RMA Denies PCG Request; Promises To
Work Toward Solution On Non-Emerged Seed Issue

LUBBOCK, July 2, 2004                             By Shawn Wade

      USDA'sRisk Management Agency has denied a request from Plains Cotton Growers to waivethe agency's 8-day deferred appraisal period for non-emerged seed in severalTexas High Plains counties. In a letter sent to PCG, RMA officials said thatthey believe the agronomic data they reviewed supports their position to leavethe rule unchanged for 2004.

      PCGofficials note that a combination of a complicated issue and a rapidlyadvancing calendar eventually created a situation that would have limited thebenefit a producer could have derived from a late deviation announcement. Hadit been granted the deviation would have allowed for appraisal and release ofdry planted cotton acreage at the end of the region's late planting periods.

      Eventhough the agency's decision and the calendar have closed the door on the issuefor the 2004 growing season, RMA officials have expressed a willingness to sitdown and discuss a permanent solution that addresses the concerns raised byPCG.

      Bothgroups have agreed to keep discussions open and work toward an equitablesolution. PCG officers, traveling to Washington as part of a Texas CottonProducers contingent are working to set up a meeting with RMA to begin theprocess.

      Undercurrent rules, seed planted into dry soil that does not receive adequatemoisture to emerge cannot be appraised or released to an alternate use until 23days (15-day late planting period plus 8-day deferred appraisal period) afterthe final planting date for the crop.

      PCG's concerns with the imposition of the deferred appraisal period wereoriginally voiced in 2002 when the rule was first enacted. Since that time therule has been modified, but not in a manner that fully addresses the issuesraised by PCG.

      Ofprimary concern is the potential that a rainfall event after the end of thelate planting period can bring dry planted seed to a stand. A late emergingstand creates a situation where the producer can be involuntarily required togrow and care for a crop with significantly reduced yield potential and littlechance of producing a positive economic return.

      Lookingat the issue of a late emerging stand from a different angle, a producer whowanted to plant after the end of the late planting period and achieved a standon the same rainfall would be considered uninsurable by RMA.

      Asecond PCG concern is that even though the crop does not emerge by the end ofthe deferred appraisal period, the producer has been unnecessarily forced todelay time sensitive management activities necessary to switch to an alternatecrop.

Hail Adjustment Procedures DrivenBy RMA Rules

      Producersacross the Texas High Plains are in the process of receiving adjustments onhail damage received over the past few weeks. The largest area dealing withthis process now is in Floyd, Swisher, and Briscoe counties.

      Thefirst thing people seeking adjustments need to be aware of is that theprocedures used to appraise damaged cotton, either by hail or other causes, isdictated by rules developed by RMA personnel. Individual companies areresponsible for carrying out the appraisal process according to the guidelinesprovided to them with relatively little leeway.

      Amongthe rules that all companies must follow are the minimum number of days (seven)that must pass before an adjustment can be made following a hail event.Individual companies have the leeway to either allow producers to leaverepresentative strips that can be adjusted, or to require the entire field tobe intact at the time of adjustment.

      Specificadjustment procedures used at this time of year are based on a combination ofstand reduction evaluation and then a hail damage evaluation to determine the overalllevel of plant destruction that occurred in the field.

      Themethod is quite involved and is designed to take into account both thepercentage of a stand that remains in the field and the average condition ofthe plants that are left.

      Thefinal appraisal is then computed to estimate either the amount of yieldpotential that remains or the amount of potential yield that was lost dependingon the viewpoint.

      Aswith any procedure some judgment calls have to be made in the field by theadjuster. Probably the most frustrating of these calls is how each adjusterdetermines what is or is not a live plant for purposes of determining theamount of stand reduction and then evaluating the level of damage to the plantsconsidered to be alive and their chances for recovery.

      RMAadjustment procedures are fluid from year to year and the agency attempts toimprove and simplify them to provide the most accurate evaluation of a crop'spotential at any given time during the growing season. PCG is constantlyworking with the agency to evaluate and develop appraisal procedures, and toidentify areas where current procedures could be made better or replaced withbetter methods.

