I appreciate very much the chance to provide the Council board and guests a state of the Foundation address.
We are all fairly happy with the new farm bill. Those who provide goods and services to the U.S. cotton industry, the members of The Cotton Foundation, are pleased. However, even with the new farm bill, the U.S. cotton industry?s need for cotton research and education has never been greater. The Foundation is capable and ready to continue as an important vehicle for facilitating, encouraging and conducting needed research and education.
Foundation membership stands at 74 member firms, down slightly from last year?s level. Some of this decrease is due to consolidation, some due to financial considerations. Up to this point, the Foundation has been able to maintain level funding or better to date. However, we believe that consolidations and introductions of new technologies have reached a point where each event will have a negative effect on income.
The 80/20 rule we learned in economics and business classes certainly applies in the case of The Cotton Foundation. 20% of our members, the larger firms, provide 80% of the total dues and special project grants. Most of these members have indicated that the amount of support provided to the Foundation must be cut in 2003. Staff is aggressively working with membership to maintain dues. Special projects are being intensely reviewed, and some will be significantly modified, in order to keep them operating in a manner which will allow the Council, the Foundation and the project sponsor to continue to meet their respective goals and objectives.
Many of the concerns of the smaller CF members are the same as the larger members. Profits are squeezed. Survival often requires a joint venture or other ownership arrangement with one of the larger firms. The on-farm economic situation has slowed adoption of technology, particularly precision farming related. Other than a Deere and Case IH, most of the providers of these technologies are smaller companies or have a small presence in the cotton industry. We are doing all that we can to get the most out of these firms? investment in U.S. cotton through the Foundation.
I?d like to remind the group that every dollar received from a foundation member in dues goes to support its general research and education projects. The Foundation retains 10 percent of special project grants. This minimal retention for administration is due, in part, to the Foundation?s access to National Cotton Council resources and other in-kind services. Foundation-supported work also benefits from Foundation investments and rent monies from its Washington office building.
The Foundation?s trustees and membership are truly grateful to Council staff and industry leadership for developing and maintaining such an innovative structure in support of U.S. cotton.
During the 2001-2002 year, the Foundation provided $474,950 for general cotton research and education projects. While the dollar amount is not a record level, the number of projects, 35, is. Between our investment, matching funds and in-kind services provided by others, the total value of these projects is in the one and a half to two million-dollar range. The quality of the projects continues to be strong.
A large portion of Foundation-supported work is driven by recommendations from the NCC?s Profitability Initiative. In looking for ways to reduce production and processing costs, the initiative pointed to the potential of precision agriculture, genetics, biotechnology, conservation tillage and narrow row cotton. That study has led to major on-farm projects using remote sensing and variable rate technology in Georgia, Mississippi, Louisiana and California. Tests thus far have shown significant efficiencies in the application of plant protectants, fertilizer, water and other inputs.
Even taking into account the factors mentioned earlier, the Foundation?s special projects remain strongly endowed by member grants over and above regular dues. These endeavors also contribute significantly to helping the NCC carry out its mission of ensuring the U.S. cotton industry competes effectively and profitably.
For example, the Policy Education Program supports many Council objectives. The program works to strengthen financial support for the Council by selecting producers from key member gins that have had a history of limited involvement in the organization. The program also helps participants understand how the Council works to develop and implement cotton policy and emphasizes the importance of getting involved in the organization.
56 producers have participated in the program since it was initiated four years ago. Today we are seeing several of the participants getting more involved in the Council as well as their local producer organizations. The Council's Member Services staff also is using the participants in efforts to maintain and increase membership.
The activities of the nematode and seedling disease projects serve as outstanding examples of the Foundation providing a framework within which a group of researchers and extension staff can quickly and deftly respond to the needs of the industry. Examples include the nematode management panel discussion and workshop at this year?s Beltwide and updated educational materials and websites.
