COTTON COUNCIL INTERNATIONAL JOINS SUSTAINABLE APPAREL COALITION

WASHINGTON, D.C. (May 20, 2020) – Cotton Council International (CCI) announces that it has joined the Sustainable Apparel Coalition (SAC) and will use the group’s sustainability measurement suite of tools, the Higg Index, to drive environmental and social responsibility throughout its supply chain.

With its membership in the SAC, CCI joins more than 250 global brands, retailers, and manufacturers, as well as government, non-profit environmental organizations, and academic institutions, which are collectively committed to improving supply chain sustainability in the apparel, footwear, and textile industry.

The U.S. cotton industry is committed to continual improvement in sustainability and continues to build upon the strong environmental gains already achieved over the past 35 years.

“We are pleased to be joining the SAC, confident that together we can scale positive impact on product sustainability over time,” said Steph Thiers-Ratcliffe, CCI Director of European Brands and Retailers. “With shared ambition in providing robust environmental data to the sector, we will collaborate to enable greater supply chain transparency and informed decision making.”

In its relationship with the SAC, CCI will contribute both data and resources to support the Higg Index, which measures sustainability performance and drives supply chain transparency and decision-making to improve efficiency and sustainability impact. The Higg Index is an indicator-based suite of tools that enables suppliers, manufacturers, brands, and retailers to evaluate materials, products, facilities, and processes based on environmental performance, social labor practices, and product design choices.

“We welcome the addition of CCI to the Sustainable Apparel Coalition and look forward to its participation in this industry-wide effort in sustainability,” SAC Executive Director Amina Razvi said. “Having CCI as part of the Coalition widens the scope of our impact within the industry and accelerates the change we’re making towards responsible industry actions.”

Companies or organizations that are not currently members of the SAC and are interested in accessing the Higg suite of tools, may inquire at https://apparelcoalition.org/join-us/.

About Cotton Council International:

Cotton Council International (CCI) is a non-profit trade association that promotes U.S. cotton fiber and manufactured cotton products around the globe with our COTTON USA™ Mark. Our reach extends to more than 50 countries through 20 offices around the world. With more than 60 years of experience, CCI’s mission is to make U.S. cotton the preferred fiber for mills/manufacturers, brands/retailers and consumers, commanding a value-added premium that delivers profitability across the U.S. cotton industry and drives export growth of fiber, yarn and other cotton products. For more information, visit http://www.cottonusa.org.

About the Sustainable Apparel Coalition:
The Sustainable Apparel Coalition (SAC) is an industry-wide group of more than 250 leading apparel, footwear, and textile, brands, retailers, suppliers, service providers, trade associations, nonprofits/NGOs, and academic institutions working to reduce the environmental and social impacts of products around the world. Through multi-stakeholder engagement, the SAC seeks to lead the industry toward a shared vision of sustainability built upon a common approach for measuring and evaluating apparel, footwear, and textile product sustainability performance that spotlights priorities for action and opportunities for technological innovation. The SAC was incorporated as a 501c(6) nonprofit organization and launched the groundbreaking Higg Index suite of tools in 2011. For more information, visit apparelcoalition.org.

GDA: Several Agriculture Commodity Commissions Seeking Nominations

ATLANTA, GA– Eleven Georgia Agriculture Commodity Commissions are seeking nominations to fill 29 board positions. Eligible candidates must be active producers of the commodity and commit to attending commodity commission meetings. Term-expiring board members are also eligible for reappointment. Please see commodity commissions and term-expiring members below:

 Apple – David Lilliard, Janice Smith Hale, Jarl Echols; Blueberry – Shane Wade, Steve Mullis, Russ Goodman; Corn – Randy Dowdy, Rodney Harrell, Robby Brett; Cotton – Chris Hopkins, Lee Cromley, John Ruark; Equine – Ron Smith; Milk – Tim Camp, Judd Chambers, Pete Gelber; Peach – Jeff Wainwright, Duke Lane III, Lee Dickey; Pecan – RG Lamar, Lanair Worsham Jr.; Soybean – Greg Mims, Tony Smith, Mark Ariail; Tobacco – Carlos Vickers, Brant Clifton; Vegetable – Jamie Brannen, Glenn Heard, Dick Minor

Nominations can be completed using a nomination form found at www.agr.georgia.gov/cpf, then submitted to Andy Harrison at andy.harrison@agr.georgia.gov or by mail at:

Attn: Andy Harrison
Georgia Department of Agriculture
19 MLK Jr. Drive S.W. Room 320 Atlanta, GA 30334

The nomination deadline is Thursday, May 30, 2020. For more information or questions please contact email andy.harrison@agr.georgia.gov or call (404) 710-1196.

