Cotton's Week April 20, '01

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Secretary Veneman Outlines
Administration's Farm Policy Agenda

Agriculture Secretary Veneman outlined 4-point agenda she says will be "core element" of sound agricultural policy. In speech at Sparks Companies Food and Agriculture Policy Conference in Washington, she said farm policy envisioned by Bush Administration consists of: 1) pursuing aggressive trade policy that includes new trade negotiating authority, new trade round in World Trade Organization, Free Trade Area of Americas, resolving trade conflicts and aggressively monitoring policies that distort trade; 2) reducing tax and regulatory burden on farmers and ranchers while continuing to protect America's natural resources; 3) conducting research addressing food safety, environment, biotechnology, energy and new uses for agricultural products; and 4) providing safety net for farmers and ranchers consistent with free market that provides opportunity to prosper in evolving and dynamic global marketplace.

Veneman noted that Congress might consider 4th year of emergency spending to boost farm economy, but warned that "annual ad-hoc assistance has problems" because such programs don't provide farmers, ranchers and their lenders with assurance of government's future role in their operations. "Any successful new policy will have to walk a very fine line between providing an adequate safety net without encouraging dependence on government," she said. "Agricultural policy must be broader than simply writing checks when farm incomes are weak."

Secretary said, "That's not to say we shouldn't help our farmers and ranchers when prices and income plummet unexpectedly, but when aid is provided, it should come in ways that are not counterproductive."

Regarding trade, she said, benefits of free trade are clear and US should and will pursue both bilateral and multilateral trade agreements, but that will take fast-track or trade promotion authority, something that "is a must." She defended Uruguay Round as putting in place "a solid framework for trade reform," including dispute settlement process.

With 96% of world population outside US, export market is essential, she emphasized. She said ratio that every US farmer and rancher should want to see improved is difference between average tariff on US farm products sold internationally and those coming into US. Average tariff on US agricultural exports is 61% versus about 12% on foreign agricultural products entering US.

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Plant Breeding, Gene Flow, StarLink Reviewed
in Biotechnology Meeting

Discussions of USDA research, with particular emphasis on plant breeding efforts, and gene flow and StarLink corn issues dominated meeting of Committee on Agricultural Biotechnology (ACAB) in Washington. Meeting was first of ACAB in new Bush Administration.

Texas producer Jimmy Dodson, chairman of NCC Environmental Task Force, represents cotton interests on ACAB. According to Dodson, anti-biotech representatives of ACAB seemed to have embraced more conciliatory position toward biotechnology. "Some comments by organic community suggest to me that their industry has accepted beneficial aspects of the technology and now are looking for ways to live with it," Dodson said.

ACAB was formed in July '99 under former Ag Secretary Glickman and has 2-year charter. Committee is composed of cross-section of 38 individuals from government, academia, production agriculture, agribusiness, environmental and consumer groups. Seven ex-officio members from other federal departments and agencies also sit on committee.

Next ACAB meeting is tentatively scheduled for July.

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President Nominates Johnson as USTR Ag Negotiator

Allen Johnson, current president of National Oilseed Processors Assn., was nominated by President Bush to be next chief agriculture negotiator in US Trade Representative's office.

Iowa native is former executive director of Iowa Soybean Assn. and former aide to Sen. Grassley (R-IA), who chairs Senate Finance Committee that oversees trade issues.

If confirmed by Senate, Johnson would be key player in Bush Administration initiatives aimed at further opening foreign markets to US agricultural commodities.

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Echols to Testify on Trade Policy

NCC Chairman James Echols, merchant from Cordova, TN, is scheduled to testify before Senate Committee on Agriculture, Nutrition and Forestry, on trade policy issues week of April 23. Committee has scheduled 2 days of hearings on trade policy as it continues its preparation for debate on new farm bill.

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EPA Will Uphold New Rule on Wetlands Development

EPA announced it would uphold new regulation that makes it tougher for farmers and others to drain or develop wetlands. Bush Administration has decided to uphold new regulation, which was developed during previous Administration.

New version of Tulloch Rule will require developers--or farmers--to seek permit from Army Corps of Engineers if their work does more than create "incidental fallback" during host of activities that are also newly defined.

Regulation, which took effect 60 days after publication in Federal Register, was one of dozens of new regulations frozen by White House after President Bush took office. Officials with current Administration say they have not altered regulation as originally published.

First made public last August, rule clarifies types of activities that are likely to require permits. Clarification is result of federal court decision in '98 that dealt with what became known as Tulloch Rule, named after plaintiff in case.

