The NCC and National Cotton Ginners Association (NCGA) submitted joint comments to the Department of Justice regarding its notice of proposed rulemaking on the “Standards and Procedures for the Enforcement of the Immigration and Nationality Act.” The comments, on the NCC’s website at www.cotton.org/issues/2016/natcomm.cfm, emphasized that the proposed rule threatens to impose penalties on employers far beyond what Congress intended or how the underlying statute has been applied.
Current regulations, which have been in place for nearly 30 years, require two conditions to be met in order to find a violation and impose penalties against an employer: (1) a discriminatory intent or purpose on the part of an employer; and (2) proof that the charging party was harmed. The proposal would remove those requirements and establish a strict liability rule.
The comments noted that for small and seasonal businesses, particularly those in agriculture, landscaping or forestry, workers are hired at the beginning of the growing or working season, and there is usually high turnover during the season. A family-owned business might have only a small number of year-round employees but may hire dozens or even hundreds of seasonal workers during a season due to high turnover. Completing a Form I-9 for each of those workers becomes a significant administrative burden, particularly with a workforce that is often comprised of non-citizens and workers with little or no proficiency in speaking or reading English. Completion of the I-9 process, even where there is no intent by the employer to discriminate, no act of discrimination, and no harm to employees, could result in sizable penalties under this new rule.
The NCC and NCGA comments in opposition to the rule noted that this “is a highly technical rule dealing with nuanced arguments about the degree of intent or purpose behind an action, but it carries a very real possibility of injuring small and seasonal employers, particularly those in agriculture. The burden of this rule on the employer community will also be far greater than the estimate provided in the notice of proposed rulemaking. The rule, as proposed, represents a costly, dangerous, and radical departure from longstanding substantive and procedural law on this subject and should be changed or abandoned by the Department of Justice.”
Overtime Rule Measure Lauded
The NCC, along with more than 200 other national, state and local organizations across various industries, cosigned a letter to Sen. Alexander (R-TN), chairman of the Senate Committee on Health, Education, Labor and Pensions, thanking him for introducing important legislation, the Overtime Reform and Review Act (S. 3464), that would provide significant relief from the negative impacts of the Department of Labor’s (DOL) final overtime rule.
Sen. Alexander’s legislation would require the DOL to phase in their new salary threshold in four separate stages over five years, starting with a moderate increase the first year followed by a “pause” year to allow employers to review and adjust their operations to comply with the new rule. The DOL’s desired threshold of $47,476 would be set on December 1, 2020, with the salary increasing annually until then.
The legislation also would exempt the most vulnerable employers from any increases after 2016 unless the Administration can prove there is no negative impact from the original increase. Entities included in this exemption are: nonprofits, colleges and universities, Medicare and Medicaid providers, and state and local governments.
The signers of the letter, on NCC's website at www.cotton.org/issues/2016/upload/16alexlet.pdf, agreed that while an increase to the salary threshold to qualify for overtime pay is due, the DOL’s increase of more than 100% will cause a disproportionate impact to a number of industries and could result in a negative outcome. The NCC and others will continue to work with Congress to advance this legislation and prevent the negative impact this final overtime rule will have on employers and employees.
USDA Trims Cotton Crop Estimate
In its October crop report, USDA estimated a 2016 U.S. crop of 16.03 million bales, 110,000 bales less than projected in its September report. Upland production was estimated at 15.47 million bales and extra-long staple (ELS) production at 562,000 bales. Harvested area was an estimated 9.66 million acres, implying a non-harvested area of roughly 490,000 acres based on USDA’s revised acreage report. The resulting abandonment rate is 4.83%. The national yield per harvested acre was estimated to be 797 pounds, 25 pounds less than the five-year average.
It is important to note that this month’s estimates are based on October 1 survey results and do not reflect Hurricane Matthew’s effects. The Southeast crop is estimated at 4.33 million bales, based on harvested acres of 2.16 million and a regional average yield of 963 pounds, 92 pounds more than the region’s five-year average.
In the Mid-South, expected production is 3.34 million bales. Harvested area is estimated at 1.47 million acres and the expected yield is 1,090 pounds per harvested acre.
The Southwest upland crop is estimated at 7.13 million bales. Expected harvested area is 5.62 million acres with per acre average yield of 609 pounds, 17 pounds less than the region’s five-year per acre average. The Texas upland crop is estimated at 6.50 million bales based on a harvested area of 5.30 million acres and an average yield of 589 pounds (-35 pounds).
