On Closer Inspection: ACRE Still Falls Short

Friday, May 25, 2012 By Shawn Wade and Jay Yates

      Last week we reported that the Average Crop Revenue program (ACRE) might be an option worth considering for cotton producers finalizing their 2012 farm program participation decision. Unfortunately that early assessment has been proven wrong and it doesn't appear that ACRE will offer a better choice for cotton producers than the Direct and Counter-cyclical (DCP) program in 2012.

      In fact, a closer inspection of ACRE's details reaffirmed why the program has always been an unattractive choice for cotton since its inception in 2008.

      The 2012 ACRE program's ultimate downfall, especially for irrigated cotton, was the program's 10 percent cap on increases to the state level ACRE program guarantee from year to year.

      Based on this single program parameter a reasonable projection for the 2012 state ACRE guarantee for irrigated cotton would be $535 per acre. A projected 2012 dryland cotton ACRE guarantee would be $221 per acre.

      Dividing the $535 projected ACRE guarantee for irrigated cotton by an estimated 2012 irrigated cotton benchmark yield of 885 pounds per planted acre (calculated from NASS data) provides an effective price guarantee of only $0.60 per pound.

      Assuming that actual state irrigated cotton yields equal the 885 benchmark yield, the 2012 market year average price would have to fall below $0.60 to trip the state ACRE trigger and open the possibility that payments could be made. Again, assuming an 885 pound statewide irrigated yield, the amount of any ACRE payment would be determined by how far below $0.60 cents the national average market price falls.

      With a market year average price of $0.60 the 2012 DCP program would likely have already delivered a significant payment, compared to none under ACRE. Any additional decline in the national average market price would increase the counter-cyclical payment rate and likely keep it ahead of the ACRE payment rate on the basis of total dollars per acre.

      The same analysis for dryland yields only slightly different results, in that meaningful payments begin to be generated at nearly the same price levels.  However the lingering effects of the 2011 drought increase the probability of a statewide average dryland yield low enough to trigger an ACRE payment at a higher price level.  State average yields for ACRE are calculated as yield per planted acre, therefore an abandonment rate of much greater than the long term average of 25% would likely trip the state ACRE trigger.

      To figure out why the 2012 ACRE guarantee would only be $535 per acre for irrigated cotton, instead of the $764 you get by multiplying the $0.863 guarantee price by the 885 pound state benchmark yield, you have to go back to ACRE's first-year guarantee for irrigated cotton in Texas.  In 2009 Texas upland cotton had ACRE State guarantees of only $424.03 for irrigated and $203.57 for dryland were the starting points.  Each year since then the state guarantee has only been allowed to rise by no more than 10% each year, while market year average prices have increased by more than 60%.

      Unfortunately, after several days of wading through the details of the ACRE program it is clear that ACRE is a poor candidate for irrigated cotton farms. On dryland cotton farms it may have slightly more potential, but would still be considered a somewhat risky option given where cotton prices or yields would have to fall to overcome the reduced level of direct payments, the possibility of counter-cyclical payments and reduced loan values.



DCP Signup for 2012 Crop Ends June 1

SURE Signup for 2010 Crop Ends June 1


Weed Resistance Could Call For More

Diversified Herbicide Plan, Expert Says

Friday, May 25, 2012         By Kay Ledbetter, AgriLife TODAY

      Producers who rely on glyphosate-tolerant or "Roundup-resistant" crops probably should be expanding their weed-control toolbox, said Dr. Paul Baumann, Texas AgriLife Extension Service state weed specialist.

      "We have a critical issue arising, in that common water hemp in Central and Southeast Texas and Palmer amaranth pigweed in the High Plains have started showing signs of resistance to glyphosate herbicides," Baumann said.

      The common water-hemp resistance started showing up in 2005 with spotty infestations along the Gulf Coast and then it was hit or miss until 2010, with it occurring in other sites, he said.

      Roundup Ready means the crop, in this case cotton, has been genetically modified to tolerate glyphosate applications made for controlling weeds, Baumann said. However, there are now biotypes of certain weeds appearing that are genetically different than others that may look the same and are tolerant to glyphosate.

