Coley, Meeks Reappointed to Cotton Commission Board

In late July, the Commodity Commission Ex-Officio Committee met to make appointments to the Georgia Cotton Commission Board of Directors.  GCC Vice Chairman Matt Coley, a cotton and peanut farmer from Vienna; and director Steven Meeks, a cotton, peanut, tobacco, and timber producer from Screven, were both reappointed to another three year term on the Commission’s board of directors.

Matt Coley and his father operate Coley Farms.  The Coleys also operate Coley Gin & Fertilizer, a cotton gin and peanut buying point that has been operating since 1945.  Matt has degrees from the University of Georgia’s College of Agricultural & Environmental Sciences.  He spent time in Washington as a staffer for Senator Saxby Chambliss and was instrumental in developing the 2008 Farm Bill.  Matt holds leadership positions in many cotton organization, including serving as a member of the National Cotton Council’s Sustainability Task Force.  Coley has served on the Georgia Cotton Commission board since 2012 and as Vice Chairman since 2017.  He was a member of the Leadership Georgia class of 2016 and serves as a member of the National Peanut Buying Points Association board.  Matt and his wife have two daughters who attend Crisp Academy, where he serves on the school board.

When asked why it was important to him to be involved with the Georgia Cotton Commission, Coley said, “As a 4th-generation cotton producer, one of my top priorities is working to make sure that the next generation has the opportunity to continue producing cotton in the future.  The work of the Georgia Cotton Commission helps ensure this by utilizing the $1/bale investment from Georgia cotton producers for research, education and promotion.  It is a great honor to be able to help steer Commission funded projects that will not only help cotton growers today, but also benefit the next generation of Georgia cotton producers.”

Steven Meeks operates Nine Run Farms and serves as operations manager for FMR Burch Farms.  After graduating from the University of Georgia College of Agricultural & Environmental Sciences, Meeks worked for Congressman then Senator Saxby Chambliss as well as the US Senate Committee on Agriculture, Nutrition, and Forestry and was a key staff member during the drafting, passage, and implementation of two farm bills.  Meeks serves on numerous cotton industry boards and has served on the Georgia Cotton Commission board since 2012.  He serves as a trustee for Leadership Georgia, of which he was a member of the 2012 class, and on the UGA CAES Dean’s Advisory Council.  Meeks has served the people of Appling, Brantley, Pierce, and Wayne Counties as a State Representative since 2018.  In the General Assembly he is a member of the Agriculture & Consumer Affairs; Energy, Utilities & Telecommunications; and Intragovernmental Coordination Committees.  Meeks and his wife, the former Joy Burch, have one son, John William.

Meeks said of his reappointment, “I am honored to have been reappointed to the Georgia Cotton Commission Board of Directors.  Cotton is Georgia’s number one row crop and the work that Commission does in research, promotion, and education is instrumental to the continued sustainability, both financially and environmentally, of cotton production in Georgia and will keep this economically important crop in Georgia for generations to come.”

The Georgia Cotton Commission is a producer-funded organization located in Perry, Georgia. The Commission began in 1965. Georgia cotton producers pay an assessment enabling the Commission to invest in programs of research, promotion, and education on behalf of all cotton producers of Georgia. For more information about this and other topics please call 478-988-4235 or visit us on the web at www.georgiacottoncommission.org.

Whitaker on Cotton Defoliation and Harvest

It’s seems like just yesterday we were planting the 2019 Georgia cotton crop, yet here at the end of September producers have already gotten started with defoliation and harvest.  We typically get started at the end of September, but things are moving faster this year.  Much of this is due to the challenges we’ve faced with tropical systems over the past three years.  Producers have made efforts to limit our exposure to the risks associated with these storms by spreading out planting, particularly by planting more of the crop earlier in the window such that their crop isn’t entirely exposed to wind and rain damage regardless of when it occurs.  Earlier plantings, along with limited rainfall and relentless heat have pushed many acres to be harvestable much earlier than usual.  Overall, the entire Georgia crop is maturing earlier than I’ve seen in quite a few years.  Harvest progress is ahead of schedule compared to most years, but there is a long way to go before we get the entire crop to the gin.

In addition to spreading risk by widening our planting window, producers are also working to limit unnecessary risks from tropical systems by being timelier with defoliation timing and harvest.  Several factors have caused cotton harvest in Georgia to typically lag behind the rest of the country.  Much of it has to do with our extremely long growing season and due to the fact that Georgia has such a large peanut crop.  Timely harvest is important for cotton, but critical for peanut and with only so much time in the day, producers have been forced to put peanut harvest ahead of cotton harvest.  However, with the introduction of round bale cotton harvesters (which require only one person to harvest the crop compared to a crew with basket pickers) and the much earlier maturity of currently planted cotton varieties (compared to full season varieties we’ve grown in the past) we now have both the ability and need to be more timely with cotton harvest than ever before.

