Next on the agenda, I would like to offer some opening remarks about this conference and discuss some recent activities of the National Cotton Council.
I am pleased to have this opportunity to participate in these conferences, which represent the largest annual gathering of the cotton industry, including its agribusiness partners, scientists, universities and friends in government.
The Beltwide Cotton Conferences are unsurpassed in terms of their diversity of audience and the number of research disciplines represented. All our participants today fully understand the importance of this gathering and meaning of the theme of this year’s conference-- “Equipping for Excellence.”
The Beltwide partnership has had a tremendously successful track record. All of the Conferences’ organizers deserve our thanks and recognition for their hard work and the excellent job they do in coordinating the many events.
In addition, the Beltwide Steering Committee, chaired by Bill Lovelady, deserves special recognition for conducting a thorough review of the conferences and making recommendations for the future as well as planning the general conference program. The Committee’s goal is to maximize Beltwide attendance and to enhance technology transfer.
The planning committee has put together an excellent program during the next day and a half. They have identified a number of key innovations and will provide expertise on how these new ideas can be applied profitably. The three-day conference format has made the technical conferences more accessible to a larger audience, which is paying dividends for those attendees.
Many have stepped forward to make this year’s conference a great one. They deserve our thanks.
I would first recognize the admirable work by the people in New Orleans in restoring much of this great city after the tremendous damage inflicted by Hurricane Katrina. We applaud all of the groups and individuals who have been involved in this mammoth undertaking.
Also, along with the many Conference sponsors, I want to say a special word of thanks to Delta and PineLand and Monsanto for their assistance at this year’s meeting. Calls were made to several Cotton Foundation members asking them to place company personnel in this hotel to help meet the Conferences’ contract requirements. Delta and PineLand and Monsanto responded favorably to our request and we are very appreciative of their assistance.
As with the Beltwide partnership, I am pleased at how our industry’s collective resources have been effectively applied to an array of priority issues this past year through the Council. At this time, I appreciate the opportunity to kick off this conference with a brief review of some of the major developments this past year.
The Council’s agenda in 2006 included efforts on a number of fronts with a primary focus on defending the U.S. cotton program and attaining sound trade policy.
Budget
Early last year, the Administration unveiled a very severe budget plan calling for nearly $9 billion in savings over 10 years in cuts to commodity programs.
The proposal called for reducing the payment limit cap for individuals to $250,000 for all commodity payments, including all types of marketing loans gains. It also sought to remove the three-entity rule and make marketing loans recourse above the payment limit.
The Council worked with other agricultural groups and our friends in Congress to protect producer eligibility of farm program benefits and deliver the message that the Farm Bill is a multi-year contract that provides the necessary stability for US agriculture and US consumers. As a result, Congress’ budget resolution did not include any of the Administration’s payment limit provisions.
The Administration’s budget also proposed a significant funding reduction for cotton research conducted by the Agricultural Research Service at locations across the Belt by $8.5 million or 15 percent. Included in this was the proposed closure of the ginning laboratories in Lubbock and Las Cruces.
We also have worked closely with cotton industry interest organizations and our friends in Congress to maintain funding for the critical research programs targeted for elimination or reduction in the Administration’s budget.
And we have urged Congress to provide much needed emergency disaster assistance to producers who suffered severe financial losses due to hurricanes, drought and upwardly spiraling costs of production due to fuel and input costs. While Congress has been unable to agree on a comprehensive disaster bill in the appropriations process, it did add $15 million in cottonseed disaster funds for declared counties in 2005. Producers in those counties will not have to prove losses for cottonseed assistance for 2005.
In action taken following the November elections, the Senate was unable to agree on a comprehensive disaster package. Work on a disaster measure will resume with the new Congress.
Doha
In late 2005, the U.S. tabled a very aggressive Doha proposal, in terms of domestic support and improved market access. The subsequent WTO Ministerial text developed later that year in Hong Kong contained very little on market access and domestic support measures specific to agriculture. In the negotiations that have followed Hong Kong, the rest of the world has not stepped up to the US level of ambition.
Cotton was singled out for special treatment in the Hong Kong text, with three specific objectives, including elimination of cotton export subsidies, increased market access for cotton exports of least developed countries, and an ambitious schedule of reducing trade distorting domestic cotton subsidies for cotton.
Throughout the months following the conclusion of the Hong Kong ministerial and up to the suspension trade negotiations in July, the Council’s leadership and staff have maintained a strong presence in Geneva and in Washington.
We have worked very closely with USTR, USDA and Congress to counter any efforts to further isolate and discipline cotton. The Council also has actively participated in a coalition of commodity, farm and dairy organizations which has communicated a consistent message that recognizes the ambition in the US offer and no additional concessions without commensurate net gains in market access for US agriculture.
When WTO Director General Lamy suspended trade negotiations after finding no clear signs of progress toward an agreement, the Council and many other agricultural groups issued statements publicly thanking Ambassador Schwab and Secretary Johanns for steadfastly maintaining the U.S. position throughout the negotiations.
Lamy has said that the end of 2007 could emerge as a possible deadline for concluding the Doha round negotiations.
