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    Standing Committee                                                   FINAL

    INTERNATIONAL COTTON ADVISORY COMMITTEE                           SC-M-338

    tlashington,   D.C.                                      December 16, 1985


                      338th meeting of the Standing Committee
                      Thursday, December 5, 19S5 at 10:00 a.m.
                    Room C-1OO6, World Bank, 1818 Ii Street, N.W.
                                  Washington, D.C.

    PRESENT:         lMS Julia Clones, Greece (In the Chair)
                     Dr. Eric N. Savage, Australia
                     Mr. Jose Antonio M. de Carvalho, Brazil
                     Yr. Benjamin Lu, China (Taiwan)
                     Mr. Y.S. Kao, China (Taiwan)
                     Mr. Jaime Infante, Colombia
                     F!r. Moharned Kassem, Egypt
                     Mr. c. panagides, Greece
                     Mr. Paramjit S. Sahai, India
                     Ms . Yahalomah Shehory, Israel
                     Ms. Maria Elena Espinosa, Mexico
                     Mr. Peter Le Poole, Netherlands
                     Mr. Alfredo Valencia, Peru
                     Mr. Victor Leviste, Philippines
                     F[r. Valery Yamnov, USSR
                     Mr. Brian l{arding, IJnited Kingdom
                     Mr. Gordon Lloyd, [Jnited States
                     Ms. Laurie Lerner, United States
                     Mr. M.E. Thigpen, World Bank
                     Mr. J.C. Santley, Executive Director
                     Dr. H.S. Singh, Economist
                     Mr. F.R. Arriola, Administrative Officer

The   Chairwoman     introduced     the  following    delegates     who were
attending    the Standing   Committee   for the first    time - Mr.    Brian
Harding   fron the T?nited Kingdom,     Mr. Elohamed   Kassem   from Egypt,
Mr.   Peter    Le  Poole   from the >Jetherlands    and ?4r. Valery   Yamnov
from the Soviet    Union.

(1)    Adoption         of Agenda

       The     agenda     was    adopted.

                                 (Agenda      item    1)

(2)    14inutes    of     previous      meetings

       No    comments.

                                 (Agenda      item    2)

(3)    Flatters    arising        out   of    previous         meetings


                                 (Agenda      item    3)

(4)    Report     on     the    World   Cotton       Situation

       Dr.     Singh     (Economist)         reported         - Attachment   1 to   SC-N-338.

      Mr. Lloyd     (United    States)    said that the          trade estimate         for
      Us.    exports    this season      was now only 2.5 million             bales.    The
      resultant      additions       to   carryover        stocks    puts pressure       on
      Congress      to   do something       to make U.S.         cotton      competitive
      with   6ther growths.        The    long     range      outlook     over the next
      five years     is going     to be difficult        and     prices    are going to
      be    lower    because      of    the burden      of excess      stocks     on    the
      market.     The surplus      will     not    be    liquidated        by increased
      consumption       but    acreage      will     have     to    be lowered.         :{r.
      Valencia      said    that, if he had received             copy of      the    Final
      Statement     of the Plenary        Meeting,      he    would     be in a better
      position      to   discuss      Dr. Singh-s       report.      He said that the
      cotton    situation     was very serious        and     he    hoped     that there
      would   be further      opportunities       for discussion        in the January
      meeting     of the Standing        Committee.        When Congress       has    made
      its    decisions      on    the    cotton      bill,    the rest of the world
      would   have to live with them.             Mr. Valencia       asked    the United
      States      delegate        to     convey       to      his      government       the
      preoccupation        of    the developing       nations     with     the    effects
      that the United       States    cotton    policy     of encouraging           higher
      production     will have       on   the     economies      of    other    producing
      countries.        These     effects      will,    therefore,      be    shared     by
      countries     who are not responsible           for     creating       the    cotton
      surplus.       He    said    that     a substantial        amount    of cotton     is
      likely     to be released       from CCC       stocks      this     spring     which

      ~ould    depress     export      prices      further.      The Chairwoman      said
      that     all the delegates        had received         copies    of    the    Final
      Statenent     at the Plenary        14eeting. She said that she was sure
      that the United          States   delegation       and the Secretariat        would
      keep     the    Committee       informed      on    developments       in   cotton
       legislation.       In reply     to Mr. Valencia,          Mr. Lloyd    said that
      he could not pass any comments               until    he knew    what     the U.S.
       legislation       would     be.    However,     U.S. farmers      are facing       a
       serious    financial     crisis      and    Congress     was conscious      of the
      need to assist        these farmers       in    returning     to profitability.
       lJ.S. loan prices       are much higher        than     the   loan    price     and
       therefore      U.S.     prices     are    going      to   have to be reduced.
      However,       it is unlikely       that any legislative           changes     will
       affect   the 1986 crop.

                               (Agenda     item     4)

(5)    Auditor-s      Report     for     1984/85

      The Chairwoman           said   that copies   of this       report  (Attachment
      11 to SC-IT-338)         had been distributed    with       the notice.

      The   report    was   approved.

                               (Agenda     item     5)

(6)   Report    on   44th   Plenary       Meeting

      Mr. Santley    said that in January        all delegates    would    receive
      copies   of the    Proceedings      including     the   Final     Statement
      when it had been translated         into Spanish    and French.       In the
      meantime , however,        he would    like to make his usual        remarks
      concerning     the    conclusions      and    the  discussions       at   the
      plenary   Meeting,    primarily   for the benefit      of the members      of
      the Standing    Committee    who did not go to the Plenary.

      Attendance       of   the    meeting       this year was very high with a
      record   number     of observing      countries.      A minimum    of time      had
      been spent on administrative             matters     and the discussions        had
      dealt with the cotton          situation.       It was his impression          that
      delegates     were more prepared         than usual     to accept     the facts,
      however      unpalatable.         He    felt     that the revamping        of   the
      agenda   for the Plenary        Meeting     had helped     to concentrate       the
      discussions      on cotton     problems.        He    said that he had given
      two reports      to the meeting       which    dealt      with    the     surplus,
      the    scenario      for    its disposal       and the longer       term outlook
      for cotton.       Production      increased     by 20 million       bales    in the
      1984/85    season,    mainly      because      of    an explosion      in average
      yield.       Acreage    and production       will be      down    sharply      this
      season    In    response      to low prices.       Even so, production         will
      still    be     9 million     bales     in    excess    of    consumption       and
      carryover     stocks    at the end of the present            season   will be 53
      million    bales     or    double    what they were only two years ago.

