REPORT OF COTTON INCORPORATED

TO THE SECRETARY’S OFFICE

January – June 2017

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TABLE OF CONTENTS OVERVIEW OF CONTENTS ......................................................................................................................................... 3 EXECUTIVE SUMMARY ............................................................................................................................................... 4 AGRICULTURAL RESEARCH COMMITTEE ............................................................................................................... 8

AGRICULTURAL AND ENVIRONMENTAL RESEARCH .......................................................................................... 8 Strategic Objective 1: Increase the short-term profitability of U.S. cotton production. .......................................... 8 Strategic Objective 2: Increase the long-term profitability of U.S. cotton production. .......................................... 15 Strategic Objective 3: Increase number of future scientists of U.S. cotton and improve the reputation of U.S.

cotton production. ............................................................................................................... 16 RESEARCH AND DEVELOPMENT COMMITTEE ..................................................................................................... 18

FIBER COMPETITION: FIBER QUALITY ............................................................................................................... 18 Strategic Objective 1: Improve quality measurements of cotton fiber, yarns, and fabrics. .................................. 18 Strategic Objective 2: Provide accurate test data to support research and marketing efforts. ............................ 20

PRODUCT DEVELOPMENT AND IMPLEMENTATION ......................................................................................... 22 Strategic Objective 1: Identify and research innovations in technology and product development that can grow

or preserve cotton market share. ........................................................................................ 22 Strategic Objective 2: Optimize and implement products and technologies to advance cotton in global markets.

............................................................................................................................................ 25 Strategic Objective 3: Augment cotton marketing activities/influence industry decisions through technical

avenues such as standardization and education ................................................................ 28 GLOBAL SUPPLY CHAIN MARKETING COMMITTEE ............................................................................................. 31

FIBER COMPETITION: COTTON MANAGEMENT SYSTEM SOFTWARE ........................................................... 31 Strategic Objective 1: Develop and maintain software tools to buy, sell, move, and use cotton with improved

efficiency and profitability. ................................................................................................... 31 Strategic Objective 2: Service and market CMS™ products that promote cotton as the most efficient and

profitable fiber in the marketplace. ...................................................................................... 31 GLOBAL SUPPLY CHAIN MARKETING ................................................................................................................. 33

Strategic Objective 1: Maintain a global presence for cotton. ............................................................................. 33 Strategic Objective 2: Promote product and marketing ideas that advance cotton use. ..................................... 36 Strategic Objective 3: Provide technical education and training to support the use of cotton products. ............. 41

CONSUMER MARKETING COMMITTEE ................................................................................................................... 43 ADVERTISING, PUBLIC RELATIONS, AND STRATEGIC ALLIANCES ................................................................ 43

Strategic Objective 1: Use advertising and public relations to build consumer demand and trade awareness for cotton and cotton products. ................................................................................................. 43

CORPORATE STRATEGY AND PROGRAM METRICS (CSPM) ........................................................................... 48 Strategic Objective: 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............................................................................................. 48

APPENDIX A: MEDIA OUTREACH COVERAGE....................................................................................................... 52 CORPORATE ADMINISTRATION/FINANCE ............................................................................................................. 54 EXPLANATION OF TERMS AND ACTIVITIES .......................................................................................................... 55

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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 Product Development and Implementation (PDI)

Global Supply Chain Marketing Committee

o Fiber Competition: Cotton Management System (EFS)§ o Global Supply Chain Marketing (GSCM)

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 2017 Plan & Proposed Budget Book for complete details on Cotton Incorporated’s current strategic plan. §Please note that Fiber Quality and Cotton Management System (EFS®), shown above in different Program Committees, are a part of the same corporate division, Fiber Competition, within Cotton Incorporated.

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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)

A challenge to using applied research to improve the profitability of U.S. cotton farming is the disconnect between the rapid pace at which new challenges arise and the slower pace at which research can deliver impacts. Such disconnects were clearly displayed in the first half of 2017 with herbicide resistant weeds, fusarium wilt, and bacterial blight. All three of these have been simmering problems but all three have been greatly exacerbated in the first half of 2017. Bacterial blight appeared earlier, in more varieties, and with more intensity than in any year since the general use of acid delinting. The area infested by PPO resistant palmer pigweed has greatly expanded in the Mid-South. But the most serious challenge is the recent spread of fusarium wilt race 4 (FOV4). This disease has spread throughout much of the San Joaquin Valley (SJV), caused havoc in Pima cotton fields until resistant varieties were developed, and is an impediment to Acala and Upland cotton culture as well, because all cotton varieties carry FOV4 to some extent and inoculum levels tend to increase on moderately tolerant varieties. In the spring of 2017, FOV4 was confirmed in Texas in the Upper Rio Grande Valley. FOV4 in west Texas poses an existential threat to cotton. FOV4 cannot be eliminated from fields by planting resistant Pima varieties nor by planting rotational crops or trees and vine crops. FOV4 can persist in the soil for decades and kills Upland cotton seedlings in patches that expand every year that cotton is planted. Cotton breeding and variety selection have allowed profitable Pima production in the face of FOV4 in the SJV and Upland cotton production in the face of a different fusarium wilt in Australia. Therefore, similar results can occur for U.S. Upland cotton. However, large acreages of cotton in Texas are now challenged by FOV4. Research continued on FOV4 despite its slipping in priority when it appeared to be contained to the SJV. Excellent public sector Plant Pathologists continued work on FOV4; and private and public cotton breeders continued with FOV4 resistance breeding. Priorities for applied research in cotton pest control shift over time as temporary solutions are found and problems abate. Weed control and insect control are excellent examples of this shift as biotech products were introduced and subsequently degraded due to pest resistance. The recurring cycle of pest suppression and resurgence is also common in pathogens and nematodes. Building solutions when these pest resurge is empowered by sustaining research investments on damaging cotton pests even when they seem temporarily well controlled. Fortunately, it has been learned from the FOV4 outbreak in the San Joaquin Valley that will help manage the pathogen that has now spread into Texas; and plant pathologists and plant breeders are experienced and equipped to address this spread. Research and Development Committee

Fiber Competition: Fiber Quality

Quality Research consists of 12 outside research projects for 2017, which is a renewal of four projects and initiation of eight new projects. The majority of projects for 2017 are focused on the Fiber of the Future effort, which involves improving fiber length uniformity. After Fiber of the Future, the second priority area for 2017 is the work on research fiber testing calibration materials including elongation calibration cottons and maturity reference standards. Product Evaluation Laboratory (PEL) activities continued to focus on normal day-to-day testing. Routine testing on high volume instrument inter-lab evaluations involved eight proficiency sets and the lab also provided testing for the USDA-AMS on eight sets of calibration cottons. A total of five proficiency tests for fabric and one for yarn were also completed in the first half of the year. Testing services were active for all areas of research and implementation for both Agricultural & Environmental Research and Product Development & Implementation divisions.

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Product Development and Implementation (PDI)

Synthetic fibers hold a significant position in the active wear and/or athleisure apparel sector. In order to reclaim cotton’s market share, PDI continues to perform research and development (R&D) in fiber, yarn, fabric, finishing, sustainability, and innovation throughout 2017. In addition, a variety of products, technologies, technical services and implementation projects were executed to increase cotton’s expansion in global markets. The release of the FABRICAST™ 2017-1 collection featured 71 new knit and woven fabric developments for the apparel and home markets. A collection of cotton/rayon blended fabrics was also released to compete with rayon’s popularity. To increase market attention, 100% cotton and cotton-blended performance fabrics, fabrics that are lighter in weight yet strong, and fabrics that dry faster and are silky smooth were featured in the collection as well. These developments show not only what 100% cotton fabrics can do, but also how cotton blends can compete with 100% synthetic fibers. Such developments showcased in the FABRICAST™ Information System, remain a valuable tool for the distribution of new cotton developments to influential designers, retailers, and brands. Knit tops and non-denim bottoms are also one of the largest markets for cotton in apparel. To compete and expand in these markets, Textile Chemistry Research (TCR) and Product Development (PD) are focusing research on performance, whether it be through a moisture management finish for active wear tops, non-formaldehyde durable press finish to eliminate wrinkles, cotton performance blends, or cotton fleece. In some cases, performance means the application of a finish to make a cotton product more strong and durable or to give it a softer hand. These finishes must conform to stricter health and safety regulations. Thus, creating new challenges in maintaining performance levels that the consumer has come to expect. Close cooperation with global chemical suppliers, combined with in-house evaluations, ensure that all products meet industry requirements.

Fiber processing (FP) continues yarn developments to improve cotton performance and cotton blends. In addition, FP supports yarn spinners and nonwoven customer developments through industry interaction. Technical Service and Implementation (TSI) continues to develop research and implement key cotton technologies in cotton’s global markets. In the first half of 2017, hundreds of projects and thousands of samples have been processed through the Textile Research Center.

Cotton Incorporated’s second global life cycle assessment (LCA) was published in 2017. The robust metrics in this report populates databases used to influence brands, retailers, and ultimately consumers on their fiber choice. Sustainability and environmental persistence are growing industry concerns. Growing sustainability concerns and cotton’s natural ability to decompose in the environment are leading to its inclusion in constructions normally dominated by synthetic fibers. Current and future R&D efforts to explore new technologies starts with including cotton in non-woven developments, additive manufacturing (3D printing), and wearable electronics. Global Supply Chain Marketing Committee

Fiber Competition: Cotton Management System Software

The contents of this report provide a review of the Cotton Management System™ (CMS™) activities and initiatives for the first half of 2017 (January through June). These activities chart the progress toward two strategic objectives:

Develop and maintain software tools to buy, sell, move, and use cotton with improved efficiency and profitability. Service and market Cotton Management System™ products that promote cotton as the most efficient and profitable

fiber in the marketplace.

The Cotton Management System™ development and maintenance teams continue to support MILLNet™ 4.8.010 software, which is the final release of the MILLNet™ 4.0 series. The MILLNet™ 5.0 software was released in the third quarter of 2016. We are currently testing the conversion programs to convert our MILLNet™ software users to MILLNet™ 5.0. The Cotton Management System™ service and marketing teams assisted customers 1,761+ times by phone, e-mail, text, face-to-face, and the Internet, and 106 service visits were conducted in the U.S., China, Colombia, Mexico, Peru, Philippines, Thailand, and Vietnam. We have two new EFS® System licensees in Guatemala. The latest MILLNet™ 5.0 software was installed.

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Global Supply Chain Marketing (GSCM)

The scope of the GSCM division covers a wide range of activities with manufacturers, retailers, brands, and trade organizations throughout the world. These activities are anchored in three important strategic objectives: build a global presence for cotton, promote product and technology ideas, and conduct education, training, and technical assistance through marketing programs that further the use of cotton in products. To date, GSCM division staff conducted more than 321 meetings with more than 224 companies. Staff organized “Optimized Cotton Processing – Moving Toward Sustainability in the Supply Chain” events that were held in Bangkok, Thailand; and Ho Chi Minh City and Hanoi, Vietnam. The events provided participants with information on sourcing for high quality and responsibly-produced cotton and ideas to improve quality and efficiency in fiber processing. The three events, which were jointly organized with CCI, attracted approximately 220 participants from eight Asian countries. An innovation cotton session was brought to Latin America reaching Mexico, Peru, and Chile. Through a combination of one open presentation and 16 one-on-one meetings, cotton ideas focusing on technologies, fashion trends, FABRICAST™ collection, market information, and sustainability reached 84 companies and 385 executives. One of the most impactful events hosted was an event which was held at the Cary headquarters in March, the ACTIVE Cotton – Lab Series. The event brought together representatives of 18 leading activewear and outdoor brands for hands-on education, demonstrations of fabric and technology innovations, and tradeshow-type displays to illustrate cotton product concepts. In its fourth full year, the Cotton LEADS™ program continues to gain momentum as a platform for communicating information about responsible U.S. cotton production to retailers, brands, manufacturers, and industry organizations worldwide. Cotton Incorporated participates in this program with the National Cotton Council of America, the Cotton Foundation, Cotton Australia, and Cotton Council International. In 2017 to date, 26 new partners have joined the program thus reaching a total of 461 partnering manufacturers, brands, and retailers. In active and performance apparel markets, several commercial programs were introduced in the first half of the year with both TransDRY® and STORM COTTON™ technologies by prominent brands in the U.S., Canada, and Asia. Most notable was a large scale global program by a major jeanswear brand on their commercial introduction of TransDRY® technology for performance denim jeans, being sold globally and developed in conjunction with regional mill partners. Several technical marketing projects are underway for 2017. These include development work with Cordura® fiber blended with cotton for improved strength and durability, performance cotton knitwear, recycling fiber into dyestuff, and developing cotton fabrics to replace microfibers. Several new marketing packages have been released in the first half of 2017: Home, TOUGH COTTON™ technology, and performance knitwear. In addition, three more packages are in development. The GSCM division manages the Importer Support Program (ISP), which provides programs that meet the mission of Cotton Incorporated and specifically benefit the importer segment of the supply chain. Twenty-five technical education workshops have been held in 2017 with 666 attendees for the first 19 workshops (data still being gathered for the other workshops). These individuals were from major brands and retailers. The COTTON UNIVERSITY™ Web site is a marketing tool and educational resource (www.cottonuniversity.org). It is the leading innovative education and information resource for current and emerging textile industry professionals who are actively seeking connections to cotton. Additionally, the COTTON UNIVERSITY™ Web site fosters industry connections and generates further marketing opportunities for cotton among supply chain decision makers. The Web site highlights 15 colleges with online courses. The newest college focused on nonwovens was launched early this year. There is also a vast community for industry, faculty, and students to connect with Cotton Incorporated and each other. In 2017, there have been 2,218 new individuals registered, bringing the total for the year to 20,150 approved users, 166,427 sessions, and 1,061,666 page views.

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Consumer Marketing Committee

Advertising

After two years, 2017 brought an end to the “Cotton. It’s Your Favorite for a ReasonSM” campaign, which featured real men and women talking about their favorite cotton pieces and communicating the physical benefits of the fiber. The ads reminded consumers to check the label and to shop cotton for their next favorite item. In May, the Advertising Department launched a new campaign, “Leave Comfort to Clothes,” in an effort to create a rallying cry for cotton; connecting with consumers through compelling stories while offering functional benefits and claims. The campaign inspires people to rethink the way they view comfort and challenges them to step out of their comfort zones – leaving comfort to clothes; thanks to cotton benefits such as softness, durability, breathability, and versatility. The 360° campaign aims to reach consumers through TV, Cotton’s consumer Web site www.TheFabricOfOurLives.com, digital media, including social and paid search, and point of purchase. Harris will conduct a brand tracking study to measure campaign awareness, ad likeability, perceptions of cotton, and purchase intent through a survey with over 2,500 consumers. Early indicators will help establish benchmarks for the rest of the campaign and inform future creative. Public Relations

Notable among the Public Relations Department’s accomplishments for the first half of 2017 were activities in support of consumer-facing company initiatives such as the Blue Jeans Go Green™ denim recycling program, “Leave Comfort to Clothes” advertising campaign, and the Lifestyle Monitor™ survey. Expanded synopses of these activities are below. In order to amplify positive cotton messages directly to the consumer, the Public Relations Department also engaged a public relations agency for 2017. The agency, Fleishman-Hillard (FH), is internationally-renowned with diverse areas of expertise across a range of areas applicable to cotton, such as agriculture and sustainability. The Cotton Incorporated FH team is based in Raleigh, NC, but has the ability to leverage experts in other FH offices. The agency has focused on key consumer-facing activities and has also pursued media coverage related to comparative marketing claims and the pre-empting of negative, inaccurate claims about cotton. Strategic Alliances

The year began with various Blue Jeans Go Green™ denim recycling program collections and distribution activities. In addition to the contemporary women’s denim-focused retailer, Madewell, collecting denim in stores nationwide, other retailers, individuals, and organizations across the country got involved. Additionally, the Strategic Alliances Department finalized the strategy and planning for Cotton Incorporated’s 60 Second Fashion Show. Corporate Strategy & Program Metrics (CSPM)

In the first half of 2017, CSPM led efforts to identify opportunities and threats for cotton using market intelligence gathered through ongoing studies of consumer attitudes from the Lifestyle Monitor™ survey, assessments of cotton’s share at retail through the Retail Monitor™ research, and comprehensive global economic research and analysis. CSPM provided 80 information requests; participated in nearly 100 meetings and presentations; authored nearly 90 publications, videos, and podcasts; and worked on 30 projects. Work completed by CSPM during the first half of 2017 includes, but is not limited to: the collection and examination of data on more than 75,000 products offered at retail in the U.S. and China; the evaluation of 4,000 U.S. and almost 10,000 global consumers; the update of a comprehensive database of monthly apparel and home furnishing imports; the management and analysis of global quantitative research in China; the management of Cotton Incorporated’s brand tracking metrics; and the delivery of consumer and economic outlook presentations. Descriptions of major projects in each area during the first half of 2017 are provided.

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AGRICULTURAL RESEARCH COMMITTEE

AGRICULTURAL AND ENVIRONMENTAL RESEARCH

Strategic Objective 1: Increase the short-term profitability of U.S. cotton production.

Cottonseed A reduction in the cottonseed marketing budget for 2016 and 2017 has resulted in a realignment of priorities towards completing the regulatory submission for Ultra Low Gossypol Cottonseed. There has been a reduction in marketing efforts that focused on short-term profitability. However, some cottonseed promotion activities were continued in 2017. A press release was distributed to the dairy producer and feed industry press in January. It was picked up by most relevant publications, especially digital media. This press release discussed supply/demand fundamentals for cotton and cottonseed, weather issues and other important topics, but with a focus on the large 2016 crop that resulted in the increase in supply of cottonseed. There was also a call to action encouraging the purchase and usage of cottonseed in dairy cattle feeds, emphasizing its ability to maintain milk production and stimulate additional butterfat. The larger crop in 2016 compared to 2015 gave the opportunity to emphasize a buying opportunity. Press releases also publicize the "Cottonseed Marketplace" on www.wholecottonseed.com. This feature allows buyers and sellers of cottonseed to come together and strike a deal. A feature article was written and published in the International Aqua Feed magazine discussing the use of cottonseed protein in aquaculture feeds. The article was awarded first place in a National Agriculture Marketing Association (NAMA) contest in the public relations division. Input Costs Cotton is more sensitive to low Potassium (K) than are most other major field crops and often shows symptoms of K deficiency in fields where soil tests do not indicate low K. In recent years the frequency and severity of K deficiency symptoms in cotton have increased in the Cotton Belt. Insufficient plant-available K in such fields may be decreasing yields, fiber quality, and profits. Deficiency symptoms are often observed at first flower and increase in severity as the boll load and filling progresses. Good K nutrition is associated with disease and drought tolerance. About 15 lbs. K2O /bale are removed in lint and seed at harvest. Increased yield potential in new varieties and better insect management have pushed cotton yields to three-four bales in many fields. These high yields put a substantial demand on the cotton roots’ ability to uptake sufficient K and other nutrients to meet the physiological demands of the plant, seed, and lint. Deep profile soil sampling has indicated low levels of plant available K below the plow layer in some production areas. According to the Nutrient Use Geographic Information System (NuGIS) webpage, K2O balance is negative (-11 to -50 lbs/a) on the majority soils in cotton production regions (IPNI, 2012). In 2015 and 2016, the Cotton Specialists and Cotton Incorporated conducted a Beltwide project on cotton K nutrition. The first objective is to quantify the K levels in the soil surface horizon and at greater soil depths in several cotton production regions. The second objective is to evaluate the impact of application methods (broadcast vs. band) and rates of K on cotton yield, quality, and return on investment. The third is to determine the impact of K application rates and methods on soil K levels over three years of cropping. Based on results, soil K recommendations will be re-evaluated and modified as appropriate. The 2015 trials were initiated at 12 locations Virginia, North Carolina, South Carolina, Alabama, Mississippi, Louisiana, Tennessee, Arkansas (2), Oklahoma, Texas (3) and Arizona. In 2016, trials were divided into sites that were at a new location (a series of single-year experiments) and sites where treatments are superimposed over the 2015 sites with an identical plot plan, called multi-year sites. Soil samples were collected to a total depth of 24 inches from all locations and analyzed at increments of 0-6, 6-12, 12-24 inches using the Melich III extraction method. Potassium treatments were applied two-four weeks prior to planting cotton. Granular treatments were broadcast and incorporated to an approximate depth of two inches with tillage. Liquid potassium fertilizer was injected approximately 6 inches deep and 4 inches to the side of the row. Nitrogen, phosphorous, and other nutrients were applied at the recommended rates to obtain maximum yields at each location. Specific cotton varieties were used across all trials for 2015 and 2016. The plots were arranged in a randomized complete block design with four replications. In-season plant measurements included stand counts, plant height, total nodes, and leaf samples collected at four weeks after first flower. After harvest the cotton was ginned and fiber samples sent to Cotton Incorporated for HVI analysis. Soil tests indicate a range of K levels across the Cotton Belt, with the lowest levels occurring at the sites in Virginia, South Carolina, Alabama, Tennessee, and an East Texas location. The Delta locations, except Tennessee, were near the current threshold of 125 ppm and no K would have been recommended at these sites for two bale yields. However, profitable cotton

