Letter to Nancy Pelosi, Speaker of the House, and Kevin McCarthy, House Minority Leader - Call For Additional Assistance To The Cotton And Textile Industries

Letter

Dear Speaker Pelosi and Leader McCarthy,

Thank you for your continued leadership through this ongoing pandemic impacting all of the
U.S. economy. As you know, agricultural producers and the entire commodity value chain are
suffering due to the crisis and the required business shutdowns resulting in disruptions
throughout the food and fiber supply chains.

Among the many agricultural sectors being impacted, the U.S. cotton and textile industry is
being particularly hard hit. The collapse in cotton demand is being felt across the U.S. cotton
industry from textile manufacturers to cotton producers, and all segments in between. The
viability of the farms and businesses, and the jobs they represent, are at risk in the ongoing crisis.
We believe any potential forthcoming package in response to COVID-19 should ensure USDA's
ability in the next round of agricultural assistance to more adequately address the magnitude of
the losses felt by cotton farmers and include critical relief for textile mills and the cotton
merchandising segment, all of which are facing unprecedented economic losses.

The COVID‐19 pandemic is devastating textile supply chains as retail outlets shutter their doors.
Billions of dollars of orders have been cancelled, and manufacturing facilities in key markets for
U.S. fibers and yarns have closed as countries implement a full lockdown. The decline in
clothing sales was the largest among the major retail categories reported by the Census Bureau in
April. U.S. textile mills report a 90% drop in orders for the yarn they produce and are
consuming cotton at a seasonally-adjusted annual rate of just 700,000 bales, down almost 80%
from year-ago levels. With mill consumption at an all-time low, the loss in monthly yarn sales
revenue exceeds $100 million. In addition, U.S. cotton textile manufacturers play a key role in
the production of personal protective equipment and other health-related textile products and
should be supported as part of the critical domestic manufacturing base.

In response to the global economic disruptions, USDA reported the single largest one-month
reduction in global mill use ever with a decline of 7.6 million bales, 8.1% lower than the
previous year. The COVID‐19 pandemic's slowdown in cotton demand adds additional carrying
costs that include storage, interest, insurance, additional interior and ocean freight costs
associated with destination displacement, and other uncontrollable costs. The industry's
merchandisers have seen the values of their inventories fall sharply as they struggle with
burdensome costs in the face of shrinking demand.

In a matter of weeks, cotton prices have fallen by 30%, and the December futures price is
currently trading 20 cents per pound lower than year-ago levels. That decline represents a loss in
market value of approximately $160 per acre of cotton.

In the U.S. cotton industry, from the textile mills through the merchandising and production
segments, the economic pressures are mounting with businesses and farms struggling to survive.
Given the precipitous decline in retail demand, the loss of textile production and lower cotton
prices that are expected to persist into 2021, the economic damage to the U.S. cotton industry is
currently estimated to be at least $3.0 billion.

In addition, the cottonseed segment is in a tenuous situation since a majority of cottonseed is
used as a feed ration for dairy and beef cattle and those industries are also facing severe
economic and production losses.

We want to work closely with you and our other colleagues to ensure adequate relief for the U.S.
cotton industry so that this critical industry receives the necessary assistance for all segments to
survive.

Thank you very much.
Sincerely,