In order      for there     to    be any opportunity         for liquidation        of
these huge surpluses,            production       on a world     basis will have
to    go    still      lower.     The question      raised      at    the    Plenary
Meeting     was how      will     this reduction       be achieved      and where.
Disposal      of the surplus         is   likely      to take several        seasons
and until progress          has been made in this            direction,       prices
will     continue     weak.     In    previous     cycles    the TJnited      States
held     a    major    part of the world        surplus.     Now, however,        the
major      surplus     is in the      People”s      Republic       of   China      (15
million     bales).      It is therefore        important      to follow     closely
the situation        in that country.         Many delegates        felt that the
Committee      should    move       to develop     cooperation      with the PRC.
On the surplus         disposal,     14r. Santley     said     that no one would
recommend         that      yields       be    reduced.       The     alternative,
therefore,       was a reduction        in world    cotton    acreage.        It was
the    view of many developing              countries,       however,       that    it
would      be    difficult       for them to carry        the burden      of supply
adjustment.         Also,   the     readjustment      of supply     was primarily
the responsibility          of those      key producing       countries      holding
big    surpluses       and all stimulants          to    production       should    be
reduced       or eliminated.         Some countries,       however,      felt    that
the readjustment           would     also come about       by the interplay         of
market     forces.      Before     official      action      is taken,     however,
the    possible        impact     on    the    cotton     economies       of    other
countries      should     be taken into account.

Mr.    Santley    said     that     the   panel     discussion        on    fiber
consumption    had been very successful.             Not only were we able
to   obtain    a    consensus      of    professional       opinion      on    the
prospective      level of consumption         by 1990 - 77 million          bales
- but we were       also     able    to   break     consumption      down into
component      parts       -     the    industrialized        countries,       the
socialist      group      and    the     developing        countries.         The
information      developed       in the     seminar    helped    to gauge what
the    longer    term    market      for    cotton    will be - 77 million
bales.   Reasoning     backwards,     we can obtain       some idea of       what
this    means    for    acreage      in an equilibrium        position.      ‘,~uch
depends   on assumptions  concerning              yield.   On   the        basis   of
the     long term trend,  yield would             be one bale per          acre    by
1990 and        acreage  would   have             to be 77 million         acres   to
balance   consumption.

The   Executive   Director     said   that   he   would   like to express
his   sincere   appreciation     to the government       of Australia   and
the   conference    organizers     for a job well done       and  also    to
Dr.    Eric Savage,     the ‘Washington    representative     of Australia
for   his hard work prior to the Plenary          Meeting.

The Executive     Director     said    recently    a  Study   on Cotton
Marketing    had   been    released    hy the Secretariat.     However,
because   no funds were made       available    in the budget  for this
study   only a limited    number   of   copies    had been printed   and

      The   Chairwoman    also complimented      the Australian    organizers
      on a most     successful     meeting.     She  said    that  everything
      possible    should     be   done    to try to induce    some of the     13
      observing   countries     to become   nembers  of the Committee.

      Mr.   Sahai   (India)    said that he      wished    to   compliment      the
      Secretariat     for a job well done.          The documents     prepared   by
      the Secretariat       were responsible      to sone extent      for guiding
      the   deliberations        of     the   Plenary     Meeting.      ~.ith   the
      experience    of the Plenary       Meeting,     he hoped    that more time
      in the Subcommittee       on Finance    would    be spent   in substantive
      matters     concerning        cotton    rather     than     administrative

      Dr. Savage    (Australia)     said    that the Australian    government
      believed   that the Plenary      l[eeting l~ad been a   successful    one
      and that substantive      issues    on cotton  had been   discussed     at

      Mr. Valencia      congratulated       the    Executive       Director     and the
      Secretariat       for   the    documents       prepared      for     the Plenary
      Meeting.       In   view    of    the    h~lge surpluses       in the People-s
      Republic     of    China,     he understood        that     the    Plenary     had
      considered     that it is        urgent     to    establish     a dialog     and a
      channel     of    communication       with     the People-s        Republic      of
      China.      He    inquired    what progress       had    been    made     by    the
      Executive    Director      in    his    consultations       with the People-s
      Republic    of  CP,ina in ~.?ashington.         Mr. Santley       said that his
      contact    in i{ashington     had offered      to    assist    in developing      a
      full program      for a visit     by him in the early          spring    of 1986.
      hr.    Santley     said any proposed        trip to the        PRC    would,     of
      course,     be    formally     considered       by    the    Subcommittee        on
      Finance,    at which    time information        would    be available      on the
      details    of the program      and. the expenses        involved.

      In   reply    to a question   from ?Ir. Panagides,        the  Executive
      Director   said that he had      received      a letter   of intent  from
      the   Secretary    of Agriculture      of .4rgentina    concerning     the
      payment   of the outstanding       assessments     of that country.     He
      said    he was confident    that serious       efforts    were now being
      made  to bring Argentina-s      assessment     up to date.

             (Agenda    item   6)

(7)    l~ork Program     for   19S5/86

      The    Executive    Director    said that in addition     to the details
      of the !fork Program      already    circulated    to the members   of the
      Standing    Committee,      the     Plenary    Meeting   agreed   that, as
      usual,    there would be a Report        on Extra-long   Staples.     Also,
      the    ICAC    iS   one   of    the co-sponsors     of the Mediterranean
      Countries     Regional   Meeting     in   Iiontpellier  at the beginning

      of March   and the Secretariat    is proceeding     with arrangements
      for   a regional   meetinfi of J.atin American      countries    to   be
      held    in  conjunction    with   the   45th    Plenary    Meeting    in

      The    Standing    Committee      took   note of the t{ork Program                    as
      approved    by the Plenary    and approved      the recommendations                   of
      the    Secretariat     concerning     the appropriate    committees                   to
      handle    the various   assignments.

                              (Agenda     item   7)

(8)    Appointment       of   Search    Committee

      The Chairwoman       said that she had been               delegated       to select      7
      people     to    form     a    Search    Committee      to assist       the Standing
      Committee     in finding       a    new    Executive       Director.           In    this
      regard,     she     felt      that while      considering       all    the the other
      factors,      the selection          of    the    Search      Committee         members
      should   be on      an    individual        delegate       basis.         The     Search
      Committee,       however,        is    open    to    other delegates           but, any
      decisions       taken are the responsibility                 of the 7 members          of
      the    Search    group.      The Group      would    report       periodically         to
      the Subcommittee          on     Finance      which    in turn would         report    to
      the Standing      Committee.         She stressed         that the selection           of
      the    7 people     was on the basis          of individuals.            Fls. Clones
      said that      some people        had suggested        that she should          also be
      a   nember    of    the     Search      group.         As    Chairwoman         of    the
      Standing    Committee       she was ex oficio          member     of any committee
      or subcommittee.            However,        should      the Standing         Committee
      wish    her to participate           as a full member          with       a    vote    it
      would   have to enlarge          the number      to 8 people,        in which      case,
      there   could conceivably           be a tie vote and someone               would have
      to have     a    double      vote.      The 7 people       are as follows          - }fr.
      Valencia     (Peru),    Mr.      Okonkwo      (J?igeria),      Mr. Engelbrechten
      (Federal      Republic      of Germany),       Mrs. Shehory           (Israel),       Dr.
      Savage    (Australia),       Mr. Kondakov        (lTSSR) and Mr. Lloyd            (US.4).
      Ms . Shehory      said      that     the    Search     Committee       would    benefit
      greatly    from the formal          participation         of    the     Chairperson.
      If voting     ever became        a problem,      the Chairperson            could have
      a   double     vote.     Ms. Clones        said that she had excluded                 the
      officers      of    the     Committee      from the list of 7 people.                 Ms .
      Espinosa     (Mexico)     and Mr. Valencia           agreed with Ms. Shehory.
      Mr. Lloyd     said     originally       the United        States     had proposed        5
      members.      Subsequently        it was enlarged         to    7 and now it will
      be 8.    His only concern           was that it would be             more difficult
      with a large group          than wfth a smaller           group.        However,      the
      Standing      Committee      itself     would    have the final approval               of
      the selection        of the new Executive            Director.         In reply to a
      question    from Mr. Carvalho           (Brazil)     the Chairwoman          said that
      a full report       would      be    prepared       on    each      meeting       of the
      Search     Committee.          She     repeated      that     she      had     selected
      individuals      and there           would     be no substitutes.              In reply

