PCG Annual Meeting Honors Past;
Provides Look At Cotton'sPresent and Future

Friday, April 14, 2006                                 By Shawn Wade

      The 2006 PlainsCotton Growers Annual Meeting was the setting for a healthy dose of celebrationas the 50 year-old organization honored its founders and the men who haveprovided pivotal leadership to the voluntary organization throughout itshistory.

      In addition toits 50th Anniversary activities, PCG stayed focused on the importantissues at hand with informative reports on the current World Trade Organizationnegotiation process, pending legislative and regulatory issues and marketbuilding activities.

NCC Counsel OutlinesIndustry Challenges

      Leading off themeeting was National Cotton Council General Counsel William A. (Bill) Gillon.Gillon, who has been a regular participant in world trade negotiations for overtwo decades, brought the PCG membership up to date on the status of the currentDoha agricultural negotiations process.

      In his remarksGillon reviewed the challenges that negotiators must overcome if they hope tohave the slightest chance of completing an agreement within the significanttime constraints created by the expiration of U.S. "Fast-Track" negotiatingauthority in June of 2007.

      Gillon noted thatin order to have any chance to be considered before "Fast-Track" rules expire,a completed Doha agreement needs to be ready by the end of December 2006.

      "They [WTOmembers] must make many difficult political decisions in April and May and thencomplete a significant amount of technical work in a short period of time inorder to reach their December goal," said Gillon.

      In describingsome of the hurdles that exist, Gillon noted that the U.S. put forth a veryaggressive proposal in October 2005 that would take U.S. agriculture to thelimit of its flexibility. He noted that if Doha negotiators continue to singleout cotton and reach other unpopular compromises it is likely to beginweakening critical U.S. support.

      Adding to thevolatile mix of issues is the fact that if a Doha agreement is completed intime, it would be debated in the U.S. Congress alongside the 2007 Farm Billduring the 2007 calendar year.

      Among theoutstanding issues Gillon highlighted were market access, export creditguarantees, and cotton. Outside of the agricultural topics, he noted thatseveral other issues are creating equally difficult obstacles. He touched onproblems in textile negotiations, non-agricultural market access, and services.

      Gillon describedinternational reaction to the aggressive U.S proposal of last October in termsthat would generally be considered less than flattering.

      He explained thatthe European Union is already attempting to categorize much of the proposal asfar-fetched to have it labeled an outlier proposal.

      Developingcountries on the other hand are generally calling for even greater cuts to U.S.programs and working to gain for themselves additional exemptions fromliberalized market access rules.

      Gillon noted thatone of the most controversial aspects of the Doha negotiations is the continuedcall for inequitable treatment of cotton. He explained that the issue iscreating such a distraction that U.S. negotiators, worried that it couldsignificantly hamper progress in other areas, have said they will not conduct anynegotiations on the cotton issue until the broader agriculture agreement isfinalized.

      Multiplying theproblem according to Gillon is that the WTO is continually failing to addressdisparities within the developing world and is rapidly moving toward policies,inappropriately pushed by numerous non-governmental organizations, which pitthe developed world against developing countries. He said the cotton issue is aprime example of a group of single-issue countries derailing the process andthe WTO as a whole doing nothing to address the underlying economic andpolitical realities that are the main cause of their problems.

      He noted thatstudies by the International Monetary Fund, Texas Tech, and the UN's Food andAgriculture Organization that show the complete elimination of all U.S. cottonprograms, which is the ultimate goal of many pushing for differential treatmentof cotton to assist African cotton producers, would have little or no impact onthe direction of the world fiber market and impact prices less that 3 percent,about one and half cents at today's price levels.

      Despite the manynegatives that surround the current WTO negotiations Gillon says U.S. cottonneeds to remember that the WTO and the environment in which international tradeis conducted is important, especially to the U.S. cotton producer that is nowselling two-thirds of his cotton to export customers.

      Completion of aDoha agreement is far from certain given the obstacles that face negotiatorsand even if a final agreement is reached, the inclusion of controversialelements like differential treatment for U.S. cotton, inadequate protectionagainst legal challenges and negligible market access gains means its paththrough Congress could be anything but easy.

      Gillon concludedsaying the U.S. cottonprogram would continue to face significant challenges through domestic budgetconstraints, payment limitation debates, and from other countries competingwith U.S. cotton exports in world markets. "The [U.S. cotton] industry is moredependent on world markets than ever before," said Gillon, "and it must eitherfind ways to avoid international challenges or it will be forced to react tothem when they occur."

Cotton Inc. HeadHighlights Research/Promotion Efforts

      CottonIncorporated President and Chief Executive Officer J. Berrye Worsham submitteda diverse and information packed report on the activities being conducted onbehalf of the U.S. cotton producers.

