Program Amendments Defeat Applauded, Brazilian Amendment Adoption Disappointing
The NCC issued a statement saying it was deeply appreciative for efforts by leaders of the House appropriations and agriculture committees to successfully convince the House to reject a series of amendments to the FY12 agriculture appropriations bill (H.R. 2112). Those amendments would have severely compromised the cotton program by amending the ’08 farm law two years before it is scheduled to expire. The NCC also complimented leaders on developing the legislation while working under severe budget pressure.
“Once again agriculture was asked to contribute to deficit reduction,” NCC Chairman Charles Parker said, “and while the cuts in this bill are difficult to accept, the leaders are to be complimented for their efforts to preserve funding for key programs and agencies as best they could.”
An amendment, offered by Rep. Flake (R-AZ) that was defeated on a voice vote, would have terminated counter-cyclical payments for upland cotton, prohibited repayment of cotton marketing assistance loans at the adjusted world price or issuance of loan deficiency payments for upland cotton, and would have prohibited cotton storage payments.
“Fortunately, a blatant and inappropriate circumvention of the farm program development process was avoided with this amendment’s defeat,” Parker said. “It would have targeted cotton specifically and undermined a critical safety net for cotton farmers who face uncertain economic and weather climates and seriously jeopardized an industry that makes significant contributions to our nation’s economic well-being.”
Parker was referring to the fact that the US cotton industry provides some 191,000 jobs and generates $27.6 billion in revenue with an additional downstream of 427,000 jobs and $123 billion in generated revenue.
The House also rejected amendments to change key components of current farm law related to determination of eligibility and limitations on benefits. Rep. Blumenauer (D-OR) proposed capping annual payments for direct payments, counter-cyclical payments, loan deficiency payments and marketing loan gains at $125,000/crop year. Rep. Flake proposed amendments that would have: 1) denied all farm program benefits if an individual’s adjusted gross income exceeds $250,000 and 2) eliminated funding for USDA’s Market Access Program (MAP).
Parker said the US cotton industry understands the gravity of the current budget situation but reiterated that Congress went through a lengthy debate during ’08 farm bill development before imposing tighter eligibility requirements and establishing limitations on benefits.
It is anticipated that both agriculture committees will debate eligibility and limitation provisions in the next farm bill, and Parker emphasized that, “the U.S. cotton industry is committed to work with Congress to achieve a balanced and reasonable approach to these critical issues so that the farm safety net for U.S. agriculture is available to all commercially viable operations.”
The NCC expressed great disappointment that the House approved an amendment by Reps. Kind (D-WI) and Flake that would prohibit the transfer of funds to the Brazilian Cotton Institute. If enacted this would result in the United States violating the Framework Agreement negotiated by the US and Brazilian governments. The agreement allowed Brazil to withhold implementation of prohibitively high tariffs on US exports and provided for a series of consultations that could lead to a resolution of the dispute.
Parker said the Kind amendment -- the latest in a long line of attempts to undermine or alter the ’10 Framework Agreement achieved by the US and Brazilian governments -- places the United States in violation of the agreement, undermines the good work of US officials, and exposes a broad range of US sectors to harmful trade retaliatory measures by Brazil on up to $800 million in US exports.
“The NCC is committed to work with Congress and the Administration to ensure the U.S. can continue to comply with the Framework Agreement to avoid serious disruption in trade and to identify a solution to the dispute,” Parker said.
Senate Ag Panel Plans H.R. 872 Mark-Up
Senate Agriculture, Nutrition, and Forestry Committee announced plans to mark up H.R. 872 on June 21 or 22. The bill, which would exempt pesticide applications from Clean Water Act NPDES permitting requirements, was passed on March 31 by the House 292-134 under an expedited process known as the suspension of the rules -- in part due to NCC members’ concerted efforts.
If passed, H.R. 872 would amend the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA) and the Clean Water Act (CWA) and eliminate the court mandated requirement to obtain CWA permits to apply pesticides over, to, or near waters of the United States.
H.R. 872 is bipartisan legislation that was introduced in the House by Water Resources and Environment Subcommittee Chairman Gibbs (R-OH), Transportation Committee Member and Chairman of the House Agriculture Committee’s Subcommittee on Nutrition and Horticulture Schmidt (R-OH), and other House Members. The bill reverses a ’09 decision of the Sixth Circuit Court of Appeals in National Cotton Council v. EPA. This court decision vacated a ’06 EPA rule and long-standing interpretation that the application of a pesticide for its intended purpose and in compliance with the requirements of the FIFRA does not also require a separate permit under the CWA.
