Disaster Provisions Included in Senate Legislation
By a 62-36 margin, the Senate approved the American Workers, State, and Business Relief Act of 2010 (H.R. 4213), which includes agriculture disaster assistance championed by Senate Agriculture Chairman Lincoln (D-AR) and patterned after legislation introduced by Chairman Lincoln and Sens. Cochran (R-MS) and Wicker (R-MS). The legislation also provides a one-year extension of temporary tax breaks, as well as longer-term extensions of unemployment insurance benefits and tax credits to help unemployed individuals keep their health insurance.
The disaster assistance provisions would provide an estimated $1.479 billion in assistance for 2009 crop losses as well as specialty crops, livestock, sugar, aquaculture, cottonseed and poultry. Included in (H.R. 4213) are: such sums as necessaryto make a 90% supplemental direct payment to producers in counties which have a ’09 Secretarial primary disaster declaration who have a minimum 5% loss in production (the latest available map showing eligible counties is on the NCC’s website at http://www.cotton.org/issues/members/2010/disasmap.cfm or check with your local FSA office for your county’s status); $42 million in supplemental assistance for the ’09 crop of cottonseed made available to first handlers for the benefit of producers in Secretarial primary counties; $25 million for grants to states to assist aquaculture producers for losses associated with high feed inputs costs during calendar year ’09; $21 million to a sugar cane cooperative for assistance to maintain and develop employment; $75 million in emergency loans to poultry producers who suffered financial losses due to a bankruptcy of a poultry integrator; $50 million for livestock producers who suffered grazing losses in 2009; $150 million for specialty crop producers who suffered losses due to flooding and $150 million for specialty crop producers who suffered losses due to drought, both in ’09 Secretarial primary disaster counties and to be made available to states in the form of block grants; and, $10 million for administrative costs to carry out these programs.
The legislation is paid for by enacting language that would deny paper mills a biofuels tax credit for their use of a fuel known as black liquor and would codify the economic substance doctrine and impose new tax penalties on transactions that were done solely to avoid taxes.
The bill contains provisions to ensure the permanent disaster programs remain the primary vehicle for delivery of disaster assistance by specifying that any payment a producer receives under this bill is deducted from a payment a producer receives under the permanent disaster programs.
Newly named House Ways and Means Committee Chairman Levin (D-MI) said, “(I)t is still not certain that a one-year extension of $31 billion in expired tax cuts will need to go through conference committee to pass.” Chairman Levin is trying to negotiate an agreement without holding a formal conference meeting. The negotiated package could then be sent to the House and Senate for a final vote and potentially avoid delays of a formal conference meeting.
The legislation includes numerous tax breaks that are popular among both Democrats and Republicans, but there are differences that must be addressed regarding the offsets used to pay for the tax provisions.
Rep. Levin said he has received assurances from Senators that they can work together to find different offsets to pay for the extenders bill. He said it is not clear how long the process of passing extenders might be if a formal conference is necessary.
Brazil Publishes Retaliation Measures
Brazil published a list of 102 products that will be subject to increased tariffs as a result of the ongoing dispute concerning the provisions of the US cotton program and the export credit guarantee program. Brazil has claimed retaliation authority of $829 million for ’10. The US cotton program’s share of the retaliation awarded to Brazil by the WTO is relatively small and fixed at $147 million. The remaining damages of $682 million are associated with the export credit guarantee program. Those damages are determined annually using a formula developed by the arbitration Panel.
Brazil’s announcement indicates that tariffs will be increased on $591 million worth of US imports. Retaliatory tariffs range from an increase of six to 94%, with the majority of covered products facing an increase of 20 percentage points in the tariff. The value of imports appears to be relatively evenly split between manufactured goods and agricultural goods. The increased tariffs will go into effect in 30 days if the United States and Brazil fail to agree on a settlement in this dispute.
In response to Brazil’s announcement, the NCC stated that Brazil’s latest actions are imposing unwarranted harm on Brazilian and American interests in times of economic hardship for all. Historically, a dispute settlement is frequently made more difficult, not easier by the application of retaliatory trade measures. Both Brazilian and American firms will find themselves economically disadvantaged by the imposition of such duties.
The NCC also said that it is unfortunate that Brazil is taking retaliatory steps even though world cotton prices are more than 50% higher than ’05, the year that was the basis for the original Panel ruling. US cotton harvested acreage and production are down by more than 40%, while production has expanded in Brazil, China and India. Also, the costs of US cotton price-related programs are down more than 80% from the previous five-year average and are projected to be minimal for the foreseeable future.
