Cotton's Week May 18, '01

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House Members Lodge Support for Boll Weevil Cost-Share

Eighteen House members joined Reps. Stenholm (D-TX), Tanner (D-TN) and Bryant (R-TN) in urging Appropriations Subcommittee Chairman Bonilla (R-TX) to provide sufficient funds to maintain federal cost-share at 30% for National Boll Weevil Eradication Program in FY02. Funding for FY01 was increased from approximately $15 million in FY00 to about $79 million, thereby raising federal cost-share to nearly 30% for first time since program has rapidly expanded.

Active eradication program will include approximately 10 million acres in 9 states for '02 crop. Post-eradication program areas, designated as "weevil free," cover about 4.5 million acres in 10 states.

Chairman Bonilla indicated his subcommittee may mark up FY02 agriculture appropriations bill as early as June 6 and that House could consider legislation by 3rd week of June.

Representatives joining Stenholm, Tanner and Bryant were Pastor (D-AZ), Wicker (R-MS), Thompson (D-MS), Frost (D-TX), Clement (D-TN), Ross (D-AR), Pickering (R-MS), Cooksey (R-LA), Hinojosa (D-TX), Watts (R-OK), Aderholt (R-AL), Shows (D-MS), Hilliard (D-AL), Etheridge (D-NC), Sessions (R-TX), Cramer (D-AL), McCrery (R-LA) and Lucas (D-OK).

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Subcommittee Sets Field Hearings
to Further Farm Bill Process

General Farm Commodities Subcommittee Chairman Chambliss (R-GA) announced series of field hearings to provide producers from throughout US opportunity to discuss in depth how individual farm programs affect them. Expanding on last year's series of full committee hearings in rural communities, subcommittee hearings in June will explore structure of loan rates, aspects of continuing current transition payments, trigger mechanisms for counter-cyclical income support and other farm bill components. Although full schedule was not announced, subcommittee hearings will conclude with session in Macon, GA, June 23.

"I want producers to comment on the proposed farm programs and how those issues related to the commodity programs hinder them from operating in the most efficient manner. It will be beneficial for members of the subcommittee to hear from farmers on how we can improve on proposals and existing programs as we move to complete the reauthorization of the farm bill in (House Ag Committee) Chairman Combest's time frame," Chambliss explained. "There are a lot of farmers out there who spend an awful lot of time on tractors thinking about how Washington could tinker with programs to make them better."

Full Agriculture Committee has been setting stage for new farm bill for last 2 years, beginning with series of field hearings on general farm policy followed by comprehensive look at farm policy proposals from 15 commodity groups.

Chairman Combest (R-TX) anticipates writing farm bill by early August to make comprehensive agricultural legislation available for House consideration in September.

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Energy Plan Calls for Increased Production,
Conservation Efforts

Incentives for increased power production and conservation were key elements of "Energy for the 21st Century," new national plan unveiled by President Bush. Plan aims to:

  • Increase energy production by spurring building of new nuclear power plants, opening Alaska's Arctic National Wildlife Refuge to oil and gas drilling and streamlining rules governing power plant and refinery expansions.
  • End bottlenecks in electricity transmission between regions of country and build more pipelines to carry oil and natural gas.
  • Encourage conservation by providing $10 billion in tax breaks, including $4 billion in tax credits for purchase of fuel-efficient "hybrid" vehicles and 15% tax credit for installing solar panels on houses. Tax credits or financial aid would also encourage alternative fuels and weatherization.

Plan would provide tax credits to encourage development of energy plants using organic wastes or biomass. Report noted that 2 most common biofuels are ethanol and biodiesel. Beyond energy benefits, development of biomass benefits rural economies that produce crops used for biomass, particularly ethanol.

Initiative, containing 105 recommendations designed to "produce more reliable, affordable and environmentally clean energy," was developed by panel headed by Vice President Cheney.

Energy crisis as it pertains to agriculture is scheduled to be among topics Ag Secretary Veneman reviews in 6 p.m. address to Memphis (TN) Agricultural Club on May 23 at Agricenter International. Secretary also will speak at Delta Council Annual Meeting in Cleveland, MS, May 24.

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Full Senate Takes Up Tax Relief Plan

Senate Finance Committee approved 11-year, $1.35 trillion tax relief plan, paving way for full Senate to take up measure. Tax package was approved on 13-5 bipartisan vote.

Principle provisions of committee's package are: across-board cut in marginal tax rates, including establishment of new 10% tax bracket effective Jan. 1, '01; revision of taxes for married couples beginning in '05; doubling of $500 per child tax credit effective '10; and phased reduction in estate taxes with repeal effective '11 and lowering of gift tax. Package also includes expansion of individual retirement accounts and 401(k) plans and increase in annual contribution limit to education savings accounts from $500 to $2,000.

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Conrad Pushes for Farm Bill Schedule

Sen. Conrad (D-ND), ranking member of Budget Committee, urged Agriculture Committee Chairman Lugar (R-IN) to set up schedule to write new farm bill soon because he says there is danger farmers could lose budget allocation to defense and other priorities if committee does not act quickly.

