Cotton's Week: April 23, 2004

The NCC reiterated its support for legislation that would close a loophole in US law and better enable the nation to challenge subsidies used by non-market countries, including the People's Republic of China. In a letter sent to Congressional staff, the NCC urged enactment of a proposed amendment which reflects the substance of S. 2212, a bill introduced earlier that changes US law to ensure that US countervailing duty law is applicable to non-market countries as well as market economies. 

By longstanding administrative determination, the Commerce Department will not apply US countervailing duty law to non-market economies. This policy decision was based on a belief that it is difficult to determine subsidy levels that exist in non-market economies. However, this well-intentioned practice often denies US industry an effective tool to combat unfair trade practices of competitors. For example, under current policy, US industry cannot use US countervailing duty law to challenge subsidies used by China and other non-market economies.

The proposed amendment does not mandate a subsidy determination, but will close this loophole in current administrative practice that can allow unfair subsidies to take US market share. The NCC supports this amendment as it will better enable US industry to respond to unfairly subsidized competition.

USDA is issuing an amendment to the Cotton Storage Agreement (CSA) to include adherence to the cotton industry’s 4.5% minimum delivery and shipping standard as a requirement for storing loan cotton.

The amendment states that warehouse operators will maintain records supporting compliance with the delivery and shipping standard and that Commodity Credit Corporation (CCC) may review the warehouse’s records to validate complaints. The amendment further specifies that disputes will be settled in a court of competent jurisdiction or through mutually agreed upon arbitration procedures. Also included in the amendment are provisions requiring each warehouse operator to develop a security plan that protects cotton handled and stored under the CSA, and to conduct a facility vulnerability assessment to establish appropriate security procedures.

CCC is sending information about the amendment to warehouse operators. Two copies of the amendment should be signed and returned no later than May 7, ’04. USDA’s notice to the industry and a copy of the amendment may be accessed at: 

Notice (#BCD70): www.fsa.usda.gov/daco/bcd_notices/bcd70.pdf

Amendment (Form #823):
http://forms.sc.egov.usda.gov/eforms/Forms/CCC0823AMENDMENT1_040413V02.pdf

Both copies of the signed amendment should be sent to: Kansas City Commodity Office; Bulk Commodities Division; 6501 Beacon Street, Stop 8748; Kansas City, MO64133-4676. For questions or additional information, contact Les Bromley at 816-926-2171.

Diuron (known as Karmex) has completed its Re-registration Eligibility Decision at the EPA, and was published for comment on April 21. This action, required by the Food Quality Protection Act of ’96, required that Diuron meet updated safety standards and be reevaluated for safety concerns to humans and the environment.

Diuron is an important herbicide to many cotton producers, with some regions of the Belt treating almost 75% of the acreage for various weed pests. Diuron is among many cotton products that will face re-registration decisions this year by the EPA.

President Bush reaffirmed his commitment to wetlands with his “Earth Day” announcement of a new national goal for wetlands. The goal entails moving beyond a policy of "no net loss" of wetlands to achieving an overall increase of wetlands in America each year. Specifically, the goal is to create, improve and protect at least 3 million wetland acres over the next 5 years in order to increase overall wetland acres and quality. In addition to their ongoing wetlands protection efforts, the Departments of Interior, Agriculture and Transportation, the EPA, the National Oceanographic Atmospheric Administration, and the Army Corps of Engineers would be responsible for these improvements and gains.

The Administration plans on increasing this acreage through partnership programs with the Fish & Wildlife Services and conservation programs under the farm law. The Administration has requested an additional $1.4 billion in the FY05 budget for conservation programs that were authorized in the ’02 farm law to finance this plan.

The President's FY05 budget asks for more than $4 billion for conservation programs that include wetlands, notably the farm law’s Wetlands Reserve Program, Conservation Reserve Program, Conservation Technical Assistance Program, Wildlife Habitat Incentives Program and Environmental Quality Incentives Program ($1.4 billion more than FY01 enacted). The request also seeks $54 million for the North American Wetlands Conservation Act Grants Program ($14 million more than FY01 enacted).

The President released new figures showing that for the first time in history, America has reversed the annual net loss of wetlands on farms and is nearing the national goal of "no net loss" of wetlands. According to Fish & Wildlife, annual losses of wetlands were down to about 58,500 acres per year in ’01, as compared to 458,000 acres per year from ’55-’74.  Currently, there are about 110 million acres of wetlands in the lower 48 states.

