With “a tremendous domestic cotton crop” shaping up this year, “if we're going to move this much cotton across retail store shelves, the research and promotion efforts of Cotton Incorporated will be more important than ever,” says Kent Nix, chairman of the Cotton Board.
In administering oversight for Cotton Incorporated activities, he says, the board “must remain dedicated to the objectives of this program” and “the implementation of plans… that will lead to increased demand and profitability for cotton — which is our fundamental goal.”
Cotton Board members, Nix said at the group's annual conference at Seattle, have been analyzing ways to improve their oversight responsibilities, and “it is our intent to provide objective and constructive input related to the program's content without crossing the line or interfering with Cotton Incorporated's program activities. “We're confident that the changes the board has made will lead to a stronger, more clearly defined research and promotion program.
“The reality of world supply and demand fundamentals,” coupled with World Trade Organization (WTO) issues and the elimination of import quotas “have potential for a substantial impact on the cotton industry's future,” he says.
The WTO is “an ongoing story that clouds our crystal balls with mixed developments, some of which are clearly troubling for our industry, and others that give hope for our future export potential,” Nix says.
And the scheduled elimination of remaining import quotas on cotton products Jan. 1, 2005, “holds potential to significantly increase the volume of imported cotton products coming into this country.”
Legal challenges by some importers to their participation in the cotton checkoff program that supports Cotton Incorporated “are prominent in our thinking,” Nix says. “The future shape of this program may be determined by decisions rendered by the courts. If these factors don't carry enough weight themselves, the presidential and congressional elections lie just around the corner.”
The board, Nix says, “applauds Cotton Incorporated for its extremely successful record” in research and promotion programs that have helped producers to improve efficiency and yields and have helped boost market share for cotton products in the face of ever-increasing pressures from man-made fibers.
China is expected to continue to be a net importer of cotton for the foreseeable future, says Berrye Worsham, CI's president and chief executive officer. “All the forecasts indicate that China is going to have to continue to import cotton.”
One of the challenges the U.S. industry faces, he says, is being “more attuned to supplying the kind of cottons these international markets want.”
“This is not a short-term thing — it's an agronomic issue that we're actively involved with, and something that's going to be critical in how much cotton we sell to China.
“The bigger issue for U.S. cotton longer term is whether we can provide the kinds of qualities of cotton the world markets want.”
What really drives U.S. cotton exports, he says, is “the gap between how much cotton is produced outside the United States versus how much is used. We are providing a great array of services to people who are buying U.S. cotton, but we're still in the business of doing whatever we can to increase the demand for cotton around the world, regardless of what kind of cotton it is, because that will ultimately affect U.S. cotton exports.”
The most important tool directly affecting the purchase of U.S. cotton — “what gives it more value than anything else, is the EFS (Engineered Fiber Selection) program,” Worsham says.
The software-based cotton fiber management system enables cotton handlers to make accurate inventory, evaluation, and handling decisions from gin to merchant. Users can profitably apply the unique, natural properties of various types of cotton groups and categories to their growing, ginning, spinning, and processing techniques to produce statistically uniform cotton mixes that are best-suited to the specified end product.
“We put it in our contract for use of the EFS program that it is based on their specifying a higher-than-normal percentage of U.S. cotton,” Worsham says.
Dean Turner, senior vice president of global product marketing for Cotton Incorporated, says, “We're trying to cover a lot of countries. Our first emphasis in setting up overseas offices has always been to enhance the export of U.S. cotton.
“We're looking more at where the decisions are being made, and focusing our efforts in these key sourcing areas.”
China, with massive imports of U.S. cotton this year, “is a major player in terms of exports of cotton products to the United States,” he says, “and we're doing a number of things related to our trade with China.”
This includes an additional staff person in the Shanghai office to focus more on sourcing offices in the region.
Japan remains an important market, Turner says, with investments in operations throughout Asia, “and our activities to influence decision makers in Japan can benefit the demand for U.S. cotton.
“We've been focusing more of our efforts on the trading houses that make the decisions and help supply the world markets for textiles and apparel. We're doing more to provide our fashion and fabric development services to those kinds of people and not so much with the raw cotton spinning mills. That's true whether it's in Japan, Taiwan, Korea, Vietnam, or other places where these trading houses have operations.”
The plan for 2005, Turner says, is to reduce the amount of time CI fashion specialists from the United States spend in smaller overseas markets, with more of that service being handled by the Singapore fashion manager.
“We have our international offices set up so we can react and provide services in a number of ways,” Turner says, with staff at the Cary, N.C., providing additional support.
Because of the importance of the China, “We're planning to increase our technical services, fiber processing consumer information services, and other assistance to that market.”
In the United States, he says, “We're doing a bit of reallocation, continuing an increased emphasis on our services to brands and retailers.” That has paid off, he says, in increased interest in the services provided by CI.
Thus far this year, Turner notes, CI fashion specialists have had 51 fashion meetings with the top 25 importers, with more than 700 attendees. The technical services staff has had nearly 50 meetings.
“The most impressive thing, I think, is that we've had over 1,120 fabric house requests. These are the people with the big pencils, who say, ‘I want you to make this.’ The brands and retailers people are the ones with the ability to make things happen in terms of using U.S. cotton.”