U.S. Cotton Trust Protocol Selects Control Union Certifications as Third-Party Verification Partner

 MEMPHIS, TENN. – (May 11, 2020) – The U.S. Cotton Trust Protocol (Trust Protocol) has selected Control Union Certifications North America (CUC) to implement an independent, third-party verification program for the Trust Protocol system. CUC was chosen from six applicants following a thorough selection process.

Data about Trust Protocol cotton is proven via Field to Market, measured via the Field Calculator and now will be verified by CUC.

Control Union Certifications has certified more than 150 programs worldwide, including working as a key partner in the early development and piloting phases of Field to Market’s Impact Claim Verification Protocol. CUC has also worked with the Better Cotton Initiative (BCI) on its third-party verification programs in multiple countries.

CUC auditors in the U.S. have a long history of working with corn, soy and canola on standards focused on land conversion, irrigation systems, water management, integrated pest management, soil protection, crop rotation and conservation practices.

U.S. cotton growers will complete a self-assessment of farming practices and share their field data through Field to Market’s Fieldprint Platform. The CUC will verify the Trust Protocol annual data that will highlight key sustainability metrics – land use, soil carbon, water management, soil loss, greenhouse gas emissions and energy efficiency.

“We’re excited to work with Control Union as our independent, third-party verification partner,” said Ken Burton, Executive Director of the Trust Protocol. “Control Union’s agriculture standards, experience and impeccable reputation will provide brands, retailers and consumers assurance that the cotton fiber sourced through the Trust Protocol is continually improving.”

The U.S. Cotton Trust Protocol will launch in June 2020. Ahead of the June launch date, the Trust Protocol was recently added to Textile Exchange’s list of preferred fibers and materials. For more information, please visit https://TrustUsCotton.org.

About the U.S. Cotton Trust Protocol

In a period of ever greater supply chain scrutiny and a growing demand for transparency, the U.S. Cotton Trust Protocol will set a standard for more sustainably grown cotton. It brings quantifiable and verifiable goals and measurement to the issue of sustainable cotton production and drives continuous improvement in key sustainability metrics.

The Trust Protocol underpins and verifies U.S. cotton’s progress through sophisticated data collection and independent third-party verification. Becoming a member of the Trust Protocol will give brands and retailers the data that provides critical assurances they need that the cotton fiber element of their supply chain is more sustainable, and free from both environmental and social risk. Brands and retailers will gain access to U.S. cotton with sustainability credentials proven via Field to Market, measured via the Field Calculator and verified with Control Union Certifications.

The U.S. Cotton Trust Protocol is overseen by a multi-stakeholder Board of Directors comprised of representatives from brands and retailers, civil society and independent sustainability experts as well as the cotton-growing industry, including growers, ginners, merchants, wholesalers and cooperatives, mills and cottonseed handlers.

About Control Union Certifications

CUC is an international auditing company founded in the Netherlands in 2002, and now has a presence in 70 countries with 4,500 employees and over 40,000 clients worldwide, ranging from multinationals to regional producers as well as governments and NGOs. The company has a long track record of managing certification programs, including with growers and food and agriculture companies around the world. CUC is a leader in the area of sustainability initiatives, certification standards and verifications of the outcomes based on key performance indicators.

Georgia Cotton Commission Approves 2021 Research

At its April 22nd Board Meeting, the Georgia Cotton Commission Board of Directors approved $688,994 in research funding for the 2021 crop year.  This money will go to fund sixteen projects that will be conducted by researchers and extension specialists from the University of Georgia based at the Tifton, Athens, and Griffin.  Projects come from a broad range of academic disciplines.  The goal of this producer-funded research is to help the cotton producer’s bottom line by conducting research that can either raise yields, promote efficiency, or open new markets.

All projects are vetted by both the Commission Board of Directors and State Support Committee, made up of cotton producers from across the state, and the Commission’s research review committee, which is a select group up of researchers, crop consultants, and local UGA Extension Agriculture/Natural Resource agents.

“In these uncertain times, it is important now, more than ever, that we as the Georgia Cotton Commission provide impactful research to the cotton farmers of Georgia.  I am confident that the research we have provided over the years will be the keys that producers will use as they try to remain viable during this period of super depressed markets,” said GCC Chairman Bart Davis, a Colquitt County cotton farmer.

The Georgia Cotton Commission is a producer-funded organization located in Perry, Georgia. The Commission began in 1965. Georgia cotton producers pay an assessment enabling the Commission to invest in programs of research, promotion, and education on behalf of all cotton producers of Georgia. For more information about the Georgia Cotton Commission please call (478) 988-4235 or on the web at www.georgiacottoncommission.org.

