Friday, May 25, 2007 By Shawn Wade
This week Congressionalleaders and the White House seemed to have finally reached an agreement on asupplemental spending bill, H.R. 2206, to support troops operations in Iraq.That perception proved true as Congress passed the revised legislationoverwhelmingly late in the evening May 24.
The last piece of the puzzleis President Bush's signature, which is expected to be on its way before theMemorial Day weekend begins.
Completion of the agreementwas good news for agriculture since the revised package includes a long-awaitedemergency agriculture disaster assistance package to assist farmers andranchers that suffered weather related losses during the 2005, 2006 and early2007 growing seasons.
As it unfolded the House ofRepresentatives held votes on two separate amendments that comprised thesupplemental bill. The vote on the first amendment, which contained domesticspending components including the $3 billion dollar agriculture disasterprovision, was approved by a strong 348-73 vote.
The vote on the secondamendment, which designated funding for military operations and procurement insupport of U.S. troops in Iraq through September 30, 2007 without thepreviously included timelines for troop withdrawal, was approved by a muchcloser vote of 280-142.
A check of the vote recordsshows that all three High Plains House members voted for the amendments to H.R.2206. Under the rules adopted by the House for consideration the two amendmentswere reunited and sent back to the Senate for consideration.
Just a few hours later theSenate had received the revised legislation and voted 80-14 to adopt therevised House version. Texas Senators Kay Bailey Hutchison and John Cornynvoted for the supplemental bill, and voiced their support for the ag disasterprovision.
Details about the agriculturedisaster assistance package are still sketchy a this time, but reductions inpayment rates for the major components was negotiated in the deal and droppedthe cost of the package down to the $3 billion level.
Early indications are thatthe program will be administered according to the rules established forprevious Crop Disaster Programs. That means producers will see the usual 65percent loss threshold for eligibility and inclusion of an $80,000 per personpayment limitation and the 95 percent benefit cap. Eligibility will also betied directly to the purchase of crop insurance, if available, during the yearof loss.
The major difference betweenthe final deal brokered this week and the most recently passed version that wasvetoed by the President is a reduction in payment rate levels. Instead of apayment rate calculated at 50 percent of the established price, crop losses oneligible commodities will instead be paid at a rate of 42 percent of theestablished price.
For cotton producers whoseestablished price is expected to be the base loan rate of 52 cents per pound,the lower payment rate would be approximately 22 cents per pound, roughly 4cents below the rate that would have been calculated at the earlier level.
One additional clarificationthat has come to light is that 2007 crops planted, or prevented from beingplanted, before February 28, 2007 will be eligible for benefits under theproposed legislation.
As soon as additional detailsregarding eligibility and benefit calculation are available, Plains CottonGrowers and Texas Cooperative Extension will release an updated DisasterPayment calculator to assist growers in estimating 2005/2006/2007 CDP benefits.
Friday, May 25, 2007 By Shawn Wade
Monsanto Corporation hasannounced that the Environmental Protection Agency has issued supplementallabels for both Roundup WeatherMAX and Roundup OriginalMAX.
The new labels will allowboth products to be sprayed "over the top" of Roundup Ready FLEX cotton beinggrown for seed production from emergence up to 7 days prior to harvest.
Before the issuance of thesesupplemental labels farmers growing Roundup Ready FLEX cotton for seedproduction were not allowed to make "over the top" treatments beyond firstbloom.
The new labels are good newsfor growers with Roundup Ready FLEX seed production contracts and provide themvirtually identical weed control options as other growers planting RoundupReady FLEX cotton.
Friday, May 25, 2007 By Shawn Wade
Wet weather has alreadycaused many High Plains cotton producers to work through a completely differentset of early season cropping issues. As federal crop insurance deadlinesrapidly approach the decisions a producer might face over the next few weeksshould wet fields keep them from getting all of their planned cotton acreageplanted, will also be relatively unfamiliar.
So the main question posed byproducers is what their options will be if they are kept out of the field and becomeunable to complete planting activities before the final planting date.
Cotton producers in countiesto the north and west of Lubbock have a May 31 final planting date. Producersin the central and southern portions of the High Plains have Federal CropInsurance final planting dates of June 5 and June 10, respectively. RollingPlains counties east of the Caprock have June 20 final planting dates forcotton. Insured producers should contact their local crop insurance agent toverify their final planting date.
For most producers the optionof filing a Prevented Planted claim for any acres they are unable to plant issimply not an attractive option.
Major drawbacks of PreventedPlanting coverage include the relatively low coverage level (50-60 percent ofthe coverage provided by the producers policy) compared to the premium cost(100 percent of the premium that would otherwise be due) and the restrictionsthat are placed on the producer and acreage upon which a Prevented Plantingindemnity is paid.
Current Prevented Plantingrules severely restrict a producer's ability to realize any income from a catchcrop on Prevented Planting acreage, regardless of the economic need of theproducer to supplement the coverage provided by a Prevented Planting indemnity.
With those thoughts in mindproducers whose intent is to plant cotton in 2007 but find themselves unable toeither complete planting operations within an insured unit or are unable to beginplanting an insured unit have the following options.
The First option available toa producer on acres they are prevented from planting is to file a PreventedPlanting claim. Electing this option and receiving a PP indemnity means theproducer agrees to abide by the restrictions on subsequent use of those acres.
In a nutshell, acreage uponwhich a PP payment is provided is restricted in its use for the balance of thecrop year. Essentially the next occurrence of any agricultural commodityfollowing the first insured prevented planted cropis considered a second crop on those acres. If a second crop is consideredplanted, hayed, grazed or otherwise harvested the PP payment will be limited to35 percent of the prevented planting payment for the first insured crop with acommensurate reduction in premium due.
The Second option is for theproducer to report and insure only the acres of cotton upon which they wereable to complete planting activities by the final planting date. Unplantedacres would not be included under the cotton policy in effect for the unit, andwould be able to be planted to another crop.
If no acreage for the unitcan be planted before the final planting date the producer would have theability to switch to an alternative crop.
If the producer has a policyinsuring the alternate crop in place in the county, the acreage planted to thatcrop would automatically be insured under the terms of that policy. If nopolicy is in force for the crop in the county the acreage planted to the cropwould be considered uninsured.
A Third possibility would beopen to a producer that is prevented from planting or completing plantingcotton by the Final Planting date, but sees an improvement in field conditionsthat would allow them to complete planting during the Late Planting Period.
In this situation theproducer would have the production guarantee for acres planted before the FinalPlanting date computed normally and the production guarantee for acres plantedduring the Late Planting Period computed under the one percent per day coveragereduction provision for cotton. The results of these computations would beblended together to establish the final production guarantee. One hundredpercent of the insurance premium would be charged for the acreage.
With grain prices at currentlevels many growers, especially those in northern portions of the High Plains,that have experienced significant rainfall and had their cotton plantingactivity delayed are seriously considering the possibility of switching gearsand planting a shorter season grain crop instead of what could easily become atime-limited cotton crop with reduce yield potential.