Cotton's Week: January 23, 2004

The Senate completed work on FY04 appropriations measures with passage of a conference report on an $820 billion Omnibus spending bill that includes agriculture and 6 other individual appropriations measures. The report was approved on a 65-28 vote and goes to President Bush, who is expected to sign it.

The legislation provides $80.6 billion in funding for agriculture programs and USDA operations. The $16.9 billion in discretionary spending is about $1 billion less than was enacted in FY03. Funding for cotton’s boll weevil eradication and pink bollworm eradication programs is included in earmarked funds for USDA’s Animal and Plant Health Inspection Service. The bill also provides $125 million for the Market Access Program, which helps fund Cotton Council International’s market development program.

The Environmental Quality Incentive Program is funded at $975 million, about $25 million below the level authorized in the farm law. Also included in the Omnibus bill was language pertinent to the Conservation Security Program (CSP). Prior to the passage of this bill, CSP was capped at $3.77 billion over a 10-year period. CSP now will receive $41.4 million in funding for FY04 and then be open as an entitlement without any caps. However, funds may be limited by the appropriations process in any one year.

The measure also includes $11 million for US textile research - $1 million for finding a chemical tracer to adhere to apparel and textiles to track their country of origin and determine if they are being transshipped through 3rd countries to avoid free-trade-pact rules; $3 million to fund apparel and supply chain research facility TC2 in Raleigh-Durham, NC, which also is supported by Cotton Incorporated, Lands’ End, VF Corp. and Russell Corp.; and $7 million for the National Textile Center, a consortium of universities with textile research programs.

Approval of the bill was delayed because of complaints about several legislative riders, including one which delays implementation of a country-of-origin labeling provision included in the ’02 farm law. Supporters of the labeling provision vowed to renew their efforts at the first opportunity. Several Senators expressed displeasure with spending earmarked for projects not included in the President’s budget or authorized by Congress.

Earlier in the week, Senate Majority Leader Frist (R-TN) put the Senate on notice that the President’s FY05 budget proposal, to be delivered to Congress on Feb. 2, will be austere for non-defense programs, holding increases to 1% with the exception of a 10% increase for homeland security.

NCC delegates will develop policies and programs that can provide solutions to concerns facing the US cotton industry at the organization’s ’04 Annual Meeting Jan. 29-Feb. 2 in New Orleans.

“Solutions through Strength” is the theme of the meeting at the New Orleans Marriott Hotel, which is expected to attract 1,000 leaders from US cotton’s 7 segments and industry stakeholders across the Cotton Belt.

NCC Chairman Bobby Greene will cover the state of the US cotton industry and outline a plan of action in his address to the general session Feb. 2. Joining him on that morning’s program will be Under Secretary of Agriculture Bill Hawks, who has oversight responsibility for USDA’s wide-ranging marketing and regulatory matters, including commodity research and promotion programs, the Animal and Plant Health Inspection Service’s boll weevil and pink bollworm eradication programs and the cotton classing system. The program also features an in-depth review of the ’04 elections by nationally syndicated political analyst and author Tucker Carlson. A report on cotton’s national and international research and promotion programs by Cotton Incorporated President/CEO Berrye Worsham will round out Monday’s general session.

Other key sessions scheduled during the annual meeting are: the American Cotton Producers (ACP), the NCC’s producer policy development group; the National Cotton Ginners Assn.’s (NCGA) annual meeting; and Cotton Council International’s Board of Directors. The ACP’s Jan. 30 meeting will feature the results of the NCC’s annual Planting Intentions Survey, which provides the first insight into growers’ plans for the ’04 season, and an address by Mack Gray, Deputy Under Secretary for Natural Resources and Environment, who will discuss USDA’s extensive conservation programs with special emphasis on the new Conservation Security Program scheduled to be initiated in the spring.

Gray also will address the NCGA’s annual meeting Jan. 31, at which he will focus on air quality issues. A special luncheon that day will feature Suzy DeFrancis, who serves President Bush as deputy assistant to the President for communications.

Dr. Franz Fischler, a member of the European Commission responsible for Agriculture, Rural Development and Fisheries, supports US Ambassador’s Zoellick’s initiative to move the World Trade Organization (WTO) Doha Round talks back “on stage.” In a Jan. 21 Brussels speech he said, “We cannot allow ’04 to pass without any progress.”

