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Corn+Soybean Digest

Tough Times In Texas

Texans, famed for legendary tough-guy tenacity, might need to dig deeper for even more grit to make it through the coming cotton season.

Current low prices merely cap off a drought-plagued 1998 season that saw Texas cotton farmers lose $2.2 billion as part of the state's $5.8 billion in total agricultural losses, according to Texas A&M University estimates.

In the five years prior to 1998, Texas cotton production averaged 4.8 million bales. Last year Texans abandoned 2.35 million acres of cotton and picked only 3.5 million bales.

The Federal Reserve Bank of Dallas says more than half the bankers responding to its fourth-quarter 1998 ag survey indicate declines in loan repayment and increases in loan renewals and extensions. In response, a third of the bankers increased collateral requirements for new loans, making cash even more scarce on Texas farms and ranches.

Land values are decreasing on both dryland and irrigated acreage, as well, the Federal Reserve Bank reports.

"It's a real squeeze," says Jackie McMahan, whose cotton and corn crops at Princeton, TX, were badly hurt by drought last year. "What we're wondering is whether the price situation is a 12-month problem, a 24-month problem or a 36-month problem or what. If we should get in a multiyear squeeze, it's going to have a telling effect here."

Yet Texans may not decrease cotton acreage. In fact, weather and price problems with virtually all crops now could have the opposite effect.

"There are not many alternatives to cotton," says Steve Verett, executive vice president of Plains Cotton Growers, Lubbock. "Cotton is still the lesser of all evils. Current prices are reaffirming what a lot of us knew in the back of our minds - that there's little hope for improvement during the next marketing year. It's going to be a tough situation."

Some Texans, after harvesting drought-stricken, aflatoxin-loaded corn in 1998, may switch acreage to cotton this year. Verett says farmers as far north as Hereford say they're getting into cotton despite the low price.

"Reputable figures say we'll have 300,000-500,000 additional acres on the Plains," say Verett. "Corn acres are going to be slashed, mainly because of water demand. This is fertile soil, with ample water to produce the cotton. And we'll continue to grow the 3.5 million acres we usually plant around Lubbock because farmers just have no other choice for the bulk of those acres."

Most farmers will hold the line on inputs, however. Texas Blackland cotton farmers, for example, recently voted by a 54% majority to establish a boll weevil eradication zone. But they declined to pay the assessment of $27/irrigated acre and $16.50/dryland acre. That, in effect, puts the program in limbo.

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