Disaster Relief Legislation to Be Considered

Senate Approves Derivatives Regulation Bill

House Ag Field Hearings Continue

Brazil Case Meetings Held

Doha Developments Discussed

Signup Deadline Near For ACRE, DCP

’10 PIE Program Tours Set

CCI Awarded $200,000 for Bangladeshi Initiative

Sales, Shipments Continue Strong

The House is scheduled to consider legislation (HR 4213 - The American Jobs and Closing Tax Loopholes Act of 2010) which includes $1.5 billion in agriculture disaster relief for ’09 crop losses and $4.6 billion to fund settlements with black farmers and American Indians under long-running class action suits for discrimination by USDA and mismanagement of American Indians’ trust accounts.

The bill also: 1) includes provisions to extend numerous tax breaks which expired at the end of ’09 including the $1.00/gal biodiesel production tax credit, the research and development tax credit, the five-year depreciation allowance for farm equipment, and the state sales tax deduction; 2) extends unemployment benefits and premium subsidies for health insurance coverage available to unemployed individuals (COBRA); and 3) includes an increase in the 8 cent/barrel assessment paid by the oil industry for the Oil Spill Liability Trust Fund.

Democratic House leaders had planned to bring the legislation to the floor on May 21 but a number of members raised objections to specific provisions which were used to offset about $30 billion of the estimated cost of $200 billion. Fiscal conservatives on both sides of the aisle were particularly vocal in their opposition to the fact that the bill as currently drafted would add more than $150 billion to the deficit.

It is not clear if the leadership will muster the necessary votes in the House and if there are 60 votes in the Senate.

The agriculture disaster provisions, which were added to the version that passed the Senate, include $1.0 billion to provide a disaster payment equivalent to 90% of the ’09 direct payment to producers in counties with a primary Secretarial disaster declaration who self-certify a 5% loss of a crop of economic significance. There is $42 million for cottonseed assistance as well as funds for aquaculture, sugar, poultry, livestock and specialty crop producers.

The provisions are based on legislation introduced in the Senate by Sens. Lincoln (D-AR), Cochran (R-MS) and Wicker (R-MS) and in the House by Reps. Childers (D-MS) and Berry (D-AR). A detailed explanation of the legislation can be accessed from the NCC’s home page, www.cotton.org.

The Senate passed legislation on a vote of 59-39 that could dramatically alter regulation of financial institutions and derivatives. The Senate and House now will attempt to reconcile their bills (S 3217 and HR 4173) but it will be complicated by the fact that the Senate left some major issues unresolved.

The legislation which passed the Senate would create a new regulator to safeguard consumers from risky loans and investments, create a process for dismantling large financial companies on the verge of collapse, and regulate the derivatives market more closely.

The bill hits the financial industry harder than had been expected. For more than a month, the financial services industry has been expecting an amendment to modify language supported by Agriculture Chairman Lincoln (D-AR) requiring banks to shed most of their derivatives business or keep it in a separate subsidiary. Federal Reserve Chairman Ben S. Bernanke, Federal Deposit Insurance Corp. Chairwoman Sheila C. Bair and White House Economic Adviser Paul A. Volcker expressed concerns about the derivatives provision.

An amendment offered by Agriculture Committee Ranking Member Chambliss (R-GA) earlier in the bill’s consideration -- to moderate the derivatives provision reported by the Agriculture Committee -- failed on a party-line vote. At the last minute, Banking Committee Chairman Dodd (D-CT) filed an amendment retaining the derivatives ban but delaying implementation for two years while top regulators studied the issue. He dropped that proposal when all parties expressed strong opposition.

The conference committee could decide to modify the Senate provision. The legislation approved by the House in December would require most trades to be cleared through a neutral third-party exchange. Trades that could not be cleared would be subject to higher capital requirements. The House legislation does not ban banks from the derivatives market entirely.

