The World and United States Cotton Outlook
on the proportion of other covered
crops planted on a farm with generic
base acres. If conditions warranted,
payments would be made for the cov-
ered crops attributed to that generic
base.
The 2018 Bipartisan Budget Act (BBA)
applied only to the 2018/19 crop, but
the 2018 Agriculture Improvement Act
applies to the 2019-23 crops. Under the
BBA, owners of generic base had sev-
eral options to convert generic base
into seed cotton or other covered com-
modity base acreage, either to 80-100%
seed cotton base depending on cotton
planting history during 2009-12 or to the
proportion of all covered crops planted
during that time period. If a producer
planted no covered commodities since
2009, all generic base would become
unassigned and ineligible for ARC/PLC
payments.
The seed cotton ARC and PLC pro-
grams will operate with the same gen-
eral parameters as they have with other
covered crops during the 2014 Farm
Bill. Seed cotton will have a reference
price of $0.367/lb., and the effective
price will be the higher of $0.25/lb. or
the weighted average price of cotton
lint and cottonseed. Payments would
equal the payment rate (if the effec-
tive price is lower than the reference
price), times the payment yield, times
85% of the seed cotton base acres.
The payment yield, by default, is the
Counter-Cyclical Payment yield under
previous legislation for lint cotton times
2.4, and the option to update yields
also exists under the same conditions
as for other covered commodities un-
der the 2018 Farm Act.
Marketing Assistance Loans
There are different provisions for up-
land cotton, ELS, and seed cotton
marketing assistance loans (MALs) in
the 2018 Farm Bill. The upland cotton
and ELS MALs remains nonrecourse,
meaning that producers may forfeit the
cotton as full repayment of the MAL,
but only upland cotton is eligible for
Marketing Loan Benefits. The upland
cotton loan rate remains between$0.45/lb. and $0.52/lb., based on the simple average of the preceding two crop
year’s Adjusted World Price (AWP), but with the new provision that the loan rate
can be no less than 98% of the previous year’s loan rate. The ELS loan rate,
along with a number of other crops, had its loan rate raised, in this case from
$0.7977/lb. to $0.95/lb. Seed cotton loans (unrelated to the ARC/PLC provi-
sions discussed above) are recourse loans, requiring full repayment with inter-
est. The loan rate for seed cotton is the same for upland cotton and ELS cotton,
respectively, depending on the variety of the cotton.
Other Cotton Provisions
The other main cotton programs that were continued, with some modification in
one case, are the Economic Adjustment Assistance to domestic users of Up-
land Cotton (“EAAP”) program, the ELS Competitiveness Payment Program,
and the upland Special Import Quota.
The EAAP program, established in 2008, provides a fixed payment of $0.03/lb.
to domestic users (e.g., mills) of upland cotton. The payments are to be used
for capital improvements such as purchasing or improving equipment, machin-
ery, and structures.
The ELS Competitive Payment Program is designed to make payments to
domestic users or exporters of ELS when, for four consecutive weeks, a) the
lowest foreign price quote for a competing variety is lower than the U.S. price
quote and, b) the low foreign price quote is less than a certain percentage of the
U.S. loan rate (previously 134% and changed to 113% in the 2018 Farm Act).
The change to 113% is offsetting to the increased loan rate but perhaps not
completely so based on an examination of historical price data. Finally, a spe-
cial import quota, is continued and unchanged from prior farm bills.
On January 9, 2020 USDA changed the foreign price quote used in the ELS
Competitive Program calculations to the more widely available Giza 94. Quotes
for Israeli Pima H1 had been utilized for several years, but the growing avail-
ability of Giza 94 resulted in a change.
New Textile Applications
Clothing and interior textiles have in the past made up the dominant part of
textile-based products in the market with a few further textile applications
constituting small niches. With important advances in textile materials
research, processing technologies and changing functional requirements of
products in other industries over the last two decades, textiles have found
an ever broader range of application in sectors as diverse as road, rail, marine
or aero-space vehicles, engineering, construction, agriculture, power and
environmental technologies, health care, defence and security etc. As a
result the products for such purposes, known globally as technical textiles,
today represent close to half of total textile production in Germany, Belgium
or Nordic countries and have reached significant proportions of production
also in countries which retain important conventional textile manufacturing
capacities such as Italy, France, Spain and Portugal.
With continued fierce price competition and little overall market growth in
conventional textile products, more and more textile manufacturers are looking
to the technical textiles field for business expansion or reorientation. However,
as these markets have structures and procedures that differ greatly from the
clothing or home textiles business, the process of transformation is
challenging.
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