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production requires approximately three bales/acre. The Southwestern sites, Lubbock, Texas; Arizona; and Wharton, Texas all had high soil test levels. Across most locations, the soil K levels decreased with depth and indicated some level of K stratification and probable K mining with depth. In 2015 significant yield responses were few for K rate or application method despite several sites being below the current soil K threshold level. In the Delta region locations with high yield potentials were planted, and a yield of 2,300 lbs. lint/acre was achieved at one site without response to K. In the Southwestern locations, a significant yield response was observed at a central Texas location, despite very low yields. In West Texas, at a location with a soil test of over 350 ppm K, a significant yield response was observed from the two highest K application rates using the injected application method. The East Texas and Arizona locations were both non-responsive. At the single-year sites in 2016, an East Texas location and the Alabama location were below the threshold of 125 ppm K. Statistical yield responses were observed with increasing K rates at the East Texas site, but not at the Alabama site. The average soil K levels of the other sites exceeded 150 ppm in the 0-24 inch depth and no yield responses were observed. An exception was the West Texas location where the highest rates of injected K provided a significant yield response that was similar to the treatment responses found in 2015. In the 2016 multi-year locations, there was a general trend to increasing soil K accumulation as the K rate increased. However, the treatment effects from increasing K rates were inconsistent. Application method did not significantly affect the K accumulation. The K research project is a work in progress. The current critical soil K level (125-150 ppm) does not appear to be a consistent predictor of K response. Mineralogical characterization of the soil clays at the sites are being done to better understand the dynamics of K in the soil. Work continues through 2017 at single-site year locations and at the multi-year site locations. Precision Cotton Two programs were released in the second quarter of 2017 to help farmers and ginners take advantage of the Radio Frequency Identification (RFID) codes that are on John Deere modules and could be used with any cotton module. The first program is an Android application called Cotton RFID Module Scan that allows a producer or ginner to read a bar code using the device’s camera, or to scan the RFID tag directly if paired with a blue tooth RFID scanner. The program allows the owner, farm, and field information to be configured at the start of a field and then automatically associates that information with all of the module serial numbers scanned. The program also allows the option for serial numbers to be combined into load numbers of a fixed quality of individual modules. Once the field is completed, the data can be emailed to the farm and/or gin as a comma delimited file that can be imported into a spreadsheet or directly to gin software. The second program is a Window’s based program that automates the process of downloading data from MyJohnDeere to a gin’s computer. The program can be configured to check the John Deere Website at a given frequency each day, pull in the new data, and put in a folder defined by the gin. The program also allows partnerships with the gins growers to be stored. Without the program, the gin would have to manually download data for each grower and manually extract the data from a multi-folder zip file. All of the source codes for both programs has been made available on an open source platform so commercial software companies have access to the code. While currently focused on the John Deere system, all programs are designed to accommodate other cloud-based databases that may become available in the future. The overall goal of this effort to electronically track modules is to establish the value of various tracking tools and demonstrate their use so that gins and producers can determine what may be of benefit to their specific operations. Providing the source code will lower the barrier of entry for companies to support electronic module tracking. The Cotton Smart Irrigation App has been available for both Apple and Android devices for more than two years, but the app could only be used in Georgia and Florida because it was tied directly to weather stations in those states. A new version of the app was released in late April of 2017 that allows estimation of cotton water use anywhere in the U.S. by utilizing national data sets from the National Weather Service. Some of the regional parameters in the app are still under review, so this should be treated as a beta version outside of South Carolina, Georgia, and Florida. Formal evaluations of the parameters are taking place this year in Arizona, Texas, Arkansas, Tennessee, and North Carolina.

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One step many producers have taken to further reduce labor requirements is to use the latest cotton harvesters that compress the seed cotton into modules while actively harvesting the crop. These machines have decreased labor requirements, but there are concerns about increased soil compaction due to the weight of the machines, and cost of the machines is also significant (up to ~$700,000 U.S.). Another disadvantage of current mechanical cotton harvesting methods is the entire crop is harvested all at once, but the first boll is mature about 85 days after planting. Thus, that boll is sitting exposed to the elements for another 60 to 90 days before it is harvested, potentially decreasing the quality of the fiber and increasing the risk it could be lost due to heavy rainfall or winds. An alternative to once-over harvest could be the use of small robots that constantly travel in the field looking for open bolls. Cotton Incorporated initiated two projects in 2017 to begin tests on the feasibility of a robotic harvester. The first is at Clemson University and will involve adapting an existing weeding robot from a company in France as the base platform. Engineers at the University of Georgia are exploring the use of a vacuum system to develop a cotton harvesting robot. Several existing research projects will accelerate the progress towards robotic applications in cotton including the work to use sensors to measure various plant parameters in a high throughput phenotype for cotton breeders, development of an autonomous vehicle operation now used on a majority of tractors on cotton farms, and progress in unmanned aerial systems (UAV, i.e., drones). The use of small semi-automated robots significantly reduces the risks of soil compaction while maximizing fiber quality. Furthermore, it is envisioned the robots could also perform other functions during the season such as pest scouting and weed control. Weed Management The diversity of commercially available herbicide resistance traits in cotton varieties is greater in 2017 than ever before. In all varieties, herbicide resistance traits are combinations. Essentially all varieties are now resistant to both glyphosate and glufosinate. The inclusion of auxin herbicide resistance traits for the herbicides 2,4-D or dicamba varies among planting seed companies and their commercial brands; and in certain company’s product lines, the traits also vary among varieties within the brand often by year of release, with certain more recent releases carrying an auxin herbicide resistance trait. No variety is resistant to both 2,4-D and dicamba. The four herbicides, for which resistance is conferred by a trait, are in all cases potentially lethal to varieties that do not have that particular protective trait. Such differences are also true between the two auxin herbicides. While both 2,4-D and dicamba share the same herbicidal mechanism of action, they are mutually lethal to varieties without their respective protecting trait because their herbicide resistance mechanisms differ. The potential advantages are large. Weed resistance to herbicides is increasing. New mechanisms of herbicide action are necessary to control weeds with glyphosate resistant populations such as horseweed, aka marestail, (Conyza canandensis), Palmer amaranth (Amaranthus palmeri), Johnsongrass (Sorghum halepense), and goosegrass (Eleusine indica). Dicamba and 2,4-D give new post emergence options for broadleaf weeds which are now scarce in both cotton (Gossypium hirsutum) and soybean (Glycine max.) Moreover these herbicides expand the options for rotation of the remaining effective mechanisms of action and advance the goal of sustained herbicide resistance management. Both 2,4-D and dicamba have been available in formulations that have been prone to off-target movement. New formulations that greatly reduce the potential for post depositional volatilization are mandated for exclusive use on the new auxin herbicide-resistant varieties and are promoted as minimizing the danger of off-target damage. However, they are more expensive than older formulations that are available from generic providers, and the new formulations have very specific labels for use that are more restrictive than those required for application of many other herbicides. Applicators will have to pay strict attention to details to minimize the risk of off-target movement. As such, the release of the auxin herbicide resistant varieties and registration for the auxin herbicide for use on them entail considerable risk for damage to non-tolerant crops. The auxin herbicides and dicamba have been registered for use on specific corn, cotton, and soybean cultivars. There are three potentially important issues: efficacy, resistance management and off-target movement. No weed management program for cotton should be undertaken without use of a pre-emergence herbicide for grasses and to decrease and slow the emergence of broadleaf weeds. In the Mid-South numerous Palmer amaranth escapes are being seen following an initial post emergence treatment of dicamba. Cooperative extension specialists are recommending to apply dicamba at the full label rate when Palmer amaranth is no taller than four inches. Even then, control is better if dicamba is

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tank-mixed with glufosinate. If dicamba is used alone, Palmer amaranth weeds may twist and remain stunted for three-five days, then commence regrowth. A second application just before or when the plants begin to regrow is recommended. Growers and the Environmental Protection Agency (EPA) were promised that use of glyphosate would not lead to resistance to glyphosate. Since this was clearly not the case, EPA has embedded resistance management provisions in the new auxin herbicide labels. Unfortunately, certain instances of poor control in Arkansas and Tennessee already may qualify as ‘suspected resistance’ (defined by EPA) and plants have been collected for assay. Cotton root rot, aka Texas root rot, caused by the soil-borne fungus Phymatotrichopsis omnivora, is a destructive disease that propagates from sclerotia which germinate from as deep as 18 inches in the soil. The fungus infects roots, grows through the soil surface, eventually girdles the stem, and kills the cotton plants. In the field, visible damage is seen at specific points and moves outward in a radial pattern. Frequently disease incidence is clustered. Even when a field appears severely diseased, damaged areas may represent less than 50% of the whole field. Airborne imagery of infested fields, taken over multiple years, shows that although the disease may be of greater extent in wet years than in dry, the points where the disease begins are highly conserved and the affected areas are largely stable across years. The fungicide flutriafol has been used in Texas since 2012 to control cotton root rot. As a result, growers have reduced cotton root rot incidence, and achieved higher yields and better fiber quality. Growers generally treat their fields uniformly even though only portions of their fields are infested. However, the spatial nature of cotton root rot, its highly visible damage, and its reoccurrence in the same areas year after year make it an excellent candidate for site-specific management. The consistent pattern of cotton root rot incidence provides the producer with an opportunity to use historical airborne imagery for making site-specific treatments. Considering the cost of the fungicide that is now about $40/acre at the full rate, site-specific treatment can be very beneficial in many fields. Historically, pre-2012 airborne and high resolution satellite imagery provides a useful data source for documenting cotton root rot infestation and can be used to generate effective prescription maps for precise management of the root rot. Variable rate controllers can be easily adapted to existing tractors/planters/applicators for implementing site-specific fungicide applications. Image processing is a specialized field and requires computer skills and an understanding of the techniques involved. If a grower is unfamiliar with such techniques, an image processing service or an agricultural dealer may be consulted to create prescription maps. As long as only portions of your fields are infested with cotton root rot, and can be effectively quantified, it is worth the effort to employ site-specific management techniques for controlling cotton root rot. Benefits can include a significant reduction in disease control costs and reduced use of fungicides in the environment. A technical bulletin has been prepared to explain the process, its benefits, and how site-specific treatment can be done. Cotton is subject to several soil-borne diseases, the most prevalent being fusarium wilt caused by fusarium oxysporum f. sp. vasinfectum (FOV). Fusarium wilt can cause severe economic losses and once it is in a field it can persist for years making management with rotation crops alone ineffective. FOV is genetically diverse. The current classification system differentiates isolates into eight nominal races, but this classification scheme is based only on four DNA sequences, primarily a partial sequence of translation elongation factor-1α (EF-1α) and secondly the intergenic spacer region of the rDNA (IGS). Novel genotypes have been identified in Australia, and the Southeast and Mid-South U.S. that fall outside this system. The pathogenicity and virulence of certain of these unclassified genotypes are very high. In recent decades, fusarium wilt was managed by suppressing the root knot nematode (RKN) (Meloidogyne incognita), because the most commonly occurring race of FOV in the U.S., race 1, was infective only in association with RKN. However the insecticide-nematicide aldicarb, the principal nematicide used to control RKN, was dropped by its manufacturer, and replacement by a second vendor was delayed. During the interval, incidence of fusarium wilt increased in the Southeast where RKN is common in coarse-textured soils. More significantly, FOV race 4, which is aggressive even in the absence of nematodes, was detected in the San Joaquin Valley (SJV) of California in 2004 (published 2006) where it has contributed significantly to the devastation of the California cotton industry. In the SJV, the total acres of Upland cotton (Gossypium hirsutum) and Pima cotton (Gossypium barbadense) have decreased from approximately 1.5 million to 0.3 million acres over the past decade, an 80% decrease. While not all the decrease is directly attributable to FOV race 4, because a long-term drought, consequent costs of water, and the profitability of alternative crops are also involved, FOV race 4 is now widespread in the SJV and is a significant concern for production of all cotton types.

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Upland cotton, which is what is grown in the Southeast, is particularly under threat since there are no commercial varieties with proven resistance to FOV race 4. There also are other root rotting FOVs for which resistance is presently unknown. Two cotton industry supported surveys unexpectedly discovered several FOV races in addition to FOV race 1 in the Southeast. These included FOV races 2, 3, and 8, and several newly discovered genotypes, LA108, LA110, LA112, and LA127/140, the latter (LAs) were initially identified in Louisiana but have been found to be widespread in the humid Cotton Belt. Recent surveys in 2015 and 2016 revealed that the genotype LA110 is now the most common FOV in Georgia behind FOV race 1. Moreover, the symptoms caused by certain of these newly found genotypes resembled those of FOV race 4. Disease caused by the newly-reported isolates was present without RKN, and the onset of disease was at the four to six leaf stage, in contrast to symptoms caused by FOV race 1 that usually was first visible at flowering. An additional genotype, designated MDS-12, was discovered and shares EF-1α sequence identity with FOV race 4; however, these isolates differed at IGS and were not as virulent as FOV race 4. Recent research based on a broad collection of FOV isolates from the U.S. suggests that there are two pathotypes of FOV, a vascular infecting type and a root-rotting type similar in its etiology to FOV race 4. In addition, preliminary results indicate that fusarium wilt in the Southeast can be caused by FOV in association with sting nematode (Belonolaimus longicaudatus); but it is not yet clear which races and genotypes of FOV may be involved. In short, fusarium wilt is re-emerging as a serious disease and is considered one of the biggest long-term threats to cotton production, yet the virulence mechanisms of FOV and how virulence phenotypes relate to genetic diversity of the pathogen are poorly understood. Since adequate control measures, particularly resistant Upland cultivars, are not available for FOV race 4 or other genotypes that are problematic in the absence of nematodes, research is urgently needed to characterize the isolates, understand their pathogenicity, and identify appropriate genotypes for use in screening and breeding of resistant cotton cultivars. The identification of cotton germplasm resistant to FOV is essential and integrated pest management strategies for all races and genotypes currently in the Southeast, or that could be introduced into the Southeast, is needed. Timely dissemination of research results on FOV and effective control strategies to regional and county extension personnel, cotton specialists, consultants, and producers will be critical for effective management of fusarium wilt of cotton. Cotton Incorporated has coordinated the collection of field samples and the testing of isolates, and assembled and reported data that confirms fusarium oxysporum f. sp. vasinfectum race 4 (FOV4) has spread to the Upper Rio Grande Valley in Pima cotton in El Paso and Hudspeth counties Texas. A cotton breeder with extensive experience in the SJV and success in breeding FOV4 resistant cotton cultivars observed fields he thought were infested with FOV4. The breeder collected infected plants, and with Cotton Incorporated’s guidance sent coded, split samples to the University of Georgia (UGA) and to the USDA-ARS Cotton Pathology lab at College Station, Texas. Without telling the labs, the breeder sampled three fields that had the FOV4 phenotype while the fourth field had a severe infestation of Rhizoctonia solani. Each lab independently isolated FOV from the three suspected fields and not from the other (or control) field. Each lab correctly identified each isolate as FOV4 using different methods – the EF-1α and IGS gene sequences at UGA and at USDA-ARS the presence of an internal transposon in the phosphate permease gene that is diagnostic for FOV4 from the SJV. Additional samples were taken by the El Paso county agent, split, and sent to the Texas Agricultural Extension Service (TAES) at Lubbock and to a pathologist experienced in soil-borne diseases at the University of New Mexico (UNM) at Las Cruces. Both the TAES and the UNM labs readily isolated FOV and the UNM lab identified FOV4 using molecular techniques (details promised by July 3). Target spot of cotton caused by Corynespora cassiicola is now a recurring disease in the Southeast and in 2016 exploded in the central and north Delta in the Mid-South. Preliminary analysis of the variability in incidence and severity among years and locations suggests that disease development is driven by extended periods of rainfall and consequent high humidity, during periods of warm temperatures (daily highs > 85°F). Following disease onset, premature defoliation frequently occurs as lesions develop on lower leaves and spread upward throughout the canopy, potentially resulting in yield loss. The objective of a three-year regional project was to evaluate the effectiveness of various fungicide application programs for managing target spot as well as yield response and lint quality. Trials were established in four locations across four states (Georgia, Florida, Louisiana and Virginia) in 2014, seven locations across six states (Alabama, Georgia, Florida, Louisiana, Tennessee, and Virginia) in 2015, and nine locations across five states (Alabama, Florida, Georgia, Louisiana, and Tennessee) in 2016. Two varieties were hypothesized to vary in susceptibility and four fungicides were evaluated when applied once or with a second application 14 days later. The timing of the first application varied among locations and years. Treatments were applied using a full factorial, randomized complete block design with two varieties, two application timings, and five fungicide treatments (four fungicides plus an untreated control). Data was taken at date of onset of lesions, and thereafter incidence, severity, and defoliation evaluated bi-weekly until crop defoliation by harvest aid. Lint yield and quality were assessed. Date of disease onset and disease severity varied among years and locations. Disease incidence and defoliation was greater on one variety,

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but one variety had consistently higher yields. Fungicides slowed disease progress and reduced overall defoliation, but yield responses to fungicide applications were infrequent. However, fungicides did reduce defoliation, which was negatively correlated with yield. Bacterial blight, caused by Xanthomonas citri pv. malvacearum (Xcm), was a major disease of cotton in the U.S. until the mid-1970s. After that time, bacterial blight was suppressed by the widespread use of resistant cultivars and acid delinting of planting seed. In 2011, the disease re-emerged in the Mid-South and in each succeeding year has been observed over a greater area in the U.S. We are conducting a coordinated research program to classify the field genotypes, detect the pathogen in planting seed, understand Xcm's pathogenic mechanisms, and elucidate the molecular genetics of host resistance in cotton. Our objective is to deploy an integrated management program and create new technologies for effective management. In 2017, bacterial blight has been observed in the field in Georgia, Mississippi, and Texas. In Georgia, bacterial blight has been found in the root-knot nematode resistant cultivars. Data taken by Georgia crop consultants shows that the spatial patterns of early disease symptoms in several fields suggest planting seed as the source of origin. Progress has been made in the Cotton Incorporated sponsored project at Mississippi State University to develop a test for bacterial blight in seed. The full genome of Xanthomonas citri pv. malvacearum has been accepted for publication. The genome of this bacterium is the very first published genome in which every gene has been identified. Twenty-one genes have been identified as a possible basis for diagnostic PCR tests. Candidate A and Candidate PCR will be tested on seed collected from field-infected bolls in 2017. Pest Management In 2017, entomology research efforts in the Southeast will primarily focus on thrips, tarnished plant bug (TPB), and bollworm management. The research goals in this region focused on mitigating insecticide resistance, optimizing thrips management, and validating TPB thresholds. A regional study including North Carolina, South Carolina, Virginia, Georgia, and Alabama seeks to continue research investigating insect pest management of thrips and bollworm. Research objectives will assess tools and practices for thrips management, monitor the status of Cry-1Ac resistance in Helicoverpa zea, and insecticide efficacy against H. zea in cotton. Thrips of the genus Frankliniella are widely recognized as serious economic pests of Southeastern cotton production whose injury and damage symptoms can range from leaf curling to delays in crop maturity, reduced yield, and stand loss. If left uncontrolled, thrips can cause lint losses as high as 400 to 660 lb per acre, or 34 to 43% of total yield in North Carolina and South Carolina, respectively (Herbert et al. 2007), and result in significant control costs. The severity of thrips damage experienced in a given year is determined by the interaction of multiple factors, which include planting date, environmental factors that influence thrips population, growth and cotton seedling growth rate, surrounding crops that are thrips-hosts, and cover crops. Traditionally insecticides have been the primary, and only economically viable management tactic for Southeastern cotton producers. However, insecticide options are dwindling (Huseth et al. 2016), and southern cotton producers can no longer rely on a single management tactic for thrips. A multifaceted management approach system is needed to ameliorate the almost guaranteed yield-robbing specter of early-season thrips pressure. Helicoverpa zea (Boddie) is one of the most important insect pests of cotton, Gossypium hirsutum L. Development of resistance to a Bt trait and the pyrethroid class of insecticides by H. zea has prompted research efforts aimed at better understanding levels of resistance and field-level efficacy of these plant protection technologies. Cry 1Ac protein expressed in transgenic Bt cotton has been widely used for management of H. zea since 1996. Extensive and constant exposure of H. zea to this protein has resulted in resistance in the Mid-South, and data generated last year shows resistance to Cry1Ac is also present in the Southeast; however, resistance levels are variable among locations and resistance has not been detected in every state. In addition to Cry1Ac resistance, increases in pyrethroid resistance have been detected in adult vial test bioassays conducted on bollworm moths captured in pheromone traps across the southern U.S., although field-level failures are not always observed. Given these findings, the researchers believe it is prudent to continue to monitor the susceptibility of H. zea to Cry1Ac, and pyrethroid insecticides, and evaluate field efficacy of these technologies used to manage H. zea in cotton. Researchers at North Carolina State University (NCSU) developed a simulation computer model to provide cotton growers and consultants with a tool to accurately forecast exposure of seedlings to thrips damage. A detailed review was conducted where Southeastern entomologists compared their thrips damage assessments over multiple planting dates and locations to

