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Year-End 2018 TABLE of CONTENTS OVERVIEW of CONTENTS

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Year-End 2018 TABLE of CONTENTS OVERVIEW of CONTENTS REPORT OF COTTON INCORPORATED TO THE SECRETARY’S OFFICE Year-End 2018 TABLE OF CONTENTS OVERVIEW OF CONTENTS ......................................................................................................................................... 3 EXECUTIVE SUMMARY ............................................................................................................................................... 4 AGRICULTURAL RESEARCH COMMITTEE ............................................................................................................... 9 AGRICULTURAL AND ENVIRONMENTAL RESEARCH .......................................................................................... 9 Strategic Objective 1: Increase the short-term profitability of U.S. cotton production. .......................................... 9 Strategic Objective 2: Increase the long-term profitability of U.S. cotton production. .......................................... 16 Strategic Objective 3: Increase number of future scientists of U.S. cotton and improve the reputation of U.S. cotton production. ............................................................................................................... 17 RESEARCH AND DEVELOPMENT COMMITTEE ..................................................................................................... 19 FIBER COMPETITION: FIBER QUALITY ............................................................................................................... 19 Strategic Objective 1: Improve quality measurements of cotton fiber, yarns, and fabrics. .................................. 19 Strategic Objective 2: Provide accurate test data to support research and marketing efforts. ............................ 22 FIBER COMPETITION: COTTON MANAGEMENT SYSTEM SOFTWARE ........................................................... 24 Strategic Objective 1: Develop and maintain software tools to buy, sell, move, and use cotton with improved efficiency and profitability. ................................................................................................... 25 Strategic Objective 2: Service and market CMS™ products that promote cotton as the most efficient and profitable fiber in the marketplace. ...................................................................................... 25 PRODUCT DEVELOPMENT AND IMPLEMENTATION ......................................................................................... 28 Strategic Objective 1 Concentrate efforts on broadly defined key market categories where cotton has suffered significant market share erosion. Identify and research sustainable innovations in technology and product development that can recover, grow, and preserve cotton market share. .................................................................................................................................. 28 Strategic Objective 2: Optimize and implement products and technologies to advance cotton in global markets. ............................................................................................................................................ 36 Strategic Objective 3: Augment cotton marketing activities/influence industry decisions through technical avenues such as standardization and education. ............................................................... 38 GLOBAL SUPPLY CHAIN MARKETING COMMITTEE ............................................................................................. 42 GLOBAL SUPPLY CHAIN MARKETING ................................................................................................................. 42 Strategic Objective 1: Maintain a global presence for cotton. ............................................................................. 42 Strategic Objective 2: Promote product and marketing ideas that advance cotton use. ..................................... 45 Strategic Objective 3: Provide technical education and training to support the use of cotton products. ............. 50 CONSUMER MARKETING COMMITTEE ................................................................................................................... 53 ADVERTISING, PUBLIC RELATIONS, STRATEGIC ALLIANCES, AND CORPORATE STRATEGY & PROGRAM METRICS ................................................................................................................................................................ 53 Strategic Objective: Use advertising, public relations and strategic alliances to build consumer demand and trade awareness for cotton and cotton products as well as use market intelligence to assess opportunities and threats for cotton, influence corporate strategy efforts and leverage program metrics to evaluate and improve tactics for fulfilling Cotton Incorporated’s mission. ............................................................................................................................... 53 APPENDIX A: MEDIA OUTREACH COVERAGE....................................................................................................... 62 CORPORATE ADMINISTRATION/FINANCE ............................................................................................................. 64 EXPLANATION OF TERMS AND ACTIVITIES .......................................................................................................... 65 2 OVERVIEW OF CONTENTS Each year Cotton Incorporated prepares a formal Strategic Plan* that covers the key principles that guide the Company’s long-range activities. The major priority areas over the next five years for programs at Cotton Incorporated are: . Two long-term goals o 20 million bales of U.S. cotton production by 2026 o 130 million bales of global cotton demand by 2026 . Stabilizing and regaining market share . Address rising cost of production . Increasing sustainability efforts . Facilitate new technical innovations to improve cotton products . Create demand for cotton to increase exports of U.S. cotton . Continue to emphasize cotton’s benefits through television advertising, digital, and social media channels In order to fulfill these priorities, specific strategic objectives are outlined for each of Cotton Incorporated’s four Operating Committees and related subdivisions: . Agricultural Research Committee . Research and Development Committee o Fiber Competition: Fiber Quality o Fiber Competition: Cotton Management System (EFS) o Product Development and Implementation (PDI) . Global Supply Chain Marketing Committee . Consumer Marketing Committee o Advertising, Public Relations, and Strategic Alliances o Corporate Strategy and Program Metrics (CSPM) Operating Committees determine tactics and activities to meet the strategic objectives identified for their program area or divisions within their program area and provide deliverables of their activity to the Board. This bi-annual report includes the following sections: 1. Executive Summary: Overview of year-to-date progress report toward achieving Cotton Incorporated’s mission and strategic objectives, organized by program committee and its related divisions. 2. Report of Activities by Program Committee and Strategic Objectives: Detail of year-to-date progress report toward achieving Cotton Incorporated’s mission and strategic objectives, organized by Program Committee and its related divisions. 3. Explanation of Terms and Activities: Summary descriptions of ongoing projects and key terminology used to explain activities within each Program Committee and its divisions are included as a reference guide *Please refer to page 1 of the 2018 Plan & Proposed Budget Book for complete details on Cotton Incorporated’s current strategic plan. 3 EXECUTIVE SUMMARY This Executive Summary section provides an overview of the report from each of Cotton Incorporated’s four operating committees and related subdivisions. Agricultural Research Committee Agricultural & Environmental Research (AERD) By mid-season of 2018 it was apparent that serious challenges were already “baked into” the U.S. cotton crop with new pathogens, expanded resistant weeds, and severe drought. Growers and researchers, however, could not imagine the unprecedented harvest challenges ahead. Due to frequent rains, many growers will harvest some or all of their 2018 cotton in 2019 and face substantial reductions in quality. In the wake of a year that presented tremendous challenges to cotton growers, there were also great successes in research and outreach, and the Agricultural and Environmental Research Department (AERD) continues to support greater resiliency in cotton production. Several AERD successes in 2018 bear highlighting. To address challenges of diseases and nematodes with cooperators AERD: 1) identified Upland varieties with tolerance to Fusarium Wilt race 4 and released a comprehensive management bulletin for Southwest growers, 2) delivered a detection method for Bacterial Blight in planting seed, 3) responded to a novel virus that spread across the Mid-South and Southeast U.S. with detection methods and redirection of plant virologists and pathologists, and 4) evaluated commercial varieties with the Barbren reniform host plant resistance trait. To enhance the value of cottonseed, USDA-APHIS deregulation of Ultra Low Gossypol Cottonseed was obtained, and AERD completed and published a three-year, human feeding study demonstrating the health benefits of cottonseed oil consumption. Further, the Whole Cottonseed marketing program was upgraded with a new advertisement and trade show booth. To enhance fiber quality, a robot harvesting
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