Cotton's Week: November 3, 2006

NCC’s Performance and Standards Task Force, chaired by AL ginner Bobby Greene, Alabama ginner, discussed the status of cotton flow reporting by warehouses and loan cotton transfer authority with USDA officials during a Memphis meeting.

Gene Rosera, USDA’s- Farm Services Agency (FSA), reported that loan cotton transfer procedures were still under development. He said software development issues could delay completion until Spring ’07.

Steve Gill, also of USDA-FSA, outlined draft provisions that would be included in a warehouse cotton flow reporting form. The Task Force discussed the provisions in detail and reached a consensus on the components of the reporting form.

Gill stated the next steps will include work with EWR, Inc. on a reporting format with simultaneous development of revisions in the Cotton Storage Agreement (CSA). He projected that the reporting procedures and a revised CSA would be available for implementation in early December.

Both cotton loan transfer and warehouse reporting were addressed in USDA’s Aug. 30 final rule covering storage, handling and ginning requirements for loan cotton.

The Task Force also reviewed different versions of scheduling programs used by various warehouse firms and agreed that a common electronic format that could be adaptable by the industry should remain a priority.

USDA announced the rules and sign-up period for the ’05 crop cottonseed disaster assistance program.

Congress provided $15 million in assistance to producers and first-handlers of the ’05 crop of cottonseed in counties affected by Hurricanes Katrina, Ophelia, Rita and Wilma, or a county contiguous to such a county. The funding was included in the ’06 Emergency Agricultural Disaster Assistance Act.

A fact sheet for the ’05 Cottonseed Payment Program (CPP) can be found at www.fsa.usda.gov/Internet/FSA_File/cpp06.pdf and a more detailed FSA notice is at www.fsa.usda.gov/Internet/FSA_Notice/cn_1011.pdf. The notice includes applications, instructions and a list of eligible counties. A map of eligible counties developed by NCC staff is available in the Issues area of the NCC’s web site, www.cotton.org.

First handlers of cottonseed, defined as gins that have eligible payment quantities, may apply for CPP funds. The eligible gins will calculate their payment quantity and submit the application to USDA. In general, the quantity eligible for payment is based on the total amount of cotton lint delivered to the gin in ’03 by growers in ’05 declared counties. ’03 was selected as the basis for distributing payments because that year generally reflects an average year for cotton production in counties that suffered ’05 losses due to hurricanes. The FSA notice addresses situations for new producers or cases where producers ginned at multiple gins or switched gins between ’03 and ’05. Also, a gin not located in a declared county can apply for payments provided they ginned ’05 cotton produced in a declared county.

Lint deliveries will be converted to pounds of cottonseed by multiplying lint pounds by 1.54176. The per-ton payment rate will be calculated by dividing $15 million by the total eligible quantity, but the payment rate may not exceed $98 per ton.

Applications must be submitted by Dec. 29 via fax to 202-690-1536 or overnight mail to: USDA/FSA/PSD, Attn. Chris Kyer, 1400 Independence Ave., SW, Room 4089-S, Washington, DC  20250-4089. For additional information, contact Chris Kyer at 202-720-7935 or by e-mail at chris.kyer@wdc.usda.gov.

NCC’s Pink Bollworm Action Committee, chaired by Tornillo, TX, producer Bill Lovelady, met in Maricopa, AZ, to review ’06 program results and discuss ’07 plans. Phase I programs in Trans Pecos/El Paso, South Central New Mexico and Chihuahua, Mexico, all reported excellent progress in pink bollworm eradication. Phase II, initiated in ’06 in east and central Arizona, also reported an excellent year.

With ’07 funding uncertain at this point, the Committee developed two options. Option 1 would continue Phases I & II and require approximately 22 million moths per day. Option II would enable expansion to bring Phase III into the program as planned. Phase III inclu des western Arizona, southern California and adjacent areas of Mexico.

If funding becomes available, producer leadership expressed urgency to fully implement the program. Option 2 would require an estimated 25 million moths per day and would require full funding ($7.8 million) for the pink bollworm program. Leadership from Mexico told the Committee that plans in Mexico would be explored at a meeting in Mazatlan in mid-November.

The committee discussed the recently-conducted EPA Science Advisory Panel (SAP), which focused on the risk of resistance by using the 100% Bt cotton grower option with sterile insects to serve the same function as refuge-produced insects (see 10/27 Cotton’s Week). This option was allowed as a result of Arizona issuing a 24c Special Local Need for Bt cotton. Existing Bt cotton labels specifically prohibit use of pink bollworm pheromones and sterile insects on the refuge cotton. California leadership expressed an intention to seek similar action in the event of program startup in that state.

USDA’s Animal and Plant Health Inspection Service (APHIS) announced a proposal to establish boll weevil regulations restricting the interstate movement of regulated articles into or through commercial cotton-producing areas.

USDA said the regulations are necessary to prevent the spread of the boll weevil to non-infested areas. To date, the highly-migratory boll weevil has caused an estimated $22 billion in yield losses and control costs to the US cotton industry.

Under the proposal, articles subject to the movement restrictions such as wild or ornamental cotton, seed cotton, gin trash and processing equipment, must be accompanied by a permit when transiting through commercial cotton-producing states.

