Plains CottonGrowers, Inc.

Making A Difference


         Since 1956 PCG has been advocate for the cotton growers of the Texas HighPlains. PCG's officers, Board and staff take this responsibility seriously andstrive to continue to fulfill the role of advocate. Even though today'slegislative and regulatory climate is increasingly hostile towards agriculture,PCG continues to maintain good working relationships within the legislative andregulatory arenas. Working on these relationships allows PCG staff members tobring producer concerns directly to the individuals that make key decisions.Working on its own, as well as in concert with organizations such as theNational Cotton Council, the Texas Agricultural Council, the Texas Ag Forum,the Texas Farm Bureau and many others, PCG has the ability to bring the factsabout a situation directly to those who need to hear it most.

         Farmers are perhaps the most vulnerable of agriculture's segments since theyare the least likely to find time to contact those deciding their fate inWashington or Austin. That is where PCG makes the biggest impact for itsmembers. PCG builds and maintains the relationships that most producers havelittle time to develop on their own.

         Agriculture's support in Congress has been on a steady decline for many yearsas more of the US Population shifts to urban areas. Likewise, the days whenagriculture could easily guarantee passage of important initiatives has passed.Winning small victories as issues arise has been the key to getting legislationand regulation to work for agriculture over the past few years. PCG has the connectionsto help win these battles and to lay the groundwork for future efforts.

         We look forward to being the advocate for High Plains cotton for years to come.



Disaster Assistance


2003/2004 CropDisaster Program

         Devastating weather impacted a significant portion of the Texas High Plainsduring the 2003 and 2004 growing seasons. In 2003 almost 1 million acres ofhigh yielding irrigated cotton acreage was lost to a string of hailstorms thatcrisscrossed the area throughout the growing season. As a result of thedisastrous economic impact of these losses on cotton producers and alliedbusinesses in PCG's service area, the Plains Cotton Growers Board of Directorsgathered information about the scope of the losses and began communicating theneed for a broad emergency assistance effort. Initially this effort focused onobtaining county level disaster declarations and developing Congressionalsupport for a 2003 Crop Disaster Program. As with many recent political andlegislative initiatives, the drive for a 2003 Crop Disaster Program stretchedthrough the 2004 growing season and finally reached a critical mass during the2004 hurricane season when Florida was hit by multiple storms. Building on thenew outcry for federal assistance to offset Florida's losses, PCG's ongoingefforts to keep the needs of High Plains producers on the Congressional radarscreen began to pay off. As a result of its long-term effort, PCG played apivotal role in securing the 2003/2004 Crop Disaster Assistance program.

         In the end PCG worked closely with former Congressman Charlie Stenholm andCongressman Randy Neugebauer to secure the 2003/2004 agriculture disasterpackage. As the process unfolded Rep. Neugebauer ultimately found himself in aposition to develop and include an Ag disaster package in the broaderassistance package Congress developed to deal with Florida hurricane situation.Staying in touch and maintaining a strong working relationship with keyCongressional leaders allowed PCG to play a significant role in the developmentand passage of the 2003/2004 Crop Disaster Program (CDP), but PCG's involvementdid not stop there. Following passage PCG shifted its focus to making sure thatbeneficial Crop Disaster Program rules the organization had helped secureduring development of the 2001/2002 Disaster Program were carried forward intothe 2003/2004 CDP. The following beneficial regulations will be part of the2003/2004 CDP:


Use of aSingle Non-harvest Factor - Prior to the 2001/2002 CDP a multi-level Non-harvest factor imposedgreater benefit reductions on producers who lost crops early in the season

PriceSelection –Producers allowed to choose higher of the Federal Crop Insurance Price or theNational Average Price Received to determine CDP benefit cap level.

YieldSelection –Producers allowed to use higher of the County Average Yield or the applicableCrop Insurance APH Yield to determine eligibility and CDP benefit level byunit.

QualityAdjustment –Development and implementation of a Bale-by-Bale Quality Loss Program (QLP) toprovide assistance to growers whose yields did not fall below the CDPqualification threshold, but who suffered significant economic injury due toexcessive quality losses that adversely affected value and marketability oftheir crops.

