Cotton Growers Warehouse Association

Industry/Government Policy

2020-2021

Loan Bale Transfers

Since the stated purpose for allowing cotton to transfer under the CCC loan was to facilitate the flow of cotton into world markets, and since unlimited transfer days will ultimately impede the flow of non-loan shipping orders into world markets, the Cotton Growers Warehouse Association supports a 75-day limit on storage credits for transferred bales. CGWA members will comply with all USDA minimum shipping requirements but assert that non-loan shipping orders should have priority over loan transfer shipping orders.

Storage Credits

The Cotton Growers Warehouse Association finds that storage credits are an important component of US cotton’s competitiveness. With this background we strongly encourage USDA to:

– Consider regional costs and practices in setting a maximum credit rate

– Allow any warehouse rate changes up to the maximum credit rate for that region

– Set the forgiveness rate at a minimum 2005 crop’s average.

National Cotton Council

The Cotton Growers Warehouse Association believes that having a single organization, the National Cotton Council (NCC), which develops and advocates U.S. cotton industry policy, is in the best interests of our domestic industry. The Cotton Growers Warehouse Association therefore urges the NCC to be diligent to assure the current makeup of the seven segments of the cotton industry and policy making procedures of the NCC are in the best interest of its members whose capital and infrastructure are located on U.S. soil.

Warehouse Performance and Transparency

The Cotton Growers Warehouse Association fully supports the National Cotton Council’s Performance and Standards Task Force in its effort to improve the flow of U.S. cotton from farm to mill. Recognizing the warehouse-merchant nexus is critical for efficient cotton flow, we believe that this is best achieved with the proper balance of market forces, incentives and mandates.

CGWA continues to support the protection and integrity of bale quality and condition, and stresses that extensive capital investments have been made to support this endeavor which should be protected to the extent necessary to accommodate significant fluctuations in cotton production.

The Members of Cotton Growers Warehouse Association:

  1. Support warehouse tariffs that place emphasis on warehouse and merchant performance.
  2. Support a concept of a premium fee for exceptional service for bales shipped when minimum shipping standard is exceeded; the incentive payment rate should be sufficient to encourage all warehouses to provide expedited loading recognizing that the expedited service may not be available at all warehouses for all weeks; any premium fee would not be charged to the sellers account; the fee is in the warehouse tariff and/or negotiated between warehouse and shipper; and an optional BMAS removal fee should be allowed for BNPU on the confirmed ready date.
  3. Support the current minimum shipping standard of 4.5% with encouraged enforcement by USDA and further, support efforts to ensure all warehouses are in compliance with the minimum shipping standard by:
    1. Encouraging all warehouses and shippers to adopt and use EWR’s Shipping Order Update (Batch 23) feature, which;
      1. provide the shipper with the ability to send shipping request dates to a warehouse via the provider system wherein dates are captured and can be audited by USDA for enforcing compliance with the minimum shipping standard, understanding that if no shipping order information is sent by the shipper to the warehouse via Batch 23, USDA cannot measure the warehouse’s compliance with the minimum shipping standard,
      2. support the creation of a software program to process unreceipted bale data through the BMAS reporting system, like what is done for receipted bales, and to work towards the most cost-efficient solution that does not include ongoing costs to warehouses and ensures weekly submissions for unreceipted and receipted bales are separately reported, understanding a goal of full transparency is needed, and
    2. provide the warehouse with shipping order updates sent via Batch 23 in the warehouse’s provider mailbox.
    3. Recognizing the new audit system is to complement, not replace, the current complaint-driven system.
    4. Encouraging USDA that when a complaint has been filed, to acknowledge in writing that a warehouse examination has occurred and what, if any, corrective actions have been implemented.
    5. Acknowledging that when combined with new incentives for enhanced service and audits, proposals for stopping storage charges will be unnecessary.
  4. Support the use of electronic notification for loads not picked up as scheduled.
  5. Support missed load out penalties of equal rates for each party:
    1. For the merchant’s account if transportation does not arrive on the confirmed ready date and/or
    2. For the warehouse’s account if bales are not ready on the confirmed ready date
  6. Support USDA rules which were published in 2014 to clarify definition of BMAS such that bales not picked up by the shipper can only be reported by the warehouse operator as BMAS for no longer than one week that such bales have been made available for delivery but have not yet been picked up; and furthermore in order to encourage maximum flexibility of service on the shippers behalf, that for determination of USDA compliance, BMAS performance shall be conducted on a two-week rolling average.
  7. Support the imposition of an additional penalty for bales not picked up after 2 weeks from the confirmed ready date(s), after which these bales should be removed from the BMAS reports and shipping calendar.
  8. Support further efforts to streamline cotton processing, storage and handling methods which enhance efficiency and increase the value of U.S. Cotton.
  9. Support only changes to the USDA Cotton Storage Agreement that are within the legal intent of the CSA which is to protect the USDA collateral interest for loan cotton and furthermore oppose using the CSA to interfere with business practices including stipulating tariffs, fees, waivers or charges which are normally the responsibility of business transactions.

