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The Rupp Report: The (Cotton) Empire Strikes Back

Jürg Rupp, Executive Editor

The relative 50:50 equilibrium between natural and man-made fibers in global fiber consumption, which existed for decades, is the object of constant change. At present, cotton only has some 37 percent of global fiber consumption; and wool, 3 percent. Improved fibers and still better fabrics have steadily corrected the previous, negative image of man-made fibers. Experts predict that by 2010, man-made fibers will have a global market share of 72 percent; cotton, 26 percent; and wool, 2 percent.

International Year Of Natural Fibers
The United Nations General Assembly has declared 2009 to be the International Year of Natural Fibers (IYNF). Natural Fiber industries provide employment to hundreds of millions across almost all countries. Natural fibers are renewable, sustainable and economical; and provide excellent performance characteristics for consumers. The International Cotton Advisory Committee (ICAC) acknowledged the work of the Food and Agriculture Organization (FAO) of the United Nations in coordinating the IYNF.

Completion Of Doha Round Needed
According to a recent Cotton Report, ICAC members acknowledged that the consequences of the ongoing global financial crisis were having particularly adverse effects on the cotton sector. Members hoped that an early and successful conclusion of the Doha Round would resolve the outstanding issues of the cotton dossier in the Doha Development Agenda (DDA) and help to mitigate the crisis in this sector. Members agreed that an ambitious and balanced outcome to the Doha Round remains a strategic objective of ICAC. The ICAC members welcomed the leadership provided by the G20 Summit as expressed in the Declaration of the Summit on Financial Markets and the Global Economy, on Nov. 15, 2008, in Washington.

The ICAC Members called on World Trade Organization (WTO) members to engage intensively to achieve modalities this year. They reaffirmed the continued validity of the two-track treatment of cotton in the DDA. They acknowledged the progress made on both the trade policy and the development assistance aspects. They urged WTO members to act urgently to resolve the outstanding issue of the treatment of the cotton dossier in the domestic support pillar of the agriculture negotiations and to make faster progress on the implementation of the commitments on the development assistance aspects.

African Cotton
The committee also observed that cotton has been an economic success story in sub-Saharan Africa. Cotton is a major source of foreign exchange earnings in more than 15 countries of the continent and is a crucial source of cash income for millions of smallholder farmers and their families. At the same time, cotton is a source of major concern on the continent because of declining production, compounded by unfavorable external factors such as exchange rates and market distortions. The committee acknowledged the strenuous efforts of governments and the private sector in African countries to ensure long-term competitiveness.

4 Cents A Pound
According to recent documents released by the US Department of Agriculture and the Commodity Credit Corporation (CCC), a corporate agency of the US government, The Food, Conservation, and Energy Act of 2008 and Upland Cotton Economic Adjustment Assistance Program presents interesting opportunities for US users of eligible upland cotton.

For spinners, papermakers and nonwoven cotton product producers, the program will pay 4 cents per pound for eligible cotton opened by the producer each year for the next four years. In year five of the program, payments by the CCC will be reduced to 3 cents per pound.

With an estimated 4 million, 480-pound bale usage, the industry would consume 1.92 billion pounds of cotton worth potential payments of $76.8 million per year for four years, totaling $307.2 million, with a fifth year worth an additional $57.6 million. Depending on usage and qualification of cotton, product and users, the investable funds could reach $365 million over the course of five years.

For details, see “ Cotton Funding Promotes Investment,” www.TextileWorld.com, Jan. 6, 2009.

January 13, 2009

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