Cotton's Week: September 19, 2003

The Cancun Ministerial World Trade Organization (WTO) meeting ended without an agreement on a framework for the rest of the negotiations, putting the future of the Doha Round in jeopardy.

The US and the European Union (EU) found it difficult to negotiate with developing countries that would not offer a reciprocal level of trade liberalization in return for decreases in agricultural subsidies and significant increases in market access to the US and the EU.

US Trade Representative Zoellick stated several times that if countries would not negotiate in Cancun, the US would pursue free trade agreements as a means of opening markets around the world.

Ambassador Zoellick, Secretary of Agriculture Veneman, Chief Agriculture Negotiator Johnson, Under Secretary Penn, Chief Textile Negotiator Spooner and others within the US negotiating team firmly resisted the attempt by 4 African countries and several international organizations to use the Cancun ministerial as a platform to attack the US cotton program and insisted on a broader approach to fiber and textile issues. Sen. Cochran (R-MS) and Reps. Thomas (R-CA), Stenholm (D-TX), Ross (D-AR) and Goodlatte (R-VA) also helped support the US negotiators.

NCC Chairman Bobby Greene stated, "It’s unfortunate that many countries of the world did not go to Cancun to negotiate, but went there to make demands. It is a testament to the US negotiators that they saw through the rhetoric and did not lose sight of the goal of the WTO negotiations, namely greater reciprocal trade liberalization."

USDA will begin issuing the third and final installment of ’02-crop counter-cyclical payments immediately for upland cotton, rice and peanuts, according to an announcement by Agriculture Secretary Veneman. USDA has determined that the total rate for upland cotton is 13.73 cents/lb.; for rice, $1.65/cwt; and for peanuts, $95/ton. Cotton producers who took the maximum 70% advance on the ’02 crop will receive an additional 4.1 cents/lb.

As required by the ’02 farm bill, final Counter-Cyclical Program (CCP) payments are made as soon as practicable following the end of the applicable crop’s 12-month marketing year, which was July 31 for the 3 crops. The farm bill provides for 2 advance counter-cyclical payments, one in October and one in February.

Counter-cyclical payments for ’02-crop upland cotton and rice are at their maximum levels due to low market prices for these commodities. The respective market prices remained well below their marketing assistance loan rates during the entire marketing year, allowing USDA to determine final counter-cyclical payment rates at this time for upland cotton and rice, Veneman said. The final weighted average marketing year price for ’02 peanuts, which was announced on Aug. 29, is $364/ton, slightly higher than the $355 loan rate. In subsequent years, when market prices may rise above the loan rates, final counter-cyclical payments may be delayed until after the final marketing year farm prices are available.

Final direct payments for ’03-crops of upland cotton, wheat, corn, grain sorghum, barley, oats, soybeans, peanuts, rice and other oilseeds will begin in October.

Rep. Stenholm (D-TX) joined in introducing a House resolution urging the US government to use all available means to force Asian countries to cease manipulation of their currencies in order to gain a competitive advantage over US manufacturers and farmers. Other co-sponsors include Small Business Committee Chairman Manzullo (R-IL) and Reps. Rogers (R-MI) and Hill (D-IN).

During a press conference Sept. 17 announcing introduction of the resolution, members explained that economists estimate Asian products gain a 25-40% advantage over US-manufactured and agricultural products by manipulating their currency values. The practice costs US manufacturers and farmers billions in exports and is causing significant job losses in the manufacturing sector.

The resolution, H. Con. Res. 285, expresses the sense of Congress that manufacturing is a critical industry to the US economy and that foreign currency manipulations are clear violations of international trade laws actionable under section 301 of the Trade Act of ’74. The resolution calls for the President to continue negotiations with East Asian countries (Japan, China, Taiwan and Korea) while pursuing other actions, including enforcement of US laws that provide remedies to counteract currency manipulation; encouraging international harmonization of exchange rates based on market forces; and instructing the US Trade Representative to take action under section 301 should negotiations fail to produce results.

Rep. Stenholm emphasized that the resolution is bipartisan and calls for the US to utilize every tool available to counteract the damage being done to US farmers, manufacturers and their employees by countries manipulating the value of their currencies to gain an unfair competitive advantage. As reported in the Sept. 12 issue of Cotton’s Week, other legislative proposals would require the imposition of tariffs on imported products in an amount equivalent to the advantage gained by manipulated currency values.

Southern Cotton Grower (SCG) and Southeastern Cotton Ginner leadership, led by Scotland Neck, NC, SCG producer President Ronnie Fleming, made extensive visits to Congressional delegations from Virginia, North and South Carolina, Georgia, Florida and Alabama to discuss critical trade and farm policy matters. Producers urged House and Senate members to co-sign a letter to the President that urges the Administration to initiate the special safeguard provisions for certain textile and apparel products as provided in the ’01 China World Trade Organization (WTO) accession agreement. They expressed appreciation to the growing number of Cotton Belt members who had already agreed to co-sign the letter.

The letter expresses opposition to the inclusion of any provision in a Central America Free Trade Agreement (CAFTA) or any other free trade agreement that would grant preferential access to textile and apparel products containing components produced in any countries other than the US and the 5 Central America countries in the case of the CAFTA. The letter expresses opposition to agreeing to cut tariffs on textile products as part of the WTO agreement until and unless other countries first reduce their tariffs to US levels.

