Cotton's Week: November 6, 2009

Cotton's Week: November 6, 2009

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Hardwick Discusses Key Issues

NCC Chairman Hardwick met with key Members of Congress and staff, including Senate Agriculture Committee Chairman Lincoln (D-AR) and House Agriculture Committee Chairman Peterson (D-MN). Hardwick also met with USDA’s Farm Service Agency staff.

The meetings provided an opportunity to discuss a number of critical issues and concerns including disaster assistance, trade policy, farm bill implementation, climate change legislation and food safety. Hardwick also thanked the members for continued cotton industry support.

During his meetings, Hardwick conveyed the deep concerns that growers, ginners, warehousers, cottonseed handlers and related agribusinesses have about the significant financial losses resulting from the rain-delayed harvest of cotton and other crops in the Mid-South and Southeast regions, particularly in Alabama, Arkansas, Mississippi, Tennessee and Louisiana.  He reminded the members that losses resulting from the ’08 hurricanes and the severe drought in

S. Texas also resulted in severe financial losses which have not been addressed. Hardwick expressed the industry's grave concerns about the regulatory drought in California which has resulted in serious financial damage to farms and related businesses as well as created massive unemployment.

Hardwick also provided updates on key trade and farm bill implementation issues.



NCC Testifies on Crop Insurance

Rickey Bearden, a producer from Plains, TX, and chairman of NCC’s Crop Insurance Task Force, participated in a Crop Insurance Roundtable called by House Subcommittee on General Farm Commodities and Risk Management Chairman Boswell (D-IA) and Ranking Member Moran (R-KS). Several other commodity groups participated in the meeting, which examined how crop insurance is working for producers.

Bearden expressed the need for higher coverage at affordable rates -- because in many areas, higher levels of buy-up coverage are extremely expensive. He also updated the members on the status of the cotton quality loss provisions with the Risk Management Agency (RMA).

The NCC has been working with RMA and USDA’s Agricultural Marketing Service to develop better quality loss adjustments within the cotton program in the hope that RMA will be able to implement those changes in the near future.

Bearden also reiterated the industry’s position that RMA should allow: 1) an individualized based rating that would not disadvantage good producers in bad county experience situations and 2) different levels of coverage for irrigated and non-irrigated production, provided dryland production is not insured at a higher percentage than irrigated.  Under the current system, which limits a grower to a single coverage level for both practices, a diverse cotton operation is stuck with balancing the coverage level between two entirely different risk management situations.

In addition, Bearden updated the members on the cottonseed pilot program recently approved by the RMA Board for the ’10 crop year. He reported that it likely will be delayed until the ’11 crop year.

The NCC will continue to work with Congress and the RMA to implement these programs that already have been approved and to look at new ways to assist cotton producers in managing their risk.



Producers Urged to Vote

Producers are reminded that to receive a ballot and be eligible to vote in the current Cotton Research and Promotion Act referendum, USDA is requiring '08 sales receipt evidence.

The referendum, which runs through Nov. 10, is to determine if Kansas, Virginia and Florida should be designated as separate "cotton producing states." If approved, each of these states would be given representation on the Cotton Board.Producers can obtain ballots at their local Farm Service Agency offices. The NCC urges producers to vote in favor of the referendum.



Petition Filed on Clean Water Ruling

The NCC and other agricultural groups filed a petition for certiorari to the US Supreme Court seeking reversal of the Sixth Circuit decision in NCC v. EPA that imposes unnecessary and hampering regulations upon producers and health officials.

In the NCC’s statement, Chairman Hardwick said, “The Sixth Circuit reversed over 30 years of precedent by using an unorthodox rationale that substituted its reasoning for the EPA’s informed decision-making. The regulation that was struck down exempted certain pesticide applications from the Clean Water Act’s NPDES permit requirement if the application was made in accordance with the FIFRA label provisions.”

The statement noted that the Sixth Circuit’s erroneous opinion instead requires many producers to obtain a NPDES permit in order to apply pesticides in, above, or even near many waterways. The permit subjects the producer or health official to ineffective and burdensome regulation, as well as potential civil lawsuits. The EPA estimates that the ruling affects 365,000 pesticide applicators that perform roughly 5.6 million pesticide applications annually.

“It’s important that the Courts decide this issue correctly,” Hardwick added, “as it has a great impact on our agricultural system as well as our public health. Applicators need to be able to respond to potential pests that could harm crops and carry diseases.”

The statement also emphasized that the Court’s decision creates duplicative regulation over pesticide applicators as they are already subject to FIFRA requirements that were put in place by Congress to govern the applications of pesticides. If the decision is allowed to stand, it could potentially unravel the current Clean Water Act’s agricultural exemptions for storm water runoff and irrigation return flow that have long protected farmers’ rights.

A number of agricultural organizations and other interested groups are joining together to file an amicus brief in support of the petition. Several cotton organizations have agreed to pool their resources to contribute to the amicus legal costs, including: Texas Cotton Producers, Plains Cotton Growers, Oklahoma Cotton Council, Southern Cotton Growers, South Texas Cotton & Grain Assoc., Louisiana Cotton Producers Assoc., North Carolina Cotton Producers Assoc., Kansas Cotton Assoc. and Rolling Plains Cotton Growers.

The Supreme Court is expected to decide whether to hear the case by year’s end.



