Cotton's Week: April 8, 2004

In an address to the National Press Club, Secretary of Agriculture Ann Veneman provided an overview of US agriculture, noting that today’s producers are more efficient and conservation minded than ever.

Veneman spoke about the commitment to conservation in the farm bill and the administration’s commitment to current farm programs. She also addressed opening new markets for trade, continuing to increase the trade of American agricultural goods and the need to get a good WTO agreement that will benefit American producers.

When asked if commodity programs should be reconsidered due to budget deficits, she responded, “As I indicated in my remarks, because agricultural prices across the board have been relatively high in recent months, the cost of the government programs to the taxpayer actually has decreased. I think that with the budget situation as it is, there will continue to be increasing pressure. But the administration's budget as it's presented for 2005 anticipates full funding of the farm programs that are in the farm bill.”

The Panel hearing the US/Brazil cotton dispute delayed issuing an interim report in the case until late April. The Panel had been expected to issue a confidential interim report on April 8, but announced on April 7 that it would not make that deadline. If the interim report is issued in late April, the final, public determination should be available to the United States by mid-June.

NCC International Trade Counsel William Gillon said the delay does not shed any light on what the Panel may decide. "This is a very complex case,” he said. “It is undoubtedly taking the Panel and the WTO Secretariat more time than they had hoped to get through all the evidence and arguments and reach their decision."

Warehousers, merchants and textile manufacturers are encouraged to complete the questionnaire in the NCC’s web-based rack sample survey found at www.cotton.org/industrysurvey.

The survey was developed by the NCC's Rack Sample Study Committee to: 1) address a concern that traditional sample handling practices are no longer cost effective due to changes within the cotton marketing system and 2) provide a closer look at industry members' usage and handling of bale (rack) samples in order to help the Committee evaluate the costs/benefits of current practices and the effect of those practices on US cotton's timely marketing/flow (see Cotton’s Week March 19). The survey will close April 30 and findings will be available on the NCC's web site and at the NCC directors’ mid-year meeting in August.

EPA has issued a permanent exemption from tolerances for Monsanto’s Cry2ab2 Bt protein found in Bollgard II and a temporary exemption from tolerances for Dow Agro Sciences’ Cry IF Bt protein found in Wide strike. The exemption from tolerances excuses these technologies from requirements to establish tolerable limits of residues in food and feed products made with this technology.

Monsanto’s permanent exemption comes after a ’01 temporary exemption issued by the EPA which has completed its final risk assessment. Dow’s temporary tolerance comes with Dow’s biotech cotton being under Experimental Use Permits since April ’03. Dow anticipates commercial release of its technology for the ’05 growing season, while Monsanto’s Bollgard II currently is available commercially.

NCC, along with other national agricultural organizations, sent a letter, which can be found at www.cotton.org/membersvcs/farm-family.cfm, to USDA’s Farm Service Agency (FSA) opposing the new definition of “family farm” in the agency’s proposed rule: Regulatory Streamlining of the Farm Service Agency’s Direct Farm Loan Programs. 

The proposed rule would cap family farm eligibility for direct and guaranteed loan programs based on farm income limits. Only farms that in a typical year generate annual gross farm income that does not exceed the greater of $750,000 or 95% of the statistical distribution of the income of farms in the state with gross sales in excess of $10,000 will be eligible for FSA assistance. For many states this would create a defacto eligibility income cap of $750,000. About 25,000 farms would be affected by this new definition. 

The groups urged USDA to withdraw the definition because it would: 1) not add any clarity to the question of what is a “family farm,” 2) unnecessarily exclude legitimate family farmers from access to capital and 3) set a precedent for other USDA programs.

When the House adopted the rule governing debate on the omnibus Transportation (highway) bill, it also approved addition of several unrelated tax provisions. One provision would exempt companies with gross receipts of $20 million or less from paying the Alternative Minimum Tax. The other provision would extend an investment tax credit of $100,000 for small business through ’07. Also added was a provision related to the tax break for fuel blended with ethanol.

The White House has threatened to veto the House version if it survives conference, citing it as too expensive.

The deadline to file comments on the Fish & Wildlife Services and National Oceanic and Atmospheric Administration (Services) counterpart regulations to the Endangered Species Act (ESA) has been extended to April 16. The NCC submitted its comments, which can be found on the NCC’s website, www.cotton.org.

