Cotton's Week: June 25, 2004

Sens. Pryor (D-AR) and Domenici (R-NM) spearheaded an effort to send a letter to Secretary Ann Veneman regarding their opposition to a proposed rule to change the definition of a “family farm” with respect to direct loans by adding stricter income regulations and family requirements. The letter was cosigned by 16 other Senators including Lincoln (D-AR), Alexander (R-TN), Breaux (D-LA), Landrieu (D-LA), Sessions (R-AL), Boxer (D-CA), Miller (D-GA) and Talent (R-MO). Other Senators have sent individual letters including Sens. Roberts (R-KS) and Dole (R-NC). 

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 Farm Service Agency assistance. 

NCC and other agricultural organizations also have sent a letter urging USDA to withdraw the definition because it would not add any clarity to the question of what is a “family farm” and would unnecessarily exclude legitimate family farmers from access to capital as well as set a precedent for other USDA programs.

The House rejected legislation designed to impose caps on discretionary spending and pay-as-you-go rules on mandatory spending but that would not have required spending offsets to “pay for” future tax cuts.

During debate on a series of budget process proposals offered by conservatives, it became clear that Republican members of the Appropriations Committee would join their Democratic colleagues to defeat the proposals. Legislation offered by Budget Committee Chairman Nussle (R-IA) would have reinstated automatic across-the-board spending cuts if Congress exceeded its budget. Nussle’s proposal was defeated 146-268.

The African Growth and Opportunity Act (AGOA) was approved by the Senate by unanimous consent and sent to the White House. The legislation is identical to legislation approved by the House by voice vote on June 14. It will extend through ’15 the provisions of AGOA legislation enacted in ’00 that allows duty-free imports from qualifying African countries. It also extends to Sept. 30, ’07 the provisions allowing least-developed African countries to use third country fabric in apparel exported to the US duty-free.

The primary impetus for the bill was the approaching expiration of a provision that allows certain less-developed African countries to ship apparel products to the US duty-free even if the components are manufactured in third countries – rather than Africa or the US African countries have expressed deep concern that without the special provision, US retailers would not continue to source products from their countries and their struggling apparel and textile industries would be devastated when all remaining quotas are removed in January ’05.

Although there was broad support for the legislation, several Senators held up passage while they attempted to add amendments. In particular, Sen. Graham (D-FL) wanted to add a provision which would have allowed Haiti to ship apparel products to the US duty-free using components manufactured in third countries.

Several Senators supported the amendment arguing it would assist Haiti’s recovery from devastating flood damage. Senate Majority Leader Frist (R-TN), a frequent visitor to Africa where he delivers medical services on a voluntary basis, worked to urge Senators to allow the House-passed bill to move through the Senate without amendment so it could be sent to the President.

The ’05 Agriculture Appropriations bill was approved by the full House Appropriations Committee after rejecting amendments to:  (1) move $8 million from Economic Research Service research programs to operate farmers’ markets (2) impose limits on use of export credits for sales to Iraq and (3) bar funding to initiate a sugar storage facility loan authorized in the ’02 farm law.

Although the legislation provides more funds for conservation programs than requested by the Administration, the legislation caps spending on several programs at levels below those authorized in the farm law.

In his opening statement, Chairman Bonilla (R-TX) explained the difficulties of addressing more than ’00 requests for funding for line item programs given the limited budget allocation. He explained that the bill, as currently drafted, has no new line item projects due to funding shortfalls.

The House cleared the Senate’s version of legislation necessary to renew through ’09 the school lunch program and the Women’s, Infants and Children (WIC) program.

The legislation has been subject to months of negotiations between the House and Senate.  The legislation continues free school lunches for families with incomes up to 130% of poverty level and reduced-price meals to families up to 185% of poverty level. Several Senators had proposed offering free meals to both sets of children, but the final bill provides for a 5-state test of the expanded program. Changes to the WIC program were mainly designed to improve efficiency and reduce fraud.

Senate Agriculture Chairman Cochran (R-MS) played a key role in successfully moving the legislation through the process without farm bill amendments. Earlier, Sen. Grassley (R-IA) had announced his intention to use the nutrition legislation as a vehicle for his payment limitations amendment.

USDA authorized nationwide emergency grazing for drought relief. Secretary Veneman announced the emergency grazing on Conservation Reserve Program (CRP) acres to provide relief for farmers and ranchers in qualifying areas suffering extreme drought.

