The governments of most foreign cotton producing nations take an active role managing either the growing of cotton or their cotton spinning industries. These practices adversely affect U.S. cotton growers. Without a U.S. cotton program the individual American cotton farmer would be competing against foreign, often centrally planned, governments. A growing share of world cotton trade is in value-added products such as yarn, textiles and apparel. Given the active involvement by most foreign governments in their spinning sectors, the U.S. cotton program becomes even more important to the entire cotton industry. The U.S. cotton program allows markets to discover prices and allocate resources, here and abroad, while providing some income protection to U.S. cotton growers. In addition, U.S. cotton prices, both domestically and internationally, are competitive with foreign growths of cotton and man-made fibers.

Notice that the title of this presentation is the "The Role of Government in Cotton Markets." It does not confine the discussion to U.S. markets or the U.S. government. While I will discuss the U.S. cotton program, it is critical that certain conditions in other parts of the world be recognized. An optimal role for the U.S. government in the cotton market is determined in part by the actions and policies of foreign governments. Developments internationally have tremendous influence on the U.S. cotton industry and the operation of the U.S. cotton program.