Funding Cotton Incorporated Is Money Well Spent

Each year when cotton producers are charged their per bale assessment to fund research and promotion at Cotton Incorporated, they often ask the same question: “What is this money doing for me?”

Simply put, the money creates a global market for cotton. Using a push-pull marketing strategy, Cotton Incorporated creates global demand for cotton throughout the supply chain – from spinners and textile makers to retail chains and consumers. Through research and promotion, Cotton Incorporated emphasizes the benefits of cotton in the minds of consumers while developing new technologies that make it more attractive to garment manufacturers and retail stores. The result is a global demand for more raw cotton fiber, building a market for U.S. cotton.

On January 21-23, Cotton Incorporated invited producers from across the Cotton Belt to a tour of their headquarters in Cary, NC, to learn exactly how that market is created. Sponsored by Delta & Pine Land Company, Bayer CropScience, Syngenta and Monsanto, the producer tour is one of many outreach programs that Cotton Incorporated uses to create awareness of its activities. During the three day event, producers from the Southeast, Southwest and Western U.S. met with Cotton Incorporated staff, toured the headquarters and visited a nearby spinning mill – seeing first hand what happens to cotton after it leaves the field and gin.

Explaining Its Mission

Because Cotton Incorporated is funded by U.S. producers, for U.S. producers, President and CEO Berrye Worsham gave a clear picture of the company’s number one objective – to improve the overall situation for the U.S. grower.

Cotton Incorporated
Quick Facts

Established: 1970
Annual Budget (2007): $78 million (Two-thirds of the budget is funded by producers’ per bale assessment. One-third is funded by an assessment on cotton imports.)
Expenditures: Marketing and Promotions, 67%; Research, 33%
Employees: 170-175
Offices: Headquarters in Cary, NC; Los Angeles, New York, Singapore, Shanghai, Mexico City and Osaka, Japan
Website: www.cottoninc.com

“Our mission is pretty straightforward. It is to increase the demand for, and profitability of, cotton through research and promotion,” he said, which is different from other cotton organizations. “Many of you might ask: what is the difference between Cotton Incorporated and the National Cotton Council? Cotton Incorporated is strictly research and promotion; the NCC is your policy arm of the cotton industry, involved in lobbying, legislation and other policy regulatory issues.”

Research and promotion is the two-pronged attack that Cotton Incorporated uses to expand the global reach of cotton. Through their efforts, cotton becomes the preferred fiber of spinners, the cutting-edge fabric of garment makers and the clothing of choice for consumers around the globe.

“Our philosophy is one where we are trying to influence both ends of the pipeline. We focus on the consumer end so that they will want cotton products,” Worsham said. “At the same time on the research level, we are trying to improve the products of cotton, trying to have better fiber. That is the push side of our operation, in what we think of as a push/pull strategy where we are working both ends of the cotton pipeline.”

Making Cotton More Desirable

Influencing all aspects of the cotton industry is a big assignment. Cotton Incorporated’s research provides information to a wide range of people, from the 500-acres farmer in the Mississippi Delta to multi-national companies like Levi Strauss & Co. They also develop in-person promotional events and launch ad campaigns throughout national media. Much of there efforts are targeted to specific groups, but some aspects such as product development and implementation affect people daily. Cotton Incorporated’s research provides consumers with value-added finishes that make cotton “the fabric of their lives,” and Donald Bailey, vice president for product development and implementation, gave examples of fabric finishes that make cotton more adaptable for everyday life.

“Over the years, Cotton Incorporated has been a leading developer of wrinkle-resistant finishing technology for cotton. But one problem with making cotton wrinkle resistant is that you loose strength, so we developed a product called Tough Cotton that allows us to retain that strength,” Bailey said. “Another major development is Storm Denim, or water-proof denim. There are a lot of applications where you wear denim and you don’t want to get wet – if you are walking to class, riding a motorcycle, or walking in the field early in the morning when there is a lot of dew on the field. You want a product that resists water but still breathes.”

Denim and wrinkle-resistant wear are definitely cotton’s strong suits, but Bailey said his department is developing products that will help cotton in other clothing segments as well. In athletic wear, a product called Wicking Windows competes with synthetic fibers that are sometimes touted as the only solution for moisture management.

“Three or four years ago, we started working on moisture management for cotton. We developed a process, and have a patent on it called Wicking Windows, and that was adopted by Champion products a couple years ago. What is unique about this finish is it has reduced absorbency, although it still has plenty, but the sweat and perspiration can move from the inside of the fabric next to the skin, to the outside where it can evaporate. So this product allows the cotton to dry very quickly. If you exercise, this fabric will move that moisture to the outside where it will dry and keep you cool.”

Although development is essential to the process, Bailey said Cotton Incorporated must partner with companies who will utilize its innovations and deliver products to consumers. Awareness and promotion of new technologies is crucial when building demand.

“Implementation is extremely important. If you develop something new and nobody knows that you have done that, if it isn’t put out into the marketplace where people can benefit from it, then you are wasting your time,” Bailey said. “So we don’t do R&D just for the sake of it, we do it for a reason.”

Over the Counter, To the Field

While producers learned more about Cotton Incorporated’s commercial and market efforts, they also found out what the organization was doing to help their efforts in the field. With an agriculture research budget of more than $10 million, Cotton Incorporated enlists the help of universities, extension specialists and private companies to improve two things close to producers’ hearts – optimum production and improved profitability. But Dr. Roy Cantrell, vice president of agricultural research, said higher production numbers were not his only concern.

“We try to improve knowledge, techniques and technologies and leverage producers’ resources to optimize cotton production and improve profitability,” Cantrell said. “But we have to be careful if we say we just want higher and higher yields, as we have found out this year that it can be very costly. So we do want higher yields, we do want better quality, but it has to be optimized so that the dollars you spend best optimize production and profitability.”

One way to increase profitability is to lower input costs, and Cotton Incorporated strives to find ways to do that, in addition to maximizing the benefits of inputs used. Cotton production is often weighed by a cost/benefit analysis, and research focuses on reducing costs without impacting benefits.

“I see no limit to the ways that we can reduce your input costs, whether it is fuel use, fertilizer or irrigation; looking into the future, we have to have research in place in all sectors to reduce input costs. At the same time, Cotton Incorporated is well positioned to add value to that cotton,” Cantrell said, adding that Cotton Incorporated provides the tools to help manage those decisions.

“Much of our research focuses on risk. How to you manage variability and yield and quality and to that end, we provide decision-making resources to help you with some of the complicated decisions that you have to make.”

Making the Rounds

After hearing from key speakers within the organization, producers visited the Cotton Incorporated headquarters to see first-hand where their investments were spent. The tour gave producers a chance to see the research laboratories where many of these innovations are created. Facilities included grading equipment, spinning machines, weaving and knitting machines, as well as a host of dying and finishing equipment.

At the end of the tour, producers met with Cotton International directors, field representatives and other organization personnel for a question-and-answer session and recap. As the event concluded, it was clear to all the tour participants what their per-bale assessment pays for – it helps to fuel demand for cotton, from both ends of the supply chain around the world.

“We are trying to influence the decision makers to use more cotton, and whenever possible, to use U.S. cotton. I want to make this point, that anytime you can create a demand for an additional bale of cotton anywhere in the world, that is ultimately going to be a benefit to U.S. cotton,” Worsham said. “ If you can create an additional 5 million bale increase demand in China, they are going to have to get that cotton from somewhere, and chances are that will be the U.S. Our philosophy is that our biggest competitor for U.S. cotton is not someone else’s cotton, but it is in fact synthetic fibers, and most likely polyester.”

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