Cotton's Week: June 11, 2004

G-8 leaders, meeting in Savannah, GA, called for cotton trade issues to be included as part of the agricultural negotiations. The G-8 is a group of major industrial nations, including the United States, that deal with trade and economic issues and relations with developing countries.

The group issued strong statements in support of progress in the Doha Round of World Trade Organization (WTO) negotiations, emphasizing agriculture as a core issue. The leaders called for a framework for agricultural negotiations to be developed by July, covering all forms of export competition, domestic support and market access. Importantly, the statement called for all 3 major aspects of the agricultural negotiations to have "equal ambition."

The group stated that cotton could best be addressed as a part of the agricultural negotiations and committed to work separately with international financial institutions on development-related issues for African countries.

NCC Chairman Woody Anderson said, “The leaders confirmed that there should not be a separate discussion on cotton issues in the WTO trade negotiations. The United States has been ready from the outset of these negotiations to make reforms in all of its agricultural programs, including cotton. Attempts to single cotton out and target it for termination have been misguided and unfortunate. Perhaps the world's leaders now can begin to focus on agriculture as a whole and make the tough calls necessary to achieve a comprehensive agreement."

USDA Secretary Veneman announced the release of an Interim Final Rule to implement the Conservation Security Program (CSP), as well as the ’04 signup dates for CSP. The CSP Interim Final Rule with request for public comments will be published in the Federal Register soon. By issuing this rule, the Natural Resources Conservation Service (NRCS) can conduct the program sign-up and implementation this fiscal year.  NRCS will consider all comments received during a 90-day public comment period (which begins the day the rule is published) in developing a final CSP rule. 

NRCS officials in the selected watersheds have completed their training and a producer self-assessment will be available in the coming days. The self-assessment will allow a producer to better understand how their operation fits into the CSP. This will be available online, on a CD and in paper form.

NCC submitted both individual and joint comments with other national commodity groups on the CSP proposed rule. The interim final rule contains changes that make the program more viable for commercial size operations, including allowing producers to determine which part of their operation they wish to enroll in CSP based on Farm Service Agency (FSA) farm numbers. In addition, the payment rates for various practices were changed from the proposed rule. 

All CSP applications that meet the sign-up criteria will be placed in an enrollment category regardless of available funding. In addition to legal contract requirements, the categories will consider an applicant’s current level of stewardship (soil condition and trend and the existence of support practices and activities) and will sort producers based on these factors. Categories also will examine a producer’s willingness to perform more conservation activities during their CSP contract to provide additional environmental performance.

Signup for the CSP will be available to eligible farmers and ranchers in 18 priority watersheds across the nation July 6-30. Selected Cotton Belt watersheds for the ’04 CSP sign-up are: Saluda (SC); Little (GA); Little River Ditches (MO/AR); Lower Salt Fork Arkansas (OK/KS); Punta de Agua (NM/TX); and Hondo (TX). The program will be offered each year, on a rotational basis, in as many watersheds as funding allows.

The EPA’s Scientific Advisory Panel (SAP) met to discuss the EPA’s evaluation of Dow AgroSciences’ new Bt cotton, WideStrike, and to discuss continuation of the 95/5 external unsprayed refuge for Bollgard cottons. The SAP is made up of experts in the relevant field of discussion that provide independent input to the EPA on decisions that warrant review by independent scientists. Interested parties, including the NCC, nominated panel members to join the discussion on the approval and refuge options for WideStrike and review of the 95/5 option. 

Panelists raised very few concerns over the human health and ecological risks presented by WideStrike. Panelists also agreed with EPA’s analysis that WideStrike be given identical refuge options to that of Bollgard and Bollgard II. Should the panel’s report, due around late July, reflect their discussion, it would be the last major regulatory hurtle prior to the registration of WideStrike.

The final discussions of the SAP focused on the 95/5 external unsprayed refuge option available to growers using Bollgard and Bollgard II Bt technology. EPA gave a 3-year conditional extension on the 95/5 option, which is set to expire in Sept. ’04. A previous panel in ’01 suggested that this option would not provide adequate protection against resistance development, and EPA mandated that Monsanto provide data on contribution of alternate host crops and plants that could serve as an unstructured natural refuge and therefore enhance the effectiveness of the 95/5 refuge. EPA also requested data on the effects of the use of  oversprays of Bt cotton and on north-to-south migration of bollworm moths on the development of resistance.

