Cotton's Week October 26, 2001

Cotton's Week October 26, 2001

Cotton's Week: October 26, 2001
Echols Asks for Positive Administration Signal

NCC Chairman James E. Echols called on Administration to "send a signal to farmers that they have not been forgotten during this period of crisis" by committing to "prompt enactment of viable, predictable, well-funded farm policy" and by maintaining ’01 loan rates.

In letter to Ag Secretary Veneman, Echols urged USDA not to decrease ’02 cotton loan rate, stating, "loan rate reduction would severely impact the ability of producers to obtain financing for their ’02 crop." Loan rate formula would allow Secretary to reduce loan rate from ’01 level, which, Echols warned, "would further undermine an already fragile financial situation."

Stating that cotton producers are facing prices approaching historical lows, Echols reiterated need for prompt enactment of new farm bill. "After nearly 2 years of hearings and input from every major sector of US agriculture, the House has moved forward with a balanced, bipartisan approach to farm legislation that complies with this budget authority and is supported by most of production agriculture. ...We respectfully urge that the Administration confirm its commitment to farmers and ranchers by committing to prompt enactment of viable, predictable, well-funded farm policy."

Echols’ letter was delivered amidst flurry of activity within farm policy circles concerning farm bill. Administration persuaded several commodities to urge delay of farm bill process, while other organizations, including NCC, remain committed to passing legislation this year.

In response to NCC request, Secretary Veneman agreed to meet with cotton industry delegation headed by Chairman Echols Oct. 31.

Administration Seeks Farm Law Delay

Agriculture Secretary Veneman and Office of Management and Budget Director Mitch Daniels, in letter to major farm organizations, said Administration is committed to completing farm bill reauthorization by September ’02 and promised "adequate funding" for new 5-year farm bill. Letter said recent accounts that $25 billion would be reasonable "do not constitute ceiling where good policy is involved."

Authors also said war on terrorism has resulted in urgent new agenda confronting Congress and Administration, situation in which "it is both unnecessary and unwise to act in haste to pass a farm bill when current law does not expire until next September."

Administration’s letter followed White House meeting in which top Administration officials urged selected ag representatives to support delay. Following meeting, corn, soybean, oilseed and livestock groups wrote Senate Majority Leader Daschle (D-SD), saying "Administration has provided assurance that the resources necessary to fund a farm bill above the current baseline will be available next year." Groups went on the say they would support Senate Agriculture Committee continuing deliberative process with goal of reaching Senate passage early in ’02.

Sen. Conrad (D-ND), chairman of Senate Budget Committee, reacted strongly to letter. In statement on Senate floor, Conrad said, "I am the chairman of the Senate Budget Committee. I want to alert my colleagues that anyone who believes the same amount of money is going to be available next year as is available this year is absolutely in a dream world. I understand the Secretary of Agriculture has called members (of Congress) in the last few days telling them money is not a problem, that she has been assured by the director of the Office of Management and Budget, Mr. Daniels, that money is not a problem. Wrong. Money is a problem. Money is going to be a big problem."

Senate Urged to Take Timely Farm Legislation Action

NCC, American Farm Bureau Federation, National Farmers Union and wheat, rice, grain sorghum, dairy, peanut and sugar groups are urging Senate to continue working toward prompt consideration of new farm legislation. Groups were scheduled to meet with Senate Agriculture Committee majority staff Oct. 26 to outline support for prompt action and to discuss process.

While highly respectful and sensitive to importance of Administration and Congress giving priority to war on terrorism and nation’s security, groups are concerned about financial crisis in US agriculture and need for improved farm policy. Groups expressed concern that financing for ’02 crops will be difficult, and in some cases impossible, to secure in absence of enactment of predictable, effective long-term policy.

Groups will continue to work with Senate in effort to promote action that would allow House, Senate and Administration to develop new legislation as soon as possible. House has acted in bipartisan manner by recent overwhelming approval of legislation developed over 2 years with input from every major agriculture interest group.

NCC continues to work with Sens. Miller (D-GA), Lincoln (D-AR), Hutchinson (R-AR) and Cochran (R-MS) in effort to develop agreement within Senate Agriculture Committee on legislation. Sen. Daschle (D-SD), majority leader, has actively promoted process.

House Approves Economic Stimulus Package

House narrowly approved economic stimulus package containing nearly $100 billion in tax and spending provisions for FY02. Final passage on 216-214 largely party line vote came after rejection of Democratic alternative with fewer tax cuts and more spending on unemployment and health care benefits. Legislation now moves to Senate, where discussions have thus far failed to produce bipartisan legislation.

House measure includes repeal of corporate Alternative Minimum Tax (AMT) and refund of AMT paid by corporations since ’86. Net operating loss carry back period would be extended to 5 years, applicable to losses in any taxable year ending after Sept. 10, ’01, and before Sept. 11, ’04. Bill would allow 30% expensing of certain qualified capital investments, accelerate implementation of new 25% marginal rate to become effective in ’02 and provide tax breaks to individuals who did not qualify for tax rebate under earlier tax bill. Capital gains taxes would be simplified by repealing mark-to-market and eliminating 5-year holding period applied to 18% and 8% rates so they apply to assets held more than one year. Medical savings accounts would be extended for one year.

Although Administration does not support every House bill provision, it urged prompt action so Senate can act and measure can be sent to conference, where final version can be written.

NCC will continue to work with American Textile Manufacturers Institute and others to promote inclusion of 10-year net operating loss carryback provision to assist textile manufacturers hard-hit by imports and slowdown in consumer purchases.