Shurley: What Will You Plant in 2020? Factors to Consider

Every year, farmers must decide what to plant.  There are many factors that are considered when making this decision.  This season, for the 2020 crop year, these decisions are compounded by a dramatic decline in market prices and, because of these low prices, net returns are expected to be slim.  The probability of even negative returns is increased.

Prices have declined in large part due to demand and market uncertainties caused by the COVID-19 virus pandemic.  Thus far this year, corn has declined almost 18%, cotton about 21%, and soybeans almost 14%.4.30.20.a

USDA (Prospective Plantings, March 31, 2020) estimates that US corn acreage planted this year will increase 5% and soybeans 9.2%.  Cotton is expected to decline 1% and peanuts increase 7%.  Focusing on the Southeast (AL, FL, GA, NC, SC, and VA), overall corn and peanuts are expected to be up and cotton and soybeans down.  Prices have declined further since the USDA end of March report, however, and this may alter these earlier farmer intentions.4.30.20.bComparing Net Returns

Farmers make planting decisions based on many factors.  Chief among these are how do net returns compare from one crop to the next.  The comparison depends on what yield do you expect, what price do you expect, and what are the variable costs.  Variable costs can also be called “operating costs”.  These are costs that are incurred only because you make the decision to produce and only because you will produce one crop versus another.  When comparing net returns, it isn’t necessary to include costs that would not change and would be incurred anyway regardless of the planting decision.  Variable costs include inputs like seed, fertilizers, chemicals, fuel and repairs, crop specific hired labor, custom hire, crop insurance, irrigation, marketing and fees, drying and storage, etc.

Below are estimates of irrigated and non-irrigated net returns for 2020.  Expected yield and expected variable costs are estimates from University of Georgia Extension. Cost estimates are available from Extension in each state.  Such estimates are only guidelines and should be modified to reflect your farm business as accurately as possible.  Every farm is different and even on a farm from field to field.

Special Note- Prices:  The price used is the price on the harvest time futures month as of April 20 plus expected basis (+ or -).  The peanut price is the expected season average price.  The price of cotton includes any LDP or MLG and fiber quality adjustments.  The cotton marketing loan program and AWP and LDP/MLG mechanisms provide a “floor” or worst case scenario to the farmer of roughly 59 cents and buffer the farmer from the price going lower.  This is a consideration worth noting.  For cotton, 59 cents should be regarded as the minimum regardless of what happens.  In these comparisons, a 59 cents minimum futures price plus 3 cents basis and quality differences equals 62 cents.

The purpose is to do a relative comparison ranking of net returns—not focused necessarily on the absolute dollar amounts—just how crops compare/rank.  For each crop, yields may average higher or lower than expected, the futures price may average higher or lower, basis may be stronger or weaker, and costs may also change.4.30.20.c

Assuming the costs, yields, and prices shown, peanuts rank comparatively highest in both non-irrigated and irrigated production.  Soybeans rank second after peanuts.  Cotton ranks third, ahead of only corn in irrigated production and ranks last in non-irrigated.

The variable costs shown do not include land rent.  Cash rent may be included, however, or yield and costs adjusted to reflect the producer share only in a share rent.  If cash land rent were included, the net return would likely be negative in non-irrigated production in all crops except peanuts.  For irrigated production, net return is likely still positive after rent but the margin is slim. In 2020, farming on rented land will be an especially risky cash flow proposition.  In terms of managing cash flow obligations, higher returning crops might be preferred on rented land.4.30.20.d

Playing What If

These comparative net returns are based on current price levels and expected yield.  Neither price nor yield is guaranteed at this juncture.  That is why the emphasis must be on ranking not absolute dollars.  It is also very important worth considering that not only futures price, but basis also is highly variable and uncertain in this market environment.  Farmers may plant or not plant a crop because it has a strong or weak basis.  For 2020, farmers should consider carefully what basis is expected.

Farmers should adjust these costs to fit their operation and this is highly encouraged.  But based on these costs and assuming these expected prices and yield, several “what if” scenarios can be very useful in helping to look at how crop alternatives compare.  This can be useful in the decision on what to plant.

___________________________________________________________________________________________
The net return from cotton is expected to be less than peanuts.  What does the price of cotton need to be to provide the same net return as peanuts?

For non-irrigated– $98 – $5 = $93 more needed
$93 difference / 750 lbs yield for cotton = $0.124 additional price
$0.62 assumed cotton price + $0.124 more = $0.742

Repeat this process for irrigated.
____________________________________________________________________________________________

What does cotton yield need to be provide the same net return as peanuts?

