The National Cotton Council is taking every available opportunity to ensure our members get assistance and resources for help in navigating the COVID-19 negatively altered business landscape.
How has the U.S. cotton industry been affected?
■ The April U.S. Department of Agriculture supply/demand estimates indicate world cotton consumption was down 7.6 million bales (6.4%) from the March report. The report notes that
1) the widespread closure of shopping malls and retail outlets by the world’s two largest apparel importers, the United States and European Union, created massive disruption in apparel sales;
2) weak consumer demand likely will persist and negatively affect cotton demand; and
3) retailers are reducing and canceling orders for textiles and apparel worldwide. U.S. textile mills are reporting declines of 90% in orders for the yarn they produce.
The short-term impact on cotton demand has been devastating, and it is difficult to predict how quickly it will recover. Key factors to watch will be the recovery in the overall economy; the extent to which unemployment rates remain at higher levels; and how quickly, and with how much discretionary income, retail shoppers return.
At the time this column was submitted in mid-April, December 2020 cotton futures were down about 30% from January levels. This season’s cotton acreage, estimated to be down less than 1% in USDA’s most recent forecast, is likely to show a larger decline.
What actions have the NCC taken?
■ One of the first and most important actions was joining with a coalition of other agriculture and business groups on a letter to President Trump and congressional leaders. The letter emphasized it was critical that any fiscal and economic response to help businesses survive the COVID-19 crisis match the scale and intensity of the steps being taken to end the pandemic.
We also conveyed to the administration, congressional leaders and the nation’s governors that the nation’s farmers needed their full support so U.S. agriculture can maintain a steady supply of food, fiber and fuel. That included urging Senate and House leadership to expand and replenish USDA’s borrowing authority under the Commodity Credit Corp.
Given the sharp drop in cotton demand and the decline in prices, emergency assistance will be needed across the U.S. cotton industry due to lost revenue and increased costs as supply chains are disrupted. The NCC will continue to monitor the economic damage inflicted on our industry and seek needed relief and assistance from the administration and Congress.
The Phase 3 stimulus package included additional funds to aid U.S. agriculture. Based on statements from the White House and USDA, options to provide additional support for agriculture are under consideration.
The NCC also will continue to convey concerns with several other federal agencies. Among actions thus far:
1) requesting the U.S. Small Business Administration to clarify that agricultural businesses are eligible to participate in the Economic Injury Disaster Loan program;
3) asking Agriculture Secretary Sonny Perdue and National Economic Council Chairman Larry Kudlow to provide relief from unfair shipping charges.
Meanwhile, the NCC’s COVID-19 resources page at www.cotton.org/issues/members/covid19/index.cfm chronicles NCC’s ongoing efforts to get assistance. That page also contains assistance/relief options/updates being provided by numerous federal agencies as well as updates on USDA’s implementation of the Coronavirus Aid, Relief and Economic Security (CARES) Act of 2020 and other important legislation.
Gary Adams is president/CEO of the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming page.