Cotton's Week: August 6, 2004

Cotton's Week: August 6, 2004

phytogen

NCC Has Concerns With WTO Framework Text

NCC Chairman Woody Anderson says that although the US cotton industry is glad to see that cotton will be addressed as part of the overall World Trade Organization (WTO) agricultural negotiations, there still are concerns about the specific references to cotton in the framework’s text.

“We are disappointed to see cotton highlighted in numerous contexts,” Anderson said. “We are encouraged to see that there are no specific commitments for a so called ‘early harvest’ of the cotton program, which would have required separate negotiations outside of the overall agriculture discussions. Agricultural reforms must occur through a broad-based approach, and this text should not limit that approach. The US cotton industry is committed to reforms, but they must be undertaken across all areas.”

NCC President and CEO Mark Lange said, “it is important to remember that the Framework Agreement adopted in Geneva does not, itself, constitute a trade agreement but, instead, puts WTO Members on record as supporting certain principles as the Doha Development Round proceeds. The Framework provisions will be viewed as generally positive by most sectors of US agriculture, since they do not appear to be so restrictive as to preclude maintenance of a workable farm program.” 

Lange said the cotton industry’s major concern is the specific references to cotton in the text.  He said “singling out cotton as a separate issue is both unfair and inappropriate. Unfortunately, this initiative has been influenced by poor economic analysis. Particular emphasis on US cotton is unjustified and unwarranted - the world cotton market is much more than the United States. The United States has not increased cotton production, but we have seen a surge in foreign production, particularly in China and Brazil.”

There are a number of independent studies that conclude only modest impacts on world prices from the presence of the cotton program. Studies by FAO, Texas Tech U. and the IMF all report that the US cotton program affects world prices by only 1-3%.

Lange said he is not surprised that these studies would conclude such a modest impact. He noted: 1) the United States represents less than one-fifth of world cotton production, 2) the cotton market does not operate in a vacuum; therefore, cotton prices are directly affected by what happens in manmade fibers and 3) with the recent explosion in manmade fiber production, US cotton represents less than 7% of world fiber markets.

 “As the Doha negotiations move forward, it is imperative that there be a broader understanding of world fiber markets and the role played by the US cotton program,” Lange said.

Rep. Stenholm (D-TX), the ranking member of the House Committee on Agriculture, said, “I am pleased that cotton will be addressed within the agriculture negotiations, even though I am still troubled that the text of the agreement treats cotton differently from other agricultural commodities. However, after speaking with our negotiators, I am confident that they will be able to use the process established in the framework to ensure that all issues affecting cotton production and marketing are considered, including factors such as subsidized synthetic fiber production.”

Congressional Cotton Belt members are traveling during the recess but have contacted USTR to express their concerns regarding the specific mention of cotton.

Speaking to the American Cotton Producers meeting, Sen. Pat Roberts’ (R-KS) assistant legislative director noted the Senator’s concern that cotton had been singled out in the framework text. He said Senator Roberts wanted US cotton producers to know that all agricultural commodities should be treated fairly and equitably in any WTO agricultural negotiations.



CRP Re-Enrollments Offered

USDA will fully implement a directive from President Bush to sustain the environmental benefits of the Conservation Reserve Program (CRP) by offering early re-enrollments and contract extensions for acres that begin expiring in ’07, Agriculture Secretary Ann Veneman announced.

She also announced that a general sign-up for CRP will be held from Aug. 30 through Sept. 24, ’04. Offers accepted under the sign-up will become effective Oct. 1, ’05, or Oct. 1, ’06, at the producer's discretion. The Environmental Benefits Index (EBI) will be used to rank the acreage offered. The EBI is based on costs and 5 other factors: soil erosion, water quality, enduring benefits, air quality and wildlife enhancement.

In 3 years, 16 million acres under CRP contract will expire. Another 6 million acres will follow in ’08, 4 million in ’09 and 2 million in ’10. President Bush's directive to offer early re-enrollment and extensions of existing contracts to current CRP participants underscores a commitment to full enrollment of CRP up to 39.2 million acres, USDA says. The current enrollment is 34.8 million acres.

Also, a request for public comment on various aspects of CRP will be published in the Federal Register in early August ’04. Among other issues, USDA is seeking public comment on the following: 1) how to manage the large acreage set to expire from CRP; 2) how to manage future CRP sign-ups and acreage; 3) how to evaluate the program's environmental effectiveness; 4) how to better utilize information technology such as Geographic Information Systems that evaluate acreage for enrollment; and 5) how to improve CRP, including the Conservation Reserve Enhancement Program, through partnerships that better address local environmental issues.

President Bush also has launched 2 new conservation initiatives, one that focuses on wetlands restoration, the other on restoring habitat for the bobwhite quail.



NCC Joins Letter on Seed Availability Bill

NCC joined with the National Corn Growers Association and the American Soybean Association on a letter to Congressional members expressing concerns with the Seed Availability and Competition Act of ’04 (H.R. 4693) introduced by Rep. Kaptur (D-OH).

The bill would require persons who seek to retain seed harvested from the planting of patented seeds to register with the Secretary of Agriculture and pay fees set by the Secretary for retaining such seed. USDA would then pass the technology fees on to the appropriate patent holders.

