WTO CottonAppeal Hearing Dec. 13 in Geneva

LUBBOCK, December 10, 2004           By Shawn Wade

      Written submissionsfrom the U.S. and Brazil have been filed and the second round of the BrazilCotton dispute appeal process is set to get underway December 13 in Geneva,Switzerland.

      Thestart of oral arguments is the next step in the U.S. effort to appeal thefindings of the WTO Dispute Panel that heard the initial complaint from Brazilcharging U.S. cotton support programs of driving down prices and unfairlyincreasing U.S. export market share.

      Cotton industryrepresentatives from the National Cotton Council have been working very closelywith staff from the U.S. Trade Representative’s office and USDA to developarguments, strategyand counter-points to be used during the U.S. presentation.

      The U.S. appeal willchallenge muchof the first dispute panel’s ruling by focusing on what U.S. cotton leaders aredescribing as “inaccurate and misleading” economic analysis submitted byBrazil.

      It is expected thatthe decision of the panel hearing the appeal will be finalized during the February/Marchtimeframe. If the decision comes then it could coincide with Congressional reconsideration of U.S.participation in the WTO and possibly impact that debate.

 

2004 HarvestPicking Up Steam As The High Plains
ApproachesThe 50 PercentPlateau

LUBBOCK, December 10, 2004                 By Shawn Wade

      The 2004 crop yearcontinues to have producers and crop watchers alike on the edge of their seats eventhough recentweather conditions have allowed producers to move more cotton from the stalk tothe module.

      The improved weatherconditions should also provide a rebound in quality readings as modulesharvested in less than ideal conditions before Thanksgiving are finally ginned.

      Latest reportsindicate the 2004High Plains cotton crop is nearing the midway point of the harvest season. Producers continue theirpush for additional progress over the next 10 days to take advantage of weather forecaststhat remainfavorable.

      Thefirst ten days of December provided the favorable weather a majority of theregion needed to dry out and generate the recent surge in harvest progress. The goal for the area over the next two weeks isto reach the 75-80 percent harvested stage before Christmas.

      According tothe Texas Ag Statistics Service the area planted an estimated 3.69 millionacres and is expected to harvest 3.37 million acres. With half of that totalleft to workthrough, aconsiderable amount of work remains.

      Despite thesometimes-rough weather that has affected the area, the crop has fairedsomewhat better than many might have predicted because of the increased acreage of newer, open-boll varietiesthat have become popular the last few growing seasons. Tempering thatperformance, however, is the realization that some lint has been lost.

      Fortunately forproducers, the 2004 crop’s projected yield per acre is allowing a broadertolerance for lint loss. That might not be the case, however, in a year where everylock of cotton counts and yields are less than ideal.

      As was noted earlier, most area gins are about finished ginningthe cotton they had on the yard and were able to retrieve from wet fields overthe Thanksgiving weekend. Much of this cotton was stripped in less thandesirable conditions and was a considerable challenge for both producers andginners.

      Harvest progresssince that time means modules are again stacking up on gin yards and in fields at astaggering pace. Gins are quickly getting back to running at full capacity and bale sampleswill soon beginto create backlogs at the USDA Agricultural Marketing Service Cotton DivisionCotton Classing offices in Lubbock and Lamesa.

      Kenny Day, Directorof the Lubbock Cotton Classing office, reports that the office is currentlyoperating 33 High Volume Instrument (HVI) machines and expect to have another 7on-line soon. Once all the HVI lines are operational, the Lubbock officeshould be able to sustain a 45-50,000 sample per day pace.

      Lamesa ClassingOffice Director Alan Wells reports his staff is operating 10 HVI lineswith one more on the way. They are currently maintaining a 10-11,000 samples per day pace.

      The two High Plainsoffices are estimating they will process some 4.3 million running bales during the 2004harvest season. Lubbock’s latest gin survey estimates it will receive 3.3 million running bales andthe Lamesaoffice is expectingto receive 1 million running bales this season.

