Cotton's Week: March 17, 2006

The Farm Service Agency (FSA) announced changes to programs authorized by the Deficit Reduction Act of ’05 (the Act), which calls for changes to the special marketing loan provisions for upland cotton and the Direct and Counter-cyclical Payment Program. President Bush signed the Act on Feb. 8.

The Act repeals the authority to issue Upland Cotton User Marketing Certificate Program (Step 2) payments to domestic users and exporters of upland cotton, which was found to be a prohibited subsidy by the World Trade Organization in a case brought by Brazil. The repeal takes effect on Aug. 1, ’06.

Under the Direct and Counter-Cyclical Payment Program (DCP), the Act reduces the maximum advance direct payment percentage for the ’06 crop year from 50% to 40%. The Act reduces the maximum advance direct payment percentage for the ’07 crop year to 22%. DCP, authorized by the ’02 farm law, provides payments to eligible producers on farms enrolled for the ’02 through ’07 crop years.

Direct payments are computed using the base acres and direct payment yields established for the farm and the statutory payment rate. DCP participants may elect to receive their direct payments in two installments per year: (1) an advance payment during any month beginning in December of the calendar year before the calendar year in which the crop is harvested; and (2) the balance of the direct payment in October of the calendar year in which the crop is harvested.

For more information on these and other FSA programs, visit your local FSA office or the FSA web site at: www.fsa.usda.gov.

The NCC and Southeastern Cotton Ginners Assoc. (SCGA) have asked USDA to extend the ’04 cottonseed disaster program application sign-up period for an additional two weeks. The current deadline for completing applications is March 27.

Recent conference call meetings with gins in the states with eligible losses indicate additional time is needed to allow for submission of proper documentation. In requesting the extension, the NCC and the SCGA noted the excellent cooperation of USDA with the gins on this disaster program. USDA has indicated that the request for an extension will receive favorable consideration. However, until USDA makes a formal determination on the request for an extension, gins and producers are urged to complete their applications as soon as possible.

The Senate adopted its FY07 budget resolution. The $2.8 trillion fiscal 2007 budget resolution passed on a 51-49 vote after more than $16 billion in spending was added through amendments. The only reconciliation portion of the bill was a provision that would pave the way for drilling in Alaska’s Artic National Wildlife Refuge (ANWR).

House Budget Chairman Nussle (R-IA) said the budget resolution in that chamber would not include an ANWR provision. The House budget resolution also is unlikely to be as generous, as some Members have said they might vote down a plan that does not include reconciliation instructions for mandatory spending.

US cotton’s requests for FY07 funding for selected federally-funded programs were conveyed in NCC letters to Sen. Bennett (R-UT), chairman of the Senate Appropriations’ Subcommittee on Agriculture, Rural Development, and Related Agencies, and to Rep. Bonilla (R-TX), chairman of the House Appropriations’ Subcommittee on Agriculture, Rural Development, FDA and Related Agencies.

The letters, which expressed the NCC’s strong support for the ’02 farm law and firm opposition to efforts to re-open it in order to further restrict farm program benefits, also noted that successful completion of the boll weevil eradication program, full implementation of the pink bollworm eradication effort, new technology developed through research, and demand-building export programs, including MAP, FMD and GSM credit, are all essential to the US cotton industry.

Among specific NCC recommendations and requests for FY07 appropriations are:

• $ 38.2 million for USDA-APHIS to provide a federal cost share of approximately 30% to active boll weevil eradication programs underway on approximately 9.9 million acres in Mississippi, Tennessee, Arkansas, Louisiana, Missouri, Texas, Oklahoma and New Mexico and sufficient funding to allow USDA’s FSA to make at least $100 million in loans to eligible Boll Weevil Eradication Foundations.
• $7.8million for the APHIS pink bollworm program, which will provide $1.6 million for indirect and direct costs to APHIS and the residual $6.2 million “Net to Field” will be for program operations. The NCC also strongly supports providing FSA with continued authority to make loans for activities associated with the pink bollworm eradication program as previously provided in the FY05 appropriations legislation.
• Funding levels authorized in ’02 farm law for the Market Access Program (MAP).   
• Sufficient funding to ensure USDA’s Foreign Agriculture Service is adequately staffed to carry out important market development and trade enhancing functions in headquarters and abroad.
• Funding be continued at the same level as provided for FY05 ($34.5 million) for the Foreign Market Development program, which requires at least a dollar-for-dollar industry match.

