CURRENT ISSUE ARTICLES

NCC Board Updated on Key Industry Issues

Coalition Unites Groups in Farm Bill Push

EPA Proposes Risk Assessment for Bees

EPA Seeks Input on Endangered Species Consultations Reform

Sales, Shipments Steady

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NCC Board Updated on Key Industry Issues

NCC officers, directors and advisors, along with other industry leaders attending the NCC's Mid-Year Board meeting in Memphis, TN, were updated on key issues and upcoming challenges and opportunities facing the industry.

NCC Chairman Chuck Coley told attendees the industry’s foremost priorities this year have focused on the farm bill, the World Trade Organization (WTO) Brazil case, agricultural appropriations, international contract defaults, and most recently, the Peruvian countervailing duty investigation.

Regarding the farm bill, he said his and other industry leaders’ testimony at Senate and House hearings provided the NCC with an opportunity “to advocate inclusion of STAX as an effective risk management program and one that demonstrates our industry’s commitment to permanently resolving the WTO Brazil case.”

Among other notable activities Coley has been involved in were:  joining NCC Vice Chairman Jimmy Dodson in discussions between US cotton industry leaders and high ranking government officials representing W. and C. African countries on building a foundation for enhanced communication and establishing the necessary groundwork for cooperation on issues of mutual interest; NCC industry leaders/senior staff, Cotton Council International (CCI) and Cotton Incorporated meetings with Brazil's national cotton producer organization to discuss risk management, cotton's sustainability, international promotion issues and other issues of mutual concern and to search for avenues of greater cooperation; and joining American Cotton Shippers Assn. (ACSA) and AMCOT representatives in NCC-arranged meetings with USDA, USTR and the State Department to convey the US cotton industry’s serious concerns about export sales that are either in default or at risk of default. Coley also reviewed the NCC’s work on the countervailing duty case in Peru; Performance and Standards Task Force Chairman Bobby Greene’s leading of an industry group to Washington to meet with USDA officials to seek their cooperation on several of the industry’s flow initiatives; and a US cotton industry delegation to China, led by American Cotton Producers Chairman Clyde Sharp, conveying the industry’s continued commitment to quality and timely delivery.

Sharp also addressed the Mid-Year Meeting telling attendees that while the ACP has its frustrations regarding the farm bill, “producer leadership continues to concur that the Council is proceeding in the correct manner with our policy and our initiatives. It is our hope that Congress will ultimately support our policy positions and that the U.S. will convince Brazil that this is a satisfactory resolution to the cotton portion of the case. We appreciate the efforts of Chairman Coley and Vice Chairman Dodson and the Council staff in these efforts.”

Darci Vetter, Deputy Under Secretary for Farm and Foreign Agricultural Services at USDA, provided the Board with an update on current trade policy issues, including a detailed update on the Administration’s efforts to resolve the ongoing WTO dispute with Brazil. Under Secretary Vetter indicated that the Stacked Income Protection Plan, known as STAX, included in the Senate legislation is a starting point for negotiating a resolution to the upland cotton portion of the dispute. She acknowledged the challenging environment surrounding a final resolution of the case and encouraged continued dialogue with the US cotton industry as the process moves forward.

John Maguire, the NCC's senior vice president, Washington Operations, updated the group on a number of issues, including federal budget proposals; agricultural appropriations; the farm bill process, schedule, and options; and contract defaults – as well as tax, trade and the environment.

Gary Adams, the NCC's vice president, Economics & Policy Analysis, told attendees in his economic update that China’s stocks policy is a key to future price direction. Rebuilding China’s reserves has provided support to prices but there are concerns about long term impacts on cotton demand. Cotton still has the challenge of competing with $0.75 polyester on the demand side, while trying to hold acres in the face of high grain and oilseed prices. Price volatility remains a concern to the industry. Regarding US production, Adams noted USDA’s recent ’12 production estimate of 17.7 million bales versus 15.6 million bales in ’11. He said although drought conditions persist in much of the Southwest, production is expected to bounce back from the low level of ’11. Prospects in other cotton-producing regions are reasonably favorable, which is providing more production potential for the US crop than the ’11 crop, even with this season’s reduced plantings.