           to    a    question     from    Mr. Harding,     Ms. Clones   said that non
           members        participating       in   the group   could    express     their
           opinions.           However,       the    group      alone     would      make
           recommendations         to    the   Subcommittee     and     the     Standing
           Committee.         Ms.   Clones    said that she had hoped       that    there
           would    be unanimous       agreement     with her selection.        However,
           she     was    obliged     to go with    the majority     of   group     views
           expressed.       It was agreed      that the Chairperson      would   discuss
           with the 7 members         when the first meeting       of the group would
           take place.

                                  (Agenda    item   8)

     (9)   Request  of    World Bank for Dr.          Gillham     to prepare     report    on
           the status     of cotton research          in East     Africa

           The Chairwoman       said     that     at    a    previous     meeting       of   the
           Subcommittee       it    had     been     agreed      that    the principles        of
           loaning    out to other       international        organizations         members    of
           the ICAC      Secretariat        would     be considered.         However,      there
           had    not    yet    been time to consider            this matter.          We   were
           therefore     faced     with     a   specific        request     which      required
           urgent    action.     This was why the request             is made directly         to
           the Standing      Committee      and not through         the usual channels         of
           the    Subcommittee.        At a future        meeting    of the Subcommittee,
           the principle      itself     would    be considered.         She said that Yr.
           Santley     had     prepared       a   paper      giving     the details       of the
           proposal      and    other      relevant       information.       The     Executive
           Director     said that the project           which    would now be undertaken
           by the     World     Bank     was    long overdue.         This study would be
           undertaken       by several      scientists       each covering        a    separate
           region    of Africa.       In his opinion,          there was a pressing         need
           to do something         to    help     the     cotton     growing    countries      in
           Africa    where   in many cases cotton            yields   were very low.         The
           ICAC had been asked         to lend a hand as far as East Africa                  was
           concerned     and Dr. Gillham        had been invited           to be one of the
           contributors      because     of his wide experience           in    that part of
           Africa.       He    felt     that     the    project      itself     was     a   very
           praiseworthy        one    and     he fully      supported    it.    He had given
           information      concerning      what     would     be involved     and what time
           would   be required       if Dr. Gillham        were to participate           in this

           Mr. Santley     said    that the World       Bank would like Dr. Gillham
           to begin    the study on January         15    and finish     it by March  15.
           Ms .  Lerner    (United    States)    asked   whether      Dr.    Cillham  had
           been contacted       concerning       whether     he    could undertake    the
           study    and still     fulfill    his obligations       to    the   ICAC.  Mr.
           Santley     said    that    it    would     have been more convenient        to
           undertake    the study     in December.       He    felt     that Dr. Gillham
           would   either   have to take leave         or work in his spare time to
           do    the    Rank study.       Mr. Santley      said that he       would  make


sure that any work by Dr. Gillham                  for the World        Bank did not
interfere      with     the ICAC pro~ram.            The work of the Committee
always     had top priority.             Soae     of the information          required
for the study may already              be    available        to the Secretariat.
The ICAC had already           had a regional         meeting       in East Africa.
Ms. Espinosa        asked whether        the Committee        had a     policy      with
respect       to    the    employment       of Secretariat        members     by other
organizations.          Ms.    Clones      said that the         Bank     study would
benefit       cotton    and also the Committee.               The issue was could
Dr. Gillham         be spared      to    undertake      the study.        Mr. Santley
said that study would            take approximately           one month      and would
be    a    desk job involving          no travel.          Dr. Gillham       would     be
back in       Washington      about    January      the 15th by which          time the
typing      of    the     scientific        material       from     the    Australian
meeting     would      have    been completed         and ready       for editing      by
Gi.llham.      Ilr. Panagides       (Greece)      proposed      that the matter        be
considered       in the context          of    Dr.    Gillharn      undertaking       the
study       for     the    World      Bank     as    part     of    his    ICAC     work
responsibilities           and without        any consultation         fees from the
Bank.      Ilr. Valencia        said     that     he was quite        satisfied     with
the paper prepared           by the    Executive      Director      on this matter.
In his opinion,         the World      Bank would         have    no tiifficulty       in
finding       someone     else to undertake          the study.         Dr.     Gillham
should     not    work     in    his spare       time because       leave was given
for rest purposes.            If    the     Bank wishes       the services        of Dr.
Gillham,      it should      engage    him as       a member     of the Bank staff
and     we    would     look     for     someone        else     to    wortk    in    the
information         section     of ICAC.       He said       that     the    Committee
would    be taking        second      place      and    that     he    was therefore
opposed       to    the    program.        He could not be subject              to    the
interests      of one of        the    employees        of    the Committee.         Ms.
Clones       said      there     were no constraints           on     debating      this
issue.        Ms.    Shehory     said that both           the    specific       request
and     the principle        involved      in the future        could be taken         up
at the      next     meeting       of    the     Subcommittee        which     could be
empowered       to make the final decisions.                  She felt       that,     in
principle,          cooperation          between        the      ICAC       and    other
international        organizations         was essential        and desirable.        The
World      Bank     should      be    asked     whether       it    can     extend    its
deadline.        The Chairwoman         said that she wished           to pursue      the
proposal         by    Greece      that     work     for     the    World      Bank    be
accomplished         within     the normal       work of ICAC by Dr. Gillham.
She said that in return             for Gillham-s                participation         in
the     study    the Bank could         provide     benefits     to the Committee,
such as helping          to finance        regional     meetings       of TCAC.      ?fr.
Valencia        said     that    if the World        Bank has decided          to carry
out this study         it would     he done with or without             Dr. Gillham.
Africa     would    benefit     and     so    would     the ICPC.       Mr. Valencia
said that the disadvantage               in the Greek        proposal     was that it
would     involve     overtime     on the part of          Gillham       and his work
for     the    Committee      could     therefore      suffer.      Mr. Lloyd       said
that in order          to cooperate        with the World Bank and with the
assurance        that     the      employment          of     Gillham       would     not
I   ,-

