Cotton Incorporated's 2003 budget for $62 million was approved during the recent Cotton Board Annual Meeting in Santa Fe, N.M.
“Although the industry continues to face stagnant yields, increased costs, along with other regional problems, U.S. cotton producers and importers can be assured that components of Cotton Incorporated's 2003 budget will continue to create new opportunities for U.S. Upland cotton while turning economic downs into stepping stones,” remarked John Pucheu Jr., Cotton Board chairman and producer from Tranquility, Calif. Pucheu also noted Cotton Incorporated's valuable partnerships with Cotton Council International continue to create cotton opportunities worldwide through international summits and trade missions to the Caribbean Basin and Sub-Saharan Africa.
According to Pucheu, the Cotton Board's continued long-term analysis of future industry trends reinforces the Cotton Board's determination to blend foresight into guidance by forming axes of information for the future.
Dr. Keith Collins, United States Department of Agriculture (USDA) chief economist, expressed his support of the Cotton Board in his remarks during the board's general session. “From what I've seen the past two days, the Cotton Board has never functioned better than this,” said Collins, “The leadership is as strong as it has ever been.”
Fourth largest crop in history
Collins noted although USDA's 2002/03 U.S. cotton production estimates of 18.4 million bales may be down 9 percent from last season, figures for this crop year make it the fourth highest in history. “There is a tremendous base domestically and abroad for your cotton,” Collins told attendees. “The world wants your cotton, so your job is simple. The key is to keep it this way.”
Cotton Incorporated president and chief executive officer, J. Berrye Worsham, concluded the Cotton Board's meeting with a summary of how Cotton Incorporated and the Cotton Research and Promotion Program can strive to improve cotton's demand in a low price environment. “We must understand factors that drive the price of cotton,” explained Worsham. According to Worsham, four major determinants that affect cotton's price are world supply and demand, the “China” factor, which country holds cotton's surplus, and competitive fiber prices.
“Cotton's price is driven by world factors,” noted Worsham, “Since USDA's August 2002 estimates indicate a tighter margin between world surplus and use, cotton prices have risen.” Another large contributor to cotton's price is China. “We never know the amount of cotton in Chinese inventory. We can only gauge this amount by the imports and exports of raw cotton into the country,” explained Worsham. He also reminded participants that China is expected to import cotton this year. Although Worsham considers where cotton inventories reside as secondary, the United States currently holds a greater percentage of world cotton inventories. “The United States has the best cotton inventory system; therefore, inventory estimates tend to be better if the United States holds the majority of supply,” stated Worsham.
Continued synthetic competition
Lastly, Worsham focused on cotton's future in new markets and continuing competition with synthetic fibers. Since 1990, 7.7 million bales of cotton demand have been created in the United States. According to Worsham, there has not been an increase in cotton demand in the rest of the world during the same time period. “The United States market is the sole driver of demand of cotton during the past decade. Cotton's market share is up six percentage points in the United States since 1990. During the same years, cotton's market share in the rest of the world has dropped 11 percentage points,” said Worsham.
Cotton Incorporated is planning to focus on major international markets during the next year. “Consumer markets in the rest of the world account for three times the size of the U.S. consumer market. Expanding these markets would be extremely beneficial for U.S. cotton,” concluded Worsham.
The Cotton Board elected the following as 2003 officers: John E. Pucheu Jr., Tranquility, Calif., chairman of the board; Kent D. Nix, Lamesa, Texas, Vice Chairman; Nancy A. Marino, Chicago, Ill., secretary; V. Larkin Martin, Courtland, Ala., treasurer; and Mike Sturdivant Jr., Itta Bena, Miss., assistant treasurer.