      Grades reported bythe Lubbock and Lamesa Classing Offices provide the best snapshot of the cropand illustrates just how rough the cotton harvested around Thanksgiving turned out tobe. Fortunately area gins seem to be working through the situation. Day and Wells saythey expect gradesto improve as recently harvested cotton becomes more prevalent.

      Cotton classed overthe past two weeks received lower color grades and hada sharp increase inbark levels compared to cotton harvested before Thanksgiving.

      Reports from theLubbock and Lamesa Classing offices show that 40-50 percent of the 486,153 bales classed between November 25 and December 9 were called barkybales.

      These bales alsofell predominantly in the Light Spot to Tinged Color grades due to the effectsof poor harvest conditions and damage that occurred while the wet cotton wasstored in the module prior to ginning.

      Overall crop qualitycontinues to be good, however, despite the bales run over the past two weeks. Forthe season, Colorgrades at theLubbock and Lamesa Classing offices are averaging a Strict Low Middling (31).

      Length and Strength seem to be becoming the signature qualitiesof the 2004 crop. The Lubbock Classing office is averaging slightly better than34.5 Staple readings and 29 grams/tex Strength measurements.

      Lamesa Classingoffice reports show that cotton moving through that office is hovering near anaverage Staple length of 35 with Strength readings averaging 28 grams/tex.

      One of the biggest areasof concern for the 2004 crop has beenMicronaire. That concern has apparently been justified. So far a significantportion of the 1,195,714 bales classed through December 9 have recordedmicronaire readings below 3.5.

      Micronaire readings below 3.5 are penalized underthe Commodity Credit Corporation Loan Premium and Discount Schedule. To date the average micronairereadings reported by the Lubbock and Lamesa Classing offices are 3.4 and 3.6,respectively.

      The good news on this front is that micronairereadings continueto inch higher as more of the crop is harvested and ginned.

      Fieldwork continuesto go full blastas producers work to harvest as much as possible before the next weather event arrives and slows things down.

      Producers wishing tooptimize machinery settings to improve harvesting efficiency and minimize lintcontamination from barkare encouragedto take a few minutes to revisit the information in the "2004 HarvestAid Guide" authored by Dr. Randy Boman and others, and published by TexasCooperative Extension.

      The "2004Harvest Aid Guide" is available online at:

http://lubbock.tamu.edu/

      To download theentire 2004 guide use the following link: http://lubbock.tamu.edu/cotton/pdf/2004harvaidhandout.pdf

      The information included in theguide could make a tremendous difference in the quality of the crop harvestedin 2004, especially under less than ideal weather conditions.

 

2005 EQIPPDG Sessions Schedule

      Farmers and ranchershave their opportunity to direct the flow of Environmental Quality IncentiveProgram funds in their County through participation in a series of meetingsrunning through December 14.

      Known as ProgramDevelopment Group (PDG) meetings, they offer farmers and ranchers anopportunity to offer their ideas and feedback on the EQIP program and how localfunds are prioritized.

      Thiswill be the second year for the PDG meetings to be held. Last year producerparticipation helped target EQIP funds on high value investments such ascost-sharing the installation of high efficiency drip irrigation and LEPAcenter pivots.

      Timesand locations of the PDG meetings are listed below.

 

EQIP Program Development Group (PDG)

      Meeting Dates, Timesand Locations

County:

Date:

Time:

Location:

Collingsworth

12/13/04

7:00PM

Salt Fork SWCD Bldg.

Terry

12/13/04

8:00AM

Brownfield NRCS office

Lynn

12/14/04

8:00AM

Life Enrichment Center

Yoakum

12/14/04

8:00AM

Plains Community Center

Childress

12/14/04

9:00AM

USDA Bldg. Annex, Childress

Floyd

12/14/04

9:00AM

Floydada NRCS Office

Randall

12/14/04

9:00AM

Farm Bureau Office, Canyon

Swisher

12/15/04

1:00PM

County Annex Building

Hall

12/15/04

9:00AM

Bronze Room, Memphis

 

Nebraska Governor Named to Replace

Ann Veneman as Secretary of Agriculture

LUBBOCK, December 3,2004 By Shawn Wade

Nebraska Governor MikeJohanns is President George Bush’s choice to take over as U.S. Secretary ofAgriculture.

