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Cotton may be down, but not out: Demand picture continues strong

What a difference a couple of years can make: Says Chris Breedlove, “When I visited with the Southern Cotton Ginners Association in late 2005, ginners were wondering how they'd keep their gins in business with all the crop problems following Hurricane Katrina, and cottonseed prices so low.

“Now,” he told SCGA members at their annual meeting at Memphis, “they're wondering how they can stay in business with so little cotton to gin.”

Cottonseed prices have skyrocketed to record levels — there's speculation that they could hit $400. Problem is, with acreage cutbacks and newer varieties that produce smaller seed, there's less product to fill the demand from dairies and other users.

Breedlove, a ginner at Olton, Texas, is president of the National Cotton Ginners Association, and like his fellow ginners and producers across the Cotton Belt, he's concerned about maintaining viability for an industry that will again this year lose significant acreage to high-flying, high-priced grains.

Kenneth Hood, veteran Mississippi producer/ginner/agribusinessman, echoed the sentiments.

“I never thought I'd live long enough to see this kind of downturn in Mid-South cotton,” he said, following reports from state association leaders detailing their expectations for further declines in cotton plantings this year. “We can only speculate as to how extensive this will be, or what kind of impact it will have on an infrastructure that has been built over many decades.”

Fewer acres will mean less cotton going to gins, fewer gins in operation (several didn't even open last season), and increased costs for gins due to reduced volume, said Tommy Valco, Agricultural Research Service cotton technology transfer and education coordinator at Stoneville, Miss.

Higher-priced cottonseed “will make up some of the difference” in costs, he said, but gins will again be faced with trying to “make choices that will allow them to be profitable.

“We're in the Era of 4 Fs — food, feed, fiber, and fuel. And right now, the fuel component seems to be wagging the tail of the ag market. The opportunity in biofuels may be great, and growers are making the choices they need to make to be profitable in this environment. But who knows how long this will continue?

“The United States still has the most efficient cotton production system in the world,” Valco said. “There is a large global demand for cotton, and the United States will definitely be a player in that market. But our competition is strong and we need to adopt the latest technologies to improve efficiency and competitiveness.”

Growing, more affluent populations in other countries will continue to demand quality cotton and cotton products, he said. But to stay abreast of these quality requirements will require continuing education of gin management and workers for a thorough understanding of ginning processes that affect quality, such as moisture, packaging, and other factors.

It is also critical, Valco said, that funding be provided for “a strong gin research program. The equipment you have in your gins today is technology we were working on in our gin labs 10-plus years ago. We need to keep this research moving forward.”

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