Cotton Industry Remains 'In Peril,' Says NCC

February 12, 2002

Even though the National Cotton Council has delivered supplemental assistance to growers for the past four years and addressed the administration of regional textile trade preference agreements to expand opportunities for U.S. textile mills, the U.S. cotton industry remains in peril, according to NCC economists in their annual outlook for delegates attending the NCC's annual meeting. In noting the U.S. dollar's strength and the reality of U.S. manufacturing being unable to compete against artificially cheap foreign products, they said, "firm closures and job losses continue across the U.S. as the nation finds itself unable to establish effective policies to address the situation."

While the U.S. cotton production sector seeks an effective farm policy in a debate that has now stretched a year in length, the U.S. cotton textile industry "fights for its very survival," they added. "The entire U.S. cotton industry faces unrivaled pressures on its very existence. Farm sector economics are as bleak as any seen in the post-war period. Prices for most commodities have not covered production expenses for five consecutive years."

The economists emphasized that as U.S. cotton considers the transitionto an export oriented industry, each cotton policy component sought by the NCC is crucial. Among those are unrestricted access to a marketing loan keyed to world price, holding on to a highly efficient yarn spinning sector by eliminating the Step 2 threshold and seeking implementation of effective regional trade agreements.

For 2002, the NCC economists project U.S. growers will produce a 17.1-million-bale cotton crop, domestic mill use will hold at 7.5 million bales and U.S. exports could reach 10.2 million bales - if China becomes a net importer of raw cotton. They said many analysts predict China will be in a "zero" import position during the 2002-03 crop year, but if the Chinese abide by their World Trade Organization commitments and if they reduce their plantings then net Chinese imports of 2 million bales or so are possible. The United States should expect to garner some 50 percent of any Chinese raw cotton imports, the economists said.