WTO Framework AgreementSets Stage
for Next Round DOHA Round Negotiations

LUBBOCK, August 6,2004                       By Shawn Wade

     Reaching a consensus of the 147 member nations of the World Trade Organizationis never an easy task, but that is what happened in Geneva, Switzerland lastweek as the organization put its stamp of approval on a new framework agreementdesigned to be the roadmap for completing the Doha Round.

      For U.S.cotton producers, the framework increases the uneasy feeling that the programsthat support them will continue to be held out as the cause of the world'sproblems and marked for unequal treatment as the negotiations move forward.

      Thefocus of Plains Cotton Growers and others at this time is to somehow graspexactly what the new framework might mean when the agriculture negotiationsreconvene next month.

      Thefirst opportunity for the cotton industry as a whole to discuss the agreementwill be August 6-8 in Albuquerque, NM at the American Cotton Producers meeting.

      ACPTexas Board member and PCG Secretary-Treasurer Barry Evans will be attendingthe meeting in Albuquerque. Joining Evans will be current PCG President RickeyBearden, Executive Vice President Steve Verett and former ACP Chairman and PCGChairman Mark Williams.

      TheACP is the producer arm of the National Cotton Council that serves as thenational voice for cotton producers on legislative, regulatory and tradeissues.

     During the ACP meeting, chief U.S. agriculture negotiator Allen Johnson willdiscuss the latest WTO developments via conference call with the ACP delegatesincluding the new framework agreement and the potential impacts on cotton.

      Thebuzzword for the agriculture framework is "harmonization" and themajority of the comments by U.S. trade officials point out that the agreementsets up a course that can ultimately bring about the elimination of exportsubsidies and significantly reduce the domestic support payments from currentlevels.

      Aswith any negotiation, the devil will be in the details of the next WTOagriculture agreement. How well those details are addressed will determine itseventual effect on U.S. growers.

      Thereis evidence that the U.S. negotiating team was listening to the concerns of theU.S. cotton industry as an attempt by African countries to split cotton out ofthe overall agriculture negotiation process was denied. However, specificreferences to cotton in the framework text continue to be a significantconcern.

      Amongthe cotton specific language is the creation of a subcommittee on cotton toensure "appropriate prioritization" of cotton issues within the scopeof the full agriculture negotiation process.

      Thespecial subcommittee on cotton will report to the Special Session of theCommittee on Agriculture to review progress on cotton related issues.

      Thecotton subcommittee's job will be to address all trade distorting policiesaffecting the sector in the three areas of work specified in the Doha text andthe new framework agreement: market access, domestic support and exportcompetition.

      Oneof the most misunderstood parts of the new framework is a provision setting upan initial 20 percent reduction in the overall level of trade distortingdomestic farm payments allowed in the next WTO agreement on agriculture.

      Theconcern among U.S. growers is that the cuts would begin right away andadversely impact the delivery of support through the 2002 Farm Bill.

      Thisis definitely not the case. The framework developed last week is really just aset of guidelines set forth to steer future negotiations and that process isnot anticipated to be completed before December 2005 and could take evenlonger.

      Thisinitial reduction in allowed support levels would specifically apply only to Developedcountries such the U.S. and the European Union that provide the highest amountsof direct support. The reduction would be implemented during the first year anew WTO agreement is in effect.

      The20 percent reduction is being termed a down payment, or the first installmentof cuts to be negotiated, and would be subtracted from each countries boundAggregate Measure of Support (AMS), Blue Box and de minimus support programs. Payments includedin the U.S. Aggregate Measure of Support are mostly categorized as Amber Boxpayments.

      Thisis relevant to cotton since current U.S. Amber Box benefits include theCounter-Cyclical payments, Step 2 and Loan Deficiency Payment/Marketing LoanGains (LDP/MLG) benefits.

      Onepotential bright spot is that the text appears to open the door for areclassification of the U.S. Counter-Cyclical payment program to be part of therevised Blue Box and therefore subject to a separate cap on allowable spending.