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the model projections. Scientists conducting the Southeastern regional thrips project have provided initial feedback on model performance and indicate that the model predictions are indicative of thrips pressure and damage. The researchers at NCSU launched the online model in March of 2017. An overview and tutorial for the model can be found here: http://www.plantmanagementnetwork.org/edcenter/seminars/cotton/ThripsInfestationPredictor/. Additionally, TPB has become a more frequent problem in Southeastern cotton most likely due to a reduced number of insecticide sprays for the control of cotton bollworm in Bt cotton varieties. Previously, frequent broad-spectrum insecticide applications for bollworm had also controlled several secondary pests such as the TPB. Since 2009, the percentage of total cotton acres sprayed for TPB in North Carolina has consistently climbed close to 50%, up from 5% six years prior. The current circumstances facing Southeastern cotton growers are similar to those faced by Mid-South growers roughly ten years ago where control costs now often exceed $100 per acre. To regain control and reduce inputs costs, current IPM strategies in the Mid-South recommend planting a hairy leaf variety, sequential spraying, rotation of insecticide classes, and planting early. The goal of this Southeastern research project is to build on previous experiences of Mid-South entomologists and adapt it for TPB control in North Carolina. The researchers developed valuable new information on control options for TPB and will focus on refining thresholds in 2017. This work has also been extended to Virginia in 2017. In 2017, entomology research efforts in the Mid-South will primarily focus on worms, thrips, and TPB management. Growers are currently able to control these pests but at a high cost. A regional study with locations in Arkansas, Louisiana, Missouri, Mississippi, and Tennessee focused on mitigating insecticide resistance in thrips and reducing the number of sprays needed to control TPB and worms. Cotton in the Mid-South is affected by a variety of insect pests that reduce yields and increase production costs. Tarnished plant bug, thrips, and cotton bollworm are the three most important pests. This regional project will conduct research trials needed to provide growers with timely information on the most effective management practices to maximize returns on investment, and to predict, respond to, and if possible, delay the development of resistance. Thrips are a widespread early-season pest of cotton, and tobacco thrips are the dominant species in the Mid-South. Insecticide seed treatments with a neonicotinoid active ingredient are the most widely used tools for thrips control. Tobacco thrips have developed resistance to thiamethoxam in recent years, leading to the elimination of thiamethoxam-only seed treatments from Extension recommendations in most of the Mid-South. Experimental evidence and field observations suggest that resistance is also developing to imidacloprid, another neonicotinoid and currently the most widely used active ingredient for thrips control. This project will monitor, throughout the region, the effectiveness of these two chemicals, as well as identify alternative insecticide seed treatments that could be used effectively for thrips control. In addition, aldicarb, which was formerly a widely used material for at-planting control of thrips and nematodes, has been re-introduced as a labeled product in the Mid-South. This active ingredient has been off of the market for several years, and evaluations will be conducted to verify its continuing effectiveness. Cotton bollworm remains a major pest of post-bloom cotton in the Mid-South, despite the widespread use of transgenic varieties that incorporate various combinations of insecticidal proteins derived from Bacillus thuringiensis to control caterpillar pests. Foliar insecticides are commonly used to supplement control of cotton bollworm. This regional reseach project will evaluate the impact of these key insecticides and their ability to preserve yield in combination with the changing suite of traits used in commercial production of cotton. Monitoring for the continued susceptibility of cotton bollworm to one or more Bt-derived toxins will also occur. Tarnished plant bug is consistently the most destructive pest of cotton in the Mid-South. Due to the destructive nature of this pest, its high mobility as an adult, and the relatively short period of effective residual activity for most insecticides, multiple applications are needed in virtually all cotton fields throughout much of the region, representing a substantial input cost to growers. Tarnished plant bug has an established history of developing resistance to insecticides, and ongoing evaluations are needed to verify the continued effectiveness of labeled materials. The timing of and intervals between applications also impact performance. For instance, two applications in relatively quick succession might provide more effective control than the same two applications spread out over a longer time period. This regional project seeks to determine the impact of residual control of insecticides based on the interval between applications, which will help producers to more effectively manage this pest and maximize returns on their input costs.

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In 2017, entomology research efforts in the Southwest will primarily occur in Texas where achieving cotton production goals often is dependent on managing pre-flowering insect pests such as thrips, cotton aphid, whiteflies, and fleahoppers. To address management of these pests, a group of nine scientists from across Texas cooperated in fulfilling three main objectives. First, the researchers will determine efficacy of neonicotinoid insecticide seed treatments to early-season cotton pests including thrips, cotton aphid and whiteflies, and evaluate mite populations. Second, the researchers will perform a survey of thrips populations infesting cotton in different cotton production regions of Texas for a better understanding of regional thrips complex compositions. Lastly, the researchers will evaluate cotton fleahopper populations on select cotton varieties to determine if colonization differs among varieties with unique genetic backgrounds. In a separate project, Cotton Incorporated and Texas A&M continued the partnership in graduate education to address the need for trained cotton entomologists. The goal is to prepare the next generation of cotton entomologists with expertise in contemporary regional pest risk assessment techniques coupled with classical IPM approaches, designed to enhance timely pest management in fields at high pest risk within large cotton production regions. The boll-feeding/sucking bug complex of stinkbugs and verde plant bugs are being utilized as the focal point of the partnership. Two graduate students and one undergraduate student have been recruited to continue this project in 2017. In 2016, a research project with a researcher at Texas A&M was initiated to employ a population genomics approach to protect and advance the ongoing boll weevil eradication efforts along the U.S.-Mexico border and beyond. This project is continuing in 2017 and will provide a new suite of genetic tools that can be used for a range of applications including, but not limited to: (1) determining patterns of insect movement among closely-related populations to prioritize proactive eradication efforts on specific populations or regions in northern Mexico acting as sources of migrants; (2) identification of source populations in the event of re-introduction into previously eradicated areas, (3) developing accurate diagnostic tools for distinguishing among closely-related weevil species, and (4) ID of genomic regions and mapping of specific genes under selection for insecticide resistance. For 2017, entomology research efforts in the Far West will primarily focus on stinkbug, lygus, and whitefly management. Growers have a well-established IPM program for lygus and whiteflies but the recent increase in brown stinkbug sprays has disrupted the program. Previous results from this research in 2016 found that spraying insecticides for control of brown stink bug provided no yield benefit and often caused outbreaks of other pests. This research was instrumental in preserving the IPM program in Arizona. With the loss of three University of California entomologists in 2017, efforts will be made this year to identify critical research gaps and how to address them. Strategic Objective 2: Increase the long-term profitability of U.S. cotton production.

Cottonseed During the first six months of 2017, most of the long-term cottonseed value-enhancement efforts were devoted to: 1) Ultra-low Gossypol Cottonseed (ULGCS) regulatory activities, 2) ULGCS value discovery (product utilization research), 3) initial efforts to promote cotton as a unique, high-value, sustainable fiber and food crop, 4) cottonseed processing on a pilot plant scale, 5) scale-up of the brush delinter and production of viable breeder-scale commercial units, and 6) cottonseed oil research. All of the required regulatory field trials for ULGCS have been completed. These field trials were conducted over a three year period. The regulatory dossier is ready for submission to USDA-APHIS, but is waiting for the filing of the event patent. The decision was made in 2014 to put the emphasis on U.S. regulatory activities while postponing the Canadian requirements due to the expense of Canadian regulatory efforts. The dossiers will be filed in Mexico soon after they are submitted in the U.S. The biggest volume of work that is needed now is the final preparation of the FDA document and final preparations of the environmental impact section for USDA-APHIS submission. Over the past few years, numerous meetings have been held with potential commercial partners for ULGCS, but the primary issue that seems to be delaying commercialization of this technology is the value proposition and international regulatory issues. In an effort to help identify the value-added potential for ULGCS, small plots of glandless cottonseed were grown in New Mexico and Texas during 2016. The seed from this glandless seed increase was used for processing research, product utilization research, and as a seed increase for planting in 2017. There is now glandless cotton germplasm with demonstrated yield potential in excess of 3½ bales per acre.

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After considerable trial and error, the cottonseed processing pilot plant is now ready for full production runs. These runs will produce hulls, meal, and oil for future processing research and helps identify the issues that need to be researched prior to scale-up. The pilot plant is tentatively scheduled to be relocated to Brownfield, TX later this year. Variety Improvement Genomics and Genetics: A significantly improved upland cotton genome sequence was made publically available on April 10 by the team at the University of Texas-Austin and the HudsonAlpha Institute, who have been working on this project for a number of years. The larger cotton community has already established this version as the best in the world. Both institutions were supported with funds from Cotton Incorporated. Germplasm and Varieties Released: Two germplasm releases were jointly made between the USDA-ARS (College Station, TX, program) and Cotton Incorporated and four additional joint germplasm releases were made with the University of Arkansas. All six were published in the Journal of Plant Registrations in 2017. Varieties developed by the University of Arkansas and University of Georgia continue to garner interest from private seed providers, and each institution has signed commercialization agreements. Cotton Winter Nursery (CWN): There were 5,827 hills planted in the Liberia, Costa Rica CWN. Unusual early season rain delayed planting and heavier than normal late season rain hindered harvest, but seed will shortly be en route to Cary where it will be forwarded on to users. An import permit allowed a test shipment of ‘dummy’ seed to depart Costa Rica and arrive in the US with minimal delay, so it is hoped the same will occur with the scientists’ seed. We delinted using our newly built system, and even with expected start-up delays, the system worked well. Drip irrigation was installed in addition to a well and pump to provide reliable water. Six users visited the Costa Rica site during the growing season and each spoke highly of the manager, site, and CWN operation. Much progress has been made in past 24 months, but work continues. 2017 Cotton Breeders’ Tour: A planning trip was taken at the end of March to talk with potential speakers and check venue options. The finalized details were posted on-line during May and nearly 50 scientists are currently registered to attend. Stops will be made at Maricopa, Eloy, Tucson, and Case Grande. A tour report will follow in the second half 2017 report. Regional Breeders Testing Network (RBTN): A cooperator at the University of Arkansas screened all 2016 RBTN entries for Bacterial blight (Xanthomonas citri pathovar malvacearum) and plans were put in place to do the same for 2017 entries. Ten 2016 entries were rated as ‘resistant.’ Cotton Incorporated Fellowship (CIF) Program: One new CIF started in 2017, who is at Texas Tech University.

Strategic Objective 3: Increase number of future scientists of U.S. cotton and improve the reputation of U.S. cotton production.

Sustainability On March 14 and 15, 2017, Cotton Incorporated’s Agricultural and Environmental Research Division (AERD) organized a meeting of leaders from U.S. cotton industry organizations including the National Cotton Council, Cotton Board, Cotton Council International, and Cotton Incorporated to join ten technical experts in cotton biology and production to discuss how future technologies would impact trends in key performance indicators (KPIs), which are used to assess the sustainability of agricultural production systems. The discussions centered around nine research and technology areas: 1) Fiber Quality; 2) Cottonseed and By-product Utilization; 3) Genetics; 4) Genetic Engineering; 5) Crop Physiology; 6) Agronomy; 7) Insect Pest Management; 8) Geospatial Technologies and Data; and 9) Machinery and Automation. A total of 14 KPIs were considered during the discussion. The meeting was also informed by a recent survey of over 50 cotton producers on their perceptions of future opportunities and challenges, as well as a pre-meeting questionnaire completed by the technical experts where they listed relevant technologies that could impact KPIs in the future. This meeting also served a secondary objective of providing a review of AERD’s strategic plan. There was optimism about the future for U.S. cotton due to the expectation that future yields will continue to increase, without a significant increase in production inputs due to genetic gains and improved management tools. This improvement in production efficiency is expected to be achieved while sustaining or even improving important fiber quality traits. There was

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consensus that the technologies discussed would have an overall positive impact on the long-term profitability of cotton production and cotton’s competitiveness with other row crops. Of the 14 KPIs considered during the meeting, the group formed preliminary recommendations for U.S. industry goals in the next 5, 10, and 30 years for seven KPIs. These seven KPIs were selected based on several criteria: the future technologies’ ability to impact a KPI, relevance to cotton’s stakeholders, harmonization with Field to Market KPIs, and robustness of metric science. The goal setting process follows the Framework for Sustainable Agriculture ANSI standard S629 recently developed by the American Society of Agricultural and Biological Engineers (ASABE). The outcome of the meeting was reported to an industry task force who will ultimately select what goals the U.S. cotton industry will set for future improvements. Web-based Outreach Over the past three years, Agricultural & Environmental Research (AERD) has funded the production of a monthly “Focus on Cotton” webcast series through the Plant Management Network. The Plant Management Network (PMN) is a nonprofit publishing effort jointly managed by the American Society of Agronomy, American Phytopathological Society, and Crop Science Society of America. PMN’s mission is to enhance the health, management, and production of agricultural and horticultural crops. That mission is achieved by producing, distributing, and promoting science-based information to producers, consultants, and other stakeholders in the agricultural industry. A multidisciplinary advisory committee of scientists who specialize in cotton and conduct applied research in the field oversees the webcast series development. An AERD staff member chairs the committee comprised of an entomologist from the University of Tennessee, a plant pathologist from the University of Arkansas, a weed scientist from Mississippi State University, and an extension cotton specialist from North Carolina State University. The committee’s role is to propose topics and nominate webcast speakers as well as to ensure these webcasts adequately serve growers and consultants with information that is science-based, easily understood, and usable in the field. Since the inaugural webcast launch in February 2013, there have been over 97,000 presentation views. Webcasts released this year have covered a range of topics such as herbicide resistance, tank cleaning, thrips infestations, resistant weeds, and management of tarnished plant bugs. The “Focus on Cotton” webcast series can be viewed at this link: http://www.plantmanagementnetwork.org/infocenter/topic/focusoncotton/. Cotton Cultivated (cottoncultivated.cottoninc.com) continues to provide a portal that integrates Web sites, downloadable documents, social media, how-to videos, and real-time news feeds that have been “cultivated” in an effort to reduce the time spent sorting through pages of irrelevant search results. For 2017, Cotton Cultivated has grown to include a new weekly weather video series specific to Cotton Belt producer, an updated Multimedia section that includes how-to videos, and access to the latest Focus on Cotton Webcasts. The current set of videos is focused on planting and growing; but the highlighted videos are rotated with the seasons to best address producer needs, and future videos will cover a range of cotton production issues including pest management, equipment maintenance, weather, agronomy, and many other topics.

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RESEARCH AND DEVELOPMENT COMMITTEE

FIBER COMPETITION: FIBER QUALITY

Strategic Objective 1: Improve quality measurements of cotton fiber, yarns, and fabrics.

Quality Measurements Improvement Bias-Free Fiber Length Distribution Measurement 2017 Objectives: Demonstrate the feasibility of a new alternative solution enabling contactless alignment and individualization of cotton fibers for length measurement with the ultimate goal of developing measurement tools and procedures that provide an unbiased characterization of fiber properties. Work prior to 2017 resulted in the design and machining of a fiber opening system with multiple draft zones. The primary goal for 2017 is to test and trouble shoot the fiber separation system using a range of draft configurations and input sliver counts. Work to date has involved preparing the prototype for draft-ratio experiments and testing fiber separation. Two main issues have been addressed: 1) Mechanical tolerances were adjusted to optimize synchronization between draft zones and electrostatic field. In addition, new rubber aprons were obtained to allow for better fiber control. 2) The code was updated to allow parametric adjustment of the draft ratios. The next step consists of testing and troubleshooting fiber separation with a range of draft configurations and input sliver counts. Elucidating the Impact of Fiber Maturity on Fiber Length Distribution and Fiber Breakage 2017 Objectives: To elucidate the impact of fiber maturity on fiber length distribution and fiber breakage. A set of samples representing a range of maturity and fineness has been identified for this objective. The initial fiber quality of the raw samples has been evaluated, and a wide range of maturity and fineness has been confirmed on the raw samples. The next step will involve taking samples at separate stages of yarn processing and subjecting the samples to Advance Fiber Information System (AFIS) and Favimat testing at a 10mm gauge length. Elucidating the Impact of Processing on Fiber Elongation 2017 Objectives: Implement and validate the newly created elongation reference materials. A large quantity of elongation reference material was developed in 2016. The reference material was produced from ten commercial bales, with one set of five bales representing material with a low elongation and the other set of five representing material with high elongation. The calibration material is well blended and captures a range of individual fiber elongation. This is very consistent with high volume instrument results. The reference values for these bales will be finalized using an average reading from the three high volume instrument systems in use at the Fiber & Biopolymer Research Institute (FBRI). A method for automatic calibration of the elongation measurement is underway. Improving the Utility of Fiber Quality Parameters as a Screening Tool in Breeding Programs 2017 Objectives: Analyze within plant variation in fiber quality to develop screening method. Compare screening methods. Study impact of trash on fiber quality assessment. In the comparison of screening methods both F2 and F3 lines were planted and harvested. The mechanical stripper used to harvest the samples was not equipped with the seed cotton cleaner, so there were many sticks and burrs mixed within the seed cotton. The seed roll within the gin stand could not be formed with these large sticks and burrs. Therefore, the samples must be hand-cleaned before saw-ginning, which is adding to the time involved in this portion of the project. Enough seed cotton is being cleaned and ginned from each sample to provide around 650 grams of lint for analysis. One hundred and twenty-five samples have been cleaned and saw-ginned up to the time of this report. Enhancing the Marketability of U.S. Cotton through Length Uniformity Improvement 2017 Objectives: Optimize the length calibration protocols for high volume instrument upper half mean length (UHML) and high volume instrument uniformity index (UI). This will also include the development of a fibrogram calibration protocol. Investigate the suitability of AFIS length distributions and high volume instrument fibrogram for the improvement of the within sample distribution of fiber length.

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This new project for 2017 is the primary project focused on improving length uniformity by providing a better measurement through the high volume instrument. The goal is to make use of the information in the full fibrogram from the high volume instrument. Little is known about the stability of the fibrogram measurement or the nature of within and between sample variations in the measurement. Well blended card web produced from two samples was used to investigate the nature of the variation in fibrogram measurements. Data shows that the amount of fiber in the beard impacts the optical density of the sample which appears to change the shape of the fibrogram for a given sample. If the optical amount imparts shape differences in the fibrogram, this could pose a challenge. This means fibrograms could have different shapes to their distributions simply because of differences in optical amounts, and not the distribution of fiber length. These results need to be confirmed on a larger set of samples and on multiple high volume instruments. If they are confirmed, the reasons for this need to be better understood before distributional information from the fibrogram can be better utilized. Maturity and Standard Fineness: Determination, Calibration, and Use 2017 Objectives: Development of a protocol for cotton fiber maturity and standard fineness calibration of high-speed instruments. This new project for 2017 is challenged with finding suitable bales of cotton to create new maturity and fineness reference materials. AFIS testing to determine maturity and fineness is underway for 1,442 samples which will then be used to target specific varieties in the 2017-2018 crop. The goal is to find three distinct levels of maturity at three distinct levels of fineness. Once the challenge of finding the bales is complete, labor intensive testing to provide the reference values for maturity and fineness will be needed. Rapid Fiber Maturity Determination 2017 Objectives: The proposed research project’s primary objective is to further the development of a rapid fiber maturity sensor. This new project for 2017 is focused on determining if a rapid system for assessing maturity can be developed based on rapid moisture measurements relating absorbed moisture to the level of amorphous cellulose as an indicator of maturity. Work has begun on a literature review covering the history of fiber maturity and fineness measurement. Additionally, for future testing, West Texas grown cotton samples have been secured that span a wide variation in micronaire ranging from 3.5 – 5.0. Work is also being planned in a cooperative effort with USDA-ARS Southern Regional Research Center (SRRC), to enhance the range of cottons available for subsequent testing efforts. The testing planned in cooperation with SRRC, currently scheduled for the end of second quarter, will examine the potential utilization of moisture as a surrogate for determination of cotton fiber crystallinity, and hence fiber maturity. Barré Grading via Image Analysis 2017 Objectives: Build upon prior work to develop an image analysis (IA) system for the detection of barré that will be able to automatically assign an American Association of Textile Chemists and Colorists (AATCC) grade for the severity of barré and reduce the amount of operator decision making in the operation of the software. Explore the feasibility of an IA system being able to determine if barré is likely caused by physical (i.e. yarn size, twist, etc.) or chemical means. This project has just been initiated owing to delays in paperwork from USDA-ARS-SRRC. It is a continuation of the project from 2015 that was not renewed in 2016. Finding Ginning Methods That Improve Fiber Length Uniformity 2017 Objectives: To develop, test, and report on ginning methods that improve fiber length uniformity index. The saw gin coupled lint cleaner was modified to allow bypassing the second cleaning saw. Modifications included designing and building the following pieces out of sheet metal: two covers for the cleaning saws, a cover/air-inlet for the doffing brush, a cutoff plate above the doffing brush, a bar, a transition, and lint flue ducting. Preliminary testing of the machine is underway. The modifications will permit running the machine with either one or two cleaning saws. The roller gin coupled lint cleaner was made operational after many years of nonuse. The dust hood and associated duct work was re-installed. The machine does require new rotary knife bearing supports, but these parts are available. Software changes were made to the variable frequency drive controllers on the conventional saw-type lint cleaner (the control). A larger drive motor for the cleaning saw may be needed due to the higher speeds of the saw on the gin test.

