Cotton's Week July 13, 2001

Cotton's Week

Cotton's Week: July 13, 2001
Hearings Scheduled to Review House Ag Committee ‘Concept Paper’

"Draft Farm Bill Concept Paper" released by House Ag Committee Chairman Combest (R-TX) will be subject of committee hearings scheduled July 17-19. According to information provided at committee briefing for ag organizations, hearings will provide opportunity for organizations to comment on and recommend any modifications to initial proposal. NCC representatives will be provided opportunity to comment at one of hearings.

Spokesmen also indicated it is committee’s intention to mark up farm legislation during week of July 30 and to complete committee work before beginning of Aug. 4 Congressional recess.

Key provisions of draft proposal include:

Continuation of non-recourse, marketing loan eligibility for 100% of production and continuation of current $75,000 limit on LDPs and marketing loan gains, with generic certificates continuing to be available. Loan rates would remain at ’01 levels, with exception of soybeans, which would be reduced to $4.92/bu. Fixed, decoupled payments would continue at ’02 rates; payment of 34 cents/bu. would be established for soybeans with comparable rate for minor oilseeds; $40,000 payment limit on fixed, decoupled payments would be maintained. New, counter-cyclical payment based on target prices would be established; target prices would be set at ’95 levels for program crops and target price of $5.76/bu. would be established for soybeans, with comparable level for minor oilseeds; payments would be decoupled and rate would be established by subtracting sum of higher of 12-month season average price received by producers or national average loan rate plus fixed payment from target price; payment limit of $75,000 would be established for new counter-cyclical payments. Acreage for payment can be updated to reflect recent plantings or remain at current Agriculture Market Transition Act (AMTA) acres at producer’s choice; update would be based on average acres planted to AMTA contract crop and/or oilseed during ’98-01; once producer chooses, both fixed and counter-cyclical payment (when triggered) will be made on 85% of eligible acreage. Payment yields will remain at current levels; Ag Secretary will be directed to develop comparable yields for oilseeds and farms without AMTA payment yields. According to Congressional Budget Office estimates, these provisions will increase spending for commodity programs by $48.886 billion over next 10 years. In addition to provisions listed above, concept paper covers sugar, dairy, wool and mohair, peanuts and fruits and vegetables.

Funding for conservation programs would be increased by $15.05 billion (75% over current levels) by reauthorizing Conservation Reserve Program, Environmental Quality Incentive Program, Wetlands Reserve Program, Wetlands Incentive Program and farmland protection and increasing funding for technical assistance and other enhancements. Proposal would re-authorize Market Access Program and increase funding from $90 million to $180 million per year. Foreign Market Development, Export Enhancement Program, Dairy Export Incentive Program and Food for Progress programs also would be re-authorized. Research, nutrition and rural development programs are also authorized and funded by provisions of draft.

New and enhanced programs would increase spending by $73.498 billion over next 10 years, fully utilizing funds made available for ’02-11 in recently approved federal budget. Consequently, any proposals offered requiring additional funding would require reduced funding for another program.

NCC’s Executive Committee and American Cotton Producers will review and analyze proposal to provide feedback requested by committee. Complete version of paper (181K PDF file) is available at the House Agriculture Committee web site.

McLendon Will Present Cotton Views at Senate Ag Committee Hearing

NCC Executive Committee Chairman Bob McLendon will present US cotton industry’s recommendations for new farm bill at Senate Agriculture Committee hearing that also will include representatives of rice, wheat, peanuts and sugar.

Hearing will 2nd conducted by Sen. Harkin (D-IA), new chairman of committee, which received recommendations on new farm law from representatives of feed grain and oilseed groups on July 12.

Senate completed process of making committee assignments following change in leadership. In addition to Harkin, Democrat members are Leahy (VT), Conrad (ND), Daschle (SD), Baucus (MT), Lincoln (AR), Miller (GA), Stabenow (MI), Nelson (NE), Dayton (MN) and Wellstone (MN). Republican members are Lugar (IN), Helms (NC), Cochran (MS), McConnell (KY), Roberts (KS), Fitzgerald (IL), Thomas (WY), Allard (CO), Hutchinson (AR) and Crapo (ID).

World Ending Stocks Projected to Increase

In country estimates released for ’01-02 marketing year, USDA projected world mill use of cotton at 92.7 million bales (480 lb.), increase of about 1.0 million from previous year because of modest increases in countries such as Pakistan, India and Indonesia. World production was projected to reach 94.6 million bales, increase of 6.6 million from previous year due to increase in production in several countries, including US.

Due to projected increase in ’01-02 beginning stocks, and with expected world production exceeding mill use, USDA projected world ending stocks for ’01-02 to be 39.96 million bales (480-lb.), for ending stocks-to-use ratio of 43.1%. For ’00-01, world production estimate was increased by 60,000 bales to 88.0 million. This results in increase in ’00-01 ending stocks of 170,000 bales to 37.8 million compared to previous month.

USDA reduced estimated ’00-01 US mill use by 100,000 bales to 8.9 million. Export estimate was raised by 100,000 bales to 6.6 million. With offsetting changes in these 2 estimates, total US offtake for ’00-01 remained unchanged from previous month at 15.5 million bales. Ending stocks for ’00-01 remain at 5.6 million bales, for ending stocks-to-use ratio of 36.1%.

