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Cotton Board approves CI budget for $62.75 million

The Cotton Board approved Cotton Incorporated's 2004 budget for $62.75 million dollars during its annual meeting in New Orleans.

While this figure is $750,000 higher than their 2003 budget, it represents a reduction of $3.8 million when adjusted to inflation compared to Cotton Incorporated's 1999 budget, Cotton Board leaders said.

“Cotton Incorporated is working to ensure cotton remains the No. 1 fiber both domestically and abroad,” said John Pucheu, Jr., Cotton Board chairman and producer from Tranquility, Calif., during remarks at the board's annual meeting Sept. 3 and 4.

Pucheu also listed some of the findings of a Cotton Board-initiated long-range industry study.

“Our industry learned that the availability of USDA's high volume instrument data on the U.S. crop, coupled with Cotton Incorporated's family of Engineered Fiber Selection computer software to manipulate that data and manufacture cotton yarn more efficiently, are two benefits available only to U.S. cotton.”

Carol Skelly, fibers analyst, USDA's World Agricultural Outlook Board, provided a brief cotton economic outlook and update on current issues in her remarks during the Board's general session.

“USDA is currently forecasting 2003/04 domestic mill use at 6.6 million bales, down nearly 10 percent from last season and 42 percent from its peak level six years ago,” said Skelly.

“Our forecast for U.S. exports in 2003/04 is 11.8 million bales, just below the record now estimated for 2002/03 of 11.9 million. Lower foreign cotton supplies and a higher consumption are likely to sustain exports at high levels for another year.”

Additionally, Skelly provided a brief overview of the complaint of “serious prejudice” Brazil has brought against the U.S. cotton program under the Agreement on Subsidies and Countervailing Measures, which applies to subsidies generally and is not limited to agriculture.

“Brazil has included the following programs for the 1999-2002 period: the CCC programs, GSM export credit, and crop insurance. If the World Trade Organization (WTO) panel finds that the U.S. has caused Brazil serious prejudice, then the U.S. will be required to remove the subsidy or take some type of mitigating or compensatory action,” noted Skelly.

Since a case of this kind has never been brought against agricultural subsidies, there are no precedents to follow, she said.

Peter McGrath, president J.C. Penney Purchasing Corp. and Cotton Board member, discussed the state of U.S. retail, focusing on dominant retail formats, e-commerce, deflation and trade issues.

“Shopping is becoming more seamless and integrated into our lives,” said McGrath, “Americans, on average, have doubled the amount of stores they visit on each shopping trip to almost three per outing.”

Consumers are more price-conscious than ever before — evidenced by the continued increase of shopping at dollar stores and super centers. “In 2002, 25 percent of primary households visited a super center weekly — two out of five households visit super centers monthly,” he said.

According to McGrath, e-commerce allows retailers to better communicate with customers by testing merchandise strategies and educating consumers on product features and benefits.

He noted that deflation is quickly becoming a global phenomenon. Since apparel prices continue to decline, the consumer mindset has changed to “wait till the next sale,” therefore, retailers continue to use promotions to drive sales, causing consumers to expect sales. Currently, only 20 percent of department sales are sold at full retail.

During his comments, Cotton Incorporated president and chief executive officer J. Berrye Worsham noted the company had adjusted its 2004 plans to take advantage and capitalize on the changing textile industry. One area Cotton Incorporated plans increase focus in 2004 is its EFS-licensed software, in part to the valuable data the software provides in HVI.

“We are appreciative of the Cotton Board's continued confidence in our programs and our staff,” said Worsham. “We look forward to stretching the economic reach of this budget to impact as many opportunities as we can to expand the demand for and profitability of cotton.”

Woody Anderson, National Cotton Council vice chairman and Colorado City, Texas producer, gave an update on National Cotton Council activities and farm policy developments.

The Memphis-based Cotton Board is the administration and fiduciary arm of the Cotton Research and Promotion Program.

e-mail: [email protected]

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