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Dual-beard Fibrography for Cotton Length Distribution Measurement 2017 Objectives: The objective of this project is to develop a portable, economical, and easy-to-use system for fiber length distribution measurement based on dual-beard fibrography and an iterative separation principle. This new project for 2017 has just been initiated owing to late submission of a proposal. Research and Fiber Quality Meetings Staff participated in a variety of meetings including: Cotton Beltwide Conference, a visit from a researcher from Commonwealth Scientific and Industrial Research Organization (CSIRO) Australia to discuss final results of 2016 projects, a presentation on contamination at Southern Southeastern Annual Meeting, an in-house meeting with a consultant on EFS®

study, multiple conference calls to discuss a laundering project with industry collaborators, the NCC Bale Packaging Meeting, conference call with a textile mill about fiber quality differences between upland and extra-long staple cottons, a fiber quality presentations for mills in Thailand and Vietnam, meet with members of Clothing Care Research Council (CCRC) in Cincinnati, internal meeting with a textile mill about bale color change issues, internal meeting with instrument manufacturer, internal meeting with software vendor, visited FBRI to discuss ongoing research, attended off-site management meeting, internal meeting with researcher from USDA-ARS-SRRC to discuss ongoing research, a conference call with new center director of USDA-ARS-SRRC, a presentation at a retailer in Minneapolis about fiber quality, and a presentation at the Cotton Warehouse Grower Association Annual Meeting on textile processing bale to finished fabric. Strategic Objective 2: Provide accurate test data to support research and marketing efforts.

Product Evaluation Laboratory Agricultural and Environmental Research Testing for Agricultural Research was focused on general Agricultural Research Initiatives and Variety Improvement. Fiber Competition For fiber testing, the following routine high volume instrument studies were completed in the first half of the year: five monthly check cottons tests, one Bremen Institute round robins, and two Commercial Standardization of Instrument Testing of Cotton (CSITC) round robins and eight USDA-AMS 220 Calibration Sets. For fabric testing, four AATCC proficiency studies were completed (colorfastness, visual color evaluation, appearance, and spray testing) and one ASTM study on tear testing. For yarn testing, one Testex proficiency was completed. Lab staff also provided testing support in the form of technical services to one EFS® licensee in need of yarn testing. Global Supply Chain Marketing Highlights of work are listed by department:

Global Supply Chain Marketing (GSCM): GSCM projects included technical service for fiber quality and an evaluation of the construction of pillow cases.

Technology Marketing (TM): TM Research work involved the evaluation of Spinit fabrics for a mill, the evaluation of alternatives to polyester fleece, and technical service involved the work on natural fiber welded yarns and resulting fabric evaluations.

Product Development and Implementation Highlights of work are listed by department:

Fiber Processing (FP): FP initiatives involved typical support work for bale checks, Murata vortex trials for a spinning mill, non-woven research support, hairiness comparisons on ring spun yarns, development of different fiber yarn blends for research, and determination of lowest twist possible on 40’s ring spun. Technical service was provided to a stock fiber company for non-woven assistance.

Product Development (PD): Testing consisted of samples for the FABRICAST™ line which were tested for basic fabric properties. If the samples contained a technology, the performance of that technology was also evaluated. PD Research work looked at effectiveness of different water repellent chemistries on different fabric constructions.

Technology Implementation (TI): Technical Services work involved yarn testing for internal informational purposes. Implementation efforts involved multiple trials and evaluations associated with the adoption of STORM COTTON™ technology, TOUGH COTTON™ technology, TransDRY® technology, and WICKING WINDOWS™ technology.

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Technical Services (TS): Testing services included the evaluation of garment claims, support for a finishing mill, barre’ issues, baseline fabric information for internal trials, and fabric strength concerns. Implementation work involved multiple trials and evaluations associated with the adoption of STORM COTTON™ technology, TOUGH COTTON™ technology, TransDRY® technology, and WICKING WINDOWS™ technology.

Textile Chemistry Research (TCR): Research included non-fluorine WICKING WINDOWS™ finish, no sweat non-fluorine development, non-formaldehyde options for various finishes, newness retention on denim, and TOUGH COTTON™ knit technology work. Implementation work focused on simulation of a mill trial, assistance with a major TOUGH COTTON™ technology adoption, and assistance with STORM COTTON™ technology adoption. Technical Service work involved sewability concerns with TransDRY® technology, testing of fabrics for a laundering study to improve DFAL processing, and various projects assisting with lab trials in Asia for different mills.

PEL Testing Summary Mid-Year 2017:

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PRODUCT DEVELOPMENT AND IMPLEMENTATION

Strategic Objective 1: Identify and research sustainable innovations in technology and product development that can recover, grow and preserve cotton market share.

Air Jet Yarn Development Fiber Processing helped a major U.S. spinner develop a combed MVS air jet yarn for a potential sheeting customer. First, the FP team procured and processed an Upland cotton to spin a suitable Ne 30/1 combed yarn. Working directly with the spinner’s technical and marketing staff, FP then produced 1,800 pounds of an MVS yarn for the development of a sheeting fabric. The yarn is now in queue for weaving trials with the sheeting manufacturer. Ultra-low Twist, Soft Hand Knit Development As an internal research project, FP began exploring methods to produce a ring spun yarn which would yield the softest possible hand in an all-cotton knitted fabric, requiring no other process to achieve the result. The FP team selected ultra-low twist as the means to reach that goal. Maintaining strength was a requirement that led to the selection of long-staple Pima cotton as the fiber. After identifying and purchasing the cotton, spinning trials began at multiple twist levels. The optimal, lowest twist for the Ne 40/1 yarn count was at a 2.6 twist multiple (T.M.), which is significantly lower than that currently found in the market. Initial fabric evaluation showed excellent results for softness, attaining acceptable strength and good fabric appearance after one wash and dry test. Currently, a comprehensive knit fabric evaluation is underway with yarns spun at 2.6 T.M. Development of Plied Yarns for Major Denim Manufacturer The FP group met with several technical service/product specialists representing a major denim manufacturer to discuss multiple iterations of plied yarns. After planning, FP produced seven samples of two-ply yarn spun with five different twist levels from both ring-spun and open-end systems. Producing samples in multiple colors (indigo, black, and natural) resulted in interesting effects for this manufacturer to present to its retail customer in woven fabrics. As of this writing, the end customer continues to evaluate those samples for decisions regarding further development. FABRICAST™ Information System - Textile Collections The PD team worked closely with Corporate Strategy and Program Metrics (CSPM) and Marketing departments to determine cotton’s market categories requiring the most focus. Knit fabrics for shirts, jackets, and hoodies are an area of high fiber consumption and required a significant allocation of R&D efforts. Knits for the active wear and athleisure market are mostly synthetic, heavy, and were given a substantial amount of R&D focus as well. Non-denim woven fabrics for pants and shorts with moisture management and improved strength and durability tie into the requirements for the active outdoor market, and sustainability is a major concern through all areas of development. FABRICAST™ 2017-1 Collection In April, the PD team released The FABRICAST™ 2017-1 collection. The FABRICAST™ 2017-1 collection consisted of 71 new knit and woven fabric developments for apparel and home markets. The new collection was made available to Cotton Incorporated account managers in all of the Cotton Incorporated offices. This required the sample cutting room staff of PD to cut and mount 2,556 fabric hangers and 12,425 swatches on specification sheets. Through trade shows, customer meetings, workshops, and presentations, 217 companies requested 259 sample booklets. As a result of the 259 requested booklets, 3,475 swatches were solicited; 2,284 knits and 1,191 wovens. Each fabric sample was accompanied by its technical details and delivered to the requestor. Through staff research, collaborations, partnerships, experimentation, and technical knowledge, the fabrics developed were ahead of trends and served to inspire the market to consider cotton in their decision-making. Every account manager received a complete set of hangers and a booklet of the swatches with all the technical specifications for their use in conducting business. The fabric collections are considered the most important and valuable tool used by account managers in their marketing toolkits. During the first half of 2017, a combination of previously archived developments and newly developed fabrics were promoted and displayed at several trade shows. The Knit FABRICAST™ collection debuted in February at Premiere Vision/Paris and was later released in March to the account management staff in all Cotton Incorporated offices. The collection consisted of new and unique fabrics featuring

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TOUGH COTTON™ technology and STORM COTTON™ technology, as well as French terry, neoprene-like fabric, and sinker loop constructions. FABRICAST™ 2017-2 Collection Work commenced on fabric constructions for future collections for the second half of the 2017 year. The planned technical developments include WICKING WINDOWS™ technology, textured single knit stretch fabrics, cotton blended with wool, and cotton blended with polyester and other polymer blends. Trials are also underway to add decorative weaving techniques, such as clip-spot, to THE FABRICAST™ 2017-2 collection. Womenswear Knits to Compete with Rayon Popularity A collection of cotton/rayon and cotton/acetate blended fabrics are ready for introduction to targeted brands that currently merchandise significant quantities of rayon tops and dresses. The developments completed by PD include plated, double-face jersey and double-sided, double knits integrated with either rayon or acetate on the garment face and cotton on the inside. These fabrics are lightweight, with ample drape properties, and sophisticated sheen attributes for the women’s knit top market where 100% cotton has had difficulty competing. Combining cotton with rayon or acetate in mechanical blends opens the door for cotton content products in a heavily dominated manmade fiber space. There were 224 cotton/rayon hangers made and 1,050 swatches cut. There were 288 cotton/acetate hangers completed and 1,350 swatches cut. 3D Printing The TCR team has been working on blending cotton with biodegradable PLA to make filaments for desktop 3D printers. To date, 3D filament with cotton fibers have been prepared; the next step will be to fine-tune the filament-making process to reduce the brittleness of the filaments for 3D printing. Newness Retention An enhanced newness retention finish has been applied to multiple knit and woven fabrics with the goal of having one finish that controls shrinkage, smoothness, abrasion resistance, fuzzing resistance, dye staining resistance, and color retention. While the results are very encouraging, the finish needs to be further optimized and costed. Moisture Management Blend Fabrics Several sets of knit fabrics have been prepared by combining polypropylene and cotton for moisture management properties. These ongoing efforts are to determine if intimate blends or alternate-feed fabrics offer different performance advantages. Currently, disperse, dyeable polypropylene/cotton combinations are being tested with the goal of allowing union dyeing of cotton and polypropylene blend fabric. New Cationic Cotton In conjunction with a major chemical company and a U.S. brand, cationic cotton is being prepared with a newly patented cationization reagent. This reagent eliminates the amine odor and has improved exhaustion efficiency onto the cotton. A quantity of the cationic reagent has been prepared by the chemical company with the expectation that a mill trial will be carried out before the end of 2017. Bleaching of Cationic Cotton A process has been developed to allow cationic cotton to be bleached without compromising the whiteness, color yield, or fiber strength of the fabric. A special chemical additive, selected by Cotton Incorporated researchers, is included in the bleach bath to achieve these results. Non-Formaldehyde Durable Press Resin Two commercially available products have been identified that can replace the industry behemoth, DMDHEU, for durable press finishing of cotton. The two non-formaldehyde resins give better durable smoothness ratings than DMDHEU, and they cause less strength/abrasion degradation to cotton fabrics. Cotton Incorporated is working with mills in the U.S., Latin America, and Asia (under strict confidentiality) to run full-scale trials. One major U.S. woven mill ran successful trials in January 2017. Another trial was conducted in a large woven mill in Mexico in late June. Additional mills in the U.S., China, Thailand, and Peru are working with Cotton Incorporated toward running trials later in 2017.

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Non-formaldehyde Durable Press Resin II Trials were conducted applying a non-formaldehyde resin with an improved catalyst and cross-linking agent to a shirting-weight fabric and a bottom-weight twill. New application parameters were determined, which significantly increased the activity/fixation of the non-formaldehyde resin. Low Crocking/Color Retention Products for Denim Work has continued on optimizing the best products for low-crocking and color retention for various denim styles. Two products were confirmed to improve wet crocking by 1.5-2.0 points on indigo, sulfur bottom, sulfur top, and black over-dye denim styles; whereas, two other products gave improved color retention. The change of color was very good (4.0 points) on all four denim styles at ten laundering cycles, but was only moderate at 20 or more laundering cycles. A technical package containing fabric samples and presentation materials has been assembled and disseminated. Enzyme Project This is a two-fold project in collaboration with a leading enzyme manufacturer to improve the aesthetics and performance of Upland cotton through the sustainable use of cellulase enzyme treatments.

Yarn Upgrade – The first objective of this research project was to determine if 100% cotton carded ring-spun yarn and carded open-end yarn could obtain the tactile aesthetics of 100% cotton combed ring-spun yarn through the use of acid cellulase and neutral cellulase enzymes. Processing trials are complete, and the finished fabrics have been submitted for evaluation.

Combi-Process – The second objective of this project was to determine if 100% cotton carded ring-spun yarn, combed ring-spun yarn, and carded open-end yarn could be enhanced with neutral cellulosic enzymes added in the dyebath, thus reducing water usage, time, and energy needed to achieve improved aesthetics for cotton fabrics. This is the sustainability portion of the project. The fabrics have been allocated and are separated into the various trials. The trials are ongoing in the Dyeing and Finishing Applications Laboratory (DFAL).

Reactive Dye Primaries/Dischargeability Study This project involves dyeing 100% cotton interlock knit fabric swatches using all of the major reactive dyes available in the industry as provided by the four major global dyestuff manufacturers. All of the reactive dyes are being dyed out at eight different percentage levels, and a larger swatch dyed out at a set level of 3% owg. After the primaries are dyed, each swatch will be measured in the spectrophotometer and the primaries stored as colorants to be used in formulation predictions. Also, each dyestuff will be evaluated to determine the degree of dischargeability using newer, more sustainable methods such as laser technology, ozone, and more environmentally friendly alternatives to potassium permanganate. Cotton Performance Blends This project is in support of PD initiatives to introduce cotton into markets traditionally dominated by synthetics, such as active wear or athleisure. In this project, cotton/nylon blends and cotton/wool blends, as well as these same blends with varying percentages of spandex, are dyed in both union and contrasting shades. The knowledge gained, and the familiarity with these dyeing blends will help to produce samples used to introduce cotton blends as a viable alternative to 100% synthetic fabrics in existing and emerging markets. Outside Research: Application of Aqueous Glycine to Improve Quality and Efficiency of Cotton Dyeing This outside research project, co-funded with a major Australian R&D corporation, is still in development. The focus of this research is to undertake pilot-scale industrial trials to enhance reactive dye uptake and fixation on cotton while reducing salt in the dyebath, and maintaining or improving the dye-fastness and handle-properties of cotton fabric. The objective is to achieve this using an environmentally friendly and easily available amino acid (glycine) instead of water as the dyeing medium. Outside Research: Comparison of Odor and Comfort Properties of Cotton, Cotton/Polyester, TransDRY™ Technology Cotton and Polyester Fabrics: A Wear Trial Different chemical compounds are released from fabric after wear. This wear trial was initiated in late spring to better understand and compare the odor intensity of five different fabric types following 20 wear and wash cycles. Assessment will be made, both before and after washing, to determine various chemical compounds found and the moisture related comfort level of the fabric type.

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After screenings, 20 volunteers were selected and provided T-shirts constructed from the five different fabrics (each T-shirt was custom made by combining two types of fabrics). Volunteers either were instructed to wear the special T-shirts during vigorous workout sessions, then wash and repeat the cycle or return the T-shirt to the lab. Volunteers must complete a questionnaire about their experience with the fabrics in which they compare the two types of fabrics being worn at one time. In addition, the returned samples will be evaluated using a sensory panel. Outside Research Project: 2018 A total of 32 preproposals were received in response to the 2018 outside research request for proposal. After pre-screening, ten of the projects were selected for submission as full-scale proposals. Strategic Objective 2: Optimize and implement products and technologies to advance cotton in global markets.

Development and Production of Functional Cotton/Synthetic Blend Yarns To meet the constant demand for higher performance yarns and fabric, FP conducts internal research on cotton/synthetic blends along with other cotton/natural blends. The FP team utilized existing combed-top wool fiber to create a tri-blend yarn containing 70% cotton, 10% wool, and 20% synthetic fiber for testing to evaluate pre-spinning process performance. An 18/1 yarn produced in ring spinning revealed good evenness and imperfection levels. A follow-up blend of 80% cotton and 20% wool yielded similar results. Both blends are currently in queue for knitting in the PDL, with subsequent fabric evaluation and conclusions to come. Package Preparation for Functional Finish Research Since January 2017, FP has performed six winding projects specifically in support of TransDRY™ technology for a total of 828 pounds. The FP team also processed another eleven winding projects consisting of various fibers, blends, and lengths in support of PD efforts, totaling 418 pounds. Technical Service Meetings with Yarn Spinners and Manufacturers Through in-house meetings, emails, and phone discussions, the FP team supported both domestic and international spinners as well as major manufacturers and retailers. In many cases, technical service requests came through Global Supply Chain Marketing (GSCM) account managers. Common cotton-related issues included undyed neps, fabric barré, yarn quality concerns, and production of softer rotor and air jet yarns. Outside investment in the U.S. spinning industry continues to occur on a regular basis. Senior management from a new spinning company came to Cotton Incorporated to meet with the FP team for a technical information exchange. Performance Cotton Research & Development - Rich Seamless Knit Active Garment Project Cotton Incorporated collaborated with a South American mill to develop a collection of cotton-rich seamless garments for the active wear market. Knitting began at the end of 2016 and continued through the first quarter of 2017. Members of the PD team traveled to South America to oversee the project. This seamless collection is cotton rich and incorporates yarns treated with TransDRY™ technology for moisture management, which gives it a unique and innovative aspect. These developments allow cotton to compete in a space dominated by nylon and polyester. The cotton-rich seamless pants, tops and jog bras debuted during the March Importer Support Program’s (ISP) ACTIVE Event, which was held at Cotton Incorporated’s World Headquarters, piquing the interest of brand and retailer attendees. Fiber Blend Research & Development Project – Knit Top Marketing Initiative Eight new knit apparel fabrics were developed for the women’s and junior’s t-shirt market with the targeted intent to combat the heavy use of synthetics in this space. The marketing team members challenged the PD team to develop lightweight, drapeable, and noticeably soft-hand fabrics in 100% cotton and cotton rich blends. The PD team explored cotton/rayon, cotton/polyester, S&Z twist cotton yarns, and a new yarn of cotton with a dissolvable core. These fabrications were finished with a new softener formula, imparting a notably improved softness, developed by the TCR team. There were 320 hangers made and 1,500 swatches were cut for the account managers to promote with outside companies. Woven Cotton Fleece Fabrics Recent studies have shown significant increases in plastic microfibers in the environment from fleece fabrics. This is especially prevalent in our waterways. Cotton fleece has been identified as a market opportunity to provide a natural fleece

