Cooperation Reinforced Between U.S., African Cotton Industries

WASHINGTON, DC – Discussions held here this week between U.S. cotton industry leaders and high ranking government officials representing West and Central African countries will build a foundation for enhanced communication and establish the necessary groundwork for cooperation on issues of mutual interest.

The meeting was a continuation of the National Cotton Council's (NCC) cooperative efforts, initiated in early 2004, that are engaging in outreach activities with the cotton producing countries of West and Central Africa to facilitate communication and a deeper understanding on matters of mutual interest.

"I know there are areas where you disagree with our farm policy, but I sincerely believe we have many areas of common interest," NCC Chairman Chuck Coley told a special delegation of West and Central African ministers, ambassadors and distinguished officials at a NCC-hosted special event on June 19. The officials represented Benin, Burkina Faso and Chad.

"I think we agree that promoting the increased consumption of cotton by the world's consumers is our top priority," said Coley, a Georgia cotton producer and ginner. He said that U.S. cotton farmers have contributed substantial financial support to promotion programs designed "to ensure that cotton is competitive in all end use markets and is the first choice of consumers." He pointed to the extensive research and promotion program supported by U.S. cotton producers since 1960, including the consumer promotion program in the U.S. known as "The Fabric of Your Life," which has been documented as having successfully maintained and enhanced consumption of cotton and cotton products in the United States. Producer check-off dollars also have been used to conduct highly successful generic cotton promotion programs throughout the world.

Coley said the industry is proud of the outreach program initiated by the U.S. industry that served as the predecessor and basis for the West African Cotton Improvement Program (WACIP).

"In recent months, we have strongly encouraged the U.S. government to provide funding so WACIP could continue," Coley said. "Now we want to work with you and your farmers to identify ways to improve the program to ensure it yields the maximum possible benefits for your farmers and industries. We need feedback to know which activities have generated the best results and what programs should be initiated in the future."

Coley said the NCC supports the extension of duty-free, quota-free access to U.S. markets for raw upland cotton produced in the countries designated as least developed by the United Nations.

"We support the commitment made by U.S. officials last year at the WTO ministerial," he stated.  Coley said the NCC has conveyed its support for prompt enactment of legislation to extend the eligibility of products containing third-party fabrics before it expires later this year recognizing its importance to employment in Africa. He also said the NCC shares concerns that extending duty-free, quota-free access to textile products from Vietnam and Bangladesh could seriously erode the benefits of AGOA for the African countries.

The West African contingent also heard a report from Dr. Gary Adams, the NCC's vice president, Economics & Policy Analysis, regarding the 2012 farm bill and the cotton provisions that the NCC has proposed for inclusion in that legislation. Adams explained that the proposal, if enacted, will result in significant reform and a deep reduction in budget outlays of as much as 50 percent when compared to historical levels.
"We believe U.S. production of cotton has responded to markets and not to programs, and that the decisions our farmers make in the future will continue to be market driven under the new policy," Coley said.

Coley also conveyed the NCC's concerns regarding market disrupting and distorting policies recently implemented by several countries, particularly the adverse impacts of the ban on cotton exports imposed by India in 2010 and the subsequent ban temporarily implemented earlier this year.

"While the initial result was to drive up prices, which some may have welcomed, the results were ultimately devastating," Coley said. "Mills reduced purchases in response to the spike in prices caused by the ban. Anytime we lose consumption it is hard to regain. In some cases, mills were bankrupted and defaulted on contracts. I believe we have a mutual interest in strongly objecting to market disruptive actions, including export bans."

Coley told the group the NCC also is concerned by China's introduction of a very generous domestic support program that guarantees China's cotton farmers prices well above world prices.

"China is an important market for all of us, but if they provide an artificial incentive to their growers to produce cotton, regardless of prevailing market prices, the cotton growers in West and Central Africa and the U.S. will be seriously impacted," Coley said. "We also are concerned with the way China is strategically limiting market access and the build-up of substantial reserves which account for a substantial percentage of the world's cotton stocks and allow China to influence world prices."

Coley said the NCC is addressing three core issues -- market access, export subsidies and domestic support – about which the West Africans are concerned.

"We eliminated an export subsidy and our export credit programs are being substantially modified," he stated. "We have supported enhanced market access by supporting duty-free, quota-free access for your fiber and by the extension of the important textile market access provisions in AGOA. We also have addressed your concern about our domestic supports by proposing significant reforms to the U.S. cotton program for inclusion in the new farm law."

Coley emphasized that U.S. and West African growers have many issues in common.

"We look forward to engaging in a dialogue with your industry representatives and we will look forward to your responses about how WACIP can be improved," he said. "Your producers will benefit when yields are enhanced, when they receive a larger share of the world price and when there is true competition for their business. We believe enhanced communications, as well as programs like WACIP and others, can advance those objectives."