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April 9, 2010
 

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US-Brazil Agreement Delays Retaliation

Following an April 1 meeting in Brasilia, US officials announced that the United States and Brazil have agreed upon a path toward a negotiated settlement over the ongoing trade dispute involving portions of the upland cotton program and the export credit guarantee program. The agreement postpones the imposition of higher import tariffs that Brazil was scheduled to implement on April 7 and also delays any cross-retaliation on intellectual property rights.

According to the USDA/US Trade Representative announcement, the United States agreed to: (1) publish a proposed rule by April 16 to recognize the Brazilian state of Santa Catarina as free of foot-and-mouth disease and swine fever and complete a risk evaluation to determine whether fresh beef can be imported from Brazil; (2) modify the operation of the GSM-102 Export Credit Guarantee Program to make it even more risk-based; and (3) establish a fund of $147.3 million per year that would provide technical assistance and capacity building for Brazil’s cotton industry. The fund’s amount corresponds to the economic impact attributed by the World Trade Organization (WTO) arbitration panel to the upland cotton marketing loan and counter-cyclical payment program. The fund will continue until the next farm bill’s passage or a mutually agreed solution is reached, whichever is sooner. Also, the fund is subject to transparency and auditing requirements.

Following implementation of these initial steps, the United States and Brazil agreed to continue discussions with a view to agreeing on a process by June that will bring a long-term solution to the ongoing dispute.

In response to the announcement, NCC Chairman Eddie Smith called the agreement “a positive development” in the long WTO case. “The two critical aspects of the agreement are that it avoids the immediately harmful economic effects of trade retaliation and it puts the serious discussion concerning changes in the U.S. cotton program before Congress in the 2012 farm bill, which is where that discussion belongs,” Smith said. “Under Secretary Jim Miller, Ambassador Miriam Sapiro and Ambassador Isi Siddiqui are to be commended for their effort and this creative approach that enables all parties to work diligently on these issues in the months ahead."

In his remarks at the Plains Cotton Growers’ Annual Meeting, Chairman Smith reiterated that this agreement should have a minimal impact near term on the US cotton industry, but the longer-term implications are more serious with the potential of having to make significant changes to the US cotton program.

 
USDA Amends GSM-102 for FY10

In response to the conditions set forth in the US-Brazil agreement in the WTO trade dispute (see related article), USDA announced, effective on April 9, the cancellation of all unused balances of the GSM-102 Export Credit Program announcements issued for FY10. Applications under the initial announcements must have been received by 11:59 p.m. on April 8, ’10, to be considered for guarantee coverage under the current terms.

For any unused allocations, USDA will issue new program announcements making the allocations available under new guarantee fee rates. Prior to those announcements, USDA will issue a “Notice to Participants” detailing the new guarantee fee rates. For more information, contact the Registrations and Operations Branch of USDA’s Foreign Agricultural Service at (202) 720-3224, or by e-mail at gsm.registrations@fas.usda.gov.

 
NCC: Leave Ag Baseline Budget Intact

In a letter to Agriculture Secretary Vilsack, NCC Chairman Smith stressed the importance of preserving the agricultural baseline budget that ultimately will serve as the measuring stick for the ’12 farm bill.

Smith noted that the “2012 farm bill will be developed amidst an even tighter budget situation than the current farm law.” For example, projected Commodity Credit Corp. outlays in the Congressional Budget Office’s (CBO) March ’10 baseline average $10.3 billion per year for FY13-17, which is $1.6 billion per year less than CBO’s March ’07 baseline average over the same fiscal years.

In the letter, the NCC strongly urged USDA to carefully consider the baseline budget implications of any program changes and if such changes are necessary, USDA should structure those adjustments in a manner that does not lead CBO to reduce the overall baseline.

House Agriculture Committee Chairman Peterson (D-MN) repeatedly has stated that the next farm bill will be written only to the level of the CBO baseline. With numerous programs in the current farm bill expiring and having no future baseline, it is imperative to preserve the highest baseline for writing the next farm bill.