When making decisions on defoliation and harvest timing, we ultimately are making a decision on which bolls to harvest.  If you ask a producer which bolls on the plant they want to harvest the answer you will get every time is “all of them”.  The issue with that answer is that all of the bolls on a plant are not ready to harvest at the same time.  Cotton bolls develop over a wide window of time and it can ultimately be several weeks between the time the earliest and latest boll on the plant reach maturity.  Weather during the harvest season impacts how long those earliest maturing bolls can still be harvested while waiting on later set bolls to mature.  If little to no rainfall or wind occurs, we have the opportunity to wait (since cotton can remain on the boll for extended periods of time under the right circumstances), yet in most years weathering impacts the ability to successfully harvest those earlier set bolls if we wait too long for those later developing bolls to mature, thus leading to a situation where we don’t have the opportunity to harvest “all of them”.  Therefore, appropriate defoliation and harvest timing decisions have to be made to ensure we harvest the most and the best bolls on the plant.  Research has shown that the value of a boll varies greatly based on where it is located in the canopy and typically bolls set earlier in the year (and lower in the plant canopy) are worth two to three times more than a boll set later in the year (and in the top of the canopy).  So, when making the “right” and most profitable defoliation timing decision we may often end up with unopen and subsequently unharvestable bolls in the top of the canopy.  Leaving bolls in the field unharvested never makes a producer happy, but is often the right decision when considering profitability.

Although we have a long way to go, the 2019 Georgia cotton crop seems to be a decent to good one.  We certainly don’t have the crop that we had before Hurricane Michael tore through the state last year or what we had in 2012, but I do expect us to produce average yields that will be among the top five or so years on record, which is quite an accomplishment given the growing season.  We dodged a bullet with Hurricane Dorian and hopefully we’ll be able to harvest this year’s crop without interruption.  For help with making defoliation timing decisions along with choosing the right product combination and rates contact your local UGA County Extension Agent.  For more information this and other cotton topics be sure to visit the UGA Cotton Webpage and sign up to receive updates at www.ugacotton.com.

This article was written by UGA Extension Cotton Agronomist Dr. Jared Whitaker.

CCI: Major U.S. Cotton Customers to See Their Raw Fiber Source Firsthand

MEMPHIS, Tenn. (September 16, 2019) – Textile manufacturing executives representing 14 countries will visit the U.S. Cotton Belt September 30-October 4 on the 41st COTTON USA Orientation Tour.

Sponsored by Cotton Council International (CCI), the export promotions arm of the Memphis-based National Cotton Council (NCC), the Orientation Tour’s major objectives are to increase U.S. cotton customers’ awareness of the types/qualities of U.S. cotton, help them gain a better understanding of U.S. marketing practices and enhance their relationships with U.S. exporters. More than 900 textile executives from 60 plus countries have participated in this biennial Tour, which was initiated in 1968.

“We want to show these important U.S. cotton customers the source of the high quality, responsibly-produced fiber they use in their textile operations,” said CCI President Hank Reichle, a Mississippi cooperative executive. “We also want to showcase how intently focused our industry is on sustainability and the degree to which we are committed and invested in continuous improvement in our production practices. Hopefully, they will come away with an even better appreciation of our fiber’s premium value and how it can make their textile operations more competitive.”

This year’s Orientation Tour includes executives representing 32 companies in Bangladesh, China, Ecuador, El Salvador, Guatemala, India, Japan, Korea, Pakistan, Peru, Taiwan, Thailand, Turkey and Vietnam. The manufacturers are expected to consume about 3.7 million bales in 2019, and the U.S. market share with them is estimated at about 33 percent. The countries represented on this year’s tour consume about 101 million cotton bales per year in their textile mills, which represents about 82 percent of the world’s cotton consumption.

The Tour participants will visit a Mid-South cotton farm; tour a cotton warehouse in the Lubbock, Texas area; observe cotton research in North Carolina and Mississippi, and tour the USDA cotton classing office in Bartlett, Tennessee. They will meet with U.S. cotton exporters and get briefings from CCI, the NCC, Cotton Incorporated, the American Cotton Shippers Association, the Texas Cotton Association, the Lubbock Cotton Exchange, AMCOT, the American Cotton Producers, the Delta Council, the Plains Cotton Growers Association, the Western Cotton Shippers Association and Supima.

# # #

Cotton Council International (CCI) is a non-profit trade association that promotes U.S. cotton fiber and manufactured cotton products around the globe with our COTTON USA™ Mark. Our reach extends to more than 50 countries through 20 offices around the world. With more than 60 years of experience, CCI’s mission is to make U.S. cotton the preferred fiber for mills/manufacturers, brands/retailers and consumers, commanding a value-added premium that delivers profitability across the U.S. cotton industry and drives export growth of fiber, yarn and other cotton products. For more information, visit www.cottonusa.org.

