By: Lisa Droke, Senior Vice President and Chief Financial Officer, The Cotton Board
The Covid-19 crisis still has yet to reach its peak in the United States, but its effects on our daily lives are truly unprecedented. Major companies are drastically lowering their financial forecasts. Many businesses are closed, many of us are working from home, and many unfortunately are not working at all. So, what does all this mean for The Cotton Board in forecasting the amount of funds that will be available for the Cotton Research and Promotion Program? How can we have any confidence as we forecast the financial future when the present is still so unknown?
Traditional financial forecasting models are based on historical data and specific industry knowledge and experience. There are many cotton industry experts, as well as governmental agency reports, that typically provide us with a high level of confidence in The Cotton Board forecast. However, there is little historical data on the economic ramifications of a global pandemic, and we already know that brands and retailers in the cotton supply chain are being impacted in unprecedented ways. Thus, the only option in regards to forecasting is to estimate based on the best information available, to revise the forecast as circumstances change and to be transparent as to the limitations of the forecast in such a volatile situation.
No one knows the future, especially in these uncertain times, but The Cotton Board will be diligent in providing a reasonable, conservative financial forecast so that the work of the Cotton Research and Promotion Program can continue and thrive.