Conrad noted that recently adopted FY02 budget resolution provides $79 billion in additional resources for agriculture over period '01 through '11. He said that at least 5.5 billion is for emergency relief this year and that bulk of additional money - $66.15 billion - is held in reserve fund pending action by respective agriculture committees to report new farm bill.

"The increase for agriculture included in the Budget Resolution properly recognizes that continued widespread hardship in the farming sector demands both policy changes and additional resources," Conrad said. He added "there is a real risk that if the (Senate Agriculture) committee does not move in a timely way to report emergency farm relief for crop year '01 (and) to reauthorize the farm bill, the money set aside for agriculture could evaporate."

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Fischler: Plan to Aid US Farmers would Distort Trade

Agricultural support proposals being discussed in Congress would distort trade and betray US free-trade principles, Europe's top farm leader said. Franz Fischler, European Union agriculture commissioner, said members of Congress and US farm and commodity groups are backtracking from existing farm law because proposed plan would increase crop subsidies when markets are down and shut them off when prices rise.

"If you have a support system when you compensate for price losses, then farmers don't get signals from the market," Fischler said in an interview. "Therefore, this system will be more and more trade-distorting."

Fischler is paying a 5-day visit to the US to meet with Agriculture Secretary Veneman and members of Congress on trade disputes before new round of World Trade Organization talks begin in November in Qatar.

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No Action on Export Credit Subsidies

Organization for Economic Cooperation and Development (OECD) completed meeting of 30 countries without action on proposal to reduce various forms of export credits, credit guarantees and credit subsidies on farm exports.

US officials indicated that US would agree to proposal if 10 OECD members involved in negotiations also agree. At this point, only Canada is holding out. Meanwhile, trade ministers of OECD countries called on negotiators to continue efforts to gain approval from all parties. Agreement would cut in half length of loans guaranteed by USDA, giving them 18-month maximum life.

According to Mary Chambliss, USDA Foreign Agricultural Service, US officials have indicated they will accept no more changes in current version of proposal, as completed last November. NCC has filed opposition to proposal, saying that it would make program ineffective for US exports of cotton, which could fall by 500,000 bales annually and further affect already depressed prices.

US used credit guarantees last year to help sell $3.8 billion in agricultural exports abroad.

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Senate Hears Testimony on Ag Nominees

Senate Ag Committee conducted confirmation hearings for Mississippi farmer William T. "Bill" Hawks, nominated by President Bush to be USDA Undersecretary for Marketing and Regulatory programs, and Texas Department of Human Services Commissioner Eric Bost, nominated for post as USDA Undersecretary for Food, Nutrition and Consumer Services.

Senate Budget Committee ranking member Conrad (D-ND) asked Hawks for report on "any aggressive steps" that have been proposed to stop entry of foot and mouth disease into US, but rejected by "administrators" at USDA and "rationale" for those rejections. Conrad said he wanted report on all proposals "at a staff level or by credible outside groups that have been rejected." Hawks said he would provide report.

Senators were friendly toward Hawks, asking him questions about how he would handle foot and mouth disease and some other issues, but did not raise any problems with his nomination.

In his testimony, Bost noted that he was concerned in Texas that people eligible for food stamps did not know about program and initiated extensive outreach effort to help people in homeless shelters and poor neighborhoods.

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Cotton Sales More than Double Previous Week

Net export sales for week ending May 10 were approximately 175,500 bales (480 lb.), more than double previous week's sales, raising total '00-01 sales to slightly over 7.7 million bales. Total sales at same point in '99-00 marketing year were about 7.36 million bales. Shipments for week were more than 156,000 bales, bringing total exports to date to approximately 4.8 million bales, down from 5.4 million at comparable point in '99-00 marketing year.

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'01 Producer Information Exchange Tours Set

Dates and locations of '01 NCC/FMC Producer Information Exchange (PIE) Program have been finalized.

Cotton producers from Alabama, Florida, Georgia, South Carolina, North Carolina and Virginia will see operations in Louisiana, Arkansas and Mississippi, July 7-12. Producers from Oklahoma, Texas and New Mexico will visit operations in Arizona and California July 21-27. Producers from Arizona and California will tour Texas' High Plains and South Texas Aug. 4-9. Producers from Arkansas, Louisiana, Missouri, Mississippi and Tennessee will travel to Georgia and Alabama Aug. 18-23.

Cotton Foundation special project is funded by grant from FMC Corp. With completion of '01 tours, program will have exposed more than 550 cotton producers to innovative production practices in regions other than their own.

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Effective May 18-24, '01

Adjusted World Price, SLM 1 1/16            37.25 cents*
Coarse Count Adjustment                       0.00 cents
Current Step 2 Certificate Value              1.64 cents
Marketing Loan Gain Value                    14.67 cents
*No Adjustment Made Under Step 1

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Five-Day Average

Current 3135 c.i.f. Northern Europe          50.89 cents
Forward 3135 c.i.f. Northern Europe          51.13 cents
Coarse Count c.i.f. Northern Europe          49.38 cents
Current US c.i.f. Northern Europe            53.30 cents
Forward US c.i.f. Northern Europe             56.30 cent

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