This topic goes to the heart of the current crisis in the Australian cotton marketing system. The cotton industry is currently in a state of shock. This shock stems from the collapse in both the Australian dollar and the Us cotton futures market. A number of growers have not survived. Many more are looking at massive losses due to buying the Australian dollar forward and not selling cotton futures forward. Big swings in markets highlight bad marketing practices. Hopefully the industry can learn from this difficult time. More importantly, we can only hope that the litigation currently underway will not destroy the Australian cotton marketing system as we know it and enjoy it today. The Australian cotton marketing system is arguably the most advanced agricultural marketing systems in the world. The current crisis centres on the collapse of the Australian dollar, the collapse of the cotton price and the selling (hedging) practices of scores of cotton growers. These growers had bought (hedged) the Australian dollar in the 60-65 Us cent area, some out for five years, They saw that as good income protection. But they did not sell (hedge) the US dollar cotton price. Over the past 18 months it slipped to a 30 year low. A number of cotton growers are now bankrupt. So far industry-wide bad debts could top $A30 million. Now, a number of cotton growers are refusing to honour contracts with cotton merchants. The cotton merchants, like Namoi Cotton, Queensland Cotton, Dunavaant and Colly are left holding the can. So this is a difficult time, but an important time, to talk about how to survive in a volatile environment