NCC: WOTUS Rule Withdrawal Is Right

MEMPHIS, Tenn. – The National Cotton Council (NCC) applauds today’s announcement by Environmental Protection Agency Administrator Andrew Wheeler that the 2015 Waters of the U.S. (WOTUS) rule has been withdrawn.

The next step will be a new final rule expected towards the end of this year.

NCC Chairman Mike Tate noted that the U.S. cotton industry has long sought consistency and simplicity in water regulations and said, “EPA’s decision ends the uncertainty caused by the WOTUS rule and the resulting, sometimes conflicting, court verdicts that led to a patchwork of regulations nationwide.”

Tate, an Alabama cotton producer, stated, “Cotton producers and all of agriculture deserve a commonsense and understandable rule that not only ensures environmental and human health but protects farmland and our rights to conduct our operations in a responsible and economically sustainable manner with flexibility that wasn’t present under the 2015 rule. While nothing is perfect, we foresee the new rule as one that does not label as ‘waters of the U.S.’ those vast areas of dry land that have been farmed for generations.”

Shurley: Understanding the Cotton Marketing Loan and LDP/MLG

Note: The purpose of the Marketing and Policy Insights publication series is to provide timely education, discussion, and analysis of critical issues facing the cotton producer.  The analysis and opinions expressed and any errors are those of the Author.  This publication is not affiliated with the University of Georgia.  The author can be reached by email at donshur@uga.edu or dshurley@abac.edu, by phone at (229) 386-3512 or 386-7275 or on Facebook at https://www.facebook.com/don.shurley.5

Cotton is a “loan eligible” crop. Bales of cotton can be stored and the producer receives a government CCC loan, pledging the cotton as collateral. The loan program is not meant to be a major marketing tool, but it can be and it is for some producers. The Loan provides cash flow and can serve to reduce price risk.

The cotton producer can store cotton under the Loan, take an LDP (Loan Deficiency Payment) if available and forgo the Loan, or bypass the Loan altogether. Southeast producers, for example, have little experience with the Loan and rarely use it compared to other parts of the country.

The 2018 farm bill established that the loan rate for upland cotton is the average Adjusted World Price (AWP) for the previous 2 completed crop marketing years—but it cannot be less than 45 cents/lb, cannot exceed 52 cents/lb, and cannot decline by more than 2% from year to year.

The loan rate for the upcoming crop year must be announced by October 1 of the year before planting—which means the average AWP for the immediate prior crop year will not have been determined at that time (cotton is on an August-July marketing year). So, there is a 1-year lag—the loan rate for 2019 cotton, for example, is determined based on the average AWP for the 2016 and 2017 crop years. The average AWP for the 2016 and 2017 crop years was over 52 cents. So, the loan rate for the 2019 crop is 52 cents.

The loan period is 9 months. Once the cotton is in loan, eventually it must come out of loan and be sold (unless forfeited to the CCC which hardly ever happens). From the producer’s standpoint, this will take place in 1 of 2 ways—the producer can either redeem the cotton at the loan repayment rate in effect (as discussed in the next section) or the producer can accept a merchant “equity” offer (as also discussed later).

Loan Repayment Rule
So, the loan rate for cotton is allowed to float between 45 and 52 cents subject to the AWP. The AWP is also important for another reason—what I call the “loan repayment rule”. The “loan repayment rule” essentially says that the CCC loan is repaid at the loan rate plus charges or the AWP, whichever is less. So, the loan rate itself can be tied to what the AWP was for the most previously completed 2 crop years and is set/fixed as of October 1 for the next crop year. Then, during that next crop year the loan repayment rule may allow the loan to be repaid at the AWP if the AWP falls below the loan rate.
The Far East (FE) Price
The AWP is derived from the Far East (FE) Price or what is commonly considered the “World price” of cotton. This FE Price is quoted daily and is the average of the 5 lowest (cheapest) prices (by origin) for 31- 3/35 cotton delivered FOB the port at several select southeast Asia locations. The following is an example of recent daily price quotations:

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The daily FE price is then averaged for the “week” beginning on a Friday and ending the following Thursday. This example shows the daily and weekly average FE price for the “week” beginning on Friday, August 23, 2019 and ending on Thursday, August 29, 2019. The average FE Price for the week was 68.70 cents/lb.

The Adjusted World Price (AWP)
As just shown, the FE price is determined daily. The AWP, however, is determined weekly based on the average of the daily FE prices for the week. The FE is the “World” price—the AWP is this World price “adjusted” for cost-to-market and quality. From the weekly average FE price, the costs from FOB southeast Asia back to average US location are deducted and an adjustment/deduction is also made for quality (the FE price is quoted for 31-3/35 compared to US base quality of 41-4/34).

