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ICAC: Emblematic of Complex Products
The theme of the 68th ICAC plenary meeting in Cape Town, South Africa, September 6-11, is unusually long: The Role of Cotton in Economic Development and Ensuring Food Security During a Period of Global Economic Crisis. This lengthy theme with two related subjects is emblematic of the complex problems facing the world cotton industry and the economic crisis in which the industry has been operating. During the cotton season just past, world cotton consumption fell by 13%, the largest percentage decline since the formation of the Committee 70 years ago, and so a focus on the economic crisis is necessary. And, as speakers during this plenary meeting will note, cotton can serve as a solution to the problems confronting the world economy and rural areas.
The purposes of ICAC meetings are to facilitate cooperation and showcase best practices appropriate for national adoption. One of the lessons of the last cotton season is that increases in trade and efficiency have also led to increased interdependence. During March 2008, volatility in the cotton futures contract traded in New York City led to the bankruptcy of some merchants and the financial weakening of many. As a result, cotton producers have had greater difficulty in selling cotton when they wish, even when quoted prices are attractive, and cotton buyers have had great difficulty securing assured shipments at fixed prices. Trade finance has become much more difficult to arrange.
Industry and government officials do not usually have much sympathy for the financial health of merchants, but the events of March 2008 illustrate how all segments of the cotton value chain are dependent on the health of the other segments and how an event in one country can affect the livelihoods of producers and consumers in other countries. The current economic recession and the attendant difficulties facing all participants in the world cotton industry provide clear evidence that the rationale for the existence of the ICAC is as valid today as in 1939 when the Committee was formed.
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