CURRENT ISSUE ARTICLES

Ag Committee Leaders Release Farm Bill Proposal

House Adopts '12 Appropriations Package

House Rejects Balanced Budget Proposal

Cotton Research, Promotion Program Benefits Everyone

SPCC Audio Conference Available

US Cotton Supply Chain Discussed

Sales Surge, Shipments Steady

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Ag Committee Leaders Release Farm Bill Proposal

House and Senate Agriculture Committee leaders submitted detailed policy recommendations to the Joint Select Committee on Deficit Reduction. The recommendations detail policy changes to begin in '13 that are necessary to achieve the $23 billion in budget deficit reduction recommended earlier by the leadership of the Agriculture Committees (see Oct. 14, '11 Cotton's Week). The recommendations, which address every title of farm law, could be considered by the 12 members of the Joint Committee for inclusion in an overall deficit reduction package. The members of the Joint Committee are not required to accept the recommendations though bipartisan support for this package should provide the Joint Committee with strong motivation to seriously consider it.

The Joint Committee has until midnight on Nov. 23 to produce a plan to reduce the deficit by $1.2 trillion over the next 10 years beginning with '13 or sequestration is triggered on Jan. 1, '13. It is uncertain if the Joint Committee will produce a plan and if the plan will include the detailed recommendations of the ag leaders.
The proposals by the Agriculture Committees for future commodity programs are as follows: grain oilseed, peanut and rice producers will have an option of a revenue program (Ag Risk Coverage or ARC) or a target price program. ARC covers revenue losses that exceed 13% with a maximum payment of 12% of target revenue and is paid on 60% of planted acres. Upland cotton producers will have the option to purchase revenue insurance that covers losses exceeding 10% of target revenue with a maximum indemnity of 20% of target revenue based on 100% of planted acres. Marketing loans will continue to be available. The limitation on ARC program benefits will be $105,000 per legal entity. Marketing loan gains continue to be unlimited. The adjusted gross income test for eligibility for ARC and marketing loans will be $950,000. Indemnities under crop insurance programs are not subject to the limits or means tests.

Most conservation programs - EQIP, CSP and others - are continued with slight modifications. The CRP acreage enrollment cap will be gradually reduced from the current level of 32 million acres to 25 million acres. The Market Access Program (MAP) is funded at $200 million annually through '17, Foreign Market Development (FMD) is authorized at $34.5 million annually, and GSM export credit guarantees are continued at current levels.

Additional details are on the NCC's website at www.cotton.org/issues/2011/upload/11supercommitteefarmbillrecs.pdf.

House Adopts '12 Appropriations Package

The House voted 298-121 to adopt the conference report on a FY12 appropriations package that combines the Agriculture, Commerce-Justice-Science and Transportation-HUD spending bills. The Senate quickly followed by approving the legislation 70-30.

The "minibus" compromise would provide a total of about $128 billion in discretionary appropriations for the fiscal year that began Oct. 1, not including emergency disaster aid. It also would include a continuing resolution to keep the remaining government agencies, not covered in the minibus, running through Dec. 16. The current CR expires at midnight Friday, Nov. 18.

The minibus (HR 2112 — H. Rept. 112-284) would provide $19.8 billion in regular discretionary funding for agriculture programs, down $391 million from FY11. The legislation includes $17.85 million for operation of the boll weevil and pink bollworm eradication programs during FY13.

The final legislation does not include an amendment adopted by the House that would have prevented the US from transferring funds to Brazil as part of a temporary agreement that has prevented retaliation against US exports. The conference report does include a provision adopted by the Senate on an 86-14 vote to impose an additional $1 million adjusted gross income test on growers to determine eligibility for farm programs. That test, which is in addition to existing farm and non-farm income tests, will be effective for '13 crop programs.

The NCC strongly opposed the income test provision when it was considered by the Senate and urged conferees not to include it in the conference report as it adds an additional uncertainty to program eligibility in the last year of existing farm law.

House Rejects Balanced Budget Proposal

The House rejected a proposed constitutional amendment that would have forced Congress to balance its budget every year as a way to reverse years of deficit spending. A majority of House members supported the balanced budget measure, but supporters fell short of achieving the two-thirds majority needed to amend the Constitution.

A Congressional vote on a balanced budget amendment, between Oct. 1-Dec. 31, was required by the Budget Control Act of 2011 (see Aug. 5, '11 Cotton's Week).

Republicans who backed the amendment said it was the only way to get Congress to put its fiscal house in order. Democratic critics said a balanced budget requirement would result in drastic cuts in Medicare and other social programs when economic downturns put the budget out of balance.

It was the first House vote on a balanced budget amendment since '95, when the House approved it but the bill fell one vote short in the Senate.