For irrigated– $268 – $185 = $83 per acre more for peanuts
$83 difference / $0.62 price for cotton = 134 more lbs needed
1,200 assumed cotton yield + 134 lbs more = 1,334 lbs

Repeat this process for non-irrigated

____________________________________________________________________________________________

What does corn price need to be to provide the same net return as cotton and peanuts

For irrigated– $185 – $152 = $33 per acre more for cotton
$33 difference / 200 bushel yield for corn = $0.165 per bushel more
$3.72 assumed corn price + $0.165 more = $3.89

Repeat this process for peanuts and non-irrigated

____________________________________________________________________________________________

For many farms, the decision especially between cotton and peanuts and corn can be an important one.  The deciding factor in many situations is—given the prices and costs, agronomically which crop has the yield advantage or which crop is likely to make the best yield under the circumstances?  Again, the farmer should develop his/her own cost estimates and expected prices are uncertain but assuming costs and prices, it is the very helpful to think about the planting decision from an environment very familiar to the farmer—yield and which crop from a yield perspective is most likely to be more profitable.

Farmers actually do this although they may not take this same approach.  But through their experience and knowledge of their farms, they know what crop has the yield potential and more or less yield risk.  Below is a comparison of corn and cotton and peanuts and cotton.

4.30.20.e

4.30.20.f

As already discussed, positive net returns are currently expected to be slim for 2020 based on where markets are at present.  For some farmers, the decision of “what do I plant” may come down to which crop they feel has the best yield potential and less yield risk.  Farmers have little to no control over any factors in the net return equation—but which crop might be the less risky at least from a yield perspective?

Comparing corn and cotton, for non-irrigated production for example, if you expect 800 lb cotton, 90 to 95 bushels on corn would be the equivalent.  Which crop do feel more likely to make the yield?  For irrigated, suppose you expect 1,200 lbs cotton.  The equivalent corn yield would be about 210 bushels.  Again, which yield do you feel the most comfortable with?

Comparing peanuts and cotton, suppose you expect 800 lb non-irrigated cotton.  The equivalent peanut yield would be about 3,100 lbs.  For irrigated, suppose you expect 1,100 lbs cotton.  The equivalent peanut yield would be 4,000 lbs.

Risk Management

Planting decisions will also be made on the basis of which crop has the better opportunity to navigate the unknown.  The earlier tables and net returns are based on current markets.  This will change by harvest time and afterwards.  Which crop(s) have the better chance of price improvement?  Likewise, which crop(s) have the higher chance of prices going lower?  A crop that isn’t ranked the highest now could end up the better choice if its price improves compared to the alternatives.  A crop that is ranked high now, likewise, could end up looking like not such a good choice if price declines.  Also, how do crops compare in terms of marketing—availability of contracts, marketing/pricing alternatives, etc?  As already mentioned, the Marketing Loan LDP/MLG for cotton is a price stabilizing factor.

Crop insurance is also a factor to consider in planting decisions.  What policy options and coverages are available?  Does farm history and experience offer any advantage or disadvantage for a particular crop?  How much coverage/protection do you desire and what policy choices do you have?4.30.20.g

The crops shown here each have both Yield Protection and Revenue Protection available.  One factor to consider is the policy Projected Price.  The Projected Price is the rate paid for any insured loss on a Yield policy.  A Revenue policy guarantee is based on the higher of the Projected Price or Harvest Price.  The Harvest Price is not yet known and will not be determined until this Fall during its appropriate price discovery period.  But the above table shows where the harvest time futures price is currently.  Compared to where the harvest time futures contract price is currently, the Projected Price is highest for cotton.

In addition to yield or revenue protection (companion policy) that covers your crop on your farm, additional/supplemental protection is also available in the form of SCO or STAX.  SCO and STAX are area policies.  SCO is available for the four crops we have been discussing.  STAX is cotton only.  If a farm has crop base and if that base is enrolled in ARC, acres planted to that crop are not eligible for SCO.  The farm may, however, enroll base in PLC and have SCO on acres planted.  If cotton base is enrolled in ARC or PLC, either program, cotton acres planted on that farm are not eligible for STAX.  But, the farm base can go to PLC and acres planted also insured with SCO.

Some producers purchase minimal coverage, some moderate coverage, some purchase “all the coverage I can get”.  The sales closing deadlines have already passed for the 2020 crop season and the deadline for enrollment in ARC/PLC for 2020 is June 30.

The availability of the new HIP-WI (Hurricane Insurance Protection-Wind Index) policy may have an impact on planting decisions.  This new program offers protection in addition to the farms companion policy and any STAX or SCO policy.  The sales closing deadline for 2020 is April 30 but will be the same as for all other polices beginning next year.  HIP-WI could be especially beneficial and a deciding factor in cotton.

