Cotton's Week March 16, 2001

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House Ag Committee Letter Supports Additional Funding

House Agriculture Committee unanimously approved sending letter to Budget Committee to express support for adding funding to agriculture budget for next 5 to10 years beginning in FY02. Letter also advises Budget Committee that additional financial assistance will be needed for current fiscal year.

Letter explains that funds provided in past 3 years were necessary and effective, but that farmers need predictable agriculture policy. "To make such long-term structural changes to our agricultural policy, we are clear that money needs to be added to the agricultural (budget) baseline." In explanation of why emergency assistance has been provided in last 3 years, Agriculture Committee Chairman Combest (R-TX) said if Congress had failed to do so "farm income would have dropped to devastating lows and all the economic infrastructure of rural America would be suffering."

In citing need for emergency assistance in current year, Chairman Combest cited 40% increase in fuel costs, high fertilizer costs, impact of strong US dollar, continued low commodity prices and EU subsidies. Ranking member Stenholm (D-TX) joined in letter outlining need for additional financial assistance, as well as citing importance of increased allocation for agriculture to facilitate development of improved farm policy.

(The full text of the House Committee on Agriculture's views and estimates letter to the Budget Committee is available on the Ag Committee's public web site,, found at this direct link:

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Secretary Veneman Outlines FY02
Agriculture Budget Proposal

Although details will not be available until next month, Ag Secretary Veneman said USDA budget request would total $17.9 billion, about 5% above FY00 spending level and $1.1 billion below FY01 budget.

Budget, as proposed during appearance before House Budget Committee, would eliminate $1.1 billion one-time emergency spending item. Other savings would come from elimination of '00 Congressional-earmarked research projects totaling $150 million that are not subject to "merit-based" selection process and by reducing or eliminating programs budgeted at $200 million that were not deemed priorities or need to be better targeted. Budget Committee Chairman Nussle (R-IA) said, "The government needs to move away from supplying emergency funding each year." Ranking member Spratt (D-SC) said he thought budget was "too thin" in some areas.

Secretary Veneman focused on trade expansion, pest and disease control, inspection, nutrition programs, rural housing and conservation programs as priorities for department operations. "We will work with Congress to assess further needs for farm assistance and will take other appropriate measures, such as pursuing an aggressive trade policy and improving the effectiveness of our current programs, to move the sector toward greater reliance on the market based economy," Veneman said. She did not specifically propose emergency economic assistance package but referred to $1 trillion contingency fund cited by President Bush in his address to joint session of Congress. Nussle warned Secretary "there are more requests for contingency funds than there are contingency funds."

Chairman Nussle announced House would mark up Budget Resolution March 21. He indicated that removing social security and Medicare funds from surplus and providing for tax cut would have approximately $600 billion in unallocated surplus for contingency funds to cover debt reduction, agriculture, defense and other programs.

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House Hearings Continue with NAWG, NFU Proposals

House Agriculture Committee hearings continued with appearances by National Farmers Union (NFU) and National Association of Wheat Growers (NAWG).

NAWG's testimony supported 4 concepts: equity, fiscal responsibility, counter-cyclical and WTO compliance. Group opposes mandatory set-asides, expansion of Conservation Reserve Program, re-establishment of Farmer Owned Reserve and limits on flexibility. Proposal supports continuation of fixed payment at '99 rate, elimination of payment limitations, elimination of cap on marketing loan, re-establishment of loan formula and $2.85/bu floor.

Plan also calls for establishment of Market Support Level (a.k.a. Target Price) to increase by 1% per year. Counter-cyclical Market Loss Payments would be triggered when Agriculture Market Transition Act (AMTA) payment plus market price or loan are less than MSL. NAWG also called for Market Loss Assistance payment of 81 cents/bu. for current year, sanction reform, fast track authority and tax relief.

NFU recommended eliminating AMTA payments, establishing loan rates at 80% of olympic average of full economic cost of production established by USDA-ERS and targeting loans in unspecified way. Group proposed establishing reserve for energy reserve and food assistance with storage payment of 30 cents/bu./yr., Farmer Owned Reserve equivalent to 20% of annual average production of each crop and secretarial authority to establish set-aside program with loan rate reductions for non-participants and loan rate increases for participants.

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USDA Announces Start of Crop Disaster Payments

Payments of more than $1.1 billion under USDA's Crop Disaster Program began March 16, according to announcement by Ag Secretary Veneman.

About 450,000 applications from 160,000 farmers have been approved, and more are expected. Final payments and statewide totals will be announced when all payments are made.

"American farmers are still feeling the pressure of low prices, and, in many cases, the effects of natural disasters," said Veneman. "These payments will assist farmers in this difficult time."

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Bill to Renew, Modify Andean Trade Pact Introduced

Sens. Graham (D-FL), DeWine (R-OH) and others introduced legislation to renew and modify '91 Andean Trade Preferences Act (ATPA) slated to expire in early December. ATPA gives Bolivia, Colombia, Ecuador and Peru special trade benefits to encourage economic alternatives to illicit drug trade.

