Cotton's Week: January 6, 2006

NCC Chairman Woods Eastland told attendees at the ’06 Beltwide Cotton Conferences in San Antonio, TX, that the US cotton industry has excellent prospects for achieving profitable cotton production and processing.

“In order for you to apply what you learn at these conferences and be successful in your respective businesses, it is critical that the National Cotton Council continue to be successful in its efforts on the many national and international policy fronts,” he told the gathering of more than 3,600 industry members, scientists, Extension, consultants, agribusiness representatives and others.

“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. There are still many challenges before us. Research, education and technology transfer continue to be critically important. I assure you that the Council will continue its longstanding commitment of its resources for technology development and transfer and bringing resolution to the technology-based priorities.”

In his comments on farm policy, Eastland said that the process of developing a new farm bill is just beginning and Congressional farm bill hearings will not occur until later this year and continuing into early next year. He said the NCC’s actions to protect the budget authority and the structure and eligibility provisions of the current Act “will build the foundation of our position on new legislation.” He told conferees that in response to a Federal Register notice which followed the conclusion of USDA’s farm bill listening sessions during ’05, the NCC submitted comments emphasizing support for the current farm bill and the importance of the legislation to the current structure and stability of US agriculture, including the vital role of the marketing loan and the NCC’s opposition to payment limits.

“We stressed the need to maintain stable predictable and equitable farm policy as we look forward to the next farm bill,” Eastland said.

Rep. Henry Cuellar (D-TX), a member of the House Budget and Agriculture committees, encouraged producers and other cotton industry members to support their industry organizations’ efforts by actively educating their elected representatives about the importance of a healthy cotton industry to the local and national economy. He also expressed support for reducing the deficit and for sound international trade policy, but cautioned that both of these issues must be addressed in a manner that provides agriculture with a safety net and a level-playing field in international markets.

Rep. Cuellar also expressed concern about the cotton references in the recent Hong Kong World Trade Organization (WTO) Ministerial declaration and pledged to work with the industry and his colleagues in Congress to ensure cotton is treated equitably during the continuing negotiations.

NCC President/CEO Mark Lange, in his presentation on trade issues, reported that the Hong Kong ministerial text discards the concept of a single undertaking in agriculture by isolating cotton for special, discriminatory treatment.

Lange said, “the Council is deeply disturbed and extremely disappointed in this development. The agricultural text has a specific section on cotton containing statements on intentions to obtain deeper and speedier concessions on cotton than other agricultural commodities.” This is an isolation of cotton for “early harvest.”

Lange noted, “The West African cotton producing countries, supported by Oxfam, have demanded an 80% reduction in all domestic cotton support by developed countries in ’06, with 10% in each of the next two years. They sought a total elimination of cotton support in developed countries within three years. That will be their starting point when the negotiations began later this month.”

Lange said overall market access on agriculture is the key component of the Doha negotiation at this time. The US has proposed average cuts in agricultural tariffs of 75% and the EU has proposed average cuts of 46%. A number of studies now indicate that if the average tariff cut is not between 60-75%, US agriculture will not make any significant gains in market access. If this very difficult issue can be addressed, it appears that there could be rapid agreement on reductions in domestic support at levels of 50% or more. At that point, there will again be a strong emphasis on an early harvest for cotton. If an agreement is reached to reduce overall agricultural support by 50% over 5 years, those same countries and non-governmental organizations expect cotton to have to reach a percentage higher than 50% sooner than five years.

“The U.S. negotiators have an extraordinary task before them to avoid such circumstances,” Lange said. “The National Cotton Council will continue to work closely with USTR and USDA to counter efforts to further isolate and unfairly discipline cotton. At the same time, we will participate with other agricultural interest organizations to insist on the necessary gains in market access that must arise in order to sustain any commitments for reductions in overall domestic support that do not isolate cotton. WTO trade ministers have set a date of April 30 to finalize modalities and July 1 for tabling schedules - meaning an intense period of further negotiations is immediately ahead.”

NCC Vice President of Economics & Policy Analysis Gary Adams told conferees that the ability to increase demand and regain market share relative to manmade fibers is paramount for US cotton to remain competitive. He said continuing to improve and maintain quality as the product moves from the grower to the final buyer is vital as are advertising and promoting our products.

Adams said that as overall demand for US production relies more heavily on exports, there could be increased volatility and implications for the US storage and distribution system as shipments can come in bunches.

