CURRENT ISSUE ARTICLES

Agriculture Committee Continues Farm Policy Hearings

June 11 Cutoff For New CSP Applications

’10 Crop of 16.70 Million Bales Projected

USDA Issues Final ’09 Crop Estimate

Greenhouse Gas Resolution Vote Near

New Climate Bill Unveiled

Registration Continues for Stoneville Ginners School

Sales, Shipments Strong

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Agriculture Committee Continues Farm Policy Hearings

During its hearing in Washington, DC, the House Agriculture Committee heard testimony from prominent academicians, several of whom recommended the next commodity title be built on a county-based ACRE program.

Dr. Bruce Babcock, director of the Center for Agricultural and Rural Development at Iowa State U., suggested that the next commodity title should be a county-based ACRE program without the individual farm loss trigger.

“To summarize, our current set of programs consists of crop insurance, which costs too much; direct payments, which are no longer justified; cotton payments, which need to be brought into compliance; ACRE, which duplicates crop insurance but provides inadequate coverage against farm yield losses; and SURE, which tries to make up for crop insurance deficiencies,” Babcock said. “This broad look at current programs leads to two conclusions. It would be much simpler and more useful to change the ACRE program to a county-level program, increase the coverage to 100 percent of planted acres, and do away with any program feature that requires farm-level yield reporting. To put these costs into perspective, the annual cost of the direct payments program is $5.2 billion. This implies that direct payments could just about pay for a county ACRE program that covered 95 percent of the product of the county ACRE yield and the ACRE price. Alternatively, cost savings from the crop insurance program would pay for a substantial portion of the costs of a county ACRE program.”

He contended direct payments are no longer relevant and are difficult to defend. He emphasized that the World Trade Organization (WTO), and especially the Brazil case decision, would influence the next farm bill debate.

“We do not know what will replace the current program, or if cotton producers will devise a replacement program in case Brazil’s plans for retaliation finally induce USDA and Congress to put the cotton program into compliance,” Babcock said.

Dr. Robert Paarlberg, the BF Johnson Professor of Political Science at Wellesley College and adjunct professor at Harvard, suggested the next farm bill will be shaped by three primary concerns/crises: the growing budget deficit, childhood obesity and the WTO.

Paarlberg said ... “the costly and embarrassing failure to reform our cotton program will be at the top of the farm bill agenda in 2012. If the offending U.S. cotton program is not changed, or if our currently decoupled payments are replaced by trade-distorting measures in the 2012 bill, America’s larger trade policy interests will be put in jeopardy.”

In addition to the discussion about the revenue plan, members and witnesses discussed the growing concern about obesity, the importance of research, conservation and rural development.

The hearings continue when the Committee meets in Morrow, GA, on May 14; Troy, AL, on May 15; and Lubbock, TX, on May 16.

June 11 Cutoff For New CSP Applications

USDA’s Natural Resources Conservation Service (NRCS) announced that June 11 will be the periodic cutoff for new Conservation Stewardship Program (CSP) applications.

CSP offers payments to producers who maintain a high level of conservation on their land and agree to adopt higher levels of stewardship. Eligible lands include cropland, pastureland, rangeland and non-industrial forestland.

The ’08 farm law allowed enrollment of 12.7 million acres per year in CSP through continuous sign-ups with periodic ranking periods. Last year’s sign-up is expected to have enrolled all 12.7 million acres.

The NRCS is encouraging producers to apply for CSP now to ensure their applications will be considered during the next funding and ranking period. Though the final rule has not been published, producers will be able to make their final decision to participate in the program after the rule is issued as long as one has applied prior to June 11.

Potential applicants are encouraged to use the CSP self-screening checklist to determine if the new program is suitable for their operation. The checklist highlights basic information about CSP eligibility requirements, contract obligations and potential payments. It is available from local NRCS offices or on the NRCS web site at http://www.nrcs.usda.gov/programs/new_csp/csp.html.

The final rule will establish the policies and procedures for the program, and it has been indicated that the final rule should be published in the coming weeks. Once published, the rule will be reviewed by NCC staff and a rule summary posted on the NCC website.

