1. Washington Report presented to National Cotton Council Board of Directors Memphis, TN September 12, 2002

2. Key Issues Farm Bill Defense Farm Bill Implementation Disaster Assistance Appropriations Trade Farm Bill Defense Farm Bill Implementation Disaster Assistance Appropriations Trade

3. Key Issues-Continued Crop Insurance Environment Taxes Flammability Homeland Security Agency Crop Insurance Environment Taxes Flammability Homeland Security Agency

4. Farm Bill Defense Amendments > FY03 Appropriations bills > Disaster assistance off-set NCC actions > Special Committee-June Board Meeting > Responses to press attacks > Action alerts Commodity and Farm Organizations > Roundtable Meeting in Washington + Coordination of Communications Efforts + Web-page + Press Conference/joint hill contacts + Letters Signed by 14 and 24 Organizations respectively Amendments > FY03 Appropriations bills > Disaster assistance off-set NCC actions > Special Committee-June Board Meeting > Responses to press attacks > Action alerts Commodity and Farm Organizations > Roundtable Meeting in Washington + Coordination of Communications Efforts + Web-page + Press Conference/joint hill contacts + Letters Signed by 14 and 24 Organizations respectively

5. Farm Bill Defense Political Analyze Votes and Basis for Decisions (Also Applies to Communications Strategy) Initial Focus on Appropriations Cmtes. Effectively Utilize House Leaders Establish Communication With Senate Leaders Establish Communication With Administration Identify Related Issues Equally Important to Others Enhance and Utilize CAC Resources Analyze Votes and Basis for Decisions (Also Applies to Communications Strategy) Initial Focus on Appropriations Cmtes. Effectively Utilize House Leaders Establish Communication With Senate Leaders Establish Communication With Administration Identify Related Issues Equally Important to Others Enhance and Utilize CAC Resources

6. Farm Bill Defense- House 3 key votes > Smith amend. 187-238 Oct. 01 > Smith motion to instruct 265-158 April 02 > Motion to recommit conference report 172-251 May 02 Solidly opposed to pay ltd amendments > AL, AR, LA, MS= 22 Majority opposed to GD amendment > AZ (1), KS (1), MO (3), NC (3), OK (1), TN (2), TX (6) = 59 Total votes in 17 cottonbelt states=203/117 > CA=52/12TX=30/20FL=23/3 > MO=9/1VA=11/3 3 key votes > Smith amend. 187-238 Oct. 01 > Smith motion to instruct 265-158 April 02 > Motion to recommit conference report 172-251 May 02 Solidly opposed to pay ltd amendments > AL, AR, LA, MS= 22 Majority opposed to GD amendment > AZ (1), KS (1), MO (3), NC (3), OK (1), TN (2), TX (6) = 59 Total votes in 17 cottonbelt states=203/117 > CA=52/12TX=30/20FL=23/3 > MO=9/1VA=11/3

7. Farm Bill Defense House Projects > AZ--Shadegg > CA--Farr, Calvert, Bono, Hunter > GA--Collins, Deal, Linder > NM--Udall > NC--Myrick > SC--DeMint, Graham, Clyburn, Spratt > TN--Wamp > TX--Hinijosa, DeLay, Armey Challenges > Republican leadership and conservatives > Black and Hispanic Caucus Projects > AZ--Shadegg > CA--Farr, Calvert, Bono, Hunter > GA--Collins, Deal, Linder > NM--Udall > NC--Myrick > SC--DeMint, Graham, Clyburn, Spratt > TN--Wamp > TX--Hinijosa, DeLay, Armey Challenges > Republican leadership and conservatives > Black and Hispanic Caucus

8. Farm Bill Defense- Senate G-D Amendment (66-31-3) Cottonbelt (7-34:pre-CA conversions) > KS--Brownback, Roberts > NM--Domenici? > OK--Nickles > TN--Thompson? > TX--Gramm > VA--Warner Future ?’s > Graham (FL), Nelson (FL), Bingaman (NM), Allen (VA) G-D Amendment (66-31-3) Cottonbelt (7-34:pre-CA conversions) > KS--Brownback, Roberts > NM--Domenici? > OK--Nickles > TN--Thompson? > TX--Gramm > VA--Warner Future ?’s > Graham (FL), Nelson (FL), Bingaman (NM), Allen (VA)

9. Farm Bill Implementation Commodity Programs > FSA Briefings > FSA Funding-OMB Letter and Appropriations > Loan Rate Announcement > NCC Letter re Base Up-date > Key FSA notices > FSA training this week Conservation Programs > NRCS reps attendance at ACP meeting > NCC leaders meet NRCS Sept. 19 Commodity Programs > FSA Briefings > FSA Funding-OMB Letter and Appropriations > Loan Rate Announcement > NCC Letter re Base Up-date > Key FSA notices > FSA training this week Conservation Programs > NRCS reps attendance at ACP meeting > NCC leaders meet NRCS Sept. 19