                jeopoardize      the work program,         his delegation          would      propose
                that    the    Committee        agree     to    the    Bank-s      request     in the
                interest      of cotton     and for the benefit           of the East        African
                cotton    producing      countries.          Dr.    Savage      said that he was
                inclined      to   agree      with     the    proposal       in    view     of     the
                assurances       given     by    the    Executive       Director,        but he was
                reluctant      to take any action          until    the principles         had    been
                discussed     and    the    decision,        therefore,      could be postponed
                until   next week.       In reply      to a     question     from Ms. Espinosa,
                Mr.    Thigpen      (\Jorld     Bank)     said that       the    Bank      did    have
                arrangements       whereby      its employees        were     secunded        out    to
                governments      for    specific       assignments        at    the    cost of the
                government     concerned.        Mr. Lloyd      said that having           discussed
                this    matter    at length      at this meeting        he was not optimistic
                that any      decision      could be taken even if it were postponed
                until     next week.      Mr. Panagides         said that       on    the     factual
                evidence     the Bank request         could be done in the course              of Dr.
                Gillham”s     normal    duties.         ~owever,     if it cannot        be done in
                this    way,     then    Dr. Gillham       should      be    granted       leave     of
                absence.      Ms. Clones      said that the Greek          proposal      would nean
                that the work for the            Bank     on    East    Africa     would    become    a
                Committee     assignment.        Mr. Carvalho       said     that     Dr.     Gillham
                would     be   using     some      information      already     available      in the
                Secretariat.        In reply,      11s. Clones       said     that      it    was not
                possible     to subdivide       and categorize       the information          and the
                expertise       that    Dr.     Gillham      would     bring    to the job.        Mr.
                Valencia      said     that     there     is    some    doubt      whether       under
                existing     contracts     a professional        member      of the Secretariat
                can     be      forced       to     work       for     another       international
                organization.        If so, this would          weaken      the Greek      proposal.
                There    is also a clause         of full dedication         to the ICAC by the
                employee.      He said that another            issue   to be      considered       was
                that the Ilorld Bank should            pay for the use of ICAC technical

                It was agreed         to    postpone     any     decision    till   the   meeting   of
                the Subcommittee           on Finance     on     December   12.

                                        (Agenda     item   9)

         (10)    Any   other    business


         The    meeting     adjourned       at   12:45   p.m.
+,; $ ,
         Standing Committee

~w’     Washin ton, D.C.                                                    November 25, 1985

                                     WORK PROGRAM FOR 1985/86
                              (Item 7, Agenda for Standing Committee)

                                                    Reference               huggested


        The plan and timetable submitted by         Steering Committee      Search Committee
        the Standing Committee (SC-N-337)           first meeting           appointed  by
        was approved. Note was taken of                                     Chairwoman of
        the information supplied by the                                     Standing Committee
        Standing Committee on the qualifi-                                  and Standing Committee
        cations and experience required
        of candidates.


        Standing Committee to continue              Steering Committee      Subcommittee on
        its efforts to collect unpaid               first meeting           Finance and Standing
        assessments and work towards                                        Committee
        improving the financial situation
        of ICAC.


        Secretariat to continue publi-              Attachment to minutes   Secretariat
        cation of review and statistical            of Steering Comittee
        bulletin.                                   second meeting

         Government regulations including           Steering Committee      Secretariat
         information on philosophy behind           second meeting
         official policy measures.

         Cotton production survey - optional        Steering Committee      Secretariat
         depending on time available and            second meeting
         financial resources


         Continue work on bibliographic             Steering Committee      Standing Committee
         database, publication of Recorder          third meeting &         and Secretariat
         and directory of current research.         report of Chairman
                                         2   -

    COMMITTEE ON COTTON PRODUCTION           Reference           Suggested
    RESEARCH (Cent.’d)                                           Committee

    Organize a seminar for the 45th          of Committee on     Secretariat
    Plenary Meeting on “Cotton               Cotton Production
    Production and Fiber Quality             Research
    Needs for the Textile Industry
    towards 2000”.

    Secretariat to publish information                           Secretariat
    on this topic for the Plenary

    J/)     Standing Committee                           Attachment I to SC-N-338


            Ilashington,    D.C.                          December 3, 1985

                            Report on the l~orld Cotton Situation
                            Presented to the Standing Committee
                                     December 5, 1985

               While the overall cotton situation for the current season has
          not changed much since the Plenary Meeting,         data for some
          countries have been revised significantly.     World production is
          now put at 81.1 million bales (17.7 million tons) compared to the
          October estimate of 80.9 nillions   (17.6 million   tons) and last
          season-s crop of 87.8 millions (19.1 million tons). I!ajor upward
          revisions have been made in the United States and Pakistan, with
          offsetting decreases in the fJSSR and Central America.

               The November  report by the Department of Agriculture places
          the U.S. crop at 13.9 million bales (3.03 million tons) compared
          with the preceding month-s forecast of 13.6 millions (2.96 million
          tons) , with the najor gain in Texas. Production       last season
          totaled 13 million bales (2.83 million tons). Area for harvest is
          down fractionally from 1984/85 but average yield is estimated at
          644 pounds per acre (722 k.gs per hectare), 44 pounds (49 kgs) more
          than last season”s record.

               In Pakistan, the production estimate has been raised to 4.1
          million bales (893,000 tons). During sowing, sizable cotton areas
          were either left unplanted or planted late due to the shortage of
          irrigation water.    However,  later rains followed by warm, dry
          weather and only minor pest infestation  resulted in good plant
          development.   lfith increased use of fertilizers, improved seeds,
          and extended plant protection measures,    average yield is now
          estinated to be only marginally less than last season.

                In the lJSSR, current indications are that seed cotton outturn
          will. tntal arol~nd 9 I’nllliog netric     ....- ~glip.st
                                                    tnnc            q.  ~ ~-i~~~~p.~

          originally envisioned. However, quality is reportedly higher than
          in 1984/85 and, assuming a ginning outturn of 29.5-30 percent,
          lint production will amount to roughly 12.3 million bales (2.7
          million tons) compared to 11.7 millions (2.5 million         tons) last

               %eavy, unseasonable   rains in many areas of Central America
          have caused boll rot and led to infestation by bollwom and other

pests. Aggregate cotton outpl~t in the region is down by 100,000
bales (21,770 tons) from the previous month-s fi~ure.

       The estimate of world cotton consumption has been increased
slightly, to 72.1 nillion       bales (15.7 million tons) compared to
70 millions (15.2 million tons) last season. In the case of the
Feople”s Republic of China, the series on cotton consumption has
‘ueeII revised fvT several seasons.   According co Ibese iacesc ciata,
cotton consumption in 1?84/85 was unchanged at 16.3 million bales
 (3.5 million tons). For 1985/86, however, consumption is expected
 to increase to 17.5 million bales (3.8 million tons).        The PR.C
government    is encouraging     mill   consumption    of   cotton by
temporarily    lowering taxes on pure and low-count cotton yarns,
iaproving    cotton cloth quality,      and   allowing    for   retail
‘installment sales of cotton cloth during 1985 only. A special
allocation    of an additional 500,000 tons (2,296,000 bales) of
?rade 3 cotton was reportedly made available for use in padding in
cities and non cotton producing areas, with a subsidy on prices to
encourage consumption.    The subsidy on padding, too, is valid only
for one year, granted to help workdown the large volume of stocks
through expanded non sill-use.

