Lookfor complete coverage of PCG's 49th Annual Meeting
in next week's "Cotton News."

 

RespondingTo Grower Concerns Monsanto
Announces Two New Drought Relief Programs

Friday, April 7, 2006                              By Shawn Wade

      An announcementfrom Monsanto that the company will offer an all new Drought Relief Program tocotton producers in selected counties of Texas, Oklahoma, New Mexico and Kansashas added a new level of risk sharing for growers facing the possibility ofdrought related yield reductions in 2006.

      The program willlikely encourage many cotton producers to reconsider planting technologyenhanced seed and Stoneville/NexGen varieties in 2006.

      Monsanto soughtinput for the new program from Lubbock-based Plains Cotton Growers, othergrower groups in West Texas, and market surveys. The Drought Relief programoffers protection for all cotton varieties containing Monsanto traits and seedcost protection for their Stoneville and NexGen varieties.

      The Trait DroughtRelief portion of the program offers growers who plant cotton seed withcurrently available Monsanto traits a full refund of 2006 technology fees onany acreage that is lost or does not produce more than 150 pounds of cottonlint per land acre due to drought. To qualify for the trait refund, growersmust meet all of the Roundup Rewards requirements.

      In addition tothe technology fee refund provision that will be available to all growers thatplant Monsanto technology, growers that opt to plant Stoneville or NexGen brandcotton seed with Monsanto technology will also receive a refund, under the SeedDrought Relief Program, equal to the suggested retail cost of their plantingseed, less the cost of any seed treatments, if the crop is lost or does notmeet the 150 pound per land acre yield threshold due to drought.

      According toliterature explaining the new program, Monsanto is offering the Drought ReliefProgram to assist growers by reducing the financial risk created by drought conditionswhen choosing these products.

      With dryconditions threatening to adversely impact the 2006-growing season before iteven gets started, many growers have worried that choosing to plant highercost, technology enhanced seed is a luxury they simply couldn't afford, eventhough they may be sacrificing some yield and quality potential shouldconditions improve.

      According toPlains Cotton Growers the fact that the moisture situation hasn't significantlyimproved is increasing producer concern as they make their final, difficultchoices regarding 2006 crop inputs.

      Followingconversations with PCG representatives and other grower groups in West Texaswho expressed these concerns and the importance of having a shared risk programtargeting dryland producers, Monsanto officials went to work to craft the newprogram.

      "With anincreased probability for reduced yields, one area where many growers,especially non-irrigated growers, have had to make sacrifices is in theircotton seed and technology program," says PCG Executive Vice President SteveVerett.

      "We are pleasedthat Monsanto continues to recognize the value growers place on risk sharingprograms. We believe that the Drought Relief Program will better enable growersto select from the newest varieties and technology and find the best fit ontheir acreage," adds Verett.

      The DroughtRelief Program is offered specifically to assist growers who are at risk ofdrought related crop losses and want to plant either Monsanto technologyenhanced products or Stoneville and NexGen seed with Monsanto traits.

      Specificallytargeting drought concerns, the extended technology and/or seed cost refundwill only be offered to growers affected by drought. Monsanto officials notethat losses due to other causes such as diseases, pests and hail will notconstitute eligible claims under the Drought Relief Program.

      It should benoted, however, that this program is offered in addition to all other RoundupRewards benefits, including the previously announced crop destruct provisionsthat allow a grower to claim a refund of Monsanto technology fees for any croplost prior to August 15, regardless of the cause of loss.

      In regard to theStoneville and NexGen Drought Relief Program provisions, Monsanto officialspoint out that the seed cost refund is offered on top of the Stoneville/NexGen100 percent replant program in place for 2006.

     Growers will have until January 15, 2007 to apply for claims under Monsanto's2006 Drought Relief Program. Cotton crops are considered a loss if the actualor estimated lint yield is less than 150 pounds per land acre, verified byeither production evidence or a Federal Crop Insurance claim that includes anestimated yield of less than 150 pounds per land acre.

Upland Cotton AveragePrice Received by
Growers Through February 2006

Friday, April 7, 2006                              By Shawn Wade

      According toinformation released March 30 by the USDA National Agricultural StatisticsService Upland cotton marketed during the month of February totaled 1.182million bales with an average price received by growers of 49 cents per pound.

      Based on thesenumbers the 2005 Upland Cotton Weighted Average Price calculated throughFebruary 2006 stands at 47.51 cents per pound.

      This is good newsfor cotton producers since it is likely that the bulk of the year's marketingshave now been reported and increases the likelihood that 2005 Counter-cyclicalpayments will ultimately be based on the maximum 13.73-cent payment rateallowed by current program rules.

      So far thecalculated 2005 Weighted Average Price is still more than four cents below the52-cent threshold where Counter-cyclical payment rates begin to drop.

      Februarymarketings were down from the level posted in January, but were stillrelatively strong and pushed the cumulative marketings for the year to 11.3million bales. The preliminary mid-month price reported for March 2006 was 49.6cents per pound.

      The 2005Counter-cyclical payment rate authorized under the 2002 Farm Bill will be basedon the 12-month Weighted Average Price Received by growers. For cotton the12-month Weighted Average Price will reflect price and marketings for the 2005marketing year. The 2005 cotton marketing year began on August 1, 2005 and endsJuly 31, 2006.

     The following table shows the average price received each month by farmers andthe calculated weighted average price based on estimated cumulative marketingsand prices reported by the National Ag Statistics Service through February2006.

Monthly Average Price Receivedfor

2005-crop Upland Cotton ThroughFebruary 2006

(Weighted by Marketings)

 

Marketings

Prices

 

(000's of Running bales)

(cents/Lb.)

 

Monthly

Cum.

Monthly

Weighted

August

1,233

1,233

42.10

42.10

September

518

1,751

44.30

42.75

October

911

2,662

48.50

44.72

November

1,831

4,493

48.50

46.26

December

3,264

7,757

47.90

46.95

January

2,420

10,177

48.60

47.34

February

1,182

11,359

49.00

47.51

March

na

na

49.60*

na 

Source:National Agricultural Statistics Service; * = preliminary