Brazil also indicated that they are considering additional retaliation against US goods valued at $238 million in the services or intellectual property sector. Brazil has indicated that they will initiate a public comment period on March 23, but no additional details have been released.
Export Initiative Plan Outlined
President Obama outlined steps that his administration is taking to implement the goal of doubling US exports in five years under the National Export Initiative (NEI).
He told an annual meeting of the US Export-Import Bank that the NEI includes government-wide advocacy for US exporters; increased financing; and assistance for US businesses to export to new markets. The Export-Import Bank will include a new $2 billion per year initiative to increase support for small and medium-sized businesses. He also said rebalancing the Chinese currency is needed to ensure that US companies have access to new markets.
President Obama said the market access element of the NEI begins with enforcing existing trade agreements, and he listed continued work on Doha World Trade Organization negotiations, strengthening of relations with South Korea, Panama and Colombia with the aim of moving forward on those pending agreements, and pursuing negotiations on the Trans-Pacific Partnership (TPP) and the Anti-Counterfeiting Trade Agreement.
He said he signed an executive order instructing the federal government to use every available federal resource to help US businesses export. The order created an Export Promotion Cabinet, consisting of the secretaries of State, Treasury, Agriculture, Commerce and Labor, along with USTR, Small Business Administration, the US Export-Import Bank president, the director of the US Trade and Development Agency, the president of the Overseas Private Investment Corporation and other senior US officials whose work affects exports.
The President’s Export Council, a national advisory committee on international trade, has been re-launched, and Boeing Co. President and Chief Executive Officer Jim McNerney and Xerox CEO Ursula Burns will co-chair that committee. The Office of the US Trade Representative will begin negotiations on the TPP on March 15 in Australia. Agriculture Secretary Tom Vilsack will be travelling to Japan on April 15.
Jackson Responds to Endangerment Finding Opposition
In an apparent response to increasing political pressure against EPA’s endangerment finding on greenhouse gases (GHGs), Administrator Lisa Jackson’s speech at the National Press Club defended EPA’s decision to regulate GHGs under the Clean Air Act.
She stated, “Once again industry and lobbyists are trying to convince us that changes will be absolutely impossible. Once again alarmists are claiming this will be the death knell of our economy. Once again they are telling us we have to choose: economy? or environment? Most drastically, we are seeing efforts to further delay EPA action to reduce greenhouse gases. This is happening despite the overwhelming science on the dangers of climate change…despite the Supreme Court’s 2007 decision that EPA must use the Clean Air Act to reduce the proven threat of greenhouse gases…and despite the fact that leaving this problem for our children to solve is an act of breathtaking negligence.”
Her speech’s major message was that environmental protection and economic prosperity are not antithetical.
“I’ve seen meaningful environmental efforts met time and again with predictions of lost jobs and lost revenue,” she said. “Lobbyists and business journals have done such a good job of engraining it into our way of thinking that many of us believe, sadly, that we must choose between our environment and our economy … In the last 30 years, emissions of six dangerous air pollutants that cause smog, acid rain, lead poisoning and more decreased 54 percent. At the same time, gross domestic product grew by 126 percent.”
EPA recently has come under increasing pressure – both legislatively and legally – on its endangerment finding. In mid- February, 12 House Republicans filed a lawsuit in the US Court of Appeals for DC challenging EPA’s finding. Similar lawsuits have been filed by Texas and Virginia, and a variety of industries and trade organizations.
Sen. Murkowski (R-AK) and Reps. Skelton (D-MO) and Barton (R-TX) have introduced joint resolutions of disapproval under the Congressional Review Act which would repeal EPA’s finding. In an effort coordinated by the NCC, 175 agricultural groups have signed on to a letter in support of these resolutions. Two bills have been introduced in the House that would forbid EPA from such regulations of greenhouse gases and another would limit the regulations.
Responding to bipartisan pressure, Jackson told Senators in a Feb. 22 letter she will delay regulation of greenhouse gas emissions until next year at the earliest, adding that regulation of the smallest emitters would not begin until ’16.
Jackson, however, still is committed to emission reductions. In her speech, she stated, “the overwhelming scientific evidence recently was met with arguments that Washington, DC, experienced an unprecedented blizzard and record snowfalls this winter – as if an unexpected change in our climate somehow disproves climate change.”