     Consumption    in the United States is now estimated at 5.6
million  bales (1.2 million tons), up 100,000 (21,700 tons) from
last season.     Sales are good for a number of textile products,
especially all-cotton yarn, athletic goods , underwear,  and most
apparel   items.    F!arket reports indicate that cotton textile
activity will be sustained well into the new year.

      Because of downward adjustments  in Italy and Yugoslavia, it
is doubtful if there will be any real increase in ~lestem Europe.
Consumption   in Italy is reckoned at 1.15 million bales (250,000
tons) against last season-s 1.20 million (261,000 tons). Earlier,
most. observers had foreseen a further increase in cotton use but
the spinning sector is currently affected by      large imports of
yarns, towels, and household      linens. Mills in Yugoslavia  are
short of foreign exchange to pay for needed fiber imports. Owing
to slow export sales, yam stocks have accumulated        in China
 (Taiwan) and cotton use during the present season is now expected
to decline.

     Based on the present estimates of world cotton production and
consumption,  carryover stocks will rise from 44.3 millions   (9.6
million tons) as of August 1, 1985 to 53 millions (11.5 million
tons) or equivalent to over 8-1/2 months consumption requirements
at the anticipated    rate of offtake.     The increase will be
concentrated in the People-s Republic of China and the United

       International cotton trade is expected  to remain close to
last     season”s   20.6 million   bales  (4.5 million  tons), but

si~nificant changes     are   expected        in the trade pattern.

     Exports  are expected to be up significantly from several
countries where supplies are higher - notably Australia, Brazil,
Pakistan and Turkey. Total shipments fron the People-s Republic
of China are likely to be around 1.5 million        bales (327,000
tons), 300,000 (65,000 tons) more than last season.

     Exports from the ?Jnlted States are now unlikely to exceed 3
million  bales  (653,000 tons) compared to 6.2 millions (1035
million  tons) in 1984/85. ~1.s. cotton continues to face strong
competition from outside growths which are generally available at
lower prices.

     The agricultural legislation being considered by Congress for
1986/87 and later seasons aims at making U.S. cotton more
competitive The bills passed by the House and the Senate would
.- according   to unofficial estimates -- result in the following
loan rates. The two bills will be looked at by a Conference
Committee and compromise legislation drawn up.

            1986/87     1987/88         1988/89     19R9/90

                                   Cents per pound

Xouse            54.4            51.7             49.0        47.0
Senate           55.0            52.3             50.0        50.0

     The present season-s loan rate is 57.3 cents.

     The House bill also includes a provision     that requires the
Secretary of Agriculture to lower the loan rate further, hy up to
20 percent,    if the world price is below the formula loan rate.
l,loreover,if at anytime during the marketing year the world price
drops below the loan rate in effect, a Payment-in-Kind         (PIK)
certificate   program must be implemented. Certificates would be
issued to first handlers of cotton in an amount equal to the
difference   between the loan rate and the world market price.

     Hotlever,   the         bill does not allow for the 20 percent
decline in the loan rate, but utilizes   in its place a “*market
loan” concept. This concept allows farmers to repay loans at the
world price or the effective      loan rate, whichever is lower. An
eligible grower who chooses not to use the loan can recieve a loan
deficiency payment equal to the difference   between the loan rate
and the loan repayment rate.

    Target Prices

    - House:       Frozen for 1986 and 1987 at the present level of
                   81 cents per pound. Thereafter, the target price
                   will be set at not less than 90 percent of the
                   3-year average of production  costs.   The maximum
                   reduction can be 5 percent      from the previous
                   year-s level. fiowever, target price can only be
                   -“ . - ..-4
                           .     if        the
                                           -.Lti   ~.:~~~g~   .nc+
                                                              ~u”<   ~f   n*fiA.*ntin”
                                                                          y.”..uL.a”..   ~~

                   e~ti~ated      fall at least 5 percent from the

                            yezr. This 5n effect f~eczc~ ~~,~~~~g~t
                   price for the life of the bill since production
                   costs are not expected to decline.

    - Senate:      Frozen for 1936 at 81 cents, but annual reductions
                   of up to 5 percent for 1987-1989. The reduction in
                   1997 will be made up with surplus commodities    of
                   equal value.    In 1988, the reduction will be made
                   up   with surplus     commodities   if   available,
                   otherwise    in   cash.   For 1989, there is no
                   provision for compensation   for reduction in the
                   tar~et price.

    Acreage Limitations

     -   ~~ouse:   Provision for Acreage Reduction Program (ARP) of
                   up to 25 percent, and Paid Land Diversion     (PLD )
                   including PIK. If ending stocks are projected to
                   exceed one-third of estimated domestic use and
                   exports,   the    Secretary   of Agriculture   must
                   implement a program for bringing  stocks down to
                   one third of use.       If ARP is insufficient, an
                   additional   reduction  of up to 25 percent paid
                   diversion/PIK program may be implemented.

     - Senate:     For 1986-88, there is authority for ARP (maximum
                   20 percent) and PLD. Thereafter, no authority for
                   ARP but PLD can be used at the Secretary”s

     Cotton prices declined further during August-October, “1985,
with the Cotton Outlook Index for l~iddling 1-3/32” quality, CIF
North Europe, going to 48 cents per pound from around 58 cents at
the start of the season.   During November   and early December,
however, the Index ha? remained generally stable.

     The near December contract on the New York Futures market has
moved narrowly    between 60-1/2 and 61-1/2 cents per pound during
the past several weeks. Quotations    for the early delivery months
of next season are noticeably lower, with December    1986 contract
at around 52 cents.   The bearish outlook reflects continued  large

 supplies    relative  to  demand and the belief that        the   new
 agricultural legislation will lower support prices.

      Egypt”s opening sales prices, announced on November 18, 1°85,
 were 4.6 to 6.7 percent lower for the ELS varieties   compared  to
 last season-s initial levels. Thus, Giza 70 Cood+l/4 was priced
           cents psr po-und, ~,g~ ~ls-xandr%a, or 6.7 percerlcless

 than last year-s openilig ‘ra–Le. LonE staple prices,  however, were
             7LGT?=FJy 10.2 to 12.5 percent.
 2iscG-G?l:eti                                Trade sources reported
 very good demand.     Total exportable supplies were estimated  at
 700,000 bales (15z,000 tons) compared to last year-s 644,000 bales
 (140,000 tons).

                     WEEKLY    COTTON       PRICES’
                         1983/84    – 1985/86
100 1                                                       ~      INDEX   “A”

                                                            -E-    INDEX   “B”

                                                            ~      NY FUTURES






                                         .. . .   . . . . .. .. .. ..

. . . . . . .. .. .. .. .. .. .. .. .. ..                   .. .. ..
. . . . .. .. .. . . .. .. .. .. ..      .. .. I
. . .. .. . . .. . . .. .. .. .. ..      .. .. 1
                                               I      F

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                                               I      . .

