Cotton's Week: June 19, 2009

The House Appropriations Committee approved the FY10 Agriculture Appropriations bill which funds the Department of Agriculture, the Food and Drug Administration and the Commodity Futures Trading Commission.

The bill, approved by voice vote, would provide $22.9 billion in discretionary funding to the three agencies - up $2.3 billion from the FY09 legislation. The bill included funding for boll weevil and pink bollworm eradication programs as well as a multitude of cotton related research programs.

The Committee rejected the reductions in farm program spending outlined in the President’s Budget.

The Administration’s budget proposal included termination of cotton storage credits, a reduction in Market Access Program funding, a new gross revenue test to determine eligibility for direct payments, changes to the crop insurance program and major reductions to conservation programs.

Earlier, the NCC was joined by other organizations in a letter urging the House Appropriations Committee’s Subcommittee on Agriculture, Rural Development, Food and Drug Administration, and Related Agencies not to include changes in farm law. In addition, 12 Cotton Belt Representatives wrote that panel’s Chairwoman DeLauro (D-CT) urging her not to terminate storage credits.

The full House of Representatives is scheduled to consider the bill on July 9.

The Senate Environment and Public Works Committee passed a substitute amendment proposed by Sens. Baucus (D-MT), Klobuchar (D-MN) and Boxer (D-CA) by a voice vote that was along party lines. The Baucus amendment replaced the language introduced by Sen. Feingold (D-WI) entitled the Clean Water Restoration Act, S. 787 (CWRA). 

The bill amends the Clean Water Act (CWA) by removing the term ‘navigable waters’ and authorizes EPA to return to its broad interpretation of waters of the United States prior to two recent Supreme Court decisions. These court rulings restricted EPA’s interpretation based on the term ‘navigable waters’ and the Commerce Clause. The bill’s authors contend that the CWRA restores the original intent of the CWA and clarifies CWA jurisdiction. 

Opponents of the CWRA claim that the bill does not "restore" the CWA but, instead, greatly expands its scope and jurisdiction. If the legislation were enacted, it fundamentally would change the law by completely severing the CWA from the Commerce Clause of the US Constitution, significantly changing the intent of Congress when it enacted the CWA. The opponents believe this would result in an unprecedented expansion of the CWA. The Commerce Clause is limited in scope to interstate commerce; purely intrastate activities are not within the federal government's power to regulate but are within the jurisdiction of their respective states.  It can be argued, therefore, that the Commerce Clause does not allow the CWA to include intrastate waters.

Sens. Vitter (R-LA) and Barraso (R-WY) offered a number of amendments including exemptions for disaster recovery, mosquito control, ground waters, agriculture and livestock production. All amendments failed along party lines.

The NCC was among 32 agricultural organizations which signed onto a letter in opposition to S. 787. Should this bill pass and the 6^th Circuit Court decision stand, there could be severe ramifications for cotton producers, including CWA permitting for pesticide applications and increased wetland protections.

Net export sales for the week ending June 11 were 158,600 bales (480-lb). This brings total ’08-09 sales to about 13.7 million bales. Total sales at the same point in the ’07-08 marketing year were about 15.3 million bales.

With purchase of 3.9 million bales in ’08-09, China remains the largest US cotton importer, accounting for 29% of total US cotton exports. Turkey has purchased 1.8 million bales, which is 13% of the total. Mexico’s textile industry has purchased almost 1.5 million bales for the ’08-09 marketing year. Sales to Indonesia have surpassed 1.1 million bales, or 8% of the total sales. Vietnam’s purchases of 780,000 bales rank them as the 5^th largest importer of US cotton, just slightly ahead of Pakistan.  

Total new crop (’09-10) sales are 848,400 bales.

Shipments for the week were 273,000, bringing total exports to date to 11.1 million bales, compared with the 11.4 million bales at the comparable point in the ’07-08 marketing year. With a little less than two months remaining in the marketing year, weekly shipments must average roughly 224,000 bales to reach the USDA projection of 12.7 million bales.

H.R. 2749, the Food Safety Enhancement Act of 2009, is moving quickly through Congress and would affect cotton gins and oilseed processors.

On June 8, Rep. Dingell (D-MI) and five Democratic cosponsors introduced H.R. 2749.  According to the authors, the bill would amend the Federal Food, Drug, and Cosmetic Act to improve food safety in the global market. H.R. 2479 was marked up and approved as amended by the House Energy and Commerce Committee Subcommittee on Health and then approved in a full committee markup.