      Worsham spent thefirst portion of his report discussing Cotton Incorporated's strategy foreffecting positive change that increases demand for U.S. cotton. He noted thatwithin the cotton industry CI staff has identified a pipeline of influence thatcan be dissected into three key components: Fiber, Product and Promotion.

      He noted thatproducers anchor the Fiber component of the pipeline and that agriculturalresearch, fiber quality research and fiber management research are key parts ofthe Cotton Incorporated program that assist growers in producing their crop andin identifying quality and management practices to enhance the value of thecrops they produce.

      Worsham noted thefocus of CI research on the development of new tools for cotton producers tomanage their operations and the creation of new cotton germplasm with enhancedfiber qualities and disease and insect resistance traits.

      Worsham describedthe Product component of the pipeline as focused on the global product supplychain and includes textile research, international marketing efforts, fashionmarketing and participation in key textile trade events highlighting thebenefits of U.S. cotton and the services and tools available through CottonIncorporated they can use to improve their business.

      Worsham thendiscussed the promotion component of the Cotton Incorporated mission explainingthat it was the most visible of all their activities. He noted that the Seal ofCotton is still one of the most recognized advertising trademarks ever createdand that the CI promotion strategy includes television, print and internetadvertising, retail marketing, international promotion and a new activity-basedprogram called "experiential" marketing that was conducted on college campusesacross the nation in 2005 – including Texas Tech.

      Worsham concludedhis report by highlighting a new program for Cotton Incorporated designed tohelp set the record straight about conventionally grown cotton and off-setefforts to push an often-misleading environmental agenda through retailoutlets.

      He noted that theCotton Incorporated educational effort doesn't seek to pit conventionalproduction against organically grown products in any way and that consumersshould be allowed to make an informed judgment on the type of product theypurchase based on facts and not inflated claims often sent out by environmentalgroups.

      As an example hepointed out a recent claim by a large retailer that they could help benefit theenvironment by stocking organically grown cotton products. Using figuresprovided them by the environmental group Organic Exchange, the retailerreported that cotton used in the 190,000 units of organic products they soldover a ten week period in 290 stores would have utilized more that 500,000pounds of pesticides if grown conventionally.

      Putting theretailers claim in perspective Worsham said that when they did the math theretailer and the Organic Exchange had overstated the potential pesticide use byapproximately 500 percent.

      By focusing onits real definition, Cotton Incorporated is trying to remind cotton consumersthat sustainable agriculture is a three-legged stool and that sustainability isachieved when a balance is reached between environmental, economic and qualityof life factors.

      Worsham notedthat CI will be developing fact-based informational brochures and DVD's on thissubject and integrating this message into its retail trade events through avariety of means.

Anniversary VideoHighlights PCG Event

      Celebrating its50th Anniversary Plains Cotton Growers officials unveiled a video presentationthat highlights the organization's roots and honors the High Plains cottonleaders that led the organization through its first 50 years of existence.

      Outgoing PCGPresident Rickey Bearden addressed the organization's membership and challengedthem to carry on the good work by: "Remembering the Past" and the reasons forPCG's creation; continue to "Affect the Present" by staying up to date on theissues that affect them and being an active part of the effort to findsolutions; and, to "Influence the Future" by stepping out to suggest new ideasand not being content to react to things as they occur.

      ExecutiveVice President Steve Verett concluded the meeting reporting that theorganization continues to garner unprecedented levels of support from HighPlains cotton producers and is ready and willing to provide another fifty yearsof high quality service to the Plains cotton industry.

FSA Extends CRP Sign-up To April 28

      AgricultureSecretary Mike Johanns today announced an extension of the sign-up deadlinesfor both the Conservation Reserve Program (CRP) and the special CRPre-enrollment and extension opportunities until April 28, 2006. The deadlinefor both opportunities was originally April 14, 2006.

      After the CRPgeneral sign-up ends on April 28, USDA's Farm Service Agency (FSA) willevaluate offers based on cost and the Environmental Benefits Index (EBI)factors of wildlife, water, soil, air and enduring benefits. Accepted offerswill become effective Oct. 1, 2006.

      In addition,subject to a compliance review, CRP participants with contracts expiring onSept. 30, 2007, now have until April 28 to apply for special re-enrollment orextension opportunities offered by FSA. Participants ranking in the EBI's topone-fifth can re-enroll their land in a new 10-year contract. For lands withrestored wetlands, FSA offered the opportunity for a new 15-year contract. FSAoffered the second one-fifth group the opportunity for a 5-year extension; thethird one-fifth a 4-year extension; the fourth one-fifth a 3-year extension;and the remaining participants a 2-year extension.

      FSA countyoffices are now beginning to notify CRP participants with contracts expiring in2008-2010 of their re-enrollment and extension opportunities. The deadline forparticipants to respond is June 30, 2006.