Cotton's Week: October 21, 2005

Cotton's Week: October 21, 2005


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Chambliss Praised for Reconciliation Leadership
The NCC thanked Senate Agriculture Committee Chairman Chambliss (R-GA) for his leadership in developing a balanced reconciliation package and steering it through the committee. The package passed by a vote of 11-9.

“The National Cotton Council is especially grateful to Senator Chambliss for his leadership in defeating an amendment by Senator Dayton (D- MN) that would have changed the payment limitation provisions of current farm law,” NCC Chairman Woods Eastland said. “If adopted , the amendment would have been extremely disruptive to farmers, lenders and agribusiness at a time when the industry is already coping with dramatic increases in fuel costs and many Sun Belt farmers are reeling from the damage of two devastating hurricanes.”

Eastland noted, however, that Sen. Grassley (R-IA) put members on notice that he intends to offer a similar amendment when the legislation is considered by the Senate.

In leading the adoption of a carefully balanced package, Chairman Chambliss ensured the necessary decisions were made by the Agriculture Committee rather than the Budget Committee. Sen. Chambliss told his panel members, “I assure you that changes made by the Budget Committee would most likely not be in the best interests of American agriculture.” He also noted that the Committee-adopted plan achieves savings from farm commodity programs, but leaves unchanged the farm program structure created in the ’02 farm bill. Savings to conservation programs is achieved without affecting landowners’ or farmers’ existing multiyear contracts in any program. Agricultural research programs remain intact, recognizing past funding levels. In preparing for the writing of the ’07 farm bill, the Committee bill also preserves budgetary resources, known as the “baseline,” for the upcoming farm bill debate by generally suspending spending reductions in FY11.

The Congressional Budget Office estimates that the Committee’s bill reduces outlays for mandatory programs under the Committee’s jurisdiction by $196 million in FY06 and $3.014 billion over the next 5 years covering fiscal years ’06-10. By achieving the savings required by the budget resolution, the Committee’s action can not be changed by the Budget Committee as it develops the omnibus legislation to be considered by the Senate. However, the package can be amended on the floor.

The major provisions of the Committee package include a reduction by 2.5% in all payments that producers receive in Direct Payments, Counter-Cyclical Payments, and Marketing Loan Gains or Loan Deficiency Payments for the ’06-10 crops. In addition, the package calls for the termination of the Step 2 program for upland cotton on Aug. 1, ’06. To achieve balance across the farm bill, spending reductions also are included for dairy, sugar, conservation and research programs.

Sen. Chambliss noted in a news release that, “We plan to work next, hopefully in a bipartisan manner, to provide disaster assistance to farmers and ranchers and others in need in separate legislation in the wake of Hurricanes Katrina and Rita and other adverse weather events. In the aftermath of these dramatic events, farmers are struggling with production losses, sharply higher energy prices and lower farm prices.”

Sen. Chambliss also welcomed the decision by USDA to delay closing any Farm Service Agency (FSA) offices under the so-called FSA for the Future initiative. He committed the Committee to work with farmers and USDA to develop plans that will ensure FSA has the resources necessary to continue to administer and deliver programs.

Advance CCP Payments Availability Stated

Current farm law authorizes advance CCP for covered commodities and peanuts for crop years ’02-07. FSA Notice DCP-142 advises state and county offices of the 1st advance CCP rates and advises county offices to issue ’05 crop counter cyclical advances on or before Oct. 31, ’05. The crops eligible for a 1st advance CCP for the ’05 crop and the payment rates (35% of projected payment) are: Corn, 14 cents/bu; Grain Sorghum, 9.45 cents/bu; Barley, 5.25 cents/bu; Upland Cotton, 4.81 cents/bu; Rice, .1925 cents/lb. and Peanuts, 1.82 cents/lb.

County offices must issue all 1st advance CCP payments on or before Oct. 31, 05.  A full schedule of ’05-06 direct and counter-cyclical payments is at

FSA Administrator Appointed

Agriculture Secretary Mike Johanns appointed Teresa Lasseter as FSA administrator. As FSA administrator, Lasseter will oversee farm programs, farm loans, commodity operations, conservation programs, disaster assistance and field operations at all FSA offices.

A Georgia native, she served at FSA from ’01-03, first as state executive director in Georgia and later as associate administrator for farm programs in Washington.

Members Respond to Payment Limits Bill

Reps. Neugebauer (R-TX) and Etheridge (D-NC) drafted a bi-partisan response to a call for changes in payment limit provisions of current farm law.

In an Oct. 5 letter to his House colleagues, Rep. Kind (D-WI) proposes capping all benefits at $250,000 per year per farmer.

In their response, Reps. Neugebauer and Etheridge remind their colleagues that the farm bill includes limits on benefits, established an adjusted gross income eligibility test and created a Payment Limits Commission, which, after exhaustive study, determined that changes in payment limits “affect farmers disproportionately depending on the crops they produce and the region they live in.” (The Commission recommended that changes not be made until new farm law is developed in ’07 to prevent financial damage associated with mid-stream changes.) Budget reconciliation should not make wholesale policy changes to the 2002 Farm Bill nor result in inequitable treatment among farmers.”

Brazil Retaliation Goes to Arbitration

In the meeting of the Dispute Settlement Body on Oct. 18, Brazil requested authorization to retaliate against the United States for failing to meet the 6-month deadline to comply with the serious prejudice component of the US-Brazil cotton dispute decision.

