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Can organic cotton be profitable?

No. 7 among a dozen “fresh ideas” for farm policy from the organization Environmental Defense is the recommendation that, “Farm and food policies should help farmers make the transition to organic food and fiber production to boost farm profitability, provide healthier food choices and help the environment.”

According to Denise McWilliams, New Mexico State University Cooperative Extension Service, such a transition might take more than a tweaking of policy.

Speaking at the 2007 Beltwide Cotton Conferences in New Orleans, McWilliams cited numerous obstacles for the adoption of organic cotton production, including crop rotation problems, ineligibility of transgenic cotton for organic certification, lack of organic cotton marketing information and production cost issues.

Elimination of some conventional inputs is expected to lower the cost of production per acre for organic cotton, but this may not necessarily lower cost of production per pound of lint,” McWilliams says. “Also, organic weed control practices, such as hand-hoeing, flaming or even additional early tillage tend to increase costs. Cost of production greatly varies among growers, production regions and countries, but unfortunately no authentic data are available to compare cost of production of organic cotton versus conventional production.”

Organic cotton producers expect a price premium in exchange for the cost of certification, the risk of lower yield and possibly lower quality due to spotted or more trash in the cotton due to imperfect control of bollworms or other insects and problems in harvesting. Spotted and higher trash cotton could cause the farmer to receive a discounted price rather than a premium.

In addition, there does not appear to be a fixed premium for organic cotton, according to McWilliams. Studies indicate an average price per pound received by farmers of 69 cents to $1.40 per pound for upland organic cotton, compared to 57 cents to 76 cents in 2003-04 and 48 cents to 57 cents in 2004-05 for base grade conventional cotton (A-Index).

More on McWilliams’ findings:

• Organic cotton produces lower yields and costs more to produce over large fields but may be viable where hand labor and small farms can utilize a holistic but limited production base and pest pressures are low.

• No systematic research has been undertaken on organic cotton production technology. Consequently, no pre-tested and authentic guidelines on production technology are available to the producers. However, general guidelines appropriate for all organic cotton production will be difficult, as each site most likely would need specific guidelines.

• Present commercial varieties of cotton have been developed for the region where they are grown to give optimum yield and fiber properties and using synthetic fertilizers and plant protection measures. New varieties need to be developed for organic cotton production. The breeding objectives could be better tolerance to insect pests and diseases. Another example could be varieties with natural characteristics to shed leaves at maturity, eliminating the need for defoliation in the case of machine picking. Also, more drought resistance and limited nitrogen-demanding varieties will need to be identified.

• A lack of nitrogen supply from the soil and insecticide efficacy as well as coverage affect yield significantly. More information on fertility and pest control are prime needs in organic cotton production.

• Information on the economics of organic production is also lacking or mixed in its message. This makes it difficult for growers considering organic production to determine if it will be profitable compared with conventional production.

• Cotton cannot be certified as organic cotton unless all the crops grown in rotation with cotton on the same land are also grown organically over multiple years. Thus, the economics of organic cotton production also have to consider the income from the rotation crops.

• Certification facilities are not available to the growers in many countries. They have to rely not only on certification by outsiders but also on the price premium decided by the certifiers.

• Cotton grown without synthetic chemicals can be referred to as environmentally friendly, chemical free, etc., which creates confusion. There is a need to promote organic cotton under worldwide acceptable labels.

• Presently, there are no official certification standards for post-harvest handling (i.e., ginning, yarn, fabric, garment manufacturing, etc.) of organic cotton. Standards and labels need to be established.

Based on a 2005 survey by the Organic Trade Association, organic cotton farmers in four U.S. states harvested 6,814 bales of organic cotton from 5,500 acres in 2004, an increase from 4,628 bales harvested from 4,060 acres in 2003. Texas is the largest organic cotton producer followed by California, New Mexico and Missouri. In 2005, U.S. farmers planted 6,577 acres of organic cotton.

McWilliams concludes that growing organic cotton is more demanding and more expensive than growing cotton conventionally. However, organic production is not necessarily any more environmentally friendly or sustainable than current conventional cotton production. “From a consumer residue standpoint there is no difference between conventionally-grown cotton and organically-grown cotton.”

There are limitations to organic cotton production that need to be overcome if organic cotton is to become more than a small niche market. “But with experience, it may be possible and could provide price premiums for growers willing to meet the challenges. Conventional and organic cotton production can co-exist. Profitability will drive decisions in the supply chain.”

While organic cotton has established a slight demand in the market place, estimated global retail sales of organically grown cotton products was $583 million in 2005, according to the Organic Exchange. OE expects global retail sales of organic cotton apparel to hit $2.6 billion in 2008. In 2000, world sales of apparel were about $1 trillion.

The task for organic cotton, according to McWilliams, is to locate production in a sustainable growth market — ideal for both production practices and in maintaining a demand for organic products.

The niche market could be expanded to other specialties — possible reentry into organic colored cottons, exotic plant dyes, minimal processing procedures—with the renewal of stricter conduits of commerce and even more constricting certification steps.

Lastly, the consumer media must continue to favor the organic cause in order to build demand and uphold organic cotton’s fragile price platform. “This is indeed a delicate balancing act.”


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