Cotton Market Insights: Better Understanding Of Demand, Exports, And Industry/Policy Efforts
DR. DON SHURLEY
TIPTON, GEORGIA
U.S. cotton exports are typically equal to about 86% of production. Major export destination countries include China, Bangladesh, India, Indonesia, Pakistan, Turkey, Vietnam, and Mexico.
It hasn’t always been this way. If you go back to the 1990’s, the overwhelming majority of U.S. cotton went to U.S. textile mills. But “U.S. grown cotton used by U.S. mills” declined from 11 million bales in the mid-to-late ‘90’s to now less than 2 million bales.
The reasons for this are complex and difficult to easily explain. But simply by the timing, it seems possibly somewhat related to the General Agreement on Tariffs and Trade (GATT) and establishment of the World Trade Organization (WTO) in 1995.
The US cotton industry is facing several market challenges:
- The decline in the US mill industry.
- The decline/slow growth in global cotton use; loss of market to man-made fibers.
- Increase in export competition, loss of market share to Brazil.
Currently, there are several industry and legislative actions to address these issues. But this is not entirely new. Maybe 20 years ago when demand growth first began to decline, industry belief was that this was due to consumer concerns that cotton production was not environmentally friendly. Later, the 2008 farm bill first authorized per lb. economic assistance payments to U.S. mills.
US Cotton Trust Protocol. The Trust Protocol now accounts for 25% of U.S. cotton acres. This National Cotton Council program focuses on providing farm-specific data on sustainable and environmentally friendly production practices and provides traceability.
BACA. The Buying American Cotton Act provides tax credits for the domestic purchase of U.S.-grown cotton and goods imported to the U.S. containing in-part or all U.S.-grown cotton. Traceability is required.
Plant Not Plastic. This is a National Cotton Council campaign to educate consumers on the environmental dangers posed by petroleum-based production of man-made fibers and micro-plastics pollution. It promotes the more environmentally friendly and natural cotton vs man-made fibers.
The Great American Cotton Plan. This is USDA’s support for and alliance with industry efforts to strengthen the U.S. cotton industry. Specifics are not known but goals include promoting U.S. mill use of U.S. cotton, supporting BACA, and improving trade. The One Big Beautiful Bill Act already continues and increases economic assistance payments to U.S. mills and increases PLC reference prices.
The overriding component to make any of this work is consumer behavior. In clothing, for example, why do mills choose to make what they make, the way they make it? Why do consumers choose to buy what they buy? Fashion/style? Comfort? Color? Name? Store? Advertising? We’ll need to understand the consumer and win the image fight.
Can we revive the U.S. mill industry? Hopefully, yes. But regardless, how does cotton become a larger consumer preference? How do we win the game? Can U.S. exports and trade market share be restored? That is both an economic and political question. The industry and policy efforts underway should give us a good shot. ∆
DR. DON SHURLEY
UNIVERSITY OF GEORGIA