Transcript The 2013 Farm Bill Preliminary Basics January 27, 2014

Cotton Industry Update
Agricultural Council of Arkansas
Board of Directors Meeting
Brinkley, AR
May 19, 2015
Key Issues
• Farm Bill Implementation
• Appropriations
• Trade Issues
– TPA and TPP
– Turkey Antidumping Investigation
– WTO Negotiations and Cotton Discussions
• Market Comments
New Crop Insurance Products
• STAX available for purchase in more than 99% of
cotton counties
– Initial data shows over 11k policies purchased w/182
in AR
• New options to update APH yields, vary
coverage level by practice and enhanced use of
enterprise unit coverage
• Still some implementation issues working to
correct in 2016
• Continue education efforts
Payment Limits
• $125,000 limit/entity for PLC, ARC, MLG, LDP
– Separate limit for peanuts
• USDA developed interim process for tracking benefits
& applying MLG/LDP to payment limit
• Reconciliation of payments relative to pay limit before
ARC/PLC payments in Oct. 2015
• Ongoing efforts with Congress and USDA to address
the issue long term
• Mechanism needed to ensure continued loan
redemptions and cotton flows to market; avoid
forfeitures
Actively Engaged Proposed Rule
• Comment deadline May 26
• Farm Bill directs USDA to:
– Define significant contribution of “active personal
management”
– Consider setting limits on how many persons can
qualify with provision of only management
– Exempt entities/operations comprised solely of
family members
• Family members – lineal family connections
– Proposed rule applies to general partnerships and
joint ventures that include non-family members
Actively Engaged Proposed Rule
• Entities with one non-family individual only
providing management – no changes/current
rules apply
• To add 2nd non-family “manager” – must be
large operation = 2,500 acres (FSA STC flexibility)
• To add 3rd non-family “manager” – must be
large and complex operation = diversification,
geographic area, agriculture activities
conducted (requires USDA/FSA review/approval)
Actively Engaged Proposed Rule
• Adding 2nd and 3rd managers triggers additional
reporting/documentation requirements
• 2nd and 3rd managers added – all individuals in
operation meet new requirements for
documenting activities and new definition for
“active personal management”
• Required management time – 500 hours
annually or at least 25% of management time
necessary for the operation
Actively Engaged Issues
• Focus of industry comments:
– Impractical to apply arbitrary limit to # of managers if
required to meet new definition of management
– Consider flexibility for family operations that lose family
exemption due to family member providing the lineal
linkage exiting operation
– Ensure family operation exemption is fully exercised by
USDA
– Define “significant contribution” of management based on
necessary activities/responsibilities, without requiring
specific hours or maintenance of time logs
Appropriations
• FY ‘16 Agricultural Appropriations
– Attempt “regular order” – open amendment
process
– Submitted letters with cotton priorities:
• APHIS – Boll weevil and pink bollworm eradication $11.52 M
• FAS – Market Access Program and Foreign Market
Development program
• ARS – Cotton research and maintain three gin labs
• Prevent any amendments that harm crop insurance,
tighten pay limits/eligibility, or reduce funding
Trade Issues
• TPA and TPP
– Trade Promotion Authority (TPA) – Passed out of
respective House and Senate committees; lost a
procedural vote in Senate as D’s vote against the
measure; debate now progressing in the Senate
– Trans Pacific Partnership (TPP) – yarn forward rule of
origin is priority for industry – agreement by end of
2015?
Trade Issues
• Turkey Antidumping Investigation
– Politically motivated case
• Self-initiated investigation of US cotton on Oct. 18, 2014
– Administration and Congressional actions
– Industry actions to date
• NCC filed industry comments and injury analysis
– Status and next steps
• Developing additional injury analysis submission; 2nd
questionnaire sent to merchandising firms; expect site
visits by Turkish authorities; public hearing in Turkey;
conclusion by fall 2015 or 6 month extension
Trade Issues
• WTO Cotton Dedicated Discussions
– Cotton is still a focal point in WTO
– Dedicated discussions on cotton are held twice a
year
– US’s message to other countries:
• We have made significant policy changes;
• We are not the problem with the world markets;
• Other countries must be held accountable and be
transparent
China Balance Sheet
Million Bales
12/13
13/14
14/15
15/16
Production
35.0
32.8
30.0
27.0
-3.0
Mill Use
36.0
34.5
35.0
36.0
1.0
Imports
20.3
14.1
7.7
6.0
-1.7
Stocks
50.4
62.7
65.3
62.3
-3.0
140%
182%
186%
173%
Stocks/Use
Change
U.S. Balance Sheet
Million Bales
12/13
13/14
14/15
15/16
Change
17.31
12.91
16.32
14.50
-1.82
Mill Use
3.50
3.55
3.65
3.80
0.15
Exports
13.03
10.53
10.70
10.70
0.00
Stocks
3.80
2.45
4.40
4.40
0.00
Stocks/Use
23%
17%
31%
30%
Production
World Balance Sheet
Million Bales
13/14
14/15
15/16
Change
Production
120.4
119.3
111.3
-8.0
Mill Use
109.0
111.5
115.3
3.8
Trade
40.0
33.8
33.7
-0.1
Stocks
102.4
110.3
106.3
-4.0
China
62.7
65.3
62.3
-3.0
All Others
39.7
44.9
44.0
-0.9
World Cotton Mill Use
Million Bales
Total
China
All Others
2006
2011
2015
124.2
104.0
115.3
-20.2
+11.3
38.0
36.0
-12.0
-2.0
66.0
79.3
-8.2
+13.3
50.0
74.2
Cotton Prices
Cents per Lb
250
Nearby NY
200
A Index
150
100
50
0
09
10
11
12
13
14
15
Challenges Going Forward
• Educating large class of new Members of
Congress and staff on cotton industry and
issues
• Increasing need to grow PAC resources
• Rebuilding cotton demand
• Leveling the playing field
• Improving cotton’s profitability
Producers
Cooperatives
Ginners Cottonseed
Merchants
Warehouses Manufacturers