For the 2019 crop year, the costs-to-market is currently set at 15.20 cents/lb and the quality adjustment to 41-4/34 is 2.05 cents. So, the total “adjustment” to arrive at the AWP is 17.25 cents/lb. The following is an example of how the AWP is determined:

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The average of daily FE prices for a week is used to determine the AWP that will be in effect for the following week. For example, the FE price for August 23-29 averaged 68.70 cents. The resulting AWP is 51.45 cents and will be in effect beginning the next day on August 30 through the close of business the following Thursday, September 5.

During the week beginning August 30, if the daily FE price is running less than 68.70, then the AWP for the following week beginning September 6 will decrease. Likewise, if the FE price is running higher, the AWP for the following week will increase.

POP or Loan Deficiency Payment (LDP) and Marketing Loan Gain (MLG)
Remember the loan repayment rule—if the AWP is less than the loan rate, the  producer can repay the loan at the AWP. When the AWP is less than the loan rate, this difference is called an LDP (Loan Deficiency Payment) or MLG (Marketing Loan Gain). The loan rate for the 2019 crop is 52 cents. For the week of August 30 through September 5, as shown above, the AWP will be 51.44 cents. This will be the first time an LDP/MLG has been in effect since late in the 2015 crop marketing year (since May 2016).

52.00 Loan Rate – 51.55 AWP = 0.55 cents LDP

An LDP (or what producers still like to call a “POP” payment) is applied for and the payment received if the producer agrees to forgo putting those bales in Loan. An LDP is in lieu of putting the crop in Loan—in other words, any bales receiving an LDP are not eligible for the Loan.

Let’s suppose it’s harvest time or after harvest. The producer must still have “beneficial interest” in the crop—still have ownership and title to the crop. If an LDP is in effect, the producer has 3 options—take the LDP and forgo the Loan, forgo the LDP and store the cotton in Loan, or forgo both the LDP and Loan (this 3rd option is not likely). Let’s assume the AWP is 49 cents and the loan rate is 52 cents. The producer has several choices including take the 3 cents and forgo the Loan—do what you wish with the cotton or forgo the 3 cents and store the cotton in Loan, sell later.

Past history and experience (in Georgia, at least) tells us that if a POP/LDP is available, producers will most likely opt to take the money. Especially if the crop is already contracted and never intended for Loan in the first place, producers are taking the LDP if it’s available.

Unlike an LDP, which may be received in lieu of a loan, a Marketing Loan Gain (MLG) may be realized when cotton is stored in Loan. The cotton is stored under Loan and if during the loan period, the AWP is less than the loan rate, a loan gain (MLG) is realized if and when the loan is paid off at less than the loan rate. The math is the same for both LDP and MLG—it’s the loan rate minus the AWP if the AWP is less. The only difference is simply the timing—one is received up front in lieu of the Loan (the LDP) and the other realized later if cotton is in Loan (the MLG).

Under the 2018 farm bill, there is no longer a payment limitation on LDP/MLG.

Price Relationships
A key to understanding how the Loan works and, more importantly, how the cotton producer will fare with the Loan whether an LDP/MLG is in effect or not, is in price relationships—not price itself, but price relationships.

The table below shows price relationships for the first 4 full weeks of the 2019 marketing year (as current as possible as of the date of this publication). Of course, the relationships are subject to change but can be relatively stable over the course of the marketing year.

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Our nearby cotton futures prices are currently running mostly 10 to 11 cents under the FE Price. As already mentioned, the AWP is 17.25 cents under the FE Price. Assuming a loan rate of 52 cents, when will there be a LDP/MLG in effect? Or, in other words, when will the AWP be less than 52 cents?

Assuming the most recent FE-Futures difference of 10.62 cents, the answer would be:
52.00 + 17.25 – 10.62 = 58.63 or roughly less than 59 cents nearby futures

In other words, if our nearby futures were 58.63 cents, then current price relationships would imply an FE Price of 69.25 cents and an AWP of 52 cents equal to the loan rate.
58.63 futures + 10.62 difference = 69.25 FE Price
69.25 FE Price – 17.25 adjustments = 52.00 AWP = Loan

For the first 4 weeks of the 2019 crop marketing year, our nearby futures has averaged 10.65 cents below the FE Price. This difference has ranged from 11.27 to 10.33 cents. One important price relationship is that when our futures prices go down, the FE Price also tends to go down. When futures goes up, the FE tends to go up. This may not happen every day or every week and not penny for penny, but over a period of time our futures price and the FE Price tend to track together.