10. Farm Bill Implementation Base and yield update Power of Attorney Timing of payments ‘03 adjusted gross income test CCP advance FSA workload > farm bill > disaster assistance Base and yield update Power of Attorney Timing of payments ‘03 adjusted gross income test CCP advance FSA workload > farm bill > disaster assistance

11. Disaster Assistance Politically driven-SD, MT, MN Senate races Senate amend to FY03 Interior Approps- 9/10 > 79-16 (48 Dems and 31 Reps) > $5.95 bil. “emergency spending” Administration letter -9/9 > generous farm bill and crop insurance coverage > don’t add to deficit Next > conference committee > House action Compromise > lower $’s than Senate > partial off-sets Politically driven-SD, MT, MN Senate races Senate amend to FY03 Interior Approps- 9/10 > 79-16 (48 Dems and 31 Reps) > $5.95 bil. “emergency spending” Administration letter -9/9 > generous farm bill and crop insurance coverage > don’t add to deficit Next > conference committee > House action Compromise > lower $’s than Senate > partial off-sets

12. Appropriations FY02 Supplemental FY03 Agriculture FY03 Interior FY03 VA-HUD Continuing Resolution Omnibus Appropriations Bill FY02 Supplemental FY03 Agriculture FY03 Interior FY03 VA-HUD Continuing Resolution Omnibus Appropriations Bill

13. Trade Trade Promotion Authority (TPA) > Textile negotiating objectives > Ag negotiating objectives Andean Trade Promotion Act Caribbean and African Trade Act China TRQ’s and new standards FTAs Sound $ Coalition Trade Promotion Authority (TPA) > Textile negotiating objectives > Ag negotiating objectives Andean Trade Promotion Act Caribbean and African Trade Act China TRQ’s and new standards FTAs Sound $ Coalition

14. Crop Insurance Ross Davidson, new RMA Administrator Frank Jones, FCIC Board member House Agriculture subcommittee oversight hearing--September 18 Issues > improved coverage at better rates > cost of production insurance > prevented planting coverage > double insurance > quality loss adjustment Ross Davidson, new RMA Administrator Frank Jones, FCIC Board member House Agriculture subcommittee oversight hearing--September 18 Issues > improved coverage at better rates > cost of production insurance > prevented planting coverage > double insurance > quality loss adjustment

15. Environment FQPA Implementation-partnerships Endangered Species Act > Crop protection products + EPA and Fish & Wildlife Service Drift Regulation TMDL Regulation and Legal Action Biotech > registrations > international trade FQPA Implementation-partnerships Endangered Species Act > Crop protection products + EPA and Fish & Wildlife Service Drift Regulation TMDL Regulation and Legal Action Biotech > registrations > international trade

16. Tax Issues Extraterritorial Income Exclusion Act of 2000 (Replaced Foreign Sales Corp.) > WTO ruling (1/14/02) + EU retaliation--$4.0 bil/yr. > Repeal and Replace with- + 20 tax provisions to compensate for loss + Boeing, Microsoft, Disney vs. Agriculture Investor Tax Credits- House/Administration Small Business Tax cuts - Senate Extraterritorial Income Exclusion Act of 2000 (Replaced Foreign Sales Corp.) > WTO ruling (1/14/02) + EU retaliation--$4.0 bil/yr. > Repeal and Replace with- + 20 tax provisions to compensate for loss + Boeing, Microsoft, Disney vs. Agriculture Investor Tax Credits- House/Administration Small Business Tax cuts - Senate

17. Flammability New CPSC Chairman Hal Stratton Upholstered Furniture > cotton has 50% share of upholstery fabric market Mattresses > cotton has 42% share of ticking market Apparel > review products with raised surfaces Children’s Sleepwear > repeal ‘96 rule modification New CPSC Chairman Hal Stratton Upholstered Furniture > cotton has 50% share of upholstery fabric market Mattresses > cotton has 42% share of ticking market Apparel > review products with raised surfaces Children’s Sleepwear > repeal ‘96 rule modification

18. Homeland Security Agency Dodson testimony APHIS > Border Functions Shift to HSA > Plum Island Shifted to HSA Other APHIS functions remain at USDA Chemical facilities security (S.1602) Dodson testimony APHIS > Border Functions Shift to HSA > Plum Island Shifted to HSA Other APHIS functions remain at USDA Chemical facilities security (S.1602)

19. CONGRESSIONAL SCHEDULE Sept. 3 and 4-returned from Aug. recess Sept. 6 special joint session NY Sept. 11 no votes Sept. 16 Yom Kippur 11 legislative days to new fiscal year-13 appropriations bills Oct. 1 FY03 begins ???? adjourn/recess Nov. 5 general elections day ???? Lame Duck Session begins Sept. 3 and 4-returned from Aug. recess Sept. 6 special joint session NY Sept. 11 no votes Sept. 16 Yom Kippur 11 legislative days to new fiscal year-13 appropriations bills Oct. 1 FY03 begins ???? adjourn/recess Nov. 5 general elections day ???? Lame Duck Session begins

