Thank you, Jim. I appreciate your kind words and, on behalf of the Board, allow me to express our appreciation for your continuing service to the industry as Chairman of the Council’s Executive Committee.

It’s a privilege to address this Board as your Chairman and report on the activities since we last met in Dallas and look ahead to some of the challenges before our industry.

We’ve enjoyed some successes during the past four months, which can be attributed to sound policy and hard work by industry leaders and Council staff. I’m very pleased with our achievements, and I would like for all of us to be able to pause, take a breather, and congratulate ourselves. However, I must tell you there is still much to do in the weeks and months ahead; there will be no time for victory laps.

Our recent farm policy success had its beginning in November 1999, when President Ron Rayner established a blue ribbon Leadership Group and charged it with exploring farm policy alternatives for the future. This group identified the critical elements necessary for a new farm bill to succeed the FAIR Act.

The Leadership Group agreed that many of the FAIR Act provisions, such as cropping flexibility and an AWP-based marketing loan with the 3-step competitiveness program, were favored by the industry. The FAIR Act’s primary flaw was the absence of an adequate income safety net.

They explored various approaches for retaining the best provisions of the FAIR Act and the potential options for adding a WTO-compliant safety net for the new law.

These basic elements of new farm policy were refined further by the Leadership Group when they met again during the Council’s 2001 annual meeting in San Diego. Acting on these recommendations, the Council’s Board and delegate body adopted specific farm policy recommendations for upland and ELS cotton that addressed the industry’s priorities for both the short term and for the longer term under new farm law.

The Council’s short term priorities called for supplementing AMTA payments with additional marketing loss payments at the highest rate possible for the remaining crop years of the FAIR Act before new farm law was implemented.

For new farm law, we supported a continuation of decoupled AMTA-like payments, but we also called for the addition of commodity-specific counter-cyclical payments. The goal was to use this dual payment approach to get the highest possible level of income support while complying both with a Congressional budget resolution and the WTO spending restrictions on so-called trade-distorting payments.

While the industry left the 2001 Annual Meeting without agreement on loan rates and operational specifics for the Step 2 competitiveness provision, differences had been sufficiently narrowed that they were not thought to be a hindrance to the development and presentation of our farm program testimony.

Bob McLendon delivered our policy recommendations as the leadoff witness before the House Agriculture Committee immediately following last year’s annual meeting. In addition to our recommendations for short-term assistance and a better long-term safety net, our testimony also included the Council’s long-standing position against payment limits. We said if payment limits are not removed, however, the three-entity rule and provisions for loan redemptions with marketing certificates should be retained, along with the establishment of separate and reasonable limits for each category of benefits.

As you know, the bill eventually reported out of conference bore a remarkable resemblance to the model farm program appended to Bob McLendon’s February 2001 testimony. This is a tribute to the direct involvement and persistence of virtually everyone in the room this afternoon.

The long and frustrating process that led to successful passage of the new farm bill included numerous industry action alerts and the development of staff analyses for use by both cotton industry members and Congressional officials. The potentially devastating impact of the Grassley-Dorgan amendment energized our membership and our friends in Congress.

Culminating efforts by the Council and others on the farm bill, President Bush signed the Farm Security and Rural Investment Act of 2002 into law on May 13, in a ceremony witnessed by more than 200 farm organization representatives, members of Congress and the media.

Three days later the Council held the first of 44 meetings across the Cotton Belt to acquaint industry members with as many details of the new bill as possible. Staff tells me that the meetings were attended by almost 6,000 people. I’m sure you recognize that handling the logistics and ensuring professionalism for 44 meetings in just 10 days is no small achievement. I applaud John Gibson and his Member Services staff for the excellent logistics work in preparation for the meetings. And I especially commend the staff who comprised the 4 teams that squeezed 44 excellent meetings into a week and a half: John Maguire, Mark Lange, Craig Brown, Ben Noble, Fred Johnson and Harrison Ashley. Thanks to you and the entire Council staff for a job very well done.

Other Council efforts this year have focused on trade issues and export assistance programs. We’ve testified in support of expanded export assistance programs, underscored the devastating impact of exchange rates, encouraged U.S. officials to monitor and enforce China’s WTO compliance, and pointed to the need for workable credit programs to support export sales.

The Council’s Board adopted policy last fall to support Trade Promotion Authority only if negotiating principles and objectives precluded U.S. negotiators from reducing tariffs on textile and apparel imports until other countries reduce their tariffs to U.S. levels. I am pleased to report that the Council worked closely with ATMI and with Senator Edwards of North Carolina to get an amendment in the Senate TPA bill that calls for essentially the same negotiating objectives for textiles as were already included for agriculture. The amendment instructs U.S. negotiators to make further reductions in U.S. textile and apparel tariffs only if other countries reduce their own tariffs to the same level.

The Senate approved its TPA bill prior to the Memorial Day recess on a 66-30 vote. It also included provisions for renewing and expanding our trade agreement with Andean countries, which include Bolivia, Colombia, Ecuador and Peru. The House had previously adopted a TPA bill on a narrow, one-vote margin. The Administration managed this razor-thin victory only after House Republican leadership made certain promises to Representative DeMint and other Textile Caucus members concerning a U.S. dyeing and finishing requirement for textiles.