     According to U.S. officials the allowed level of support would be approximately$49 billion.

      Thekey point according to USDA Under Secretary J.B Penn is that the 20 percentreduction agreed to in the framework is "in permitted levels, not actuallevels". Penn went on to say, "You can cut 20 percent from yourpermitted level and not cut anything at all."

      Fromthat point, additional reductions would be implemented according to a tieredformula that will supposedly be designed in a manner that asks for deeper cutsby higher subsidizing countries and requires lesser cuts by countries thatprovide less in direct support payments to growers.

 

2003-CC PaymentCalculation Update

LUBBOCK, August 6,2004                       By Shawn Wade

     Perhaps the only positive spin a producer can put on the recent slide in cottonprices is that it halted any further decline in the 2003-Counter-Cyclicalpayment rate that might have resulted in producers who received an advance CCpayment last fall from owing money back to the government.

      Withthe end of the 2003 marketing year, the only thing left to do now is finalizethe July market numbers and figure in any data that may have been received, butnot yet included, in the totals reported for previous months.

     According to NASS procedures, survey participants are allowed to submit revisedor missed data for any month of the marketing year survey period. NASS uses acomprehensive survey process to assemble the data used to develop the estimatedlevel of marketings and the prices paid to growers.

      Forthose who are tracking the monthly numbers and using them to generate an estimatedWeighted Average Price Received this final adjustment can sometimes create aslightly different final Weighted Average Price than they had estimated.

      Calculations based on currentestimates indicate the final 2003-crop Counter-Cyclical payment rate would beapproximately 3.21 cents per pound. Producers who received an advance CCpayment would receive the difference between the amount of the advance and thefinal payment rate. The first, and only, advance payment issued for the 2003CCP payment was 2.01 cents.

      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 ended July 31, 2004.

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

 

Average PriceReceived Through June 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

403

11,193

60.50

62.52

July

---

---

59.30*

---

Source: NationalAgricultural Statistics Service; * = preliminary

 

 

 

Don't Forget The 2004 HighPlains Ag Expo In

Dumas, TX - Aug. 24, 25,26

LUBBOCK, August 6,2004                       By Shawn Wade

     Farmers and ranchers from a five state area are being encouraged to attend the2004 High Plains Ag Expo in Dumas, Texas on August 24-26.

      Thethree-day event, sponsored by Premier Events, LLC of Burnsville, Minnesota,will provide an opportunity to view 250 exhibits and demonstrations involvingthe latest products and technologies available to agricultural producers.

      TheHigh Plains Ag Expo is hosted by Moore Farms of Dumas, Texas. The show site islocated one mile east of Highway 287-87 on 14th Street. Located onUS Highway 287-87, Dumas is forty-five miles north of Amarillo, Texas.

      Showhours are 9:00 am to 7:00 pm August 24, 9:00 am to 5:00 pm August 25, and 9:00am to 4:00 pm August 26.

      Forthose interested primarily in cotton, August 24 is designated as "CottonDay" at the Expo and will feature a Commodity Breakfast and CottonIndustry Program and workshop. Continuing education credits for private andcommercial pesticide applicators is available to those attending the cottonprogram.

      Themorning meeting is designed to introduce Plains Cotton Growers, the NationalCotton Council, the Cotton Board and Cotton Inc. to the growers new to cottonindustry. The afternoon meeting will be devoted to a cotton production workshop.

      Ifyou are interested in attending the Expo and staying in Dumas you are advisedto go ahead and make your reservations.

      TheHigh Plains Ag Expo's official host hotels are the Comfort Inn/Dumas (Phone:806-935-6988) and the Days Inn/Dumas (Phone: 806-935-2222). Other Dumas hotelsare:

     Holiday Inn Express                      806-935-4000

      DumasInn                                   806-935-6441

      Super8                                         806-935-6222

      BestWestern Windsor Inn            806-935-9644 or

                                                           800-661-7626

      SuperInn                                     806-935-9281

      EconoLodge                                806-935-9098