Cotton's Week: November 20, 2009

Bipartisan legislation to provide emergency disaster assistance has been introduced by Sens. Cochran (R-MS), Lincoln (D-AR) and Wicker (R-MS).

Mounting financial losses resulting from yield and quality losses due to disastrous weather conditions in the Mid-South, Southwest and neighboring states moved a bipartisan group of Senate leaders to introduce legislation that would provide prompt and effective relief to growers in counties with Secretarial disaster declarations. The legislation would utilize the Direct Payment delivery mechanism to provide a payment to growers in disaster counties.

The use of Direct Payments places minimal burden on Farm Service Agency offices that already are overwhelmed conducting reviews of farm reorganizations resulting from ’08 legislative and regulatory changes as well as conducting sign-up for ’10 programs. A more traditional program which requires rulemaking and significant administrative activities likely would not deliver needed assistance until late ’10.

The ’08 farm bill included a permanent disaster program (SURE) but regulations implementing that program have yet to be published. Also, because benefits for the SURE program are based on average prices for the entire crop year, any assistance for ’09 crop losses will not be available until late ’10 or early ’11. Further, the losses for ’09 will include significant quality losses, and the manner in which SURE covers quality losses is unknown.

The emergency assistance legislation introduced provides a budget offset to ensure there is no addition to the deficit and it prohibits double-dipping by making growers who receive an emergency payment ineligible for SURE for ’09 losses. There is a fund to provide assistance for cottonseed losses, and specialty crops and livestock also are eligible for assistance.

NCC Chairman Jay Hardwick, Newellton, LA, praised the Senators’ initiative to provide prompt and necessary assistance to producers who will experience significant losses after investing fully in the inputs necessary to bring their crops to completion.

“I am pleased to be joined by my counterparts at the American Soybean Association, USA Rice Federation, US Rice Producers Association and Southern Peanut Growers in supporting the efforts of this outstanding, bipartisan group of U.S. Senators,” Hardwick said “I look forward to working with these groups and others to support efforts to deliver the assistance necessary to allow farmers, some of whom have suffered back-to-back losses to begin planning for 2010,” Hardwick said. “Our support for this effort is in no way a criticism of the good intentions of the Congress to provide a permanent disaster program in the 2008 farm law. Unfortunately, that program simply cannot deliver the assistance necessary to address these losses due to the budget constraints placed on the authors during the farm bill debate. I am also pleased that the legislation is bipartisan and includes key Senators who have been leading advocates for farmers and production agriculture, including Senator Lincoln, chairman of the Agriculture Committee, Senator Cochran, ranking member of the Appropriations Committee, as well as Senator Wicker.”

The NCC is urging its members to contact their Senators to either thank them for co-sponsorship or urge them to join the legislation. A letter on the NCC’s web site at  http://www.cotton.org/issues/2009/disgenlet.cfm from the above organizations in support of the legislation was sent to current co-sponsors and is being sent to other Senators.

The NCC’s immediate past Chairman Larry McClendon, Marianna, AR, will participate in a roundtable session in Little Rock on Nov. 24 hosted by Sen. Lincoln and looks forward to thanking her for prompt action and support for emergency assistance.

“I look forward to congratulating her on her election to chair the Agriculture Committee and for once again stepping up to lead efforts to make sure farmers and ranchers have an effective advocate in Washington,” McClendon said. “Throughout her career, Senator Lincoln has been a proponent for sound farm, conservation and nutrition policy and once again she has identified a need and taken the lead on critically important legislation.”

Companion legislation is expected to be introduced in the House after Thanksgiving.

The World Trade Organization’s (WTO) Dispute Settlement Body officially recognized the Aug. ’09 Arbitration Panel finding in the case brought by Brazil against the US export credit guarantee program and portions of the US cotton program.

Brazil can impose up to $147 million annually in countermeasures related to the US cotton program. The amount of countermeasures Brazil may impose due to the US export credit guarantee program will vary from year to year based on a formula established by the Panel. Earlier in November, Brazil published a list of 222 items being considered for additional duties.

NCC Chairman Jay Hardwick stated, “World cotton production data continue to demonstrate that the U.S. cotton program cannot be damaging Brazil's or any other country's interests. U.S. cotton production in 2008 was more than 45 percent below the 2005 level while combined production in Brazil, China and India increased more than 20 percent since 2005."

Hardwick added, "The Council will continue to work with USTR, USDA and Congress to ensure that the many changes previously made to the U.S. cotton program and the export credit guarantee program are fully understood and considered by the WTO."

The NCC’s statement and a backgrounder are available at the NCC’s home page, www.cotton.org.

Beginning on Jan. 8, ’10, the Cotton’s Week newsletter will be distributed to NCC members by email only and no longer by regular mail. NCC members who have not yet provided the NCC with their email addresses should send them to memberservice@cotton.org as soon as possible.