Additionally, the Cotton Growers Warehouse Association contends that the availability of information is beneficial to cotton market participants. The Members of the Cotton Growers Warehouse Association:

  1. Support transparency on notification of shipping orders as to whether bales are categorized as loan transfer or non-loan transfer.
  2. Support limiting storage credit forgiveness on loan transfers to provide a disincentive for the use of transfers for the sole reason of collecting the storage credits.
  3. Urge that information be collected and maintained by EWR, Inc. and/or the USDA on bales shipped differentiating as to whether shipments were for immediate delivery to a buyer or for CCC loan bale transfer for convenience of the merchandiser. The purpose of the CGWA request for shipping data is to provide a tangible basis for evaluating the extent FSA rules (specifically those which provide for transfer of CCC loan bales and removal of storage credit limits) meet the industry-wide objective of improving efficiency, responsiveness and accessibility of bales for shipment. CGWA opposes any increases in minimum shipping standards of 4 ½% per week until such time as this information is available and an objective analysis supports doing so.
  4. Encourage national and regional shipper associations to implement educational programs for communicating the importance of adoption of Batch 23 order features.

Outside Storage

The Cotton Growers Warehouse Association continues its opposition to outside storage of cotton bales as a customary practice, realizing unnecessary and prolonged use of outside storage increases the likelihood of country damage which jeopardizes the position of U.S. cotton in foreign markets. CGWA supports the temporary allowance of outside storage of cotton only under extraordinary circumstances. USDA denial of storage credits should be limited to individual bales remaining outside more than 15 days after the warehouseman is notified the bale is in the CCC loan program.

CGWA supports the USDA policy of allowing outside storage only in areas determined to be storage deficit areas.

Staged

The Cotton Growers Warehouse Association’s definition of "Delivered or Staged for Scheduled Delivery" is as follows:

Cotton bales that are "delivered or staged for scheduled delivery" means any cotton bales that, with respect to the relevant week of shipment,

  1. Have been delivered by the warehouse; and
  2. Are scheduled to be delivered and are ready for delivery but are not picked up.

Electronic Bills of Lading

The Cotton Growers Warehouse Association opposes any obligation calling for warehousers to print bills-of-lading as any such requirement inherently increases warehouse’s errors and omissions liability without any tangible benefit to the warehouse or improvement on industry services and efficiency.

Phytosanitary Harmonization

The Cotton Growers Warehouse Association supports USDA/APHIS/PPQ efforts to harmonize international rules for import and export phytosanitary requirements for cotton bales; the CGWA also recognizes the efforts the United States has made toward eliminating unnecessary fumigation requirements for exporting domestic cotton by certifying that bales meet commercial ginning requirements and meet minimum compression densities of 22 pounds per cubic foot; and acknowledges that for international harmonization, imported bales meeting the same ginning and compression standards may be permitted without fumigation provided standards for exemption for pests that are non-typical of US cotton meet the same scientific proof of no-pest-risk as US bales prepared for export; supports use of electronic phytosanitary certificates.

Occupational Safety and Health

The Cotton Growers Warehouse Association recognizes that worker safety and health are primary concerns for all segments of the cotton industry and request that the National Cotton Council maintain liaison with all agencies and industry segments including warehouse associations; the CGWA also urges its members to have a safety policy in place and perform regular training for all affected employees on safe bale handling and stacking including requirements for pedestrian safety measures.

Warehouse Systems Research

Urge the USDA, Cotton Incorporated and the Cotton Foundation to allocate funding for systems analysis research that focuses on identifying potential areas of payoff such as cotton flow, transportation, labor saving devices, safety, fire detection, equipment use and utilization of other physical resources.

Permanent Bale Identification

Recognizing Permanent Bale Identification is an essential feature of US cotton bales urge the National Cotton Council to review PBI tag requirements in light of emerging technology.

Bale Bag Closing

Encourage bagging equipment designers, approved bagging manufacturers, gins, warehouses and others work together to improve bale bag closing techniques which: (1) take into account bale stack stability; and (2) prevent lint from being exposed to contaminants.

Marketing Units

Encourage pilot programs to investigate the feasibility of innovative methods to increase storage and handling efficiency from the gin to the textile mill such as 4-bale groupings (a nominal short ton) to be merchandized as a single unit.

Support cotton industry education programs to prevent lint contamination from all sources, especially from those originating in the cotton field and cotton gins.