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that is comfortable and environmentally friendly. Development is ongoing with mill partners to create high-loft napped wovens for home and apparel applications. Woven Cotton Blends for Performance Trials are underway to develop new cotton/polymer blends for added performance. With mill partners, intimate blends of nylon and cotton are being combined with cotton yarns treated with TransDRY™ technology in chambray fabric. For denim, an intimate blend warp of cotton/nylon/aramid is being used in conjunction with various fillings, such as a TransDRY™ technology or wool to create high-wear denim with moisture transport or insulative character. At Cotton Incorporated, a nylon multifilament warp was setup on the loom for cotton/nylon blended fabric for applications such as outerwear shell jackets and lightweight pants. Durability – Cotton Cordura® Knit Apparel Collaboration A comprehensive project evaluating the durability of cotton in combination with a branded Nylon 6-6 fiber commenced during the first half of the year. The PDI Division engaged a domestic yarn spinner to produce three different blends of cotton and nylon 6-6 (75% Cotton/25% Nylon 6-6; 70% Cotton/30% Nylon 6-6; and 60% Cotton/40% Nylon 6-6). Cotton is not traditionally seen as a strong/durable fiber, and blending with Nylon 6-6 will increase strength, abrasion resistance and longevity. The goal is to maximize the cotton content in combination with increased strength. Clip-Spot Wovens Traditionally used for decoration, clip-spot weaving techniques offer an opportunity to construct fabrics with zones of differing functionalities. Trials were initiated to use clip-spot for functional purposes, such as creating regions of softness and regions of breathability, or regions of durability with regions of flexibility. Trials are also underway to add new decorative clip-spot concepts to the FABRICAST™ collection. TransDRY™ Technology Warp Non-fluorine TransDRY™ technology warp trials are in the initial evaluation phase. Under investigation is the effect of TransDRY™ technology in the warp and how it affects moisture transport. Both end/end and solid TransDRY™ technology warps are being evaluated with a variety of filling combinations and weaves. Long-Term Research Projects: Natural Fiber Welding, 3D-Printing, Spinit Technology, CORIZON® Technology The PD team was involved, and will continue to be involved, in the research and evaluation of several novel and cutting-edge technologies. Much of the evaluation is confidential and in the basic research stage; however, being aware of far reaching opportunities for innovations where cotton can be integrated is vital in Cotton Incorporated’s research efforts, regardless of the outcome. Outside Research: Circuit Printing on Cotton Fabric with Carbon Coating This project’s main focus is to develop a cotton-based supercapacitor with low toxicity, high energy, and high power densities that can be used to power wearable technology in textiles. The supercapacitor is achieved by dip-coating cotton fabrics with oxidized graphite (OG), which is a water-dispersible carbon compound with a strong affinity to cotton. This project started in late spring and the concentration of OG and the cross linker to be used on the substrate have been optimized. The treated fabrics were evaluated by testing for flexibility, resistance, and durability through a wash study. Non-fluorine Durable Water Repellents Non-fluorine water repellents have been developed for STORM COTTON™ finish, WICKING WINDOWS™ finish, STORM DENIM™ technology, and TransDRY™ technology. The minimum application concentrations of the water repellents and the minimum required application concentrations of the cross-linkers which can withstand 30 home laundry cycles (HLTD) have been determined. Co-application of a wax-based non-fluorine water repellent with a silicone-based water repellent maintains the softness of hand and technology performance through 30 HLTD. “Quick-dry” Cotton: SportDRY A very soft finish has been developed to make cotton dry faster and feel more comfortable by reducing cotton’s absorbency. Lab trials are being run to compare jersey knits and interlock knits composed of open-end and ring spun yarns. A new absorbency test method is in development to determine the percentage of water that sticks to a fabric compared to the percentage of water absorbed by the fabric.

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Slick Hand Softener A silicone softener formulation, producing a very slick hand to make cotton feel more like rayon, has been developed to improve the perception of comfort at the point of sale. This finish will be applied to the cotton fabrics in the special FABRICAST™ T-Shirt collection. Sweat-Hiding Cotton Cotton Incorporated’s sweat-hiding finish has been used to treat 100% cotton Solucell® interlock and jersey knit fabrics. This finish enables the surface of the fabric next to a person’s skin to absorb water while hiding the appearance of moisture on the face of the fabric. Solucell® yarns are composed of cotton with a core of dissolvable polyester. Once the polyester dissolves, the yarns are more open. This yarn technology in conjunction with the sweat-hiding finish enables water to quickly spread across the inside surface of the fabrics while not soaking through to the face. Solucell® pique knits treated with WICKING WINDOWS™ finish on the inside of the fabric and a sweat-hiding finish on the face of the fabric produce a fabric with a soft hand that wicks moisture on the inside while hiding sweat on the outside. TOUGH COTTON™ Technology There is a heightened interest in TOUGH COTTON™ technology by many brands and retailers. As a result, members of the PDI staff have been working to provide support to mill partners and to answer technical questions from the brands. Internal Product Development Services The PD Laboratory produced knitted and woven fabrics supporting research activities in the following departments: FP, TCR TSI, and GSCM. This support service within the company resulted in the machine set up and production of eighty-four 40-pound rolls of single knit fabrics; twenty-two 40-pound rolls of double knit fabric; one sweater fabric; and six small-run samples. This adds up to a total of 8,516 yards of cloth, and numerous small sample prototypes generated on the sampling loom. Internal Swatch Cutting Services The PD Sample Cutting area cut and provided fabric swatches and information for various marketing activities including 75,823 swatches for the Mexico Retailer Workshop and 6,000 swatches for Global Product Supply Chain (GPSC) activities. Technical Assistance – Knits and Wovens The PD team provided technical guidance to fabric mills, universities, converters, knitting machinery companies, and apparel brands on technical fabric layouts, setting up complex knit structures, fabric predictions, finding yarn and fabric sources, and explaining machinery types. Intra-departmental Technical Assistance In support of the Fashion Marketing team’s general, active, and denim trend presentations, PD analyzed knit and woven garments and fabrics. The PD team also provided information and images of the FABRICAST™ collection line’s internal developments, and swatch packets of PD fabrics for use in brand and retailer presentations. Fashion Marketing Color and Lifestyle Trend Forecast The Product Development team assisted the Fashion Marketing team by analyzing woven and knit fabrics for their general, denim, and active trend presentations. In the first half of the year, the PD team analyzed over 197 woven and knit fabrics. The analysis included information for yarn type, knit or weave structure, weight, finishing and any remaining information that is interesting about the fabric. Technical Service and Implementation Trials In the first half of 2017 there have been ten international technical mill visits in Mexico, Central America, South America, and Asia. These trips are supporting implementation and research activities related to Cotton Incorporated performance technologies. There were six domestic mill visits, as part of a technical service “Road Show” to address issues such as barre, preparation, dyeing, technology-related problems, shrinkage, and yellowing. This resulted in an additional five trips to one mill addressing specific technical issues. Two domestic implementation visits were conducted in support of a STORM COTTON™ finish adoption by a U.S. brand for 2017/2018 production at a domestic mill.

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Internal Technical Service and Implementation Activities In the first half of 2017, the DFAL processed 72 projects consisting of 229 samples. This totals 3,328 pounds or 4,992 yards of fabric processed. The Analytical Lab completed 61 projects, which included a total of 951 samples. Technology Implementation processed 77 projects with 293 samples. Internal Dyeing, Finishing and Printing Activities From January through June, the Color Services Lab completed 29 projects containing 177 samples. The number of projects processed through the digital printing/laser/garment processing area totaled 53 with 1,396 samples generated. Strategic Objective 3: Augment cotton marketing activities/influence industry decisions through technical avenues such as standardization and education.

Nonwoven Exposition INDEX in Geneva, Switzerland The FP team assisted the GSCM Nonwovens Marketing division at the most important nonwoven exposition (held every three years) in Geneva, Switzerland. During the four-day expo, hundreds of industry professionals stopped by the Cotton Incorporated booth. Decision makers from multi-national consumer product companies stayed in the booth and received detailed technical advice about cotton and the technologies to support their future business developments and products. The machinery manufacturers shared that cotton-processing capability remains very important to customers purchasing new nonwoven lines. Nonwoven World of Wipes Conference (WOW) in Nashville, TN The World of Wipes is three-day conference specializing in all aspects of the wipes industry including sustainability, raw materials, processing technologies, innovative products, and marketing information. Cotton Incorporated staff played a visible role by chairing the conference and meeting decision makers each evening in the tabletop innovation room. Interest in cotton continues to build momentum in wipes. Technical Conferences and Mill Meetings in Thailand and Vietnam The FP team gave multiple presentations at three technical workshops held this June in Thailand and Vietnam. The three conferences primarily target multinational spinners and took place in Bangkok, Thailand; and Hanoi and Ho Chi Minh City, Vietnam. Spinners from all over the Association of Southeast Asian Nations (ASEAN) region, including the Philippines, South Korea, Taiwan, Indonesia, China, and Bangladesh attended these workshops. Following the workshops, the FP team visited five Vietnamese textile mills outside Hanoi. Technical Assistance at the USDA Gin Schools The FP team supported two of the three USDA ginning schools held this year. Class instruction took place in Lubbock, TX, and Stoneville, MS, with topics ranging from how ginning results affect yarn production to the cotton research Cotton Incorporated performs. Discussions encompassed all aspects of textile processing and included level-three classes that resulted in testing for ginning certification. The FP team also gave instruction in Continuing Education classes at both schools. Standards and Metric Development In 2017, Product Integrity (PI) has been primarily involved with the development of the Sustainable Apparel Coalition’s (SAC) Higg Product Footprint tool. The goal is to obtain a consumer-facing product score to meet the future demands for transparency and to measure impacts from the complete life cycle of textiles and footwear. As a co-leader of the team on the materials and manufacturing section, PI guided the taxonomy creation for apparel manufacturing and identification of data requirements. With support from CSPM, significant contributions were made to the care and disposal section of the tool as well. Data on types of care and disposal were extracted from the Global Consumer Use survey in 2015 for the LCA of cotton update. These results were incorporated into the Average and Mindful Consumer Use scenarios for apparel. Industry Activity and Interaction Several in-house and outside meetings took place during the first half of the year. Some of the key contacts included a major domestic denim brand, a domestic indigo fabric supplier, a Peruvian yarn and woven fabric producer, a domestic producer of silver embedded fiber, a major retailer, a Chinese specialty yarn producer, a towel and sheeting manufacturer, and a major fabric supplier for industrial fabrics.

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A presentation regarding performance sweaters and natural sweaters was given at the Shima Seiki 3rd Global Seminar in Brooklyn, NY. This two-day conference brought together representatives from the fiber industry, manufacturers, technology and brands to discuss educational topics focusing on the future of the textile industry. The presentation titled Cotton Contrast: Exploring two Distinct Directions with One Natural Fiber included the performance knitwear collection developed by Shima Seiki and Cotton Incorporated, which contained moisture management technologies and a natural approach to cotton knitwear. Conferences, Presentations, and Trade Shows The PDI team attended and provided exhibition materials, including fabrics and garments, for:

Outdoor Retailer Show, U.S. Premiere Vision Apparel Fabrics Trade Show, France Kingpins Denim Textile Show, Netherlands Piti Filati, Italy Interfiliere, France Techtextil, Germany SAC Meeting/ Planet Textiles, India WEAR Conference, U.S. AAFA, U.S. Interdye, China

AATCC International Conference, Workshop, and Meetings The AATCC International Conference held in Wilmington, NC, attended by several PDI staff, offered opportunities to attend technical presentations on key textile related topics. A PD team member made a presentation in the Concept to Consumer track highlighting many of the most recent knit and woven apparel and home textile developments. Two TCR team members gave separate presentations on cationic cotton developments in the Advances in Dyeing Development track.

Members of the PDI team participated and attended the AATCC Moisture Management Testing Workshop, which was a two-day workshop held in Durham, NC, for a better understanding of moisture management technology testing methods and which methods are best suited when developing prototypes for the active market. Members of the PDI team participated in and attended other various AATCC Committee Meetings, Special Interest Group committee meetings, conferences, and workshops. Future Textiles Awards Several PDI team members in conjunction with Technology Marketing (TM) attended the Techtextil Conference and Symposium in Germany. A PD team member served as one of eight international judges for the 2017 Future Textiles Awards held in conjunction with Techtextil in Germany. 2017 Research Trips In May, team members from TCR, PD, and TM visited four companies in Italy and Denmark, which are producers of chemicals, dyestuffs, knitting machinery, and enzymes. The meetings resulted in improved insight into new products, and the discussion of future collaborations. Two PD team members visited the TextielLab and TextielMuseum in Tilburg, Netherlands to investigate this unique knowledge center, which combines a specialized workshop for the manufacture of unique fabrics and an open studio where innovation is central. The extensive library, museum collection and temporary exhibitions were an important source of information and inspiration. Members of the TCR team visited two mills and a chemical company in India to learn of their capabilities, sample fabric, and discover new chemical technologies.

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Importer Support Program (ISP) Workshops The PDI team provided resources and staffing for the following ISP workshops hosted at the Cary, NC, headquarters:

Denim Manufacturing & Garment Finishing in February The ACTIVE Event in March Textile Fundamentals in May Modern Printing Science in May Woven Fabric Structure & Design in June Sweater Manufacturing & Design in June

Brand and Retailer Textile Classes: ISP and GSCM In February, one PD team member conducted a textile knitting fundamentals course for three major lifestyle apparel brands located in California. This class supported marketing efforts in building a better understanding of how cotton fits into development, sourcing, and fiber choices. In May, a PD team member conducted a Home Textile Fundamentals class for a major apparel retailer in Minnesota.

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GLOBAL SUPPLY CHAIN MARKETING COMMITTEE FIBER COMPETITION: COTTON MANAGEMENT SYSTEM SOFTWARE

Strategic Objective 1: Develop and maintain software tools to buy, sell, move, and use cotton with improved efficiency and profitability.

Development The Cotton Management System™ Development group focuses their resources on designing, coding, and testing new soft-ware products for managing and improving the efficiency of cotton flow in international and domestic markets. The key directives for the Development group are to maintain and extend key software applications. The following projects are in various stages of development as outlined below. MILLNet™ 5.0 conversion programs to allow our MILLNet™ 4.8 customers to move up to this software are in the final testing phases. MILLNet™ for Merchants software will be upgraded to match changes in MILLNet™ 5.0 and is under development. Maintenance The Cotton Management System™ Maintenance group focuses resources on designing, coding, and testing enhancements to existing software products for CMS™ software users. EFS®-USCROP™ Software The database for EFS® - USCROP™ software was updated with the Commodity Credit Corporation (CCC) Loan table for 2017. Weekly updates to the USCROP™ database are ongoing as provided by the USDA. MILLNet™ Software Products Conversion programs for converting our MILLNet™ 4.8 to MILLNet™ 5.0 are being tested, and changes to the MILLNet™ for Merchants are being made to take advantage of the new fields available in MILLNet™ 5.0. MILLNet™ 5.0 is our flagship product for managing and improving the efficiency of cotton flow in international and domestic markets and consolidates many functions that were handled by stand-alone software products in the past. Cotton Communicator™ Software Currently 45 users from 17 companies use Cotton Communicator software to generate cotton shipment documents for receipt by mills. It is now available to the industry via internet download. Minimal maintenance was required during the first half of 2017 to support usage by the industry.

Strategic Objective 2: Service and market CMS™ products that promote cotton as the most efficient and profitable fiber in the marketplace.

To date, 77 mills, gins, and merchants around the globe are active EFS® System software program licensees. During the first half of 2017, two EFS® MILLNet™ licensees were installed in Guatemala with MILLNet™ 5.0 software. The CMS™ software products enable the scientific use of high volume instrument data to purchase, receive, and warehouse cotton, and to select laydowns and consume cotton bale inventories. The growing global demand for high volume instrument data continues to be an advantage for U.S. cotton and builds long-term relationships between EFS® System mills and U.S. shippers that are not based solely on price. The Cotton Management System™ software programs currently being marketed include:

EFS® System MILLNet™ 5.0.010 software EFS® System MILLNet™ for Merchants 8.2 software EFS®-USCROP™ 7.0.3 software Cotton Communicator™ 1.021 software

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Service The Cotton Management System™ Service group focuses their efforts on providing customer service support that enables EFS® System licensees to use CMS™ software products effectively. Customer Service and Distribution of Software Updates Customer Service answered over 1,210 emails; had 120 face-to-face meetings; answered 176 phone calls; responded to 175 texts; conducted 145 Internet sessions during the first half of 2017; and provided valuable assistance to EFS® System software licensees regarding questions and updates. On-site Customer Service Installation of MILLNet™ software was completed at two mills in Guatemala, one Chinese mill was signed to an EFS® license, and EFS® staff has recently begun re-entering the Indonesia market. Four companies are currently using MILLNet™ version 5.0, though in-house beta testing continues as more features are added and occasional bugs are fixed. There were 43 service visits to foreign mills, including visits to China, Colombia, Guatemala, Mexico, Peru, Philippines, Thailand, and Vietnam. There were two service visits to domestic mills. Marketing The Cotton Management System™ Marketing group uses their resources to seek out potential customers and develop effective ways to communicate the benefits of the CMS™ software. Educate and Promote the Use of High Volume Instrument (HVI®) Data and Cotton Management System™ Software Packages Staff made contacts during their attendances at the Optimized Cotton Processing symposium in Bangkok and Thailand. The Cotton Management System™ Marketing group has updated the MILLNet™ marketing booklet, which is more detailed than our other marketing materials. Plans are also in motion to update the EFS® System introduction video and to investigate the feasibility of designing a MILLNet™ warehouse space estimator app. Research Potential CMS™ and EFS® Software Licensees Staff participated in a variety of meetings including attending the Asia Cotton USA Seminar Series in Thailand and Vietnam. South America and Vietnam markets continue to be scoured for EFS® System software candidates via on-site service visits, and the process of reentering the complicated Indonesian textile industry began in April. Staff made eight marketing visits that included China, Mexico, Peru, Indonesia, and Vietnam. An active prospect list in each market is being maintained, with an outline of their suitability for utilization of MILLNet™ software.

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GLOBAL SUPPLY CHAIN MARKETING

The scope of the GSCM division covers a wide range of activities with manufacturers, retailers, brands, and trade organizations throughout the world. These activities are anchored in three important strategic objectives: build a global presence for cotton, promote product and technology ideas, and conduct education, training, and technical assistance through marketing programs that further the use of cotton in products.

Strategic Objective 1: Maintain a global presence for cotton.

Marketing to the World’s Supply Chain Companies and Organizations An important tactic for maintaining a global presence for cotton is through direct account interaction with mills, manufacturers, brands, and retailers for the apparel, nonwovens, and home products markets. To date, GSCM division staff conducted more than 321 meetings with more than 224 companies. Staff from the Global Supply Chain Marketing division exhibited at nine global tradeshows in the first half of 2017. Several major shows continue to be a primary focus of division efforts, including the Outdoor Retailer Show in the U.S. and Premiere Vision in Europe. Cotton Incorporated and Cotton Council International worked together in the first half of the year to plan activities for a much larger and highly-visible joint presence at the upcoming fall edition of Premier Vision for September. Mexico City staff participated at the first Denim Show in Mexico through diverse activities: exhibiting a wide variety of product ideas, leading the conference program content and sponsoring a runway to highlight a rich cotton high-end denim collection. Staff also spent considerable time during the year attending 14 major industry conferences in the United States, Latin America, and throughout Asia, as a way to maintain connectivity with key industry contacts and stay up to date on relevant industry trends and market directions. In addition to presence at industry events, the division hosted several key events as a way to reinforce key marketing initiatives with targeted customers. Staff organized “Optimized Cotton Processing – Moving Toward Sustainability in the Supply Chain” events that were held in Bangkok, Thailand; and Ho Chi Minh City and Hanoi, Vietnam. The events provided participants with information on sourcing for high quality and responsibly-produced cotton and ideas to improve quality and efficiency in fiber processing. The three events, which were jointly organized with CCI, attracted approximately 220 participants from eight Asian countries. An innovation cotton session was brought to Latin America reaching Mexico, Peru, and Chile. Through a combination of one open presentation and 16 one-on-one meetings, cotton ideas focusing on technologies, fashion trends, FABRICAST™ collection, market information, and sustainability reached 84 companies and 385 executives. The tour in Peru and Chile was carried out in conjunction with CCI, delivering new contacts and a great potential for technology adoptions like TOUGH COTTON™, STORM COTTON™, and TransDRY® technologies, particularly for two Chilean brands. The presentations in Mexico delivered the opportunity to expand cotton activewear ideas as a result of customized market outlook information, fashion trends, and a display of the activewear garment collection, particularly to two large retailers. Staff prepared a two-day private workshop on cotton products and cotton processing for 35 buyers of the most rapidly growing department store in Mexico. Additionally, a one-day customized presentation on cotton fiber properties was brought to 40 apparel buyers of a large mid-tier department store. Along with the largest Mexican mill and importer of U.S. cotton in Latin America, staff exhibited garments on the runway at Fashion Week Mexico. The collection featured 20 cotton-rich stylish garments made of denim, twill, and other cotton fabrics. The runway event was extensively covered through social media and specialized fashion publications. Staff attended the Mexican Textile Chamber luncheon where the Seal of Cotton and the Cotton LEADS™ trademarks were featured. Staff also attended Peru Fashion, a boutique textile and apparel show in Lima, Peru, where Mexico City staff had the chance to initiate conversations with several mills about adopting the Seal of Cotton trademark. The Americas Outlook Nonwovens Conference provided an opportunity to secure meetings with Latin American nonwoven companies to discuss the incorporation of cotton fiber into their products.

