David Scott asks USDA for aid to cotton merchandisers
Posted on Dec 20, 2021 at 19:00 PM
Citing what he termed “unparalleled costs and losses impacting merchandisers of U.S. cotton,” House Agriculture Committee Chairman David Scott (D-Georgia) wrote to Agriculture Secretary Tom Vilsack on Dec. 10 requesting financial relief.
Scott asked Vilsack to direct some of the funding to cotton merchandisers - businesses that market ginned cotton to textile manufacturers. Scott noted that cotton-related professions provide 53,000 jobs in Georgia. Cotton’s overall economic impact on the state surpasses $3 billion. Georgia ranks third among U.S. states in cotton production.
“Our nation’s cotton industry is experiencing unprecedented supply chain disruptions,” Rep. Scott wrote. “Our nation’s cotton merchandisers are being significantly impacted by COVID-related demand erosion and by supply-chain disruptions.”
Scott emphasized the role that cotton merchandisers play in providing liquidity and risk management for all U.S. cotton producers and farmers.
The U.S. cotton industry has faced numerous challenges with international trade, much of it related to shutdowns from the COVID-19 pandemic. According to economic analysis from the National Cotton Council (NCC), shutdowns around the globe resulted in sharp decline in consumer demand. In response, the international shipping industry reduced capacity.
As demand and economies have recovered, an extensive list of factors – from shippers declining to refill empty containers being returned overseas to labor shortages – have compounded financial hardships for U.S. cotton merchandisers. Shipping cost rates have increased for both rail and ocean freight, and merchandisers, as well as grower-owned cooperatives have incurred additional costs to store more cotton for longer than anticipated.
The NCC estimates that U.S. cotton merchandisers have sustained additional direct costs for shipping and storage have surpassed $780 million, which does not include financial losses due to contract defaults and sales cancellations.
The USDA has allocated $500 million for relief from agricultural market disruptions. The market disruption aid funding was announced in September as a part of a $3 billion package to address challenges facing U.S. agricultural producers.
The market disruption aid is targeted for increased transportation challenges, availability and cost of certain materials and other obstacles related to marketing and distribution of agricultural commodities.