No easy task in market that now prefers non-cotton products Three-of-a-kind has not been a winning hand for American cotton producers. Cotton seasons 1998, 1999 and 2000 have been anything but financially rewarding, partly because of low world prices and faltering demand.
New Cotton Council International Chairman Larry Nelson, an Edmonson, Texas, cotton producer, called the past three seasons "challenging."
"We hope that better days are ahead, but those better days will not happen on their own. We have to help ourselves," Nelson said at the CCI board of directors meeting held in conjunction with the National Cotton Council's recent annual meeting in San Diego, Calif.
One element of that self-help is CCI, the international promotional arm of American cotton producers. CCI has a daunting task because, unlike the United States, where cotton is the preferred textile product, the rest of the world prefers non-cotton products. And, that demand is rapidly growing.
In its annual economic outlook, the NCC's economic services staff said all man-made fiber use soared to 144.8-million bale equivalents in 2000. Cotton was about 90 million bales. Cotton use is rebounding from a decline started in 1998. However, polyester use increased steadily through the market turmoil of that and the subsequent season.
"With 96 percent of the world's population living outside the United States, we have a big challenge in getting cotton fiber and Cotton USA's messages to mills and consumers around the world," said Allen Terhaar, CCI executive director.
However, the message is getting out. World cotton consumption increased by 8 percent in 1999 to almost 92 million bales, said Terhaar, and it is expected to increase to 92.2 million bales for the 2000 crop year.
Restoration of Step 2 set the stage for American cotton's world comeback. Helping also was a revival of economies in many countries. This came in spite of a strong dollar.
U.S. exports of cotton yarn, fabric and finished goods rose 18 percent in 2000.
"New trade legislation for the Caribbean Basin and Sub-Saharan African countries hold the promise of exporting more U.S. cotton yarn and fabric to those countries as a means of combating the influx of Asian product into the United States," Terhaar said. CCI has initiated new programs in the Caribbean Basin and Sub-Sahara to support U.S. yarn and fabric exports to those regions.
CCI promotes U.S. cotton internationally by granting licenses to use the Cotton USA logo on 100 percent cotton products containing at least 50 percent U.S. cotton. They work with U.S. mills, cotton marketers and foreign textile mills to develop eligible products.
Exports of U.S. products to the Caribbean Basin were expected to expand rapidly when the U.S-Caribbean Basin Trade Partnership Act became effective last Oct. 1. It allows apparel made from fabric formed in the United States from U.S. yarn shipped to the Caribbean to be sewn and cut and shipped back to the United States duty-free.
However, several Customs issues are yet to be finalized. Only 11 of the 28 nations eligible to receive preferential treatments for textile and apparel have met Customs requirements.
One of the more contentious issues yet to be resolved is whether otherwise qualified items dyed and finished would be allowed into the United States duty-free. Right now, they are, but it is uncertain whether that will be part of the final rules. The council believes dying and finishing should not exclude products.
Until that and other issues are resolved, it will be difficult for U.S. mills and CBI apparel producers to form business plans for the future. Final rules are expected to be released soon. Once those are known, U.S. raw cotton and cotton product uses are expected to increase.
CCI has taken on a new program for the Import Support Group of the Cotton Board. This brought in an initial commitment of $800,000 to CCI to support U.S. yarn and fabric exports to the CBI and Sub-Saharan Africa.
About 25 percent of the assessments levied by the Cotton Board for the work of Cotton Incorporated is from imported cotton products. Like the state support program, where funds are allocated to support local cotton production search, the new Importers Support Group uses a portion of their Cotton Board assessments to enhance textile sales.
The future looks good for 2001, according to Terhaar. The dollar is weakening and that should make U.S. cotton and cotton products more attractive. World demand is forecast to exceed production for the third straight year, diminishing burdensome stocks even more.
The new administration and its secretary of agriculture, Ann Veneman, an experienced and trade-oriented leader, also offer hope for more export sales and should assure continued federal funding for CCI promotional efforts.
In the midst of this optimism is the reality of continued lack of consumer demand for cotton outside of the United States.
That is not new, but what makes it more ominous now is the slowing of the U.S. economy. "There appears to be few options overseas of countries where consumers will pick up the slack from weakened demand in this country," said Terhaar.
Terhaar pledged that CCI "is looking at every option of how we can work independently and in collaboration with others to address the lack of underlying demand for cotton in overseas markets."
One of those partners is Cotton Incorporated, which not only works closely with CCI, but has also increased its financial support of CCI to $2 million annually.
"One of our key partners and largest financial supporters is Cotton Incorporated," said Terhaar. "CCI and Cotton Incorporated carry out a number of joint activities and that number is increasing year-after-year," said Terhaar.
While CCI's job is a tough one, success is showing. One measure of that is that the Cotton USA logo is gaining in recognition. It reached a level of 43 percent among consumers in a dozen key countries and as high as 86 percent in some countries. It is to international marketing of products from U.S. cotton as the Cotton Seal is for products in this country.
CCI's program is directed by NCC members representing all segments of the cotton industry. In San Diego, new officers were elected. They included Nelson and Hans G. Kretschmer, a cooperative official from El Paso, Texas, as CCI's president.
Other CCI officers elected for 2001 are William B. Dunavant III, merchant, Memphis, Tenn., first vice president; Robert A. Carson Jr., producer, Marks, Miss., second vice president; and David Stanford, cooperative official, Lubbock, Texas, treasurer.
CCI elected three new directors for 2001: Robert W. Norris, a cooperative official from Bakersfield, Calif.; Larry R. McClendon, a producer from Marianna, Ark.; and N. Wiley Murphy, a producer from Tucson, Ariz.