NCC Letter Urges Availability of Partial CCP For '08 Upland Cotton
NCC Chairman Larry McClendon wrote Agriculture Secretary Vilsack requesting on behalf of NCC members that he utilize the authority available under the '08 farm law to make available to eligible producers a partial counter-cyclical payment for '08 upland cotton, effective January 27 -- and that it be made at the maximum level of 5.03 cents/lb.
January 26, 2009
The Honorable Tom Vilsack
Secretary
U.S. Department of Agriculture
1400 Independence Avenue, SW
Washington, DC 20250
Dear Mr. Secretary:
On behalf of the members of the National Cotton Council, I am writing to request that you utilize the authority available under the 2008 farm law to make available to eligible producers a partial counter-cyclical payment for 2008 upland cotton, effective January 27. Further, we request that the partial payment be made at the maximum level of 5.03 cents/lb., which is the 40% of the difference between the target price and the sum of the base loan rate and the direct payment (40% of (71.25-(52.00+6.67)).
Unfortunately, due to a range of factors and in spite of dramatic reductions in production, cotton prices for the 2008 marketing year are expected to be at levels which will result in a counter-cyclical payment of the maximum allowable rate. Macroeconomic uncertainty has rippled through world fiber markets, and weaker mill demand has translated into lower farm-gate prices for U.S. growers. In addition, continued competition from subsidized manmade fiber production in Asia is pressuring cotton prices. As a result, monthly prices, as reported by USDA’s National Agricultural Statistics Service (NASS), have trended lower during the 2008 marketing year. Current spot market prices remain well below the base loan rate of 52 cents. Futures contracts indicate no near-term improvement in prices. NCC economists agree with USDA’s latest projected price range of 44 to 52 cents, included in the January 12 World Agricultural Supply & Demand Estimates.
Therefore, we recommend you make the maximum allowable partial CCP available. The maximum partial payment will assist some growers in securing financing for 2009 crops. However, it should be noted that until the regulations and notices implementing the new farm law are clarified, many growers will be unable to complete and submit their farm plans for approval and enrollment into the DCP program.
Thank you for your consideration of our views and recommendations. I or the Council staff would welcome the opportunity to discuss this matter with you and other department officials at any time.
Sincerely,
Larry McClendon
Chairman
cc:
Carolyn Cooksie, Acting Deputy Under Secretary for Farm & Foreign Agricultural Services
Linda Treese, Acting Deputy Under Secretary for Farm & Foreign Agricultural Services
Dennis Taitano, Acting Administrator, FSA
Candy Thompson, Acting Deputy Administrator for Farm Programs
Scott Sanford, Director, Fibers, Peanuts & Tobacco Analysis Group, FSA