Other Factors to Consider

Considerable space has been devoted here to net returns and the factors that impact net returns.  The fact is, however, that price and net return are but only one consideration and, for some farmers may not even be the most important.

  • Price outlook—Current prices allow a ranking and relative comparison. Consideration must also be given to the outlook for the commodity and how price might change during the remaining growing and market season.
  • Government payments—In general, government payments are not a consideration. ARC/PLC payments are made on 85% of base acres, not acres planted.  MFP trade assistance payments may or may not be made for 2020—that determination has not been made.  Even so, the most recent round of MFP were a flat per acre rate based on historical acreages for the county.  CFAP coronavirus relief payments, however, are expected to be made based on 2019 crop price and marketings.  So, there is link to production.  But, any such payments for 2020 are unknown and yet to be determined.
  • Your “baseline”—Expected net returns are only a “baseline”. They are what’s expected based on many assumptions and estimates.  Planting decisions must also take into account the uncertainty/risk in net returns and how crops compare.
  • Rotations and conservation—Most farmers will use market signals and expected net returns to only tweak the operation. They may switch a few or modest amount of acres here or there but will try to stick with established crop rotations and cover crops as much as possible.  In other words, if net returns are expected to be low, you just take your punches and hope to survive another year.
  • Some crops just have their place—There are situations from farm to farm, field to field where due to soil type, fertility, weed management needs, etc. that a particular crop is just a better fit. Also, let’s suppose your yield goal is 1,200 lbs cotton and 5,000 lbs peanuts and 225 bushel corn.  You may feel in a particular situation that one crop offers a much better opportunity to get there.
  • Credit—The availability of money can be a constraint. If funds are limited, you may have to plant the cheapest crop although that crop may not be the most preferred based on net returns.
  • Machinery, equipment, and labor—Planting decisions are constrained by limits on machinery, equipment, and labor. You can’t plant more than you can manage efficiently and timely for the remainder of the season.  Some farmers rely on custom harvest for some crops.  When prices are low and margins thin, there may not be room in the budget for custom harvesting.
  • Potential for cost management—Consideration should be given to which crop’s costs can be managed the best. Net returns consider what is expected.  Are there advantages or disadvantages from crop to crop as to costs getting out of hand?  Also, if there is delayed planting or poor stands or replanting or poor performance or drought or flood or other problems, are there manufacturer or supplier programs that will cover the loss or provide assistance?

Note:  Sponsorship and funding support provided by Bayer CropScience.  This material is not affiliated with the University of Georgia.  All opinions and any errors in information and analysis are solely those of the author.  This publication is not affiliated with the University of Georgia.  The author can be reached by email at donshur@uga.edu or dshurley@abac.edu, by phone at (229) 386-3512 or 386-7275 or on Facebook at https://www.facebook.com/don.shurley.5.

U.S. Cotton Trust Protocol Added to Textile Exchange’s List of Preferred Fibers and Materials

MEMPHIS, TENN. – (April 27, 2020) – The U.S. Cotton Trust Protocol has been added to Textile Exchange’s list of preferred fibers and materials. The Trust Protocol will now be one of 36 fibers and materials that over 170 participating brands and retailers can select from as part of Textile Exchange’s Material Change Index program.

Textile Exchange defines a preferred fiber or material as one which results in improved environmental and/or social sustainability outcomes and impacts in comparison to conventional production. The Trust Protocol will join a portfolio of more sustainable cotton production initiatives including the Better Cotton Initiative (BCI), Cotton Made in Africa (CmiA), Fairtrade Cotton, Organic Cotton, REEL, ISCC, and Recycled Cotton as a preferred cotton fiber.

The master list of preferred fibers and materials evolves over time as sustainability innovations prove themselves. Textile Exchange consults widely with its members and NGO partners to ensure the categories are always reflective of the latest thinking.

“We are pleased to see the U.S. Cotton Trust Protocol recognized on Textile Exchange’s list of preferred fibers and materials,” said Ken Burton, executive director of the U.S. Cotton Trust Protocol. “The U.S. Cotton Trust Protocol is an industry-wide system that will guide U.S. cotton growers to continuously improve and reduce their environmental footprint. We will provide brands and retailers with aggregate data that track the efforts of U.S. cotton growers to improve water and soil conservation and reduce greenhouse gases. These data will support the fashion and retail industries in their efforts to demonstrate progress toward sustainability goals.”

Textile Exchange encourages companies to accelerate their use of preferred fibers, and acknowledges and honors companies that recognize the importance of integrating a preferred fiber and materials strategy into their business practices.

