Cotton's Week: April 28, 2006

Cotton's Week: April 28, 2006

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Talent, Lincoln Propose Farm Bill Extension

Sens. Talent (R-MO) and Lincoln (D-AR) are gathering support for, and plan to introduce, legislation in the Senate that would extend the current farm law until after a WTO Doha Agreement is passed by Congress. Similar legislation has been introduced in the House.

Sen. Grassley (R-IA) said that he would support a one-year extension of the farm law combined with Trade Promotion Authority (TPA). TPA is set to expire July ’07, and without trade agreements, would be open to amendment in Congress. Sen. Grassley is chairman of the Finance Committee which oversees trade agreements.

A major negotiating deadline has passed and WTO director-general Lamy indicated that negotiators must reach agreement by mid-June on broad parameters for reductions in tariffs and farm subsidies. As negotiations continue, it is unclear whether the WTO will reach agreement in the Doha round before Congress must write a new farm law.

The structure of a new farm bill likely would be affected by the WTO agreement. Extending the current law until after an agreement is ratified would ensure that Congress understands its obligations in the WTO before writing a bill.



Check-off Program Complaint Dismissed

The US Court of International Trade dismissed the complaint filed by Cricket Hosiery against the Cotton Research and Promotion Program, potentially ending the latest round of legal challenges to the constitutionality of cotton’s check-off program.

The Court considered all aspects of the challenge filed against the program but held generally that the earlier decision of the US Supreme Court in the Livestock Marketing case precluded the challenges raised by the plaintiffs.

The Court stated “because the Supreme Court has squarely held that, without more, generic messages created pursuant to an agriculture marketing program do not implicate an individual’s free speech rights -- because that speech is the government’s own and because the speech complained of in this action is government speech -- this Court is constrained to find that plaintiffs have not adequately established that no set of circumstances exists under which the [Cotton Research and Promotion] Act would be valid.”

The Court’s decision was strongly influenced by the Livestock Marketing case which upheld the validity of research and promotion programs similar to the cotton program. The plaintiffs have 60 days in which to appeal the decision.


Bearden Conveys Insurance Goals

Rickey Bearden, a Plains, TX, cotton producer, met with the Federal Crop Insurance Corp. (FCIC) Board of Directors as part of a panel of commodity organizations invited to discuss important, industry-related crop insurance issues.

Bearden encouraged the Risk Management Agency (RMA) to look for ways to move insurance rating and experience to a more individual history vs. county experience, to develop a good grower discount policy, and to continue to investigate new and innovative products that could offer better and more affordable risk management opportunities for cotton producers.

During his presentation, Bearden reminded FCIC of the industry’s primary goal – access to a product that provides adequate protection from weather-related production losses at affordable prices. He offered the NCC’s services to RMA as it undertakes a complete cotton policy review.

Bearden also said that while the cotton industry strongly supports a viable federal crop insurance program, it does not support it as a delivery system for farm program benefits. Rather, he stated, it should continue to be a separate, voluntary program.



House Ag Panel Schedules Farm Policy Field Hearings

The House Committee on Agriculture has scheduled several hearings in the Cotton Belt.

Rep. Moran (R-KS), chairman of the General Farm Commodities and Risk Management Subcommittee, has scheduled a hearing for 2 pm, MST on May 1 at Central Arizona College in Coolidge, AZ, to review federal commodity programs.

House Agriculture Committee Chairman Goodlatte (R-VA) also has announced a full committee hearing at Angelo State U. in San Angelo, TX, on May 9 for an overall review of federal farm policy. Producers representing the cotton industry will testify at both hearings.

Both the full Committee and the General Farm Commodities and Risk Management Subcommittee have conducted hearings across the country in recent months seeking input from producers as Congress begins to formulate the rewrite of the farm law.



Senate Panel Approves EPA Posts

The Senate Environment and Public Works Committee approved the nomination of William Wehrum for EPA’s top air pollution policy post.

Many in the US cotton industry support his nomination and believe that he well qualified given his background and experience in air policy. It is unclear when the full Senate will take up the nomination as some members are opposed to his nomination.

Wehrum, currently the acting assistant administrator for air and former deputy assistant administrator, plays a central role in formulating EPA policies regarding air pollution. He is very important to the current rulemaking on particulate matter (PM) and was helpful in getting exclusion for agriculture and mining from the proposed coarse PM standard.

The committee also approved James Gulliford to be assistant administrator for prevention, pesticides, and toxic substances.



Industry Responds to Misinformation

Larry Darden, president of the Virginia Cotton Growers Assoc., submitted a rebuttal to an article critical of commodity programs that appeared in the Staunton(VA) News Leader.

The article focused on the comments of Staunton area sheep ranchers who were hosting a W. African farmer as part of an Oxfam America-arranged tour (see April 21 Cotton’s Week). The ranchers’ comments took aim at commodity programs, including cotton and rice, saying they were aimed at large-scale corporate and investor farms at the expense of smaller farms.

Darden pointed out in his letter to the editor that the Virginia tour of W. African farmers was part of acampaign, orchestrated by international aid organizations such as Oxfam which is being conducted with a complete disregard for accuracy or truth.

