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49th Plenary Meeting, Montpellier, France

Statement of the 49th Plenary Meeting

1. The world supply of cotton during 1990/91 is estimated at 114 million bales, 2 million greater than in 1989/90. World production and consumption are each estimated at 87 million bales, and ending stocks for 1990/91 are expected to be little changed from the 27 million bales estimated at the end of 1989/90. The Secretariat's stock ratio model, as shown in the attached table, suggests an average price for the season close to that recorded for 1989/90.

2. Supplies will probably grow in 1991/92. World cotton production is forecast to rise 4 million bales to a record 91 million in 1991/92, resulting in a supply of 118 million bales.

3.The distribution of the world cotton supply by types is shifting. Exports of extra-fine, fine and coarse cotton am expected to fall during 1990/91, while supplies of medium cotton, especially high-medium cotton, are likely to be larger than last season.

4. World textile fiber consumption follows closely the trend of world economic growth; fiber consumption in 1991 is expected to grow more than 2 percent, if economic growth improves. A tight cotton market in 1990 has reduced stocks, and cotton prices have risen faster than price of chemical fibers. Consequently, cotton's share of world fiber use is expected to fall from 49.2% in 1989 to 48.9% in 1990. Higher oil prices may affect these forecasts.

5. While cotton's share of fiber markets has been strong in recent years, it is recognized that the gains which have been achieved could be reversed if the momentum for cotton is not maintained.

6. The work of the International Institute for Cotton in developing the market for cotton was noted. Members of the Institute asked other producing countries to join with them in supporting the Institute so that its work can continue.

7. The Committee heard presentations from Cotton Associations. It was noted that Cotton Associations have an important role to play in the establishment of trading rules and in the settlement of disputes.

8. The Committee heard reports from a number of governments regarding the organization of cotton sector activities. It appears that the role of private entities has expanded and that there is increased reliance on the market process.

9. The Committee looks forward to the successful outcome of the Uruguay Round of the GATT. A trading system for cotton and cotton textiles with improved market access would assist all countries.

10. The inability to achieve an international agreement on cotton based on any of the solutions proposed since 1945, combined with the ineffectiveness of agreements covering many other commodities, suggests that new ideas on ways to reduce cotton price fluctuations maybe studied. Concern was expressed by a number of producing countries that trade barriers and subsidies in some countries contributed to price volatility and impacted adversely on the level of cotton production in non-subsidizing countries.

11. A number of consuming countries noted the efforts of producing countries to reduce the contamination of raw cotton with extraneous materials. Attention was drawn to the importance of finding a solution to the problem of sticky cotton.

12. A technical seminar was held on Cotton Production Research from a Farming Systems Perspective, with Special Emphasis on Stickiness. It was decided to hold next year's seminar on Cotton Growing in a Safe Environment.

13. The Committee discussed the relationship of ICAC with the Common Fund for Commodities and adopted the following resolution:

"The Advisory Committee,

"Taking into account the decision, report and consultations made since its 48th Meeting on the relationship between the ICAC and the Common Fund for Commodities,

"And acting within the framework of Article 12 of the Rules and Regulations of ICAC,

"Instructs the Secretary General to submit, not later than 31 December 1990, a written request to the Fund for the Committee to become designated as an International Commodity Bcdy (ICB) for cotton, as envisaged under the Agreement establishing the Common Fund and in accordance with the Regulations and Rules for Second Account Operations approved by the second Meeting of the Governing Council of the Fund.

"Takes this action with the clear understanding that it will not increase the budget of the Committee nor the financial obligations of member countnes.

"Instructs the Standing Committee to continue to review the use of the Committee's resources on a regular basis in accordance with the financial regulations of the Committee, and to include, in its regular reports at meetings of the Advisory Committee, a special item about the relationship of ICAC with the Common Fund.

"Also instructs the Standing Committee to finalize meanwhile, and with the shortest possible delay, the procedures and criteria for project appraisal with special consideration to the joint requirements to share in the resources available under the second Account of the Common Fund."