Agriculture Programs Spared The Knife As
Congress Approves FY2010 Budget Resolution

Friday, May 1, 2009                                   By Shawn Wade

      The FY2010 Budget Resolution that was agreed upon by House and Senate conferees earlier this week, and subsequently approved by Congress, will not require cuts to commodity support programs authorized under the 2008 Farm Bill.

      Confirmation that agriculture programs would be excluded from the many budget areas that will be tasked with providing spending reductions under the FY2010 Congressional Budget Resolution was welcome news for growers.

      Producer concern about agriculture's potential treatment under the resolution stemmed from knowledge of renewed efforts to undermine commodity program provisions through the budget writing process and the fact that the Obama Administration's first budget blueprint highlighted changes in farm programs.

      With this first hurdle cleared it is important to note that this is probably not the only bullet that agriculture will have to dodge before current the legislative cycle or the FY2010 Agriculture Appropriations process is completed. It does however set aside as unworkable several potentially damaging proposals including the Obama Administration's suggestion to eliminate Direct payments to all farms with more than $500,000 in gross sales and capping DCP and loan benefit payments at $250,000 per individual.

      Fortunately the same Congressional leaders, namely Senate Budget Committee Chairman Kent Conrad and House Agriculture committee Chairman Collin Peterson, that supported agriculture so strongly during the farm bill debate led the charge to clarify the fact that when it comes to providing budget savings and value on investment agriculture has delivered its fair share.

      Agriculture's success in this round was aided by strong arguments against these proposals and supporting the implementation of the 2008 Farm Bill as approved by Congress before significant changes are considered. These arguments were put forth by a coalition of agriculture groups including Plains Cotton Growers, the National Cotton Council and the Southwest Council of Agribusiness.

 

Upland Cotton Average Price Received by
Growers Through February 2009

Friday, May 1, 2009                                   By Shawn Wade

      March marketings of 764,000 bales kept pace with February's bale count to bring total estimated 2008-crop Upland cotton marketing totals to 6.928 million bales.

      While the marketing totals were nice to see, the down side to the report is that the average price received by growers failed to advance above the previous month's price and settled at 41 cents per pound for March. Looking ahead the preliminary price USDA reports for April marketings is higher at 42.8 cents.

      With preliminary information on two-thirds of the 2008-marketing year in the books total marketings have narrowed their deficit to the previous year by about 275,000 bales. The gap is now 2.875 million bales below the 9.803 million bales marketed through the same period for the 2007-crop. According to the USDA report, the average selling price reported for the month of February was 41.00 cents per pound.

      Based on these figures, the 2008 Upland Cotton Weighted Average Price calculated through March 2009 is 49.41 cents per pound, further solidifying its position below the 52-cent Upland cotton Base Loan rate.

      The following table shows the average price received each month by farmers and the associated weighted average price based on prices and cumulative marketings from August 1, 2008 through March 2009.

      The 2008 Counter-cyclical payment rate authorized under the 2008 Farm Bill will be based on the 12-month Weighted Average Price Received by growers. For cotton the 12-month Weighted Average Price will reflect price and marketings for the 2008 marketing year. The 2008 cotton marketing year began August 1, 2008 and ends July 31, 2009.

Average Price Received For 2008-crop Upland Cotton (
Weighted by Marketings)

 

Marketings

Prices

 

(000's of Running bales)

(cents/Lb.)

 

Monthly

Cum.

Monthly

Weighted

August

1,144

1,144

56.50

56.50

September

95

1,239

61.10

56.85

October

578

1,817

55.50

56.42

November

978

2,795

53.10

55.26

December

781

3,576

51.90

54.53

January

1,849

5,425

46.10

51.65

February

739

6,164

41.60

50.45

March

764

6,928

41.00

49.41

April

na

na

42.80*

na

Source: National Agricultural Statistics Service; * = preliminary

Revised Market Year Average Price Forecasts
Included In Latest SURE Calculator Update

      New Market Year Average (MYA) prices have been included in an April 29, update of the Texas AgriLife Extension Supplemental Revenue Assistance (SURE) Benefit Estimator.     

      Growers that have previously downloaded the SURE calculator are encouraged to visit the Plains Cotton Growers, Inc. website (www.plainscotton.org) or the website for the Texas A&M Research and Extension Center at Lubbock (http://lubbock.tamu.edu).

      This latest version of the estimator (ver. 1.3) does not make any changes to underlying assumptions defining how the calculator operates. USDA is still working on writing rules for the SURE program and so far little new information that would alter current understanding about how the program will eventually operate has been released.