Notice of the proposed rule was included in the Oct. 31 Federal Register. Consideration will be given to comments received on or before Jan. 2, ’07. Send an original and three copies of postal mail or commercial delivery comments to Docket No. APHIS-2006-0002, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Rd., Unit 118, Riverdale, MD 20737-1238. For Internet comments, go to the Federal eRulemaking portal at http://www.regulations.gov, select “Animal and Plant Health Inspection Service” from the drop-down menu; then click on “Submit.” In the Docket ID column, select APHIS-2006-0002 to submit or view public comments and to view supporting and related materials available electronically.

NCC has established an online resource (http://www.cotton.org/tech/safety/biosecurity.cfm) to raise awareness of how the agro-terrorism threat applies to the US cotton industry. This includes USDA’s voluntary “Pre-Harvest Security Guidelines and Checklist” for farming operations.

The potential of terrorist attacks against agricultural targets is recognized as a national security threat by the federal government. The Dept. of Homeland Security, in concert with other federal agencies, continues to develop strategies to protect agricultural production and processing from terrorist acts.

NCC, as a member of the Food and Agriculture Sector Coordinating Council, is working with state and federal government agencies to monitor and communicate counter-terrorism measures that affect all cotton industry segments.

The ’06 FSA county committee elections began, and the deadline for eligible voters to return ballots to their local FSA offices is Dec. 4, ’06.

Committee members apply their knowledge and judgment to make decisions on disaster and conservation payments, establishment of allotments and yields, producer appeals, employing FSA county executive directors and other local issues. FSA committees operate within official regulations designed to carry out federal laws.

To be an eligible voter, farmers and ranchers must participate or cooperate in FSA programs. A person who is not of legal voting age, but supervises and conducts the farming operations of an entire farm, also can vote. Agricultural producers in each county submitted candidate names during the nomination period held last summer.

Eligible voters who do not receive ballots in the coming week can obtain ballots at their local USDA Service Center. Dec. 4 is the last day for voters to submit ballots in person to local USDA Service Centers. Ballots returned by mail must be postmarked no later than Dec. 4. Newly elected committee members and alternates take office Jan. 1.

Close to 8,000 FSA county committee members meet monthly at more than 2,300 FSA offices nationwide. Each committee consists of three to five members who serve three-year terms. About one-third of county committee seats are up for election annually. For more information about FSA county committees and FSA programs, visit: http://www.fsa.usda.gov.

Net export sales for the week ending Oct. 26 were 129,100 bales (480-lb). This brings total ’06-07 sales to almost 4.2 million bales. Total sales at the same point in the ’05-06 marketing year were approximately 7.4 million. Total new crop (’07-08) sales are 168,300 bales.

For the marketing year to date, Mexico remains the largest importer of US cotton with purchases of 1.0 million bales. China follows as the second largest buyer at 833,000 bales. Mills in Turkey have purchased 545,000 bales of US cotton.

Shipments for the week were 122,400 bales, bringing total exports to date to 1.6 million bales, compared with the 2.8 million at the comparable point in ’05-06.

Agriculture Secretary Mike Johanns announced expansion of the Adjusted Gross Revenue-Lite (AGR-Lite) plan of insurance for the ’07 insurance year into 10 more states, including Arizona, New Mexico and Kansas. Prior to this expansion, it was offered in 18 other states, including Virginia, North Carolina and Alabama.

"This insurance is a useful risk management tool, particularly for small diversified producers," Johanns said. "It is based on individual farm revenue, so producers are offered a great deal of flexibility in how they manage their farm or ranch operations."

AGR-Lite is a whole-farm revenue plan of insurance, developed by the Pennsylvania Dept. of Agriculture, providing protection against low revenue due to unavoidable natural disasters and revenue fluctuations. Policies are limited in size to a maximum liability of $1 million annually. Most farm-raised crops, animals and animal products are eligible for protection. The plan uses a producer's five-year historical farm average revenue, as reported on IRS tax returns (Schedule F or equivalent forms) and the current year's farm plan, as a basis to provide a level of guaranteed revenue for the insurance period.

The AGR-Lite plan can stand alone or be used in conjunction with most other federal crop insurance plans. It provides insurance coverage for multiple agricultural commodities under one insurance product and establishes revenue as a common denominator of insurance for all agricultural commodities on that farm.

More detailed information about AGR-Lite is available on the Risk Management Agency’s (RMA) web site at: http://www.rma.usda.gov. Policy materials will be available soon at that site.

Adjusted World Price, SLM 11/16	42.44 cents	*
Coarse Count Adjustment	0.00 cents
Marketing Loan Gain Value	9.56 cents
Import Quotas Open	8
Step 3 Quotas (480-lb. bales)	850,594
ELS Payment Rate	0.00 cents
*No Adjustment Made Under Step I
Five-Day Average
Current 3135 c.i.f. Northern Europe	58.54 cents
Forward 3135 c.i.f. Northern Europe	NA
Coarse Count c.i.f. Northern Europe	NA
Current US c.i.f. Northern Europe	59.50 cents
Forward US c.i.f. Northern Europe	NA
2005-06 Weighted Marketing-Year Average Farm Price
Final Marketing Year Average Price	47.70 cents