The first House vote on a balanced budget amendment in 16 years came as the Joint Select Committee on Deficit Reduction appears to be sputtering in its attempt to find at least $1.2 trillion in deficit reduction over the next decade.

With the national debt now topping $15 trillion and the deficit for the just-ended fiscal year passing $1 trillion, supporters of the amendment declared it the only way to stop out-of-control spending. But Democratic leaders worked aggressively to defeat the measure, saying that such a requirement could cause devastating cuts to social programs during economic downturns and that disputes over what to cut could result in Congress ceding its power of the purse to the courts.

The measure mirrored the '95 resolution in stating that federal spending cannot exceed revenues in any one year. It would have required a three-fifths majority to raise the debt ceiling or waive the balanced budget requirement in any year. Congress would have been able to let the budget go into deficit with a simple majority if there was a serious military conflict.

Cotton Research, Promotion Program Benefits Everyone

In response to a proposed amendment to legislation under Senate consideration to terminate all commodity check-off programs, the NCC says the highly successful Cotton Research & Promotion Program (CR&P) should be continued.

"Self-help programs such as the CR&P are more important than ever given the global market environment for U.S. cotton and the budget pressures on production and processing government research," NCC Chairman Charles Parker said. "Fortunately, the CR&P is a highly effective government/private sector partnership, one that generates returns for U.S. cotton producers and importers of cotton products through coordinated, effective research and promotion of U.S. cotton producers' end products."

The CR&P is charged with improving the demand for and profitability of cotton through research and promotion. Administered by the Cotton Board, the CR&P is conducted by Cotton Incorporated and governed by the USDA. It is funded entirely by assessments levied on US cotton producers and importers of cotton and cotton products. USDA requires that all check-off programs conduct an independent review of their program every five years to evaluate the program's effectiveness. The study is peer-reviewed.

Parker pointed to a recent in-depth, independent economic effectiveness study contracted by the Cotton Board and conducted by Forecasting and Business Analytics, LLC. That firm reported that, "Unequivocally, cotton producers, importers and the government benefit from the check-off program."

The study concluded that for the life of the CR&P, it had generated an $8.80 return (for producers and the US government) for each dollar invested by producers and a $14.80 return for each dollar invested by US importers of cotton products. The program also generated the following positive economic returns:

″ US cotton farm prices averaged 5.4 cents per pound higher;

″ US cotton production averaged 500,000 bales higher;

″ Annual world consumer demand for cotton was higher by 2 million bales per year;

″ US mill cotton consumption was 1.2 million bales more than it would have been without the program;

″ US importers of cotton products increased profits by an average of $900 million per year.

SPCC Audio Conference Available

The Progressive Business Conferences is conducting an audio conference on Thursday, Dec. 1, beginning at 1 pm EST on EPA's "SPCC Program Requirements: Compliance Guidelines for Your Facility." For details and to register, visit www.pb-conferences.com/226/0/2/p6BSYYc/p6QJJVU3i/p0e.

According to the audio conference organizers, topics will include a clear explanation of the latest EPA amendments to go into effect, guidelines for Spill Prevention Control and Countermeasure (SPCC) compliance requirements, hands-on procedures for developing a SPCC plan for your facility, and specific examples of SPCC plans that target the most critical issues.

Producers are encouraged to take advantage of the off-season to prepare their SPCC Plan. There are many opportunities, including this audio conference, for producers and ginners to educate themselves regarding the SPCC program requirements. For more information on the SPCC, visit the NCC website: www.cotton.org/tech/safety/oilsp.cfm.

US Cotton Supply Chain Discussed

Cotton Council International (CCI) held one-day conferences in Istanbul, Turkey, and Prague, Czech Republic, to address the changes and challenges ahead for the global textile industry. The conferences gathered 170 key industry leaders to learn about issues affecting the US cotton supply chain.

CCI and Cotton Incorporated hosted suppliers of US cotton, the Turkish textile industry and their downstream customers in the brand and retail sectors at the conference in Istanbul titled "Sourcing in a Volatile World." The conference provided opportunities for buyers and sellers of US cotton to discuss the current market situation and how fast-changing raw material prices are pushing the textile and garment industry to look for new ways of doing business.

Industry leaders from across Europe participated in CCI's "COTTON USA Supply Chain Conference" in Prague, an event tailored specifically for European brands and retailers. Futurist Matthias Horx delivered the keynote presentation which highlighted how global markets and future mentalities change.

Sales Surge, Shipments Steady

Net export sales for the week ending Nov. 10 were 666,200 bales (480-lb). This brings total '11-12 sales to approximately 9.5 million bales. Total sales at the same point in the '10-11 marketing year were approximately 12.7 million bales. Total new crop ('12-13) sales are 346,900 bales.

Shipments for the week were 175,800 bales, bringing total exports to date to 1.5 million bales, compared with the 2.4 million bales at the comparable point in the '10-11 marketing year.

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