So, what does this mean? Two things:
1-Based on current adjustments and price relationships, if our futures prices are above roughly 59 cents, there is no LDP/MLG. In most years, thankfully, cotton is above 59 cents and while there is no LDP/MLG, that means a better price for cotton.
2-When the price of cotton falls below roughly 59 cents on futures for the week, an LDP/MLG will likely kick in. Because our futures and the FE Price tend to move together, the lower the price of cotton the lower the FE and AWP and the higher the LDP/MLG. The LDP/MLG acts like a “shock absorber” protecting the producer from lower prices.

Merchant Equities
The MAL (Marketing Assistance Loan) or what we’ve simply referred to as the Loan, is nothing more than a way to store the crop and sell it later. It’s primarily a cash flow tool—get the loan rate up front and deal with pricing and the market later on.

Most of the time, an LDP/MLG will not be a factor because the price of cotton is above the “trigger” (above roughly 59 cents on nearby futures and an FE price of roughly 69 cents). Regardless of whether an LDP/MLG is in effect or not, if cotton is stored in Loan the producer must eventually (before the end of the loan period) either redeem the cotton (pay off the loan and charges and sell the cotton) or accept an “equity” offer from a buyer/merchant. In most cases, producers will go the merchant equity route.

If an LDP (POP) is in effect and the producer takes the LDP (and forgoes the Loan on that number of bales), the total money in the producers pocket is the LDP plus the eventual contract or cash sale of the cotton. The cotton can be sold or stored or whatever, but it no longer is eligible for Loan.

If the cotton goes to Loan and especially if there will be a MLG in effect, how the producer will fare depends on price relationships. But, let’s look at 2 examples, one without a MLG and the other with MLG.

Look first at the following example with no MLG—this is going to be the case most of the time. The producer has cotton in Loan at 52 cents. Assuming no loan forfeiture, the producer must now eventually do 1 of 2 things—redeem (repay at the loan plus charges or AWP whichever is less) or he/she may keep the loan amount and accept additional money (an equity payment) from a buyer/merchant. Nearby May futures is 68 cents. Let’s assume the FE price is 10.65 cents above futures. So, the FE price would be 78.65. The adjustments are -17.25 cents. So, the AWP in effect would be 61.40 cents or roughly 8 cents below nearby futures as shown in the example.

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If the producer went the redemption route—paid off the loan plus charges (or at the AWP if less) and sold his/her cotton, the net total money received would be 65.20 cents (loaned 52.00 – 56.30 payoff + sell 69.50 = 65.20). Alternatively, the producer could just accept an equity of 13.2 cents. The producer has already received and will keep the loan amount (52 cents). The equity estimate, as calculated, is the sale of  cotton minus the payoff (69.50 sell – 56.30 payoff = 13.20). This amount (13.20) when added to the loan amount already received (52.00) would equal the net received through loan redemption (65.20). The AWP is above the loan rate so there is no MLG.

In exchange for the equity paid, the merchant then assumes control of the cotton in loan. The merchant will pay the interest and other charges when the cotton is eventually redeemed from loan (sold).

Here’s another example but when a MLG is in effect. Nearby futures is much lower at 58 cents. Assuming the same FE and AWP differences, the AWP is below the loan rate resulting in a small Marketing Loan Gain (MLG) (52.00 Loan – 51.40 AWP = 0.60 cents MLG). Equity is estimated at 8.10 cents.

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As in the first example, the estimated merchant equity offer is the spot price sale of cotton (59.50) minus the payoff (51.40 AWP since that is less than the loan plus charges). When a MLG is in effect, interest and storage are forgiven—CCC interest is forgiven and applicable storage and warehousing costs are paid by the merchant/buyer but taken into consideration when determining the equity.

Note: The above are general examples and estimates of equity. In reality, merchants use a different approach to determine equity and their equity calculation may vary somewhat from what is shown here. But, these examples are good for teaching several points. When cotton is in the Loan, how the producer will fare depends on price relationships. Equity and total money in the producers pocket will increase

  • If futures increases in relation to the FE price
  • If the FE price declines in relation to our futures prices
  • If basis improves

Summary and Implications for Decision Making
Cotton is a “loan eligible” crop. Bales of cotton can be stored and the producer receive a government CCC loan, pledging the cotton as collateral. The loan program is not meant to be a major marketing tool, but it can be and it is for some producers. The cotton producer can bypass the Loan altogether, store cotton under the Loan, or take an LDP (Loan Deficiency Payment) if available and forgo the Loan.

An LDP or MLG is possible because of how the marketing loan for cotton works and the “loan repayment rule”. Based on current (2019 crop year to-date) price  relationships and adjustments, an LDP/MLG will be in effect when our cotton futures are below roughly 59 cents. Thankfully, LDP and MLG will not be a factor in most years. The 2019 crop, however, is the first time an LDP/MLG has been in effect since late in the 2015 crop marketing year (since May 2016).

