Cotton's Week: January 31, 2003

Cotton's Week: January 31, 2003

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Veneman Announces Second CCP Payment

A 2nd advance counter-cyclical payment for ’02-crop upland cotton, rice and peanuts becomes available to farmers Feb. 3, according to an announcement made Jan. 31 by Agriculture Secretary Veneman.

"This action meets the schedule of the ’02 farm law and provides timely benefits to farmers," Veneman said. The new farm law authorizes the Secretary to make up to 70% of the projected CCP available in February of the year following harvest.

The Secretary’s announcement follows recent appeals by the NCC and members of Congress to make the payment available. A letter authored by Sens. Shelby (R-AL) and Miller (D-GA) and signed by 10 other Senators cited data that indicates the CCP rate for cotton, rice and peanuts is expected to be the maximum under the law, so making a partial (advance) available will assist producers experiencing cash flow difficulties due to disastrous losses and chronically low prices. The NCC wrote earlier urging Veneman to utilize her authority to make 70% of the maximum CCP available for cotton. She made 35% available beginning last October.

Others Senators signing the letter were Sessions (R-AL), Breaux (D-LA), Landrieu (D-LA), Lincoln (D-AR), Bingaman (D-NM), Chambliss (R-GA), Graham (R-SC), Warner (R-VA), Lott (R-MS) and Pryor (D-AR).



Goodlatte Apponts Subcommittee Chairs; New Members Named

House Agriculture Committee Chairman Goodlatte (R-VA) named subcommittee chairs for the 108th Congress, and new committee assignments were announced.

Rep. Lucas (R-OK) will continue to chair the Conservation, Credit, Rural Development and Research subcommittee; Rep. Moran (R-KS) will serve as chair of the General Farm Commodities and Risk Management subcommittee; Rep. Jenkins (R-TN) will serve as chair of the Specialty Crops and Foreign Agriculture Programs subcommittee; Rep. Gutknecht (R-MN) will chair the Department Operations, Oversight, Nutrition and Forestry subcommittee; and Rep. Hayes (R-NC) is the new chairman of the Livestock and Horticulture subcommittee.

Newly appointed to serve on the Agriculture Committee were Balance (NC), Cardoza (CA), Case (HI), Marshall (GA), Alexander (LA) and Scott (GA). They join returning members Stenholm (TX), ranking member, Peterson (MN), Dooley (CA), Holder (PA), Thompson (MS), McIntyre (NC), Etheridge (NC), Boswell (IA), Lucas (KY), Hill (IN), Baca (CA), Larson (WA), Ross (AR), and Acevedo-Vila (PR). Additional vacancies will be filled in the near future.



Proposed EQIP Regulation Scheduled for Publication

A proposed regulation implementing the Environmental Quality Incentives Program (EQIP), re-authorized in the ’02 farm law with significantly increased funding and numerous enhancements and modifications, is expected to be published by USDA on Feb. 3. According to materials provided by USDA’s Natural Resources Conservation Service (NRCS) in a briefing for farm organizations, the proposed regulation will be open for comments for 30 days from the date of publication.

The fundamental philosophy of EQIP will not change, and producers will apply for the program as in the past, but they should expect faster responses. NRCS has established national priorities including water quality, air quality, soil erosion and at-risk species habitat recovery that will be used to guide the allocation of funds to states. State Conservationists will identify state resource priorities that reflect the national priorities in management and allocation of funds; will determine which conservation practices will be eligible and the maximum payment levels in the state; and may delegate implementation to Designated Conservationists. A locally led conservation process will continue to be the cornerstone of EQIP.

The regulation outlines the process for evaluating applications, use of technical service providers (subject to a separate rule to be published in the near future) and defines Limited Resource and Beginning Farmers. The program will be administered by NRCS

Producers may have more than one contract per tract at any given time and receive payments in the same year the contract is approved. Contracts may be from 1 to 10 years in duration, Conservation Priority Areas are no longer required and there is a limitation of $450,000 per individual or entity over the life of the farm law regardless of the number of farms or contracts. Individuals or entities with an adjusted gross income of $2.5 million averaged over the past 3 years (unless 75% or more is derived from farming, ranching or forestry activities) are not eligible to receive EQIP payments. The proposed rule on EQIP can be seen at www.nrcs.usda.gov/programs/farmbill/2002/pdf/EQIP_rule_sum_030130.pdf.



December Cotton Usage Estimated at 7.88 Million Bales

December’s (5-week month) total cotton consumption in domestic mills was 301.1 million pounds for a seasonally adjusted annualized rate of 7.88 million 480-pound bales, according to estimates by the Commerce Department. The annualized rate for December ’01 was 7.45 million bales.

Commerce also raised the November (4-week month) estimate by 958,000 pounds to 271.5 million. The revised seasonally adjusted annualized rate of consumption for November is 7.70 million 480-pound bales, an increase from the November ’01 annualized rate of 7.20 million bales.

Using the latest figures from Commerce, calendar ’02 mill use is estimated to be 3.69 billion pounds or 7.69 million bales. This is down from the 7.99 million bales used in calendar year ’01.