Federal Crop Insurance

         Federal Crop Insurance is an important part of the risk management solutionsavailable to producers. As such changes to the program are continuallymonitored by PCG to determine whether they will provide positive or negativeimpacts to producers. PCG continues to fight for effective reforms so that theCrop Insurance program provides cost-effective alternatives for riskprotection.


Final Planting Datesand Appraisals for Non-Emerged Seed


          In June of 2002 Plains Cotton Growers, Inc. learned that USDA's Risk Management Agency had announced changes to new rules deferring appraisals at least 15 days beyond the applicable late planting period in cases where spring-seed crops fail to emerge due to drought conditions.

         PCG immediately took up the issue and worked closely with officials at RMA, theHouse Agriculture Committee and Texas Cooperative Extension and the TexasAgricultural Experiment Station to provide RMA decision-makers with the dataillustrating the need to revise the rules for non-emerged crops in 2002. Thanksto the help of Texas Cooperative Extension's Dr. Randy Boman and the TexasAgricultural Experiment Station's Dr. John Gannaway, who helped find andevaluate data requested by RMA during this process, a change was announcedlater that month.

         The announcement changed the current rule that required appraisals onspring-seeded crops which fail to emerge due to insufficient soil moisture tobe deferred for at least 15-days after the end of the applicable late plantingperiod. The revised rule reduced the deferral time to at least 5 days after theend of the applicable late planting period. Additional time may be added to the5-day deferral period if the insurance provider believes a situation existsthat necessitates a longer deferral period. The announcement, published in FCICBulletin MGR-02-011, applies only to Texas cotton acreage in counties with June10 or earlier final planting dates.

         Unfortunately, the change included in MGR-02-011 only applied to the 2002 cropin a specific set of Texas counties. PCG continues to discuss the issue withRMA in an effort to secure a more permanent solution.


Compromise Developed

             Agreeingthe best way to find solutions was to sit across the table from one another,exchange information and fully discuss viable alternatives may prove to be theturning point in the long-running dialogue between Plains Cotton Growers, Inc.and the USDA Risk Management Agency.

             Representativesfrom PCG and the Risk Management Agency met in Kansas City February 16 and madesignificant progress toward a compromise solution on the issue that protectsthe interests of both High Plains cotton producers and RMA.

             Themeeting's positive result should also allow the process to shift from seekingsolutions to finalizing an agreement. TO date a final decision has not beenissued by RMA on this issue although a decision memorandum has been developedand forwarded to RMA Administrator Ross Davidson in Washington, DC.

             PCGhas continued to communicate with RMA personnel and reiterate the importance offinalizing the agreement and finding a way to temporarily implement the rule in2005.

             "Themembership of Plains Cotton Growers is extremely appreciative of the Agency'swillingness to work toward an equitable solution on the deferred appraisalissue," says PCG Executive Vice President Steve Verett. "Working together wehave crafted what we believe will be a solution that allows producers to maketimely farm management decisions and maintains actuarially sound riskmanagement products for the U.S. cotton producer."

             PCGoffers its sincere thanks to Dr. Randy Boman, Extension Cotton Specialist, Dr.John Gannaway, Texas Agricultural Experiment Station Cotton Breeder, andNational Cotton Council Vice President - Producer Affairs Craig Brown, ofMemphis, TN, who participated in the meeting with PCG Staff members SteveVerett and Shawn Wade, and to the USDA-RMA personnel who were involved in themeeting.

             RiskManagement Agency personnel that participated in the meeting were: David Hatch,Associate Administrator, RMA; Tim Hoffmann, Director, Product DevelopmentDivision; Heyward Baker, Director, Risk Management Services; Ann Jenkins,Insurance Management Specialist; Kent Lanclos, Senior Economist; Dave Bell,Chief, Product Development-Loss Adjustment Standards; Sam Cameron, Senior RiskManagement Specialist; Shirley Harris, Risk Management Specialist; and TaraPonds, Risk Management Specialist.



RMA Announces T-YieldUpdate / Modifies Rules Per PCG Input

         Based on PCG's understanding of current provisions the T-yield change initiallyproposed by RMA would have impacted growers in two significant areas.

