Cotton's Week March 2, 2001

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President's Acknowledgement of Ag Needs Is `Heartening'

Noting that President Bush's acknowledgement of need for additional assistance for agriculture in presenting budget to Congress is "heartening," NCC Washington Operations Vice President John Maguire said "the NCC is working diligently with other ag groups and Congress to convey the importance of sufficient funding for short-term assistance as well as long-term policy development."

Maguire, in address to Mid-South Farm and Gin Show audience in Memphis, said House Ag Committee Chairman Combest (R-TX) and Senate Ag Appropriations Subcommittee Chairman Cochran (R-MS) "have been in constant communication with the Administration and Budget Committee chairmen about the situation (see related article). And in recent weeks, USDA officials have conveyed the situation to Congress."

In remarks to joint session of Congress, President Bush said that agriculture emergencies in US will qualify for part of $1 trillion he wants to set aside over next 10 years for times of crisis. Current budget does not mention special funding for farmers beyond that provided through existing support programs. Agriculture Secretary Veneman said the Administration doesn't know yet how much help farmers will need.

"We don't have a number at this point," she said. "We will be looking at what the need is, and we'll be working with . . . other parts of the Administration and the Hill to determine what amount of emergency funding will be needed."

Maguire said agriculture is competing for funds with tax cuts, debt retirement, education and defense programs. "However, rapidly escalating input costs, sluggish export demand and chronically low commodity prices have created a cost-price squeeze and low farm income, making short-term financial assistance for farmers imperative for this crop year."

For the short-term, Maguire said, NCC advocates market loss assistance and Agriculture Market Transition Act payments in '01 that equal assistance provided in '00; adjusted payment base; mitigated impact of payment limits; and reauthorization of cottonseed assistance program that has provided $180 million in assistance over past 2 years.

For long-term cotton policy, Maguire said, the industry has recommended maintaining the marketing loan with its 3-step competitiveness program; fixed, decoupled payment and counter-cyclical payment; elimination of payment limits; and permanent cottonseed assistance program.

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Cochran Requests Emergency Economic Loss Assistance

Calling financial stress in US agriculture "extraordinary," Ag Appropriations Subcommittee Chairman Cochran (R-MS) requested that FY02 budget resolution include emergency economic loss assistance for farmers for '01 and '02 "or until such time as a replacement for the '96 farm bill can be enacted." Cochran made request in letter to Senate Budget Committee Chairman Domenici (R-NM).

"Specifically," letter stated, "since conditions are not appreciably improved for '01, we support making market loss assistance available so that the total amount of assistance . . . through the '01 Agriculture Market Transition Act (AMTA) payment and the market loss payment will be the same as was available for the '00 crop."

Letter continued, "We understand it is unusual to ask that funds to be made available in the current fiscal year be provided in a budget resolution covering the next fiscal year, but the financial stress in US agriculture is extraordinary."

In address to Mississippi Farm Bureau Federation in Washington, Cochran said, "while farmers and ranchers clearly prefer receiving their incomes from the market, federal assistance will be necessary until conditions improve as farmers strive to reduce costs and expand markets.

"In addition to financial assistance, we can also combat these financial difficulties by developing policies and programs to ensure a competitive agricultural economy, reduce trade barriers and open markets worldwide." He said emergency assistance would address problems in short-term while allowing Agriculture committees time to develop comprehensive new farm bill when current law expires in '02.

Cochran said he favors continuation of AMTA payment, adoption of additional income support program to supplement payments to producers, retaining current marketing loan and giving President fast-track authority to help producers improve export opportunities.

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AFBF Proposes $9 Billion in '01 Assistance

Emergency assistance for '01 crop year totaling $9 billion was included in American Farm Bureau Federation (AFBF) requests to House Agriculture Committee for upcoming revisions in new farm bill. AFBF President Bob Stallman proposed additional $7.8 billion annually to direct farm income payments and additional $4 billion for conservation incentives, export development, research and rural development assistance.

Testimony supported continuation of production flexibility contracts created in '96 farm bill and requested some type of counter-cyclical payment that would be paid when commodity prices are depressed. AFBF would include fruit and vegetable producers in counter-cyclical payment at cost of $1.5 billion. Another proposal would add oilseeds to regular crop acres eligible for production flexibility contract and let farmers sign up crop acres that were not included in '96 signup. Those additions would add about $500 million annually to program costs.

Stallman also presented plan to re-balance loan rates. AFBF proposal would bring loan rates for other crops up to levels considered comparable to soybean loan, which is locked in at $5.26 per bushel. Loan rate of 55.57 cents was proposed for upland cotton.

AFBF opposed means testing, payment limitations and targeting of benefits.

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Discretionary Spending Cut Requires
`Clear Sense of Priorities,' Says Veneman

USDA Secretary Anne Veneman said Administration's $19.4 billion level of discretionary funding for FY01 will be reduced for FY02. She said FY01 mark was up 13% over FY00, and that level "is in our view, unsustainable." Proposed mark is $17.9 billion for FY02, and that restraint "does not require radical surgery," she said, "but this does mean we have to have a clear sense of our priorities."

Among reductions are about $1.1 billion in mostly one-time emergency funding that should not be needed this year, officials said. On export side, Veneman explained that both Market Access Program and Export Enhancement Program are to be funded in budget.

As for budget's tax proposals, Veneman stressed that farmers will benefit from elimination of estate tax, and budget proposes Federal Farm and Ranch Risk Management accounts that would allow farmers to save for another year when needs are greater.