Legislation would renew those provisions and provide apparel products produced in ATPA countries same tariff and quota preferences available to products manufactured in Caribbean Basin Initiative (CBI) region. Legislation, if enacted as introduced, would provide duty-free and quota-free access to apparel products assembled or cut in ATPA countries using US-manufactured yarn and fabric. Representatives from Andean countries have agreed that up to 100,000 jobs are at risk because companies will relocate to CBI unless ATPA countries receive equal treatment.

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Effort Launched to Force New Ergonomic Regulation

Congress' rollback of Occupational Safety and Health Administration (OSHA) ergonomics regulation (see March 9 Cotton's Week) continued to draw comment, with several Senators launching effort to force new regulation in 2 years on behalf of California and other states that have such standards.

Proposed amendment to bankruptcy reform act would have required Labor Department to finalize rule that addresses work-related ergonomic hazards within 2-year period. New rule would set forth in clear terms when employers would have to act to address hazards as well as measures required of employer under rule. There is strong support for having Senate go on record in support of relatively quick action by Bush Administration on issue. Labor Secretary Chao has indicated that department intends to revisit issue and work to create workable ergonomics standard.

Organized labor is urging workers to file ergonomic complaints that would require OSHA inspections. In other actions, independent standard setting organization, American National Standards Institute (ANSI), circulated draft standard that could become de facto standard along with threshold limit values being adopted by American Conference of Governmental Industrial Hygienists until there is OSHA standard. North Carolina repealed its standard, which covered all industries, through declaratory ruling issued March 6.

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NAS Panel Says More Research Needed on Bt Crops

In report commissioned by EPA and released March 15, National Academy of Sciences (NAS) said more research is needed to determine impact of biotech crops on environment and to assess health risks of such ag technology. EPA is considering whether to renew registrations for Bt varieties of cotton, corn and potatoes that expire in September.

Scientists looked at need for further study, effect of technology's impact on insects, biodiversity and economic benefits of such crops.

"Because of the general concern about the environmental consequences of horizontal gene transfer, the possibility of the transfer of transgenes from plants to microorganisms in soil warrants further study," panel wrote in report. Regarding impact on insects, report states, "With the large plantings of Bt corn and Bt cotton that are now common in many states, the effects of these crops on non-target organisms should now be tested directly in the field."

As to economic benefits of such crops, panel expressed "broad concern" that level of EPA's benefit estimates is not in balance with risk assessment.

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Forward `A' Index Introduced

Forward "A" Index was introduced week beginning March 16. Forward index is comprised of Northern Hemisphere new-crop quotes for delivery October-November '01 and Southern Hemisphere '00 crop for delivery in October-November '01. Week ending April 19 will be first week of 6-week blending period in making transition to calculation of AWP based on forward "A" Index.

During transition period, AWP will be based on following formulas for blending of "A" indices: weeks ending April 19 and April 26, current (multiplied by 2) plus forward, sum divided by 3; weeks ending May 3 and May 10, current plus forward, divided by 2; and May 17 and May 24, current plus forward (multiplied by 2), sum divided by 3.

Subsequently, AWP will be calculated strictly from forward "A" Index until beginning of '01-02 crop year.

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Weekly Export Sales Hit Marketing-Year High

Net export sales for week ending March 8 were almost 323,000 bales (480-lb.), marketing-year high, raising total '00-01 sales to about 6.5 million. Total sales at same point in '99-00 marketing year were about 6.8 million bales. Shipments for week were about 171,000 bales, bringing total exports to date to 3.48 million bales.

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Auction Benefits Cotton Foundation

"Funding For The Future" special project, sponsored by Vance Publications, raised $6,500 for Cotton Foundation research and education during '01 Beltwide Cotton Conferences auction. Fifteen firms donated items. Combined with '00 inaugural auction proceeds, project has raised more than $17,000 to support Foundation general projects.

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Bayer Grant Will Support Journal of Cotton Science

NCC announced that its on-line Journal of Cotton Science (JCS) has received support through Bayer Corporation's $50,000 grant to The Cotton Foundation.

Quarterly JCS, available at, strives to improve competitive position and profitability of US cotton industry by showcasing documented research from many disciplines, stretching researchers' thinking beyond horizons of their individual expertise, stimulating multidisciplinary projects and providing timely, easy-to-use research results. By doing so, JCS gives producers, researchers, Extension personnel, crop consultants and others central, easily accessible base of proven research findings in disciplines ranging from agronomy to textile processing. To date, JCS has received 202 manuscripts for peer review. Of those, 89 have been accepted, published online and archived on CD-ROM.

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Effective March 16-22, '01

Adjusted World Price, SLM 1 1/16.......41.75 cents*
Coarse Count Adjustment................ 0.00 cents
Current Step 2 Certificate Value....... 3.15 cents
Marketing Loan Gain Value..............10.17 cents
*No Adjustment Made Under Step 1

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Five-Day Average

Current 3135 c.i.f. Northern Europe....55.60 cents
Forward 3135 c.i.f. Northern Europe....No Quote
Coarse Count c.i.f. Northern Europe....52.88 cents
Current US c.i.f. Northern Europe......57.00 cents
Forward US c.i.f. Northern Europe......No Quote

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