Cotton's Week: December 29, 2005

The NCC expressed extreme disappointment in the declaration approved by the participants in the World Trade Organization (WTO) Ministerial Conference recently concluded in Hong Kong. NCC Chairman Woods Eastland said that the Declaration’s text is not consistent with the concept of a single undertaking for agriculture and establishes an unwise precedent for WTO trade negotiations.

The final text, posted on the WTO web site on Dec. 22, calls for the elimination of all forms of export subsidies for cotton by developed countries in ’06, seven years ahead of the schedule set for the remainder of agriculture. On market access, cotton exports from Least Developed Countries will be given duty-free, quota-free access to developed economies. In addition, the text states the objective that trade-distorting domestic subsidies for cotton be reduced more ambitiously and quickly than for agriculture in general. 

In earlier drafts, the paragraph regarding reductions in domestic subsidies was bracketed, signaling that the language had not been agreed to by all members. However, the brackets were removed in the text’s final version, indicating that agreement had been reached. The declaration assures that cotton will remain a focal point of these negotiations. NCC leadership and staff will continue to meet with US Trade Representative and USDA officials, as well as Congressional members, to assess the current text and evaluate future implications.

Eastland expressed appreciation to Ambassador Portman, Secretary Johanns and their staff for their efforts, but also noted that the text offers very little to the US cotton industry and requires significant, unilateral concessions in return.

“Throughout the cotton discussion we have documented reliable economic studies published by prestigious international and academic organizations, which conclude that the U.S. cotton program is not responsible for poverty in Africa,” Eastland stated. “Further, the parties continue to ignore the realities of the complicated world markets for fibers and textiles and the importance of increasing domestic consumption in developed and newly developed countries. Apparently, emotion has over-ruled fact. U.S. cotton producers should not be asked to accept unfair, unequal treatment in the Doha Round. We call on all parties to work to return the negotiations to a single undertaking so that the Round can be successfully completed and implemented to the benefit of all farmers.”

The Senate passed the FY06 Department of Defense Appropriations bill prior to adjourning for the year. The President is expected to sign the bill in early 2006.

As one of the final bills to pass during the first session of the 109^th Congress, the measure included many provisions extraneous to the original bill. Sen. Cochran (R-MS), chairman of the Appropriations Committee, fought to include $29 billion in relief funds for GulfCoast states affected by this year’s hurricanes.

Also included in the bill was $900 million for farm bill conservation programs. The bill directs the Secretary of Agriculture to increase enrollment in conservation programs including but not limited to the Conservation Reserve Program, the Wetlands Reserve Program, the Conservation Security Program, the Grassland Reserve Program, and the Environmental Quality Incentives Program.

There also was a provision that would allow for additional conservation funding from potential excess revenue from the sale of analog frequencies to communications companies provided for in the reconciliation bill.

Both the House and the Senate passed versions of the Budget Reconciliation conference report but another hurdle remains before it becomes law.

The Senate removed a technical portion of the bill during its debate on the conference report regarding Medicare. Because the conference reports are no longer identical, the bill must go back to the House of Representatives for passage in order to reflect the changes made in the Senate. That vote is not likely to occur until late January or early February. Although the measure is expected to pass the House once again, it is possible that the delayed vote could affect passage of the bill as it would then become amendable on the House floor. Members who face tough re-elections may have a harder time supporting the measure to start off an election year.

The bill’s agriculture provisions were not changed in the Senate and likely will stay intact. The bill would reduce conservation, research, rural development and commodity programs by $2.7 billion over the five-year period. It also would extend for two years the Milk Income Loss Contract, which compensates dairy farmers when milk prices fall below a level set by the federal government, at a cost of $998 million. Advances of direct payments were reduced from 50% to 40% for the ’06 crop year and to 22% for the ’07 crop year generating savings of $1.5 billion.