      "If all else is killed out but that one plant is different, that is the start of the problem," he said. "One common water hemp plant could shed 400,000 to 500,000 seeds. So if that one weed is not killed, then later that year or the following year, there may be a whole patch of this resistant biotype of the weed."

      Baumann said he has been warning farmers for the past 10 years that they need to use a multi-herbicide program and not just rely on one product to do the job.

      "We have to have more than one mechanism to manage the anomalies," he said. "The resistant plants have probably always been there, but when you eliminate the competition with a highly effective herbicide like glyphosate, they begin to flourish."

      The problem can be even worse for producers who plant back-to-back Roundup Ready cotton and Roundup Ready corn, if they continue to use only glyphosate herbicide on either crop, Baumann said.

      His recommendation is for producers to return to using soil-residual herbicides along with the glyphosate products. Trifluralin (Treflan) and pendamethalin (Prowl) are two of the available products that could be used in cotton programs. Some other approved products that also are soil-active herbicides are Staple, Cotoran, Dual and Warrant.

      "All of those have a different mechanism of action than glyphosate and will effectively provide substantial control of either species," Baumann said. "Roundup is too good on too many weeds to pull out of a program, but use it as one of the tools and not the only one."

      The other option, he said, is to switch to Liberty Link cotton, which is tolerant to the herbicide glufosinate (Liberty). This product has much of the same spectrum for weed control as glyphosate, but has a different effect on the weeds which makes it a sound alternative to glyphosate.

      The application timing on pigweed, however, is much more critical in terms of weed size for treatment with Liberty, Baumann warned, so treatments must be applied to small (less than 4 to 5 inches) Palmer amaranth or common water hemp.

      "The big issue is, from a producer's standpoint, by the time he recognizes or notices the resistance issue, he has probably already treated those weeds twice without any results and the weeds have gotten too big to treat it with any product," he said. "The only alternative at that point is plowing or cultivating the middles or hand-pulling those weeds in the rows."

      Baumann said producers should start with the mix of herbicides, putting out a soil-applied pre-emergent or pre-plant incorporated herbicide without fail, and it will be more economical to management the weeds in the long run.

      "I know farmers don't want to spend more money fighting a problem they don't yet have," he said. "But my argument is, even if you don't ever have the resistance problem, you are just ensuring that there is no competition to your crop from weeds from day one if you use a soil-active herbicide. Those first eight to 10 weeks are the most critical in keeping weed-free to prevent competition and yield loss."


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CCI holds "Cottonscape" Event in Mumbai

Friday, May 25, 2012         From Cotton Council International

      A panel of cotton and textile industry associations in India addressed issues facing cotton at the retail level during CCI's recent "Cottonscape" event in Mumbai. The panel included representatives from the Cotton Association of India, the Confederation of Indian Textile Industry (CITI) and the Clothing Manufacturers Association of India (CMAI). The event featured fashion shows highlighting cotton apparel and attracted 67 media outlets, including print, television and online, with an estimated reach of 160 million people.

      The panel focused on identifying and understanding issues facing cotton products in the Indian retail environment, such as eroding market share and competition from synthetic fibers. The panel agreed that ensuring a cotton-friendly domestic consumer market needs to be addressed by the industry as a whole; that the needs of consumers and how cotton as a fiber can meet those needs should be better understood; and that innovation is a critical element of cotton's ability to be a preferred fiber by Indian consumers if cotton is to meet the challenge of competition from manmade fibers.

      The event also included fashion and lifestyle elements used to create visibility for the Cottonscape advertising campaign. The campaign features a series of advertisements capturing cotton at various stages in people's lives and appears in fashion and lifestyle magazines throughout India. Cottonscape included three fashion shows, which highlighted the versatility of cotton. In keeping with the theme of the Cottonscape campaign, the cotton fashions were shown for mid- and high-end demographics, and included fashions for a variety of age groups and occasions.


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