Panel Approves Climate Bill

The Senate Environment and Public Works Committee, in an unprecedented procedural maneuver, passed a sweeping climate bill co-authored by Chairman Boxer (D-CA) and Sen. Kerry (D-MA) with no Republicans participating in the 11-1 vote. Sen. Baucus (D-MT), chairman of the Senate Finance Committee, was the only Democrat who voted against the bill.

Sen. Inhofe (R-OK), the Committee’s ranking member, previously had said that Republicans would boycott the meetings that Boxer scheduled to mark up her climate change bill (S. 1733). Republicans want a more thorough analysis of the bill’s costs.

Sen. Voinovich (R-OH) made an 18-minute appearance at the markup session to deliver a statement in which he urged Boxer to delay further work on the legislation until the EPA carries out a more comprehensive analysis of the bill. Boxer suspended the markup for 90 minutes so that EPA official David McIntosh could answer any Committee questions about the extent of the EPA’s analysis of the bill. McIntosh explained that the EPA’s analysis of the Kerry-Boxer bill has been “unprecedented at this stage in the markup.” Sen. Boxer also displayed 20,000 printed pages of EPA analysis – along with an electronic copy of another 320,000 pages of analysis.

Environment and Public Works Committee rules require at least two members of the minority to be present for votes on amendments and to approve legislation. After Republicans made it clear that they would stay away from the markup indefinitely, Boxer took advantage of a broad interpretation of the rules that allow the Committee to report out legislation with a simple majority vote on the bill - but no votes on amendments.

Even the Committee’s Democrats were uncomfortable with the breakdown of bipartisan cooperation. Boxer’s unusual move may have been her bill’s death blow as climate change deliberations have shifted to Sens. Kerry, Graham (R-SC) and Lieberman (I-CT) who have been meeting with White House officials and moderate lawmakers to frame the outlines of legislation that could attract the 60 votes needed to defeat a filibuster. Their efforts also were boosted with a cautious endorsement by the US Chamber of Commerce.



NCC Opposes Chemical Facility Bill

The Chemical Facility Anti-Terrorism Act of 2009 (H.R. 2868), introduced by Rep. Thompson (D-MS) on June 15, would amend the Homeland Security Act of 2002 to establish provisions for the regulation of security practices at chemical facilities. H.R. 2868 would authorize the Secretary of Homeland Security (DHS) to designate any chemical substance as a substance of concern and establish the threshold quantity for each such substance after considering the potential extent of death, injury, and serious adverse effects that could result from a chemical facility terrorist incident.

NCC and other agricultural groups are concerned about the impact to farms which utilize certain fertilizers and pesticides that might be considered as a substance of concern. These groups sent a letter to House members expressing their concerns, in particular their objection to the Inherently Safer Technology (IST) provisions of the legislation. IST would allow the DHS to mandate that businesses employ specific product substitutions and processes. If the IST mandate and assessments are put in place for the nation’s agricultural industry, they could jeopardize the availability of widely used, lower-cost sources of essential plant nutrient products or certain agricultural pesticides used by farmers and ranchers.

The bill was debated on the House floor and it was expected to pass a vote sometime on Nov. 6.



Pima Variety Made Available

Monsanto and Dow AgroSciences LLC announced that the companies have reached agreement on a stewardship plan which will provide California cotton growers access to a PhytoGen® Pima variety with the Genuity Roundup Ready Flex trait for the '10 growing season.

A stewardship program was needed because although Monsanto has initiated submissions required to obtain all necessary registrations, the company is awaiting certain approvals. Therefore, Monsanto and Dow AgroSciences have worked across industry groups to provide a stewardship plan to contain the seed products at ginning and throughout the value chain, and to limit distribution of these products to the United States, Canada and Mexico at this time. To take advantage of this plan, PhytoGen Seed Company, in selling Genuity Roundup Ready Flex Pima seed, will limit sales to California growers who have signed the required stewardship agreement.

Dow AgroSciences has one Pima variety (PhytoGen PHY 805 RF) with the Genuity Roundup Ready Flex trait that it intends to offer for sale under the stewardship program for '10.

The companies pointed to the cooperation of the California Cotton Growers and Ginners Assoc. and its member gins, the NCC, and the American Cotton Producers, as well as the J.G. Boswell Company, as instrumental in the agreement's development.



Sales, Shipments Rebound

Net export sales for the week ending Oct. 29 were 222,000 bales (480-lb) bringing ’09-10 sales to about 4.3 million bales. Total sales at the same point in the ’08-09 marketing year were about 7.0 million bales. Total new crop (’10-11) sales are 157,000 bales.

Shipments for the week were 204,700 bales, bringing exports to date to 2.3 million bales, compared with the 3.2 million bales at the comparable point in the ’08-09 marketing year.



Prices Effective Nov. 6-12, '09

Adjusted World Price, SLM 11/16

52.78 cents

*

Fine Count Adjustment ('08 Crop)

 0.00 cents


Fine Count Adjustment ('09 Crop)

  0.00 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 0.00 cents


Import Quotas Open

13


Special Import Quota (480-lb bales)

822,935


ELS Payment Rate

  9.57 cents


*No Adjustment Made Under Step I

 

Five-Day Average



Current 5 Lowest 3135 CFR Far East

69.15 cents


Forward 5 Lowest 3135 CFR Far East

NA


Coarse Count CFR Far East

72.88 cents


Current US CFR Far East

76.50 cents


Forward US CFR Far East

NA


 

'09-10 Weighted Marketing-Year Average Farm Price  
 

Year-to-date (Aug.-Sept.)

54.14 cents

**

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

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