The Secretary has authority to approve emergency grazing of CRP in response to drought or natural disaster. In addition, managed haying and grazing of CRP acreage is allowed under certain conditions.

The announcement authorizes emergency grazing of CRP acreage, in eligible counties only, until Sept. 30, ’04. To be eligible, a county must have suffered at least a 40% deviation from normal precipitation or be a D3 or D4 level for drought as rated by the US Drought Monitor. FSA state technical committees must consult with Natural Resources Conservation Service state technical committees prior to approving counties for emergency grazing during the primary nesting season established for managed haying and grazing. After a county is approved, eligible CRP participants who do not own or lease livestock can rent or lease their grazing privileges. CRP rental payments will be reduced 10% for the areas grazed.

Additional information is available at www.fsa.usda.gov/haynet.

Mycogen Corp. was granted US patent rights to glyphosate resistance in cotton. The patent, originally filed with the US Patent Office in ’87, will be effect until ’21 for Mycogen, an affiliate of Dow AgroSciences LLC. Both Mycogen and Dow AgroSciences are wholly-owned subsidiaries of Dow Chemical.

“The issuance of this significant patent demonstrated that Dow was the first to invent glyphosate-tolerant cotton,” said Pete Siggelko, Dow AgroSciences’ vice president for Plant Genetics and Biotechnology. “These recently issued patents demonstrate our significant long-standing commitment to the cotton market and our desire to create value for growers by developing innovative technology, and we now look forward to working with those companies interested in commercializing glyphosate-resistant cotton technology.”

According to Cropnosis, an independent market research/consulting firm, in ’02, 71% of US cotton acres planted (about 10 million) were glyphosate-resistant.

The Agriculture Subcommittee on Conservation, Credit, Rural Development and Research reviewed agriculture biotechnology to gauge upcoming technologies from providers. The panel, chaired by Rep. Lucas (R-OK), heard testimony from technology providers Monsanto, Dow AgroSciences and Syngenta on products that were in the development pipeline for near term release.

Much focus was placed on drought resistant crops in soybeans, rice and corn; trait improvements in corn for increased ethanol production; micronutrient improvements in grain crops; and healthier oils from corn, soy and canola. Dow and Syngenta both mentioned their upcoming Bt technologies in cotton scheduled to be released in the very near future. 

International acceptance and usage of biotechnology also was a key point of discussion. Tech providers, research and agricultural interests all agreed the resistance to biotechnology was a setback to international trade and detrimental to the developing world. The committee discussed the potential for a World Trade Organization case with the European Union over the newly established traceability and labeling rules. While it was not agreed upon that such laws have adversely affected trade as of yet, the tech providers agreed that the rules were potentially damaging.

Cotton Council International’s (CCI) Market Access Program (MAP) allocationof $9,899,373 for FY04 is $1.5 million or 18% more than the previous year, making CCI the second largest MAP recipient. USDA MAP allocations to all participants totaled $125 million.

CCI also received a Foreign Market Development (FMD) allocation of $3,300,900, bringing the total funding allocation for these 2 programs to $13.2 million for FY04/05. Allocations for Emerging Markets Program funding have not been announced. Spending under the new MAP and FMD fiscal years begins July 1 and Oct. 1, respectively.

According to the Commerce Department, May (4-week month) total cotton consumption in domestic mills was 236.4 million pounds for a seasonally adjusted annualized rate of 6.23 million bales (480-lb.). Last year’s May annualized rate was 6.87 million bales.

The April (4-week month) estimate of domestic mill use of cotton was lowered by 2.9 million pounds to 230.0 million. The revised seasonally adjusted annualized rate of consumption for April is 6.11 million bales. This is lower than last year’s April annualized rate of 7.12 million.

Based on Commerce estimates from Aug. 1, ’03, through May 29, ’04, projected total pounds consumed during crop year ’03-04 would be 3.0 billion pounds or 6.27 million 480-pound bales. USDA’s latest estimate of ’03-04 crop year mill use is 6.3 million 480-pound bales.

Preliminary June domestic mill use of cotton and revised May figures will be released by the Commerce Department on July 29.

Net export sales for the week ending June 17 were 151,200 bales (480-lb.), resulting in total ’03-04 sales of almost 14.4 million bales. Total sales at the same point in the ’02-03 marketing year were about 12.8 million bales. Total new crop (’04-05) sales are 2.1 million.

Shipments for the week were 395,800 bales, bringing total exports to date to 12.1 million bales, ahead of the 10.2 million at the comparable point in the ’02-03 marketing year.