New USDA chief vows to keep country’s cotton exports strong
The new U.S. agriculture secretary told cotton producers that the Bush administration would make every effort to ensure that the commodity gets a fair shake in international markets.
“Now I firmly believe that free trade has to be fair trade, and you have my commitment that we will be fighting hard for you to make sure that we provide that level and fair trading field out there,” said Agriculture Secretary Ed Schafer in a Feb. 9 speech to the National Cotton Council’s annual meeting in Memphis, Tenn.
Schafer noted the administration’s disappointment with the World Trade Organization Compliance Panel’s findings in a cotton case raised by Brazil against the United States. In December, the WTO panel partially upheld Brazil’s claim that the United States didn’t go far enough to comply with earlier findings against the U.S. support programs.
“We believe that the changes we have made brought our programs into full compliance with the WTO rulings, and we will recommend that the original cotton case is just not appropriate ' And we continue to believe that support payments and export credit guarantees under our programs are fully consistent with our WTO obligations, and we are going to continue to work in that manner,” Schafer said.
The USDA estimates that about 75 percent of U.S. cotton is exported, with $4.7 billion in export sales in 2006 and a nearly 75 percent increase in the number of bales exported into 2007.
Gary Adams, the council’s vice president of economics and policy analysis, said U.S. cotton growers are projected to produce 15.4 million bales in 2008, the smallest since the 1998 crop of 13.9 million bales. He expects U.S. cotton exports of 14.7 million bales and domestic use of 4.4 million bales in 2008-2009.
Regarding international trade, Adams said world production is expected to increase to 122.4 million bales in 2008 as larger crops in China, Brazil, India, Pakistan, Australia and West Africa more than offset lower U.S. production. India is now the second-largest producer and processor of cotton, devoting more area to cotton production than any other country.
“While their textile industry has been expanding, the most notable development in the Indian market is cotton production that has more than doubled in the last five years, and is estimated at almost 25 million bales in 2007,” Adams said.
He noted that the council sees India producing more than 26 million bales in 2008 and expects them to remain a significant exporter, as much as 7 million bales.
On the demand side, Adams said even with slower growth in China mill cotton use, that country’s textile sector still could consume a healthy 57 million bales — 16.6 million bales imported — in the 2008 marketing year. He said China also would continue to be the largest export market for U.S. cotton.
World 'demand is expected to grow but at a slower pace due to overall economic performance and strength in cotton prices relative to competing fibers,” Adams said. “However, total use is expected to exceed production, which will further tighten stocks.”
The National Cotton Council’s 2008 Cotton Economic Outlook report is available online at www.cotton.org/econ/reports/annual-outlook.cfm.