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GSCM division staff have seen an increasing trend in the advent of small and mid-size design consulting and sourcing companies who are offering expertise and sourcing assistance to brands and retailers interested in developing new clothing and accessories lines. These design and sourcing companies are asked to bring new ideas related to fiber, yarn, fabric, and finished product ideas to the customer and then help execute the ideas through a network of factory suppliers. It can be very influential to engage with these companies to make them aware of Cotton Incorporated resources, product concepts, and technical innovations as a way to keep cotton ideas in front of them. Several successful programs have been implemented with technology innovations, executed by these design and sourcing companies, with more forthcoming in 2018. This model is proving very successful with not only smaller size brands, but increasingly with larger retailers for large-scale programs. Equally important is the shifting trend towards manufacturers influencing product level decisions with new fiber, fabric, or finished product offerings. Fewer brands and retailers are going to their suppliers and stating what fiber or fabric they want to buy, but instead are shifting towards a model of reliance on the mills and manufacturers to bring innovation and new ideas to the table for consideration. It is imperative that GSCM division’s international marketing efforts focus on the most influential global mills and continue to engage them throughout the year with fabric or yarn ideas, as well as finishing concepts that can give them new cotton ideas to develop for their customers. A strong U.S. housing market has had a strong positive influence on the home products market over the past year and offers opportunities for expanded cotton use in this category. Although recent strategy for this market was to engage and stay connected with key home product importer accounts, as well as a few key retailers with significant home products presence, there is a need to pay closer attention to this market and potentially impact cotton use through our various technology innovations that currently meet the demands of products being developed for this market. In addition to traditional apparel and home products markets, it also is increasingly important to pay close attention to and identify opportunities to engage with companies who might not use cotton in a traditional end use type of category. GSCM staff have already met with and conducted meetings with accounts that are leaders in technology, computing and mobile development, wearable and e-textiles, and accounts looking to disrupt or reinvent textile processes. GSCM staff will continue to look towards the future as all types of industries evolve and seek opportunities for cotton use in a multitude of end-use products. One of the most impactful events hosted was an event which was held at the Cary headquarters in March, the ACTIVE Cotton – Lab Series. The event brought together representatives of 18 leading activewear and outdoor brands for hands-on education, demonstrations of fabric and technology innovations, and tradeshow-type displays to illustrate cotton product concepts. A second ACTIVE Cotton event will be held in August. Staff also participated in the Struktur event in Portland in April. The Struktur event brings together large and upcoming companies in the outdoor and active markets. The Home Market Week in New York City was attended by staff in March 2017. Cotton Incorporated was a sponsor of the Home Textiles Today industry breakfast and provided consumer insights to the audience. Cotton Incorporated joined with one of the leading casual wear brands in China to conduct a range of promotional activities related to the Seal of Cotton and Cotton LEADS™ trademarks. A total of 1.08 million pieces of 100% cotton pants carrying the hangtags with both trademarks will be distributed in China. A leading active and outdoor apparel brand in China was provided with customized hangtags carrying the Seal of Cotton and Cotton LEADS™ trademarks. More than 500,000 pieces of underwear and intimate wear carrying the customized hangtags were introduced into the Chinese retail market. Staff collaborated with a cotton-friendly life-style brand in China to promote the Seal of Cotton and Cotton LEADS™ trademarks. Hangtags for 300,000 apparel pieces were provided for the Fall/Winter 2017 collection of 100% cotton products. Staff provided marketing support for 10,000 pieces of Seal of Cotton trademark for product packaging to a Hong Kong-based global underwear/casual wear brand. Products included 100% cotton shirts, underwear, pajamas, jackets, tee shirts, casual pants, and shorts. The cotton products will be distributed globally.

Two large regional brands, one located in Argentina and the second in Colombia, have initiated the process to adopt the Seal of Cotton trademark, which could represent millions of cotton-rich garments.

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Participation in industry events included: Staff presented at Fabrics China Trend Forecast Conference in Shaoxing, China. Around 200 representatives from

leading mills attended the event. Staff attended Hong Kong Fashion Week, Hong Kong. The event attracted around 15,000 representatives from all

sectors of the textile and apparel industry in Asia. More than 1,500 Asian companies exhibited at the event. Staff attended the 2017 CNCE Cotton Industry Development Forum in Beijing, China. The event was attended by

more than 700 representatives from spinning mills and textile companies. Staff attended the 2017 Intertextile Shanghai, Yarn Expo in Shanghai, China. More than 350 global spinners

exhibited at the event. Staff attended the 2017 China International Cotton Conference in Chongqing, China. The challenges and

opportunities for the future development of the world and China cotton industries were discussed. It attracted more than 800 participants.

Staff attended the Kingpins Show in Hong Kong. Thirty-six major denim manufacturers exhibited at the show featuring their latest products to more than 200 visitors.

Staff attended JOEONE’s Bottom Wear Festival in Wuhan, China. This media event was attended by 200 invited guests and watched online by more than 80,000 viewers. JOEONE was awarded the Cotton LEADS™ certificate during the event.

Staff attended and exhibited at INDEX 2017 in Geneva, Switzerland. This nonwovens event attracted more than 12,000 visitors and 666 exhibitors from 41 countries.

Cooperation with Cotton Council International (CCI): Through the introduction by Cotton Incorporated staff, a medium to high-end Chinese lounge wear brand became a

COTTON USA licensee. Staff attended the COTTON USA Industry Gathering Event held in Hong Kong. The networking event was attended

by representatives from key textile mills, fashion brands, sourcing companies, and textile associations. Cotton Incorporated staff participated and exhibited at the COTTON USA Sourcing Fair in Hong Kong. The fair

attracted 46 yarn and fabric suppliers, 43 garment mills, and 25 brands/sourcing companies. A total of approximately 250 participants attended the fair.

Staff arranged a meeting between CCI’s Japanese representative and a TransDRY® technology licensed supplier. Staff arranged a meeting between CCI directors in charge of South East and North East Asian markets in Hong Kong

to discuss joint events scheduled in Bangkok, Thailand and Ho Chi Minh City and Hanoi, Vietnam. Key accounts and strategies also were reviewed.

Staff participated in CCI’s Cotton Day events held in Tokyo, Japan; Seoul, South Korea; Taipei, Taiwan; and Beijing, China.

Staff attended “Cotton Global Market, Sourcing & Sustainability Updates in 2017” in Hong Kong. The event was organized for more than 100 senior executives from the local textile and garment industry. CCI jointly organized the event with three local textile associations.

Staff attended “Travel in Comfort,” an event organized by CCI and a leading bed linen brand in Hong Kong. The event was to launch a new COTTON USA collaboration collection to the industry.

Staff participated in CCI’s All Asia Staff Meeting in Chengdu, China. Invitations were extended to several brand/retailers to attend the Western Hemisphere Sourcing Fair in Cancun,

Mexico, in June 2017. In its fourth full year, the Cotton LEADS™ program continues to gain momentum as a platform for communicating

information about responsible U.S. cotton production to retailers, brands, manufacturers, and industry organizations worldwide. Cotton Incorporated participates in this program with the National Cotton Council of America, the Cotton Foundation, Cotton Australia, and Cotton Council International. In 2017 to date, 26 new partners have joined the program thus reaching a total of 461 partnering manufacturers, brands, and retailers

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Strategic Objective 2: Promote product and marketing ideas that advance cotton use.

One of the key objectives within the Global Supply Chain Marketing Division is to promote product and marketing ideas that advance cotton use. Staff from the GSCM division constantly work with global customers to identify opportunities for collaboration and to support companies’ use of cotton in the products they design, source, and specify with their global mill suppliers. Efforts in the first half of 2017 have focused on product adoptions that will reach retail in 2017 and 2018 and to help finalize product adoptions already underway, that have been introduced at retail in the first half of the year. Influencing the use of cotton through technology innovations and product ideas continues to be a major focus for the GSCM division, working closely with interested brands and retailers and connecting them with licensed technology suppliers around the world. A significant amount of staff time and resources have gone into the facilitation of programs reaching commercial stage in the first half of the year, and ongoing work to facilitate additional adoptions in the latter half of 2017 and into 2018. Carrying momentum of a 2016 launch by a major mass retailer, the TOUGH COTTON™ technology has continued to surge in popularity among brands and retailers; and GSCM staff, along with staff from the Product Development & Implementation team, continue to support numerous large scale programs with brands and retailers, protecting cotton use from shifting to blends with synthetic fibers. The concept of improved wear and abrasion resistance has also resurged in the home textile market and staff are currently working with several home products companies to support development trials to run the endure™ finish, which is the same as TOUGH COTTON™ technology but re-branded for use in home textiles applications. GSCM staff worked to support continuation of the TOUGH COTTON™ technology program with the retailer currently selling products, and supporting adoptions of the technology by two additional mass retailers and several specialty brands for large scale programs to be introduced in the coming months, primarily for children’s and teens clothing, where the features of durability and extended wear-life resonate with moms buying clothing for their children. A major U.S. based teen-focused brand has successfully fast-tracked their development of the product with a key mill supplier in Vietnam to bring the product to retail in the first half of the year. In active and performance apparel markets, several commercial programs were introduced in the first half of the year with both TransDRY® and STORM COTTON™ technologies, by prominent brands in the U.S., Canada, and Asia. Most notable was a large scale global program by a major jeanswear brand on their commercial introduction of TransDRY® technology for performance denim jeans, being sold globally and developed in conjunction with regional mill partners. The TransDRY® technology also has been adopted by golf and outdoor brands with introductions in the first half of the year, while the STORM COTTON™ technology has been introduced by several outdoor brands and through direct-to-consumer brands through their e-commerce sites. Additional opportunities are currently being explored for both technologies with brands in the latter half of the year. Several technical marketing projects are underway for 2017. These include development work with Cordura® fiber blended with cotton for improved strength and durability, performance cotton knitwear, recycling fiber into dyestuff, and developing cotton fabrics to replace microfibers. Several new marketing packages have been released in the first half of 2017: Home, TOUGH COTTON™ technology, and Performance Knitwear. In addition, three more packages are in development. Staff are working with a major activewear company on options for updating their core fabric categories as well as collaborating with several suppliers to develop a cotton-rich performance knitwear collection. Staff also provided the ACTIVE trend presentation to five major activewear brands. A private educational workshop for a major technology brand on Textile Fundamentals was given by staff in February as well as a private educational workshop for three U.S. brands on Knitting Fundamentals in that same month. Two private workshops were held for the development and quality assurance teams at a workwear company and a major retailer. The active and performance apparel markets continue to be a major focus of efforts to increase cotton consumption where possible. Cotton Incorporated’s TransDRY®, STORM COTTON™, and WICKING WINDOWS™ technologies are major technology developments to help cotton perform for these market categories. GSCM staff identified opportunities to integrate the TransDRY® technology for numerous product adoptions for applications in intimate apparel by one U.S. and one Canadian brand. Additional adoptions reaching commercialization in the first half of the year with the TransDRY® technology included a U.S. outdoor brand integrating the technology in polo style knit shirts, a Canadian activewear brand who successfully integrated the technology into their line of sports/lifestyle apparel, a U.S. based golf brand who introduced products through their e-commerce site featuring TransDRY® technology, as well as further supporting a continuing TransDRY® technology

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program through a major U.S.-based retailer. Additional programs are underway and being supported for introduction later in 2017 and into 2018 on products from a high-end menswear brand being introduced in the Fall of 2017, and an outdoor-focused brand planning to launch a line of woven pants featuring TransDRY® technology, slated for introduction at the end of the year. The most visible global introduction of the TransDRY® technology in the first half of the year came from a major U.S.-based jeans brand who introduced the technology globally featuring the TransDRY® technology hangtags prominently displayed on the products. This introduction is relatively large scale within the company and is slated for continuation and growth across the brand in a variety of denim and non-denim products. Additionally, staff from the GSCM division continue to work with global mill partners to assist their efforts to run development trials with non-fluorine chemistry, which is now being specified by many brands and retailers. The STORM COTTON™ technology has been adopted by a number of brands in the first half of 2017, including two U.S. brands that introduced fleece jackets featuring the technology in the winter season; both brands offering products through their respective Web sites, while a third brand is planning introduction of similar fleece products for the fall 2017 season. Additional opportunities are being supported to reach commercial stage later in 2017, including products such as men’s apparel, outdoor clothing, and lifestyle apparel featuring the STORM COTTON™ technology. The technology also has been evaluated by a major socks/hosiery brand for use in development of a water-repellent sport sock, and GSCM staff are providing support to develop finished samples for the brand’s wear trials of the finished socks. In addition to exploring opportunities with flagship technologies, GSCM staff assess opportunities to influence brands based on their stated needs for development. GSCM staff identified an opportunity to assist a major U.S.-based menswear brand on development of cotton golf apparel that hides perspiration by using an adaptation of the WICKING WINDOWS™ technology, which is applied as an all-over print of repellent chemistry to the outside surface of the fabric. Trials to apply this version of the finish are being run through partner mills in Asia and Peru in order to commercialize the concept. GSCM staff were approached by a major retailer of fabrics and crafting supplies with the challenge of trying to develop a cotton fleece fabric alternative to their current line of synthetic microfiber fleece. GSCM staff are working closely with staff from Product Development to assess this opportunity and determine what developments might be created and marketed to this retailer and others looking for the same type of solution to the controversial microfiber fleece products currently receiving a lot of negative attention for polluting the environment. In addition to supporting ongoing programs with brand and retailer customers, staff in the GSCM division continue to identify opportunities for the development of new product and marketing ideas to continue to influence customers. In 2017, a collection of cotton-dominant seamless garments were developed and added to the performance knitwear collection. The performance knit collections also incorporate both TransDRY® and WICKING WINDOWS™ technologies into the various concepts. These collections were introduced at the ACTIVE Event hosted by the division in March, and also were featured prominently at the Outdoor Retailer Show Summer Market in July. GSCM staff constantly look for opportunities to work with and support companies using cotton in their products or those using technology innovations and wanting to reference use of the innovations on product tags, Web sites, or various product marketing channels. GSCM staff executed Seal of Cotton trademark license agreements with seven new brands and retailers in the U.S., Canada, and Portugal in the first half of the year. Technology commercialization for cotton included:

A leading U.S. based outdoor apparel brand produced 10,000 pieces of STORM COTTON™ for Fleece garments for commercialization. The 88% cotton/12% polyester men’s fleece will be distributed in the U.S. and global markets during Fall/Winter 2017 and Holiday 2017/2018 seasons. Garments were produced by a Hong Kong-based company with a production base in China.

A leading U.S. based denim brand commercialized more than 50,000 pieces of TransDRY® technology denim jeans. The 100% cotton and cotton spandex men’s denim jeans, produced by a Chinese mill and two Taiwanese mills, will be distributed in the U.S. and global markets for Spring/Summer 2017 and 2018.

A leading U.S. sports brand produced approximately 30,000 pieces of 100% cotton men’s casual shirts with NATURAL STRETCH™ technology. The products will be distributed in the U.S. market during Fall/Winter 2017. Production was completed in China by a Hong Kong-based mill.

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Adoptions of cotton technologies included: A leading U.S. based casualwear brand worked with Hong Kong-based mills to develop STORM COTTON™

technology on men’s sweaters. The products will be distributed in the U.S. and global markets and will carry the STORM COTTON™ trademark.

A leading U.S based denim brand worked with two mills, one in China and the other in Taiwan, to develop WICKING WINDOWS™ finishing on ladies’ denim jeans, which will be distributed in the U.S. and global markets.

A leading U.S. based golf brand worked through a sourcing company and a fabric mill in Hong Kong to develop sweat hiding technology on jersey fabric for golf shirts. The golf shirts will be distributed in the U.S.

A leading U.S. based outdoor apparel brand worked with a Hong Kong-based fabric mill to develop STORM COTTON™ and TOUGH COTTON™ technology for their Spring/Summer 2018 men’s fleece collection.

An Osaka based trader specializing in textile and accessories, successfully developed TransDRY® and STORM COTTON™ technology knit fabrics in cooperation with a Korean mill. Using their patented technology to make garments without “sewing-with-thread” process, they made samples to promote at their exhibition in April.

Japan’s major underwear manufacturer and retailer with over 100 years of history in the business started working with the country’s spinning mill to develop 100% cotton TransDRY® technology underwear for Spring/Summer 2018.

Staff assisted a Korean knit garment manufacturer to finish cotton knitted fabrics with TOUGH COTTON™ technology.

One of the leading denim fabric manufacturers in China received the first bulk order of 4,000 pounds of non-fluorine TransDRY® technology denim fabric from a leading U.S. denim brand. The current order of TransDRY® treated yarns were imported from the U.S., and the denim fabric manufacturer had considered using a local yarn dyer for future orders.

A famous Chinese underwear retailer worked through a medium-scale printing company to develop ten tons of WICKING WINDOWS™ technology fabric for underwear. Products will be distributed in China carrying the WICKING WINDOWS™ and COTTON USA trademark hangtags.

A leading Korean apparel manufacturer completed development of TOUGH COTTON™ technology fabrics for their Spring/Summer 2018 collection. Products were targeted to major U.S. specialty and chain stores.

A leading U.S.-based casual wear brand worked with mills in India, Korea, China, and Vietnam to develop TOUGH COTTON™ technology on their collection for kids’ fleece and leggings. The products will carry hangtags with the TOUGH COTTON™ trademark and will be distributed in the U.S. and globally.

A leading European apparel brand worked with a knitting mill in Bangladesh to develop STORM COTTON™ finish for kid’s cotton tees. The product will be distributed in Europe, Russia, and Brazil.

A leading U.S. based outdoor and casual wear brand worked with mills in China and Taiwan to develop TransDRY® finish on knit and woven fabrics for men’s tees and casual shirts. The products will be distributed in Asia Pacific markets.

A Peruvian manufacturer confirmed selling polo shirts with TransDRY® technology to a high-end U.S. brand. Technical marketing and technical assistance:

Provided assistance to one of the Japanese TransDRY® technology knit garment suppliers that has a large production base in Bangladesh, to develop new TransDRY® technology products.

A Japanese garment trader that has a strong sales channel with the nation’s major specialty stores and general merchandising stores recently became interested in TransDRY® technology. Staff provided on-site technical support to the partnering dye house located outside of Bangkok, Thailand.

An international sports brand worked with one of the largest vertical textile companies in China to redevelop non-fluorine TransDRY® technology.

Staff assisted a leading knit supplier in China to develop non-fluorine TransDRY® technology yarn at their own yarn dye mill. This supplier had previously adopted TransDRY® technology with outsourced TransDRY® treated yarns.

Staff assisted a medium-scale knit supplier in China to develop non-fluorine STORM COTTON™ technology for an American sportswear and footwear retailer.

At the request of the Japanese-arm of a U.S. brand, a medium-scale trading company in China was asked to develop non-fluorine STORM COTTON™ technology samples. The expected order quantity is 2,980 pieces of men’s 5-pocket pants and 3,160 pieces of men’s Chino pants.

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Staff assisted a medium-scale denim laundry conduct multiple trials to develop non-fluorine STORM DENIM™ technology for an international brand/sourcing company. Assistance was provided to select the proper shade and improve the hand to perfect technology for an order for their Spring/Summer 2018 collection.

Staff assisted a Chinese trading company in developing 100% cotton waffle printed knit fabric and 80% cotton/20% polyester printed fleece fabric treated with STORM COTTON™ technology. Development was for a U.S. outdoor brand.

Staff assisted a qualified TOUGH COTTON™ technology supplier to develop TOUGH COTTON™ technology on knitted fabric for their U.S. customer.

Staff provided assistance to an innovative knitted fabric manufacturer to develop non-fluorine STORM COTTON™ technology for a U.S. sports brand. The manufacturer worked through the creative center in China for this U.S. brand and final products will be distributed in China.

Staff assisted a large-scale garment manufacturer in China to perfect sweat hiding technology with double-sided print application. The garment manufacturer was asked by a U.S. retailer for this development.

Staff provided assistance to a large-scale Chinese denim fabric supplier to develop non-fluorine TransDRY®

technology yarn. Staff assisted a medium-scale trading company in China to develop TransDRY® technology on woven and knit

fabrics. Non-fluorine TransDRY® technology yarns were sourced from a licensed Korean TransDRY® technology supplier.

Staff assisted a Vietnamese laundry mill to develop STORM DENIM™ technology. Development was initiated from the interests of their major customers who were looking for water-repellent products.