Veneman said budget also contained provisions to provide for emergency or "crisis" funding and stressed that USDA does have part of that emergency money set aside.

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January Mill Use at 9.05 Million Bales

Commerce Department's estimate of January (4 weeks) cotton consumption in domestic mills was 331.21 million pounds for seasonally adjusted annualized rate of 9.05 million 480-lb. bales. Estimate is down almost 900,000 bales from 9.93 million bales consumed in January '00.

Commerce revised December (5 weeks) consumption estimate 373.17 million pounds, 6.3 million pounds below previous estimate of 379.52. Seasonally adjusted annualized rate of consumption for December is 9.74 million bales, 570,000 bales below last December's use of 10.31 million bales.

Preliminary February domestic mill use of cotton and revised January figures will be released by March 28.

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Trade Ambassador Discusses Agenda

New US Trade Representative Robert Zoellick met with representatives of 28 agricultural organizations, including Chairman of NCC's International Trade Policy Program Committee, Bobby Weil, merchant from Montgomery, AL. During meeting, Weil emphasized bilateral nature of cotton's interests - raw cotton exports and textile imports - and indicated cotton industry would evaluate each trade issue separately on its own merit.

Weil stressed importance of China complying with recent agreement and stated that industry was opposed to US/Singapore free trade negotiations because current proposals could be detrimental to cotton's interests. He also encouraged Administration to maintain strong support for GSM-102 Export Credit Guarantee program.

Ambassador Zoellick stated Administration supports core principles of free trade, but not to exclusion of economic realities. He indicated agency was anxious to move forward with new round of negotiations in World Trade Organization and has strong interest in free trade agreements with South America and Singapore. Zoellick stated that regional trade agreements could spur progress in global trade talks. He also stated that US will defend right to trade biotechnology enhanced commodities.

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USDA to Begin Water Monitoring Survey

Water monitoring survey, developed by USDA Agricultural Marketing Service (AMS) Pesticide Data Program (PDP) and designed to produce statistically reliable human consumption data on pesticides in drinking water, begins this month. To date, PDP activities have focused on producing pesticide residue data in food commodities. This pilot survey will introduce drinking water analyses to program.

Pesticide residue data for drinking water are necessary to support Food Quality Protection Act (FQPA). Agricultural Appropriations Bill for FY01 allocated funding for limited drinking water survey designed to provide this information. PDP will conduct initial water survey in community water systems in California and New York. US Geological Survey is working collaboratively with PDP and will conduct sample collection for survey. New York and California PDP laboratories will perform sample analyses.

EPA is expected to use data generated by PDP to perform aggregate risk assessments that are used to make regulatory decisions about pesticides. According to EPA, data available through various monitoring programs do not include all pesticides currently under FQPA evaluation. Adequate monitoring data on pesticide residues in drinking water can be used to refine risk assessments and to validate or refine statistical models. Data will help ensure that problems identified in risk assessments are valid, and that any mitigation actions taken are necessary for protection of public health and environment.

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Pork Checkoff Will Continue

Under settlement reached with National Pork Producers Council (NPPC) and Michigan Pork Producer Assn., Ag Secretary Veneman announced that pork checkoff program will continue but with certain program restructuring.

Changes, effective immediately, are reportedly designed to ensure separation of National Pork Board and NPPC and make program more responsive to concerns of pork producers.

Pork Board will have approximately 2 years to demonstrate value of checkoff program to industry. USDA will conduct survey by June '03 to determine whether 15% of producers and importers are in favor of conducting referendum to decide continuation of checkoff program. If required number of producers and importers request referendum, it would be held within one year.

Meanwhile, group of independent hog producers says it plans to sue USDA in response to settlement

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Export Commitments Top 6 Million Bales

Net export sales for week ending Feb. 22 were about 172,000 bales (480-lb.), raising total '00-01 sales to slightly over 6 million. Total sales at same point in '99-00 marketing year were about 6.6 million bales. Shipments for week were about 143,000 bales, bringing total exports to 3.1 million bales.

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NC State Student Receives Millennium Scholarship

Meghan Lynn Hedgepeth, junior agriculture business management major at North Carolina State U., received '01 Cotton Grower Millennium Grant. Scholarship program, supported by grant to The Cotton Foundation from Cotton Grower magazine in cooperation with NCC, provides $2,500 award to college student majoring in agriculture and planning career in cotton industry.

Selection is based on academic achievement, leadership, individual accomplishment and essay about applicant's goals and ambitions. Selection committee includes leading agribusiness company officials and a cotton producer.

Hedgepeth, of Conway, NC, spent her summers helping with fieldwork and other duties on her parents' cotton farm. Her career goal is to become involved in agriculture in her community, either through support industries such as production credit banks and cooperatives or on farm.

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Effective March 2-8, '01

Adj. World Price, SLM 11/16.........44.48 cents*
Coarse Count Adjustment............0.00 cents
Current Step 2 Certificate Value...3.47 cents
Marketing Loan Gain Value..........7.44 cents
*No Adjustment Made Under Step I

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Five-Day Average

Current 3135 c.i.f. N. Eur........58.33 cents
Forward 3135 c.i.f. N. Eur...........No Quote
Coarse Count c.i.f. N. Eur........54.93 cents
Current US c.i.f. N. Eur..........63.05 cents
Forward US c.i.f. N. Eur.............No Quote

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