Cotton's Week May 4, '01

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ACP Offers Loan Level Recommendation

At its spring meeting near Birmingham, AL, American Cotton Producers (ACP), chaired by Alabama producer Hollis Isbell, discussed farm policy, loan levels, crop insurance and other issues. Focus of meeting was effort to enable NCC to proceed with consensus policy on loan level, despite some remaining disagreement between segments on specifics of loan program. Since its annual meeting in San Diego, NCC has worked to find consensus on loan level for new farm program legislation. Despite significant areas of agreement, all segments have not agreed on all points - with ACP supporting loan level not less than 55 cents and American Cotton Shippers Assn. agreeing on loan level of not more than 55 cents (conditioned on certain specific spending priorities).

During meeting, ACP proposed that all segments should agree with interpretation previously discussed by NCC Executive Committee that would give NCC authority to seek 55-cent loan rate, while placing highest priority on maintaining non-encumbered marketing loan, full funding for Step 2 and seeking elimination of payment limitations. It would also allow NCC to support elimination of 1.25-cent Step 2 threshold. Furthermore, any changes to this interpretative position would have to come back to NCC for discussion prior to establishing any new position.

Producer leaders discussed components of NCC's farm policy recommendations regarding payment base on counter-cyclical program and possible implementation criteria for seeking Step I adjustments for new crop cotton. ACP adopted several Crop Insurance Working Group recommendations regarding insurance reform implementation issues. NCC staff discussed recent EPA/Natural Resources Defense Council consent decree and urged growers and interest organizations to support overturn of decision during comment period. As part of current USDA request for comments, growers and organizations were also urged to submit comments supporting Cotton Research and Promotion program.

ACP took action on proposed changes by New York Board of Trade for No. 2 cotton contract. Growers expressed support for proposed changes regarding minimum strength requirements and additional discounts for old-crop(s) cotton. Concern was noted with proposed discounts for 4.7-4.8 micronaire levels.

Beltwide Cotton Production Conference Chairman Bill Lovelady sought program suggestions for next year's conference. Chairman Isbell reported on recent sessions with cotton breeding companies regarding new variety releases. Isbell will make extensive report on ACP actions to NCC directors at upcoming spring meeting in Washington DC.

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Budget Agreement Reached

House and Senate negotiators reached agreement on President Bush's first budget that includes significant tax cut and compromise on overall spending. Agricultural programs get boost of $79 billion above current projected spending to be available from '01-11, with $5.5 billion earmarked for '01 and $73.5 billion slated to be available from '02-11. Amounts can be compared with $9 billion in additional funding in '01 that was passed in Senate version of resolution and supported by agricultural groups, including NCC, and $12 billion per year increase requested by several agricultural groups, including NCC, for '02 and subsequent years.

NCC Chairman James Echols expressed appreciation for fact that budget recognized that additional spending for agriculture is needed. "We are making progress in our efforts to help farmers through these tough economic times. The action of the budget conference is a move in the right direction, but we may need additional funding to ensure producers receive adequate economic assistance for the '01 and subsequent crops," stated Echols.

In news release announcing budget agreement, House Agriculture Committee Chairman Combest (R-TX) stated, "This budget provides an unprecedented increase for agriculture -- nearly doubling the amount available to be spent for farm programs. I am extremely pleased to have the resources necessary to craft a stronger, more predictable farm safety net for the future."

Agreement removes necessity for House Agriculture Committee to pass legislation by July 11, but staff indicated committee intends to have plan for new farm programs in place by August recess.

Conference agreement on budget also included tax cut of $1.35 trillion and spending increase of about 5%. House was expected to vote on agreement on May 4, but had to postpone vote until Tuesday, as several pages of resolution were missing from document that was filed. House Democrats complained they had not been given adequate time to review agreement.

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Louisiana Growers Approve
Continuation of Eradication Program

Northwest Louisiana cotton farmers overwhelmingly approved boll weevil eradication containment program. With 556 of 1,579 eligible farmers voting, 534, or 96%, voted for maintenance program.

With success of 5-year eradication program in 17-parish area along Red River from Arkansas line to south of Alexandria, farmers are planning big jump in acreage planted to cotton this year, said Commissioner of Agriculture and Forestry Bob Odom.

"The initial 5-year program in the northwestern parishes ended in '00. It has effectively eliminated the most troublesome insect in cotton, cut farmers' chemical input costs by some 70% and given them one crop that they can expect to see a profit from in the coming year," Odom said.

