I am pleased to have an opportunity to update you on CCI’s COTTON USA activities.
As you know from last night’s event, this is a very special occasion for CCI – the 50th anniversary of the founding of our organization. In the spirit of the occasion, I would like to share with you one more time the themesetter from last night’s festivities.
That really sums up the spirit of CCI during its first 50 years, and it also conveys our enthusiasm for our organization and its mission looking forward.
Of course, none of this would have been possible without the initiative 50 years ago and the solid support over the years from the National Cotton Council leadership. There are really far too many people to thank for their efforts and support over the years. Behind me on the screen you see a scrolling list of CCI’s presidents over the years.
The list reads like a “who’s who” of cotton industry leadership for the past five decades – and there are many other individuals who do not appear on the list but who have been every bit as supportive of CCI’s mission. I thank all of them and all of you for that support.
I also wish to personally thank the past Chief Executive Officers of the National Cotton Council who are here today. Each of them served also as the CEO of Cotton Council International during their tenures. In that regard, I want to recognize those present here today -- Earl Sears, Phil Burnett, Gaylon Booker, and our current NCC CEO, Mark Lange, for their leadership and support.
My final thanks go to the CCI funding organizations. Naturally, that list includes the National Cotton Council. It also includes Cotton Incorporated, the American Cotton Shippers Association, the New York Board of Trade, the San Joaquin Quality Cotton Growers Association, Supima, the Southern Cotton Growers, Monsanto through the Cotton Foundation, the American Cotton Cooperatives, and the National Cottonseed Products Association.
From the public funding side, CCI would like to thank the U.S. Department of Agriculture for its financial support and close collaboration over the past half century.
And, of course, the U.S. Congress for authorizing and appropriating funds for the common cause of export promotion. In these times of budget deficits, it is sometimes tempting to target such programs for reductions -- but they are vital to the future of this industry and they help maintain our export competitiveness.
We do not need to dwell on the past, but I would like to point out to you that, at CCI’s inception in 1956, record-breaking yields put U.S. production at 14.7 million bales and large carryover stocks increased supply to 26.8 million bales. The industry was in crisis: stocks were the highest in recent memory, man-made fibers were on the move and exports were the lowest they had been in a decade. That year U.S. cotton exporters shipped a total of only 2.2 million bales, mainly to Japan, France, Great Britain, Canada and Spain.
The supply-demand industry crisis of the 1950’s led to the NCC signing the first “cooperator agreement” with the United States Department of Agriculture in 1955, and this led in 1956 to the incorporation of a new organization called Cotton Council International. CCI’s focus was to be -- and still remains – export market development.
That was a half century ago -- and U.S. mill demand stood at 9 million bales out of a world total of 27 million bales.
By comparison, today’s global mill demand for cotton is more than four times greater than in 1956. For the 2005-2006 marketing year, the U.S. is projected to export nearly 17 million bales, which translates to more than a seven-fold increase in exports compared with 1956 and represents around seventy percent of current U.S. production.
Times have changed, and exports have only gotten more important -- and our support for export market development has only become more important. We all realize that as a fact.
I do want to point out, however, that the challenges of cotton exports and cotton promotion have changed significantly over the years.
Earlier I mentioned our key markets in 1956 -- Japan, France, Great Britain, Canada and Spain. Of those, Japan is the only significant remaining market, and even Japan is a much diminished destination for our cotton compared with the 1950’s.
We have an entirely new set of players for cotton fiber exports today -- emerging markets like China, Indonesia, and Vietnam, or Turkey and Mexico. And in the past several years CCI and the U.S. Industry have been working hard to expand exports of U.S. cotton yarn and fabric to the Caribbean Basin and Andean countries.
CCI as an organization, working hand-in-hand with Cotton Incorporated and with the U.S. industry, has been aggressive in going after those changing opportunities.
Just two months ago I was in China to open CCI’s new office in Shanghai. That office is collocated in the same building with the Cotton Incorporated office. Although it was just opened, our office there already feels small because of the enormity of the work effort that is needed in China – a country that is expected to spin an incredible 51 million bales of cotton this coming year, around half of that imported.
Not only have the markets changed, but the issues have changed dramatically as well.
During my travels I had a chance to become more familiar with how CCI goes about its COTTON USA promotions. Who would have thought back in 1956 that our industry would be doing consumer brand and retail promotion in overseas markets? Yet that is CCI’s largest expense category today.
And it makes a lot of sense. More than 95 percent of the world’s consumers are outside our borders today, and some of the best opportunities for growth in consumption. The high-end, quality image implied in the COTTON USA Mark program in target overseas markets is just what we need to appeal to the growing middle class and affluent consumers.
Another change in today’s world is that we are being asked questions that did not exist back in 1956.
Almost daily we are asked questions about the environment, organic and sustainable cotton, and “fair trade”. In many cases these were not even significant questions for cotton a decade ago, much less in 1956.
We need to be prepared to answer those questions to the overseas press and consumers. U.S. cotton has a good story to tell when it comes to environmental responsibility and sustainable practices – and we need competent, experienced international spokespersons to make that case. CCI and Cotton Incorporated are well-positioned to do that.
One thing that has changed in magnitude, but not in fact, over the past 50 years is the competition with synthetics.
By far the biggest issue our cotton industry faces globally today is the continuing press of synthetic fibers, particularly in developing countries. We only had hints of this challenge in CCI’s early history, and mainly in the U.S. and Europe. However, today our industry needs to focus on the challenge from synthetics globally, and particularly in Asia.
During my stops in India and China, we spent a lot of time on this topic. Cotton has gained a bit of a reprieve from the pressure from synthetics recently because of the higher petroleum and polyester prices.
However, I believe this is a temporary reprieve. We must work hard as an industry to build underlying consumer demand for cotton overseas, and we must find ways to work with other countries, overseas industries and international organizations to make this happen.
Again, I believe that CCI and Cotton Incorporated are embarked on strategies to make this happen. Our industry is taking the lead globally in building generic demand for cotton products, and we hope other countries cotton industries and governments will pick up the flag as well.
In this time of criticism of cotton policy, it is time for others to give credit where credit is due – no other country has done as much as our country to build demand for cotton at home and abroad. Every other cotton industry overseas, from producer to mill to garment manufacturer is benefiting from our years of investment in that arena. It is time for them to join the U.S. in the effort, and to share in both the expense and the benefits that derive from demand enhancement.
I am very proud for the chance to serve as CCI’s president during its 50th year. We have big challenges ahead of us as an industry – but we also have excellent leadership and institutions in place to meet those challenges. Cotton Council International is one of those great institutions, and this year we celebrate the fact that CCI is in this business for the long run.
Thank you all for helping to make that happen.
