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Prices push cotton acreage down

Cotton gins are like cattle fences — once they're torn down they're not likely to be built back. That loss of infrastructure, one economist says, could become a reality if cotton falls out of favor with Delta growers.

“The Delta is in a very precarious situation right now. What happens to the area's economy may hinge on whether or not farmers can continue to afford to grow cotton,” says Fred Cooke, an agricultural economist at Delta Research and Extension Center in Stoneville, Miss.

If cotton prices continue to linger in the gutter, forcing the closure of the many of the gins and warehouses that now dot the Delta landscape, the trend may be irreversible, according to economists. “If cotton comes back strong, and we've lost these gins, we'll be in big trouble,” Cooke says. “People most likely aren't going to be in the position to invest the $1.25 million or more it will take to build a new gin.”

While Cooke terms the loss of cotton warehouses “less critical,” he says it will result in increased trucking costs for the area's farmers.

What's more, he says, a healthy cotton economy boosts the entire area's economic infrastructure, and without it, many other Delta businesses will close shop. “Some of the seed and chemical suppliers aren't sure today that they'll be here in another year. They are facing big losses again this year, and many are carrying debts on their books from the 2001 crop season.”

In Mississippi, Extension cotton specialist Will McCarty says his state's growers will likely cut cotton acreage by more than 400,000 in 2002. Mississippi producers harvested 1.6 million acres in 2001, but are expected to plant less than 1.2 million acres of cotton this year.

According to the Louisiana Agricultural Statistics Service, that state's 2002 cotton acreage is projected to be down more than 24 percent — 210,000 acres — from last year's 870,000 acres. The state's growers are reporting 2002 cotton planting intentions at 660,000 acres. Replacing cotton, almost acre for acre, is corn, with an estimated 570,000 acres expected to be planted this year in Louisiana.

“On the surface, it might appear ‘no big deal, corn replaces cotton,’ but in dollars and cents it will mean a substantial loss to the farm community. Cotton is a much more valuable crop than corn, acre-for-acre,” says Bob Odom, state agriculture commissioner.

“The two issues driving what farmers are going to go with this year are price and program. The prices being paid for our highest return crops are in the tank, and the uncertainty surrounding what farm programs are going to be finally approved by Congress has everyone guessing,” Odom says. “If there is no second loan payment included in the new farm bill under consideration then virtually no program will cash flow.”

The price of corn, although still not at a profitable level, is helping move acreage out of cotton and into corn, Odom says. “Corn is actually 5 cents ahead of last year, selling recently for $1.92 a bushel compared to $1.87 at the same time last year.”

In comparison, he says, “A year ago, cotton was selling for over 50 cents a pound. Today it's selling for about 30 cents a pound. A world glut of cotton, caused mainly by large carryover stocks from last year and beefed up Chinese production, is causing severely depressed cotton prices.”

In Arkansas, 2002 cotton acreage is expected to be down about 10 percent to 970,000 acres, according to USDA's March 28 Prospective Plantings Report. The same report estimates Tennessee growers will plant 6.5 percent fewer acres of cotton in 2002, for a total of 580,000 acres.

Nationwide, USDA numbers put 2002 cotton acreage at 14.8 million acres, six percent below 2001 levels. “Producers from all upland cotton producing states except for Kansas, Georgia, and Missouri, intend to decrease acreage from last year,” USDA reports.

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