Based on Commerce estimates from Aug. 1 through Dec. 28, projected total pounds consumed during crop year ’02-03 would be 3.65 billion pounds or 7.61 million bales. USDA’s latest estimate of ’02-03 crop year mill use is 7.5 million bales.

Preliminary January domestic mill use and revised December figures will be released by Commerce Feb. 27.



Crucial Arkansas Boll Weevil Eradication Vote Underway

Producers and landlords are in the process of voting again on a boll weevil eradication program for eastern Craighead and Mississippi counties in northeast Arkansas. This area, about 300,000 acres, is surrounded on all sides by active eradication programs.

Because of historical lower levels of boll weevil control costs and because of weevils migrating from the area into eradication areas, the program being voted on has a considerable amount of financial assistance. Included is the federal cost share for ’03 of about $3 million, up to $6 million in assistance from producers in the Southeastern Boll Weevil Eradication Foundation and up to $3.5 million in assistance from the Arkansas program.

The assessment will be for $8 per acre for 7 years and will not exceed that amount. The proposed program will be operated by the Southeastern Boll Weevil Eradication Foundation, which has programs underway in Missouri, Tennessee and Mississippi. The most recent vote captured 65% positive votes, just 1.7% short of the 66.7% required for passage.

Charles Parker, Senath, MO, producer and Chairman of the NCC Boll Weevil Action Committee, said, "It is crucial that the Arkansas program pass so the entire Cotton Belt can move forward to complete the eradication program. As long as weevils are allowed to reproduce, adjacent states can only hold their own, and that comes at great expense because of migrating weevils."

Mark Bryles, Arkansas Grower Board member from Blytheville, said "It is obvious that our neighbors are anxious for us to pass the referendum, and we thank them for generating the financial assistance for our producers. I think that in the long run, we can all win by passing the program."

To be eligible to vote, persons must have produced cotton or have been crop-share landlords for the production of cotton in ’02 in those zones conducting the referendum. Ballots and signature envelopes, which must be signed, must be postmarked by 4:30 p.m., Feb. 7, or hand delivered by that same time to the Farm Service Agency office in Osceola for Mississippi County or in Jonesboro for Craighead County.

Copies of the ballot may be used if additional ballots are needed. Contact Darryl Little at the Arkansas State Plant Board at (501) 225-1598 for additional envelopes.



Record $3.9 Billion for Conservation Programs in the Works

Agriculture Secretary Veneman announced that President Bush will propose a record $3.9 billion for conservation programs in FY04, an increase of $582 million over the FY03 level.

Almost $3.5 billion of the record-level proposal will be used for financial assistance or other direct payments to farmers. The proposal includes $2 billion for the Conservation Reserve Program for rental and other costs on new and old acreage; $850 million for the EQIP program; $250 million for the Wetlands Reserve Program to enroll an additional 178,000 acres; $112 million for the Farmland Protection Program; $85 million for the Grassland Reserve Program; $42 million for the Wildlife Habitat Incentives Program; and $19 million for the new Conservation Security Program, on which an Advance Notice of Proposed Rule is expected shortly.



House Leaders Urge WTO Complaint against EU Ban on Modified Goods

House Speaker Hastert (R-IL), House Ag Committee Chairman Goodlatte (R-VA) and other lawmakers sent a letter to President Bush urging a World Trade Organization (WTO) complaint against the European Union (EU) because of its refusal to approve new products containing genetically modified ingredients.

The letter charges that the EU’s effective ban on new modified crop varieties is costing US agriculture some $300 million a year. "This is simply a non-tariff barrier based on politics and protectionism, not science," the letter noted. "This discriminatory policy would be disastrous for US farmers and their ability to provide an abundant reliable product for the world’s population at a time when dozens of countries are currently experiencing serious food shortages."

The US has become more vocal on the issue, with US Trade Representative Zoellick saying earlier this month that the Bush Administration was coming close to taking action against the EU over this issue via the WTO.



Export Sales Climb

Net export sales for the week ending Jan. 23 climbed approximately 26% from the previous week to 272,600 bales (480-lb.), resulting in total ’02-03 sales of over 8.2 million. Total sales at the same point in the ’01-02 marketing year were approximately 10 million bales. Total new crop (’03-04) sales are 520,200 bales (480-lb.).

Shipments for the week were 265,800 bales, bringing total exports to date to 4.2 million bales, down from 4.9 million at the comparable point in the ’01-02 marketing year.



Prices Effective January 31-February 6, 2003
Adjusted World Price, SLM 1 1/16          43.51 cents*
Coarse Count Adjustment                    0.00 cents
Current Step 2 Certificate Value           5.12 cents
Marketing Loan Gain Value                  8.49 cents
Import Quotas Open                                  4
Step 3 Quotas as of 1/31(480-lb. bales)       437,672

* No Adjustment Made Under Step I

Five-Day Average

Current 3135 c.i.f. Northern Europe       56.58 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         61.70 cents
Forward US c.i.f. Northern Europe            No Quote

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