 
Letter Urges Completed Work on Job Creation Package

Senate Agriculture Committee Chairman Lincoln (D-AR) sent a letter to Senate Majority Leader Reid (D-NV) and House Speaker Pelosi (D-CA) urging both to make the completion of Senate-House negotiations on a critical package of tax cuts and other job-creation measures the first legislative priority following the current state and district work period.

In a news release, she quoted from the letter saying, “In our continuing efforts to restore the nation’s economy and create jobs, there is no step more important than providing a stable economic environment for our businesses. Without predictability in the tax code, our businesses lack the certainty needed to plan for the future, make capital investments and hire workers. In my home state of Arkansas, the lapse in the biodiesel tax credit has resulted in biodiesel production nearly ceasing for the entire first quarter of this year.”

The release noted that the Senate passed the American Workers, State and Business Relief Act on March 10, and the legislation now has to be reconciled with the House version of the bill before it can be signed into law. The Senate-passed version of the bill contains Sen. Lincoln's $1.5 billion disaster assistance package for farmers and ranchers who incurred significant agricultural losses last year.

“Congress must act quickly to retroactively renew the important provisions that have already expired and to provide emergency relief,” she said in the release, “whether to farmers who have faced tremendous losses due to natural disasters, to families struggling with the loss of a job and their health insurance, or to states struggling to preserve the critical services they provide in Medicaid as part of our nation’s health safety net.”

 
EPA Hosting Water Priorities Forum

EPA Administrator Lisa Jackson is hosting a clean water forum to discuss broad clean water priorities -- ones likely that will solidify the agency's agenda for the next several years. Sources, though, say the forum also could address the longer-term need to revise the Clean Water Act (CWA).

EPA Water Chief Peter Silva announced the April 15 online forum and asked for public input on critical unmet clean water needs and challenges. Silva said the forum will bring together 100 regulators, environmentalists, industry and other high-level officials to help address three themes: 1) a CWA watershed approach, 2) managing pollution from nutrients and 3) limiting storm water pollution. Similar forums also will be held in each of EPA’s regional offices.

The forums will seek to determine a broad agenda for EPA under its existing authorities with the future possibility of legislative changes to the CWA. To begin addressing the legislative piece of the discussion, Silva is citing a March 19 report, Considering the Clean Water Act, which recaps a major conference convened last fall by the Nicholas Foundation at Duke U. and the Water Environment Federation.

While the report does not recommend specific next steps for legislative reform, it identifies four options, including: 1) updating the act to improve existing tools, 2) expanding the law beyond traditional applications, 3) updating other relevant statutory mechanisms to better address water quality and 4) creating new legal or regulatory tools to target nonpoint sources or integrated watershed restoration and management.

On managing nutrients, Silva seeks comment on critical elements that must be included in an effective nutrient strategy, how strategies should differ for protecting healthy waters and restoring polluted ones, and examples on approaches that have worked and failed.

 
’10 Ginner School Registration Continues

Registration for the remaining ’10 Ginner Schools can be completed online at http://ncga.cotton.org. The Western Ginners School is set for Las Cruces, NM – May 11-13; and the Stoneville Ginners School will be held in Stoneville, MS – June 15-17. The ’10 Southwest Ginners School in Lubbock, held on April 5-7, had 148 participants from nine states.

Each coursework level is built on the previous instruction level, with Level I as the foundation. Thus, beginning students, regardless of gin experience, should start with Level I.

Level I courses: Introduction to Cotton Ginning and the Industry; Maintenance of Auxiliary Gin Components; Basic Hydraulics; Basic Gin Safety; Maintenance and Adjustments for Seed Cotton Cleaners, Gin Stands, and Lint Cleaners; Air Utilization and Drying; and Electricity in the Gin.

Level II offerings: Purpose and Operating Principles of Individual Gin Machines; Efficient Operation, Adjustment, and Maintenance of Gin Equipment; Pneumatics and Waste Collection; Electrical Systems; Hydraulic Systems; Gin Safety; Management Tips; and Roller Ginning (at the Western School only).