Upland production in the West is an estimated 677,000 bales with an estimated harvested area of 219,000 acres and a regional yield of 1,484 pounds, 12 pounds less than the region’s five-year average.
The ELS crop is an estimated 562,000 bales. Harvested area is pegged at 191,000 acres with an average yield of 1,409 pounds per harvested acre.
U.S. Cotton Crop, 2016-17
PLANTED
ACRES
Thou.
HARV.
ACRES
Thou.
YIELD PER
HARV.
ACRE
Lb.
5-YEAR
AVG.
YIELD
Lb.
480-
POUND
BALES
Thou.
UPLAND
SOUTHEAST
2,180
2,158
963
871
4,330
Alabama
345
342
982
844
700
Florida
102
100
864
803
180
Georgia
1,190
1,180
976
910
2,400
North Carolina
280
275
908
821
520
South Carolina
190
189
990
819
390
Virginia
73
72
933
941
140
MID-SOUTH
1,505
1,471
1,090
1,012
3,340
Arkansas
380
375
1,088
1,047
850
Louisiana
145
140
960
992
280
Mississippi
440
435
1,159
1,067
1,050
Missouri
285
271
1,116
1,035
630
Tennessee
255
250
1,018
880
530
SOUTHWEST
6,037
5,616
609
626
7,125
Kansas
32
31
852
664
55
Oklahoma
305
285
960
665
570
Texas
5,700
5,300
589
624
6,500
WEST
228
219
1,484
1,496
677
Arizona
115
114
1,516
1,514
360
California
66
65
1,735
1,652
235
New Mexico
47
40
984
995
82
TOTAL UPLAND
9,950
9,464
785
806
15,472
TOTAL ELS
195
191
1,409
1,443
562
Arizona
15
15
882
955
27
California
155
153
1,518
1,516
484
New Mexico
8
8
935
870
15
Texas
17
16
1,080
920
36
ALL COTTON
10,145
9,655
797
822
16,034
Source: USDA-NASS October Crop Production Report.
USDA Report Sees Increased Exports
In its October report, USDA sees U.S. mill use unchanged from the previous month at 3.50 million bales but exports reaching 12.00 million bales, 500,000 more than estimated last month. This generates a total 2016-17 offtake of 15.50 million bales. Ending stocks for 2016-17 are projected at 4.30 million bales for an ending stocks-to-use ratio of 27.7%.
For the 2015-16 crop year, USDA gauged U.S. cotton production at 12.89 million bales. Estimated mill use and exports were unchanged from the September report at 3.45 million bales and 9.15 million bales, respectively. Total offtake for the 2015-16 crop year is estimated at 12.60 million bales. Ending stocks were estimated at 3.80 million bales. The estimated stocks-to-use ratio for the 2015-16 marketing year is 30.2%.
USDA’s October report raised 2016-17 world production estimate by 220,000 bales from the September report to 102.69 million bales. World mill use was raised 800,000 bales from the September report to a projected 112.03 million bales. Consequently, world ending stocks for 2016-17 are projected to be 87.35 million bales for a stocks-to-use ratio of 78.0%.
For the 2015-16 marketing year, USDA estimated world production at 96.32 million bales, 120,000 less than estimated in the September report. Estimated world mill use was raised 1.22 million bales to 111.31 million bales. World ending stocks on July 31, 2016 are now estimated at 96.6 million bales. This has a corresponding stocks-to-use ratio of 86.8%.
COTTON USA Quality Conference Held in China
Cotton Council International (CCI) launched its first COTTON USA Quality Conference. Held in Shanghai, China, the event showcased U.S. cotton fiber and cotton yarns as key ingredients in manufacturing high quality textile products. During the conference, some 80 leaders from the U.S. and Chinese cotton textile industries discussed the importance of consistent, high quality supplies of raw fiber for mills.
China is the world’s largest textile producer, consuming 35 million bales of cotton in 2015. China yarn imports reached an equivalent of 9 million bales of raw cotton in 2015.
“The COTTON USA Quality Conference gave us a unique platform to emphasize U.S. cotton’s quality, responsibility and innovation, as well as exchange dialogue with some of China’s largest mills and manufacturers,” CCI President Keith Lucas said. “It was highly productive to engage with some of our largest customers, learn their needs and exchange information on what the U.S. industry can do to help them meet challenges in manufacturing to maintain high quality standards. We are looking forward to working together in the future for the benefit of all customers of U.S. cotton.”
