FSA Initiates Fine Count And Transportation
Adjustments To Cotton AWP Calculation

Friday, October 31, 2008                           By Shawn Wade

      The USDA Farm Service Agency has announced the release of regulations implementing several important cotton program provisions approved in the 2008 Farm Bill. According to USDA the new provisions include a modification to the transportation adjustment portion of the adjusted world price (AWP) formula, the addition of a new fine count adjustment for high quality cotton, and implementation of a 10 percent reduction in the national cotton storage rate cap.

      Cotton industry leaders, who had written to USDA requesting quick action to implement these provision just last week, welcomed USDA's announcement as good news for producers, warehouses, manufacturers and merchandisers who are struggling to compete in a difficult and volatile market.

      The reduction in the storage cap rate lowers the maximum monthly storage rate paid by the Commodity Credit Corporation (CCC) from $2.66 down to $2.39 per bale.

      The 2008 Farm Bill mandates that USDA make storage credits available whenever the AWP is below the loan. However, to reduce program costs, the new law also required that the maximum storage credit be reduced by 10 percent for the 2008-11 crops and 20 percent beginning with the 2012 crop.

      The USDA announcement also clarified that the reduced storage rate will not apply to redemptions of 2007 crop cotton.

      Beginning with the 2008 crop, the reductions will apply to the national maximum rate established by USDA in August 2006 and not to individual warehouse rates, which significantly reduces any adverse financial impact to cotton warehouses.

      The second change announced by FSA was the modification of the transportation adjustment used to calculate the adjusted world price for cotton used in the cotton competitiveness provisions of the farm bill. The transportation adjustment portion of the AWP formula works to equalize the average price of cotton delivered to the Far East with the U.S. cotton price received by the producer, before transport to a buyer.

      The third announced change was the implementation of a new Fine Count Adjustment mechanism to the process used to determine Loan Deficiency Payment (LDP) and Marketing Loan Gains (MLG) for cotton. The adjustment is applicable only to cotton quality of Middling, Leaf grade 3, Staple 35 (31-3-35) or better. If applicable, the Fine Count Adjustment provides an additional adjustment to the announced adjusted world price for purposes of establishing LDP payment rates or calculating MLG's for cotton being redeemed from the loan.

      The AWP will continue to be calculated in accordance with these and other previously announced adjustments included in the new law. The cumulative effect of these provisions is to ensure US cotton is available at competitive prices in domestic and international markets.

      The adjustments in the calculation of the weekly AWP were made to enhance competitiveness and the modest projected costs were totally offset by changes in other provisions of the cotton program. The new law also includes an economic assistance program for US domestic textile mills. The regulations approved by USDA will establish the rules for participation in that program.

2008 High Plains Cotton Quality Summary

      The following is a summary of the cotton classed at the Lubbock and Lamesa USDA Cotton Division Cotton Classing Offices for the 2008 production season.

 

Current Week:

 

Office

Bales

Color

Leaf

Staple

Lamesa

20,546

21+ - 12.6%

31 - 63.7%

3.37

35.81

Lubbock

31,465

21 - 10.4%

31 - 60.5%

3.46

36.56

 

Mike

Strength

Uniformity

Bark

Lamesa

4.14

28.66

80.24

25.5%

Lubbock

4.01

29.45

80.61

16.9%

 

 

Season Totals To Date:

 

Office

Bales

Color

Leaf

Staple

Lamesa

24,882

21+ - 20.7%

31 - 57.5%

3.34

35.71

Lubbock

33,601

21+ - 11.5%

31 - 58.9%

3.45

36.55

 

Mike

Strength

Uniformity

Bark

Lamesa

4.15

28.58

80.33

21.8%

Lubbock

4.02

29.42

80.62

17.7%

 

Dale Swinburn To Receive Distinguished
Alumni Award From TTU CASNR

Friday, October 31, 2008                           By Shawn Wade

      The Texas Tech College of Agricultural Science and Natural Resources Alumni Association will honor three alumni, Jeff D. Morris, Dunia A. Shive and Dale V. Swinburn, as distinguished alumni at its annual reception and dinner November 7.

      Swinburn is the owner of Dale Swinburn Farms in Tulia. He graduated from Texas Tech with a bachelor's degree in agronomy in 1965.

      Swinburn has been an active participant in the High Plains cotton industry for many years and is a past member of the Cotton Incorporated Board of Directors and is currently serving as Chairman of the Plains Cotton Improvement Program, a producer funded cotton research program overseen by Plains Cotton Growers, Inc.

      Morris is the president and CEO of ALON USA, a refining and marketing company based in Dallas. He graduated from Tech in 1974 with a bachelor's degree in chemical engineering.

      Shive is the president and chief executive officer of Belo Corp., one of the nation's largest publicly traded television companies. Shive, who graduated from Tech with a bachelor's degree in accounting in 1982, owns 20 television stations and their associated Web sites and two regional cable news channels.

      The dinner begins at 6:30 p.m. November 7 at the Merket Alumni Center at 17th Street and University Avenue.