Farm Groups Concerned About Deficit Reduction Efforts
The NCC joined with 132 other farm organizations on a letter to President Obama, House Speaker Boehner (R-OH) and Senate Majority Leader Reid (D-NV) expressing strong opposition to any deficit reduction package that would disproportionately affect US farmers/ranchers and rural America -- noting particular concern with the depth/timing of cuts to agricultural policies reportedly being considered for inclusion in legislation to increase the debt limit.
The letter conveyed deep concern about any requirement that cuts be implemented for ’12, effectively reneging on commitments already made to and relied upon by producers and their lenders under the five-year ’08 farm bill. The groups also said they strongly believe that any policy decisions or mandated cuts ought to be determined by the congressional committees of jurisdiction and made in the context of the ’12 farm bill.
“The current record droughts, flooding and other natural disasters clearly illustrate the unique risks producers face and underscore just one of many reasons behind the need for strong, consistent farm policy which is in serious jeopardy if the reported depth and timing of cuts contemplated by negotiators are accurate,” the letter noted. “Though we have watched the total federal dollars allocated for assistance to farmers and ranchers diminish with each passing year, farm organizations have consistently recognized the need to reduce government indebtedness. We have expressed a willingness to shoulder a proportionate share of budget reductions in relation to the share of the budget devoted to farm and ranch assistance. In fact, we may have been the only sector to step forward, despite our having already been cut three times in the past six years, most recently with significant cuts to crop insurance.”
The groups stated that while their members support efforts to bring down the deficit and debt in an orderly and comprehensive manner, “we cannot in good faith support deficit reduction efforts that target U.S. farmers and ranchers and rural America for disproportionately large cuts to the small percentage of the mandatory budget devoted to supporting agriculture. Accordingly, we will oppose any cuts to farm policy that are proposed outside the context of a comprehensive agreement involving all federal spending that seriously addresses the fiscal crisis our nation faces. We strongly urge you to develop a balanced approach to deficit reduction that distributes reductions to all segments of the federal budget.”
CFTC Proposed Rules For Dodd-Frank Will Change
Commodity Futures Trading Commission (CFTC) Chairman Gensler said that most of the agency's 51 proposed rules to implement the Dodd-Frank Wall Street Reform and Consumer Protection Act will be changed before they are submitted to a final CFTC vote.
During a hearing before the Senate Agriculture, Nutrition & Forestry Committee to discuss the status of Dodd-Frank, Gensler told Sen. Roberts (R-KS) that “those final rules will be logical outgrowths of what we proposed.”
Committee Chairman Stabenow (D-MI) related several concerns about the implementation of Dodd-Frank. She said she is concerned about the “timing and clarity” of the process as well as efforts to harmonize domestic and international regulations. She also said there are serious concerns that the European Union (EU) is working at a slower pace than US regulators on derivatives reform -- opening the potential that the EU could adopt looser rules and attract US firms.
The CFTC proposed a rule to delay finalization of many Dodd-Frank rules from Congress' original July 16 deadline to Dec. 31.
Gensler said the delay was needed to ensure legal certainty for market participants because the Commission could not meet the July deadline. He assured the Committee that the CFTC has sufficient legal authority to “phase in” final rules because Dodd-Frank does not establish deadlines for implementing rules. He said it was “very important” that entities such as swap data repositories, clearinghouses, and swap execution facilities be “registration ready—open for business,” with their rule books in place before the trading and clearing of swaps becomes compulsory. “Mandatory clearing, trading, [and] transaction compliance would be phased in after that,” Gensler said.
Stabenow also said she was “particularly concerned” with differences in regulatory approaches taken by the CFTC and US bank regulators.
Sen. Roberts said he was concerned that the CFTC and other regulators, including the Fed and the Securities and Exchange Commission, are not coordinating the overall regulatory impact of this act.
“I'm particularly concerned … that our regulatory process is headed for trouble internationally,” he stated. He said he was concerned that the law would “raise transaction costs, stifle legitimate economic activity, increase unemployment, and create new risks and uncertainty where it didn't exist before.”
DOT Seeks Comments on Previous Regulatory Guidance
The US Dept. of Transportation's Federal Motor Carrier Safety Administration (FMCSA) issued a notice for public comments concerning the applicability of FMSCA regulations to operators of certain farm vehicles and off-road agricultural equipment.
Specifically, FMCSA requests public comment on: 1) previously published regulatory guidance on the distinction between interstate and intrastate commerce in determining whether operations of commercial motor vehicles within the boundaries of a single state are subject to FMSCA regulations; 2) the factors that states are using in deciding whether farm vehicle drivers transporting agricultural commodities, farm supplies and equipment – as part of a crop share agreement – are subject to commercial driver’s license regulations; and 3) proposed guidance to determine if off-road farm equipment or implements of husbandry operated on public roads for limited distances are considered commercial motor vehicles.
According to the Journal of Commerce, the Federal Motor Carrier Safety Administration (FMCSA) will delay the release of its controversial new truck driver hours-of-service (HOS) rules until October.
