The strong dollar reduces demand for US textiles - especially cotton

This can and often does work its way back to the farm. Our farmers have gotten some relief in recent years through programs that were written into farm law, the latest one being written in 1995. Also, for the past several years, there's been emergency assistance legislation that's been written to help all of agriculture. So, we've had a higher survival rate among cotton farmers than we've had among domestic customers of the cotton farmer.

Now, we tend to think of remedies for these sorts of things a little differently than others might. We don't believe that the cotton industry and the coalition that we normally can put together with other commodities are going to be very persuasive in terms of seeing our government change its monetary policy.

The cotton industry operates under a program that calls on the US Secretary of Agriculture to discover a world market price. The Secretary does this by averaging the five cheapest growths quoted for Northern Europe delivery and adjusting it back to US quality and location. Then we've got a loan program that allows a farmer to put his cotton in the loan and redeem that loan at the lower of the original loan rate or the adjusted world price.

We look at this program and say: "suppose we made it possible, using an exchange rate index, for that loan redemption to go even lower." If we take that 133 index, for example, and divide it into that loan redemption rate, then you take that loan redemption rate down appreciably, and you allow that cotton to come out of the loan at a price that could allow it to be sold much more aggressively into the world market. You would allow the farmer to do better, and you would move product into the market. There are other ways to do that. For example, in the case of cotton we have a program that makes a payment to domestic mills and to our exporters when a determination is made that we are not price competitive by a definition set forth in the statute.

You could use this exchange rate index to do the same sort of thing - in this case increasing that payment. This would permit a domestic mill or an exporter to quote raw cotton or cotton textiles at a lower price in the international market.

Any of these adjustments are very costly. We're talking about an exchange rate that's much higher than it was in 1995 and so, whatever you do, you're going to have to make an adjustment that costs money, $7 or $8 billion a year, maybe, if you do it all. If you do it for cotton alone or cotton textiles alone, maybe a half a billion dollars a year. In any event, this is a difficult problem. We're focused on some ways to solve it that are specific to cotton Hopefully, all our efforts will lead to a reasonable solution.