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                                            w !
                                            0 i
                                         . ID I
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                                          . .  1
.. .. .. .. .. .. .. .. .. .. ..         . . 1
                                          . . I       ..
                     o                         I
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                                         . . . ; ,.   .. .. .. .. ..
1                                                –7-
iBLE     2.    WORLD
--------------------------      --------------------    -----— ----- -—--—---                                                      ----------        -——
                            :                 YEAR BEGINNING   Gi.JGiJST1
 CCIUNTRY                                 :1980/81:1981/82:                     1982/83:1983/84:                  1984/85:1985/86:             1986/87
                                          :             s                   :              :                  :      PREL.      : PROJ.      : PROJ.
-----    —-----     -----   --—-—   -----      —----   —----       -—---         --——_ -----         -----        ---—-    ----------        --—--   ---

JNITED  STATES                                 3.00             2,67                6.h3             7.94              2.78         4.07           9.39
)THER NET EXPORTERS                            8.89             8.07                9.05             7.77              7.50        1~-55          11.49
JET IMPORTERS                                  5.34             4.53                4.46             4.14              4.00         4.01           4.27

    SUB–TOTAL                                17.23             15.26               20.14           19.85              14*2H        20.63          25.14

:HINA, P.R.                                    2.21             3.02                2.74             3.78              8.00        19.30          23.40
J.S.S.R.                                       2.07             2.16                2.18             1.97              2.73         3.20            3.30
)THER SOCIALIST                                1.05             1.05                1.17             1.20              1.20          1.20           1.20
 SUB-TOTAL                                     5.32             6.24                6.09             6.94             11.93        23.70          27.90

 WORLD TOTAL                                 22.55             21.50               26.23           26.79              26.20        44.33          53.04

JNITED STATES                                11.12             15.64               11.96             7.77             ~~m98        13.80
;LSEWHERE                                    27.69             28.25               26.97           26.08              34.35        31.82
  SUB-TOTAL                                  38.81             43.89               38.94           33.85              47.33        45.69

;HINA, P.R.                                  12.43             13.63               16.53           21.30              28.70        23.00
J.S.S.R.                                     13.17             1~.9a               12= 19          12.28              11.72        12=30
ITHER    SOCIALIST                               .09               .08                   .08           .08                .08          .08
   SUB–TOTAL                                 25.68             26.69               2=.     80      33.66              40. so       35.38

 WORLD        TOTAL                          64.50             70.58               67.73           67.51              87.83        81.07

JNITED   STATES                              14.12             18.31               18.60           15.71              15.76        17.95
:LSEWHERE                                    41.92             40.85               40.48           37.98              45.85        4a. 37
   SUB–TOTAL                                 56.04             5?. 16              59.08           53.69              61.&O        bb .32

:HINA,   P.R.                                14.64             ib.66               19.27           25.08              36.70        42.30
                                             15.23             15.13               14=37           14.25              14.45        15.50
                                               1.13              1.13                1.25            1.2a               1.28         1.28
   SUB-TOTAL                                 31.00             3z. 92              34.89           40.60              52.42        59.08

    WORLD     TOTAL                          87.05             92.08               93.97           94.30             114.03       125.40

                                               5.89              F     96            5.5:            = OT
                                                                                                     “.,-               5.45
JNITED   STATES                                                  ---

ELSEWHERE                                    32.89             %7 71
                                                               k&.&                33.41           34• 42             35.55
   SUB-TOTAL                                 38.78             37.48               3s. 92          40.35              4J..CI3

:HINA,    P.R.                               15.08             16.09               16.41           16.30              16.30        17.50
J.S.S.R.                                       8.97             8.98                 9.04            9.10               9.15         9.26
ITHER    SOCIALIST                             3.28             3.27                 3.47            S.46               3.53         3.55
   SUB-TOTRL                                 27.33             2B .35              28.91           28.86              28.98        30.25

  WORLD TOTAL                                6&.      10       65.82               &7. 83                                          72.12
---------------------                                                                              -----     -—---      ----———    ------      ---———-
    Table 3.             Cotton Price Quotations - North European Ports 1/

: -------------------------------                : ----------------------------------------------------------------------                                             ---------------------------              .
:                                                :                                                                                                                                                             :
:                                     1984   :                                                                                               1985                                                              :
:       Growth                        Oct.   : April                     May                     June                         July                  August   Sept.                     Oct.         N(lV.21:
: -------------------------------            : -------          _-----------           &--------------------------------------------------                            ---------------------------              ,
:                                            :                                                                          U.S. cents per pound                                                                   :
: UNITED STF.TES                             :                                                                                                                                                                 :
:   Orl.Tex.~                         67.75 : 64.69                     64.90                    63.44                        62.50                 62.90     63.00                   63.65         6:1.75     :
:       T
    Mere.err.Ml-3/32°                 74.69 : 76.06N                    72.55                    70.25                        69.25                 68*20     67.94                   68.65         6;’.75     :
:   California S.M. l/8”’             78.19 : 76.75                     74.65                    72.56                        71.00                 69.60     68.19                   69.20         68.50      :
: MEXICAN                                   :                                                                                                                                                                  :
:   M 1-3/32” .                       73.88 : 69.19                    68.50                    ,65.50                        62.88                 59.35     54.94                   50.85         50.25      :
: GUATEMALA                                                                                                                                                                                                    :
:   M 1-3/32”’”                       71.38 j 63.88N                   64.65                     62.75                        59.75                 57.00     51.13                   46.05         46.25      :
: SYRIAN                                     .
:   M 1-3/32” S.G.                    75.50 ; 75.00N                   75.00                     75.00N                       75.00N                                                                47.00      ;
: TURKIS1l                                  :                                                                                                                                                                  :
:   Izmir 1,1-3/32’”R.G.              77.06 : 72.75                    76.90                     69.50                        66.38                 62.00     58.00                   56.75         56.00      :
: USSR                                       :                                                                                                                                                                 :
:   Vtoroi                                   :         -                                                                                            58.92     55.75                   48.25         4E’.00     :   &
: PAKISTAN                                   .                                                                                                                                                                 :   I
:   N.T. Sind S.G.                    60.75 i 51.56                    50.70                    69.43                        46.88                   4.75     41.13                   38.80         3P’.5O     :
: EGYPTIAN a/                                                                                                                                                                                                  :
:   Giza 70 F.G.                     166.90 :167.30                                                                                                                                                            :
:   Giza 67 81/69 F.G.               138.25 :134.75N                                                                                                                                                           :
: SUDANESE                                  :                                                                                                                                                                  :
:   Barakat Grade 5 a/                96.38 : 98.00N                   99.30                    99.00                        99.00                  99.00     99.00                   99.00N        98.50 :
: CIF INDEX .4                                                                                                                                                                                                 .
:   M 1-3/32;                         73.63 : 66.26                    6.5.07                   62.85                        61.10                  56.97     53.43                   48.84         48.15 :
:-------------------------------             : ------------------------------------------------------------------------------------------------                                                                .

