Beltwide’s Big Hitters
March 4, 2009 I love raw oysters. One block from my house in Memphis is the Half Shell restaurant. It has some of the best raw oysters in the city, and it’s a fun place to get a couple dozen with friends. But when I think raw oysters, the real deal raw oysters, I think New Orleans. To me, New Orleans is the heavyweight when it comes to these briny bivalves, and I ate my fair share while I was at the Beltwide Cotton Conference last month.
As far as heavyweights are concerned, the most influential players in the cotton industry attend the Beltwide each year. You can bet that what they say has relevance in the ever-changing cotton industry. The following quotes were taken from talks given during Beltwide and provide a good snapshot on what these leaders believe regarding issues facing the industry.
Allen Helms
Chairman, National Cotton Council
We have urged Congress to provide much needed emergency disaster assistance to producers who suffered severe financial losses due to hurricanes, drought and upwardly spiraling costs of production due to fuel and input costs. While Congress has been unable to agree on a comprehensive disaster bill in the appropriations process, it did add $15 million in cottonseed disaster funds for declared counties in 2005. Producers in those counties will not have to prove losses for cottonseed assistance for 2005.
In the six field hearings held by the House Agriculture Committee last year, the cotton industry’s testimony:
• Stressed the importance of maintaining current law to its scheduled expiration with the 2007 crop;
• Urged members to base the new Farm Bill on current law;
• Asked that there be no further reductions in payment limits or changes in eligibility rules;
• Emphasized that conservation programs should operate on a voluntary, cost-share basis, as a complement, and not a substitute, to farm programs; and
• Suggested an extension may be necessary to eliminate uncertainty if the WTO negotiations have not made sufficient progress.
The Council also has been actively involved with the WTO Brazilian cotton case. Following the repeal of the Step 2 program in 2006, the government of Brazil formally requested, and was granted, the establishment of a compliance panel to determine if the U.S. has conformed with the earlier WTO ruling.
Brazil is contending that U.S. actions, relative to the programs for Step 2, export credit guarantees, marketing loans and countercyclical payments, are not enough to comply with the original ruling.
We are continuing to work with USTR and USDA in developing a defense.
J. Berrye Worsham
President and CEO, Cotton Inc
Our mission at Cotton Incorporated is to increase the demand for, and profitability of, cotton through research and promotion. We have to take advantage of every opportunity for cotton as well as try to eliminate or minimize obstacles that may limit opportunities for demand building. Sustainability is a little of both – an opportunity and an obstacle.
What is sustainable production? We have to satisfy today’s demand as well as the future’s demand for food and fiber. We must maintain environmental quality and our resource base and it must be economically viable.
In other words, it is what comes closest to the intersection of environment, quality of life and economics. It is a continuum.
The interest in sustainability at the retail, brand and mill level is real – and is not likely to go away. But there are opportunities for cotton. Perhaps the biggest one is framing the discussion to one of cotton vs. chemical synthetic fibers – the biggest competitor to U.S. cotton.
Cotton has been attacked on a number of fronts – environmental, trade, subsidies, etc. The information is distorted and we don’t want the result to be harm to U.S. cotton. If we don’t correct what’s out there, the myths will become fact by default. Many brands and retailers are starting sustainable or environmental programs based on inaccurate information about cotton.
Again, our industry must understand that the world is using more and more fiber – an increase of 3%-4% per year. (Note: in 2014, we will be using four times what we were using 50 years ago.)
Through modern technology, cotton has been able to supply its share with virtually no increase in world land devoted to cotton. All of the increase has been supplied with higher yields.
In simple terms, cotton is a natural and renewable fiber, and the alternative to cotton production is not organic, but chemical fiber production. We are getting this message out.
The organic questions won’t go away. And I want to be clear that we are not anti-organic. If growers can find markets and grow it organically, then that is great. But the reality is that the entire world’s supply of organic cotton is just 0.2% of the world’s production. The entire supply world fit on one medium-sized cargo ship.
Mike Johanns
U.S. Secretary of Agriculture
I’m very pleased to announce today that we will be providing $100 million in funding through the USDA to promote United States agricultural products overseas and improve market access worldwide.
We expect to export a record $77 billion worth of ag products in the coming year. U.S. cotton exports hit a record $4.7 billion last year, and we are anticipating that that number will grow this year to about $5 billion.
And to keep reaching new customers around the world, USDA is providing nearly $13 million this fiscal year to Cotton Council International under the Market Access Program. I scanned pretty quickly the allocations, but I think this is the largest we will be making.
There was a point in time within the last year where many were calling for a straightforward, simple extension of the current Farm Bill. In fact, I went to Lubbock, TX, for a Farm Bill forum, and I’ll never forget person, after person, after person saying, “Extend the current Bill, don’t undot an ‘I,’ don’t uncross a ‘T,’” in terms of the current Farm Bill.
Eighty percent of the U.S. cotton crop goes into the international marketplace. That’s important. You lose that, and you’ve just lost cotton in the United States. You can’t minimize that. So you have to pay attention to that, too.
Then the other thing is — not in cotton so much but in most of the other major program crops — growers are probably are not going to receive a countercyclical payment or a loan deficiency payment. Reason why: Prices are very high. (Growers of other crops are) truly farming for the marketplace, which from the day (the market started up) I can remember farmers saying, “We don’t want to farm for the government, we don’t want to farm for a check in the mailbox; we want to farm for price and profit and farm for the marketplace.”
David Burns
President, Cotton Council International
A small group of producers and industry leaders realized that the only way (to fight synthetic fiber) was to take matters into their own hands and promote cotton directly to the consumers, and that is when Cotton Incorporated got started.
ICAC estimates that the annual additional U.S. off-take because of this promotion is between 10-12 million bales. Just think where we would be on prices today if we did not have that additional off-take. Folks, that is 10% of the world utilization, and that has got to make a difference. Also, just think if U.S. consumer demand for cotton apparel and home furnishings were 11 million bales instead of 23 million bales. Imagine how many U.S. and overseas companies would not be in business if it were not for this demand. There would probably be a lot more pine trees grown in North Carolina, where I am from. The stage has shifted. The U.S. remains a battleground for the war between cotton and synthetics. But the heart and mind of the young and middle class consumers globally are where the real threat and opportunities lie.
For instance, in India five years ago, there were no shopping malls; today there are 600, and in China the growth is even more dramatic. It is amazing.
I came back from my trips to India and China convinced that the underlying consumer promotion of dynamic emerging markets is one of the keys to the future of our industry.
CCI and Cotton Incorporated have shown that consumer demand responds to advertising. We know how to do it. It is expensive, it takes time, but we know how to do. So my message is simple. We need to take the show on the road, promoting Cotton USA but also promoting directly and indirectly the underlying demands for cotton, regardless of its origin. The old adage that a rising tide raises all ships is still true today. It will take a rising tide of consumer demand for cotton globally to keep prices high enough for U.S. producers in our seven segments to remain profitable.
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