Johanns, 54, is a2-time Republican Governor of Nebraska and brings a strong agriculture pedigreeto the Bush Cabinet.

Raised on a dairy farmin Iowa, Johanns also holds a law degree from Creighton University in Omaha,Nebraska, and has a track record of streamlining and improving governmentoperations.

Johanns has also been along-time proponent of agriculture and rural development. He brings a strongbackground on key Ag policy issues including ethanol and value-addedagriculture.

“The selection of GovernorJohanns by President Bush appears to reinforce the Administration’s commitmentto agriculture. We should have a leader at USDA that understands producers andthe many facets of agriculture that exist in this country,” says PCG ExecutiveVice President Steve Verett. “Johanns agriculture background appears to bebroad, with practical knowledge ranging from a family dairy operation in Iowato the larger-scale, irrigated and dryland agriculture that exists inNebraska.”

Verett said PlainsCotton Growers looks forward to getting better acquainted with the newSecretary and to working with him in the future.

 

FSA Seed Cotton Loan Program Provides Income Optionfor Producers in 2004

LUBBOCK, December 3,2004 By Shawn Wade

Producers interested insecuring a Commodity Credit Corporation Seed Cotton Loan on cotton harvested,but not ginned before the end of the calendar year, need to be aware of somechanges that will make it a little easier to avoid unwelcome tax problems dueto delayed harvest.

The tax implicationsfor a producer are two-fold. Producers unable to get their 2004 crop harvestedface the possibility of having what would normally be two years of income fallinto a single year. When this happens it creates an overly large tax situationin the following crop year and creates current year tax problems by not havingthe income expected for the current year in time to report for the 2004 taxyear.

One possible remedy isthe Seed Cotton Recourse Loan program offered by the Commodity CreditCorporation.

Through the programproducers with cotton harvested and stored in modules can apply for a recourseloan on the cotton and potentially generate a 2004 cash-flow that can bereported for tax purposes.

In the past, manyproducers who participate in marketing pooloperations have chosen not to utilize this mechanism because of the complicatednature of the process and the additional hassle it causes for themselves andtheir Cooperative Marketing Association (CMA). Recent rule changes however, shouldmake the program more attractive to CMA members in 2004.

The changes, announcedNovember 19, make it easier for a producer who needs 2004 income that can begenerated by the Seed Cotton Loan to do so and still participate in a marketingpool.

They essentiallyprovide marketing pool participants the same flexibility to use Form G loanproceeds to repay the seed cotton loan. Previously, only producers who used theForm A loan were allowed to direct marketing loan proceeds to repay anoutstanding seed cotton recourse loan.

For that reason, seedcotton recourse loans have not been a great option for producers whose cottonwould be marketed through a pool that uses the Form G loan program. Before therule change, cotton marketed through a CMA, that was pledged as collateral fora seed cotton recourse loan, had to have the seed cotton loan repaid before thecotton was allowed to be put into the Form G loan program. This requirementgreatly complicated the job of the marketing pool and the producer.

The changes announcedby FSA now require a County FSA office to verify several pieces of informationwhen a producer seeks to obtain a seed cotton recourse loan.

First, FSA offices willnow be required to determine if the producer is a CMA member by referring tothe producers file.

Secondly, the FSAoffice will provide the CMA with the applicable producer names and Farm SerialNumbers for all cotton pledged as collateral for a Seed Cotton Loan.

CMAs are technicallyrequired to monitor reports of seed cotton recourse loans made to CMA membersand contact the appropriate County FSA office to determine the status of themember’s seed cotton recourse loan.

If the seed cottonrecourse loan has been repaid, the CMA is free to process the cotton withoutfurther involvement by FSA or the CCC.

If it is determinedthat the seed cotton loan has not been repaid, and CCC has not released itssecurity interest in the cotton, the CMA is directed to issue a check jointlypayable to the producers and CCC for the Form G loan benefits payable for thecotton. The producers will then have to take the check to the FSA office andrepay the seed cotton recourse loan.

