The International Cotton Advisory Committee, the intergovernmental forum for discussion of maters related to cotton, met in Tashkent, Uzbekistan, from October 7 to 11, 1996, in its 55th Plenary Meeting since the Committee was established in 1939. Thirty-five member countries were represented. Representatives of 14 non-member countries and five international organizations participated as observers. The Committee approved the following statement:

1. World cotton production and consumption are expected to maintain a balance at more than 19 million tons during the next two seasons. Because the differences between production and consumption during 1996/97 and 1997/98 are expected to be small, only minor adjustments in ending stocks are forecast, and a period of stable prices at a slightly above average level is expected.

2. According to estimates presented to the Committee, the average Cotlook A Index is likely to rise 10 to 15% above the long run average of 73 US cents per pound by 2000 because of slow growth in cotton supplies. Competition with food crops for land may constrain cotton plantings, and current technology is likely to result in only modest gains in cotton yields during the next four seasons.

3. World cotton consumption has been stagnant since the mid-1980s. However, it is expected to climb by 900,000 tons, to a record 19.5 million tons during the next two seasons. During the past ten years, increases in cotton use in many countries have been partially offset by declines in countries comprising the CIS.

4. Cotton's share of world textile fiber use fell from 50% in the mid-1980s to 45% in 1995. It was noted that the decline in share has been caused by a number of factors, including reduced promotional activities, quality disadvantages and supply shortages as a result of limited gains in cotton yields. It was decided that the ICAC Secretariat and the Standing Committee, together with invited specialists, would prepare specific proposals for arresting the decline in cotton's market share. Such proposals would be circulated to member countries two months in advance of the 56th Plenary Meeting in order to seek approval and implementation at that Meeting.

5. Several countries reported their experiences with efforts to liberalize their cotton economies. Some countries were encouraged by the initial results of these efforts, while other countries felt that current institutional arrangements best protected the interests of farmers.

6. The Committee heard reports that, through liberalization, government policies were increasingly permitting cotton growers to respond to market signals, while reducing the free provision of input supplies. The need for small farmers to have increased, affordable information about how to cope with privatized markets was again noted. Some delegates noted that subsidies by some countries were preventing efficient world production and trade. Member countries called for the elimination of subsidies and unfair trade practices through the whole cotton production and marketing chain.

7. The Committee heard reports that the world cotton economy is undergoing great change. New routes for the transportation of cotton are being explored, new communication technology is being widely adopted and the use of containers in shipping cotton is becoming more common. Progress is being made in the development of a new cotton futures market in Turkey. Sources of export supply and import destinations have changed in the past decade, and the number of participants in the world cotton market has increased. New entrants were urged to comply with standards of the profession. Governments and other parties involved in the trade were urged to confirm their support for international arbitration as a means of resolving contractual disputes and abide by the terms of accepted international conventions for the enforcement of arbitral awards.

8. The need to improve cotton quality was emphasized. Due to the demands of modern spinning technology and pressures in the marketplace for increased textile efficiency, raw materials are under increasing stress. There is a need for higher quality cotton. Cotton's competitiveness in the marketplace would be assisted by the development of varieties better adapted to improved spinning technology, by better ginning and by reducing contamination.

9. Governments supported a petition to declassify cotton as a hazardous material. This petition will be considered by the International Maritime Organization in the next year. It was noted that there was no empirical support for the classification and acceptance of the petition would reduce costs.

10. The Committee held a technical seminar on the topic "Short Season Cotton: How Far Can It Go?" The technical seminar in 1997 will be devoted to a review of progress under Committee-sponsored and Common Fund-financed cotton development projects. Plans were made for the second World Cotton Research Conference to be held in Greece in 1998.

11. The 56th Plenary Meeting of the Committee will be held in Asuncion, Paraguay, in the last week of October 1997. The Committee has previously accepted invitations to hold the 57th Meeting in Bolivia in 1998 and the 58th Meeting in Sudan in 1999.

1/ Includes Brazil, China (Mainland), Colombia, Mexico, Turkey and traditional importers except Greece
2/ The inclusion of linters and waste, changes in weight during transit, differences in reporting periods and error account for differences between world imports and exports.
3/ Difference between calculated stocks and actual; amounts for forward seasons are anticipated
4/ World-less-China (Mainland) ending stocks minus China net exports, quantity divided by world-less-China consumption
5/ U.S. Cents per pound. Model results for 1996/97 and 1997/98 are based on net China (Mainland) trade, ratios of world-less-China (Mainland) ending stocks to use, barter sales from Central Asia, and futures prices. The estimate for 1994/95 is adjusted for quotes during June and July.
*/ 95% confidence intervals extend 9 cents per pound above and below each point estimate

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