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Cotton organizations convey concern over Farm Law Regulation
Oct '08
In a letter to Agriculture Secretary Ed Schafer, the National Cotton Council, the National Council of Textile Organizations, AMCOT, the American Cotton Shippers Association and the American Cotton Producers conveyed serious concern about the delay in publishing the regulation necessary to implement the cotton provisions of the Food, Conservation and Energy Act of 2008.

The delay, they wrote, has resulted in a significant volume of cotton being redeemed from the loan based on an Adjusted World Price (AWP) that was not calculated in accordance with the statute.

The new law includes several important adjustments in the calculation of the weekly AWP. These changes, which were to be effective beginning with the start of the 2008 crop year on August 1, were designed to improve the accuracy of the AWP calculation and to ensure US cotton moves to market at competitive prices. One of the changes which required using Far East rather than North Europe price quotations was implemented through administrative action. Two other important changes still have not been implemented three months into the 2008 crop year.

“The new law also includes an economic adjustment assistance program for our hard-pressed textile industry which must compete with low cost, subsidized imports of textile and apparel products,” the letter stated. “The economic adjustment assistance program also became effective on August 1. In the absence of regulations, domestic textile mills have no guidelines on how to participate in the program. They have no assurance that consumption records and investment decisions which have been made since August will comply with the eventual program requirements.”

The letter noted that the estimated costs of the modifications to the AWP calculation and the economic adjustment assistance program were offset by reductions in the cotton target price, adjustments to the cotton loan schedule which effectively reduced the loan on certain qualities, and a reduction in the maximum cotton storage credit rates. It also stated growers, merchants, marketing cooperatives and mills have a reasonable expectation that the regulation implementing the adjustments to the AWP and initiating the economic adjustment assistance program should be published in a timely manner so US cotton can be redeemed and marketed at a competitive price and domestic mills can make informed decisions.

“It should also be noted that a majority of the savings to be achieved through reforms to payment limitations, eligibility and new income tests are the result of reductions in benefits to cotton farmers,” the groups stated.

The groups asked that the Secretary do what is necessary to immediately publish the applicable regulations. They also said they expect USDA to provide appropriate adjustments for those growers, merchants and cooperatives that have had to redeem significant amounts of cotton from the loan or have had to accept a loan deficiency payment based on an AWP that was not calculated in accordance with the new statute.

National Cotton Council

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