The newsletter will continue to be posted on the NCC’s website, www.cotton.org, under the News and Events section, but will require a password. Passwords will be provided upon completion of the short form located at http://www.cotton.org/register/request-password.cfm.

Questions or requests for assistance should be directed to memberservice@cotton.org, area membership representatives or Marjory Walker at 901-274-9030.

The Senate Committee on Health, Education, Labor, and Pensions (HELP) approved by voice vote a bipartisan measure (S. 510) to strengthen Food and Drug Administration (FDA) authority to enhance food safety.

“I applaud the committee for taking swift action to make this bill one step closer to becoming law,” Sen. Chambliss (R-GA), ranking member of the Senate Agriculture Committee, said in a news release.

Sens. Chambliss (R-GA), Isakson (R-GA) and Burr (R-NC) are co-sponsors of the original bill, which was introduced by Sens. Durbin (D-IL) and Gregg (R-NH).

The bill would allow FDA to require certification for high-risk foods and to deny entry to a food that lacks certification or that is from a foreign facility that has refused US inspectors. The measure also would put in place a voluntary qualified importer program under which importers could get a certification of safety for their foreign supplier. Under the legislation, FDA would be required to inspect all food facilities at least once every four years and high-risk plants at least once a year.

On July 30, the House passed a food safety bill (H.R. 2749) but because it included new fees and extensive new authority for FDA, many Representatives from agricultural districts opposed the measure.

House Agriculture Committee Chairman Peterson (D-MN) successfully convinced the bill’s authors to delete many of the more objectionable provisions which would have provided FDA authority over on–farm practices but the legislation still is considered over-reaching by many Members and farm groups.

It remains unclear whether the Senate will be able to pass a food safety measure before the end of the year given the current focus on the health care debate. Most observers believe the next action on the legislation will occur in early ’10.

The NCC joined commodity, livestock, general farm organizations and the grain trade on a letter to the Senate HELP Committee in advance of the markup outlining concerns about the Senate bill and making recommendations for improvements. The letter, which is in the Issues area of the NCC’s website, www.cotton.org, also outlined significant concerns with the provisions in the House-passed bill. The NCC will continue to be an active member of the coalition to ensure that the final legislation does not include many of the objectionable provisions of the House-passed bill.

The ’10 Beltwide Cotton Conferences’ Cotton Production Conference program is nearly finalized and will feature the latest information on topics ranging from nitrogen application to nematode control.

The NCC-coordinated Beltwide Cotton Conferences (BWCC) is set for Jan. 4-7 at the New Orleans Marriott and Sheraton New Orleans hotels. Detailed programming information as well as instructions for meeting registration and housing reservations is at the BWCC website, www.cotton.org/beltwide. Early (online) registration runs through Dec. 7.

Net export sales for the week ending Nov. 12 were 276,100 bales (480-lb). This brings total ’09-10 sales to about 4.7 million bales. Total sales at the same point in the ’08-09 marketing year were about 7.4 million bales. Total new crop (’10-11) sales are 157,000 bales.

Shipments for the week were 128,000 bales, bringing total exports to date to 2.6 million bales, compared with the 3.7 million bales at the comparable point in the ’08-09 marketing year.

The House is expected to consider legislation during the week of Nov. 30 that would make permanent the current estate tax rate and exemption levels. This is a reversal from plans to move forward on a one-year extension of the ’09 estate tax rate and exemption levels.

The current estate tax rate is 45% with an exemption level of $3.5 million for individuals and $7 million for couples. In ’10, the tax is eliminated but the rate will return to 55% and the exemption to $1 million in ’11.

The legislation that is expected to be considered by the House would establish a permanent 45% rate indexed to inflation. The decision to make the ’09 rate and exemption permanent may be opposed by Democrats and Republicans who have supported other proposals.

Rep. Brady (R-TX) introduced a plan (H.R. 3905) that would extend the current estate tax through ’10 and then over the next 10 years reduce the rate from 45% to 35% while raising the exemption from $3.5 million to $5 million. Rep. Thompson (D-CA) has introduced legislation that attracted significant support for the ag community, and Sens. Lincoln (D-AR) and Kyl (R-AZ) are authors of a compromise plan supported by the business community that would make permanent an estate tax exemption amount of $5 million for individuals ($10 million for couples) and establish a maximum tax rate of 35%.

The NCC has joined a large group of farm and ranch organizations calling for legislation that preserves the stepped-up basis and provides the lowest possible rate with the highest possible exemption. The groups also expressed support for including provisions in Rep. Thompson’s proposal to exempt certain farm land from estate taxes.

Due to Thanksgiving Holidays, Cotton’s Week will not be published on November 26.