As a result of these efforts and those of the other members of a textile-fiber coalition there are 43 co-signers in the House and 11 in the Senate, with the numbers increasing daily.

The producer delegation also urged continued opposition to any changes in the farm bill during consideration of the ’04 Agricultural Appropriations Bill. They reiterated the de-stabilizing impact on production financing, marketing and planting decisions of amendments such as the payment limit changes proposed by Sen. Grassley (R-IA).

The NCC submitted comments in response to USDA’s interim rule that allows outside storage of loan-eligible extra long staple (ELS) cotton under certain conditions. Details of the interim rule were outlined in the Aug. 15 Cotton’s Week

The NCC expressed opposition to the rule and urged its withdrawal. In the event USDA chooses not to withdraw the rule, the NCC asked that the industry’s concerns be addressed and for the rule to be restricted to the ’03 crop year, with limited participation, to allow a full evaluation by USDA and the industry.

The NCC’s objections to the rule addressed industry concerns about cotton quality, the rule’s implementation and lack of standards and the increased risks of loss for producers and the USDA.

Comments pointed out that the Joint Cotton Industry Bale Packaging Committee has not been asked by the industry or USDA to evaluate bale packaging as a substitute for conventional storage and has not determined if any approved packaging materials effectively protect the quality of cotton stored outside. The NCC said the rule’s producer-certification requirements cannot be met by most producers and it fails to establish appropriate standards for protecting ELS cotton stored outside. According to the NCC, the rule will result in increased loan processing times for ELS cotton stored outside and will unnecessarily put USDA assets at risk. The NCC told USDA that producers were not provided with the degree of cost risk compared with cost savings.

Comments followed a number of Washington contacts prior to the rule’s publication and a conference call meeting between USDA officials and the NCC Board in August after the rule was published.

The NCC, along with several cotton interest organizations, submitted comments for the registration of Glufosinate herbicide on cotton. Glufosinate is manufactured by Bayer CropScience and is used on other crops such as corn.

Assuming tolerances are granted, growers can soon expect the use of Glufosinate in a new line of herbicide-tolerant crops meant to metabolize the compound. Glufosinate has shown good efficacy against pigweed, morning glory and other weeds that are particularly troublesome in the Southeast.

In addition to those that signed onto the NCC’s comments, several regional groups either submitted their own comments or did both. Bayer CropScience expressed gratitude to the growers and their efforts to aid in the registration of this compound.

The Biosafety Protocol (BSP) ratified by 54 nations around the world went into effect on Sept. 11 as one of the first implemented treaties designed to regulate and monitor the flow of living modified organisms (LMOs) in global trade. While most cotton products will not be affected, the trade of cottonseed for planting will be monitored when shipped to a country that is a signature of the treaty.

Raw cotton lint and trash do not contain LMOs and are not governed by the treaty at this time. The NCC is working with a coalition including the corn and soybean industries to help ensure that the definitions and regulations of this treaty are based on firm science, are workable and place as small a burden as possible upon members.

James E. Echols, who served as NCC chairman in ’01, died Tuesday, Sept. 16, in Memphis, TN. Echols also served as president and chairman of Cotton Council International and served in numerous NCC Board, officer and committee capacities.

Echols headed Cargill Cotton as president and chief executive officer for 13 years before he retired in April, closing out a 43-year career with the 124-year-old company formerly known as Hohenberg Bros. Co. He also was CEO of Cargill's worldwide product line that included Ralli Brothers and Coney in Liverpool, England.

He was a past president of the Southern Cotton Assn. and the American Cotton Shippers Assn. and a former member of the board of managers of the New York Cotton Exchange.

Memorials may be sent to: Second Presbyterian Church World Missions; the Church Health Center, 1210 Peabody Ave., Memphis, TN 30104; or to the American Cancer Society, 1378 Union Ave., Memphis, TN 38104.

Sens. Craig (R-ID) and Kennedy (D-MA) plan to introduce bipartisan immigration reforms for the agricultural industry entitled Agricultural Jobs, Opportunity, Benefits and Security (AgJOBS) Act of ’03. Reps. Cannon (R-UT) and Berman (D-CA) will introduce companion legislation in the House.

The NCC has worked with the Agricultural Coalition for Immigration Reform on the initiative, which will reform the existing H-2A guest worker program to provide a long-term labor safety net and allow adjustment of status provisions. This will allow a long-term solution for H-2A and allow legal documentation of current workers.

The National Council of Agricultural Employers supports this plan as well as other farmworker advocates. NCC will continue to work with this coalition as the legislation moves forward.

The House Agriculture Committee has complied with a FY04 Budget Resolution provision requiring the committee to report proposals for reducing waste, fraud and abuse. The Agriculture Committee’s savings target is $5.25 billion for fiscal years ’04-13.

In a letter to Chairman Goodlatte (R-VA) and Ranking Member Stenholm (D-TX), members cited a number of previous actions taken in regard to crop insurance. They explained that every effort has been made to identify changes in legislation which would save $5.25 billion of projected mandatory program costs (1% of total) over the next 10 years by eliminating waste, fraud and abuse.

The NCC has nominated Bill Tracy of Buttonwillow, CA, to serve a 3rd term on the Pesticide Program Dialogue Committee (PPDC) for the EPA. Established under the Federal Advisory Committee Act by the EPA, the PPDC consults in the transition of re-registration of pesticides under the Food Quality Protection Act of ’96 (FQPA).