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May 18, 2012
 

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Cotton's Week: March 22, 2024
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Stronger Risk Management Sought in '12 Farm Law

NCC Chairman Chuck Coley testified at the House Agriculture Committee's General Farm Commodities & Risk Management Subcommittee's hearing regarding development of a '12 farm bill. He told the panel that even with budget constraints and trade concerns, it is critically important that new farm law provide certainty to those involved in production agriculture because "they make long-term investment decisions based in part on federal farm policy."

With the US cotton industry facing the unique challenge of resolving the World Trade Organization (WTO) dispute with Brazil, Coley stated that, "In developing new farm legislation, the U.S. cotton industry pledges to work with Congress and the Administration to resolve the Brazil WTO case and remove the imminent threat of retaliation against exports of U.S. goods and services."

He told the panel that in light of budget constraints and trade considerations, the US cotton industry recommends a revenue-based crop insurance program available for voluntary purchase -- which will strengthen growers' ability to manage risk. By complementing existing products, the program would provide a tool for growers to manage that portion of their risks for which affordable options are not currently available. He added that the revenue-based crop insurance safety net would be complemented by a modified marketing loan that is adjusted to satisfy the Brazil WTO case.

"This structure will best utilize reduced budget resources, respond to public criticism by directing benefits to growers who suffer losses resulting from factors beyond their control, and build on the existing crop insurance program, thus ensuring no duplication of coverage and allowing for program simplification," he stated. "The revisions will provide confidence to lenders and ensure market-oriented production decisions that ultimately serve the long-term financial health of merchandizers, processors, related businesses and rural economies."

Coley urged the Committee to include – beginning with the '13 crop – the NCC's Stacked Income Protection Plan (STAX) in new farm law. He said the program will be administered in a manner consistent with current crop insurance delivery systems and is designed to complement existing crop insurance products.

"While this proposal does not change any features of existing insurance products, the STAX product is explicitly structured so as to avoid duplication of other insurance coverage," he said.

Regarding other insurance features, Coley said the industry strongly supports the continuation of the successful enterprise unit pricing that was introduced in '08 farm legislation and urges Congress to provide for the availability of enterprise unit pricing for growers who separate their farms by irrigated and non-irrigated practices. He said the industry also supports crop insurance products that allow growers to insure the deductible of their underlying buy-up policy.

Coley said moving upland cotton's support into an insurance program is consistent with the determination of the WTO panel in the US-Brazil WTO case -- that found no trade distortion or price suppression related to insurance programs. He said the NCC believes the combination of STAX and the modified marketing loan significantly reduces US trade-distorting support for upland cotton.

As part of the '12 farm bill, the NCC would oppose any further restrictions on payment eligibility, including lower limits or income means tests. Coley said the '08 farm law included the most comprehensive and far-reaching reform to payment limitations in 20 years. The limitations were made more restrictive and the adjusted gross income test was substantially tightened.

"Likewise, we have serious concerns with any efforts to change the requirements that determine whether an individual is considered to be actively engaged in the farming operation," Coley said. "Arbitrary restrictions on the contribution of management and labor are out of touch with today's agricultural operations and would only contribute to inefficiencies."

The NCC also supports the continuation of the Economic Adjustment Assistance Program (EEAP) for domestic textile manufacturers. Coley said the EEAP, authorized in the '08 farm bill, has revitalized the US textile manufacturing sector and added jobs to the nation's economy.

Coley also called for retention of the extra-long staple competitiveness program and ongoing support of two vital export promotion programs -- the Market Access Program and Foreign Market Development Program.

 
DCP, ACRE Signup Deadline Near

USDA Farm Service Agency (FSA) Administrator Bruce Nelson reminded producers that enrollment for the '12 Direct and Counter-Cyclical Program (DCP) and the Average Crop Revenue Election Program (ACRE) ends on June 12, '12.

"Producers who want to participate in DCP or ACRE must enroll their eligible farms," Nelson said. "We encourage them to take the time to sign up before the deadline. Electronic DCP (eDCP) is a great option for enrolling during this busy planting season."

Producers who choose to participate in either the revenue-based ACRE safety net or the price-based DCP safety net must enroll their farms each year. All owners and operators who will share in the DCP or ACRE payments on the farm must sign enrollment form (CCC-509) by June 1.

Since '09, producers have had the option to participate in DCP or ACRE. A producer who initially chose to remain in DCP has an option to switch to ACRE during the current enrollment period; however, producers who chose to enroll in ACRE cannot switch back to DCP.

Producers can make use of the eDCP automated website to sign up, or they can visit a nearby FSA county office to complete their '12 DCP or ACRE enrollment form. eDCP saves time, reduces paperwork and speeds up contract processing. It is available to all producers who are eligible to participate in the DCP and ACRE programs and can be accessed at www.fsa.usda.gov/dcp. To access the service, producers must have an active USDA eAuthentication Level 2 account, which requires completing an online registration form at www.eauth.egov.usda.gov followed by a visit to the local USDA Service Center for identity verification. For more information on DCP or ACRE, contact a nearby FSA Service Center or www.fsa.usda.gov/dcp.