In that case, federal court ruled EPA couldn't claim that landowner was filling in wetlands just because soil might fall back into trench or hole being dug by backhoe or other equipment. Environmentalists have claimed that since decision, developers and farmers have used Tulloch loophole essentially to drain and develop wetlands even if they did not technically fill in hole or trench. EPA claims that loophole allowed 20,000 wetlands acres and 150 miles of streams to be damaged or destroyed from '98 until now.

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Congressional Staffers Visit Cotton Belt

Congressional Staff Education and Orientation Program enabled 18 Congressional staffers to become better acquainted with US cotton industry during 3-day tour. Group visited Cotton Incorporated's headquarters in Cary, NC; Monsanto's Life Sciences Center in St. Louis; USDA's cotton classing facility and NCC headquarters in Memphis; cotton farming and processing operations in Mississippi; and USDA's Southern Regional Research Center in New Orleans.

Program, supported by Monsanto Co. grant to Cotton Foundation, is in 4th year.

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Reports of Agreement on Chinese Farm Subsidies
Denied by USTR

Spokesman for US Trade Representative denied news reports that US and Chinese negotiators have agreed on China's permitted level of overall farm subsidies as new member of World Trade Organization (WTO). "There is no agreement," he said.

China and US completed their own trade agreement, including agricultural matters, in '99 as prerequisite to China's entry to WTO.

However, China wants to be classified in WTO as developing nation, which will allow its agricultural subsidies to equal 10% of value of its farm production. US wants China ranked as developed country for agricultural trade purposes, which limits subsidies to 5% of production.

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Blended Adjusted World Price Introduced

USDA began blending forward and current "A" indices to switch adjusted world price (AWP) between old crop ('00-01) and new crop ('01-02) week ending April 19.

During 6-week transition period, AWP will be calculated as follows: weeks ending April 19 and April 26, current "A" (multiplied by 2) plus forward "A," divided by 3; weeks ending May 3 and May 10, current "A" plus forward "A", divided by 2; and weeks ending May 17 and May 24, current "A" plus forward "A" (multiplied by 2), divided by 3. Subsequently, AWP will be calculated strictly from forward "A" Index until beginning of '01-02 crop year.

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Chinese Agencies Project 21 Million-Bale Crop

High internal prices in China are expected to induce greater cotton acreage in '01-02, leading to expected crop of about 21 million bales (480-lb.), according to China's State Statistics Bureau, Ministry of Agriculture and Chinese Supply and Marketing Cooperative. Three agencies project Chinese cotton area in '01-02 ranging from 10.5 million to 11.4 million acres. For '00-01, USDA is currently estimating Chinese crop of 20 million bales.

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Cotton Sales Slightly Lower than Previous Week

Net export sales for week ending April 12 were 168,735 bales (480-lb.), almost 9% lower than previous week's sales, raising total '00-01 sales to slightly above 7.3 million. Total sales at same point in '99-00 marketing year were about 7.14 million bales. Shipments for week were almost 91,000 bales, bringing total exports to date to almost 4.3 million bales.

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Court Orders Public Comment on EPA-NRDC
Consent Decree

On last day of Clinton Administration, EPA reached agreement with Natural Resources Defense Council (NRDC) regarding lawsuit filed by NRDC concerning implementation of Food Quality Protection Act. Agreement would establish deadlines for EPA to meet in reassessing certain pesticides and completing cumulative risk assessment.

On April 13, Judge Charles Legge issued order granting motion to have proposed EPA-NRDC consent decree published on EPA web site for public comment. This is critical and unprecedented event. Never before has federal court required publication of agency consent decree for comment, absent statutory mandate requiring such publication. Precedent should be helpful in future cases involving contested EPA consent decrees.

Judge Legge noted in his opinion that "the subject of the settlement is a matter of considerable public interest." He stated that settlement between NRDC and EPA was negotiated in very short time, "without an opportunity for meaningful comment by even the interested parties who have already appeared in this case." Court concluded that opportunity for public comment would be required "for the benefit of EPA" as well as court.

Comments are to be submitted to EPA by May 14 and will then be forwarded to court. Hearing on proposed consent decree is scheduled for June 14.

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Effective April 20-26, '01

Adjusted World Price, SLM 1 1/16           38.04 cents*
Coarse Count Adjustment                     0.00 cents
Current Step 2 Certificate Value            1.84 cents
Marketing Loan Gain Value                  13.88 cents
*No Adjustment Made Under Step 1

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Five-Day Average

Current 3135 c.i.f. Northern Europe        51.68 cents
Forward 3135 c.i.f. Northern Europe        52.38 cents
Coarse Count c.i.f. Northern Europe .......49.70 cents
Current US c.i.f. Northern Europe          54.42 cents
Forward US c.i.f. Northern Europe          58.00 cents

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