Cotton bales not moving fast enough out of warehouses to customers in the U.S. and worldwide.
John Hart | Mar 04, 2018
The National Cotton Council is addressing problems of cotton bales not moving fast enough out of warehouses to customers in the U.S. and worldwide.
In an interview with Southeast Farm Press, Dr. Gary Adams, president and CEO of the Council, said the Council’s Cotton Flow Committee has worked on the cotton flow issues for many years, even prior to the time Adams joined the staff of the Council. “The committee has been doing some good work over this last year to look at ways to improve cotton flow,” Adams said.
Problems of slow U.S. cotton shipments were brought up by Joe Nicosia, senior head of cotton and merchandising platforms at Louis Dreyfus Company in Memphis, in a speech to the Southern Cotton Growers and Southeastern Cotton Ginners Association annual meeting in Myrtle Beach, S.C. Jan. 19. Nicosia said shipping delays by the warehouses harms all sectors of the industry.
“Warehouses serve as the storage and distribution centers and are responsible for making the product available to the customer. Their level of performance is critical to the overall success of the industry. Sub-optimal performance of any one of the segments negatively affects the bottom line of all segments to some extent,” he said. Adams said all sectors of the cotton industry are engaged to find answers to the shipping delays. He said the Council and the Council’s Cotton Flow Committee are working hard to find a solution. Among the solutions is to include incentives in the new farm bill to improve cotton flow.
“One of the recommendations that came down from our board was to look at some type of credit that might be generated by a warehouse if they achieve a certain shipping performance within a week. Those credits would be used to help offset the cost of a future redemption of cotton out of the CCC (Commodity Credit Corporation) loan, but it would provide incentives to have more cotton moving into the marketing channels earlier in the marketing year,” Adams said.
The Cotton Flow Committee is also looking into practices to optimize the location of cotton within the warehouse. “On electronic warehouse receipts there is actually a field for a locator identification. One of the things the committee talked about is to require that that field be actually populated so that you have a much better idea of where the cotton bale is in the warehouse,” Adams said.
A challenge facing shippers was last year’s large 21 million bale U.S. crop. “It really puts some constraints on the warehouse when receiving all of the cotton in the fall and at the same time they are trying to turn around and ship different bales of cotton,” Adams said.
“Some warehouses are shipping as hard as they can go. They are doing everything they can to move cotton. And then you have some warehouses, for a variety of reasons, that aren’t shipping as fast. There is a lot of variability when you look across that segment.” (Source: southeastfarmpress.com)