 
EX-IM Reauthorization Bill Passed

During debate, the Senate rejected five amendments and then passed (78-20) a bill (H.R. 2072) previously approved by the House that reauthorizes operations of the US Export-Import Bank from June 1- Sept. '14. Ex-Im reauthorization had been stalled in the Senate over a procedural dispute about amendments. The measure, which also increases the ceiling on the Bank's lending from $100 billion to $140 billion, now goes to the President for his signature.

The legislation also includes provisions proposed by the US fiber, textile and apparel industries that will require the bank to make stronger efforts to provide export credit guarantee programs that are better suited to the industry's trade practices and supply chain (see 3/16/12 Cotton's Week).

Sen. Cantwell (D-WA) said the Bank's successes, in selling US products overseas support, some 300,000 American jobs every year. Its fees and returns on loans also have added some $3.7 billion to the US Treasury since '05. She also noted the Bank's bad loan rate historically has been below 2.5%.

She also argued that the bill contains a number safeguards against unwise spending, including quarterly reports on its default rate with a requirement that the Bank show Congress how it intends to remedy the situation when it climbs above 2%. The bill also asks for a Government Accountability Office report on what it sees as risky loans. A third point requires the Bank to request public input for loans that exceed $100 million.

 
Ramaswamy Appointed USDA–NIFA Director

Dr. Sonny Ramaswamy has been appointed director of USDA's National Institute of Food and Agriculture (NIFA). In making the announcement last week, USDA chief scientist and Under Secretary for Research, Education and Economics Dr. Catherine Woteki pointed to Dr. Ramaswamy's years of experience in the land-grant university system and his understanding of its importance to the nation's future.

Dr. Ramaswamy previously served as dean of the College of Agricultural Sciences at Oregon State U. and director of the Oregon Agricultural Experiment Station. While at OSU, he led the college's academic programs and also directed the research programs at the main campus and at 11 branch experiment stations.

In addition to his tenure at OSU, Dr. Ramaswamy has held positions at other universities including: 1) aassociate dean of Purdue's College of Agriculture, where from '06-09 he directed its agricultural research programs; 2) head of the entomology department at Kansas State U. from '97-06, where he was a distinguished professor; 3) faculty member of Mississippi State U.; and 4) research associate at Michigan State U.

Dr. Ramaswamy is a fellow of the American Assoc. for the Advancement of Science and the Entomological Society of America. He received a BS and MS in Entomology from the U. of Agricultural Sciences in Bangalore, India, and a Ph.D. in Entomology from Rutgers U.

 
Cotton Challenges Discussed in Mumbai

A panel of cotton and textile industry associations in India addressed issues facing cotton products in the Indian retail market, such as eroding market share and competition from synthetic fibers, during Cotton Council International's recent "Cottonscape" event in Mumbai. The event also featured fashion shows highlighting cotton apparel and attracted 67 media outlets with an estimated reach of 160 million people.

The panel, which included representatives from the Cotton Assoc. of India, the Confederation of Indian Textile Industry and the Clothing Manufacturers Assoc. of India, agreed that ensuring a cotton-friendly domestic consumer market needs to be addressed by the industry as a whole; that the needs of consumers and how cotton as a fiber can meet those needs should be better understood; and that innovation is a critical element of cotton's ability to be a preferred fiber by Indian consumers -- if cotton is to meet the challenge of competition from manmade fibers.

Cottonscape's three fashion shows highlighted the versatility of cotton with the fashions targeting mid- and high-end demographics and a variety of age groups and occasions.

 
Sales, Shipments Steady

Net export sales for the week ending May 10 were 185,400 bales (480-lb). This brings total '11-12 sales to approximately 12.2 million bales. Total sales at the same point in the '10-11 marketing year were approximately 15.7 million bales. Total new crop ('12-13) sales are 1.3 million bales.

Shipments for the week were 205,100 bales, bringing total exports to date to 8.9 million bales, compared with the 12.2 million bales at the comparable point in the '10-11 marketing year.

 

 
Effective May 18-24, ’12

Adjusted World Price, SLM 11/16

 66.36 cents

*

Fine Count Adjustment ('11 Crop)

 0.09 cents


Fine Count Adjustment ('12 Crop)

  0.29 cents


Coarse Count Adjustment

  0.00 cents


Marketing Loan Gain Value

 0.00 cents


Import Quotas Open

13


Special Import Quota (480-lb bales)

871,389


ELS Payment Rate

0.00 cents


*No Adjustment Made Under Step I

 

Five-Day Average




Current 5 Lowest 3135 CFR Far East

86.36 cents


Forward 5 Lowest 3135 CFR Far East

87.28 cents


Coarse Count CFR Far East

NA


Current US CFR Far East

 91.20 cents


Forward US CFR Far East

86.45 cents


 

'11-12 Weighted Marketing-Year Average Farm Price  
 

Year-to-Date (Aug.-March)

91.13 cents

**


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