’10 Crop of 16.70 Million Bales Projected

In its May report, USDA projects ’10-11 US production of 16.70 million bales. Mill use is seen at 3.30 million bales and exports rising to 13.50 million bales. The estimated total offtake would be 16.80 million bales. Beginning stocks of 3.10 million bales would result in US ending stocks of 3.00 million bales on July 31, ’11, and a stocks-to-use ratio of 17.9%.

For the ’10-11 marketing year, USDA projects world production to be 113.88 million bales. Mill use is set at 119.08 million bales. Beginning stocks of 52.75 million bales would result in world ending stocks of 50.13 million bales on July 31, ’11, and a stocks-to-use ratio of 42.1%.

For the ’09-10 marketing year, USDA finalized US cotton production at 12.19 million bales, an increase of 40,000 bales from the previous month. Mill use was lowered 100,000 to 3.40 million bales and exports were unchanged at 12.00 million bales. The estimated total offtake of 15.40 million bales generates ending stocks of 3.10 million bales and a stocks-to-use ratio of 20.1%.

World production for the ’09-10 marketing year was estimated to be 102.91 million bales, up 1.19 million bales from the April report. China accounts for most of the increase, based on reports of higher production for Xinjiang. World mill use was lowered 180,000 bales. Consequently, world ending stocks are estimated to be 52.75 million bales with a stocks-to-use ratio of 45.5%.

USDA Issues Final ’09 Crop Estimate

In its final estimate of the ’09-10 US cotton crop, USDA put all cotton production at 12.19 million bales.

Final planted area is estimated to be 9.15 million acres and final harvested area is estimated to be 7.53 million acres. The ’09-10 national upland yield is an estimated 766 pounds per harvested acre, 63 pounds below the five-year average of 829 pounds. The estimated national average ELS yield of 1,389 pounds per harvested acre is 122 pounds more than the five-year average.

US Cotton Crop, ’09-10
	PLANTED ACRES Thou.	HARV. ACRES Thou.	YIELD PER HARV. ACRE Lb.	5-YEAR AVG. YIELD Lb.	480- POUND BALES Thou.
UPLAND
SOUTHEAST	1,891	1,863	884	772	3,431
Alabama	255	248	668	668	345
Florida	82	78	723	745	118
Georgia	1,000	990	902	792	1,860
North Carolina	375	370	990	813	763
South Carolina	115	114	872	736	207
Virginia	64	63	1,052	867	138
MID-SOUTH	1,627	1,555	806	945	2,610
Arkansas	520	500	818	1,052	852
Louisiana	230	225	745	884	349
Mississippi	305	290	687	910	415
Missouri	272	260	927	997	502
Tennessee	300	280	843	836	492
SOUTHWEST	5,243	3,729	643	721	4,992
Kansas	38	34	748	543	53
Oklahoma	205	195	785	718	319
Texas	5,000	3,500	634	724	4,620
WEST	247	244	1,488	1,375	755
Arizona	145	144	1,477	1,412	443
California	71	70	1,646	1,414	240
New Mexico	31	30	1,172	960	72
TOTAL UPLAND	9,008	7,391	766	829	11,788
TOTAL ELS	141	138	1,389	1,267	400
Arizona	2	2	1,170	866	4
California	119	116	1,494	1,333	361
New Mexico	3	3	686	845	4
Texas	18	18	836	831	31
ALL COTTON	9,150	7,529	777	839	12,188
Source: USDA-NASS May Crop Production Report.

Greenhouse Gas Resolution Vote Near

In January, Sen. Murkowski (R-AK) introduced S.J. Res. 26, a resolution of disapproval under the Congressional Review Act, which would prevent EPA from moving forward with greenhouse gas regulations under the Clean Air Act. Sen. Murkowski’s resolution is co-sponsored by 40 of her colleagues, including three Democrat: Lincoln (AR), Nelson (NE) and Landrieu (LA).

Sen. Murkowski is planning to take the resolution to the Senate floor on May 20. With 40 co-sponsors, the measure will require 10 more senators for passage.

The Supreme Court ruled in ’07 that EPA has the authority under the Clean Air Act to regulate carbon dioxide and other greenhouse gases -- provided that the agency finds that such pollution endangers human health and the environment. In December, EPA Administrator Lisa Jackson formally issued the required "endangerment finding." This finding has set the stage for an unprecedented expansion of EPA regulation and expensive permitting processes.