“At Textile Exchange, our mission is to inspire and equip people to accelerate sustainable practices in the textile value chain,” said La Rhea Pepper, Managing Director of Textile Exchange. “We’re pleased to add Trust Protocol cotton to our list of preferred fiber and materials, which will give brands and retailers another option to source sustainable cotton as they integrate preferred fibers into their business strategy.”

About the U.S. Cotton Trust Protocol

In a period of ever greater supply chain scrutiny and a growing demand for transparency, the U.S. Cotton Trust Protocol will set a standard for more sustainably grown cotton. It brings quantifiable and verifiable goals and measurement to the issue of sustainable cotton production and drives continuous improvement in key sustainability metrics.

The Trust Protocol underpins and verifies U.S. cotton’s progress through sophisticated data collection and independent third-party verification. Becoming a member of the Trust Protocol will give brands and retailers the data that provide critical assurances they need that the cotton fiber element of their supply chain is more sustainable, and free from both environmental and social risk. Brands and retailers will gain access to U.S. cotton with sustainability credentials proven via data tools from Field to Market: The Alliance for Sustainable Agriculture, measured via the Field Calculator and verified with Control Union Certifications.

The U.S. Cotton Trust Protocol is overseen by a multi-stakeholder Board of Directors comprised of representatives from brands and retailers, civil society and independent sustainability experts as well as the cotton-growing industry, including growers, ginners, merchants, wholesalers and cooperatives, mills and cottonseed handlers.

About Textile Exchange

Textile Exchange is a global nonprofit that creates leaders in the sustainable fiber and materials industry. The organization manages and promotes a suite of six leading industry standards, as well as, collects and publishes critical industry data and insights that enable brands and retailers to measure, manage and track their use of preferred fiber and materials.

With more than 400 members representing leading brands, retailers and suppliers, Textile Exchange has, for years, been positively impacting climate through accelerating the use of preferred fibers across the global textile industry and is now making it an imperative goal through its 2030 Strategy: Climate+. Under the Climate+ strategic direction, Textile Exchange will be the driving force for urgent climate action with a goal of 35-45% reduced CO2 emissions from textile fiber and material production by 2030.   www.TextileExchange.org

Media Contact: Avra Lorrimer, Avra.Lorrimer@hkstrategies.com; +1 212-885-0318

Quail Forever – 2020 Planting Season Considerations for ROI and Biodiversity

This article was submitted by Chaz Holt, a Precision Agriculture and Conservation Specialist with Quail Forever.  You can reach him on twitter @agrarianlife or via email at cholt@quailforever.org.

Planting season has begun even if seed is not in the ground yet.  Before you plant everything this spring, consider your Return on Investment (ROI) per acre. With precision technology today, we can now think about each acre we farm instead of whole fields or even whole farms. Our commodity markets are in tight positions at these uncertain times and we want nothing more than for all our farmers to weather this storm together.  As a businessperson and farmer, you mostly already know where low yielding averages are in your fields and you know what each foot, each acre, and each field costs to produce Cotton.  Now is the time to consider Profits are Greater than Yields.  Many of you must be considering horrible prices out there and historical knowledge of ‘bad’ spots.  Average costs of inputs remain but cotton prices are falling or remaining low.  If you can conserve your operating costs on areas where your crop is most likely to Not pay back its debt or provide profit to the whole farm, but instead focus on the good and excellent acres, you are likely to have less risk and more profit this year. In a year where it seems ROI will be rough, let those negative acres build biodiversity this year.  Biodiversity is proving to be beneficial for soil and water health as well as provide housing for ‘good’ bugs and wildlife.   The last thing we want is a farm to struggle more than they have to, hang on to the best crop possible and save on that debt load if we can.   If you would like to know more about ideal options for those negative acres on your farm we can look at information from your John Deere Ops Center or any other precision platform to best determine areas with most risk.  This service is brought to you by Cotton Incorporated, Quail Forever, National Fish and Wildlife Foundation (NFWF), and the American Society of Agronomy (ASA), for additional considerations, options, or assistance of any kind you can contact me.