Fischler said he could see a number of ways to build a head of steam, one of which would be to intensify direct contacts and multilateral talks at the political level. He indicated that, “The crunch moment, getting together all those responsible for the outcome of the negotiations to really test what they are willing to give and take has … not been reached yet.” Fischler said that sooner or later, the overall balance of the agreement will depend not just on what individual WTO partners are asking for but also what they are willing to contribute and added, “The European Commission will be doing everything in its power to achieve this.”

With respect to Zoellick’s proposal for discussing cotton-related issues (Jan. 16 Cotton’s Week), Fischler said, “There appears to be an emerging consensus in Geneva to treat the trade-related issues concerning cotton, such as market access and the level and form of subsidies, in the context of the agricultural negotiations. The financial and technical assistance issues, on the other hand, should be addressed through the appropriate international forums outside the WTO, either as part of bilateral development cooperation or through international bodies like the World Bank.”

USDA’s Animal and Plant Health Inspection Services (APHIS) published a notice in the Jan. 23 Federal Register  to compile an Environmental Impact Statement (EIS) in connection with potential changes to the regulation of the importation, movement and release of transgenic organisms. The changes are intended to take into account transgenic organisms that may be considered Biological Control Organisms, Noxious Weeds or Plant Pests as defined under the Plant Protection Act.

These new regulations are largely designed to regulate the new generations of transgenic plants that will incorporate pharmaceutical and industrial compounds such as materials for plastics. However, the new regulations do have the potential to increase or even decrease regulations on transgenic cotton.

The proposed EIS will take into consideration many factors such as how to best regulate and contain plants designed for use in compounds and materials for plastics, transgenics that may pose a noxious weed risk or that are a biological control agent, possible regulation of growers that decide to produce such plants, the presence of biotech components where they are not supposed to be, as well as other areas that could be proposed to the agency.

The purpose of the revisions is to increase public involvement in the regulator process and improve transparency of regulation, according to APHIS. Emphasis was placed on the future regulation of new technologies in non-food use and on noxious weed considerations. Such regulations appear to be designed to potentially classify these plants as noxious weeds to prevent their introduction into the food supply and to improve food safety.

APHIS has invited commodity groups to meet the week of Feb. 23 to provide guidance on the regulations. The agricultural community in Washington is cautiously optimistic regarding the guidelines, which would help provide alternative markets for certain transgenic crops and improve options open to growers for market diversification. The NCC will meet with APHIS and will work closely with other agricultural interests to ensure proper regulation of transgenic plants in the future.

Jack McDonald, Jr., 72, president of the NCC in ’91, died Jan. 17 at Decatur (IL) Memorial Hospital. He retired as corporate vice president of Archer Daniels Midland (ADM) in ’99 after serving as president of Southern Cotton Oil Co. and Columbian Peanut Co.

Mr. McDonald served as a NCC vice president and Board member before being elected president. He was a past president and board member of the National Cottonseed Products Assn. and a former director and past president of the Memphis Board of Trade.

He began his career with Buckeye Cellulose Corp. in ’56, working in various assignments in Memphis, Cincinnati, Little Rock and Augusta, GA, before being named manager of southern crushing operations in Memphis. The Helena, AR, native joined ADM in ’80.

A memorial service will be held at 11 a.m. Saturday, Jan. 31, at St John's Episcopal Church in Decatur. Burial will be in Maple Hill Cemetery, Helena, at a later date. Memorials may be made to the St. John's Episcopal Church (Decatur), St. John's Episcopal Church (Helena) or the donor's choice.

Surviving are his wife of 50 years, Virginia “Sis” McDonald; a daughter, Carla McDonald Hawkinson, of Maryville, TN.; a son, Jack McDonald, III, of Blacksburg, VA.; a brother Thomas Bruce McDonald of Cornwall on the Hudson, NY; and 2 grandchildren.

Net export sales for the week ending Jan. 15 were 174,500 bales (480-lb.), resulting in total ’03-04 sales of almost 9.7 million bales. Total sales at the same point in the ’02-03 marketing year were approximately 7.9 million bales. Total new crop (’04-05) sales are 384,400 bales (480-lb.).

Shipments for the week were 372,600 bales, bringing total exports to date to 4.5 million bales, ahead of the 3.9 million bales at the comparable point in the ’02-03 marketing year.