While the EPA set out to regulate only mobile sources (motor vehicles), the overlapping triggers within the Clean Air Act will immediately extend the agency’s regulatory reach to stationary sources as well – giving it authority to regulate all greenhouse gas emissions. Nationwide, the EPA has estimated that some six million buildings, facilities, farms, landfills and other establishments ultimately will be covered by these regulations. According to EPA, some 3.9 million single family homes would be regulated at the Clean Air Act’s explicit statutory thresholds.

Through the “tailoring rule,” EPA is seeking to raise the Clean Air Act’s regulatory threshold for greenhouse gas emissions to at least 25,000 tons per year – a hundredfold increase from the statute’s current triggers. As a federal agency, however, the EPA has no authority to make an arbitrary change to the statutory language. It is expected that the “tailoring rule” will be challenged in court. Even if the tailoring rule survives litigation, it still will fail to provide the protection that the EPA claims. Due to state and local requirements – which require legislative amendment to change – the “tailoring rule” would not shield smaller emitters in some 37 states. If states do not amend their laws, their smaller emitters will never be shielded from these regulations. Even if they do act, the protection will be temporary – as the EPA has made clear that smaller sources will face regulation within a matter of years. Regulated entities would be required to acquire permits before facilities are built or modified, and, in many cases, “best available control technologies” to be purchased, installed, and operated.

Because Congress never intended for the Clean Air Act to apply to greenhouse gases, it is one of the costliest and least effective tools available to achieve emission reductions. Environmental groups, senior congressional Democrats and administration officials (including the EPA administrator and the President) have expressed their preference for congressional legislation instead of bureaucratic regulation. Sen. Murkowski’s resolution will prevent EPA from moving forward with regulations and return the debate to Congress.

New Climate Bill Unveiled

After months of speculation, Sens. Kerry (D-MA) and Lieberman (I-CT) unveiled their energy and climate bill, the “American Power Act.”

Unlike the House-passed Waxman/Markey climate change bill (HR 2454), which would set an industry-wide cap on emissions of gases contributing to global warming and establish a market for buying and selling government-issued allowances, the Kerry-Lieberman legislation would take a sector-by-sector approach to reducing emissions.

The Kerry-Lieberman package aims to incentivize the growth of domestic energy production, including several types of renewable energy; set a national framework for reducing carbon emissions; and provide rebates to consumers who may face higher energy costs, according to a draft document containing key provisions of the bill.

The legislation calls for a 17% reduction in carbon emissions from ’05 levels by ’20, increasing to more than an 80% cut by ’50. The bill establishes a price floor for carbon at $12, which would increase at 3% over inflation annually, up to a ceiling set at $25, which would increase by 5% over inflation annually. States would no longer be able to implement mandatory greenhouse gas reduction programs.

The Senate bill would set up an emission trading program for utilities starting in ’13, with factories and other “industrial sources” joining the cap-and-trade program in ’16. Only the largest emitters -- those emitting more than 25,000 tons of carbon annually -- would be affected. Farmers would be exempt from mandatory pollution compliance obligations in the bill, but would be able to participate in a new “multi-billion dollar revenue stream through a domestic offset program that incentivizes farmers to reduce emissions on the land,” the document noted.

USDA would be the lead agency overseeing agriculture and forestry offsets. The legislation also provides additional support for the Rural Energy for America Program (REAP).

Opponents already have issued press releases regarding concerns they have about the legislation, including an expansion of offshore oil drilling.

Registration Continues for Stoneville Ginners School

Registration for the ’10 Ginners School in Stoneville, MS, on June 15-17, can be completed online at http://ncga.cotton.org. The recently completed Southwest and Western Ginners Schools in Lubbock, TX, and Las Cruces, NM, had a combined attendance of 176 participants.

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. In addition to Levels I, II and III, all schools feature a two-day continuing education (CE) course for certified ginners and gin managers. Full details of each instruction level and the CE course also are available at http://ncga.cotton.org.

Sales, Shipments Strong

Net export sales for the week ending May 6 were 273,800 bales (480-lb). This brings total ’09-10 sales to approximately 11.7 million bales. Total sales at the same point in the ’08-09 marketing year were approximately 13.0 million bales. Total new crop (’10-11) sales are 992,700 bales.

Shipments for the week were 271,700 bales, bringing total exports to date to 8.4 million bales, compared with the 9.4 million bales at the comparable point in the ’08-09 marketing year.

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