Cotton leaders updated on key industry issuesCotton leaders updated on key industry issues
• NCC Chairman Chuck Coley told attendees the industry’s foremost priorities this year have focused on the farm bill, the World Trade Organization (WTO) Brazil case, agricultural appropriations, international contract defaults, and most recently, the Peruvian countervailing duty investigation.
August 27, 2012
NCC officers, directors and advisors, along with other industry leaders attending the NCC's Mid-Year Board meeting in Memphis, were updated on key issues and upcoming challenges and opportunities facing the industry.
NCC Chairman Chuck Coley told attendees the industry’s foremost priorities this year have focused on the farm bill, the World Trade Organization (WTO) Brazil case, agricultural appropriations, international contract defaults, and most recently, the Peruvian countervailing duty investigation.
Regarding the farm bill, he said his and other industry leaders’ testimony at Senate and House hearings provided the NCC with an opportunity “to advocate inclusion of STAX as an effective risk management program and one that demonstrates our industry’s commitment to permanently resolving the WTO Brazil case.”
Among other notable activities Coley has been involved in were: joining NCC Vice-Chairman Jimmy Dodson in discussions between U.S. cotton industry leaders and high ranking government officials representing western and central African countries on building a foundation for enhanced communication and establishing the necessary groundwork for cooperation on issues of mutual interest; NCC industry leaders/senior staff, Cotton Council International (CCI) and Cotton Incorporated meetings with Brazil's national cotton producer organization to discuss risk management, cotton's sustainability, international promotion issues and other issues of mutual concern and to search for avenues of greater cooperation; and joining American Cotton Shippers Assn. (ACSA) and AMCOT representatives in NCC-arranged meetings with USDA, USTR and the State Department to convey the US cotton industry’s serious concerns about export sales that are either in default or at risk of default.
Coley also reviewed the NCC’s work on the countervailing duty case in Peru; Performance and Standards Task Force Chairman Bobby Greene’s leading of an industry group to Washington to meet with USDA officials to seek their cooperation on several of the industry’s flow initiatives; and a US cotton industry delegation to China, led by American Cotton Producers Chairman Clyde Sharp, conveying the industry’s continued commitment to quality and timely delivery.
Sharp also addressed the Mid-Year Meeting telling attendees that while the ACP has its frustrations regarding the farm bill, “producer leadership continues to concur that the Council is proceeding in the correct manner with our policy and our initiatives.
“It is our hope that Congress will ultimately support our policy positions and that the U.S. will convince Brazil that this is a satisfactory resolution to the cotton portion of the case. We appreciate the efforts of Chairman Coley and Vice-Chairman Dodson and the Council staff in these efforts.”
Darci Vetter, Deputy Under Secretary for Farm and Foreign Agricultural Services at USDA, provided the Board with an update on current trade policy issues, including a detailed update on the Administration’s efforts to resolve the ongoing WTO dispute with Brazil.
STAX a starting point
Under Secretary Vetter indicated that the Stacked Income Protection Plan, known as STAX, included in the Senate legislation is a starting point for negotiating a resolution to the upland cotton portion of the dispute.
She acknowledged the challenging environment surrounding a final resolution of the case and encouraged continued dialogue with the U.S. cotton industry as the process moves forward.
John Maguire, the NCC's senior vice-president, Washington Operations, updated the group on a number of issues, including the federal budget proposals; agricultural appropriations; the farm bill process, schedule and options; and contract defaults — as well as tax, trade and the environment.
Gary Adams, the NCC's vice-president, Economics & Policy Analysis, told attendees in his economic update that China’s stocks policy is a key to future price direction.
Rebuilding China’s reserves has provided support to prices but there are concerns about long-term impacts on cotton demand.
Cotton still has the challenge of competing with $0.75 polyester on the demand side, while trying to hold acres in the face of high grain and oilseed prices. Price volatility remains a concern to the industry.
Regarding U.S. production, Adams noted USDA’s recent 2012 production estimate of 17.7 million bales versus 15.6 million bales in 2011. He said although drought conditions persist in much of the Southwest, production is expected to bounce back from the low level of 2011.
Prospects in other cotton-producing regions are reasonably favorable, which is providing more production potential for the US crop than the 2011 crop, even with this season’s reduced plantings.
Ricky Clarke, a Cordova, Tenn., merchant and current ACSA chairman, reported on the difficult circumstances facing the industry given the widespread contract defaults by international mills.
NCC President/CEO Mark Lange reported on the Peruvian countervailing duty case against U.S. upland and said the NCC is taking aggressive steps in pursuit of a successful outcome.
He said the NCC has employed a leading law firm in Lima, Peru, that is now representing the NCC as a party of interest in the proceedings.
CCI President Jimmy Webb reported on multiple CCI COTTON USA success stories, ranging from the “Naturally Color Your Life" promotion in China to the annual “Cotton Days” in Korea, Japan, Taiwan and Thailand.
Among upcoming activities are: the CCI/Cotton Incorporated-led US cotton industry executive delegation to Turkey (the U.S.’ second largest export market) and to Dubai for meetings with Pakistan customers; meetings with leading U.S. cotton importers in Bangladesh, China and Korea to discuss next year’s supply chain marketing programs; helping U.S. yarn and fabric manufacturers on convincing Chinese importers to use U.S. yarn; and preparing for the biannual Sourcing USA Summit in Rancho Palos Verdes, Calif., a flagship event that brings together the U.S.’ best customers with U.S. merchants and coops.
Webb said he was pleased to see CCI and Cotton Incorporated involved in organizations like the International Forum for Cotton Promotion, the Discover Natural Fibers Initiative and other global promotion efforts but “it will take a lot of work and a lot of continued investment in demand building to bring mill and end-use of cotton back … but it also means other countries and industries, if they are serious about the future of the cotton industries in their countries, will need to join in those investments in demand building as well.
“The U.S. can lead and can show by example, but we cannot do it all by ourselves.”
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