Change Brings Opportunity

The last several years have been challenging for the cotton industry and the associations serving it. Membership has been challenged, budgets tightened, and relevancy questioned. Association leadership has responded with more tightly focused agendas and a greater-than-ever willingness to work together to promote cotton and diminish restraints to trade. It hasn’t been without challenges, particularly on the merchant side.

Take, for example, the American Cotton Shippers Association, (ACSA) which lost four prominent members (Dunavant Enterprises, Weil Brothers, Reinhart, and Walker) and its president John Dunavant, who resigned in August following the sale of his company. But if there is any redemption to contraction, it is that those who survive typically form closer relationships, and new voices and new ideas emerge.

When Jordan Lea of Eastern Trading Co. in Greenville, South Carolina was named to step in as ACSA’s new president, the industry outlook was still bleak. But now, with encouraging futures prices and increased acreage in the U.S., ACSA, along with the industry it serves, is on the rebound.

On May 12-14, ACSA will hold its 86th Annual Meeting in Charleston, South Carolina. Lea will continue as president for marketing year 2010/11.

“ACSA never had a president resign before, so it’s unprecedented territory,” Lea says. “But honestly, the last six months have been a real benefit for me. I have a better understanding of the workings of the association and have benefited from strong support from the board.

“We’ve got a challenging basket of issues – the financial reform bill and we’re on the cusp of the new farm bill. But the biggest challenge will be replacing Neal Gillen, who has been our voice in Washington, DC. Neal will be retiring in July after 43 years. He’s the most knowledgeable person I’ve ever worked with, and his institutional knowledge is unmatched.”

Lea lists the opportunity to participate in the formation of policy affecting the industry as one of the main benefits of membership in ACSA. The association maintains an office in Washington, DC, with two registered lobbyists “representing our interests and telling our story, communicating our concerns and reminding members of Congress how many jobs the cotton industry creates and our positive impact on the trade deficit.”

ACSA members also benefit from insight and access to information provided by ACSA staffers who consolidate information on markets from a wide array of sources on a daily basis.

And Lea firmly believes the annual meeting is a benefit and a “must attend” event. “It’s an opportunity to network with other members and service providers – freight, logistics, controllers, bankers, insurance companies, services they use on a daily basis,” he points out. “It’s also a chance to explore what happened the previous year and to say ‘this is where we stumbled, where we failed and what we won’t do next year.’”

In 2009, ACSA formed a new relationship with International Cotton Association (ICA) with the appointment of the ACSA president to the ICA Board of Directors. “With probably 50% of our efforts, we’re trying to accomplish the same things as ICA. We want to avoid duplication of efforts by like-minded associations,” Lea explains.

There have been two formal meetings between ACSA and ICA on how they might work together to avoid duplication of efforts and to reinforce areas of common interest. Lea suggests that one approach might be to consolidate the two cotton schools run independently by each organization. Another possible area of collaboration is trade rules.

“One of the things ACSA is faced with is tactfully addressing the need to raise the credibility of a foreign-growth contract to that of the U.S.,” says Lea. “I think the opportunity is there, but it requires a universal effort. Whether cotton is purchased under ACSA or ICA rules, ICA is the arbitral authority. It is the place to seek retribution and clarification.”

More collaboration among associations is happening in the area of educating consumers on the benefits of cotton. Lea reports the Cotton Council International has offered to help finance seminars overseas with participation from ACSA, ICA, and AMCOT. “A two-day seminar was held in Vietnam recently and it was very successful. The response was overwhelming.”

Lea admits he’s bullish about the outlook for U.S. cotton. USDA is pegging acreage at 10.5 million acres, but Lea thinks their estimate is low. “Depending on the weather, I wouldn’t be surprised to see 10.8 million, or even 11 million acres. People are more enthusiastic about cotton, and they should be.”

Based on moisture and planting conditions, he sees the potential for a great crop – in the range of 17 million bales and exports of 13.5 million bales, 80% of the crop.

Challenging times and changing organizations present opportunities. There is a changing of the guard in the cotton industry. Some leaders that have dominated have disappeared and new leaders are stepping up to take their places.

“Think of it like timber management,” Lea says. “You cut down the tall trees and take the canopy out and some of the undergrowth and scrubs begin to flourish. We have a lot of rising stars, young people coming into the industry.”