The House bill also contained provisions for expanding regional fabric quotas in the Caribbean Basin Trade Preference Act, the Andean Trade Preference and Drug Enforcement Act, and the African Growth and Opportunity Act. These new regional fabric caps are higher than our industry can support. The quota for the African region is especially troubling. If approved, it could destroy any opportunities we might otherwise enjoy from regional trade agreements in this hemisphere.

Our delegates adopted a resolution in Dallas calling on the Council to work with the textile organizations to craft an Andean trade preference proposal that is supported by the textile industry and for the Council to support it if it is good for the whole industry.

Following through on that resolution, several meetings have been held, some involving only the senior staff of the Council, ATMI and AYSA and others involving both staff and industry leaders. Three sessions were arranged with key Congressional offices in an effort to determine specific interests of Congressional leaders and to explore opportunities for working together to get the best possible provisions for the U.S. cotton and textile industries in these new trade bills.

Late last month, a House anti-terrorism spending bill passed with the dyeing and finishing provision that had been promised to Mr. DeMint. Under this provision, Caribbean Basin apparel that is made from fabric produced in the U.S. can exported to the U.S. duty-free only if the fabric was dyed, printed and finished in the U.S. The provision extends the same requirements to apparel produced in the Andean countries of Bolivia, Colombia, Ecuador and Peru.

While this provision is welcomed by some segments of the U.S. textile industry, it is not universally favored. U.S. yarn spinners, for example, fear that it could jeopardize some sales they currently make to U.S. knitters who ship gray fabrics to the Caribbean region for finishing. Some of the recent discussions among Council, ATMI and AYSA leaders have centered on this issue, specifically exploring whether it is feasible to "grandfather-in" this business.

The House/Senate conference on the TPA bills is expected to begin right away and it could continue for a period of two weeks to two months. There are some major differences between the two bills. The outcome will have very significant implications for the U.S. cotton and textile industries, and it is very important for us to find common ground on at least some core provisions so we can speak with a strong, unified voice during the conference process.

Bill Gillon’s report later this afternoon will provide the Board with an update on several other trade matters, including WTO issues with China and Brazil.

While international trade policy must be among our highest priorities as we continue our efforts to restore economic vitality throughout the industry, foreign market development must be a companion to those efforts. I’m pleased that the Farm Bill provides additional support for CCI and similar organizations, raising the amount authorized annually for Foreign Market Development from $27 million, to $34.5 million for the duration of the Farm Bill. For the Market Access Program, it implements a phased-in funding approach that eventually reaches $200 million by the year 2005.

We would have preferred higher amounts for each of those programs, but this increased funding will give a solid boost to export promotion programs for fiber and U.S.-manufactured products, provided that we keep our industry seed-money at a level that enables us to compete aggressively for the public funds.

The economic conditions that have squeezed profits out of the cotton industry in recent years have also forced virtually all of our industry organizations to trim their respective budgets. Even though budgets are under pressure, I want to encourage organizational leaders, including those responsible for the Council’s budget planning, to keep a high priority on overseas market development. Without question, we will need to use every feasible resource to enhance demand.

I said earlier in my farm bill remarks that we have no time for victory laps. One of the biggest challenges facing our industry in the coming months and possibly for years ahead will be the successful defense of the farm bill. Senators Grassley and Dorgan are already serving notice that their payment limit amendment will be offered on forthcoming appropriations measures. And, of course, the EU, Brazil and Australia are already asserting that the bill is not WTO compliant.

We will have to defend the bill on multiple fronts, and we will need all the help we can get. We had a meeting just this morning to begin laying groundwork for this effort. I have also invited commodity and general farm organizations to meet on June 12 in Washington to discuss the development of a coordinated effort to defend the new farm law against its critics. In our letter of invitation, we acknowledged that there may be differences of opinion about specific provisions of the new law but we suggested there should be a strong consensus to defend the level of funding provided for commodity and conservation programs.

With the budget surplus rapidly disappearing, we can realistically expect amendments to be offered to modify farm programs to generate ‘savings’ that could be spent on other priorities. Likewise, we are deeply concerned about the incessant, bitter press accounts and editorials about the farm bill and the continued media criticism of The President for signing the farm bill.

On another front, Gaylon Booker recently sent the Council’s official family a communication that will provide industry leadership with information on how they can respond to farm bill criticism by the media through letters to the editor and with trade publication interviews.

Looking ahead, Council delegates have identified a number of other priorities that we will be addressing for the remainder of the year:

The input provided by our members during the recent farm bill meetings will be put to good use in the farm bill implementation process, which is already underway at USDA.

• The Council will be working for the funding of a disaster program in future spending measures.

• Our active participation in the Sound Dollar Coalition will continue as we attempt to address currency exchange rates and the strong dollar.

• Quality Task Force activities will continue with pepper trash research, variety selection, sticky cotton measurements and loan schedule improvements during their next meeting in the fall.

• The Bale Packaging Committee will review recommendations from a special subcommittee addressing the committee’s structure and procedures on bale cover specifications.

And we will continue to be engaged in a number of regulatory issues covering flammability, cottonseed ammoniation, crop protection product registration, air quality standards, and biotech issues.

In addition, the Study Committee on the Future Role of the Council continues its important work of structuring the Council in this current economic and political environment so that our organization will remain financially strong and our programs are directed at the industry’s top priorities.

As I said at the beginning of my remarks, the industry’s efforts –through the Council—have yielded many positive results. However, we still face stiff challenges that will require us to be unified in our purpose and persistent in attaining our goals. I look forward to working with you toward that end.