Among points the letter made was that while the W. Africans’ poverty and hardships are real and should not be dismissed, abolishing the US cotton program will not solve their problems – a fact strongly supported by several independent analyses.

Darden’s letter also addressed the commercial vs. small farm statement by citing a USDA study of agriculture census data that shows commodity program payments have not contributed to increases in farm size over the last 20 years.

“U.S. farming operations have increased in size only as necessary to achieve economies of scale and to react to ever-shrinking margins,” Darden’s letter stated. “These larger farming operations remain predominately family farms.”



Gin School Registration Open

Registrations are being accepted for the ’06 WesternGinSchool, which is being held on May 16-18, at the USDA Gin Lab in Mesilla Park, NM, and for the Stoneville Gin School on June 13-15 at the USDA Gin Lab in Stoneville, MS.

The Western school will offer a combined Level I/II course, Level III and Continuing Education course for advanced and certified ginners. The basic levels I/II and III of the Western school will include sections on roller ginning. 

The Stoneville school will offer all three basic levels of instruction in addition to the Continuing Education course for advanced and certified ginners. The Continuing Education course at both schools will consist of one day devoted to topics addressing cotton quality, while the second and third days are reserved for safety training based on the Texas Ginners’ Trust Safety Certification program. That program includes Red Cross First Aid and CPR certification.

Additional details, including hotel/motel information, on all schools as well as on-line registration can be accessed at the National Cotton Ginners Assoc. web site, http://ncga.cotton.org or by calling Betty Thorne or Dr. Bill Norman at 901-274-9030.



NRCS Unveils Strategic Plan

The Natural Resources Conservation Service (NRCS) has issued “Productive Lands―Healthy Environment,” the agency’s strategic plan for ’05-10.

The plan, which NRCS describes as bold, forward-looking and far-reaching,sets the direction for NRCS and describes its conservation priorities and goals. NRCS says the plan also challenges the agency to reformulate some past approaches and develop and adopt new approaches, and will guide it in implementing key overarching strategies, managing agency business lines, meeting customer needs, and developing and strengthening capacity to achieve NRCS mission goals.

Requests for hard copies of the plan may be made at http://landcare.sc.egov.usda.gov/ or by calling 1-888-LANDCARE.


CCI Capitalizes on New Peruvian Pact

Cotton Council International promoted US cotton at the 9th annual Peru Moda Trade Show in Lima. Seven US mills joined CCI at its COTTON USA Sourcing Program booth enabling the US and Peruvian companies to take advantage of business opportunities available through the recently-signed Peruvian Free Trade Agreement (FTA).

Representatives from more than 200 Peruvian export companies from textile, apparel, footwear and accessories industries and more than 450 visitors from the United States, Latin America and Asia attended the trade show.

Jonathan Fee, partner of Alston & Bird LLP, spoke with textile/apparel industry members about the US-Peru FTA and other US trade agreements. In addition to participating in the trade show, three different groups of US mills toured 30 Peruvian companies.



Mill Use Outpaces ’05 March Rate

According to the Commerce Dept., March (5-week month) total cotton consumption in domestic mills was 297.57 million pounds for a seasonally adjusted annualized rate of 6.25 million bales (480-lb). Last year’s March annualized rate was 6.16 million bales.

The February (4-week month) estimate of domestic mill cotton use was raised by 28,000 pounds to 236.73 million. The revised seasonally adjusted annualized rate of consumption for February is 6.34 million bales, higher than last year’s February annualized rate of 6.19 million.

Based on Commerce estimates from Aug. 1, ’05 through April 1, ’06, projected total pounds consumed during crop year ’05-06 would be 2.9 billion pounds or 6.02 million bales.  USDA’s latest estimate of ’05-06 crop year mill use is 6.0 million 480-pound bales.

Preliminary April domestic mill use of cotton and revised March figures will be released by Commerce on May 25.



Sales, Shipments Remain Robust

Net export sales for the week ending April 20 were 350,900 bales (480-lb). This brings total ’05-06 sales to about 15.9 million. Total sales at the same point in the ’04-05 marketing year were almost 12.8 million bales. Total new crop (’06-07) sales are 464,600 bales.

Shipments for the week were 394,500 bales, bringing total exports to date to 11.0 million bales, compared with the 8.9 million at the comparable point in the ’04-05 marketing year. With slightly more than three months remaining in the marketing year, weekly shipments must average roughly 413,800 bales to reach the USDA projection of 17.0 million bales.



Prices Effective April 28-May 4, 2006

Adjusted World Price, SLM 11/16

40.45 cents

*

Coarse Count Adjustment

0.00 cents

Current Step 2 Certificate Value

3.04 cents

Marketing Loan Gain Value

11.55 cents

Import Quotas Open

 1

Step 3 Quotas (480-lb. bales)

113,839

ELS Payment Rate

 0.00 cents

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

55.86 cents

Forward 3135 c.i.f. Northern Europe

No Quote

Coarse Count c.i.f. Northern Europe

53.77 cents

Current US c.i.f. Northern Europe

58.90 cents

Forward US c.i.f. Northern Europe

 No Quote

 
2005-06 Weighted Marketing-Year Average Farm Price  
 
Year-to-Date (August-February)

47.51 cents

**

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

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