AgTC, a coalition made up of a wide range of agricultural shipping interests, also weighed in on the pending FMCSA HOS Rule. In its communication to members, it stressed the “...increasing concern among shippers about the additional costs for all products moving by truck (either short haul or long haul)...” due to the HOS regulations for truck drivers.
The proposed rule would reduce the driving hour limit from 11 to 10 hours, retain the current “Driving Window” but restrict “Hour On-Duty Time Limit” provisions. Other HOS changes would add extra time to mandated rest breaks and additional restrictions to “Restart” provisions.
AgTC also noted that “...motor carriers, drivers, trade associations, shippers and other stakeholders have submitted comments and asserted that the proposed changes are unnecessary... and that the current rules are both safe and effective...”.
USDA Air Quality Task Force Begins New Term
USDA’s Agricultural Air Quality Task Force (AAQTF) recently held the organizational meeting of the 8th two-year term for the panel in Washington, DC.
AAQTF advises the Secretary of Agriculture on agricultural air quality issues. Its mandate is to strengthen and coordinate USDA's air quality research efforts and identify cost effective ways to help the agriculture industry improve air quality and meet federal and local air quality emissions requirements.
AAQTF membership includes representatives from: 1) various production agriculture organizations, 2) air quality researchers from USDA research agencies and universities, 3) state environmental regulatory agencies and EPA and 4) other parties interested in agricultural air quality. Dave White, chief of USDA’s Natural Resource Conservation Service (NRCS), chairs the AAQTF.
The newly appointed task force’s membership includes seven members newly appointed and 19 reappointed. Re-appointments include: Bryan Shaw, TX; Kevin Rogers, AZ; Robert Avant, TX; and Bill Norman, NCC vice president, Technical Services, TN. New appointments include: Annette Sharp, LA; and Brock Faulkner, TX.
With last year’s demise of cap-and-trade legislation that would have imposed limits on greenhouse gas (GHG) emissions and established a set of credits for sequestered carbon, the price of the credits went from a high of more than $7 per ton in ’08 to 5 cents per ton last November. As a result, programs that paid farmers for their carbon-reducing practices have closed down.
A carbon credit program run by the North Dakota Farmers Union aggregated some 5.5 million acres across 42 states, handing out $7.4 million to 4,000 program participants over the program’s five years. A similar program run by the Iowa Farm Bureau Federation contracted some 2 million acres with 3,900 farmers in 16 states. The programs would, in turn, sell the credits on the Chicago Climate Exchange (CCX) to companies that exceeded their emission limits and could use the credits to reduce their carbon footprint.
Established in ’03, the CCX was the only voluntary GHG reduction and trading system foremissions sources and offset projects in North America and Brazil. CCX officials said the exchange had an aggregate baseline of 680 million metric tons of carbon dioxide equivalent and allowed companies that joined the exchange to reduce their aggregate emissions some 6% by ’10.
From early in the last decade, the price of carbon began to build but then fell due to legislative uncertainty and the ’10 elections. The effective final carbon credit price per metric ton of carbon dioxide on the CCX went from a high of $7.50 in May ’08 to a low in Nov. ’10 of between five and 10 cents, less than the cost of registering the credits. Trading on the CCX virtually had stopped in Feb. ’10 and remained at zero for the next nine months. In Nov. ’10, the CCX said it was ceasing the trade of carbon credits at year’s end.
Sales Rebound, Shipments Steady
Net export sales for the week ending June 9 were 10,600 bales (480-lb). This brings total ’10-11 sales to approximately 15.4 million bales. Total sales at the same point in the ’09-10 marketing year were approximately 13.4 million bales. Total new crop (’11-12) sales are roughly 5.8 million bales.
Shipments for the week were 233,900 bales, bringing total exports to date to 13.2 million bales, compared with the 9.9 million bales at the comparable point in the ’09-10 marketing year.
Effective June 17-23, ’11
Adjusted World Price, SLM 11/16
123.43 cents
*
Fine Count Adjustment ('10 Crop)
0.67 cents
Fine Count Adjustment ('11 Crop)
0.72 cents
Coarse Count Adjustment
0.00 cents
Marketing Loan Gain Value
0.00 cents
Import Quotas Open
1
Limited Global Import Quota (480-lb bales)
217,208
ELS Payment Rate
0.00 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 5 Lowest 3135 CFR Far East
NA
Forward 5 Lowest 3135 CFR Far East
143.94 cents
Coarse Count CFR Far East
NA
Current US CFR Far East
174.70 cents
Forward US CFR Far East
149.55 cents
'10-11 Weighted Marketing-Year Average Farm Price
Year-to-Date (Aug.-April)
81.47 cents
**
**August-July average price used in determination of counter-cyclical payment