After reviewing the data, EPA stated that, “Based on the Agency’s analyses, the pyrethroid overspray studies and alternative host studies support the continuation of the 5% external, unsprayed structured non-Bt cotton refuge for CBW resistance management.”

The NCC closely follows the refuge requirements from the EPA and works to promote the best use of new technologies for cotton growers. The NCC will continue to work for the registration of WideStrike by the ’05 cotton growing season and to ensure that refuge requirements on all Bt cotton products are effective and feasible for growers.

Net export sales for the week ending June 3 were 181,200 bales (480-lb.), resulting in total ’03-04 sales of almost 14.1 million. Total sales at the same point in the ’02-03 marketing year were about 12.6 million bales. Total new crop (’04-05) sales are 1.8 million bales.

Shipments for the week were 300,700 bales, bringing total exports to date to 11.3 million bales, ahead of the 9.7 million at the comparable point in the ’02-03 marketing year.

The NCC has set dates and locations for the ’04 Cotton Foundation Producer Information Exchange (PIE) Program. Cotton producers from New Mexico, Arizona and California will see operations in Texas July 10-15; Mid-South producers will travel to the Southeast July 17-22; Texas and Oklahoma producers will travel to the Far West July 24-29; and Southeast producers will visit the Mid-South Aug. 7-12.

The PIE enables cotton producers to observe cotton production and talk to their peers in regions different than their own. Participants gain new perspectives in such areas as land preparation, planting, fertilization, pest control, irrigation and harvesting.

Upon completion of the ’04 tours, the PIE program will have exposed more than 700 US cotton producers to innovative production practices in regions different than their own. The program has been funded since its ’89 inception by grants from FMC Corp. to the Foundation.

The ’05 Beltwide Cotton Conferences will be held under a theme of “Innovation and Application - The Competitive Edge” Jan. 4-7 at the Marriott Hotel in New Orleans. The Beltwide Cotton Conferences’ Steering Committee recommended the forum go to a 3-day format. That panel and the technical conferences’ chairmen will be meeting this month to discuss programming.

The conferences will continue to include the Cotton Production Conference and its special seminars and workshops along with The Cotton Foundation’s technical exhibits and the 12 cotton technical conferences covering disciplines ranging from economics to weed science.

In its June report, USDA gauged US ’03-04 cotton production at 18.26 million bales. Projected mill use and exports were unchanged from the May report at 6.30 and 13.80 million bales, respectively. As a result, projected total offtake remained the same at 20.10 million bales. This generates an ending stock value of 3.60 million bales. The estimated stocks-to-use ratio is 17.9%.

For the ’04-05 crop year, USDA projected the US crop at 17.60 million bales. US mill use and exports are projected at 5.80 and 11.50 million bales, respectively, for total ’04-05 offtake of 17.30 million bales. Ending stocks for ’04-05 are projected at 3.90 million bales, for an ending stocks-to-use ratio of 22.5%.

In USDA’s June report, expected ’03-04 world production estimates were lowered 30,000 bales to 93.46 million. USDA increased the estimate of beginning stocks to 36.59 million – resulting in a world supply of 130.05 million bales. Estimated world mill use was raised 810,000 bales to 98.61 million. The projected world ending stocks on July 31, ’04 is now pegged at 32.03 million bales. This has a corresponding stocks-to-use ratio of 32.5%.

For the ’04-05 marketing year, USDA projected world production of 102.88, up 380,000 bales from the May report. World mill use was raised 860,000 bales from the May report to a projected 99.86 million bales. Consequently, world ending stocks for ’04-05 are projected to be 35.35 million bales, for a stocks-to-use ratio of 35.4%.

The June report provides the first projections for cotton supply and demand in countries outside the United States. With a crop of 29.00 million bales, China is expected to account for much of the increase in world production. Continued strong growth in their textile sector raises China’s expected mill use to 34.20 million bales. Although not to the extent of ‘03/04, China should remain a significant net importer with imports of 6.25 million bales.

Pakistan, Australia and Brazil account for much of the remaining increase in the world crop. Modest growth in consumption is expected in Pakistan, India, Indonesia and Thailand. USDA expects mill use to fall in the EU and Mexico.