History and experience (in Georgia, at least) tells us that if and when a POP/LDP is available, producers will most likely opt to take the money. Especially if the crop is already contracted and never intended for loan in the first place, producers will take the LDP if it’s available. Marketing associations are traditionally heavy users of the Loan, but most producers in the Southeast have little personal experience with the Loan.

The FE Price and our cotton futures prices tend to move together—when our cotton prices go down, the FE price is likely also going down. If the FE price is low enough, the resulting AWP can be below the loan rate which means we’ll have LDP/MLG. This helps insulate the producer from very low prices.

An LDP (POP), if available, is available because prices are very low. If taking the LDP, the producer should be aware that there is no longer protection from prices going lower on those bales (on the bales “POPed”). Producers should be prepared to sell or consider alternatives to manage downside risk.

An LDP is available because price is very low. Low prices are obviously, not what we want. If you think or are willing to take the risk that prices are going to improve, then you could take the LDP and market the cotton later on the (hopefully) higher market. Alternatively, you could forgo the LDP and store the cotton in Loan—which would afford protection from lower prices just in case in the form of a MLG.

If an LDP (POP) is available and the producer doesn’t take the LDP, then the best strategy may be to put the cotton in loan and you may still realize a MLG later. The MLG is the same calculation as the LDP. Whether there is an LDP/MLG in effect or not, if cotton is stored under Loan, how the producer fares will depend on price relationships as this affects the spot price and the loan equity.

If cotton is in Loan and a MLG is in effect, remember that the FE Price (and thus the AWP and resulting MLG) and our futures price tends to move together. But, the MLG is fixed for a week whereas our futures obviously change daily. While the MLG is fixed for a week (until the close of business on Thursday), if the daily FE price during that week is increasing then you can be assured that the AWP will increase and the MLG decrease effective the following week. If the FE Price is going up, our futures are probably also going up. Selling into this increasing market before the MLG declines effective for the following week would be one way to increase your total money received.

The Loan is a marketing tool whether or not an LDP/MLG is in effect or not. In most years, cotton prices will be high enough that an LDP or MLG will not be triggered. The Loan is mostly a cash flow tool. The cotton must eventually come out of Loan and sold on the spot market.

Acknowledgements
Appreciation is expressed to merchants and USDA FSA staff who provided valuable time and expertise to review this publication. Any errors and misinformation are unintended and the responsibility of the author.

NCC Farm Bill Educational Webinars

Sign-up for the 2018 Farm Bill has begun (deadline is March 15, 2020).  The National Cotton Council staff will conduct 2018 Farm Bill education webinars later this month as follows:

Thursday, September 19, 8:00 am
Monday, September 23, 8:00 am
Wednesday, September 25, 8:00 am
Thursday, September 26, 10:00 am

All times are Central.  All cotton industry members and other interested parties are invited to participate.  Organizations or individuals are encouraged to relay this information to their respective financial institutions and other agri-businesses. All webinars will cover the same information on Seed Cotton ARC/PLC election, 2019 and 2020 crop enrollment, marketing loan provisions, program eligibility provisions and the Economic Adjustment Assistance for Textile Mills (EAATM)

In addition to the webinars, the NCC continues to update its farm bill resources at http://www.cotton.org/issues/2018/fminfo.cfm. A list of frequently asked questions and answers will also be posted following the webinars along with a series of short YouTube videos focusing on specific provisions of the farm bill.

For this webinar, guests will need to use Zoom software. To connect, click https://cotton.zoom.us/j/589146147.  (If this is your first experience with the Zoom software, you will be prompted to download the Zoom client). Please include your personal email address.  Also, if you are hosting a group session, when prompted, please provide the number of participates.  If you have difficulty joining the webinar, email Michelle Huffman at mhuffman@cotton.org  or Shawn Boyd at sboyd@cotton.org for assistance.

Please note that all audio will be through your computer, tablet or smartphone as there is no conference line audio provided.  Participants will be unable to verbally ask questions. All questions will be submitted electronically via Zoom client and answered orally by the presenter.  An electronic version of the PowerPoint presentation will be available prior to the webinar at the Council’s website in the 2018 Farm Bill portal (Members Only).

If you are organizing listening groups for the webinar suggested equipment is as follows:

Small Room/Conference Room with:

  • Computer with HDMI or VGA out
  • TV with HDMI connection
  • Projector with screen if no monitor available
  • Bluetooth Speaker/Soundbar.  Available at most retailers, they have both Bluetooth and 1/8” audio connections. The soundbar will need to plug into outlet.
  • Speakers for computer if soundbar is not practical. Suggest using the largest size desktop speakers available.  Generally, they have 1/8” audio connection.