         First, it would have impacted the grower's APH calculation when 60 percent of theT-Yield is substituted for low yields or zero production incurred in disasteryears. Second, it will reduce the Yield floor (80 percent of T-yield) thatestablishes minimum coverage levels for all producers.

         PCG efforts to modify the calculation to relate to yield per harvested acrewere unsuccessful. As it stands now T-yields in effect for the 2002 crop yearwill be based on the average yield per planted acre for the 1991-2000 cropyears.

         PCG and other cotton groups concerned about the update and its effects wereable to persuade RMA to modify the final ruling and allow growers to retainprevious T-yield substitutions at the 2001 level.

         Growers were concerned about RMA's decision to update cotton T-yields due tothe fact that these yields are used to calculate substitute yields plugged intoa producers Actual Production History (APH) yield calculation for years inwhich no crop was harvested and a zero yield exists. Growers are allowed tosubstitute 60 percent of the County T-yield following changes made a couple ofyears ago.

         The concern of growers was that in many areas that have experienced significantcrop losses for several years the new calculation would significantly lower theCounty average yield and subsequently lower the substituted yields in their APHcalculations, especially since early indications were that the substitutionswere to be done dynamically each year based on the current T-yield value.

         The potential impact of the situation would have been a significant reductionin coverage levels for many growers.


Farm Security and Rural InvestmentAct of 2002


PCG Submitted Recommendations For Farm Bill in June 2001

         PCG's positions have reflected the needs and interests of cotton growers on theTexas High Plains and what they feel is necessary for survival in theshort-term as well as what they feel would best provide the strengthened safetynet that they need for the future.

         PCG worked closely with its producer Board members and had many conversationswith growers and industry leaders to derive a comprehensive proposal forconsideration as part of the broader effort to craft improved farm policy.

         In this regard PCG has advocated several program alternatives as well as thestrongly held belief that the marketing loan program should be retained withtwo important modifications. The first is the return to a formula derived loanrate and the second is the need to increase the minimum cotton loan rate to notless than 60 cents per pound in recognition of the increased cost associatedwith producing a crop. Also high on PCG's list was the importance of continuedfunding for Step 2 and availability of generic certificates to help keep U.S.cotton competitive and moving to market.

         PCG's stance on the loan makes up the first of a three-part program to achievean overall level of support for cotton of not less than 80 cents per pound. Theother key parts of the plan include development of a counter-cyclical supportmechanism similar to the Target Price system used in the 1990 Farm Bill.

         Payments under the PCG version of the Target Price mechanism would be coupledto planting and paid based on modified payment yields reflecting the higher ofa grower's current APH or the frozen 1985 payment yield used today. The thirdand last part of the safety net structure would be comprised of a fixedAMTA-style de-coupled payment in the 7-9 cent per pound range.

         PCG also discussed the idea of developing a short-term, Resource ConservationProgram that would allow producers to voluntarily set-aside less productive orhigher-cost acreage in exchange for a payment based on a 1-3 year contract.


PCG Made WashingtonRounds

         Getting into the halls of Government is usually not much of a problem; actuallytalking to the key Senate, House and Administration officials that sway thedevelopment of key legislation is typically a little bit harder.

         For Plains Cotton Growers the ability to talk to key decision-makers played apivotal role in making sure the situation of cotton producers on the HighPlains, and production agriculture in general, was communicated clearly. Theability to open a two-way dialogue also provided PCG the opportunity to putforth a number of potential solutions and see many of them carried forward.

         PCG officers, Ronnie Hopper of Petersburg, Rickey Bearden of Plains and MarkWilliams of Farwell, along with PCG Executive Vice President Steve Verett,talked about the needs of High Plains cotton producers to the people thatultimately decided if the Farm Bill process would completed in time to helpproducers in 2002.

         Key points of the message delivered included reemphasizing the critical natureof the situation and the potential effects it will have on grower financing in2002; encouraging the quick completion of a Senate Farm Bill package; and theneed to construct a bi-partisan Bill that could go to Conference with the Housepassed Farm Security Act of 2001.


PCG Increased Farm BillEfforts

         Lubbock based Plains Cotton Growers, Inc. took a bold step to crank up itseffort to get a farm bill in place in 2002.