Cotton producers from the Lamesa, TX, area participated in a US cotton tour. While in Memphis, the 22 participants visited NCC headquarters and the USDA-AMS classing office.

The group also toured Cotton Incorporated’s headquarters in Cary, NC, and visited with Congressional members and staff in Washington DC, including Reps. Bonilla (R-TX), Hensarling (R-TX), Neugebauer (R-TX), Stenholm (D-TX) and Thornberry (R-TX). Both House and Senate Agriculture Committee staff briefed the group on the outlook for Congress and their respective committees.

The producers also met with key staff at the USDA where they discussed cotton industry issues.

Cotton farmers and landowners with cotton production in the proposed St. Lawrence Boll Weevil Eradication Zone in Texas approved establishment of a boll weevil eradication program in the new zone’s 4 counties.

The ballots were verified by the Texas Department of Agriculture under strict state regulations. The eligible voters approved establishment of the zone by 83% with 86% approving the assessment of maximum annual $6 per land acre of irrigated cotton and $2 per land acre of dryland cotton.

The St. Lawrence zone contains about 157,000 acres of cotton in the area of MidlandCounty south of a line 15 miles south of Interstate 20 running from the EctorCounty line east to the GlasscockCounty line; Glasscock, Reagan and Upton counties.

Voters also elected GlasscockCounty cotton producer Carey Niehues as the board member from that zone to serve on the statewide board of directors for the Texas Boll Weevil Eradication Foundation, Inc. Niehues has farmed in that county for 24 years.

USDA appointed Bobby Carson, Jr. to the Farm Service Agency's (FSA) Mississippi Committee. Carson, who raises cotton, corn, soybeans and grain sorghum on his north Mississippi farm, is an American Cotton Producers vice president and board chairman of Cotton Council International.

FSA state committees are responsible for the general direction and supervision of state FSA programs. The committees keep farmers informed of Agency program activities and resolve appeals and complaints.

NCC will continue to take applications through July 1 from qualified US industry members seeking entry to the ’04-05 Cotton Leadership Class. Those interested in applying can visit the Cotton Leadership Program’s web site at http://leadership.cotton.org to review the program curriculum, eligibility requirements and download the application. The site also includes a contact form which allows users to submit questions, request information and schedule a personal visit with local program alumni.

The program seeks to identify potential industry leaders and provide them developmental training. During 5 sessions of activity across the Cotton Belt, class participants visit with industry leaders and observe production, processing and research. They also meet with lawmakers and government agency representatives in Washington, DC, and attend the NCC’s annual meeting and its mid-year board of directors meeting. The program, now in its 21st year, is supported by a grant to The Cotton Foundation from DuPont Crop Protection.

The new class, which will be comprised of 4 producers and a participant from each of the other 6 industry segments, will be announced in August by the NCC’s Cotton Leadership Development Committee.

Cotton Council International and its PR agency, Golin/Harris International, recently accepted a Gold Quill merit award for the ’03 Cotton Day in Hong Kong. Sponsored by the International Association of Business Communicators, the award honors excellence in business communication. Of 920 entries, 109 received an award. This year's professional winners competed against entries from Argentina, Australia, Bermuda, Canada, Croatia, Hong Kong, Japan, Mexico, Netherlands, New Zealand, People’s Republic of China, Philippines, Russia, Slovenia, South Africa, Switzerland, Taiwan, Turkey, United Kingdom and the United States.

Net export sales for the week ending April 15 were 181,300 bales (480-lb.), resulting in total ’03-04 sales of almost 13.2 million. Total sales at the same point in the ’02-03 marketing year were about 11.5 million bales. Total new crop (’04-05) sales are 1.2 million bales (480-lb.). Shipments for the week were 339,700 bales, bringing total exports to date to 9.1 million bales, ahead of the 7.6 million at the comparable point in the ’02-03 marketing year.

On April 16 the Memphis Territory Middling 1-3/32” quote in the “A” index was designated as nominal which means that the US has a limited amount of shippable quantities of 1-3/32 inch “A” quality cotton from the Memphis/Eastern region.

During the weeks prior to this announcement, the Memphis quote had been one of the lowest quotes in the “A” index. The Memphis quote entered the “A” index on March 24 at 71.75 cents per pound. During the following weeks, the Memphis quote continued to fall until reaching a low of 66.00 cents per pound on April 14. Currently, the Memphis quote remains nominal at 73.75 cents per pound, which is 3.55 cents per pound above the current “A” index. The week ending April 22 marked the second week of the necessary 4 consecutive weeks of conditions in the world market that would restore Step 2.