Ricky Clarke, a Cordova, TN, merchant and current ACSA chairman, reported on the difficult circumstances facing the industry given the widespread contract defaults by international mills.

NCC President/CEO Mark Lange reported on the Peruvian countervailing duty case against US upland and said the NCC is taking aggressive steps in pursuit of a successful outcome. He said the NCC has employed a leading law firm in Lima, Peru, that is now representing the NCC as a party of interest in the proceedings.

CCI President Jimmy Webb reported on multiple CCI COTTON USA success stories, ranging from the “Naturally Color Your Life" promotion in China to the annual “Cotton Days” in Korea, Japan, Taiwan and Thailand. Among upcoming activities are: the CCI/Cotton Incorporated-led US cotton industry executive delegation to Turkey (the US’ second largest export market) and to Dubai for meetings with Pakistan customers; meetings with leading US cotton importers in Bangladesh, China and Korea to discuss next year’s supply chain marketing programs; helping US yarn and fabric manufacturers on convincing Chinese importers to use US yarn; and preparing for the biannual Sourcing USA Summit in Rancho Palos Verdes, CA, a flagship event that brings together the US’ best customers with US merchants and coops.

Webb said he was pleased to see CCI and Cotton Incorporated involved in organizations like the International Forum for Cotton Promotion, the Discover Natural Fibers Initiative and other global promotion efforts but “it will take a lot of work and a lot of continued investment in demand building to bring mill and end-use of cotton back … but it also means other countries and industries, if they are serious about the future of the cotton industries in their countries, will need to join in those investments in demand building as well. The U.S. can lead and can show by example, but we cannot do it all by ourselves.”

Coalition Unites Groups in Farm Bill Push

The NCC has joined a coalition of 39 US agricultural organizations in an effort to raise public awareness of Congress' need to pass a new, comprehensive, five-year farm bill before current farm programs expire in September. The coalition, called Farm Bill Now, comprises associations and coalitions representing commodity crops, livestock, dairy, specialty crops, state and local governments, minor crops, energy and bio-based product groups, farm cooperatives and financial groups.

A coalition-issued statement "Why We Need a Farm Bill" noted that, "Calling the farm bill the 'farm bill' suggests its impact is limited only to farms and to the rural areas to which they are so closely tied. It's really a jobs bill. A food bill. A conservation bill. A research bill. An energy bill. A trade bill. In other words, it's a bill that affects every American. The farm bill affects our nation's ability to provide the necessities of life for a global population projected to pass 9 billion by 2050. Here at home, it affects an industry that provides 23 million -- or 1 in every 12 -- American jobs. The farm bill has broad impact on our citizens and our economy. It provides healthy foods to millions of schoolchildren and nutritious options to families in need. It develops and expands trade with valuable foreign markets. By reducing spending significantly compared to prior farm bills, the proposals pending right now in Congress address the need to get our nation's fiscal house in order."

The statement pointed out that the farm bill 1) benefits American farms -- 98 percent of which are owned and operated by families, 2) helps big farms and small farms, major crops and specialty crops, organic farmers and conventional farmers, cattle ranchers and cotton ginners, farmers markets and national suppliers, and the vast range of other pursuits that make up American agriculture and 3) this year would help farmers tackle the challenges posed by the worst drought in a generation.

"While Congress waits to finish the farm bill, we are united in asking all Americans to encourage legislators -- home for summer town hall meetings and speeches -- to finish this vital legislation before the current farm and food law expires in September," the statement said. "After all, it's your bill too."

In addition to their statement, Farm Bill Now launched an interactive web portal at www.FarmBillNow.com, through which visitors to the site can connect to their members of Congress and show their support for a new five-year farm bill.

In the coming weeks, Farm Bill Now will hold events in Iowa and on Capitol Hill to underscore the message as well. That includes 1) farmers representing multiple groups within the coalition discussing the Farm Bill Now effort on Aug. 28 in Boone, IA, at the annual Farm Progress Show, the nation's largest outdoor farm show, and 2) many of the groups' representatives gathering on the grounds of the US Capitol on Sept. 12 to encourage Congress to pass the farm bill before programs expire at the end of September.