Farm Groups Alarmed at Jackson’s Statement on Spraying Permits
Farm groups are concerned that EPA Administrator Jackson is taking a broad view of the Sixth Circuit ruling in NCC v. EPA, which will require certain pesticide uses to obtain clean water permits.
Jackson said at a March 5 event at the National Press Club in Washington, DC, that the Sixth Circuit ruling “basically says you need a permit to apply pesticides that have any shot of running off the land and ending up in water.” She added that, “[O]ftentimes in agricultural use, the pesticides applied aren’t meant to end up in water, but they can end up in water.”
This position seems to contradict what the EPA Office of Water has been saying about narrowly applying the ruling by not covering agricultural activities in the agency’s upcoming permitting program. Farm groups are concerned about the statement, saying it illustrates the “broadest reading of the case possible,” and are worried that EPA may be moving away from a long-time policy of exempting agricultural stormwater from permitting.
But an EPA spokeswoman said Jackson’s comments “didn’t mean to suggest we are changing the current scope of our pesticide general permit or to change any of the current provisions that affect agriculture. Agriculture is not covered under the proposed [National Pollutant Discharge Elimination System (NPDES)] permit.”
William Jordan, senior policy advisor with EPA’s pesticides office, told a conference on March 3 that the four activities subject to permitting are: mosquito control; control of aquatic weeds and algae; wide-area pest control programs, often using airplanes and covering wide swaths of land such as federal forests; and control of aquatic nuisance animals, like zebra mussels and Asian carp.
Still, Jordan said the draft could be revised to include agricultural applications if the issue is raised during the public comment period for the permit. The draft permit is scheduled for comment release in May.
USDA Sees Declining World Stocks
In its March report, USDA gauged US ’09-10 cotton production at 12.40 million bales. Mill use increased 100,000 bales to 3.50 million bales, which reflects higher consumption in the months of November through January. Exports were unchanged from last month at 12.00 million bales. The estimated total offtake now stands at 15.50 million bales generating ending stocks of 3.20 million bales and a stocks-to-use ratio of 20.6%.
USDA released ’10-11 projections during last month’s Agricultural Outlook Forum. US production is estimated to be 16.00 million bales for ’10-11. Mill use is set at 3.40 million bales while exports are reported to increase slightly to 12.60 million bales. The estimated total offtake stands at 16.00 million bales. With beginning stocks of 3.20 million bales, this would result in US ending stocks of 3.20 million bales on July 31, ’11, and a stocks-to-use ratio of 20.0%.
In their March report, USDA pegged world production for the ’09-10 marketing year at 102.24 million bales, down 500,000 bales from their February report. World mill use was raised 170,000 bales based on increases in Turkey, Vietnam and the United States. Consequently, world ending stocks are estimated to be 51.41 million bales with a stocks-to-use ratio of 44.4%.
USDA sees ’10-11 world production at 113.50 million bales for the ’10-11 crop year and mill use at 118.50 million bales. With beginning stocks of 51.41 million bales, this would result in world ending stocks of 48.91 million bales on July 31, ’11, and a stocks-to-use ratio of 41.3%.
Shipments Reach Another High
Shipments for the week ending March 4 were 342,600 bales (480-lb) – a marketing year high – bringing total exports to date to 5.8 million bales, compared with the 6.9 million bales at the comparable point in the ’08-09 marketing year.
Net export sales for the week were 150,700 bales. This brings total ’09-10 sales to approximately 9.6 million bales. Total sales at the same point in the ’08-09 marketing year were approximately 10.8 million bales. Total new crop (’10-11) sales are 445,400 bales.
Effective March 12-18, ’10
Adjusted World Price, SLM 11/16
68.21 cents
*
Fine Count Adjustment ('08 Crop)
1.75 cents
Fine Count Adjustment ('09 Crop)
1.55 cents
Coarse Count Adjustment
0.00 cents
Marketing Loan Gain Value
0.00 cents
Import Quotas Open
13
Special Import Quota (480-lb bales)
849,628
ELS Payment Rate
11.97 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 5 Lowest 3135 CFR Far East
84.58 cents
Forward 5 Lowest 3135 CFR Far East
NA
Coarse Count CFR Far East
NA
Current US CFR Far East
87.90 cents
Forward US CFR Far East
NA
'09-10 Weighted Marketing-Year Average Farm Price
Year-to-Date (August-January)
60.52 cents
**
**August-July average price used in determination of counter-cyclical payment