Keynote speakers were: Sun Huaibin, vice president, China National Textile and Apparel Council; Jon Devine, senior economist, Cotton Incorporated; Mike Tate, chairman, American Cotton Producers; Roger Insley, president, Custom Technical Solutions; Roger Gilmartin, Tri Blend Textiles; and Vaughn Jordan, deputy director, CCI. A panel discussion featured: Zhou Yejun, general manager, Wuxi No. 1; Chen Xiachi, general manager, Texhong Textile Group; Yang Bin, director and vice president, Foshan Seazon; and Shu Zonghua, director and vice president, Jiangmen Daxing.
Due to changing marketing conditions, the global textile supply chain is evolving across regions. With the need to embrace responsible production practices as a global norm and recognizing consumer markets are gradually producing a larger middle class, CCI works with partners to forge and strengthen business opportunities. Setting the gold standard for global best practices in cotton production, the United States is well-positioned to continue offering its valued customers steady supplies of U.S. cotton fiber. In 2015, the value of U.S. raw fiber exports to China was $852.9 million, while yarn exports totaled $115 million.
Key Indian Textile Leaders Talk Cotton’s Importance
More than 60 delegates representing India’s cotton textile leadership attended an invitation-only COTTON USA seminar in Mumbai to explore how, in these changing and challenging times, cotton can have an increased importance in the textile value chain.
GTN Textiles Group Chairman B.K. Patodia, through his keynote address on “Growing the Passion and Spinning the Fashion,” highlighted that the cotton success story primarily comes from the strong linkages between passionate cotton farmers who have passed on a legacy and the spinning mills who have catered to the ever-changing needs of fashion through their innovative approach in spinning.
More than 20 prominent textile mills attended, along with 12 COTTON USA licensees (Raymond, Vardhman, Welspun, Trident, GTN Textiles, Ambika, Morarjee, Brandix, SA Aanandaan, Pee Vee Textiles, Ramco Group Textiles and Arun Textiles). In addition, leading domestic apparel brands such as Madura Lifestyle and Raymond participated along with the international brand, Ralph Lauren.
The COTTON USA seminar also had participants attend from within the sub-continent: Malek Spinning Mills Ltd (Bangladesh) and Brandix Textiles (Sri Lanka). Their participation and views shared as part of business forums brought new insights and perspective to current issues and encouraged more collaboration among textile value chain players.
Cotton Council International (CCI) Executive Director Bruce Atherley offered an update on CCI’s promotion of U.S. cotton worldwide, and encouraged the multi-national cotton fraternity to think innovatively to bring cotton to the forefront. COTTON USA licensees shared their candid views on using U.S. cotton and other growths in terms of cotton quality and performance during the panel discussion, “What Delights Indian Spinners.”
Supima President and CEO Marc Lewkowitz provided an update on Supima production and consumption. He also shared the experience of brands using Supima and how Supima is making stronger inroads within the premium clothing value chain.
Additional speakers touched on agricultural and economic topics. Scott Sindelar (minister counsellor, USDA Foreign Agricultural Service, New Delhi) highlighted the importance of agriculture in the commercial economy and presented the audience with opportunities and challenges in an Indo-U.S. trade discussion. Harminder Sahni (managing director, Wazir Advisors) shared insights on global textile and clothing demand and its impact on fiber consumption. Ashish Jhalani (founding member of e-tailing India) reported on the e-commerce business in India, with a special focus on fashion e-tailing and how it’s reshaping the fashion space. Sean Callanan (CCI manager of Europe, South Asia and Africa) provided updates on U.S. cotton acreage, production and projected exports as well as the latest information regarding the same data points for global cotton.
COTTON USA’s seminar also offered an opportunity for textile manufacturers and retailer and brand sourcing experts to discuss the benefits of increased collaboration through the panel discussion on “Raw Material Planning in Today’s Dynamic Consumer Environment.”
Sales Strong, Shipments Steady
Net export sales for the week ending on October 6 were 246,200 bales (480-lb). This brings total 2016-17 sales to approximately 5.9 million bales. Total sales at the same point in the 2015-16 marketing year were approximately 3.6 million bales. Total new crop (2017-18) sales are 440,800 bales.
Shipments for the week were 166,000 bales, bringing total exports to date to 1.9 million bales, compared with the 1.1 million bales at the comparable point in the 2015-16 marketing year.
