Thank you, Mr. Chairman.
I am pleased to have an opportunity to update you on CCI’s COTTON USA activities these past few months.
First off, I would like to thank the National Cotton Council for their firm support of export promotion programs during the passage of the 2002 farm bill. That support is now paying off in terms of added funding from the FMD and MAP programs from USDA.
As a matter of fact, the COTTON USA program has received an increase of 27 percent in public support this year compared with last year.
Very simply, this 27 percent increase is due to a few key factors: the increased funds available through the new farm bill, the fact that we have a good program and, most importantly, the continued strong industry support and financial commitment.
Remember that we achieve around a 4 or 5 to one leverage for the funds that we put into this program. At a time when 65 percent or more of our cotton fiber -- and over 4 million bales-equivalents of additional cotton yarn and fabric -- move into export channels, it is hard to find more important ways to invest in our future.
I want to also inform you that congressional and administration support for these programs is strong, but cannot be taken for granted during this time of ballooning federal deficits.
I mentioned that a big part of our success in getting more public funds was the strong industry support for the COTTON USA program. I am very pleased and proud to tell you that four organizations have pledged to increase their funding levels by 40 percent or more this year. Those organizations are the American Cotton Shippers, AMCOT, Supima and the National Cottonseed Products Association.
Additionally, the Southern Cotton Growers started contributing directly to the COTTON USA program last fall, and renewed their pledge this year in spite of the very poor crop they harvested last year and the need to reach into reserves to meet their commitment.
The largest increase in industry funding came through a commitment from Cotton Incorporated to increase its contributions by $500,000 starting January 1 of this year. This represents a 25 percent increase for Cotton Incorporated, and further sets them apart as the largest single private contributor to CCI.
As a past chairman of Cotton Incorporated, this particularly pleases me since it reflects how well the organizations are working together. We need all the resources we can get focused on export market development for our fiber and our cotton manufactured goods – and Cotton Incorporated and CCI are working as an efficient team to make exports happen.
I want to thank all of these organizations for the sacrifices they have made to make more funding available to support CCI’s COTTON USA program.
Getting funding is good. But, the important thing is getting the job done. Let me just mention a few of the upcoming CCI events to give you a flavor for what we are doing.
In late September I will be leading a COTTON USA Executive Delegation to China. Bill Dunavant, Bobby Weil, David Stanford, Mark Williams, Don Conlin, Allen Terhaar and Jeff Coey will accompany me on that delegation.
China, as you know, has rapidly become our second most important export market after Mexico. However, unlike Mexico, we have significant trade policy concerns with China on several fronts.
The Executive Delegation will not be in China to focus on trade policy, but one cannot deal with China without somehow getting involved with policy issues. Those issues are front, right and center of how much cotton fiber China will import, and how much cotton product they export to the U.S. and other markets, and under what conditions.
CCI’s role is to work within the NCC trade policy environment, providing information on the ground to help in policy formulation, and to provide opportunities to get that trade policy message across to overseas entities – be they China or others.
These COTTON USA Executive Delegations are important in promoting our cotton fiber exports, but they are also an important contact point for our U.S. industry and key overseas decision makers in moving our policy agenda forward.
Another example of what CCI does to enhance our understanding of competitive challenges is a team of producer leadership to Brazil that we put together at the request of the National Cotton Council. The leaders on that team were Bobby Greene, Woody Anderson and Craig Shook.
The itinerary and meetings were put together by CCI staff, and Gary Adams accompanied the team to develop an economic assessment of Brazil’s capabilities, costs of production, support mechanisms, etc as the U.S. begins the process of negotiating a Free Trade Agreement of the Americas.
Bobby, Woody, Craig or Gary can give you more details on what they learned on that mission. The main point is that CCI, as our export promotion arm and through its work in more than 50 countries overseas, provides opportunities to both gather information, and to present information to overseas companies, organizations and governments that help facilitate open, efficient and, hopefully, fair trade.
Let me just mention a few other upcoming events briefly.
The past two weeks we had a top-notch COTTON USA special trade mission from India visiting the U.S. They crossed the cotton belt, meeting first with Cotton Incorporated in Cary and touring the research facilities, then meeting with co-op and merchant trade, producers, AMS, and others as they moved West.