A Vietnamese fabric and garment manufacturer initiated development of STORM COTTON™ technology fabric for a leading Japanese lifestyle brand. The brand wants to launch a collection of performance apparel in conjunction with the upcoming 2020 Olympic Games to be held in Japan.

Staff visited the production mill in Vietnam of a Korean fabric and garment manufacturer. This manufacturer would like to develop TOUGH COTTON™ technology fabrics/products for a U.S. casualwear brand. Products would be distributed globally.

A licensed TransDRY® technology supplier in Taiwan requested assistance to adopt TOUGH COTTON™ and STORM DENIM™ technologies.

Staff provided technical support to a Taiwanese woven fabric manufacturer to develop TransDRY® technology for their U.S. brand.

Staff provided technical assistance to a leading textile company in China to develop TOUGH COTTON™ technology on knitted fabric for their U.S. customer – a leading U.S. sportswear brand. The textile company qualified as a supplier of TOUGH COTTON™ technology.

Staff assisted a knit fabric company in China to develop STORM COTTON™ technology for their German customer – a leading sportswear brand in Germany.

Staff provided technical assistance to a yarn and fabric manufacturer in Taiwan, following the change of chemistry to a new version by the chemical supplier. The manufacturer was a licensed TransDRY® technology supplier.

Staff provided technical assistance to a fabric manufacturer in Indonesia following their interest to adopt non-fluorine TransDRY® technology.

Staff provided technical assistance to re-implement TransDRY® technology to two Peruvian mills, each one targeting different U.S. brands.

Nonwovens Marketing The market for cotton nonwovens continued to thrive in the first half of 2017. The biggest factors driving the market are stable pricing, trust in the safety and benefits of cotton, appeal to consumers, and the large number of companies that are cotton-capable and are growing in experience with cotton processing. Several research projects remain in development due to continued expressed interest in uses for cotton in nonwovens. The number of new licensing programs continued to grow, as well as the number of expanded programs in early 2017. Five technical development projects have been in progress for the first half of 2017.

3D printing: In conjunction with a company specializing in the manufacturing of biocomposites, as well as Product Development and Implementation, filaments are being developed using cotton particles.

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Short fiber development: Work is continuing with short fiber development as there has been an expressed interest in this project from a Brazilian company that currently works with eucalyptus.

Wetlace and pulp: Development is continuing in conjunction with three leading nonwoven technology companies. Polymerizing cottonseed oil: A project in conjunction with Mississippi State University to develop films using

cottonseed oil has continued into 2017 from last year. A potential market for this development would be injection molding.

Licensing and Program Development In the first half of the year, nonwovens licensing was active and involved companies from around the world. There were ten new licensees, one existing licensee that renewed their agreement, one company that expanded their agreement with three new products, and a major drug chain that is expanding their line of products.

A U.S. company producing beauty products licensed the Seal of Cotton trademark for their cotton balls and cotton rounds.

A U.S. company producing pet products licensed the Seal of Cotton trademark for cotton dog bath wipes. A U.S. skincare product producer licensed both the Seal of Cotton and the natural™ trademarks for cotton rounds. A U.S. beauty product producer licensed the Seal of Cotton trademark for cotton swabs. A U.S. company producing jewelry and leather cleaning products licensed the Seal of Cotton trademark for jewelry

cleaning wipes. A U.S. company licensed the Seal of Cotton trademark for their 100% cotton, subscription-based feminine hygiene

products. A U.S. company manufacturing beauty products licensed the Seal of Cotton trademark for their cotton balls, pads,

and swabs. A large multinational manufacturer amended their agreement to include diapers, wipes, and tampons. A company producing bleached cotton fiber and spunlaced fabric in Pakistan renewed their licensing agreement for

the Seal of Cotton trademark. A company producing baby care products in Mexico licensed the enhanced™ trademark for wipes containing 25%

cotton. A producer of feminine products in China licensed the Seal of Cotton, natural™ and enhanced™ trademarks for

feminine hygiene products with a 100% cotton topsheet. A feminine hygiene product producer in Korea licensed the natural™ trademark for 100% cotton topsheet.

In addition to the ten new licensees, two licensed companies expanded their programs:

A popular drug chain will be expanding their line of 100% cotton feminine hygiene products to include nineteen skus, this includes twelve private label and seven branded products. Cotton Incorporated will be partnering with the supplier and retailer to call attention to the products in-store with radio, digital promotion, coupons, social media, and shelf trays.

A cotton hygiene product manufacturer active in Europe and expanding markets has introduced several new programs in the first half of 2017.

Market Development Activities Marketing Communications: The nonwovens ads produced in 2016 were successful, and the decision was made to

continue the same campaign into 2017. This campaign includes two separate advertisements; one focused on sustainability and one focused on the performance of cotton.

Brochures o All three of the nonwovens sourcing directories (fiber sourcing, nonwovens sourcing, and converted product

sourcing) have been updated with the latest information. o In the second half of the year, a brochure will be produced summarizing the findings of the completed research

on the global incontinence market. Social Media: In May, a licensed brand of cotton feminine hygiene products was featured on Cotton Incorporated’s

social media for Women’s Health Week. Cotton University™ Web site: Multiple lectures provided courtesy of North Carolina State University are being

updated and will be posted later in the year.

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Events o Outlook Latin America: This is a three-day conference and tabletop exhibition, attended along with Mexico City

staff to connect with key companies in the region. Very good connections were made and beneficial meetings were held during this event.

o INDEX17: This is the world’s leading global nonwovens exhibition, attended by over 12,000 people with over 600 exhibiting companies. Cotton Incorporated staff from Cary, Shanghai, and Hong Kong participated. A presentation was given for “The Impact of Global Agricultural Practices Related to Cotton on the Environment: 2016 LCA Results.”

o NETInc: This conference focused on sharing information on the latest technologies, processes, and practices with presentations over three days. The Life Cycle Assessment (LCA) results also were presented during this event.

o World of Wipes: The focus of this international conference was to learn about new technology, emerging markets, and popular topics in the wipes market, such as flushability. Cotton Incorporated staff served as chairperson for this event, hosted a tabletop display, and attended a dining event with a representative of a non-profit organization promoting sustainable products.

Importer Support Program: The first half of the year centered on understanding tier one and original equipment manufacturer (OEM) targets for the automotive industry, in order to find opportunities for cotton in these markets. Another focus is identifying a consultant to make appointments with the right companies and fine-tune marketing materials for these meetings.

Fashion Marketing Fashion Marketing staff worked on production of the Fall/Winter 2018/2019 season. Presentation, micro site, and materials all came out in the early part of this year. It was debuted at Premiere Vision in Paris in February. While finishing production for the Fall/Winter 2018/2019 season, Fashion Marketing staff also started production for Spring/Summer 2019. Production for Denim 2018/2019 continued the first half of the year with the presentation, micro site, and materials officially coming out in May and June of this year. The denim presentation has been shown to dozens of clients so far after coming out in May. The Seasonal Fall/Winter 2018/2019 presentation was taken across the United States, Latin America, and Asia in the first half of the year. Presentations continue in the New York region. In the first half of the year, presentations were seen in various cities in Mexico, Columbia, Peru, Chile, France, England, China, Japan, Hong Kong, Thailand, and Korea, as well as dozens of cities in the U.S. Production of Active Spring/Summer 2019 and Fall/Winter 2019-2020 was completed with the presentation, micro site, and materials officially coming out in June of this year. The active presentation continues to be a highlight and focus for the Fashion Marketing team, and the presentation itself is highly innovative, as remarked by clients. The presentation has been taken to dozens of clients. Fashion Marketing staff produced a specialized presentation for the Turkish market. A presenter was taped and it was dubbed in Turkish with sub titles so clients in Turkey could understand the key concepts of the Fall/Winter 2018/2019 season. This is also downloadable for clients in that region so they can share with colleagues. Materials were sent in conjunction with the presentation. Staff continue with the bi-monthly travel blog. Cities/events highlighted so far this year are: Buenos Aires, Mexico City, New York Fashion Week, San Miguel de Allende, The Armory Show in NY, London, San Francisco, Amsterdam, The Frieze Show NY, Wellington, Melbourne, and Tokyo. Staff did research both locally in New York and abroad. Research was conducted in Sydney and Melbourne, Australia; Wellington, New Zealand; Osaka and Tokyo, Japan; Bangkok, Thailand; Singapore, and Paris, France. Staff participated in the Premiere Vision trade show as well as holding a position on the board of Color Association for the Women’s, Men’s, and Active Markets. Strategic Objective 3: Provide technical education and training to support the use of cotton products.

The GSCM division manages the Importer Support Program (ISP), which provides programs that meet the mission of Cotton Incorporated and specifically benefit the importer segment of the supply chain. Twenty-five technical education workshops have been held in 2017 with 666 attendees for the first nineteen workshops (data still being gathered for the other workshops).

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These individuals were from major brands and retailers. The purpose of these workshops was to provide detailed technical information and training on relevant topics important for cotton. The table below summarizes the information for those workshops.

WORKSHOP (Topic and Location) # of Companies # of Attendees Overall Program: Denim Manufacturing & Garment Finishing - Cary, NC 14 26 4.89 Color Measurement Issues - Shanghai 14 30 4.83 Garment Wet Processing Technologies - Shanghai 14 27 4.76 Printing Science & New Print Technologies - Shanghai 14 36 4.87 Color Measurement Issues - Hong Kong 17 25 4.44 Garment Wet Processing Technologies - Hong Kong 17 25 4.46 Printing Science & New Print Technologies - Hong Kong 17 26 4.48 Modern Printing Science - New York City 29 54 4.81 Fabric Analysis Woven - New York City 34 53 4.82 Finishing Fundamentals - New York City 31 51 4.68 Textile Fundamentals - Plano, TX 4 34 4.85 Garment Wet Processing - Plano, TX 5 34 4.72 Textile Fundamentals - Cary, NC 19 26 4.61 Modern Printing Science - Cary, NC 17 25 4.96 Knit Design - Columbus, OH 10 48 4.67 Sweater Design - Columbus, OH 15 49 4.82 Knitting & Weaving Fundamentals - Portsmouth, NH 11 38 4.88 Dyeing Science - Portsmouth, NH 10 39 4.61 Woven Fabric Structure & Design - Cary, NC 12 20 4.9 In addition to the workshops in Asia, the lecturers were, for the first time, given the opportunity to visit five mills in China. They had the chance to see some eco-friendly processes in an innovative knitted denim fabric mill, as well as experience first-hand a vertical denim company, from spinning, weaving, dyeing & finishing, cut & sew, to laundry. The COTTON UNIVERSITY™ Web site is a marketing tool and educational resource (www.cottonuniversity.org). It is the leading innovative education and information resource for current and emerging textile industry professionals who are actively seeking connections to cotton. Additionally, the COTTON UNIVERSITY™ Web site fosters industry connections and generates further marketing opportunities for cotton among supply chain decision makers. The Web site highlights 15 colleges with online courses. The newest college focused on nonwovens was launched early this year. There is also a vast community for industry, faculty, and students to connect with Cotton Incorporated and each other. In 2017, there have been 2,218 new individuals registered, bringing the total for the year to 20,150 approved users, 166,427 sessions, and 1,061,666 page views. COTTON UNIVERSITY™ webinars offer a unique way to reach the industry and amplify our message. In 2017, two webinars have been held so far, including one on the life cycle assessment of cotton. Webinars reached more than 230 companies. Webinars are one of the most successful methods to share information with a large number of industry professionals from the global cotton industry. The Importer Support Program (ISP) Committee identified three areas of focus for the year: sustainability communications, automotive markets, and traceability. Work is underway in the traceability area. For automotive, work was completed to determine the market entry strategy. The ISP Subcommittee has yet to provide approval to move forward at implementing the strategy. Sustainability communications work has been placed on hold per the ISP Subcommittee.

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CONSUMER MARKETING COMMITTEE

ADVERTISING, PUBLIC RELATIONS, AND STRATEGIC ALLIANCES

Strategic Objective 1: Use advertising and public relations to build consumer demand and trade awareness for cotton and cotton products.

Advertising May marked the launch of the new campaign, Leave Comfort to Clothes, with one 15 second television spot (Festival). In the first half of 2017, TV advertising was seen by 71% of women 18-34, 8.3 times; and 76% of women 18-49, 9.1 times. The commercial was also seen by 63% of men 18-34, 5.6 times; and 70% of men 18-49, 6.2 times. Television

A total of 477 million television impressions were delivered across ABC, The CW, and FOX broadcast networks and thirteen cable channels (Freeform, Food Network, HGTV, BET, CMT, Bravo, E!, Oxygen, MTV, TBS, TLC, VH1).

Units were scheduled during popular primetime programming such as Dancing with the Stars, Jane the Virgin, MasterChef Junior, Shark Tank, Empire, Supergirl, Brooklyn Nine-Nine, and Keeping Up with the Kardashians.

Digital Media

The Leave Comfort to Clothes video campaign (Festival, Kiss, and Truck) launched on a rolling basis starting in May, already garnering over 12 million impressions. The videos ran on predominantly fashion- and lifestyle-focused sites across the video network partners, such as betterhomesandgardens.com, usatoday.com and shape.com.

The campaign was also promoted through online display banner advertising on women’s and men’s fashion, lifestyle and active sites such as Purewow, Refinery29, Thrillist, and Men’s Health. This portion of the campaign already garnered almost six million impressions.

Mid-funnel tactics, which includes running display banner ads on retail sites and aligning with relevant content on fashion and lifestyle Web sites, were used to promote campaign messaging; effectively reaching and influencing consumers with a consideration and/or purchase intent mindset. These initiatives launched in May and were implemented across retail sites such as Overstock.com and Kmart.com. The campaign has garnered over 18 million impressions to date, with a click-through-rate of 0.53% (compared to an industry average of 0.07 – 0.10%).

Paid Search During the first half of 2017, the Advertising Department employed Search Engine Marketing on Google and Bing.

This tactic raises awareness for cotton while serving users in their time of need, while encouraging them to learn more about cotton and its benefits. These efforts drove over 270,000 visits to TheFabricOfOurLives.com.

The Advertising Department also ran campaign and branded videos on YouTube generating over 1.6 million views. Social Media

Paid and organic social media was used to reach and engage with fans and new users across channels such as Facebook.com/cotton, Twitter.com/discovercotton, Instagram.com/discovercotton and Pinterest.com/discovercotton.

Collectively, all social campaigns have garnered over 23 million impressions so far this year, driving over 4.5 million engagements (likes, shares, clicks, etc.).

The Advertising Department launched the Stain Calendar campaign on Instagram and Twitter. The Department paired quirky, high-fashion images with stain tips on national food holidays like Donut Day, Bacon Day, Spaghetti Day, and Lobster Day. The campaign has garnered three million impressions to date, driving over 560,000 engagements (likes, shares, clicks, etc.).

The Department also launched the Digital Bursts series, which used quick, eye-catching animations to communicate key comparative messages to consumers. So far, two digital bursts (centered on the following claims: cotton washes clearer in activewear and a better night’s sleep in cotton) have launched on Cotton Incorporated’s consumer-facing Facebook channel. The two bursts targeted adults 18+ and garnered over 2.5 million impressions with an average ad recall rate of 6.7% (on-par with industry benchmarks). Ad recall looks at brand awareness by measuring ad recall lift by surveying consumers two days after they were exposed to the content.

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Ongoing social promotions supported the Blue Jeans Go Green™ program and retail partnerships, as well as product adoptions in the marketplace and key Cotton Incorporated relationships, such as Conscious Period Tampons and Red Land Cotton.

The Department continued the Did You Know (#DYK) series on Twitter to educate and entertain consumers about cotton, the industry, and cotton sustainability. For example, “DYK: In the U.S., 64% of cotton is grown by natural rainfall, and water use has declined by 75%.” This tweet received 16 retweets and 15 likes, which is high for an organic post for Cotton Incorporated.

The Department continued the relationship with brand ambassador fashion blogger, Damsel in Dior. This year, two videos were created for Cotton Incorporated, both of which performed well above Cotton Incorporated’s benchmark as far as view rate, which was calculated by looking at the number of impressions served compared to the number of actual video views, 43% and 48% respectively.

TheFabricOfOurLives.com

The Department continues to write blog posts covering a range of topics, such as seasonal trends, wellness, and sustainability, always including corresponding cotton-rich shop items and highlighting Cotton Incorporated product adoptions in market.

The Department continues to update Shop Cotton multiple times a week to ensure visitors see the most up-to-date and best cotton-rich offerings from around the Web. These efforts have driven over 57,000 clicks to various e-commerce sites year to date (62% of 2017 goal).

The Department partnered with micro-influencer, The Neon Tea Party, to create custom do-it-yourself denim projects such as denim earrings, pom-pom jeans, and a patchwork jacket.

Production

Production was completed on various communication vehicles within the new Leave Comfort to Clothes campaign, including but not limited to:

o Three 0:15 videos (Festival, Kiss, and Truck) o Digital media campaign (banners and mobile pre-roll)

Production began on an interactive rich media unit that allows users to engage with multiple campaign assets on desktop and mobile devices across our ad network.

Production was completed on the first batch of digital bursts. Production began on the second batch. Production was completed on growing Seal of Cotton logo files to be used in presentations, videos, etc. Production was completed on an informational card that lists Cotton’s trade-facing and consumer-facing Web sites

and social media handles. Production was completed on The United of America project which includes a video and Web page on

www.TheFabricOfOurLives.com. Production was completed on the Clorox and Cotton Incorporated partnership page on

www.TheFabricOfOurLives.com. Trade Print

A total of 15 trade ads ran in the first half of 2017 in industry publications such as Textile Insight, EcoTextile News, China Textile Leader, and AATCC. The print campaign was complemented by digital banners on sites such as EcoTextile.com, WWD.com, and AATCC.org. Messaging included topics such as consumer preference, sustainability, and Cotton Incorporated’s range of services.

A total of 18 nonwoven-specific trade ads ran in the first half of 2017 in publications such as Nonwovens Industry, Nonwovens Report International, and Sustainable Nonwovens. The print campaign was complemented by digital banner ads on nonwovens-industry.com, INDA.org, WTiN.com, and sustainablenonwovens.net. Messaging included topics such as performance and sustainability.

Production began on updating cottonseed print ads for publications such as American Dairyman, Hoard’s Dairyman, and Milk, to run in late fall.