EPA Proposes Risk Assessment for Bees

EPA recently published online a proposal, jointly developed with the Canadian Pest Management Regulatory Agency and the California Dept. of Pesticide Regulation, outlining a quantitative approach to determining a pesticide's potential hazard to bees.

With Colony Collapse Disorder continuing to be an unsolved problem and with pressure from some beekeepers and environmental groups, EPA has increased its scrutiny of pesticide use in cotton regarding impact on honeybees. The cotton plant is indeterminate, i.e., it flowers throughout the growing season and also has additional nectaries outside the flowers, making the assessment of risk to bees more complex.

The proposal, "The White Paper in Support of the Proposed Risk Assessment Process for Bees," identifies three protection goals: protection of pollination services, protection of honey and hive product production, and protection of pollinator biodiversity.It targets colony survival, growth and reproduction as primary assessment endpoints.

The proposed methodology would involve a tiered risk assessment approach. Relatively conservative estimates during the initial screening would determine if further assessments are needed. The more advanced level of review, identified as Tier II and Tier III tests, will make use of colony-level studies, including tests conducted under field conditions and measured values that are more reflective of actual pesticide use.

EPA has asked the Federal Insecticide, Fungicide & Rodenticide Act Scientific Advisory Panel to review the proposal at a Sept. 11-14 meeting. More information on this topic is at http://www.regulations.gov under Docket ID No. EPA-HQ-OPP-2012-0543.

EPA Seeks Input on Endangered Species Consultations Reform

In an Aug. 17 Federal Register notice, EPA announced that it is seeking comments on a proposal jointly developed with USDA, the National Marine Fisheries Service (NMFS) and the US Fish and Wildlife Service (together,"the Services") to enhance opportunities for stakeholder input during pesticide registration reviews and endangered species consultations.

Section 7 of the Endangered Species Act (ESA) requires all federal agencies to consult with the Services prior to any federal action if there is any potential impact on a protected species. Pesticide registration is considered a federal action. Prior to '04, EPA believed the extensive environmental risk assessments required in the registration process also would include impacts on endangered species. However, the judge, in a lawsuit initiated in '02, ruled that EPA was in violation of the ESA for not consulting with the Services. The Food Quality Protection Act mandates EPA to review all registered pesticides every 15 years. EPA began that process in '06 and has included ESA consultations in its reviews.

EPA and the Services have not worked effectively at all in the consultation process. One reason for this problem is the difference in legal authorities – EPA registers pesticides under the Federal Insecticide, Fungicide & Rodenticide Act, which is a data-dependent, risk-based process and must consider cost/benefit analyses in its decisions. The Services, acting under ESA, is more speculative and precautionary in its approach and has no cost/benefit directive. EPA has lambasted some of the earlier opinions issued by the NMFS, which used outdated pesticide labels, included cancelled uses and assumed 100% fields treated at maximum allowable rates.

Highlights of the proposal include:

• ″Emphasis on coordination across these federal agencies;
• ″Expanded role for USDA and the pesticide user community in providing current pesticide use information to inform and refine EPA's ecological risk assessments;
• ″"Focus" meetings at the start of registration review for each pesticide active ingredient, to clarify current uses and label directions and consider the potential for early risk reduction;
• ″Formal ESA consultations later in the registration review process, allowing time to engage stakeholders in the development of more refined ecological risk assessments and more focused consultation packages including mitigation for listed species; and
• ″Outreach to potentially affected pesticide users to discuss the technical and economic feasibility of draft Reasonable and Prudent Alternatives (RPAs) intended to avoid jeopardy to threatened and/or endangered species.

Comments must be submitted by Oct. 16, '12, to docket EPA-HQ-OPP-2012-0442 at www.regulations.gov.

Sales, Shipments Steady

Net export sales for the week ending Aug. 16 were 90,500 bales (480-lb). This brings total '12-13 sales to approximately 4.6 million bales. Total sales at the same point in the '11-12 marketing year were approximately 6.7 million bales. Total new crop ('13-14) sales are 171,200 bales.

Shipments for the week were 149,500 bales, bringing total exports to date to 351,800 bales, compared with the 265,000 bales at the comparable point in the '11-12 marketing year.

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