Larger Room with:

  • Computer with HDMI or VGA output
  • Projector with screen (minimum 6ft wide screen)
  • Large Speakers rated for a big room/PA Speakers (may need RCA_1/4” to 1/8” adapter to plug into laptop)

We look forward to providing timely information regarding the 2018 cotton provisions and urge your participation.  Any questions can be forwarded to the NCC office or your Member Services Representative.

USDA Resources Available for Farmers Hurt by 2018, 2019 Disasters

WASHINGTON, D.C., Sept. 9, 2019 – U.S. Secretary of Agriculture Sonny Perdue today announced that agricultural producers affected by natural disasters in 2018 and 2019, including Hurricane Dorian, can apply for assistance through the Wildfire and Hurricane Indemnity Program Plus (WHIP+). Signup for this U.S. Department of Agriculture (USDA) program will begin Sept. 11, 2019.

“U.S. agriculture has been dealt a hefty blow by extreme weather over the last several years, and 2019 is no exception,” said U.S. Secretary of Agriculture Sonny Perdue. “The scope of this year’s prevented planting alone is devastating, and although these disaster program benefits will not make producers whole, we hope the assistance will ease some of the financial strain farmers, ranchers and their families are experiencing. President Trump has the backs of our farmers, and we are working to support America’s great patriot farmers.”

More than $3 billion is available through the disaster relief package passed by Congress and signed by President Trump in early June. WHIP+ builds on the successes of its predecessor program the 2017 Wildfire and Hurricane Indemnity Program (2017 WHIP) that was authorized by the Bipartisan Budget Act of 2018. In addition, the relief package included new programs to cover losses for milk dumped or removed from the commercial market and losses of eligible farm stored commodities due to eligible disaster events in 2018 and 2019. Also, prevented planting supplemental disaster payments will provide support to producers who were prevented from planting eligible crops for the 2019 crop year.

Eligibility

WHIP+ will be available for eligible producers who have suffered eligible losses of certain crops, trees, bushes or vines in counties with a Presidential Emergency Disaster Declaration or a Secretarial Disaster Designation (primary counties only). Disaster losses must have been a result of hurricanes, floods, tornadoes, typhoons, volcanic activity, snowstorms or wildfires that occurred in 2018 or 2019. Also, producers in counties that did not received a disaster declaration or designation may still apply for WHIP+ but must provide supporting documentation to establish that the crops were directly affected by a qualifying disaster loss.

A list of counties that received qualifying disaster declarations and designations is available at farmers.gov/recover/whip-plus.  Because grazing and livestock losses, other than milk losses, are covered by other disaster recovery programs offered through USDA’s Farm Service Agency (FSA), those losses are not eligible for WHIP+.

General Eligibility and Payment Limitations

WHIP+ is only designed to provide assistance for production losses, however, if quality was taken into consideration under federal crop insurance or the Noninsured Crop Disaster Assistance Program (NAP) policy, where production was further adjusted, the adjusted production will be used in calculating assistance under this program.

Eligible crops include those for which federal crop insurance or NAP coverage is available, excluding crops intended for grazing. A list of crops covered by crop insurance is available through USDA’s Risk Management Agency (RMA) Actuarial Information Browser at webapp.rma.usda.gov/apps/actuarialinformationbrowser.

Eligibility will be determined for each producer based on the size of the loss and the level of insurance coverage elected by the producer. A WHIP+ factor will be determined for each crop based on a producer’s coverage level. Producers who elected higher coverage levels will receive a higher WHIP+ factor.

The WHIP+ payment factor ranges from 75 percent to 95 percent, depending on the level of crop insurance coverage or NAP coverage that a producer obtained for the crop. Producers who did not insure their crops in 2018 or 2019 will receive 70 percent of the expected value of the crop. Insured crops (either crop insurance or NAP coverage) will receive between 75 percent and 95 percent of expected value; those who purchased the highest levels of coverage will receive 95-percent of the expected value.

Once signup begins, a producer will be asked to provide verifiable and reliable production records. If a producer is unable to provide production records, WHIP+ payments will be determined based on the lower of either the actual loss certified by the producer and determined acceptable by FSA or the county expected yield and county disaster yield. The county disaster yield is the production that a producer would have been expected to make based on the eligible disaster conditions in the county.

WHIP+ payments for 2018 disasters will be eligible for 100 percent of their calculated value. WHIP+ payments for 2019 disasters will be limited to an initial 50 percent of their calculated value, with an opportunity to receive up to the remaining 50 percent after January 1, 2020, if sufficient funding remains.

