Cotton Incorporated President and CEO Berrye Worsham chats with Larry Nelson Tulia Texas following Worsham39s remarks at the  Ncational Cotton Council annual meeting

Cotton Incorporated President and CEO Berrye Worsham chats with Larry Nelson, Tulia, Texas, following Worsham's remarks at the Ncational Cotton Council annual meeting.

What issues loom for cotton in 2016?

Low price, lack of a safety net, competition, and China stockpile offer challenges to U.S. cotton producers for coming year

The U.S. cotton industry will continue to push for cottonseed designated as an “other oilseed;” Cotton Incorporated sees areas of optimism along with serious challenges; and U.S. cotton acreage will increase for 2016.

Speakers at the National Cotton Council’s annual meeting in Dallas, Texas, painted a mostly grim picture for cotton going into the 2016 season: Low prices; the increasingly likely possibility China will release some of its cotton stocks onto the market this spring; and the Secretary of Agriculture’s rejection of cottonseed as an “other oilseed” all are challenges facing cotton producers.

Keynote speaker Rep. Mike Conaway, R-Texas, chairman of the House Agriculture Committee, says the cottonseed as an other oilseed issue is not dead. “The fight is not over. The Committee believes the secretary has the authority to make the designation.”

Conaway says he and others on the committee, along with cotton industry representatives, continue to discuss the possibilities with Secretary of Agriculture Tom Vilsack, who, he says, is aware of the importance of cotton and the challenges facing the industry.

“Our lawyers say it is permitted under the farm bill and his lawyers say it is not,” Conaway added in a press briefing following his official remarks. “We tend to listen to the lawyers we are paying.”

Shawn Holladay, president, Pains Cotton Growers, says the industry will continue to push for the oilseed designation, which would offer growers support under the Price Loss Coverage or Agricultural Risk Coverage programs of the Agriculture Act of 2014.

For some West Texas farmers, the “situation is dire. Some will not be able to get financing for the 2016 crop,” he noted. Support under ARC or PLC would offer incentives for lending agencies to finance production costs.

Conaway urged growers to “keep doing what you’re doing—write letters, communicate and pass any suggestions you have to us. We need action.”

Jody Campiche, NCC vice president, economics and policy analysis, offered more reason for concern, even as a December-through-January survey show growers intend to increase cotton acreage to 9.1 million acres in 2016.  See planting report coverage.

Depending on the region, those additional acres will replace wheat, peanuts, corn, soybeans, and grain sorghum. In South Texas, where acreage is expected to increase significantly, the bump will come mostly from acreage not planted last year due to excessive spring rainfall.

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Dr. Campiche says cotton consumption has improved over the last five years but not enough to offset the effect of large stocks. She also notes that China is expected to release some of the large stockpile of cotton they’ve held for several years at prices consistent with 2016 markets. “That will be bearish for prices.”

Challenges going into 2016, she adds, include sluggish demand, low prices for other commodities, and reduced consumption in China. “The outlook is not promising for (cotton) producers in 2016.”

Cotton Incorporated

Berrye Worsham, president and CEO, Cotton Incorporated, says the low price of polyester continues to hurt cotton mill use, as do fashion trends that rely on less cotton—athletic apparel, for instance. “We are seeing a lot of growth in active wear,” he says.

Cotton Incorporated is employing new, innovative strategies to get more cotton into active wear fabrics. Worsham says new marketing incentives, including widespread use of social media, target a younger audience. He says Cotton Incorporated also is pushing cotton and technology to produce fabric for athletic wear.

Promotions such as cotton denim recycling, using denim as residential insulation and donating it to Habitat for Humanity is an important opportunity to provide a needed public service and also to show cotton’s commitment to sustainability, he says. Singer Cheryl Crow volunteers to promote that initiative.

He says promotions in China and other countries seek to find ways to “soak up some of the cotton inventory.

“We are making inroads into the active wear markets,” Worsham says. “Major brands are showing interest in cotton, but we have a long way to go.”

He says the Cotton University website offers information about all aspects of working with cotton and educates the industry. “We had 14,000 users in 2015, a 40 percent increase.”

Interest in high percentage cotton blends is increasing. “We will have to do this to make inroads back into some markets, as we did in the 1970s.” He says consumers still show an interest in 100 percent cotton but the high cotton content blends offer other avenues to use more cotton.

He says a recent survey indicates 68 percent of manufacturers expect to use more cotton in 2016. That’s partly due to low prices. “But consumer demand also plays a role,” he says. “Global economics will be a factor.”

Worsham says a trend to lighter weight fabrics, which over the past few years has meant about 10 percent less cotton use, is declining. “That offers some opportunity for growth.”

He says Cotton Incorporated has received more requests to use the Seal of Cotton on brands. “We’re seeing this increase for the first time in several years,” he says. “Also, we’re bringing back the Natural Blend seal.

“We have a lot of work to do to help growers survive in this low-price environment.”

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