After the Senate passed “The Restoring American Financial Stability Act of 2010,” Chairman Lincoln made the following statement, “As Chairman of the Senate Agriculture Committee, I was proud to craft the bill’s strong derivatives title. My legislation brings a $600 trillion market into the light of day and ends the days of Wall Street’s backroom deals.”

The House Agriculture Committee completed field hearings with stops in Morrow, GA; Troy, AL; and Lubbock, TX; on May 14, 15 and 17.

At each stop, Chairman Peterson expressed his concern that budget constraints could make writing effective farm policy extraordinarily difficult in ’12 and he encouraged growers to evaluate alternatives, including whole farm revenue plans. The Chairman stated that different farm programs may be required for different commodities. Committee members also asked growers to document the economic impact of environmental regulations and proposed cap-and-trade legislation.

US and Brazilian officials met in Washington late last week and in Geneva this week in continued discussions about settlement of the Brazil World Trade Organization (WTO) case. There are expectations that the discussions will cover both short and long term solutions for resolving a bilateral dispute over US cotton subsidies and the export credit guarantee program.

USDA Under Secretary Miller has stated publicly that Brazil wants further changes in the GSM 102 program so that it complies with the restrictions on the program called for in the draft text on the table in the WTO’s Doha round. There have been numerous indications that Brazil recognizes that any changes to the cotton program have to take place within the context of the ’12 farm bill. The immediate question is what commitment the US administration officials can make prior to June 21 that will be enough to convince Brazil to continue to suspend retaliation. US and Brazilian officials are scheduled to meet again in Brazil in early June.

The WTO agricultural negotiating committee met this week in Geneva to discuss developments in the Doha round. The US representative, Ambassador Punke, said the July ’08 draft agricultural text is not acceptable because it is neither balanced nor ambitious. Burkina Faso reminded the United States that failure to resolve the “cotton” issue - as agreed in the ’05 Hong Kong Ministerial Declaration - already has had a deadly impact on its farmers and economy.  The “cotton-four” countries - Benin, Burkina Faso, Mali and Chad - cannot wait any longer.

Trade ministers from two dozen countries are due to meet in Paris on May 27 for discussions on Doha during the Organization for Economic Cooperation and Development's annual ministerial.

USDA Farm Service Agency Administrator Jonathan Coppess reminds farmers and landowners that they have until June 1, ’10, to sign up for the ’10 Direct and Counter-Cyclical Program (DCP) and the Average Crop Revenue Election Program (ACRE). More than 75% of an expected 1.7 million farms have already enrolled.

Producers may complete and sign ’10 ACRE election forms and DCP and ACRE contracts at any USDA Service Center or they can enroll on the USDA website. At www.fsa.usda.gov/dcp, producers may click on Access eDCP Services then choose payment options, assign crop shares, sign and submit their contracts, and view/print submitted contract options from any computer with Internet access.

The NCC has scheduled dates and locations for the ’10 Producer Information Exchange (PIE) Program. Sponsored by Bayer CropScience through a grant to The Cotton Foundation, the program is now in its 22nd year.

Upon completion of this year’s four tours, the PIE program will have exposed nearly 900 US cotton producers to innovative production practices in regions different than their own.

The USDA has granted Cotton Council International (CCI) $200,000 to carry out a two-year Technical Assistance Initiative in Bangladesh.

Bangladeshi mills have a positive impression of US cotton, but lack awareness of the varieties available, the technical attributes, the best processing methods, and how to purchase the fiber. CCI believes a better understanding of these factors by the Bangladeshi industry could overcome the price advantages of competing growths.

Net export sales for the week ending on May 13 were 251,700 bales (480-lb). This brings total ’09-10 sales to approximately 12.0 million bales. Total sales at the same point in the ’08-09 marketing year were approximately 13.2 million bales. Total new crop (’10-11) sales are 1.2 million bales.

Shipments for the week were 286,000 bales, bringing total exports to date to 8.7 million bales, compared with the 9.8 million bales at the comparable point in the ’08-09 marketing year.