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 and its members for their firm support of export promotion programs during the past legislative year. That support is now paying off in terms of continued strong funding for the FMD and MAP programs in spite of federal budgetary pressures. It will take our consistent efforts to ensure adequate funding for these programs because the budget pressures will surely not diminish.
Ladies and gentlemen, we just finished a year when exports of cotton fiber, upland plus pima, reached a record 13.8 million bales. This level of 13.8 million bales of exports out of 18.3 million produced last year in the U.S. means we achieved an export percentage of 75 percent -- a level that just a few years ago would have been thought to be highly unlikely, if not impossible.
However, as we look to the future, this level of exports is not only likely, but absolutely necessary if we are going to continue raising cotton with acreage, yields and infrastructural capacity that is anything like what we have today.
I wish we could say that the record exports were occurring even as our domestic mill industry thrived. However, we know that, to a certain extent, the fiber export success reflects the very difficulty our domestic mills have had in the struggle against overseas competition.
Nevertheless, CCI, working with U.S. textile mills, Cotton Incorporated as partners, has carried out very active programs to promote exports of U.S. cotton yarn and fabric, particularly to the CBI and Andean countries. We hope these efforts will expand even more as the industry and negotiators work out regional free trade agreements that truly benefit our manufacturers while helping hemispheric trade compete against cheap third-country imports.
In just the past few months since our annual meeting, CCI, in coordination with the Importer Support Group of the Cotton Board and Cotton Incorporated, arranged for a “Cotton’s Sourcing Summit” in Miami in February. This Sourcing Summit had strong U.S. mill attendance. In addition, CCI arranged U.S. mill participation in an apparel sourcing show in Guatemala in May, a textile and apparel "Speed to Market” Summit in July in El Salvador, and will sponsor an Andean Sourcing Fair in Colombia in September.
To further enhance the CBI market for U.S. cotton yarn and fabric, we have invited 40 CBI textile and apparel manufacturers to meet with U.S. mills in late September here in our country. CCI expects this tour to further solidify relationships and sales to that region.
CCI has also upgraded its Web and database services to better feature products offered by our manufacturers to potential overseas buyers of U.S. cotton yarn and fabric.
These are but a few of the events and activities CCI’s COTTON USA programs have implemented to help grow our exports of manufactured cotton products, which now account for an estimated 3.3 million bale-equivalents of the cotton yarn, fabric and apparel pieces produced in this country – at a combined export value of $5.4 billion last calendar year.
And our efforts continue. We are not content with the status quo or with old approaches to promotion.
Yesterday I attended the COTTON USA Export Promotion Committee meeting and learned more about an effort to promote exports of baled sliver. Cotton sliver is not something we usually think of as an exportable product. However, based on initial analysis, it seems like it might be feasible.
With our U.S. manufacturers under continued pressure and facing consolidation, does it not make sense to look to retain some of our competitive mill capacity if we can use it in new ways? That is where the idea of sliver export promotion comes in. In June CCI received approval from USDA to use funding to explore market development of sliver. One U.S. company is already poised to supply those exports, and we hope that more will join that company in the not-too-distant future.
I mentioned the COTTON USA Export Promotion Committee. Each year this committee meets to examine likely scenarios for the next 5 to 10 years of cotton fiber and product trade.
During yesterday’s meeting we found out that it will be difficult for the U.S. to export the requisite 12 to 14 million bales of cotton fiber a year unless key markets perform according to expectations. Some of those key markets are Turkey, Indonesia, Thailand, India and Pakistan, Mexico and, of course, China.
For those key markets we have a variety of programs in place. These include technical and trade seminars, teams, summits, and ongoing contacts between buyers and sellers.
CCI’s COTTON USA trade servicing programs are familiar to most of you. Let me just highlight a couple of them today.
The first is a COTTON USA Executive Delegation to Dubai, Thailand and Vietnam that I had the pleasure of leading in May of this year.
Why Dubai, you might ask?
Well, with the difficulties of traveling in some regions of the world, CCI took the suggestion of its exporter members to hold an event at a convenient nearby location so that as many buyers as possible could travel there at their own cost. For that reason we held a COTTON USA sourcing conference in Dubai for mills and trade from India, Bangladesh and Pakistan.
The event exceeded our expectations. The turnout was excellent – both from the local mills as well as the U.S. exporters and their representatives from the region, and there was a true give and take between buyers and sellers. I believe this COTTON USA conference in Dubai can serve as a model for future events of this type in other regions of the world.
Another event I want to highlight is the upcoming Sourcing USA Summit for cotton fiber to be held in San Diego in November. This will be the third in a series of these bi-annual summits carried out on behalf of U.S. fiber exporters and arranged by CCI and Cotton Incorporated. We are expecting this to be another premier event, attracting some 350 to 400 of the top mills from around the world, and nearly all exporters of U.S. fiber.
As you can see, a number of these activities involve full collaboration with Cotton Incorporated and its technical and marketing staff.
A new initiative this year has been CCI and Cotton Incorporated’s collaboration, with funding through the USDA Emerging Markets Program, to accelerate and intensify the use of Cotton Incorporated’s Engineered Fiber System, or “EFS”, overseas. As of January of this year CCI and Cotton Incorporated began a $350,000 two-year program targeted at Indonesia, and CCI just received authorization for another $300,000 two-year program targeted at EFS in Turkey.
