessed by clicking on the Beltwide icon on the NCC’s home page, www.cotton.org.