Production Cost Factors Highlighted

The NCC submitted a statement to be included in the record for the recent hearing of the House Subcommittee on Biotechnology, Horticulture and Research on the factors affecting producers' production costs.

Published: May 6, 2016
Updated: May 6, 2016

Statement Submitted on Behalf of:
The National Cotton Council
Hearing: “Focus on the Farm Economy: Factors Impacting Cost of Production”
House Agriculture Subcommittee on Biotechnology, Horticulture, and Research

April 27, 2016

Thank you to Chairman Davis and Ranking Member DelBene for holding the April 27 hearing to discuss factors impacting costs of production for farmers and ranchers. The NCC is the central organization of the United States cotton industry. Its members include producers, ginners, cottonseed processors and merchandizers, merchants, cooperatives, warehousers and textile manufacturers.  A majority of the industry is concentrated in 17 cotton-producing states stretching from Virginia to California. The NCC represents producers who cultivate between 10 and 14 million acres of cotton.  Annual cotton production, averaging approximately 16 to 20 million 480-lb bales, is valued at more than $5 billion at the farm gate.  The downstream manufacturers of cotton apparel and home furnishings are located in virtually every state. Farms and businesses directly involved in the production, distribution and processing of cotton employ more than 230,000 workers and produce direct business revenue of more than $27 billion.  Accounting for the ripple effect of cotton through the broader economy, direct and indirect employment surpasses 420,000 workers with economic activity well in excess of $120 billion. In addition to the cotton fiber, cottonseed products are used for livestock feed, and cottonseed oil is used as an ingredient in food products as well as being a premium cooking oil.

Highlighted below are a number of recent issues that have resulted in costly burdens for the cotton industry:

Enlist Duo Technology
After a successful introduction of Enlist Duo in 2015 on certain crops and in specific states, on November 24, 2015, EPA asked the 9th Circuit Court of Appeals to remand the registration back to EPA for further review because of concerns under the Endangered Species Act (ESA).  This is the only time ever where EPA has attempted to vacate a pesticide registration through a court action.  Currently under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), EPA is required to comply with a number of procedural safeguards before a pesticide registration can be cancelled, which they have failed to do.  Due to the lengthy regulatory review process (5 years) and the lack of new information, agriculture groups  pushed to have a regulatory decision made on Enlist in time for the 2016 growing season.  However, it is clear at this time that will not happen for the current growing season, so cotton producers have missed yet another year without the ability to utilize this new technology to help control herbicide resistant weeds.  Without these newer technologies and additional modes of action, producers are left to use more costly control methods and also suffer from quality impacts to the crop that results in reduced crop value.

Dicamba & 2, 4-D Product Registration/Labels
Cotton farmers have been waiting for new technologies to help them combat herbicide resistant weeds.  The two traits furthest in development and regulatory approvals are tolerances to 2,4-D (Dow) and dicamba (Monsanto).  Initial concerns with the 2,4-D label were geographic restrictions due to endangered species assessments and mandatory weed resistance management requirements.  Similar issues arose in consideration of the dicamba registration.  NCC worked with EPA and the registrants to resolve concerns related to the mandatory weed resistance management requirements and to expedite addressing ESA concerns. 

The traits have been approved for years or months by USDA, and EPA is the sole hold up in getting these new and severely needed technologies out to producers. The cost to control herbicide resistant weeds is one of the greatest cost many cotton producers face and given the current economic conditions in the cotton industry, these technologies are sorely needed by producers to help manage production costs and continue to ensure high quality cotton.

Chlorpyrifos is used on cotton (predominantly in western US production areas) to control aphids, lygus and whiteflies.  It is one of the few remaining crop protection products that provides a broad spectrum of control for multiple insect pests.  Without control of these pests, producers can sustain yield loss and quality loss.  The quality loss results from the sugary excrement of honey dew by the insect pests followed by sooty mold, a black mold that infests the honey dew deposits.  The contaminated cotton lint has a black appearance with a sticky secretion that interferes with textile processing and is referred to as “sticky cotton.”  Sticky cotton is known to deposit the sticky residue in lint processing equipment and clog equipment until the residue is removed.  Sticky cotton is a major threat to potential sales of U. S. cotton lint world-wide.  Chlorpyrifos is an important component of Integrated Pest Management (IPM) systems that rotate chemistries as necessary for control of cotton insect pests. 

The NCC supports the protection of human health, but has concerns that EPA is inferring harm beyond the scope of scientific data.  The NCC urges EPA to continue the historic path of reliance on credible scientific data and require all studies submitted to meet the same requirements as those required of registrants.  Additionally, the NCC urges EPA to retain all tolerances for chlorpyrifos, and especially those for uses on cotton.

The NCC has a number of concerns with the EPA’s pollinator risk assessment on imidacloprid, including: its premature release, the tone of the press release, inaccurate representation of material, the use of incomplete studies, and flawed exposure aspects.

The NCC believes the overall implications of imidacloprid as related to cotton are not valid because of improper exposure assumptions.  The NCC believes the preliminary report identifies some applications that pose potential concerns that need careful consideration with appropriate exposure to evaluate the risk.  The NCC is hopeful that EPA will complete Tier III studies that assess field conditions with inclusive real-world exposure under choice environment rather than toxicity-based data with assumed presence of bee exposure.  Additionally, the NCC would urge EPA to provide an additional comment opportunity inclusive of Tier III studies and corrected references (particularly the USDA Crop Attractiveness reference) prior to any final risk decision.

