The cotton industry, agriculture and rural Australia as a whole continued to be affected by drought and the 2006–07 season saw the smallest area planted to cotton for 20 years. Looking back, cotton production has been less than 50 per cent of normal levels in three of the last five years, a situation made worse by low cotton prices in $A terms. Understandably, the impact of the current downturn is testing the resilience of a dynamic and innovative industry whose growers are noted for their willingness to adopt research outcomes. Given these circumstances, it is remarkable that the latest estimate of cotton produced in the 2007 harvest is 1.2 million bales of largely high quality cotton, which will contribute over $400 million to Australia’s exports and offset the economic impact of drought on cotton-related businesses and communities. It is also noteworthy that internationally the Australian cotton industry continued to be recognised as a leader in the sustainable production of cotton. The Corporation is, equally, not immune to the impacts of drought, which has meant a significant reduction in industry levies and Australian Government contributions. But given conservative budgeting, the benefit of financial reserves and prudent management of R&D expenditure, the Corporation has been able to maintain R&D investments at a level that underpins the delivery of the outcomes sought in the CRDC Strategic Plan 2003–08.