Brazil
The Council also has been actively involved with the WTO Brazil cotton case. Following the repeal of the Step 2 program on August 1, 2006, the government of Brazil formally requested and were granted the establishment of a compliance panel to determine if the U.S. has conformed with the earlier WTO ruling.
Brazil is contending that U.S. actions, relative to the programs for Step 2, export credit guarantees, marketing loans and countercyclical payments, are not enough to comply with the original ruling.
We are continuing to work with USTR and USDA in developing a defense to the latest charges by Brazil.
Farm Bill
Following USDA’s farm bill listening sessions, conducted in over 40 states during 2005, a number of Congressional farm bill hearings were held in 2006.
In the six field hearings held by the House Agriculture Committee last year, the cotton industry’s testimony:
· Stressed the importance of maintaining current law to its scheduled expiration with the 2007 crop;
· Urged members to base the new farm bill on current law;
· Asked that there be no further reductions in payment limits or changes in eligibility rules;
· Emphasized that conservation programs should operate on a voluntary, cost-share basis, as a complement, and not a substitute, to farm programs; and
· Suggested an extension may be necessary to eliminate uncertainty if the WTO negotiations have not made sufficient progress.
A number of cotton industry leaders, including Council Vice Chairman John Pucheu, have presented testimony at the House field hearings. In addition, the Council provided testimony during the full Committee’s hearing in Washington in September.
The Senate Agriculture Committee also conducted a number of regional farm bill hearings in 2006. Chuck Coley provided the Council’s testimony at the first Senate hearing in Albany, GA. In July, I provided the Council’s testimony at the second Senate hearing in Cape Girardeau, MO. The Senate’s final regional hearing was conducted in Lubbock, Texas, where Rickey Bearden provided the Council’s testimony.
As you probably are aware, several important factors will shape a new farm bill, including any final WTO agricultural agreement, Congressional budget authority, and the balance between nutrition, conservation and commodity spending.
Additional farm bill hearings are expected in the coming months with the new Congress.
Quality and Flow Issues
The Council also has been working to address a number of important quality and flow issues.
Immediately following the 2006 Annual Meeting, I appointed a Bale Moisture Task Force to carry out the Board’s policy for providing USDA with input in addressing the excessive bale moisture issue. Working under an extremely tight rulemaking schedule established earlier by USDA, this task force developed policy recommendations for consideration by the Council’s Executive Committee and those recommendations were further strengthened at the urging of National Cotton Ginners’.
In an effort to develop a more unified industry position on the more pressing cotton flow issues, I appointed the Performance and Standards Task Force.
This task force has met three times this year to establish short and long term goals for improving cotton flow. They also developed consensus industry policy in response to USDA’s proposed rule, covering a wide range of cotton storage and flow issues, including specifications on outside storage, a proposed uniform CCC storage credit rate and re-concentration of loan cotton.
The task force also reached consensus on the components of a warehouse cotton flow reporting procedure.
Technical and Regulatory
The Council has continued efforts on a number of technical programs and regulatory issues. In 2006, these included:
· Working for Federal funding for the National Boll Weevil Eradication Program and the Pink Bollworm Eradication Program
· Supporting the re-registration of Bollgard I cotton through 2009
· Launching of a Cotton Foundation-supported weed resistance learning module, and
· Working with EPA and crop protection registrants in the efforts to maintain the availability of a number of important products, including carbofuran, aldicarb and MSMA.
The Council and Cotton Incorporated also have launched a joint initiative on cotton sustainability to maintain U.S. cotton’s image in domestic and overseas markets. These efforts have included industry meetings with Walmart officials to stress the attributes of U.S. conventionally and organically-grown cotton. Berrye Worsham’s report following this will provide the latest details of the sustainability effort.
Cotton Council International
We all know the value of the research and promotion program. As a direct result of our efforts, the U.S. leads the world in per capita consumption of cotton products. We are the cotton market of the world and our annual consumption of cotton textile and apparel products exceeds our own level of cotton production.
Closely linked to our domestic cotton research and promotion program are the overseas market development programs of Cotton Council International, which plays a major role in strengthening key markets in Europe, Asia, Latin America, the Middle East and Africa.
The flagship of these activities is the Cotton USA Sourcing Summit that CCI holds in collaboration with Cotton Incorporated and the U.S. industry. The 2006 Summit, held last November, drew the world’s leading mill customers and U.S. cotton exporters to discuss cotton processing and trade.
I would note that last year, CCI opened an office in Shanghai as part of a new effort to connect U.S. cotton with the Chinese textile industry. Of course, CCI’s Shanghai office is in the same building as Cotton Incorporated and our Chinese customers will benefit from the combined resources of both organizations.
With almost a third of the U.S. cotton production this past year being exported to China, I am very pleased that tomorrow’s program will include reports from a joint Council-CCI program that is designed to better acquaint our industry’s leadership with China’s cotton industry. This initiative is called the China Leadership Exchange.
In concluding, I encourage your full participation in the Conference’s general sessions as well as the special workshops and seminars. These are excellent examples of the efforts underway in a wide array of scientific disciplines to lower costs and apply technology to a host of problems and opportunities.
I hope you enjoy the Conference and I extend best wishes for the year ahead.