Level III: Review of Functions of a Ginning System; Electrical Systems; Air Systems in the Gin; Drying and Moisture Restoration Systems; Matching Machinery Capacities in the System; Seed Cotton Unloading Systems and Management of Seed Cotton Handling Systems; Bale Presses and Hydraulic Systems; Safety Programs and Labor Regulations; Cottonseed Handling Systems; and Roller Ginning (at the Western School only).

In addition to Levels I, II and III, all schools will feature a two-day continuing education (CE) coursefor certified ginners and gin managers. One may register for the two days or for individual parts of the course with a minimum of one day registration. Check at each school location for the order in which these will be covered.

The CE course’s first day offerings will focus on developing basic skills and knowledge with PLC controllers, touch screens and electrical components. Training will provide students with a basic understanding of PLC operation and programming that will allow for better communications with the repairman to expedite resolution of problems in the gin. The session will include a discussion of electricity in the gin and a focus on reading wiring diagrams and identifying problems that will allow for better communications with electricians. Other discussions will be held onhigh efficiency motors, power saving techniques, energy management and new technology to conserve energy.

The second day’s CE course discussion will focus on high capacity ginning and quality preservation and how ginners can get the most out of the gin through reduced operational costs, gin management and maintenance activities. Included will be identifying capacity drags, understanding the difference between urgency and carelessness, and identifying capacity killers. The course will feature discussions on developing a program that can assist ginners in reaching the gin’s full operational capacity and maintaining that level throughout the ginning season.

In addition, the CE course will include a focus on safety training with: 1) a discussion on keeping the workplace safe by identifying hazards and 2) a review of safety training materials.

 
’09 US Cotton Production Estimate Lowered

In its April report, USDA gauged US ’09-10 cotton production at 12.15 million bales. The production estimate was lowered 251,000 bales from last month based on USDA’s final Cotton Ginnings report, released on March 25. Both mill use and exports were unchanged from last month at 3.50 million bales and 12.00 million bales, respectively. The estimated total offtake now stands at 15.50 million bales, generating ending stocks of 3.00 million bales and a stocks-to-use ratio of 19.4% -- the smallest since ’03/04.

In USDA’s April report, world production for the ’09-10 marketing year was estimated to be 101.72 million bales, down 520,000 bales from the March report. World mill use was raised 370,000 bales to 116.07 million due to increases for Brazil, India, Turkey and Uzbekistan, which partially offset a reduction for Pakistan. Consequently, world ending stocks are estimated to be 50.91 million bales with a stocks-to-use ratio of 43.9%.

 
Sales Steady, Shipments Strong

Net export sales for the week ending April 1 were 194,200 bales (480-lb). This brings total ’09-10 sales to approximately 10.4 million bales. Total sales at the same point in the ’08-09 marketing year were about 12.0 million bales. Total new crop (’10-11) sales are 642,200 bales.

Shipments for the week were 335,400 bales, bringing total exports to date to 7.1 million bales, compared with the 7.9 million bales at the comparable point in the ’08-09 marketing year.

 

 
Effective April 9-15, ’10

Adjusted World Price, SLM 11/16

68.96 cents

*

Fine Count Adjustment ('08 Crop)

 0.53 cents


Fine Count Adjustment ('09 Crop)

  0.33 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 0.00 cents


Import Quotas Open

13


Special Import Quota (480-lb bales)

879,549


ELS Payment Rate

0.00 cents


*No Adjustment Made Under Step I

 

Five-Day Average



Current 5 Lowest 3135 CFR Far East

85.33 cents


Forward 5 Lowest 3135 CFR Far East

81.35 cents


Coarse Count CFR Far East

NA


Current US CFR Far East

88.58 cents


Forward US CFR Far East

NA


 

'09-10 Weighted Marketing-Year Average Farm Price  
 

Year-to-Date (August-February)

61.27 cents

**


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