         PCG's Executive Committee, under the leadership of the organization's presidentRonnie Hopper, voted unanimously to enhance grower representation and presencein the nation's capitol during the Fall of 2001. The group engaged former TexasLt. Governor Ben Barnes, and his firm Entrecorp, to help represent cottonproducers, especially those in West Texas, to members of the U.S. Senate andits Agriculture Committee.


Program Yield UpdateOption Provides Grower Flexibility

         One of the most underrated elements of the new Farm Bill has been the provisionthat allows growers the option to update program payment yields used for makingCounter-cyclical program payments.

         For veteran farm program participants the ability to choose the highest yieldis believed to be a first-time occurrence. In past farm bills when programpayments were tinkered with and payment yields updated it was a take it orleave it proposition. Either the producer took the updated payment yield, forbetter or worse, or they decided not to participate in the program at all.

         The Farm Security and Rural Investment Act of 2002 provides this unprecedentedoption to growers. For the first time producers will either be able to selectthe highest possible yield for use in making their counter-cyclical payments.

         Any way you cut it this freedom is something producers have never had beforeand will have a tremendous positive impact for all producers.


 Final Product Very Similar to PCGRecommendations

         One of the greatest testaments to PCG's ability to communicate High Plainsneeds is the fact that so many of the ideas advanced by the organization foundtheir way into the final product.

         Key parts of the Farm Security and Rural Investment Act that will strengthenthe safety net for growers include the retention of the marketing loan ( withgeneric certificates), inclusion of a fixed decoupled payment and the return ofthe Counter-cyclical payment structure.

         Altogether this provides a three-tiered safety net that provides a guaranteedamount of support when prices fall below pre-determined trigger levels.




         PCG has been continuously monitoring the activity surrounding implementation ofthe Farm Security and Rural Investment Act of 2002. PCG activities have includedmaking recommendations, reviewing and commenting on proposed rules andattending Farm Service Agency training sessions to better understand theprocedures that will be employed during sign-up and delivery of the newprogram.


Base/Yield Update Allows SeparateDryland/Irrigated Yield Plugs

         After several months of discussions and numerous conversations with USDA staffand the staff of the House Agriculture Committee, PCG is pleased to report thatits efforts, and the efforts of many others, USDA has modified the proceduresfor including substitute yield that can be used when actual yields fall below75% of the 1998-2001 County average yield. The yield plug is used when figuringupdated counter-cyclical payment yields.

         PCG's position on the issue was that USDA's original rule did not fully takeinto account the differences in production practices that often exist under asingle farm serial number and the fact that farms can often be listed under asingle farm serial number, but not be physically located near one another.

         These differences, it was argued, should allow growers who have adequateproduction records to differentiate between farms on the basis of productionpractice and/or location should be allowed to utilize the yield plug procedureon a field by field.

         Apparently USDA listened to PCG's argument as well and this week sent outupdated instructions allowing producers to include either a dryland orirrigated yield plug when the actual yield for either production practice fallsbelow the 75% County average threshold.

         The process will require producers to provide adequate records of theproduction by each practice on the farm and for the County FSA personnel tomanually replace the actual production under the practice with the appropriateyield plug. In FSA terminology the yield plug is referred to as either thedryland or irrigated minimum production figure.



Pesticide Labeling and Regulation


         Making the best and safest tools available for producers has always been a goalof PCG in its dealings with the Environmental Protection Agency and otherregulatory agencies with jurisdiction over pesticides and pesticide issues.

         In recent years PCG supported efforts to obtain emergency labeling for a numberof products on behalf of cotton producers. Furadan® 4F, for lateseason aphid control, and Pirate®, for beet armyworm control, are two thatreadily come to mind.

         This was not the first time PCG has stepped up to gain the availability of amuch needed new product. In 1992 PCG played the central role in preparing theSection 18 request for Baytan® 30 Flowable Fungicide, a product nowcommonly used to treat planting seed for protection against Thielaviopsisbasicola, (Black RootRot).


Eliminating BurdensomeRegulations

         PCG played a pivotal role in helping eliminate the requirement that cotton ginsseparate gin trash from Furadan® treated cotton fields.