Interview with Terry Townsend

Face2Face
Terry Townsend
Terry Townsend
Executive Director
ICAC
ICAC

The only solution for cotton will be to raise yields through improvements in technology.

Terry Townsend, the Executive Director of International Cotton Advisory Committee (ICAC), talks about the changes that have taken place in the global cotton industry over the years and how cotton can remain competitive in the future, in an interview with Fibre2Fashion Correspondent Ilin Mathew. Synopsis: The ICAC is an association of governments of cotton producing, consuming and trading countries. It works to raise awareness of critical issues involving cotton, provides statistical and scientific information, and facilitates cooperation on international issues related to the cotton economy. Townsend has a Ph.D. in Agricultural and Resource Economics from Oregon State University in the U.S. He joined the ICAC as statistician in 1987 and became Executive Director in 1999. Prior to joining ICAC, he worked at the United States Department of Agriculture (USDA) analyzing the U.S. cotton industry and editing a magazine devoted to a cross section of agricultural issues. Excerpts:

You are with the ICAC since 1987. What significant changes have taken place in the global cotton industry over the years?

Biotechnology, consolidation, instrument testing of cotton quality, and the Brazil cotton case in the WTO are the four biggest changes that have occurred in the world cotton industry since 1987. Biotechnology (GMOs) has fundamentally transformed weed management and insect control in cotton production. About two-thirds of world cotton production today uses biotech traits. Biotechnology is a continuum of change within agriculture that started with Mendelian breeding, and continued with mechanization, synthetic fertilizers and insecticides. Together, these fundamental breakthroughs in agricultural science have enabled the world population to grow to 7 billion today. During the past 25 years, the number of major cotton merchants handling 200,000 tons of cotton in international trade per year has fallen from more than 20 to just ten. Gins are larger and far fewer in number. Ocean freight companies, insurance companies, and banks handling trade finance have all grown larger, with smaller firms either going bankrupt or being purchased by growing firms. Farming itself is expanding, and the number of persons employed in cotton production is declining as agriculture becomes more capital intensive. The world cotton industry is thousands of years old, but the commercial industry is about two hundred years old since the invention of the cotton gin in 1798. Over the first 150 years or so, the cotton industry developed as separate national industries with parochial practices, including hand classing of cotton. In the last 40 years, hand classing has given way to instrument testing using high-volume instruments (HVI). Today, about half of world cotton production is tested with instruments at the producer level, and probably 90% of cotton laydowns in textile mills are determined using HVI information. The use of instrument testing is dramatically improving the efficiency of cotton trade and mill use. The Brazil cotton case in the WTO was the first time in world history that a country was forced to curtain agricultural subsidies based on agreements reached within multilateral trade negotiations. The reverberations of the Brazil cotton case are still being felt as the U.S. moves toward change in its farm legislation.

As of today, what are the major challenges faced by the international cotton community as a whole?

The world economy is highly competitive, and commodity industries must be efficient and innovative to meet competitive pressures. Cotton will face pressures on three fronts over the next decade: competition with other crops for planted area; competition with polyester for fiber market share; and public interest pressures from environmentalists and labor rights campaigners. Over the next decade, cotton will need to find its way between $6 maize and 80-cent polyester, while also reducing pesticide use and ensuring progressive labor standards.

In recent period, global consumption of cotton has been declining rather than moving up. What do you think are the reasons for these and how they can be overcome?

The entire world cotton market is affected by the policy of the Government of China to maintain a national reserve and purchase cotton from farmers at approximately $1.50 per pound of lint equivalent. This policy keeps cotton prices on the world market above their long term average, and above the price of polyester. Consequently, textile mills, especially mills in China, are shifting to polyester faster than demand for fiber is growing.

For cotton, competition with polyester is a powerful challenge that is accelerating as chemical fibre production technology results in lower costs of polyester production. How do you think the cotton sector can overcome the challenges posed by polyester fibre?

While cotton must compete with grains for land area, it must also compete with polyester for fiber use. The harsh reality for cotton is that polyester can be engineered to be longer, stronger, finer, more even, without contamination and more stable in price than cotton. Cotton does have major advantages in look, feel and performance that contribute to consumer preference. However, consumer preference only goes so far, and therefore, cotton must remain price competitive with polyester in order to remain in use by designers and manufacturers. Consequently, higher cotton prices are not an option to offset higher grain prices if cotton is to remain a competitive apparel fiber. The only solution for cotton will be to raise yields through improvements in technology. Producing countries need to invest more in agricultural research if cotton is to remain competitive with alternative crops and with polyester.

Genetically Modified (GM) cotton or Bt cotton has increased cotton productivity in many countries. Is this growth sustainable and do you recommend the use of Bt cotton in countries, especially African countries, where they are yet to commercialize Bt cotton cultivation? Why?

Biotechnology is the future of agriculture, not just cotton. The tools of biotechnology were discovered in the 1960s, biotech traits were identified in the 1980s and crossed into commercial varieties in the 1980s and 1990s. Biotechnology went through an extensive process of regulatory approval in the 1990s, and commercial varieties were released in 1996. New traits are under development, and by 2020 biotech cotton events will be commercially available that provide increased salt tolerance and nitrogen use efficiency. Biotechnology already accounts for about two-third of world cotton production, and this proportion will increase in the decades ahead. Countries that do not use biotechnology will fall further behind in efficiencies and cost of production.
Published on: 25/10/2013

DISCLAIMER: All views and opinions expressed in this column are solely of the interviewee, and they do not reflect in any way the opinion of Fibre2Fashion.com.

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