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![Page 1: Cotton Industry Update Agricultural Council of Arkansas Board of Directors Meeting Brinkley, AR May 19, 2015.](https://reader036.fdocuments.net/reader036/viewer/2022062516/56649ddd5503460f94ad544c/html5/thumbnails/1.jpg)
Cotton Industry Update
Agricultural Council of ArkansasBoard of Directors Meeting
Brinkley, ARMay 19, 2015
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Key Issues• Farm Bill Implementation• Appropriations• Trade Issues– TPA and TPP– Turkey Antidumping Investigation– WTO Negotiations and Cotton Discussions
• Market Comments
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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
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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
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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
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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)
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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
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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
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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
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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?
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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
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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
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China Balance Sheet
12/13 13/14 14/15 15/16 Change
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
Stocks/Use 140% 182% 186% 173%
Million Bales
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U.S. Balance Sheet
12/13 13/14 14/15 15/16 Change
Production 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%
Million Bales
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World Balance Sheet
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
Million Bales
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World Cotton Mill Use
2006 2011 2015
Total 124.2 104.0-20.2
115.3+11.3
China 50.0 38.0-12.0
36.0-2.0
All Others 74.2 66.0-8.2
79.3+13.3
Million Bales
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Cotton Prices
09 10 11 12 13 14 150
50
100
150
200
250
Nearby NY A Index
Cents per Lb
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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
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MerchantsGinners Cottonseed
Producers Cooperatives
Warehouses Manufacturers