the influence of Federal programs that may simultaneously affect both the demand for cotton and the
supply of cotton on the estimated returns to generic cotton promotion and research. The objective of this
paper is to reveal the nature of these interaction effects and to empirically determine their magnitude.
1.1 Cotton Research and Promotion Program
Until the development of petroleum-derived synthetic fibers in the 1950s, cotton was unrivaled as
the dominant fiber in clothing and home textiles in the U.S. The introduction and rapid quality and cost
improvement of polyester and nylon fibers led to a sustained decline in the demand for cotton for all uses
beginning in about 1960. By 1966, cotton’s decline had progressed to the point that Congress felt a need
to intervene, eventually passing the Cotton Research and Promotion Act of 1966. In passing the law,
Congress reasoned that the inroads in the textile fiber market made by synthetic fibers were largely a
result of research and promotion conducted by its makers (primarily large chemical firms). Because
individual cotton producers did not have the resources to perform these activities or the legal means to
join together to fund such work, Congress provided a coordinating mechanism to enable producers to
collectively engage in research and promotion.
On December 31, 1966, USDA put into effect the Cotton Research and Promotion Order after a
successful referendum of growers. The Order required participating producers to pay a base assessment
of $1 per bale of upland cotton. In a 1976 referendum, U.S. producers voted to authorize collection of a
supplemental assessment, not to exceed 1 percent, based on the value of the cotton. The supplemental
assessment was set at 0.4 percent in 1977, increased to 0.6 percent in 1985, and lowered to the current
level of 0.5 percent in 1991. Although the two-thirds vote required by the referendum assured broad
support, any producer who did not wish to participate in the checkoff program could apply for a refund of
all assessed amounts.
The Cotton Research and Promotion Act was modified significantly in 1990, in an effort to boost
its impact on the overall textile market. Most notably, importers of textiles containing upland cotton were
checkoff programs are overseen by USDA’s Agricultural Marketing Service to ensure the programs operate within
Congressionally mandated rules of compliance.