    Source: “Cotton Outlook””,Liverpool. 1/ Prices are for shipment within the following three monthe except where crop
    delivery bccurs at a later date. a/ Official sale prices. b/ New crop begins here. N: nominal. M: Middling. S.M.:
    Strict Middling. S.G.: Saw ginned. R.G.: Roller ginned. F.G. Fully good.

       Information        on    Item    9 of     the    338th     Standing    Committee         ?Ieeting

    The World Bank has inquired           whether    the services      of Dr. Gillham,
    Head of the Technical         Information     Section,     would   be available      on
    a consultative       basis   to prepare     a report    on the status      of cotton
    production      research       in the East African        Countries.      The report
    would   take about one month           to prepare.      The report     is part of a
    series     on   this topic for Africa          as    a    whole.      It   is    being
    coordinated       by     Dr.     Ken     Anthony,      Consultant      in    Tropical
    Agricultural      Research    from England.      “The deadline       for completing
    the report     is March     1986.    It is a desk job and           ~ travel    is not.
    involved.       There would      be no cost to the         ICAC.   ) Dr.     Gillham,
    however,    would    receive    a consultancy     fee from the World Bank.

    I believe    that participation      in this undertaking       would  be in the
    mutual    interest     of  the    Bank,     the    ICAC    and    its  members,
    particularly      the African   countries.       I    also    think   that   Dr.
    Gillham”s    participation     in    the study would      be an expression     of
    the mutual    cooperation   between     the   tJorld    Bank and the ICAC as

    The   question    is whether   this request     can be accommodated     within
    the time constraints       without    in any way adversely     affecting    Dr.
    Gillham”s    performance      in    the   regular   work   program     of   the
    Technical      Information       Section.       He   has    the     following

            January     4-9     - 3eltwide         Cotton     Conferences,      Las     Vegas

            February       27-March          1st       - International        Cotton     Conference,

            March    4-8        -   Second         Regional         Meeting    of      tlediterranean
            Countries,         Montpelier,          France

    Other    priority      work      items     through      March     are:

            Publication         of   Recorders

            Preparations         for    Regional        Meeting

            Editing     Plenary        Meeting      material

            Correspondence           and   administration.

    In the    event    that   Dr.              Gillham-s   leave          entitlement    would not
    allow him sufficient      time             to complete    the         study,   he may have to
    take unpaid    leave   or work             on the study at            weekends    or    in his
    spare  time.

    It    iS   important     that    a decision      by the    Standing    Committee     be
    made   on this    item  as soon     as    possible.      Early    in the new     year,
    the Subcommittee       on Finance     should     take   up the matter      of longer
    term   policy   in instances     such    as these     as requested      in the 326th
    meeting    of the Subcommittee        on Finance      in April    1985.
1-                                                              Attachment II
                                                                to SC-N-338

                  STAFF    RETIREMENT        PLAN

        REPORT,      FINANCIAL         STATEMENTS       AND
               ADDITIONAL          INFORMATION
       YEARS   ENDED      JUNE     30, 1985       AND   1984
1“                                                      KStreet,
                                                     1801    N.W                 Telephone 2022960800
                                                     Washington,   DC 20006

                                                                     September   5, 1985

     To the Standing   Committee of the
       International   Cotton Advisory Committee

           We have examined    the statements    of assets and fund balances
     arising from cash transactions     of the International   Cotton Advisory
     Committee   and the International      Cotton Advisory   Committee   Staff
     Retirement Plan as of June 30, 1985 and 1984 and the related state-
     ments of cash receipts, disbursements       and changes in fund balances
     for the years then ended (Exhibits        I and III).   Our examinations
     were made in accordance     with generally   accepted auditing standards
     and accordingly    included  such tests of the accounting     records and
     such other auditing     procedures   as we considered   necessary   in the
     circumstances   as further described    in the following paragraph.

           Our examinations    were confined    to the accounting     records  of
     the international    Cotton Advisory    Committee   and the International
     Cotton Advisory   Committee   Staff Retirement    Plan and did not extend
     to the records    of the member     governments     to ascertain    whether
     proper quota assessments    had been made.

           As described    in Note 2, the accompanying    financial    statements
     have been prepared     on the cash basis of accounting;       consequently,
     certain revenue and the related assets are recognized when received
     rather than when earned and certain expenses         are recognized      when
     paid rather than when the obligation      is incurred.    Accordingly,    the
     accompanying     financial   statements   are not intended       to present
     financial   position    and results   of operations    in conformity     with
     generally accepted accounting principles.

           ln our     opinion,   the financial    statements     examined    by us
     present    fairly    the assets   and fund balances     arising    from cash
     transactions    of the International   Cotton Advisory Committee and the
     International     Cotton Advisory Committee Staff Retirement       Plan as of
     June 30, 1985 and 1984, and their cash receipts,          disbursements    and
     changes in fund balances      for the years then ended, on the basis of
     accounting     described   in   the  preceding   paragraph,     consistently

      Our examinations     were made    for the purpose     of forming     an
opinion  on the basic financial      statements  taken as a whole.        The
schedule  of uncollected   assessments    as of June 30, 1985, presented
as Exhibit II, is presented    for purposes of additional      analysis and
is not a required     part of the basic financial       statements.     Such
information   has been subjected    to the auditing    procedures    applied
in the examinations    of the basic financial     statements    and, in our
opinion,   is fairly stated in all material      respects   in relation    to
the basic financial statements     taken as a whole.

                                                                                     EXHIBIT I    I
                              INTERNATIONAL COTTON ADVISORY COMMITTEE                             {
                             STATEMENTS OF CASH RECEIPTS, DISB~SEMENTS
                                   AND CHANGES IN FUND BALANCES

                                                                          Year ended June 30
                                                                           1985        1984
  Contributions by member governments
    For current year                                                      $617,628     $610,456
    For prior years                                                        205,838      182,809
    For year in advance                                                     13,800       48,333

                                                                          837,266       841,598
  Interest                                                                 56,758        44,837
  Sales of Committee publications                                          16,055        18,485
  Reimbursement of advances for Federal income taxes (Note 2)              20,725        20,566
  Refund of unvested Committee contributions to Staff Retirement Plan                    36,366
                                                                           930,804      961,852

  Salaries and employment benefits                                        441,828       408,530
  Contributions to Staff Retirement Plan (Note 3)                          74,219        76,211
  Printing                                                                 62,829        65,319
  Travel                                                                   51,196        45,091
  Communications (including freight and postage)                           39,955        46,456
  Occupancy (Note 4)                                                       70,421        89,593
  Language services                                                        73,802        54,962
  Office expenses (including office equipment purchases of $19,359
    in 1984 and $5,630 in 1983)                                            42,563        43,273

                                                                          856,813       829,435

Excess of (disbursements over receipts) receipts over disbursements        73,991       132,417
Fund balances, beginning of year                                          556,660       424,243

Fund balances, end of year                                                $630,651     $556,660

                                 STATEMENTS OF ASSETS AND FUND BALANCES
                                     ARISING FROM CASH TRANSACTIONS

                                                                                June 30
                                                                            1985        1984
  Cash                                                                    $130,651     $ 56,660
  Certificates of deposit                                                  500,000      500,000
                                                                          $630,651     $556,660
Fund balances
  Allocated as follows:
    Working Fund                                                          $342,651     $356,660
    Reserve Fund                                                           288,000      200,000