2020 Using Pesticides Wisely Course

Using Pesticides Wisely Training moved to online delivery April 21-23, 2020
Using Pesticides Wisely (UPW) 2020: The University of Georgia (UGA) and Georgia Department of Agriculture (GDA) dicamba training program will complete the 2020 sessions using online webinar delivery of materials. The decision of the U.S. EPA requires only applicators who were not trained in 2019 to be trained in 2020.
Online sessions remove the limitations of meeting room capacity, thus growers can register for the date and time which works best for their schedule. Please note that each session has its own registration link, so it is important to use the link that matches your preferred time. Registration information will require that you enter your address, phone number, email and pesticide license number (a license is not required for 2,4D application, just type in N/A). The meeting link will be emailed to registrants prior to the session. Using Pesticide Wisely (UPW) will last about 1 hour and 30 minutes. Participants will be able to submit questions using a chat box or over phone.
Attendee’s names will be placed on a list posted to the Georgia Department of Agriculture’s auxin website at http://www.agr.georgia.gov/24c.aspx. Please allow up to 21 days after the training date for names to be posted. This list will serve as the official training record as attendance verification.93679888_127682225529153_2578359534548418560_n

Summary of Congressional Relief/Stimulus/Funding Package on COVID-19 (Phase 3)

Funding for Government Operations 
$340 billion across Federal agencies and state and local communities.  More than 80% ($275 billion) would go to state and local governments and communities.
•    $117 B for hospitals
•    $45 B for FEMA
•    $16 B for Strategic National Stockpile
•    $4.3 B for Centers for Disease Control
•    $11 B for Vaccines, Therapeutics, Diagnostics, and Medical Needs
USDA Funding – $49 billion total
•    Of this amount, $9.5 B to support agricultural producers, including livestock and specialty crop producers to respond to the COVID-19 losses.
•    The Commodity Credit Corporation (CCC) is provided restored funding/borrowing authority of $14 B.
•    The Secretary of Agriculture is given the authority to extend the term of marketing assistance loans to 12 months from the current 9 months.  This authority expires end of September 2020.
Department of Commerce Funding 
•    Manufacturing Extension Partnership (MEP) – $50 million to be distributed among the 51 MEP centers to help small- and medium-sized manufacturers recover from the economic impacts of coronavirus. The bill also waives the statutory cost-match requirements for all FY 2020 funding.

Coronavirus Aid, Relief, and Economic Security Act (CARES Act)

Paycheck Protection Act (Small Business Loan Program) – $350 billion
•    Eligible to businesses with up to 500 employees – loan period of Feb. 15, 2020 to June 30, 2020
•    Loan provided through banks, credit unions and other traditional lenders
•    Gives Treasury the authority to set criteria that would allow farm credit institutions to be eligible lenders under the paycheck protection program until the national emergency for COVID-19 expires
•    Also allows not for profit entities, sole proprietors, and self-employed individuals to qualify
•    Maximum loan amount of $10 M through end of 2020
•    Expands use of loan funds to include payroll, paid sick or medical leave, insurance premiums, salaries, mortgage and lease/rent payments, utility, and other debt obligations
•    Government guarantees the loans at 100% through end of 2020; 75% to 85% after 2020
•    Waives borrower and lender fees and collateral and personal guarantee requirements
•    Loan forgiveness – establishes process for borrowers to have loan forgiven in amount used for payroll, mortgage interest, rent, and utility for a period of 8 weeks after loan origination.  Amount forgiven reduced proportionally to the number of employees laid off during the period relative to prior employment level.  Eligible payroll costs do not include compensation above $100,000 in wages.

Unemployment Insurance Provisions
•    Temporary unemployment assistance program through December 2020 for those not typically eligible – such as self-employed, independent contractors, and limited work history
•    Provides payments to states to reimburse nonprofits and government agencies for half costs incurred through end of 2020 to pay unemployment benefits
•    Additional $600 per week payment to each recipient of unemployment insurance for up to 4 months
•    Pay costs of first week of unemployment benefits through 2020 for states that pay recipients as soon as become unemployed
•    Provides additional 13 weeks of unemployment benefits through 2020
Individual/Family Relief
•    Checks up to $1,200 per person/$2,400 per couple and increased by $500 per child.  Phases down at adjusted gross income over $75,000 single/$150,000 married; completely phased out at $99,000 single/$146,500 head of household, one child/$198,000 joint filing with no child based on 2019 if filed (or 2018) tax return.
•    Extends tax filing date to July 15; tax payment deadline already extended by IRS to July 15
•    Waives 10% penalty for early withdrawal for distributions from retirement accounts
•    Waives required minimum distribution rules for defined contribution plans and IRAs for 2020
Businesses Relief
•    Refundable tax credit for 50% of wages paid during COVID-19 crisis.  Available if operations were fully or partially suspended due to COVID-19 shut down; or gross receipts declined by more than 50% compared to same quarter in prior year.  For eligible employers with 100 or less full time employees, all wages qualify for the credit regardless of business status.  Credit is provided for first $10,000 of compensation including health benefits.
•    Employers and self-employed individuals can defer payment of employer share of Social Security (payroll) tax.  Deferred tax must be paid back over the next 2 years with half paid by end of 2021 and half by end of 2022.
•    Allows net operating losses (NOLs) from 2018, 2019, or 2020 to be carried back 5 years.  Temporarily removes the taxable income limitation to allow a NOL to fully offset income.
•    Allows pass-through businesses and sole proprietors to benefit from NOL carryback provision
•    Temporarily increases from 30% to 50% of taxable income for 2019 and 2020 the amount of interest expense that businesses are allowed to deduct
Medical, Healthcare, Education, and Drug Provisions
•    Hospitals and health care workers: $100 billion into hospitals and the nation’s health system.
•    Schools: $30 billion in emergency education funding.
Economic Stabilization and Assistance To Severely Distressed Sectors – $500 billion
•    Large corporations: $500 billion in loans, loan guarantees and other investments, overseen by a Treasury Department inspector general. These loans will not exceed five years and cannot be forgiven.
•    Airlines will receive $25 billion (of the $500 billion) for passenger air carriers and $4 billion for cargo air carriers.
•    Transportation: $25 billion is dedicated to emergency transit funding.