The letter also noted that the industry is concerned with the Administration’s proposal to eliminate earmarked projects of USDA’s Agricultural Research Service (ARS) and Research, Education and Economics initiated since ’01, without regard to the importance and significance of the work. The NCC, which estimates this proposal will amount to an $8.1 million reduction in cotton specific research, urged the two subcommittees to reject the terminations of base funding that, as proposed, will result in closure of the important cotton harvesting and processing research labs in Lubbock, TX, and Las Cruces, NM.

The letter also urged the subcommittee to restore specific cotton research efforts to their FY06 levels. This work is being conducted at ARS facilities in Auburn, AL; Tifton, GA; College Station, TX; Florence, SC; Clemson, SC; Lubbock, TX; Shafter, CA; Columbia, MO; and Phoenix, AZ. Restored cuts also were urged for cotton research projects at various locations including Brawley, CA, Oxford, MS, Weslaco, TX,  New Orleans, LA, and Gainesville, FL, and support was asked for new initiatives for addressing emerging pests such as cotton disease research at College Station, TX.

The letter also noted that the National Research Initiative Competitive Grants program is slated for a significant increase.

 “We are supportive of a healthy, competitively awarded research program provided it is part of a balanced program including formula grants which provide a fundamental capacity support base,” the letter stated. “However, we oppose the shift of Hatch Act grants to other funding mechanisms and encourage maintaining funding to at least the 2006 level. We encourage funding for a new five state regional research and education project on reniform nematodes located at Auburn, AL.”

Led by Rep. Thomas (R-CA), a letter from western House members Pearce (R-NM), Pombo (R-CA), Costa (D-CA), Cardoza (D-CA), Nunes (R-CA), Radanovich (R-CA), Franks (R-AZ), Grijalva (D-AZ), Hayworth (R-AZ) and Renzi (R-AZ), urged Subcommittee Chairman Bonilla and Ranking Member DeLauro (D-CT) to include $7.8 million for pink bollworm eradication and $420,000 for the Shafter Research and Extension Center in the FY07 agricultural appropriations and not to accept the Administration’s proposal for closure of the Las Cruces gin lab and termination of important research being conducted at the Shafter facility.

The Senate Judiciary Committee met to mark up a comprehensive immigration bill, the fifth Committee hearing this month on this issue. Committee members seem close to agreement on the two most difficult elements of comprehensive immigration legislation: how to design a system to regulate the flow of future workers into the country and what to do about the estimated 12 million illegal immigrants now living in the United States.

The Committee will meet again on March 27to review the final language. During the upcoming recess, the details of the issues will continue to be worked out. If the Committee can come to agreement and pass the legislation, the full Senate immediately would begin debating the bill. If the Committee can not come to an agreement, Majority Leader Frist (R-TN) will proceed with a bill that addresses border enforcement, but will not contain a guest worker provision. In either case, it is expected that Sen. Craig (R-ID) will offer his AgJobs bill as an amendment on the floor.

President Bush nominated former Sen. Dirk Kempthorne, now the Governor of Idaho, as Interior secretary. The Energy and Natural Resources Committee must approve the nomination before sending it to the full Senate for confirmation.

Kempthorne, a senator from ’93-99, already has the support of the Chairman Domenici (R-NM) and Ranking Member Bingaman (D-NM) and is respected by the Members who served with him. During his single Senate term, Kempthorne was chairman of the Environment and Public Works Subcommittee on Drinking Water, Fisheries and Wildlife and chairman of the Armed Services Subcommittee on Personnel. He left the Senate to run for governor and is now in his second term.

The Interior Department oversees millions of acres of federal land as well as wildlife and mineral resources. The federal government owns much of the land in many Western states, giving Interior a major voice in local issues and ultimate authority over disputes on everything from logging and drilling to endangered species and off-road vehicles.

NCC members and their employees are urged to consider early voting in the ’06 elections.

The “Cotton Helping Americans Vote™” web site at http://cotton.helpingamericansvote.org/home8670.asp will provide information on how to do this in person or by mail in your state. The site is set to go live during the week of March 20.

Net export sales for the week ending March 9 were 477,600 bales (480-lb). This brings total ’05-06 sales to about 14.0 million. Total sales at the same point in the ’04-05 marketing year were almost 11.5 million bales. Total new crop (’06-07) sales are 323,100 bales.

Shipments for the week were 468,400 bales, bringing total exports to date to 8.3 million bales, compared with the 6.6 million at the comparable point in the ’04-05 marketing year.