India has become our 9th or 10th largest export market for upland cotton fiber in recent years, and it is also a key market for Pima. CCI has worked that market hard for the past 6 years. Even before it looked like India was going to be a net importer, CCI saw India’s potential and was putting significant emphasis on developing solid relationships with key mills.
Those solid relationships have paid off, both in terms of Indian cotton imports from the U.S., but also in providing a framework for an experimental program with Cotton Incorporated that we are calling the "Cotton Gold Alliance". Simply put, the Gold Alliance is designed to use the Seal of Cotton for the first time outside of North America to develop underlying demand for cotton fiber at the consumer level.
Our greatest challenge for cotton has always been, and will likely always be, the competition with man-made fiber. That challenge of synthetics is what led to the creation of Cotton Incorporated in 1970, and the challenge has only grown much greater since then.
Although we cannot rest on our laurels, we have been very successful in reestablishing cotton against synthetics at the consumer level here in the U.S.
However, the battleground has shifted from the U.S. to overseas, particularly to developing countries where synthetics are rapidly making inroads among traditional cotton consumers. The Cotton Gold Alliance is the first significant attempt to reverse this trend outside of North America.
Another one of CCI’s key annual events is what we call the COTTON USA Orientation Tour. The purpose of this tour is to get 25 or more mid-level mill executives and cotton buyers from key overseas markets to see our cotton supply system in its entirety.
Over the 35-year since we started these tours, hundreds of key contacts from importing countries have gotten a very positive orientation to our U.S. cotton production and supply infrastructure. It is not uncommon to run into overseas customers, now at retirement age, who still look back on their Orientation Tour to the U.S. as one of the most formative experiences of their career. Our next Orientation Tour will be this September.
I do not want you to think that we are all about fiber and have forgotten our U.S. manufacturers.
CCI has a large and very active program to promote U.S. cotton yarn, fabric and finished goods into export markets – particularly to the CBI and Andean countries.
For example, CCI has organized a Sourcing Fair in Antigua, Guatemala for September 17 to 19 to encourage business between US textile mills participating in the Sourcing USA Program and CBI companies. Around 75 companies will participate in the 2½ day event.
In addition to CBI executives, decision makers from Korea and Taiwan with large factories in the CBI will attend. We believe we can convince those companies to source U.S.-made cotton yarn and fabric instead of their traditional sourcing in their home countries.
Typically such Sourcing Fairs feature morning seminars focused on trade topics and Cotton Incorporated's research on knit fabrics and apparel. In the afternoons we hold trade fairs where buyers and sellers can see product and make contacts that result in business. CCI also facilitates one-on-one meetings between CBI buyers and US cotton textile yarn and fabrics exporters.
This is but one of several events of this type CCI puts on clearly focused on U.S. cotton yarn and fabric exports.
CCI also offers opportunities for U.S. manufacturers to participate in value added buyers guides, searchable Web directories of U.S. manufactured cotton products, global trade shows to display their products, Sourcing USA summits, and COTTON USA retail promotions.
Manufacturers have responded very positively, and have increased their direct funding of these programs by 136 percent from last year to this year. Like the other examples I mentioned earlier, this is another excellent case of industry members putting up funding so that CCI can increase its leveraging of public funds, and can launch and sustain programs big enough to have an impact.
As I said, these are just a few examples of a very active COTTON USA program.
I am confident that we have the mechanisms in place to maximize our U.S. exports of cotton fiber, and of cotton yarn and fabric. We even have activities in place to promote exports of cottonseed meal and linters.
The National Cotton Council sets the policy framework for CCI’s work overseas. It is a difficult policy environment today, as you well know.
As president of CCI, I want to assure you that the CCI officers, board and staff are working diligently within the NCC policy framework in the interests of the overall U.S. industry, to ensure a competitive and, hopefully, a profitable export sector.
As with the question of funding – we cannot do it alone. To be successful, we need the broad industry behind us.
I have been tremendously impressed with the staunch industry support for CCI and the COTTON USA program. I thank you, the NCC and the seven segments of this industry, for that support, and I commit my best efforts to make it successful.
If we are going to produce 17 million bale crops, and export 12 million as fiber and another 4 or 5 million as manufactured product, then our trade policies and export promotion programs must ultimately be successful ones.
