Chicago was a logical choice for host-city of the 85th Annual American Cotton Shippers Association Convention, held in late May. The picturesque downtown of the Windy City provided the convention’s 235 attendees with first class business facilities as well as entertaining social functions.

But the city also provided ACSA President Joe Nicosia with an opportunity to play host. Nicosia, who serves as CEO of Allenberg Cotton Co., made much of the opportunity to bring the industry to his hometown in one of his last acts as president of the organization before John Dunavant assumes that title.

In his President’s Address, Nicosia recounted his upbringing in the city, and drew comparisons to the current state of the American cotton industry. Both, he said, were faced with defining moments.

“The events of March 4, 2008 presented us with our own defining moment. In 90 minutes, companies, careers and fortunes were destroyed. In the end we have to refer to our own survival instincts,” said Nicosia, referring to the day futures trading turned the cotton industry on its head. On that day cotton futures went above $1, then dropped to below .50 cents in November.

Survival was the focus of Nicosia’s speech, as he noted the Darwinian principle that “it’s not only the strongest who survive, but the one that is most responsive to change.” To that end, he went on to list four important factors that are currently shaping the industry.

The Chinese Dilemma

The first factor Nicosia mentioned was the organization’s ongoing negotiations with the Chinese government concerning the cotton importer registration and evaluation system of the Association of Quality, Supervision, Inspection and Quarantine. He decried the new system as something that has the “potential to be used as a trade barrier and subsequently, more scary, an unjust reason for contractual default should AQSIQ arbitrarily decide to tighten the quality standards.” On a more hopeful note, Nicosia noted that progress has been made with the AQSIQ situation, however slowly.

The issue surfaced throughout the Convention, with the organization’s Foreign Affairs committee drawing language to ask ACSA to “aggressively negotiate more balanced and fair terms to the registration process. In particular, AQSIQ should establish a procedure of appeal which would allow shippers to contest any adverse findings or rulings.”

Protection from Harmful Futures Trading

Nicosia’s speech also touched upon the positive developments that have come about through the Commodity Futures Trading Commission in response to the harmful events of March of 2008.

The ACSA president had himself been active in arguing for commodity trading reform on Capitol Hill. As CEO of Allenberg Co., he had firsthand knowledge of the lingering negative affects from the Spring of 2008.

“On March 4, 2008, we experienced a shock greater than anyone could’ve ever imagined, and it changed the cotton world in one day,” Nicosia said.

The industry stance that he supported on Capitol Hill is one that calls for greater transparency in commodity trading as well as placing limits on hedge exemptions. “We are not there yet, but in a few months I believe the necessary legislation changes will be made,” said Nicosia.

Nicosia also made a point to remind the association that they were in the service industry, and that U.S. cotton is in a constant battle with other cotton exporting nations for consumers and market share.

ACSA members were encouraged to maintain high standards for delivery and performance. To accomplish that, Nicosia argued, shippers must no longer allow the current gin and warehouse rebate system to hold sway over their scheduling systems.

“Such schedules reflect poorly on our ability to service our customers,” Nicosia said.

Lastly, Nicosia made a plea for industry unity. The American cotton industry’s various organizations exist to better the standing of the entire industry, Nicosia said.

“We are in a global business. If you think regionally you will be a regional player. The American Cotton Shippers Association consists for the good of all its members. Protectionism and isolationism has not worked in global trade and will not work in our industry or our association either,” Nicosia said.

ACSA’s convention served to drive home Nicosia’s last point. Attendees were able to listen to reports from prominent cotton associations from America and around the world.

Earlier in the weekend, Mark Lange of the National Cotton Council updated attendees on the Doha Round as well as the current World Trade Organization case with Brazil. Terry Townsend and Armelle Gruiere of the International Cotton Advisory Committee made a presentation on world sustainability. Both drove home Nicosia’s insistence that cotton’s organizations are serving the industry well.

ACSA itself, Nicosia said, was on the forefront of benefiting its members and the American industry as a whole.

“We are in a never-ending battle to maintain our export market share, and the American Cotton Shippers Association is our best weapon to fight those who wish to steal our customers and create unfair trade barriers against U.S. cotton.”