In recent surveys, farmers in area have indicated they will increase acreage from about 90,000 last year to 130,000 for '01 crop season.

The cost to farmers for maintenance program will depend on costs incurred. They voted to spend up to $10 per acre. During initial 5-year program, when insecticide applications were made throughout season, average cost was $30 per year per acre.

The Red River vote does not affect boll weevil eradication work going on in northeast Louisiana, where program is in 3rd year of its first 5-year effort.

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Ben Noble to Join NCC
as Senior Government Relations Representative

Ben Noble, acting chief of staff to Sen. Lincoln (D-AR), will join NCC Washington office as Senior Government Relations Representative effective May 21. NCC President Gaylon Booker stated that Noble has shown tremendous knowledge of legislative process and deep understanding of agricultural policy. "We are very fortunate that Ben has decided to join the NCC staff," stated Booker.

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Bush Nominates Johnson for EPA Position

President Bush officially nominated Stephen L. Johnson to be Assistant Administrator of EPA for Prevention, Pesticides and Toxic Substances. In this position, Johnson will oversee Food Quality Protection Act implementation as well as registration of new pesticides and biotechnology products.

Johnson has served as Acting Administrator of EPA's Office of Prevention, Pesticides and Toxic Substances since January. He has held variety of positions at EPA, including Deputy Director of Office of Pesticide Programs from '97 to '99 and Executive Secretary of Scientific Advisory Panel for Federal Insecticide, Fungicide and Rodenticide Act. Prior to joining EPA, he served as Director of Operations at Hazelton Laboratories Corp. and Litton Bionetics, Inc. Johnson is graduate of Taylor U. in Indiana and received Master's degree from George Washington U.

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Second Ag Energy Hearing Held

Second hearing to review impact of energy crisis on US agriculture included testimony from farm organization, USDA and US Energy Department representatives. Hearing was held by House Subcommittee on Conservation, Credit, Rural Development and Research Chairman Lucas (R-OK).

Lucas said despite farmers being more energy efficient than ever before, higher costs are still cutting into already minuscule profit margins. He pointed to higher costs for diesel fuel, propane and anhydrous ammonia, which is made from natural gas, and higher energy bills for irrigation and crop drying as examples of special problems producers are facing.

Energy suppliers, energy producers and utility representatives testified in first hearing held previous week.

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Cotton Sales More than Double Previous Week

Net export sales for week ending April 26 were approximately 115,000 bales (480 lb.), more than 2 1/2 times previous week's sales, raising total '00-01 sales to almost 7.5 million. Total sales at same point in '99-00 marketing year were about 7.25 million bales. Shipments for week were nearly 148,000 bales, bringing total exports to date to slightly more than 4.5 million bales.

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Applications Being Accepted for New Scholarships

Graduating high school seniors who are sons and daughters of US cotton producers are encouraged to apply for 1 of 3 new $1,500 college scholarships. Applications for new "Grown and Made in the U.S.A. Grow Smart" college scholarships must be submitted by June 1. Cotton producers' high school seniors graduating spring '01 with at least B average and who plan to enroll in 4-year agriculture-related curriculum beginning fall '01 are eligible. Applicants are required to write essay on cotton's importance to US agriculture.

Applications must be mailed and postmarked by June 1, to Scholarship Headquarters, 400 E. Diehl Rd., Naperville, IL 60563. Applications also may be submitted online at For more information, contact Scholarship Headquarters at (630) 505-1100. Winners will be announced in July.

"Grow Smart" scholarships are funded by Aventis CropScience through grant to The Cotton Foundation. "We want to demonstrate our commitment to American cotton growers, their families and the future of US agriculture," said Al Luke, Aventis' cotton marketing lead.

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Effective May 4-10, '01

Adjusted World Price, SLM 1 1/16             37.86 cents*
Coarse Count Adjustment                       0.00 cents
Current Step 2 Certificate Value              1.40 cents
Marketing Loan Gain Value                    14.06 cents
*No Adjustment Made Under Step 1

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Five-Day Average

Current 3135 c.i.f. Northern Europe          51.50 cents
Forward 3135 c.i.f. Northern Europe          51.95 cents
Coarse Count c.i.f. Northern Europe          49.44 cents
Current US c.i.f. Northern Europe            53.70 cents
Forward US c.i.f. Northern Europe            56.65 cents

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