We feel that anything we can do to enhance use of U.S. cotton’s advantages, such as full HVI classification, EFS systems and timely/reliable trade will help U.S. market share in spinning countries.
Sometimes market development does not mean inventing something new – it just means better using already-existing facilities and programs.
With that in mind, CCI initiated a program last year that took students from the International Cotton Institute at Rhodes College to Cary, North Carolina for an all-day tour of the Cotton Incorporated Research and Promotion headquarters there. The pilot program was such a success that Rhodes wanted a repeat this year, and that happened in July.
Using that as a model, the Calcot Classing and Marketing School class of 2004 just completed their tour of the CI’s Cary facility a couple of weeks ago. The students had nothing but praise for the program, and I can tell you this goes a long way in making a favorable impression on the future customers for U.S. cotton. They come away convinced that there is no other country that does as much to service its customers from field to fabric as does the U.S. industry. With today’s fierce price competition, we need to look for every other marketing advantage we can identify to give our cotton an edge in domestic and overseas markets.
Again, these are just some sample activities being carried out to promote U.S. fiber.
Of course, we have not neglected consumer promotion.
The COTTON USA consumer promotion program remains at the core of CCI’s export promotion strategy. With very limited budgets against the challenge of promotion, CCI has to constantly innovate and leverage to make sure we have impact at the consumer level.
That includes closely tying CCI’s expenditures on consumer and point-of-sale promotions to our mill, brand and retailer partner spend in target markets.
It also means looking at new ways of leveraging our public relations spend. For example, in Japan that meant identifying three very “cotton-interested” television and movie celebrities to appear with CCI and the local industry leadership as part of Japan’s “Cotton Day” events this year. The press pick-up was overwhelming, resulting in a press equivalent of $2.5 million from that event alone.
Similarly, in Korea, CCI joined forces with the Make A Wish Foundation to put on a fashion show that involved seriously ill children and their families, and to help make a travel dream come true. This “Cotton Day” show also used the powerful symbolism of another event – the hand-painting of cotton T-shirts by South Korean children to be donated to North Korea – as a powerful message about friendship, and about the ability of cotton to be a medium for expression of people of all ages. Cotton Day in Korea also received very extensive and positive media coverage for cotton and COTTON USA.
Gaining and preserving market share for U.S. cotton and cotton products in target countries represent important “battles” – but we should never forget the “war”. In our lexicon, the “war” is cotton versus man-made fibers.
Again, CCI is showing a lot of innovation in trying to wage that war. The Cotton Gold Alliance program in India, another joint program with Cotton Incorporated and with USDA funding support, is a test case to determine whether generic cotton promotion, along the lines of the successful effort carried out here in the U.S. for the past 30 years, can be successful in other countries.
India was chosen as the test case, and the Seal of Cotton was selected as the best symbol to rally around at the consumer level.
After nearly 2 years in action, we can say that we know some of the start up hurdles we face in launching and sustaining such a program. We can also say with certainty that we know we can move the market.
We can raise recognition of the Seal of Cotton among consumers.
We can attract top brands and manufacturers into the program.
We can leverage publicity and advertising to maximize image at the consumer level.
We can effect a premium for 100% cotton products at retail.
And, we can raise consumer preference for cotton products over man-made fiber products.
Where we have been less successful is in getting local interested parties to put up their own money to sustain the program! However, we knew this would be a challenge from the beginning. While we wish that part were going as well as the rest of the program, we are not giving up at this point.
We need to find ways to raise underlying demand for cotton at retail because our livelihoods depend on that final consumer more today than they have anytime in the past!!!
Just a couple more comments:
We have not forgotten other cotton products. CCI continues its efforts to promote cottonseed meal in livestock operations in Mexico.
CCI also managed a U.S. cotton linters trade team to China in May, and put together a buyers’ guide to U.S. linters in Chinese to stimulate trade.
CCI has supported efforts to eliminate unnecessary fumigation requirements for U.S. cotton shipments to Egypt, and is working with USDA to address cotton quality standards in China that will, hopefully, ensure that the world’s largest producer and spinner of cotton decides on standards that facilitate rather than restrict trade.
CCI has also been active in supporting the NCC and U.S. cotton industry’s trade policy efforts from China to the Andean countries and West Africa, from free trade agreements, to credit guarantee programs to contract sanctity.
I hope what I have presented to you today gives you a feel for the very active and diversified program that CCI carries out around the globe in conjunction with its U.S. industry partners, and Cotton Incorporated and USDA. As I said, this is just a sampling of the activities.
I will end my remarks where I started them – with the message that your support is fundamental to the COTTON USA export market development program, and exports of cotton fiber and value-added cotton products are increasingly vital to the survival and profitability of our industry.
Ladies and gentlemen, there is no getting around it. This industry is “export dependent”, and we need export programs we can depend on.
I believe CCI’s COTTON USA program is such a program.
I reiterate, if we are going to produce 18-20 million bale crops, and export 12 to 14 million as fiber and another 3 or 4 million as manufactured product, then our trade policies and export promotion programs must ultimately be successful ones.
I again thank the National Cotton Council and its membership for all their financial and policy support to keep CCI and the COTTON USA program thriving.
Thank you!