Similarly, the NCC urges EPA to include producers in the finalization of any risk-benefit process.  The NCC reiterates the importance of the neonicotinoid chemistry for control of piercing, sucking pests, and urges the EPA to recognize the limited chemistries that provide control of these pests.  Loss of additional chemistries continues to decrease rotation of modes of action and encourage development of resistant pests. 

Organophosphates & Sulfonylureas
The insecticides Dimethoate and dicrotophos (Bidrin) provide producers with an alternate chemistry to incorporate into their IPM systems and resistance management programs targeting cotton insect pests, such as cotton fleahoppers, fleabeetles, stinkbugs, and thrips.  Tribufos, the active ingredient in DEF/Folex, has been a critical crop defoliation tool for cotton by providing effective leaf drop across environments, which prevents  leaves from staining the fiber  and causing trash in the fiber.

EPA is currently reviewing the organophosphate (OP) pesticide class and has added new risk safety factors in the review of all OP pesticides.  NCC disagrees with the EPA’s claimed validity for including the new risk safety factors and urges the EPA to consider the weight of evidence that does not support the inclusion.  Additionally, NCC urges the EPA to recognize the benefits of these products providing producers with effective insect resistance management options and/or options for effective activity under unique environmental conditions.

In September, 2015, the 9th U.S. Circuit Court of Appeals ordered EPA to revoke its approval of Sulfoxaflor, a pesticide generally used against sap-feeding insects, due to lack of evidence to conclude the chemical would not harm bees.  In response, EPA issued a cancellation order for all previously registered Sulfoxaflor products on November 12, 2015, meaning the sale of any Sulfoxaflor product still in distribution or retail site is prohibited.  Only the use of existing stocks by farmers is permitted provided use is consistent with previously-approved labeling. 

Sulfoxaflor is one of the newer chemistries registered by EPA for control of key insect pests in a number of crops including cotton. The product had some of the most extensive research and data to document interaction and impact with bees. Yet EPA chose not to challenge the court decision and took the most unusual step of not allowing the continued use of the product that was already in the distribution system.

Pesticide Applicator Certification
On August 5, 2015, EPA issued a proposed rule on changes to the existing regulation concerning the certification of applicators of restricted use pesticides in hopes of protecting the environment and reducing risks to those applying pesticides.  The NCC believes most of EPA’s proposed changes in the rule should not be adopted because the majority of the proposed changes are not based on a demonstration of need, or justification, but do contain costly burdens, especially for state agencies.  However, for those that are adopted, the NCC urges EPA to allow 12 months before their implementation in order to ensure adequate training material, notification, and preparedness are in place.  The NCC urges EPA to avoid regulations for which EPA cannot demonstrate a deficiency in the current process, especially when those regulations pass additional costs along to state agencies.

Worker Protection Standard
On November 2, 2015, EPA issued their final rule on the Agriculture Worker Protection Standards (WPS).  NCC raised concerns that during the development of the new rule the agency failed to identify the benefits of its revisions.  Additionally, the rule signed by the EPA administrator in September included some provisions that were not in the May 2015 “draft final” regulation provided to the House Agriculture Committee.  Specifically, there are two provisions stakeholders never had a chance to submit comments on: First, which is most concerning to grower organizations, is the provision authorizing a “designated representative” access to a farm’s pesticide use information and second is the provision setting out “application exclusion zones”.  NCC urges the agency to clarify these provisions and address the key concerns as the implementation process moves forward.

National Pollutant Discharge Elimination System
A 2009 decision in the U.S. Court of Appeals for the Sixth Circuit erroneously applied the provisions of the National Pollution Discharge Elimination System (NPDES) permitting process under the Clean Water Act (CWA) to pesticide applications that were already fully regulated under the Federal Insecticide, Fungicide and Rodenticide Act (FIFRA).  Requiring NPDES permits is duplicative of the long-standing FIFRA-based regulatory process and provides no additional protection to water beyond those already in place via FIFRA. Additionally, these permits are creating significant financial strain for many producers and other entities.

Current Pesticide General Permits (PGP) are set to expire October 31 of this year, and the 2016 proposal would authorize continued or new discharges to, over, or near jurisdictional waters under the new Clean Water Act (CWA) regulations finalized by EPA.  Although this year’s proposal would be similar to the 2011 PGP, there are a number of provisions that concern the agriculture community. 

FDA Animal Food Safety Rule
The Food and Drug Administration’s (FDA) implementation of the Food Safety Modernization Act (FSMA), includes a new animal food safety rule that, as currently drafted, would negatively impact cotton gins and cottonseed storage.  The rule attempts to regulate gins and the onsite storage of cottonseed rather than recognizing that gins simply separate cotton seed from the fiber and store the cottonseed as a raw agricultural commodity for later shipment.  No processing of cottonseed occurs at the gins.  NCC is urging FDA to provide a clarification or technical correction to the rule so that gins are not unnecessarily regulated under the FSMA animal food rule, leading to additional costs and regulatory burdens with no proven benefit or outcome.