 

TASS Reports 2004 Planted Acreage;
May Marketing Figures Added To CCP Calculation

LUBBOCK, July 2, 2004                             By Shawn Wade

      USDA'srelease of the first survey-based accounting of the acres planted in 2004should help clear the picture of just where the Texas High Plains stands, ormore accurately where the crop started acreage-wise, in 2004.

      Basedon an early June sampling of cotton producers, the Texas AgriculturalStatistics Service (TASS) has projected the High Plains region, or morespecifically Texas crop reporting districts 1-N and 1-S, began 2004 with 3.72million acres of cotton and indicates a 159,000-acre increase over 2003acreage.

      Thisis, perhaps, a slightly different number than some were expecting. Strongprices for corn and other crops that are options for producers in mostlyirrigated, northern areas of the High Plains had been expected to take acreageaway from cotton.

      Thatdoes not seem to be the case as crop reporting district 1-N is estimated tohave planted some 890,000 acres in 2004, 64,000 acres more than were planted in2003 for a projected increase of 8 percent.

      TASSdistrict 1-S, which includes the majority of the cotton acres on the HighPlains, is projected to increase acreage a modest three percent in 2004. TASSfigures indicate a total of 2.83 million acres planted to the region's numberone field crop. If these figures hold true it will amount to an acreageincrease of 95,000 acres from 2003.

      TheTASS report has significantly refined the picture of how many acres the HighPlains planted to cotton in 2004. Attention will now begin shifting to theproduction side of the equation, even though it is still too early to reallybegin talking about what the region might produce in 2004.

      Earlyseason estimates of how the Texas High Plains cotton crop is faring are usuallya mixture of educated guesses, fact-based rumors and information gleaned fromcasual conversation. The 2004-crop year has been no different up to this point.

      AsPCG reported last week, cotton acreage lost so far continues to tally below thelong-term average for the region. Most estimates at this time point tosomewhere between 300,000 and 400,000 acres that have either been lost or arelikely to be written off due to insufficient moisture to establish the crop.

      Splittingthe difference on that range and subtracting 350,000 acres from the TASS plantedacreage figure indicates as many as 3.37 million acres are standing on the HighPlains.

May Numbers Add Little to 2003 CCPayment Calculation

      Theaddition of 360,000 bales of production at an average price of 60.6 cents didlittle to move USDA's weighted average price calculation, which now includes 10months of information.      Some adjustments may be made toindividual months before the final weighted average price is announced and thatfigure is plugged into the 2003-Counter-Cyclical payment formula thatdetermines the final payment rate.

      Based on current estimates, thefinal 2003-crop Counter Cyclical payment rate would be approximately 3.13 centsper pound. Producers who received an advance CC payment would receive thedifference between the advance payment rate and the final payment rate.

      The2003 Counter-Cyclical payment rate authorized under the 2002 Farm Bill will bebased on the 12-month Weighted Average Price Received by growers. For cottonthe 12-month Weighted Average Price will reflect price and bales marketed forthe 2003 marketing year. The 2003 cotton marketing year began August 1, 2003and ends July 31, 2004.

      Thefollowing table shows the average price received each month by farmers and theassociated Weighted Average Price based on cumulative bales marketed throughMay 2004.

 

Average PriceReceived Through May 2004

For 2003-crop UplandCotton

(Weighted by balesmarketed)

 

Bales Marketed

Prices

 

(000's of Running bales)

(cents/Lb.)

 

Monthly

Cum.

Monthly

Weighted

August

420

420

46.30

46.30

September

769

1,189

55.70

52.38

October

1,783

2,972

68.00

61.75

November

1,912

4,884

63.40

62.40

December

1,938

6,822

64.10

62.88

January

1,546

8,368

62.50

62.81

February

1,422

9,790

62.70

62.79

March

167

9,957

59.40

62.74

April

473

10,430

61.20

62.67

May

360

10,790

60.60

62.60

June

---

---

60.60*

---

Source: NationalAgricultural Statistics Service; * = preliminary