Liu: Cotton Outlook under Worldwide Coronavirus Outbreak

Along with the life-and-death struggle and the rising cases of Covid-19, financial markets worldwide have lurched lower. The sell-off of the U.S. stock market started on Feb. 21, 2020. Since then, the great coronavirus crash has been frightening in its speed. Even U.S. Treasury bonds and gold, traditionally a safe harbor in times of crisis, have come under pressure. Crude Oil May 2020 (CLK20) future prices slide to the lowest point at $20.52 per barrel on Mar. 18, 2020.

As investors’ recent pessimism over a coronavirus-induced business slowdown, the cotton market also shadows the pandemic of the coronavirus as well. May 2020 cotton futures for old crop closed at 54.93 cents per pound, and new crop December futures closed at 56.10 cents on Mar. 19, 2020.

Cotton growers need to be aware of the rising volatility and uncertainties in the cotton market. Since the disease outbreak, the cotton supply chain has been severely interrupted. Countries worldwide are implementing social distancing or lockdown, hoping to slow down the spread of the virus. The cotton industry suffers tremendously as the temporary closedown of factories to control the virus.

The long-term impact of the virus is also expected. The aftermath of the coronavirus pandemic is highly likely to result in a global economic slowdown or recession. Cotton products are discretionary items. Thus, the consumption of cotton goes up or down with the economy. Cotton demands are likely to continue decreasing due to the slowing down of the global economy. The world cotton demand is currently forecasted at 118 million bales, down 5 million bales from the last peak in 2017.

On top of everything discussed so far, the U.S. dollar appreciates during the time of crisis as investors are seeking a safety harbor. This appreciation of the U.S. dollar further hinders the export opportunity for cotton. In 2019, 83 percent (16.5 million bales) of cotton produced in the U.S. were exported and traded in the global market. U.S. cotton relies on the global market and international trade to consume excess supply and support domestic prices. The decline in oil prices is likely to increase the competition of synthetic fiber down the road, similar to what we observed after the drop in oil prices during the 2008 financial crisis.

The uncertainties in trade make cotton profitability more challenging. The signing of the Phase 1 trade deal between the U.S. and China on Jan. 15 gave the cotton market a short period of optimism. China agreed to purchase at least $40 billion worth of agricultural products for each of the next two years. However, no details are released so far about how China will be able to fulfill this large purchase of agricultural products. The outbreak of the coronavirus further increased the uncertainty in trade.

USDA Farm Service Agency announced the weekly average adjusted world price (AWP) and loan deficiency payment (LDP) rate every Thursday in the Upland Cotton Announcement. The AWP is currently at 49.95 cents per pound. The LDP rate of 2.05 cents per pound is available from Mar. 20 through Mar. 26. The LDP rate is the difference between the base loan rate of 52.00 cents and the AWP. If taking the LDP, the producer should be aware that there is no further protection from prices going even lower. Producers can wait until Mar. 25 or Mar. 26 in poping their cotton to see what the prices hold for next week. If a producer is willing to take the risk and feels that cotton prices are going to improve, then the producer could take the LDP and market the cotton later.

Looking ahead, producers need to be aware of the continuous risk of down-side price weakness and volatile cotton prices.  It might take a while before we see a recovery of cotton prices. Strategies to improve productivity or cutting costs are highly recommended during the time of low cotton prices.

Additional Information

Georgia Department of Public Health reports daily of the confirmed cases of Covid-19 in Georgia (https://dph.georgia.gov/covid-19-daily-status-report ). The latest news about the Covid-19 in the U.S. can be found on the CDC’s website (https://www.coronavirus.gov/). Keep your distance, and stay safe.

This article was written by UGA Extension Cotton Economist Dr. Yangxuan (Serinna) Liu.