“Ultimately, we are competing in a very competitive world market,” Adams said. “Our success depends on a number of factors. Some of those are external. A weak dollar, strong foreign economic growth and more open markets should boost exports and prices. Weather problems outside the US wouldn’t hurt either. The balance between exportable supplies and import demand will be key to movements in market prices.”

Among key projections he noted: 1) US cotton is on pace to export more than 16 million bales of raw fiber – roughly 70% of this year’s crop – with mill use at about 6 million bales, 2) China is on pace to be the largest consumer of US cotton, likely buying 7 to 8 million bales of this year’s crop and 3) global manmade fiber use totals 180 million bales, compared to 115 million bales of cotton and 4) India, which is spinning16 million bales of cotton and harvesting 22 million acres, is poised to expand both production and consumption.

Cotton Incorporated President/CEO J. Berrye Worsham, in highlighting the company’s current and planned activities, emphasized how research and promotion are strategically integrated to increase the demand for and profitability of cotton.

“Agricultural research is the foundation for our overall research efforts because fiber is the building block of all end products containing cotton,” Worsham said.

He also pointed to:  1) a ’05 milestone of the signing of an Engineered Fiber Selection software license to a Chinese textile mill - providing US cotton a first-mover-advantage for future accomplishments in a country that will continue to have a direct impact on the US cotton industry’s success and 2) a unique ‘experiential marketing’ promotion billed as ‘Cotton’s Dirty Laundry Tour’ conducted on select US college campuses to educate young consumers about the benefits and advantages of cotton and cotton products.

“These young adults will be consumers of apparel products for decades and this tour was an effort to establish in them a preference for cotton,” Worsham said.

Full reports of Eastland, Lange and Adams are at www.cotton.org/news/meetings/2006bw/.

Friday, Jan. 13 is the deadline for making hotel reservations for the NCC’s ’06 Annual Meeting Feb. 9-13 at the JW Marriott Starr Pass Resort & Spa in Tucson, AZ. The special room rate will be honored after the cut-off date based on the availability of convention-rated rooms. Go to www.cotton.org/events/amreg to reserve rooms, register for the meeting and get general meeting information.

NCC Chairman Eastland will address the Feb. 13 general session along with Stuart Rothenberg, editor and publisher of The Rothenberg Political Report, a Washington-based biweekly newsletter that reports on and analyzes current political developments.

Among other important convention sessions is the Feb. 10 American Cotton Producers meeting where the NCC’s planting intentions survey results will be announced. On Feb. 11, the NCC will present its Economic Outlook and the National Cotton Ginners Assoc. will hold its annual membership meeting. The Saturday luncheon will feature John McConnell, who serves as President George W. Bush’s deputy assistant and senior speechwriter.

Net export sales for the week ending Dec, 29, ’05 were 178,400 bales (480-lb). This brings total ’05-06 sales to about 10.5 million. Total sales at the same point in the ’04-05 marketing year were about 8.8 million bales. Total new crop (’06-07) sales are 168,800 bales.

Shipments for the week were 220,400 bales, bringing total exports to date to 4.8 million bales, compared with the 3.4 million at the comparable point in the ’04-05 marketing year.

Winners of the ’06 High Cotton Awards are: Cliff Fox, Capron, VA.; Joe Bostick, Golden, MS; Lawrence Braswell, Raymondville, TX; and Wally Shropshire, Blythe, CA. The awards program, which recognizes cotton producers for growing good crops while doing their best to protect their soil, water and wildlife, is sponsored by Farm Press Publications through a grant to The Cotton Foundation. The winners were recognized at the Beltwide Cotton Conferences.

"We are very proud of this year's winners and the conservation ideals they represent," said Greg Frey, publisher of Delta Farm Press, Southeast Farm Press, Southwest Farm Press and Western Farm Press. "Each of them is dedicated to taking care of their land and the environment, and leaving both better than they found them."

Dr. Daryl T. Bowman, a professor of Cotton Breeding at North Carolina State U., is the recipient of the ’05 Cotton Genetics Research Award. The announcement was made during the Beltwide Cotton Improvement Conference.

He received $1,000 in recognition of his efforts, which include his leadership in variety testing techniques, statistical analysis of test data, genetic diversity of cotton cultivars and germplasm, host-plant resistance to insect and nematode pests, and genetic tolerance to abiotic stresses. He also is credited with one cotton cultivar release and four cotton germplasm releases.

US commercial cotton breeders have presented the Cotton Genetics Research Award for more than 40 years to a scientist for outstanding basic research in cotton genetics. The Joint Cotton Breeding Committee, comprised of representatives from state experiment stations, USDA, private breeders and the NCC, establishes award criteria.