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Priorities For Profitability

Gary Adams

Gary Adams

The NCC’s 2017 Economic Outlook was presented at the organization’s annual meeting in February.

The National Cotton Council’s priorities for 2017 range from exploring all opportunities to improve cotton’s safety net to aggressively working to ease the regulatory burdens facing U.S. cotton producers.

What are the NCC’s major 2017 priorities?
As laid out to delegates at the NCC’s recent annual meeting, the NCC will be active in: 1) securing short-term economic assistance for cotton producers — which includes working to get a cottonseed policy in place as a bridge until the new farm bill is enacted; 2) strengthening cotton’s safety net in the next farm bill; 3) enhancing cotton crop insurance policies, including improvements in quality loss provisions; 4) maintaining beneficial trade agreements and policies, while addressing unfair trade practices and man-made fiber policies and overcapacity; 5) reversing burdensome regulations, while preserving critical crop protection products; 6) securing funding for the industry’s priorities in the annual appropriations process; and 7) ensuring that our industry has a well-funded political action committee for advancing cotton’s priorities with our nation’s lawmakers.

Has the economic outlook improved?
For the past three years, U.S. cotton producers have struggled with low cotton prices and high production costs. In fact, if producers did not enjoy above-average yields in 2016, cotton’s market revenue likely fell short of total costs. For some producers, the shortfall is three years and counting. Although current futures markets have increased from year-ago levels, many producers continue to face economic hardships.

Even under this business climate, the NCC’s annual acreage survey sees 2017 U.S. cotton acreage of 11 million acres, 9.4 percent more than in 2016. This increase largely is the result of weaker prices of competing crops and improved expectations for water. When making 2017 planting and marketing decisions, producers should keep in mind that the loan rate for base grade cotton for 2017 is 49.49 cents, down from 52 cents for the 2016 crop.

Assuming average abandonment and trend yields, the 2017 U.S. crop is projected at 16.8 million bales. Cotton used by U.S. mills is expected to increase by 100,000 bales in 2017. However, U.S. exports, strong in 2016 at 12.8 million bales, are projected to fall to 12.4 million bales in 2017, leading to an increase in ending stocks of 898,000 bales. Decreased trade is due largely to more competition from other cotton-producing countries.

Competition from manmade fibers remains strong, but the NCC believes there are real opportunities for cotton to make inroads against synthetic fibers. That will necessitate industry members’ continued focus on contamination prevention as one way to demonstrate our ongoing commitment to quality and helping maintain U.S. cotton’s reputation in the global marketplace. The NCC took additional steps at bolstering its reputation during our recent annual meeting by creating new industry member working groups that 1) will be charged with finding more ways to enhance cotton flow – and ensuring timely delivery to our domestic and overseas customers and 2) will work with U.S. cotton industry associations to develop industrywide goals for environmental stewardship improvements, farm productivity and resource efficiency.

Gary Adams is president/chief executive officer of the National Cotton Council of America. He and other NCC leaders contribute columns on this Cotton Farming magazine page.