Why should cotton growers care about Cotton Incorporated?

Why should cotton growers care about Cotton Incorporated?

A cynical eye would see it as just another dog-and-pony show. But as for the Cotton Incorporated multi-region producer tour held recently, the dogs did cool tricks and the ponies were thoroughbreds.

Each year about this time, Cotton Incorporated invites cotton producers from across the country to tour its headquarters located in Cary, N.C. It’s a pretty big deal with more than 100 folks from all cotton-growing regions flying into or driving to the area for a long weekend. Between some wine and dine, the event’s meat is an organized tour of the headquarters, which is its research and development hub.

Some quick history if you didn’t know: In 1960, cotton apparel and home fabrics accounted for 78 percent of all textile products sold. Over the next decade, that market share was cut in half by synthetic fibers, still cotton’s most formidable competitor. At the behest of cotton growers, Congress passed the Cotton Research and Promotion Act of 1966, establishing the assessment check-off and setting up money and plans for cotton to regain its place in the market. From this, Cotton Incorporated was created in 1970.

Cotton Incorporated is still funded by check-off dollars assessed on each bale of cotton marketed in the U.S. or the equivalent imported into the country. The assessment is $1 plus .5 percent of a bale’s value. Its annual budget fluctuates, depending on how much cotton is produced and sold each year. The budget this year is $80 million.

Why should U.S. cotton growers care about Cotton Incorporated or what it does? Well, pretty much half of its annual budget comes from cotton farmers’ pockets or is taken off the top at point of bale sale. That’s money, theoretically, that farmers could spend on something else.

Most farmers on the tour were impressed with the facility and folks working it, enough to ask many questions and to request more details on on-going projects, of which there are hundreds ranging from on-farm production, fiber processing, dyeing and finishing, product development and testing, and market analysis and advertising. Cotton Incorporated will spend $22 million alone on marketing and advertising cotton in the coming year. You’ve seen the logo: the word “cotton” written in a lower-case cursive font crowned by a fluffy cotton boll.

Is $2-cotton a good thing?

Did everybody on the tour think the Cotton Incorporated headquarters was the best thing since $2-a-pound cotton? No, a small handful had less-than-soft things to say about how the check-off money was used and if it was really necessary. And, hey, they had the right to ask questions and express their opinions. That’s one reason why Cotton Inc. opens its doors to such tours. But to go back to my $2-a-pound analogy above, there’s a Catch 22 there.

Though $2 cotton is great in the short term for growers who can take advantage of it, like some did in 2010, $2-cotton also makes making things from it more expensive. In most years, the price difference between polyester and cotton is about 5 to 15 cents per pound. In 2010, when cotton prices spiked, polyester was $1 cheaper to buy, and cotton paid in the long term by losing out on market share as brands and retailers opted for more polyester-made things or blends with more polyester.

A decade ago, cotton had about 40 percent of the total world fiber consumption. That trend stayed steady for several years but dropped to 33 percent to 34 percent in 2011. Cotton is still trying to gain back market share from that price spike.

But the fiber competition is more than just price driven. Berrye Worsham, president and CEO of Cotton Incorporated, explained to the tour that there has been a recent 2.6 percentage points market share loss by cotton to synthetic fibers that can’t be explained by simple pricing differences. With about 200 million bales of fiber around the world, that loss equates to about five million bales worth of cotton. Or, in other words, it triggers about a 7.5 percent reduction in planting, about a 10 percent loss in exports, and about a 14 percent loss in prices to farmers.

There’s little doubt cotton is superior in many ways to man-made fiber, though man-made fiber does have its useful uses. And all of us use or have around us at all times something made from man-made fibers. You can’t escape 'em.

So to make a  commodity like cotton sustainable and economically feasible for growers, and at the same time making that commodity appealing and easily available to consumers through value-added products down the supply chain, is a major trick that requires dedicated plans, technology and the people to even come close to pulling it off on a regular basis.

Cotton Incorporated plays a major part in the industry to help U.S. cotton pull off that trick.

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