Brazil requested authority to retaliate for $1 billion, claiming the US cotton program caused $1 billion of injury to Brazil annually. Brazil requested authority to impose tariffs on US imports, but also requested authority to suspend other trade obligations with respect to the United States (cross-retaliation), including its obligations with respect to intellectual property rights. The United States objected to the amount requested by Brazil and also stated that it had not followed procedures regarding its request for cross-retaliation. The United States also noted: 1) it was taking significant steps to implement the Panel decision, including proposing the Step 2 program elimination, and 2) budget proposals of the Administration and the Congress that would cut expenditures for the marketing loan and counter-cyclical programs. Brazil has refused to enter into a sequencing arrangement with the United States.

With the US’ formal objection, the matter will be referred to an arbitration body that is supposed to be concluded by Nov. 21. USTR Robert Portman also stated that the United States was moving forward in complying with the applicable decisions.

NCC Chairman Woods Eastland commented that, “by continuing to move forward with retaliation, even though it is aware the U.S. is taking significant steps to comply with the Panel's decision, Brazil seems to be signaling that it cannot be satisfied in this matter. This is unfortunate. Given the fact that the Senate Agriculture Committee this week voted to end the Step 2 program, I believe Brazil should suspend retaliation procedures and wait on the U.S. Congress to act.”

EU’s Inaction Snags Doha Negotiations

Efforts to drive the Doha WTO negotiations toward an agreement at the December ministerial meeting in Hong Kong hit a snag as the European Union (EU) was unable to effectively respond to US’ and other countries’ market access demands. EU Trade Commissioner Peter Mandelson was under fire from several EU member countries, led by France, which accused the Minister of exceeding his negotiating authority and offering too much on agriculture.

Conversely, the United States, Australia, Brazil, India and others criticized the EU for not being able to develop a more significant offer on market access. The EU also is troubled by the degree the United States has suggested the EU cut its domestic support to agriculture. Despite the current impasse, USTR Portman suggested that he expects the EU would be able to come forward with another offer by next week.

Amb. Portman noted that agriculture is the key to breaking the deadlock, and moving the entire negotiation forward. The US negotiator praised the G-20 group of developing countries and Australia for their proposal to limit the number of sensitive products to 1% of tariff lines. This proposal is in line with the US proposal.

GAFTT Requests Textile Sectoral

The Global Alliance for Fair Textile Trade (GAFTT) announced they are asking governments around the world to insist that textile issues be addressed in a Special Textile Sectoral in the WTO Doha Development Round trade talks.

GAFTT is an alliance of 97 trade groups from 55 countries supporting fair trade for textiles and clothing. GAFTT believes that textiles have to be separated out from the non-agricultural market access area in order to be handled successfully during the Hong Kong Ministerial in December. A Special Textile Sectoral will allow WTO member countries to deal with concerns such as tariffs and non-tariff barriers in a comprehensive manner in order to achieve an orderly and fair long-term development of trade in the critical sector of textiles.

Sales Healthy, Shipments Lag

Net export sales for the week ending Oct. 13 were 266,000 bales (480-lb). This brings total ’05-06 sales to slightly more than 7.0 million. Total sales at the same point in the ’04-05 marketing year were about 6.3 million bales. Total new crop (’06-07) sales are 138,700 bales.

Shipments for the week were 139,800 bales, bringing total exports to date to 2.5 million bales, compared with the 1.4 million bales at the comparable point in the ‘04-05 marketing year.

’06 BWC Housing Deadline Oct. 24

Deadline for early housing reservations for the ’06 Beltwide Cotton Conferences is Monday, Oct. 24. NCC members, selected Cotton Foundation members and Certified Cotton Interest Organizations executive officers can submit their housing forms online on the Beltwide web site at and selecting the housing section. Housing for all attendees will open on Nov. 1, at 9 am CST.

Attendees also are reminded they must complete conferences’ registration online by going to the Beltwide site. For additional information, contact the NCC’s Debbie Richter, P.O. 820285, Memphis, TN  38182 (901) 274-9030 FX (901) 725-0510 or email

Meanwhile, the Production Conference agenda is taking shape and will include topics ranging from how growers can get their cotton crops off to a good start to the impact of trade agreements on US cotton’s future. Precision agriculture, which has moved from the basic research phase to applied applications and integration into an increasing number of farming operations, will receive an emphasis. Other topics being considered are a focus on the Conservation Security Program, an update on Washington, DC, activities affecting US cotton, an economic report focusing on the globalization of cotton and updates on NCC and Cotton Incorporated activities.

Production Conference workshops/seminars will cover control of the lygus/stinkbug complex; understanding disease resistance; how variable rate application/global positioning system technologies relate to plant pathology and nematology in cotton; new developments from industry; and a cotton economic outlook that will center on the US situation, world situation, trade policy issues and market outlook for the '05-06 crop year.

Prices Effective October 21-27, 2005

Adjusted World Price, SLM 11/16

43.86 cents


Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

4.51 cents

Marketing Loan Gain Value

8.14 cents

Import Quotas Open


Step 3 Quotas (480-lb. bales)


ELS Payment Rate

0.00 cents

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

59.34 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

56.70 cents

Current US c.i.f. Northern Europe

63.85 cents

Forward US c.i.f. Northern Europe

No Quote

2004-05 Weighted Marketing-Year Average Farm Price  
Final Marketing-Year Average Price

41.60 cents


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