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Public Relations (PR) Support of Consumer Programs Public Relations supported key consumer-facing projects in the second half of 2016, including the Blue Jeans Go Green™ denim recycling program, a collaborative promotion with Clorox Bleach, and the “Leave Comfort to Clothes” advertising campaign. To support the “Leave Comfort to Clothes” advertising campaign, the department released a press release over the wire. The release was picked up by over 200 media outlets and had a total potential audience of over 13.1 million. The department also supported the campaign on the trade social media channels and will continue to do so during the remainder of 2017. To support the Blue Jeans Go Green™ denim recycling program, the department made several posts on the trade-facing social media channels. The program was worked into a Lifestyle Monitor™ article, and the department also continues to provide information for and review and approve press releases for brands/retailers who partner with the program. Sustainability In 2017, the department continued to take a more direct and visible approach to challenging inaccurate claims about cotton’s environmental impact. Using Cotton Incorporated communication platforms such as Facebook and Twitter, staff was able to point out inaccuracies in articles and share others that were written favorably about cotton (i.e. microfiber issues). On these social channels, the department was also able to repost digital animations and videos that had been made in previous years about pesticide usage and water usage. In April, the department focused all Lifestyle Monitor™ article topics on sustainability and the environment leading up to Earth Day on April 22. The three articles covered topics such as consumers choosing cotton because it is a natural fiber, how the fashion industry is making strides in sustainability efforts, and how the Blue Jeans Go Green™ denim recycling program closes the gap in cotton sustainability. In May, the department hosted a media event with Sourcing Journal – “Everything You’ve Heard About Cotton is Wrong.” The event addressed the top ten “alternative facts” about cotton, the technologies and practices that define modern cotton agriculture, and the business of sustainability and the apparel industry. A panel discussion was also held about cotton and the 21st century. Cotton Incorporated Lifestyle Monitor™ Survey The Lifestyle Monitor™ survey and other data resources within continue to attract interest in the media, as well as the industry. Public Relations continues to work closely with the Corporate Strategy and Program Metrics Department to promote all the analytical resources of the Company, and to integrate these data to support the direction of the Company’s cotton-promoting programs. There was a focus on the activewear market, and the data collected was used to create a multimedia microsite featuring videos and images available to the press. A media alert was sent out to announce the launch of the site, and it was picked up by over 230 media outlets with a total potential audience of 89.4 million. The microsite was also shared on all the Cotton Incorporated trade-facing social media pages. The microsite will be updated several more times throughout 2017 to reflect new topics and data from the survey. The Lifestyle Monitor™ articles continue to gain traction in Sourcing Journal, where the articles are frequently the top reads of the week. Some of the most popular articles were about the rise of Amazon in the fashion sector, new approaches to active retailing, athleisure in the workplace, and the “uberization” of the apparel market. Many of the articles published in Sourcing Journal are also published on Rivet. The department continued its editorial partnership with The Robin Report in 2017 with articles promoting the Lifestyle Monitor™ survey and other analyses from the Corporate Strategy and Program Metrics Department. Clorox Co-promotion Cotton Incorporated collaborated with Clorox Bleach on a consumer-facing, social media promotion. The promotion highlighted the ability of cotton apparel to release odor-causing bacteria in a standard home laundering, unlike polyester. The

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promotion utilized parenting bloggers and home décor bloggers to distribute the message. Results are being tabulated and will be included in the end-of-year report. Social Media The department has also focused on organically growing their social media presence (separate from the consumer facing “Discover Cotton” pages). From January 1, 2017 through June 28, 2017, the trade Facebook page went from 6,341 followers to 7,817. This number of followers may appear small, especially relative to the consumer Facebook page, which has more than one million followers. However, given the smaller size of the trade audience, the number of followers is quite good. The most popular post during this time (also in the history of the page) was the sustainability video made with fashion blogger and Cotton brand ambassador, Jacey Duprie, of Damsel in Dior. The video was posted two times during the first two quarters of 2017. The posts combined had an organic reach of 164,358. The engagement (reactions/comments/shares) for the posts was 4,693, and there were a total of 72,408 video views (61,067 of these were unique views). Twitter engagement also grew during the first half of 2017, with a total of over 125,500 impressions from January 1 through June 28. This is compared to around 100,000 for the second half of 2016. The page now has 3,877 followers, which is up from 3,562 on January 1. PR continues to post more frequently on Cotton Incorporated’s LinkedIn page, sharing articles and information pertinent to the cotton, agricultural, and textile industries – press releases, webinars, environmental videos, etc. While there is not as much engagement with posts as other forms of social media, the posts do receive a significant amount of organic impressions – a total of over 93,000 between January 1 and June 28. Strategic Alliances Consumer Sustainability Initiative: Blue Jeans Go Green™ Program The ongoing year-long partnership with Madewell continues again in 2017. With over 115 stores across the U.S., consumers can recycle denim in-store at any time and receive $20 off a new jeans purchase. For a limited time beginning in March, Madewell enclosed a postage-paid mailer for return recycling with every purchase made at Madewell.com. On March 29, Madewell store associates volunteered for the day to help build with Habitat for Humanity of Greater Los Angeles. Six houses currently under construction in the city of Bellflower by the local affiliate will include insulation provided by the Blue Jeans Go Green™ program. Additionally, Madewell began testing Podcast Advertising with Gimlet Media Inc. with a message around the denim recycling program. Thus far, podcast advertising has proven to be beneficial for driving traffic in-store and raising awareness of the Blue Jeans Go Green™ program.

Surrounding Earth Day, several new retailers executed consumer-facing programs in-store including AYR, Bloomingdale’s, Bevello, and Denim Habit. In addition, Madewell did a big PR and social push which resulted in a national TV segment on the Today Show, several press hits, and increased social conversation.

The mail-in program continued to be a successful collection channel receiving over a thousand pieces of denim per month for recycling. In addition, several organizations throughout the country have contributed denim through the program’s Corporate Social Responsibility channel including Abercrombie & Fitch, Wrangler, Cone Denim, Unifirst, and more. During the first half of the year UltraTouch™ denim insulation was distributed to three grant recipients and several Habitat for Humanity affiliates including Greater Los Angeles, Wake County (NC), Greenville (SC), New Orleans, Westchester (NY), and Greater Teton (WY). Strategic and Retail Partnerships The first half of the year saw the completion of the strategic planning for Cotton’s 60 Second Fashion Show. Re-imagining the fashion show for the social media age, Cotton will create the first 60 Second Fashion Show featuring women’s and men’s contemporary cotton looks within this compressed timeframe. Produced as a high-energy live fashion show, the event’s highlights will be edited into an interactive video. Consumers will be able to click the video to engage with it, inclusive of purchasing cotton products and social sharing. With a single click, viewers

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will seamlessly launch into an interactive digital experience, where they can manually rotate every outfit, create personalized digital lookbooks, share desired outfits socially, and (most importantly) click to purchase. This fully shoppable content will be aggressively promoted on multiple platforms to reinforce cotton as relevant, on-trend and to serve as a springboard to purchase. Bloomingdale’s, Cotton’s exclusive retail partner for this program, will provide access to contemporary brands to be featured within the fashion show while also promoting the overall program through its promotion channels, including the in-store environment. Who What Wear, the selected media partner, will aggressively promote Cotton’s 60 Second Fashion Show across their platforms. Who What Wear will also secure a reputable celebrity to host the live show as well as fashion influencers to be featured in video content. The program aims to create mass reach, encourage social conversation, and drive incremental sales of cotton apparel online as well as at brick-and-mortar. The live fashion show will be held in New York City on Wednesday, August 2. The final, interactive video is scheduled to launch digitally on Thursday, September 7.

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CORPORATE STRATEGY AND PROGRAM METRICS (CSPM)

Strategic Objective: 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.

Market Intelligence This area encompasses ongoing research studies that assist Cotton Incorporated in monitoring the supply chain for changes in cotton use and/or market perceptions. Lifestyle Monitor™ Survey Key highlights from recent research results will be used to better understand attitudes towards cotton and competitive fibers, cotton made in the USA, infant/baby clothing preferences, sustainability, denim jeans, opportunities to improve brand loyalty, and back-to-school shopping intentions. In the first half of 2017, subject areas of research in the Lifestyle MonitorTM survey included, but were not limited to:

• Online Shopping: Although the majority of consumers prefer to research clothing online (66%), the majority prefer the remainder of their shopping journey - pre-purchase questions (68%), purchasing (75%), post-purchase questions (52%), and re-purchasing (54%) - to occur in a physical store.

• Infant/Toddler: Among those who purchase infant/toddler products, close to 9 in 10 (89%) prefer infant/toddler clothing to be cotton-rich.

• Cotton Competition: Compared to manmade fiber clothing, more than 7 in 10 consumers say cotton clothing is the most sustainable (84%), soft (81%), comfortable (80%), authentic (80%), trustworthy (79%), appropriate for casualwear (77%), and reliable (73%).

• USA Cotton: More than 4 in 5 consumers (81%) who say buying USA-made clothing is important say so because they prefer to support the U.S. economy, followed by the belief that USA-made clothing is better quality (39%) and more sustainable (33%).

• Denim Jeans: Consumers say they pay an average of $37 for a pair of jeans, but they are willing to pay 2-15% more for jeans that are more durable, perfect-fitting, or custom-made.

Retail Monitor™ Survey Key highlights from the most recent research results used to help understand cotton’s presence in key product categories at retailers audited are: Overall Market:

• Womenswear: While cotton’s share (weight basis) declined in most women’s categories, share increased in women’s pants, which was driven by increases in casual pants (up 2.2% percentage points).

• Menswear: Cotton’s share (weight basis) increased in 3 out of the 5 major menswear categories; men’s pants (+5.5 percentage points), men’s woven shirts (+1.0 percentage point), and men’s knit shirts (+0.1 percentage points). o Men’s Pants: Increases in cotton’s share of men’s pants were driven by increases in both men’s dress (+4.5

percentage points) and casual (+1.4 percentage points) pants. o Men’s Woven Shirts: Increases in cotton’s share of men’s woven shirts were driven by increases in men’s casual

collared shirts (+2.2 percentage points). Import Database Key highlights from the analysis of apparel and home furnishing import data indicate:

Average product weights have stabilized. The 10-15% decline in average product weight throughout the late 2000s was a headwind for consumption. That headwind appears to have diminished.

Cotton’s share was generally stable for apparel in 2016. Cotton’s share of home imports has been flat to slightly higher.

The bale equivalence of cotton imports for apparel and home was generally stable in 2016. The database was updated to incorporate widespread revisions to the U.S. import classification system in 2016.

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Corporate Strategy This area involves the analysis and dissemination of the market intelligence that has been collected through both proprietary and secondary research studies. This information is used to drive internal and external strategies. Industry Presentations and Meetings During the first half of 2017, staff executed nearly 100 presentations and meetings on fiber economics and market research with key global industry contacts which included delivering domestic and global market intelligence presentations in China, Colombia, Hong Kong, Japan, Mexico, South Korea, Taiwan, and the United States. Key topics included Centennials/Generation Z, experiential retailing, athleisure, home textiles, sustainability and environment, winning consumer loyalty in developing markets, customization, mobile and e-commerce, retail and consumer updates, as well as economic outlook presentations together totaling nearly 1,700 attendees. Economic Publications CSPM staff continually tracks prices throughout the supply chain; such as the analysis of the increases in cotton fiber prices throughout the 2016/17 crop year and how this has had only minimal effects on sourcing costs.

Six issues of the Monthly Economic Letter were published to inform participants in the cotton supply chain about developments in the cotton market in order to help them make better and more profitable decisions.

Six issues of the Executive Cotton Update, which focuses on the U.S. economy and is designed as a tool to inform clients about how changes in the U.S. economy might affect the cotton supply chain, were published.

Six reports about how changes in cotton prices are “passed through” the supply chain were published and distributed.

Staff provided weekly radio updates on the cotton market. These “Weekly Cotton Market Updates” are posted on the Cotton Board Web site and distributed to nearly 50 different radio stations across the nation.

Staff provided weekly television interviews to RFD-TV which garners 11 million impressions weekly from viewership of 45 million subscribers. A recent Agricultural Resource Management study revealed that RFD-TV is the number one source of information for farmers and ranchers.

Additional Publications & Supply Chain Insights

Home Textiles: Sheets & Bedding and Home Textiles: Towels. Based on the results of the Home Textiles Study, two infographics were created and disseminated to key accounts and retailers and presented at the Home Textiles Today Public Relations event in March. Key findings show that consumers want performance features in their top-of-bed products, and current offerings do not meet their needs.

Live Comfortably: Cotton in the Home Market webinar. Staff participated in a Cotton UniversityTM webinar on the home textiles market. Consumer use and buying trends, the home textiles market outlook, and how cotton is the natural solution to many consumer concerns were covered.

U.S. Activewear Market video insights. These seven animated infographics aim to help brands and retailers gain insights on topics such as athleisure, breaking brand loyalty, primary purchase drivers, new performance technologies, and smart fabrics to help attract and retain customers. These video insights were based on the 2016 Activewear Study and were published on the Cotton Incorporated and Lifestyle MonitorTM dedicated microsite.

Consumer & Retail Trend Reports. Staff created three reports focusing on the U.S., Chinese, and Mexican activewear markets, the U.S. home textiles market, and Centennials/Generation Z. Reports were distributed internally, to Cotton Council International, and several were used in meetings with key accounts globally.

Lifestyle MonitorTM email. In collaboration with Public Relations, emails with trending topics from recent Lifestyle MonitorTM research are disseminated monthly via email to direct traffic to LifestyleMonitor.CottonInc.com.

Strategic Research and Program Metrics These projects enhance knowledge about key decisions for cotton’s use and help measure corporate efforts to support the Company’s mission. The Advertising Tracking Survey is an ongoing market research study conducted by CSPM. The Chinese Consumer Survey is an ongoing market research study conducted jointly by Cotton Council International and CSPM. The latest findings from these projects as well as additional results from other strategic research studies are provided.

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Trade Policy Study: Polyester & Products In addition to the comprehensive database covering U.S. imports, Cotton Incorporated staff established a series of databases to describe textile trade for major importers of fiber, filament, yarn, fabric, and apparel. The list of countries with organized trade data include China, Japan, and the E.U. among others. A purpose of this project was to better understand trade flows and the competition that cotton has been facing from man-made fibers. These data were shared with the National Cotton Council and the International Cotton Advisory Committee as part of an effort to better understand how cotton’s markets have been affected by man-made fibers in recent years. Trade Sustainability Research Working with NMI (the Natural Marketing Institute), CSPM conducted research among 102 industry professionals to gain understanding of how the trade approaches sustainability within their organizations. The survey was sent to professionals within the textile or peripheral industries, and responses were received from a mix of retailers (35%), brands (32%) and manufacturers (32%), as well as sourcing professionals (14%), and mill (4%) representatives. The largest share (44%) of respondents were executives within their companies, one-fifth were product development (20%) and sales (19%), while 18% were Corporate Social Responsibility (CSR)/Sustainability. When asked what sustainability meant to their company, more than half (55%) said that it meant using responsible ingredients, making products in an environmentally-friendly way (55%), and balancing profit and environmental concerns (54%). Only 4% say they didn’t really know what it meant and 1% said it was a marketing activity with no real meaning or benefit. The results were presented during a Public Relations’ May trade media event with Sourcing Journal – “Everything You’ve Heard About Cotton is Wrong.” Home Textiles Research Home research was conducted through an online survey among 2,000 U.S. women (60%) and men (40%) ages 18-70. The survey participants had to have purchased or have influence over the purchase of bath towels, sheets, and bedding for their household. The results of the research were provided in presentations, Supply Chain Insights publications, and a webinar. Below are highlights of the findings:

• Over one-half (53%) of consumers enjoy shopping for home textiles, and a further 11% cite home textiles as their favorite item to shop for.

• Towels are purchased with the greatest frequency, with 43% buying them at least every nine months. Sheets follow, with roughly one-third buying them at least every nine months. In comparison, bedding products are purchased less often, with one-third buying them less than once every two years.

• While there is no marked seasonality to shopping for home textiles, nearly half of consumers buy as needed throughout the year, purchases are typically pre-planned with half of consumers or more across all product categories saying they plan before buying.

• Cotton is by far the most preferred fabric for all of the home textile categories researched; 83% prefer it for their towels, 72% prefer it for their sheets, and 68% prefer cotton for their bedding.

Chinese Consumer Survey Below are highlights from the most recent results:

• BRANDS: International brands’ share of Chinese consumer purchases have increased significantly across product category, particularly in activewear and denim. Fast-fashion brands account for 27% of international brands purchased in 2016, up from 16% in 2012; followed by activewear brands (25%, down from 30% in 2012); jeanswear brands (22%, down from 26% in 2012); and Hong Kong-based brands (18%, up from 15% in 2012).

• MIDDLE CLASS: Over the next 14 years, the middle class is projected to nearly double to 60% of the population. The growth is coming from the “upper” middle class (those making between $15,000 and $40,000 USD annually). These consumers will be the target audience for apparel brands and retailers in the coming decades.

• UPPER MIDDLE CLASS: Three out of four upper-middle class consumers say they are bothered by fiber substitution away from cotton and more than three in five are willing to pay a premium to keep their clothing cotton-rich, significantly higher than their lower-income counterparts.

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Chinese Retail Audit Below are highlights from the most recent results:

• Cotton’s share (weight basis) of major menswear product categories audited in Shanghai and Xian stood at 77% in 2017, down slightly from 2016 and 2015 (79%). Cotton’s major competitor in menswear remains polyester (14% share in 2017 up 2 points from 2016).

• Over the past year, cotton’s share decreased in men’s pants (79% to 75%), knit tops (89% to 86%), men’s woven tops (85% to 82%) and outerwear (46% to 35%), and remained flat in men’s jeans (87%).

• Cotton’s share (weight basis) of major womenswear product categories audited in Shanghai and Xian China stood at 51% in 2017, down slightly from 2016 (52%) and flat compared to 2015 (51%). Cotton’s major competitors in womenswear are polyester (26%) and rayon fibers (10%), similar to the situation in the U.S.

• Over the past year, cotton’s share increased in women’s woven tops (49% to 54%), dresses (28% to 29%), and jeans (84% to 85%), and decreased in women’s pants (54% to 45%), knit tops (68% to 62%), and outerwear (39% to 33%).

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APPENDIX A: MEDIA OUTREACH COVERAGE Generating press releases about noteworthy activities and accomplishments, as well as sharing information with the media, remain extremely successful means of securing press coverage. These proactive and reactive communications draw upon the knowledge of in-house experts and the full range of data and analyses generated by the company. The following communications were disseminated in the first half of 2017. Trade March 1, 2017 Cotton Incorporated and PurThread Technologies, Inc. Announce a Collaboration April 11, 2017 Upland Cotton – An Improved Genome Sequence Will Advance Fiber, Fuel, and Food

Applications Consumer April 28, 2017 Cotton Incorporated Launches New Television Campaign Print Coverage The following is a list of some of Cotton Incorporated’s print coverage in the first two quarters of 2017. Triangle Business Journal Coverage of PurThread release Home & Textiles Today Mention of Cotton Incorporated Television and Radio Coverage The following is a partial list of Cotton Incorporated’s television and radio coverage in the first two quarters of 2017. WBEL Radio FM South Beloit, IL Earth Day Satellite Media Tour (SMT) WXGM Radio FM Norfolk, VA Earth Day Satellite Media Tour (SMT) WTLV NBC-TV Jacksonville, FL Earth Day Satellite Media Tour (SMT) WBX Radio AM (CBS) Boston, MA

Earth Day Satellite Media Tour (SMT)

KMTV CBS-TV Omaha, NE Earth Day Satellite Media Tour (SMT) KFNN Radio AM Phoenix, AZ Earth Day Satellite Media Tour (SMT) KTNV ABC-TV Las Vegas, NV Earth Day Satellite Media Tour (SMT)

WFTX FOX-TV Ft. Myers-Naples, FL

Earth Day Satellite Media Tour (SMT)

WFTS ABC-TV Tampa, FL Earth Day Satellite Media Tour (SMT) KCTU IND-TV Wichita, KS Earth Day Satellite Media Tour (SMT) WTMJ NBC-TV Milwaukee, WI Earth Day Satellite Media Tour (SMT) WTVF CBS-TV Nashville, TN Earth Day Satellite Media Tour (SMT) KGUN ABC-TV Tucson, AZ Earth Day Satellite Media Tour (SMT) Spectrum News Raleigh, NC Interview with James Pruden & Coverage of the Blue Jeans Go

GreenTM program WFTS ABC-TV Tampa Bay, FL Mention of the Blue Jeans Go GreenTM program Internet Coverage The following is a partial list of the online mentions of Cotton Incorporated, or its initiatives or programs, in the first two quarters of 2017. EcoTextile News Mention of Cotton Incorporated & Interview with Berrye Worsham Southeast Ag Net Mention of Cotton Incorporated 4-Traders Mention of Cotton Incorporated Cotton Grower Online Mention of Cotton Incorporated Southwest Farm Press Online Mention of Cotton Incorporated SunHerald.com Coverage of new campaign press release NewsObserver.com Coverage of new campaign press release

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Abc6.com Coverage of new campaign press release YourOhioValley.com Coverage of new campaign press release Our Good Life (Blog) Coverage of new campaign press release Bleeping Motherhood (Blog) Coverage of new campaign press release Western Farm Press Online Mention of Sourcing Journal + Cotton event Delta Farm Press Online Mention of Sourcing Journal + Cotton event Genetic Literacy Project Mention of cotton’s reduced environmental impact Quartz Mention of Sourcing Journal + Cotton event Could I Have That (Blog) Cotton + Clorox Collaboration Look Linger Love (Blog) Cotton + Clorox Collaboration Agriculture Industry Today Mention of Cotton Incorporated A Merry Mishap (Blog) Cotton + Clorox Collaboration Well Spent Mention of Cotton Incorporated Milwaukee Journal Sentinel Mention of Sourcing Journal + Cotton event Mammoth Times Online Mention of Sourcing Journal + Cotton event Observer News Enterprise Mention of Sourcing Journal + Cotton event The Buffalo News Online Mention of Sourcing Journal + Cotton event Sportswear International Mention of Sourcing Journal + Cotton event InBusiness Mention of Cotton Incorporated Sourcing Journal Coverage of Lifestyle Monitor™ data + column Robin Report Coverage of Lifestyle Monitor™ data + column WWD.com Coverage of Lifestyle Monitor™ data + mention of Cotton Incorporated Houston Chronicle Online Coverage of PurThread release San Francisco Chronicle Online Coverage of PurThread release Times Union Online Coverage of PurThread release Fibre2Fashion Coverage of PurThread release Home & Textiles Today Mention of Cotton Incorporated Children’s Apparel Coverage of activewear microsite InStyle Mention of the Blue Jeans Go GreenTM program Today.com Mention of the Blue Jeans Go GreenTM program The Chirping Moms Cotton + Clorox Collaboration That Chic Mom Cotton + Clorox Collaboration Denimology Mention of the Blue Jeans Go GreenTM program