Cotton Incorporated 2008 Annual Report

It will not surprise any of you to hear me say that times are hard. The financial upheaval that began with the collapse of the housing market has affected every industry from the Big Three auto makers to the local Starbucks and, perhaps more to the point, the consumers who buy cars, coffee, and cotton. Specific to our industry, we saw the value of cotton drop sharply in the second half of 2008, a decline in global mill demand for cotton fiber, and the closing of cotton merchants who have been in business for over a century. As has been said of our economic recovery, “the road ahead will be long and steep.” The good news for cotton amid this turmoil is that there is a road, a path to get through these trying times.

Commodities such as cotton have always been volatile, but they have historically managed to recover in time. Along with patience, the key to navigating the road ahead is unity - a collective commitment to the singular vision that cotton remains a viable commodity and viable beyond its traditional use as a textile fiber. World population projections for the next 50 years indicate that fiber demand to clothe this population will increase dramatically. At the same time, the demand for natural resources such as land and water will also increase beyond their current availability. Keeping this in mind, consider all the advances the U.S. cotton industry has made over the past 25 years to accommodate these needs: land use has decreased even as yields have increased; pesticide use has diminished by 50% and irrigated water applications are down by 45%. In addition, new and notable uses for the cotton plant in the construction, erosion control, and food industries have emerged as new avenues for both profit and perception.

Perception is a vital component of moving forward on the road ahead. Cotton has taken many blows over the years; however, we are entering an era where the facts and foresight of the U.S. cotton industry may help speed our journey and ease its grade. Factors such as 2009 being declared the International Year of Natural Fibers by the United Nations and the renewed consumer desire for comfort in these difficult economic times bode well for cotton in a general sense. But there is more.

The research conducted through Cotton Incorporated and the promotion of these advances have the potential to elevate cotton beyond solely a preferred textile fiber to a source of innovative products that create additional revenue channels while helping our neighbors and the environment in the process.

The road ahead will be long and steep, but for those who make the journey, the destination may well be worth the trip.

Ted Sheely
Chairman

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