                                                                          $630,651     $556,660
                                                                                     EXHIBIT II   :

                              SCHEDULE OF UNCOLLECTED ASSESSMENTS
                                            (Note 2)

  Member                                           Uncollected Assessments
Governments                                        for year ended June 30

                            1983 &
                            ~                   1984                  1985            Total

Argentina                  $ 27,600          $ 14,000               $ 13,300        $ 54,900
Bangladesh                                                           11,000           11,000
Brazil                                                               12,700           12,700
Chad                         11,100            11,100                10,200           32,400
China (Taiwan)
Colombia                                                             10,360           10,360
El Salvador                  11,900            11,700                10,700           34,300
Germany, F.R.
Guatemala                                      16,100                14,700
Honduras                                        1,300                 8,300
Iran                                                                  8,300            8,300
Iraq                                             9,500                9,200           18,700
Italy                                                                 2,867            2,867
Ivory Coast                                      4,945               10,500           15,445
Korea, Rep.
Nicaragua                    27,000            13,100                11,900           52,000
Nigeria                                         9,200                 8,700           17,900
Pakistan                                                             19,431           19,431
Peru                                                                 10,800           10,800
Portugal                                       17,300                17,600           34,900
Turkey                                                                  760
Uganda                                                                8,000
United Kingdom
United States
Yugoslavia                   34,800             17,900                15,500          68,200

                           $112,400           $126,145              $214,818        $453,363

-he   following countries have made advance payments to be applied to the next fiscal year:
       Australia              $13,500
       Cameroon                    300


                                                                                               EXHIBIT       111

                         INTERNATIONAL           COTTON     ADVISORY      COMMITTEE                                .

                                      STAFF       RETIREMENT       PLAN

                       STATEMENTS     OF    CASH     RECEIPTS,      DISBURSEMENTS

                                AND     CHANGES       IN FUND      BALANCE

                                                                                 Year    ended    June       30
                                                                                  1985                 1984

       Contributions     by Committee   (Note 3)                          $      74,219 $              76,211
       Contributions     by participants    (Note 3)                             37,110                38,105
       Interest                                                                 120,298               105,686
                                                                                231,627            220,002

       Refunds of contributions            to participants
         who resigned including            final payment
         of vested interest                                                     298,256               180,668

     Excess of (disbursements  over              receipts)
       receipts over disbursements                                              (66,629)               39,334

     Fund   balance,   beginning      of year                                 1,157,396          1,118,062

     Fund balance,     end of year                                        $1,090,767           $1,157,396

                           STATEMENTS       OF     ASSETS    AND   FUND       BALANCE
                              ARISING       FROM     CASH    TMSACTIONS

                                                                                        June     30

                                                                                 1985                 1984
     Savings accounts                                                     $   90,767 $ 157,396
     Certificates  of deposit                                              1,000,000  1,000,000

     Fund   balance                                                       $1,090,767 $1,157,396
                           INTERNATIONAL             COTTON        ADVISORY        COMMITTEE
                           INTERNATIONAL             COTTON        ADVISORY        COMMITTEE
                                           STAFF      RETIREMENT            PLAN

                                   NOTES       TO    FINANCIAL           STATEMENTS
                                          JUNE       30, 1985 AND 1984

Note     1 - Organization
        The       International            Cotton       Advisory            Committee       (Committee)          is    an
association           of     governments             having         an    interest        in    the      production,
export,        import       and     consumption             of      cotton.         It    is an       organization
designed          to promote        cooperation             in the solution               of cotton        problems,
particularly           those        of     international                 scope     and    significance.               The
Committee,           established           in       1940,     is exempt            from   Federal         income      tax
under       the     provisions        of       the    International              Organizations           Immunities

        Assessments           are     collected             from     each     member       government          and    are
due    on    July    1 of     the    fiscal          year     for    which       they     are   assessed.            Each
government           contributes           ‘fan equal            contributiontl           ($7,721        and    $8,320
in 1985 and            1984,        respectively)              with       the      remainder        of    the    total
assessment          prorated        among       members        according           to the average           trade      in
cotton       (exports        and     imports)         during         the previous           four      cotton     years
(August       - July)        ended       prior       to the         fiscal       year     for which        contribu-
tions       are applicable.

Note    2 - Accounting              Policies
        The Committee’s              accounting             records         are maintained            on the basis
of cash       receipts        and     cash       disbursements.                  Accordingly,          the records
do    not     include       uncollected              quota       assessments             (see   Exhibit         II)    or
accumulated          severance           pay    and annual           leave       for covered          employees        of
$197,210       and    $229,633           at June       30, 1985           and 1984,        respectively.

             The        United        States            Government              has      agreed           to    reimburse             the
     Committee           for     amounts           the       Committee          has      advanced          to its employees
     who are            U.S.     citizens              for    Federal           income         taxes.            The       ‘Committee
     anticipates              that    it will           receive       $7,914           from the U.S. Government                        as
     repayment           of     taxes       for the period                 January          1> 1985        through          June      30>
     1985. Other receivables                            and payables              are not significant.

             The        amount         of        the     Reserve           Fund        iS     fixed        by       the     standing
     Committee            and        withdrawals               may        be      authorized              by        the      standing
     Committee           only        when        the    monies        available               in    the    Working           Fund     are
     inadequate           to     cover       commitments             or     liabilities             of    the       Committee.

             The        accounting           records          of     the       Staff     Retirement             Plan        are     main-
     tained       on     a cash       basis.

     Note     3 - Staff Retirement                       Plan
              The        Staff        Retirement              Plan        (Plan)         is    a     defined-contribution

     plan     covering              all     of    the     employees             of the        Committee.               Annual        con-
     tributions            to       the     Plan       made     by    the        Committee           and       by    participants
     equal        147     and       7%, respectively,                    of     the participants                     annual         gross

     salaries.                The     Committee’s              contributions,                  together             with     interest
     earned         thereon,          vest        in the       participants                  over     a three-to-ten                 year
     period.              The       benefits             available              to      each       participant               are,       in
     general,            the    amounts           contributed              by     the       participant             with     interest
     earned        thereon          together           with    that        portion          of the contributions                     made
     by     the     Committee             (with        interest           thereon)            in which          the participant
     has     a vested            interest.               At    June        30,       1985,         the    total        of    employee
     contributions,                  vested            committee           contributions,                 and        interest         was

Note   G - Lease       Commitments
       The    Committee       has   leased   office     space    in Washington,          D.C.   for
a three-year       period      ending     December      31,    1987.      Rental    commitments
for existing      office      space     are as follows:

       Years    ending    June 30:                                     Amount:

                 1986                                              $ 54,120
                 1987                                                54,120
                 1988                                                27,060

       The Committee’s          basic    monthly     rental     will be increased         for its
pro    rata    share     of   the   increases      in   real     estate     tax    and   building
operating      costs.

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