Senate Approves FY02 Ag Appropriations Measure

Senate approved funding for USDA, Commodity Futures Trading Commission and Food and Drug Administration for FY02. Measure now goes to conference committee, where differences between House and Senate versions will be resolved.

Senate version, which had been delayed by unrelated complications, provides significantly more funding for cotton’s boll weevil eradication program and slightly higher funding for pink bollworm eradication program than House version.

House and Senate also approved Continuing Resolution to keep government agencies operating until Nov. 16 in absence of approval of individual FY02 appropriations measures.

Action has accelerated on appropriation measures in recent days, although Senators and Representatives were unable to access their offices until mid-week. As of Oct. 26, Hart Senate Office Building and Longworth House Office Building remain closed. Members have discussed possibility of adjourning this session of Congress by Thanksgiving if work on appropriations and certain security measures can be completed.

Beltwide Panelists Will Address Cotton's Look of Tomorrow

Can producers look forward to having both yield and quality in the cotton cultivars of tomorrow or will there always be a tradeoff? What role will biotech play?

Those questions will be addressed in "Cultivars: What's Needed, What's Imminent and What's In the Pipeline," one of four cutting-edge panel discussions featured at ’02 Beltwide Cotton Production Conference, Jan. 8-12 in Atlanta.

NCC members have until Oct. 29 to take advantage of early hotel reservations for the conference. Open registration begins Nov. 1. Information regarding the 2002 Beltwide Cotton Conferences is available on-line at Find out what will be presented, register for the conference and make travel plans.

Sample roundtrip airfares from Cotton Belt cities to Atlanta as of Oct. 26 include Bakersfield, CA $450; Phoenix $325; Lubbock $375; Little Rock $200; Jackson, MS, $245; Memphis $145; Houston $235; Dallas-Ft. Worth $250; Monroe, LA, $230; and Raleigh, NC, $130. These fares require a Saturday night stay and are subject to availability. Fares may change at any time.

Little to Head FSA

James R. Little, who has 30 years experience at USDA and has served recently as acting Farm Service Agency (FSA) Administrator, was named to head agency by Agriculture Secretary Veneman. He has worked in budget, crop insurance and financial management divisions.

Pink Bollworm Action Committee Sets Priorities

NCC’s Pink Bollworm Action Committee identified priority action items in El Paso, TX, meeting chaired by producer Bill Lovelady, Tornillo, TX. Meeting attracted 70 participants, including 12 from Mexico.

Committee agreed that it would increase efforts to secure federal cost share funding to make available sterile insects for release no later than ’03 crop season. Technical Advisory Committee will provide advice on technical and operational aspects of areawide pink bollworm programs. Committee also will focus on securing support for continuing eradication efforts in Trans Pecos-El Paso zone to bring program to conclusion; continue dialogue with Mexico and New Mexico on Trans Pecos-El Paso progress and future direction of bi-national program; and assign to Technical Advisory Committee budget development for each year of phases I, II and III of proposed bi-national program.

Progress of Trans Pecos-El Paso zone, conducted as dual boll weevil and pink bollworm program by Texas Boll Weevil Eradication Foundation, was reviewed. Program Manager Dr. Charles Allen reported 72% reduction in moth captures following first season of pheromone applications for mating disruption. He noted that sterile insect releases next year will not be possible because of expected shortfall of federal cost share funds. As alternative, program is expected to use 2nd year of pheromone application.

US Wins Asian Approval for Agricultural Biotechnology

Heads of government meeting at Asia-Pacific Economic Cooperation (APEC) in Shanghai endorsed proposal by US to establish new high-level policy dialogue on biotechnology. APEC leaders are expected to "exchange views and pursue cooperative activities on a wide range of issues relating to biotechnology development, regulations governing new products, implications for trade and effective communications strategies."

Most APEC nations are developing domestic regulatory, trade, and scientific policies to address emerging field of agricultural biotechnology. APEC Leaders’ Declaration calls for more capacity-building activities to help member economies develop agricultural biotechnology.

September Mill Usage Set at 7.87 Million Bales

Commerce Department estimate for September (5-week month) cotton consumption in domestic mills was 374.73 million pounds, for seasonally adjusted annualized rate of 7.87 million 480-pound bales. Revised seasonally adjusted annualized rate of consumption for August is 7.94 million bales.

Cotton Sales Lower than Previous Week

Net export sales for week ending Oct. 18 were 182,600 bales (480 lb.), approximately 11% lower than previous week’s sales of 205,400 bales, raising total ’01-02 sales to over 6.8 million. Total sales at same point in ’00-01 marketing year were almost 4.0 million bales.

Shipments for week were 150,200 bales, bringing total exports to date to slightly over 2 million bales, up from approximately 1.05 million at comparable point in ’00-01 marketing year.

Effective Oct. 26-Nov. 1, ’01

Adjusted World Price, SLM 1 1/16                    22.05 cents*
Coarse Count Adjustment                              0.00 cents
Current Step 2 Certificate Value                     1.83 cents
Marketing Loan Gain Value                           29.87 cents
*No Adjustment Made Under Step I

Five-Day Average

Current 3135 c.i.f. Northern Europe                 36.12 cents
Forward 3135 c.i.f. Northern Europe                    No Quote
Coarse Count c.i.f. Northern Europe                 33.38 cents
Current US c.i.f. Northern Europe                   39.20 cents
Forward US c.i.f. Northern Europe                      No Quote