Competitiveness Restored by Step 2
Could Be Lost Without Certificates

WASHINGTON—National Cotton Council (NCC) leaders met with Secretary of Agriculture Dan Glickman to urge prompt implementation of authority to issue cotton marketing certificates that could be redeemed for loan collateral at the adjusted world price (AWP). NCC President Ron Rayner headed the delegation that included Board Chairman Jack Hamilton, Treasurer Bob McLendon, Past President Tom Smith, Vice President Jim Echols, American Cotton Producer Chairman Allen Helms, Jr., Executive Vice President Phil Burnett and Washington Operations Vice President John Maguire.

The secretary invited the delegation to discuss the benefits of issuing certificates and allowing redemption at the AWP as provided in the FY2000 agriculture appropriations bill. The delegation pointed out that more than 3,000 producers have at least 1.1 million bales "locked" in the loan because they have exhausted their cumulative annual limitation of $150,000 on the combination of loan deficiency payments (LDPs) and marketing loan gains. The NCC delegation explained that without the certificates, redeemable at the AWP, the competitiveness achieved with the reactivation of Step 2 could be lost to foreign growths if a significant amount of cotton from the 1999 crop remains in the loan until fall and is then forfeited.

The group reminded Secretary Glickman that under the law, forfeited cotton would add to carryover and would have to be auctioned by USDA this fall, depressing prices at harvest. The secretary was urged to utilize the authority provided by Congress to issue certificates that allow producers to redeem and market cotton in an orderly fashion. With prices for all commodities forecast to remain low through the remainder of 2000, the delegation noted, certificates could help alleviate a problem in 2001 when the limitation on benefits reverts to $75,000 in the absence of further action by Congress.

The secretary advised the delegation that he understood the importance of the decision and the importance of making a final determination in the near future. The NCC delegation visit followed the secretary’s meeting with Sen. Blanche Lincoln (D-AR) and frequent contacts by members of the Senate and the House, including Reps. Marion Berry (D-AR), Cal Dooley (D-CA) and Allen Boyd (D-FL), urging prompt implementation of certificate authority.