While these changesmake it easier for CMA members to access this program, it is still importantthat producers play an active role in the process by making sure information isbeing correctly exchanged between the CMA and FSA, and seeing that themarketing pool gets confirmation when the seed cotton loan is finally settledand the CCC lien has been released.

Continued on page 2


 

The reality of theprocess however, is that appropriate producer files will likely be flagged bythe CMA and any loan proceeds payable from farms where seed cotton loans wereobtained will be paid with a joint check until confirmation of loan repaymentand release of the CCC lien is received.

The main reason forthis is that producers can request seed cotton loans on individual modules andare not required to obtain the loan on every module produced on a particularfarm. Also, there is no practical way for the CMA to identify what bales comefrom a particular module. For the CMA it will likely be easiest to simply flagthe production from the entire farm and issue checks with CCC’s name on themuntil proof that the seed cotton loan has been repaid is obtained from theproducer or FSA.

It is in the producer’sbest interest to request written proof of the loan settlement and lien releasefrom FSA when the seed cotton loan is repaid. They can then deliver thatconfirmation to their CMA. After the lien is released, CMA issued checks willno longer list CCC as a joint payee.

 

Advance 2005 Direct Payments Available from FSADecember 1

LUBBOCK, December 3,2004 By Shawn Wade

Producers wanting tokeep additional farm income in the 2004 tax year may request a fifty percentadvance on their 2005 Direct Payment under the 2005 Direct and Counter-cyclicalProgram (DCP).

Requests for theadvance can be made at county FSA offices anytime after December 1, 2004 byproducers enrolled in the 2005 DCP program. To receive the advance in the 2004calendar year, producers must make the requests before the end of December andgive county offices adequate time to process the application and get thepayment made.

 

2005 EQIP PDG Sessions Scheduled

Farmers and ranchershave their opportunity to direct the flow of Environmental Quality IncentiveProgram funds in their County through participation in a series of meetingsrunning through December 14.

Known as ProgramDevelopment Group (PDG) meetings, they offer farmers and ranchers anopportunity to offer their ideas and feedback on the EQIP program and how localfunds are prioritized.

This will be the second year for the PDG meetingsto be held. Last year producer participation helped target EQIP funds on highvalue investments such as cost-sharing the installation of high efficiency dripirrigation and LEPA center pivots.

Times and locations of the PDG meetings are listedbelow.

 


 

EQIP Program Development Group (PDG) Meeting Dates,Times and Locations

County:

Date:

Time:

Location:

County:

Date:

Time:

Location:

Bailey

12/7/04

8:00AM

Five Area Telephone Board Rm.

Hutchinson

12/10/04

10:00AM

Holt Community Bldg., Holt

Hockley

12/7/04

8:00AM

Bank One Meeting Rm.

Ochiltree

12/10/04

9:00AM

Museum of the Plains

Lamb

12/8/04

10:00AM

Lamb County Electric Co-op Inc

Collingsworth

12/13/04

7:00PM

Salt Fork SWCD Bldg.

Garza

12/8/04

8:00AM

Post Community Center

Terry

12/13/04

8:00AM

Brownfield NRCS office

Cottle

12/9/04

1:00PM

Paducah NRCS office

Lynn

12/14/04

8:00AM

Life Enrichment Center

Hansford

12/9/04

1:00PM

First State Bank, Spearman

Yoakum

12/14/04

8:00AM

Plains Community Center

Donley

12/9/04

2:00PM

Courson RFO, Clarendon College

Childress

12/14/04

9:00AM

USDA Bldg. Annex, Childress

Carson

12/9/04

8:00AM

Panhandle NRCS office

Floyd

12/14/04

9:00AM

Floydada NRCS Office

Potter

12/9/04

9:00AM

NRCS Service Center, Amarillo

Randall

12/14/04

9:00AM

Farm Bureau Office, Canyon

Briscoe

12/10/04

10:00AM

City Bank

Swisher

12/15/04

1:00PM

County Annex Building

 

 

 

 

Hall

12/15/04

9:00AM

Bronze Room, Memphis