The letter stated the bill would: 1) change the current marketplace-driven system to a government-administered program, and 2) eliminate the incentive for seed companies to invest in the long-term research and development necessary for delivering enhanced seed attributes.

“Furthermore, we are concerned that the government-administered program, contemplated under the bill, would disrupt farmer and company compliance with important insect resistance management and channeling requirements,” the letter stated.

The bill also proposes imposing tariffs on US imports of products derived from biotech seed if royalties charged in the United States are higher than royalties charged for biotech seed exported and purchased in a foreign country.

“This system is unworkable and it would put the United States in violation of its World Trade Organization obligations, potentially exposing our country to retaliatory actions by our trading partners,” the letter warned.



CA County Implements Biotech Ban

California’s Trinity County became the second California County to ban crops that contain genetically modified traits. Trinity County’s board of supervisors voted 3-1 to implement the ban preventing the cultivation of biotech crops or the rearing of biotech animals.

Trinity, a county just northeast of Mendecino County where a similar ban was implemented earlier this year, does not produce cotton, and has little agricultural production.

The ban represents a continuing trend of activist efforts to prevent the cultivation and spread of biotech crops on the local level, rather than on the federal level, which have been unsuccessful to date. This ban will go into effect on Sept. 2, ’04.



Johnson Appointed to Key EPA Post

President Bush appointed long-time EPA employee Stephen Johnson as deputy administrator of the EPA. As a recess appointee, Johnson will continue to serve until the end of the 108th Congress, which adjourns in Jan. ’05.

Johnson, who has been acting as deputy administrator since July ’03, was the former assistant administrator for the Office of Pesticides, Pollution and Toxic Substances, which oversees pesticide registration.

His appointment was but one of several to the EPA being delayed by some controversy between members of the Senate Environment and Public Works Committee over claims the EPA has been unresponsive in providing them with information. In order to continue in this role, Johnson will have to be re-nominated after the ’04 calendar year.



Shipments Steady, Sales Weaken

For the week ending July 29, net export sales reductions of 18,500 bales (480-lb.) resulted in total ’03-04 sales of almost 15.1 million. Total sales at the same point in the ’02-03 marketing year were slightly more than 13.2 million bales. Total new crop (‘04-05) sales are 3.2 million bales.

Shipments for the week were 256,000 bales, bringing total exports to date to 13.7 million bales, ahead of the 12.0 million at the comparable point in the ’02-03 marketing year. Weekly shipments must be roughly 120,000 bales for the remaining 2 days in the marketing year to reach the USDA projection of 13.8 million bales.



Congressional Staffers to See Cotton Research Efforts

Congressional staffers will observe cotton research and agricultural operations Aug. 9-12 as part of the ’04 Congressional Staff Education/Orientation Program funded by The Cotton Foundation through a grant from Monsanto.

The 16 staffers will visit Cotton Incorporated headquarters in Cary, NC, before traveling to the Mid-South where they will tour the Crittenden Gin in Clarkedale, AR, get an update on cotton issues at NCC’s headquarters in Memphis, and see the USDA Classing Office in Bartlett, TN.

While in Mississippi they will tour Monsanto’s Leland, MS, Experiment Station; get an overview of USDA-ARS and Mississippi State U. research at the MSUResearchCenter at Stoneville; and visit Dan Branton’s catfish operation near Greenville. The tour will conclude with a visit to the USDA Southern Regional Research Center in New Orleans.



Mid-South Producers to Host Southeastern Peers

Cotton producers from 6 Southeastern states will participate in the final ’04 Producer Information Exchange (PIE) tour when they visit the Mid-South Aug. 7-12.

On Aug. 8, the 11-member contingent will travel to Arkansas to tour cotton farms in Tyronza and Yarboro. The next day will be spent in Tennessee with visits to the USDA Classing Office in Bartlett and a cotton farming, ginning and warehousing operation in Burlison.

The next 3 days will be spent in Mississippi. On the 10th, the participants will tour farms in Tunica County, on the 11th they will travel to Washington County for visits to the Delta Council and the Stoneville Experiment Station and to cotton farms in that area. The tour concludes Aug. 12 in LeFlore County with visits to Staplcotn Cooperative in Greenwood and a cotton farm in Indianola.

The program is supported by a grant to The Cotton Foundation from FMC Corp.


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Prices Effective Aug. 6-12, 2004

Adjusted World Price, SLM 1 1/16

36.96 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

1.05 cents

Marketing Loan Gain Value

15.04 cents

Import Quotas Open

 3

Step 3 Quotas (480-lb. bales)

 356,008

ELS Payment Rate

 28.04

*No Adjustment Made Under Step I
 
Five-Day Average
 
Current 3135 c.i.f. Northern Europe

 52.60 cents

Forward 3135 c.i.f. Northern Europe

 No quote

Coarse Count c.i.f. Northern Europe

 50.20 cents

Current US c.i.f. Northern Europe

 53.65 cents

Forward US c.i.f. Northern Europe

 No Quote

 
2003-04 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-June)

 62.52 cents

**

**August-July average price used in determination of counter-cyclical payment

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