A number of agricultural and agri-business associations have expressed their concerns regarding H.R. 2749, saying that the bill would give the Food and Drug Administration (FDA) broad new powers to regulate the entire spectrum of the agricultural and food system and, in many cases, without appropriate thresholds or accountability. These groups, in a letter to House Energy and Commerce Committee Chairman Waxman (D-CA), expressed the following concerns:

• FDA could suspend a facility’s registration upon a “reasonable belief” for violations that could result in serious adverse health consequences or death to humans or animals without a scientific risk assessment.
• The bill would authorize FDA to establish (by either regulation or guidance) facility-specific preventive controls or elements of a food safety plan.  
• The bill requires FDA to impose several fees to help fund the agency’s mission, but provides no basis to justify the level of user fees. Funds generated from the user fees are directed into FDA’s general revenues rather than to a dedicated account to pay for FDA’s food/feed safety functions. The bill contains no constraint on FDA expenditures for food safety activities and, in fact, allows items such as “functions performed by advisory committees” to be included in food safety activities to be paid for via these fees. A flat facility registration fee applicable to all types and sizes of facilities poses questions of equity, particularly for small businesses that consume a negligible share of FDA resources.
• The bill requires FDA to implement regulations which establish standards for safe growing, harvesting and storage of raw agricultural commodities, including on-farm regulation if required to minimize the risk of serious adverse health consequences or death to humans or animals. It specifically references naturally occurring hazards, such as mycotoxins in corn. The bill also specifically cites manure, water quality, employee hygiene, sanitation, animal controls and temperature controls that FDA determines to be “reasonably necessary.”  
• The bill dramatically expands FDA’s access to facility records and expressly encompasses farms in the records-access requirement. The bill also authorizes FDA to promulgate regulations mandating the types of records required and requiring that records be kept in a standardized electronic format and be retained for up to three years.  
• The contemplated product-tracing system in the bill far exceeds the Bioterrorism Act’s requirement that facilities maintain records sufficient to identify the immediate previous source of the agricultural products and ingredients they receive and the next subsequent recipient to which they ship. The bill mandates that FDA issue regulations establishing a tracing system that enables it to identify within two business days each person who grows, produces, manufactures, processes, packs, transports, stores or sells agricultural commodities, food, feed or feed ingredients.  
• The bill would lower the threshold for detaining a product so that FDA only needs to have a “reason to believe” that it is adulterated, misbranded, or otherwise in violation of the bill in order to use recall, cease-distribution or quarantine authorities.  
• The bill requires all non-processed food products, which would encompass raw agricultural commodities like grains and oilseeds, to identify the country-of-origin of the product. This labeling also would apply to products of US origin. Such labeling would be onerous and extremely costly to business and consumers alike, particularly for products containing numerous ingredients from numerous countries.

USDA’s latest weekly Crop Progress report shows 95% of the US cotton crop had been planted as of June 14, up from 89% the previous week.

Kansas and Oklahoma, with 84% and 81%, respectively, are the only Cotton Belt states reporting plantings at less than 90% complete. Although the vast majority of the crop is now planted, weather throughout the spring delayed planting and subsequent crop development.

As of June 14, USDA reports 10% of the crop squaring, which compares to 15% at this time last year and a five-year average of 21%. Notable delays are evident in several Southeast and Mid-South states. Alabama reports just 1% of the crop has reached the squaring stage, compared to an average rate of 17%. In the Mid-South, crop development delays are reported in Arkansas, Mississippi, Missouri and Tennessee.

USDA has released its initial evaluation of the crop’s condition with percentages of the crop rated as Very Poor, Poor, Fair, Good and Excellent. Currently, 6% is rated as Excellent with 39% Good. A total of 18% is in either the Poor or Very Poor category. State-level results are posted in the Economics area of the NCC’s website, www.cotton.org.

It is important to remember that current conditions reflect the acres that are intended for harvest and will not include the failed acres in south Texas.

The Cotton Museum at the Memphis Cotton Exchange announced plans for an expansion that will contain a contemporary-themed permanent exhibit and a classroom where students at all grade levels can experience cotton history first-hand.

The new exhibit and classroom, slated for completion by Sept. ’09, is being sponsored by Monsanto, Case IH and Cotton Incorporated. Simultaneously, the museum is developing a grade-level specific education program targeted to local elementary, middle and high school students. Plans call for the appointment of a Teacher Advisory Board to facilitate that process.

"With this expansion, we're dramatically enhancing our ability to fulfill our educational role within the community,” says Calvin Turley, the museum's founder and president. “We'll be able to accommodate more student groups and to enrich their learning experience at the museum. The history of cotton commerce - from field to fabric - is inextricably tied to the history of this region. Our mission is to share that history with the broader community."

The new exhibit will enable museum visitors to explore the history of cotton farming from a 21st century perspective and incorporates three key elements: advances in biotechnology, mechanization and environmental sustainability.

The Museum was founded in ’06 to share the US cotton industry’s story and its many influences on daily life, the arts, and the development of this region with students, residents, and visitors. Since then, it has established itself as the most important national museum devoted to cotton.