AP NEWS
Related topics

New Cotton Bill Makes American Product More Competitive

July 12, 1986

CHICAGO (AP) _ For consumers fond of ″natural″ products, there are good times ahead with cotton replacing synthetic fibers in many fabrics.

And they might not have to dig quite as deeply into their pockets to pay for that new pair of slacks.

This comes about through the new farm bill, which beginning Aug. 1 introduces a replacement for cotton price supports that is aimed at giving American growers a larger share of world market.

The idea is to bring the price of American-grown cotton down to a competitive level while subsidizing farmers’ income through a device other than price supports.

Already, cotton prices on the futures market have plunged by close to 40 percent from the first of the year, with the October contract now at about 32 cents a pound on the Cotton Exchange in New York.

″The market thinks this could come down to maybe 28 cents, and I think certainly 30 cents,″ said Ernest Simon, cotton specialist in New York with Prudential-Bache Securities Inc.

The American industry views the sharply lower prices as the ingredient it needs to compete in foreign and domestic markets where it has been taking a beating.

In a half dozen years, cotton exports have fallen from close to 9 million bales annually to 2 million.

And of the clothing and other finished goods sold in this country, 50 percent to 70 percent comes from foreign sources, said Dewey Trogdon, president of the American Textile Manufacturers Institute. Trogdon also is chairman and chief executive officer of a large textile mill, Cone Mills Corp. in Greensboro, N.C.

″The domestic industry feels good about it (the cotton program),″ Trogdon said. ″We’ll certainly be able to compete better in Europe with Asian products. And theoretically, we should be able to compete better in Asia, but that will depend on what their government’s do (to protect their industries).″

The government believe the program will triple exports to 6 million bales next season, Simon said.

The world price of cotton has declined in line with American futures prices, anticipating the effect of the farm bill.

While the lower prices are not expected to be passed on penny for penny to the American consumer, there will be some savings, Trogdon said. However, he said, any lower prices will not show up until apparel for the fall of 1987 hits the market.

The sunny prospects for the cotton industry have a darker side for the taxpayer. The Reagan administration said earlier that the plan would cost nearly $2 billion, although some observers say this could go higher.

″This is a very, very generous program,″ said Simon, indicating he believes this could prove to be a serious problem.

″It’s a five-year bill, but if a new administration comes in I don’t think they’ll let it go for five years,″ he said. ″It’s too expensive.″

End Adv Weekend Editions July 12-13

AP RADIO
Update hourly