NCC Response to 2006 Crop Storage, Handling and Ginning Regulations

On August 30, 2006, USDA’s Commodity Credit Corporation (CCC) issued a final rule amending regulations covering cotton storage, handling and ginning requirements for the 2006 and subsequent crops of upland and Extra Long Staple cotton. USDA characterized the provisions as necessary to “help protect the quality of cotton and relieve regional storage congestion.”

The National Cotton Council submitted comments to the earlier proposed rule following careful deliberations by its Bale Moisture Task Force and its Performance and Standards Task Force. These task forces’ recommendations were adopted by the NCC’s Executive Committee and embodied in the NCC’s comments to USDA. The new regulations change CCC rules with respect to the transfer of loan cotton, outside storage of loan cotton, bale moisture and payment of storage credit by CCC.

NCC Chairman Allen Helms stated, “Many of the National Cotton Council’s recommendations on the transfer of loan cotton, outside storage and the calculation of a national storage credit rate were included in USDA’s final rule. The rule also includes NCC recommendations on a reporting system to determine compliance with the warehouse shipping standard. Obviously, there are some areas of concern that will require clarification and some action on the part of the industry to resolve, but on the whole, we believe this process worked very well. It is clear that USDA gave serious consideration to the industry’s consensus positions offered in the NCC’s comments.”

The industry recommendations concerning calculation of national storage rates were included in the rule, but CCC did not accept the recommendation supporting the right of warehouses to increase their tariff rates up to the maximum credit rate. The rule does not include recommendations regarding high moisture bales; instead, CCC chose to establish a 7.5 percent maximum moisture level requirement for baled cotton at the gin. The rule also incorporates recognized industry standards concerning bale condition as part of CCC’s bale eligibility requirements.

Bobby Greene, chairman of the NCC Performance and Standards Task Force, said, “We are very pleased overall with USDA’s acceptance of the Council’s recommendations on a number of important issues. However, there are concerns about the potential inequities that may arise from USDA’s decision on storage cap, which would be applicable when the AWP is below the loan redemption value. The Council will continue to urge the CCC to allow warehouses to adjust their tariffs to a level that is equivalent to the maximum credit rates.”

Responding to USDA’s actions on bale moisture, NCC Bale Moisture Task Force Chairman Kenneth Hood said, “It is unfortunate that USDA’s rule did not fully implement NCC’s policy recommendations. We will monitor this issue in the months ahead and work to increase awareness in our industry in order to avoid future problems.  It is critical that we maintain confidence in the quality of U.S. cotton.”

A fact sheet summarizes CCC's new provisions for the 2006 and subsequent crop-year cotton marketing assistance loan program.