WHIP+ benefits will be subject to a payment limitation of either $125,000 or $250,000 per crop year, depending upon their verified average adjusted gross income. As under 2017 WHIP, the payment limitation for WHIP+ factors in the person’s or legal entity’s income from activities related to farming, ranching, or forestry.  Specifically, a person or legal entity, other than a joint venture or general partnership, cannot receive more than $125,000 in payments under WHIP+, if their average adjusted gross farm income is less than 75 percent of their average adjusted gross income (AGI) for 2015, 2016, and 2017.  The $125,000 payment limitation is single total combined limitation for payments for the 2018, 2019, and 2020 crop years.  However, if at least 75 percent of the person or legal entity’s average AGI is derived from farming, ranching, or forestry related activities and the participant provides the required certification and documentation, the person or legal entity, other than a joint venture or general partnership, is eligible to receive, directly or indirectly, up to $250,000 per crop year in WHIP+ payments, with a total combined limitation for payments for the 2018, 2019, and 2020 crop years of $500,000.  The relevant tax years for establishing a producer’s AGI and percentage derived from farming, ranching, or forestry related activities for WHIP+ are 2015, 2016, and 2017. For information regarding the payment limitation that applies to WHIP+, please contact your local USDA service center or visit farmers.gov/recover.

Future Insurance Coverage Requirements

Both insured and uninsured producers are eligible to apply for WHIP+. But all producers receiving WHIP+ payments will be required to purchase crop insurance or NAP, at the 60 percent coverage level or higher, for the next two available, consecutive crop years after the crop year for which WHIP+ payments were paid. Producers who fail to purchase crop insurance for the next two applicable, consecutive years will be required to pay back the WHIP+ payment.

Additional Loss Coverage

The Milk Loss Program will provide payments to eligible dairy operations for milk that was dumped or removed without compensation from the commercial milk market because of a qualifying 2018 and 2019 natural disaster. Producers who suffered losses of harvested commodities, including hay, stored in on-farm structures in 2018 and 2019 will receive assistance through the On-Farm Storage Loss Program.

Additionally, the disaster relief measure expanded coverage of the 2017 WHIP to include losses from Tropical Storm Cindy, and peach and blueberry crop losses that resulted from extreme cold.

Enhanced Assistance Through Tree Assistance Program (TAP)

TAP traditionally provides cost-share for replanting and rehabilitating eligible trees. WHIP+ will provide payments based on the loss of value of the tree, bush or vine itself. Therefore, eligible producers may receive both a TAP and a 2017 WHIP or WHIP+ payment for the same acreage.

In addition, TAP policy has been updated to assist eligible orchardists or nursery tree growers of pecan trees with a tree mortality rate that exceeds 7.5 percent (adjusted for normal mortality) but is less than 15 percent (adjusted for normal mortality) for losses incurred during 2018.

Prevented Planting

Agricultural producers faced significant challenges planting crops in 2019 in many parts of the country. All producers with flooding or excess moisture-related prevented planting insurance claims in calendar year 2019 will receive a prevented planting supplemental disaster (“bonus”) payment equal to 10 percent of their prevented planting indemnity, plus an additional 5 percent will be provided to those who purchased harvest price option coverage.

As under 2017 WHIP, WHIP+ will provide prevented planting assistance to uninsured producers, NAP producers and producers who may have been prevented from planting an insured crop in the 2018 crop year and those 2019 crops that had a final planting date prior to January 1, 2019.

Other USDA Disaster Recovery Assistance

When major disasters strike, USDA has an emergency loan program that provides eligible farmers low-interest loans to help them recover from production and physical losses.

Livestock owners and contract growers who experience above normal livestock deaths because of specific weather events, as well as from disease or animal attacks, may qualify for assistance under USDA’s Livestock Indemnity Program. Producers who suffer losses to or are prevented from planting agricultural commodities not covered by federal crop insurance may be eligible for assistance under USDA’s Noninsured Crop Disaster Assistance Programif the losses were from natural disasters.

USDA’s Emergency Assistance for Livestock, Honeybees and Farm-Raised Fish Program provides payments to producers of these commodities to help compensate for losses because of diseases (including cattle tick fever) and adverse weather or other conditions, such as blizzards and wildfires, that are not covered by other disaster programs.

USDA also provides financial resources through its Environmental Quality Incentives Program for immediate needs and long-term support to help recover from natural disasters and conserve water resources. Additionally, the Emergency Watershed Protection Program helps local communities immediately begin relieving imminent hazards to life and property caused by floods.  In addition, the Emergency Conservation Program provides funding and technical assistance for farmers and ranchers to rehabilitate farmland damaged by natural disasters and help put in place methods for water conservation during severe drought.

For more information on FSA disaster assistance programs, please contact your local USDA service center or visit farmers.gov/recover. For all available USDA disaster assistance programs, go to USDA’s disaster resources website.