US production forecast for ’01-02 crop year was increased by 400,000 bales to 19.2 million, increasing projected total supply to 24.8 million. Projected ’01-02 US mill use was reduced to 8.5 million. If projection were realized, this would be lowest level of US mill consumption since 7.8 million bales in ’88-89. Projected exports were unchanged from previous month at 9.0 million bales. Ending stocks for ’01-02 were raised 700,000 bales to 7.3 million, which would be highest since ’85-86, when ending stocks were 9.3 million. Projected ending stocks-to-use ratio for ’01-02 is 41.7%.

House Overwhelmingly Supports Ag Spending Bill

House completed work on FY02 agriculture appropriations bill, with overwhelming 414-16 vote supporting $74.2 billion measure that funds most agriculture programs, USDA, Food and Drug Administration and Commodity Futures Trading Commission. Bill was crafted under guidance of Agriculture Appropriations Subcommittee Chairman Bonilla (R-TX).

During consideration, House rejected several amendments, including one offered by Rep. Royce (R-CA) that would have eliminated funding for Market Access Program. Amendment offered by Rep. Smith (R-MI) to tighten payment limitations on LDPs and market loan gains was ruled out of order. Senate is expected to take up funding legislation in appropriations subcommittee week of July 16.

Bill Would Elevate EPA to Cabinet Level

President Bush endorsed idea of creating permanent position in Cabinet for Secretary of Environmental Protection following introduction of bill by Rep. Boehlert (R-NY) that would rename Environmental Protection Agency and elevate administrator to Cabinet status. Bush would sign legislation if it were to pass because Cabinet status would lend "justifiable recognition" to agency's importance, White House spokesman Ari Fleischer said.

Under proposal, EPA Administrator Whitman would become Secretary of Department of Environmental Protection. She would not have to be confirmed again by Senate. "(Cabinet status) will enhance her stature. It will underscore the importance of what she’s about and will give her equal status with Cabinet officers she has to deal with everyday," Fleischer said.

Boehlert and other lawmakers, including Democrats and Senators, have tried for more than 12 years to create Cabinet-level status for EPA. Measures typically have failed because members attached controversial provisions and favorite projects. In ’94, for example, House voted not to consider bill unless members could include provisions that would limit agency's authority.

Boehlert said US is only industrialized nation whose top official on environmental issues lacks formal standing as minister or Cabinet member.

Immigration/Labor Policy Reform Measure Introduced

Sen. Craig (R-ID) introduced "Agriculture Job Opportunity and Benefits Security act" (S.1161), comprehensive H-2A guest worker reform and immigration status adjustment program. Co-sponsors included Enzi (R-WY), Cochran (R-MS), Burns (R-MT), Frist (R-TN), McConnell (R-KY) and Hutchinson (R-AR).

To speed approvals by Labor Department, bill shifts H-2A program to "attestation" certification program, similar to H-1B high-tech temporary worker alien program. In addition, prevailing wage would be established as standard wage for workers admitted under H-2A program. Prevailing wage is standard required in all other immigration programs. Participating employers must continue to furnish housing and transportation for workers.

Second provision in Sen. Craig’s legislation is "earned status adjustment" program. This provision is to address largely undocumented workforce. Provision would require 150 days of work in agriculture in 12 consecutive months during 18-month period prior to enactment to qualify for adjustment program. Bill then requires adjusting workers to work minimum of 600 days in agriculture to be completed during maximum of 6 years, with requirement that 80% of that obligation (480 days) be completed during first 4 years of adjustment program. Workers can also complete adjustment in 4 years if they meet 600-day work obligation during that period.

US Cotton Export Sales Weaken

Net export sales for week ending July 5 were approximately 32,200 bales (480 lb.), approximately 13,100 bales lower than previous week’s sales, raising total ’00-01 sales to almost 8.3 million. Total sales at same point in ’99-00 marketing year were slightly over 7.7 million bales.

Shipments for week were 153,900 bales, bringing total exports to date to approximately 6.16 million bales, down from 6.49 million at comparable point in ‘99-00 marketing year.

NCC Unveils Enhanced Web Site

NCC’s web site - – has been overhauled and includes new look and new features. Among key features are: 1) Search, located in upper right side of each page for help with finding pages, and 2) Printing, which includes "format page for printing" option in upper right above search form for printing less cluttered pages.

To better organize site, some pages have been moved. Among changes are: 1) Quick Links (on Home Page of old site) are now in section labeled "Industry Resources." 2) Members Only - now labeled "Member Services." Users can browse to that section and login using same username and password. 3) Educational Materials - order form and information regarding materials is located under "Publications & Education."

Coinciding with site redesign is more expedient posting of news and information and increased site visitation, which surged 43% in ’00.

Effective July 13-19, ’01

Adjusted World Price, SLM 11/16           31.91 cents*
Coarse Count Adjustment                    0.00 cents
Current Step 2 Certificate Value           2.55 cents
Marketing Loan Gain Value                 20.01 cents
*No Adjustment Made Under Step I

Five-Day Average

Current 3135 c.i.f. Northern Europe       46.00 cents
Forward 3135 c.i.f. Northern Europe       45.55 cents
Coarse Count c.i.f. Northern Europe       43.85 cents
Current US c.i.f. Northern Europe         49.80 cents
Forward US c.i.f. Northern Europe         52.15 cents