Crisis. It’s hard to even think about the future when things seem to be crumbling down around you. In the cotton business, it’s rare to find a sustained period of good crops, reasonable prices, a stable farm program, strong demand, affordable input costs…and the list goes on. At the moment, each of these issues is a challenge for us.
Cotton has faced droughts, floods, pests of all sorts, 20 percent interest rates in the 1980s and constant legislative and regulatory challenges. Add to that more than 50 years of intense competition from synthetic fibers to capture cotton’s market share. When you think about all that cotton has survived, the resilience of the businesses that comprise this industry continues to amaze.
I have had a front row seat to the cotton industry for nearly 50 years. In 1968, I had the good fortune to become a field representative for the National Cotton Council of America. My time with the Council included representing the organization in Washington, D.C., and then directing its programs from the Memphis headquarters. I then moved to the Cotton Board as CEO for eight years at which point I returned to the Council as its CEO for 12 years. Fourteen years ago, I became the CEO of The Seam, LLC, a startup online trading firm backed by the industry’s leading cooperatives, merchants and textile mills. As did others who served in such positions, I observed difficulties borne by businesses in each segment of the industry. I also got to see how the industry has overcome virtually every obstacle presented.
Once again, we’ve seen how rapidly things can change.”
In my opinion, there has been one common denominator that the U.S. cotton industry has used to create solutions to problems – innovation.
Innovation has helped create farm legislation vital to surviving unpredictable markets and weather. It has also helped U.S. farm acres produce yields that were unthinkable 30 years ago. Innovation has enabled the transformation of our supply chain through HVI and electronic warehouse receipts. Innovation has made it possible to purchase U.S. cotton over the Internet.
You may now be wondering “is there any innovation left that can help us navigate our way out of the current set of problems?” Good question.
Farmers have enjoyed improving prices for the past few years, due to strong global demand. That demand, led by China, has created the perception that we may be moving into a period of sustained growth for agricultural commodities. Once again, we’ve seen how rapidly things can change.
As I write this, cotton futures on the ICE exchange are fighting to stay above the 60-cent level. With much effort from farmers, cooperatives, merchants and agribusiness suppliers, the U.S. industry has invested hundreds of millions of dollars to build markets around the world. Cotton Incorporated and Cotton Council International are innovative channels that have established us as the most reliable, dependable source of cotton in the world.
Today, farmers are looking at current and future prices and asking, “how am I going to make money at these prices? And what are my alternatives?” In the next 30 to 90 days, each farmer will examine his situation and make decisions.
Currently, there are no easy answers. But I can tell you that based on what I have seen, the U.S. cotton industry has proven that when it communicates and thinks, it innovates its way through tough times. And that should give us all hope. Hope that down the road, we’ll look back on this period as one when advances in production, marketing and the supply chain were invented that kept U.S. cotton as the world’s preferred fiber. American cotton farmers play a huge role in this continuing story. It all starts with you. Keep innovating!
– Phil Burnett is on the Board of Directors of The Seam, LLC, Memphis, Tenn. (www.theseam.com)