The bill also provides for the early termination of the Step 2 program effective Aug. 1, ’06. There were no provisions to extend the funding baseline for commodity programs past the current term of the farm bill. However, the funding baseline for conservation programs was extended. The measure also would reduce funding for agriculture conservation programs by $934 million over five years and cut funding for agriculture research programs by $620 million.

In comments submitted to USDA in response to the Federal Register notice requesting feedback on farm policy considerations, the NCC emphasized its support for the current farm bill and the importance of the legislation to the current structure and stability of US agriculture. The importance of the marketing loan was highlighted, as well as the cotton industry’s opposition to payment limits.

Looking ahead to the next farm bill, the NCC comments stressed the need to maintain a stable, predictable and equitable farm policy. The comments will be available in the Members Only area of the NCC’s web site, www.cotton.org.

Articles that appeared in the journal, International News on Fats, Oils & Related Materials (INFORM), and in Oil Mill Gazeteer magazine point out the health benefits of using cottonseed oil as an alternative to other oils containing trans fatty acids.

The articles, which were co-authored by Dr. Phil Wakelyn, NCC senior scientist, Environmental Health & Safety, pointed to research that indicates that diets high in trans fatty acids may have unfavorable effects on both LDL (bad) and HDL (good) cholesterol.

As a result of that research, professional health organizations recommend that consumption of trans fatty acids be reduced. The US Departments of Health and Human Services and Agriculture jointly published revised “Dietary Guidelines for Americans” in January ’05 that 1) recognized the importance of limiting both trans and saturated fatty acids as well as cholesterol and 2) made fat consumption recommendations.

The Food & Drug Administration (FDA) issued a final regulation requiring the labeling of trans fats on packaged foods effective Jan.1, ’06. The articles, which point out that cottonseed oil has properties that make it very desirable for development of trans fatty acid free products for meeting this new FDA requirement, can be found in the technical section of the NCC’s web site at http://www.cotton.org/tech/cottonseed/index.cfm and at http://www.iomsa.org/leads/OMGdec05.pdf.

The NCC-supported America’s Heartland public television series will be aired beginning Jan. 7 by KTXT Channel 5 PBS in Lubbock, TX, (9:30 am) and by KTEJ Channel 19 in Jonesboro, AR, and KETS Channel 2 in Little Rock, AR (4 pm). The series also is slated to begin airing Jan. 11 at 7:30 pm on KAET Channel 8 in Tempe, AZ. Current air times in your community and others when finalized are at http://www.americasheartland.org.

The America’s Heartland series celebrates the nation’s agricultural landscape by profiling the people, places, and processes that bring food, fiber, and fuel from farm and ranch to American consumers. It began airing this fall after being distributed to more than 300 U.S. public television stations by America’s Public Television. The show now is reaching more than 45% of the nation’s households.

 NCC and several other commodity organizations support the show, which is being produced by KVIE, the public television affiliate in Sacramento. The Monsanto Company and the American Farm Bureau Federation are the flagship supporters for the series.

According to the Commerce Dept., November (4-week month) total cotton consumption in domestic mills was 214.8 million pounds for a seasonally adjusted annualized rate of 5.93 million bales (480-lb). Last year’s November annualized rate was 6.26 million bales. The October (4-week month) estimate of domestic mill use of cotton was raised by 287,000 pounds to 235.3 million. The revised seasonally adjusted annualized rate of consumption for October is 6.06 million bales. This is lower than last year’s October annualized rate of 6.24 million bales.

Preliminary December domestic mill use of cotton and revised November figures will be released by Commerce on Jan. 26.

Net export sales for the week ending Dec. 15, ’05 were 307,200 bales (480-lb). This brings total ’05-06 sales to about 9.8 million bales. Total sales at the same point in the ’04-05 marketing year were about 8.3 million bales. Total new crop (’06-07) sales are 168,100 bales.

Shipments for the week were 297,900 bales, bringing total exports to date to 4.4 million bales, compared with the 2.9 million at the comparable point in the ’04-05 marketing year.