20. Elections House > 223 Republicans > 209 Democrats > 1 Independent > 2 Vacancies new districts > NC, GA, TX, AZ, CA House > 223 Republicans > 209 Democrats > 1 Independent > 2 Vacancies new districts > NC, GA, TX, AZ, CA Senate > 49 Republicans > 50 Democrats > 1 Independent cottonbelt races > NC, SC, GA, TN, AR, TX, MO, LA “agriculture” > SD, MT, IA, MN

21. Golden Rule #1 “You can get more with a smile, a kind word and a gun, than with a smile and a kind word.” — Al Capone “You can get more with a smile, a kind word and a gun, than with a smile and a kind word.” — Al Capone

22. Golden Rule #2 “The most critical rule for survival in any situation is never look like food.” — Park Ranger “The most critical rule for survival in any situation is never look like food.” — Park Ranger

23. Golden Rule #3 “It doesn’t do to leave a live dragon out of your calculations if you happen to live near one.” “The Hobbit” “It doesn’t do to leave a live dragon out of your calculations if you happen to live near one.” “The Hobbit”

24. FSA Proposed Rule Published May 9 Comments Due July 8 Primary Provisions: > Bale Lists for LDPs Provided in Electronic Format > Classing Information Required > Effective Time of AWP to Be 12:01 Am (EST) Friday > CCC to Use Electronic Agent Designations > Cotton Under Seed Cotton Loan Cannot Fix AWP > Flat Bales Ineligible for Loan BGs and Negative Values > Repay at P&I > Establish Minimum Repayment at 0 or 5 Cents and LDP may not exceed loan principal > Certificate Redemption not allowed for negative value Compression charges Primary Provisions: > Bale Lists for LDPs Provided in Electronic Format > Classing Information Required > Effective Time of AWP to Be 12:01 Am (EST) Friday > CCC to Use Electronic Agent Designations > Cotton Under Seed Cotton Loan Cannot Fix AWP > Flat Bales Ineligible for Loan BGs and Negative Values > Repay at P&I > Establish Minimum Repayment at 0 or 5 Cents and LDP may not exceed loan principal > Certificate Redemption not allowed for negative value Compression charges

25. Payment Limit Commission Members to Be Appointed Within 60 Days, Meet 30 Days After Appointment and Report in 1 Year > 3 Appointed by Secretary > 3 Appointed by Senate Agriculture Committee > 3 Appointed by House Agriculture Committee > USDA’S Chief Economist Report on “Impact” of Further Limitations on Payments on Farm Income, Land Values, Agribusiness Infrastructure, Planting Decisions, Supplies and Prices Members to Be Appointed Within 60 Days, Meet 30 Days After Appointment and Report in 1 Year > 3 Appointed by Secretary > 3 Appointed by Senate Agriculture Committee > 3 Appointed by House Agriculture Committee > USDA’S Chief Economist Report on “Impact” of Further Limitations on Payments on Farm Income, Land Values, Agribusiness Infrastructure, Planting Decisions, Supplies and Prices

26. China TRQs > allocation > administration Standards and testing TRQs > allocation > administration Standards and testing

27. China July 9-10 NCC-ACSA-AMCOT > USDA-Commerce-State-USTR-Hill > other organizations Aug 14 Dunavant-Smith-Booker > USDA and USTR Aug. 30 NCC staff > House Ag cmte staff re Geneva Week of Sep. 2 > USTR Geneva consultations July 9-10 NCC-ACSA-AMCOT > USDA-Commerce-State-USTR-Hill > other organizations Aug 14 Dunavant-Smith-Booker > USDA and USTR Aug. 30 NCC staff > House Ag cmte staff re Geneva Week of Sep. 2 > USTR Geneva consultations

28. China Week of Sep. 16 NCC-ACSA-AMCOT > USTR Week of Sep. 23 > USTR Ambs. Huntsman and Johnson to China Sep. 25 > comments on standards and testing due Oct. > Pres. Jiang Zemin to Crawford Ranch Week of Sep. 16 NCC-ACSA-AMCOT > USTR Week of Sep. 23 > USTR Ambs. Huntsman and Johnson to China Sep. 25 > comments on standards and testing due Oct. > Pres. Jiang Zemin to Crawford Ranch

29. China Sep. 5 Hood-ACSA-AMCOT- NCC-CI > USDA- AMS and FAS Sep. 9 NCC-ACSA > USDA Sec. Hawks and AMS Admin. Sep. 10 NCC-ACSA > USTR Sep. 25 > standards and testing comments due Sep. 5 Hood-ACSA-AMCOT- NCC-CI > USDA- AMS and FAS Sep. 9 NCC-ACSA > USDA Sec. Hawks and AMS Admin. Sep. 10 NCC-ACSA > USTR Sep. 25 > standards and testing comments due