Economics and Competition Worry Cotton Farmers

January 7, 2009 06:00 PM
 

Charles Johnson, Farm Journal National Editor
 
A continued tough economic outlook and acreage uncertainty put the crowd in a subdued mood at the Beltwide Cotton Conference in San Antonio, Texas, this week.
 
Due to the softening world economy, USDA projects cotton demand for the marketing year ending July 31, 2009, to be 116.6 million bales, down from 123.4 million bales in 2007. China's textile mills are expected to post a production decline for the first time since 1998. USDA looks for world textile mill production to drop 5.5% this marketing year, the largest decline in history.
 
Thanks to recent declines in fuel and fertilizer costs, inputs could be in the range of where they were in 2007 or even a bit lower, helping cotton farmers, says Gary Adams, National Cotton Council (NCC) economist. Strengthening soybean prices, however, will likely put a lid on cotton acreage and Mark Lange, NCC president and chief executive officer, thinks farmers may further reduce the crop in 2009. In 2008, higher prices for corn and soybeans lured many acres out of cotton and some traditional cotton states like Mississippi and Louisiana drastically cut the crop.
 
Now that grain has a solid footing in the old cotton strongholds, it could remain a factor at least for the near future. "Producers are telling me that farming grain is easy compared to cotton. There's more time for family, for golf, for other things. We're seeing a lot of grain bins built in the mid-South and they're sure going to find ways to fill them,” says Tom Barber, Arkansas Extension cotton specialist.
 
Even so, a large number of farmers still debate just how much of the competing crops they will grow this year. "There are a lot of questions out there. I've been at Auburn University 15 years and this is the most indecision among farmers I've seen since I've been there,” says Dale Monks, Alabama Extension cotton specialist.
 
Only the Southwest seems likely to increase cotton acreage this year. "I sense increased enthusiasm for cotton and think we possibly may see an increase in Arizona and New Mexico,” says Randy Norton, Arizona Regional Extension specialist. "We've seen a dramatic drop-off in the availability of small-grain contracts, so many farmers will return to cotton in 2009. Plus the price of Pima cotton has increased to $1.30 per lb., which is pretty attractive to a lot of our growers.”
 
For many generations of farm families, cotton farming has been a big part of their identity as well as their business. Communities were built around it, with many non-farming jobs depending on it. That makes it tough to turn away from the crop when economics change.
 
"I'm proud to say I'm a cotton farmer,” says Jon Whatley, Odem, Texas. Farmer/ginner Ray Makamson, Itta Bena, Miss., plans to continue with cotton as well. "We'll probably cut some acres back but we'll still be in the cotton business. I am very concerned about the cotton infrastructure. You can't put the infrastructure back when it's gone. We can't just sit there and let the infrastructure go away,” Makamson says.
 
Larry McClendon, Marianna, Ark., NCC chairman, puts cotton first on his farm, as always. "Unlike the current trend, we're going to keep cotton as a viable crop on our farm. For 30 years cotton has been a solid component of my business. I'm not saying this out of emotion, but I intend on keeping it that way,” he says.
 

 
You can e-mail Charles Johnson at cjohnson@farmjournal.com.
 

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