The counterpart regulations are designed to allow the Services to approve the EPA’s risk assessment to listed species in order to streamline the consultation process.  The regulations were issued to a series of lawsuits filed by activist groups to bring the EPA into compliance with the ESA.

Pulaski County (AR) Judge Jay Moody threw out the lawsuit of northeast Arkansas farmers who challenged their forced participation in the state's boll weevil eradication program. The decision means farmers in Mississippi and eastern Craighead counties will have to continue paying a per-acre fee for the cost of boll weevil eradication on their land after voting against participation on 5 occasions. About $2.4 million was collected from the farmers in the 2 counties to continue spraying for the weevil, but is being held in escrow until the case is decided.

Moody dismissed the case with prejudice, barring the plaintiffs from bringing the same claims in another suit.

"We're disappointed with the outcome, but we always knew this case was going to be appealed regardless of the ruling in circuit court,” said plaintiffs' lawyer Allan Gates of Little Rock.

Senath, MO, producer Charles Parker, chairman of the Boll Weevil Action Committee, said, “We’re very happy that the court ruled in favor of the boll weevil eradication program because adjacent areas cannot complete eradication without northeast Arkansas’ participation.”

Moody, who previously ruled the Plant Board acted lawfully when it drafted the farmers into the program, ruled that: 1) the proceeds did not become state funds and were used to benefit growers directly, so the assessments were not a tax and the Boll Weevil Eradication Act did not illegally delegate taxing authority to the state Plant Board, 2) the law set appropriate guidelines for Plant Board rulemaking and for issuance of regulations for assessments, 3) the regulations were rationally related to the state's legitimate purpose of boll weevil eradication and did not violate the farmers' equal protection rights, 4) the Plant Board complied with requirements to notify farmers of the rule-making process and 5) plaintiffs failed to show that the board did not properly consider their comments.

World production for the ’03-04 crop year was lowered 80,000 bales to 92.78 million in USDA’s latest report. The world mill use estimate was unchanged at 97.88 million bales. Ending stocks for ’03-04 were lowered 120,000 bales to 31.61 million for a corresponding ending stocks-to-use ratio of 32.3%.

In its April report, USDA gauged US ’03-04 cotton production at 18.22 million bales. Both mill use and exports were unchanged from last month’s report remaining at 6.30 million bales and 13.80 million bales, respectively. The projected total offtake of 20.10 million bales generates ending stocks of 3.55 million bales. The estimated ending stocks-to-use ratio is 17.7%. This is the lowest level since the ’94-95 crop year when the stocks-to-use ratio was 12.9%.

Memphis-based EWR, Inc., the largest provider of electronic cotton warehouse receipt services, purchased the assets of eCotton, the largest producer of cotton gin and warehouse software. eCotton products include a variety of online services and an electronic warehouse receipt system. Last season, EWR, Inc. handled more than 70% of the cotton receipts issued.

EWR, Inc. President/CEO Joe Wyrick said the eCotton name will be retained and eCotton customers can continue using its software products. He said most customers will see little change in their operations and will continue to do business as they do currently. He said evaluations are underway to determine how operational efficiency might be increased and customer service maximized from the companies combining.

The general public has deep trust and confidence in American farmers/ranchers as well as school teachers, veterinarians and physicians according to a national consumer opinion survey conducted by Market Directions, Inc. and jointly underwritten by the Animal Agriculture Alliance and National Corn Growers Association. More than 40% of respondents over the age of 25 considered farmers and ranchers to be one of their 2 most favorably viewed groups. At the same time, the poll indicated that animal rights activists are showing themselves to be consistently out of touch with the public at large.

Net export sales for the week ending April 1 were 266,700 bales (480-lb.), resulting in total ‘03-04 sales of almost 12.8 million. Total sales at the same point in the ‘02-03 marketing year were approximately 11.1 million bales. Total new crop (‘04-05) sales are 978,500 bales (480-lb.). Shipments for the week were 460,300 bales, bringing total exports to date to 8.3 million bales, ahead of the 7.0 million bales at the comparable point in the ‘02-03 marketing year.