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CCC approves new rules for cotton program for 2008-2012

04
Nov '08
The Commodity Credit Corporation(CCC) approved new regulations for implementing cotton programs authorized by the Food, Conservation and Energy Act of 2008 (2008 Farm Bill) that will be published soon in the Federal Register.

These regulations govern several programs for the 2008 through 2012 crops of upland and extra-long staple (ELS) cotton, specifically marketing assistance loans (MAL) and loan deficiency payments (LDP); recourse seed cotton loans and the ELS cotton competitiveness payments. The regulations also provide for a new program of economic assistance payments to domestic cotton users for upland cotton bales used starting August 1, 2008.

These regulations implement new statutory requirements for the ongoing MAL and LDP programs. Starting with the 2008 crop,loan rate adjustments for location are eliminated for upland cotton and other minor rate adjustments for leaf and micronaire are incorporated. The regulations also revise the calculation of the Adjusted World Price (AWP) transportation adjustment and reduce by 10-percent the maximum rates used for calculating any storage payments for the 2008 through 2011 crops.

This reduction of storage-payment rates does not apply to repayments of any outstanding 2007 crop loan obligations. A 20-percent reduction from 2006 rates in maximum storage-payment rates will be effective for redemptions of the 2012 crop.

The 2008 Farm Bill authorizes the reduction of the upland cotton AWP for any United States premium factor for cotton qualities higher than Middling 1 3/32-inch. This change allows for an adjustment for periods when loan premiums exceed market premiums.

The CCC will announce and implement this weekly adjustment, termed the "fine count adjustment" (FCA), for loan repayments processed starting Friday, Oct. 31. The FCA will be calculated and announced separately for each crop of upland cotton.

Starting with the upland cotton AWP that becomes effective Friday, Oct. 31, CCC will adjust the price by the average cost to market upland cotton to the Far East, including average transportation costs as determined from survey results.

This adjustment will replace use of a 52-week rolling average calculation method. The new regulations provide that this transportation adjustment and the FCA also apply to loan redemption calculations of outstanding 2007-crop upland cotton.

United States Department of Agriculture (USDA)


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