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Senators Urge Support for Cotton and Textile Industries in Next Pandemic Relief Package

A pair of senators is calling on the government to lend a helping hand to the domestic cotton and textile sector.

On Tuesday, Sens. Thom Tillis (R-N.C.) and Mark Warner (D-Va.) urged Senate Majority Leader Mitch McConnell (R.-Ky.) and Minority Leader Chuck Schumer (D.-N.Y.) to adequately address the magnitude of the losses felt throughout the cotton supply chain by cotton farmers, textile mills and the cotton merchandising segment in the next round of COVID-19 assistance.

“Across the agricultural sectors, the U.S. cotton and textile industry is particularly hard hit as the COVID-19 pandemic is causing unprecedented demand destruction for cotton apparel and textiles,” Tillis and Warner wrote in a letter. “Billions of dollars of orders have been cancelled as retail shopping outlets remain closed or operate at reduced capacity. The collapse in cotton demand is being felt across the U.S. cotton industry, from textile manufacturers to merchandisers to cotton producers, and all segments in between. The viability of the farms and businesses, and the jobs they represent, are at risk of not surviving this crisis.”

The senators said when Congress considers additional relief efforts in response to COVID-19, any package should ensure the next round of agricultural assistance will respond to the crippling devastation felt throughout the cotton supply chain by cotton farmers and include critical relief for textile mills and the cotton merchandising segment, “all of which are facing unprecedented economic losses,” they said.

The letter noted that from March through May, the Census Bureau reported that clothing sales were down $44 billion, or 67 percent, relative to the same three-month period in 2019.

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“U.S. textile mills report a 90 percent drop in orders for the yarn they produce and are consuming cotton at a seasonally adjusted annual rate of just 250,000 bales, down over 90 percent from year-ago levels,” it said. “With mill consumption at an all-time low, the loss in monthly yarn production value is $200 million to $300 million.

“U.S. textile manufacturers have idled much of their production capacity, with the notable exception being the industry’s efforts to redirect production lines to manufacture PPE and other health-related textiles,” it added. “However, that production is costly to maintain when running at less than optimal capacity. The response of the textile manufacturers underscores the importance of supporting and rebuilding this domestic production base.”

“In response to the global economic disruptions, the U.S. Department of Agriculture lowered its estimates of global mill use for this year and next by a combined 23 million bales, which exceeds the size of annual U.S. cotton production. That loss in demand represents a market value of almost $8 billion,” the senators said.

“The slowdown in cotton demand has caused the cancellation of 1.5 million bales of export sales since January, resulting in additional carrying costs that include storage, interest, insurance, additional interior and ocean freight costs associated with destination displacement, and other uncontrollable costs,” the letter said. “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. Cotton prices fell by as much as 30 percent since early this year and that decline represents a loss in market value of approximately $160 per acre of cotton.”

Given the severe pressures facing U.S. cotton and the broader agriculture industry, the senators, who were joined by a bipartisan group of 16 of their colleagues, said Congress should pass the necessary legislation before the August recess.

“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 and recover,” they added.