Published on 02/21/01

Georgia Cotton Growers Face Tough Decisions

The world has changed and the price U.S. farmers will get for their cotton has drastically fallen, all in just two short months.

At Christmas, a farmer could get about 66 cents for a pound of cotton. Now, that farmer can get only about 59 cents. This isn't good news for farmers trying to decide how much land to plant in cotton in 2001.

For each 1-cent drop in the cotton price, Georgia farmers lose about $9.6 million in income. For each 1-cent drop, Georgia's economy loses about $28.8 million, says Don Shurley, an Extension Service economist with the University of Georgia College of Agricultural and Environmental Sciences.

Shurley figures farmers need at least 65 cents per pound just to break even.

It Looked Good for a While

Historically, Shurley said, cotton prices tend to improve during January and February. The fall in prices since December is unusual. When prices do fall, they tend to fall later in the growing season, closer to harvest. Cotton is harvested in autumn.

In the past two months, world and domestic cotton conditions have taken a turn for the worse for U.S. growers.

Late last year, the U.S. Department of Agriculture estimated world production at 86.7 million bales. (A bale equals 480 pounds of cotton lint).

Adding the leftover stocks, this would be the smallest supply since 1996. Leading cotton- producing countries, such as India, Pakistan and China, were expected to decrease production for the 2000 crop.

That was good news for growers. When the supply goes down, the price goes up.

However, Shurley said, the latest estimates show world production at 88.1 million bales. The expected drop in production did not materialize. So supplies are higher than expected.

Things Don't Always Go as Planned

Cotton farmers around the world plan to grow just as much or more cotton in 2001. This includes U.S. cotton farmers.

Early conservative estimates say U.S. growers will plant about 15.9 million acres of cotton this year, about 400,000 more than last year. The USDA will release final cotton estimates in March.

World market conditions look gloomy. Domestically, things don't look much better. The U.S. textile industry, which buys 60 percent of the total U.S. cotton production, is hurting.

"We've lost about 1.5 million bales of our own textile business since 1997," Shurley said. That means 720 million pounds of U.S. cotton in 2001 will have to find a buyer somewhere else in the world.

Americans still like cotton. In fact, U.S. retail consumption is growing strong, Shurley said. However, a higher percentage of that consumption is coming from imports of fabric and finished products, such as shirts and jeans. This makes U.S. growers depend more on exports and foreign textile mills.

If the U.S. textile industry continues to suffer losses, and if world cotton production continues to increase, U.S. cotton farmers face tough decisions in the future.

Brad Haire is the former news editor with the University of Georgia College of Agricultural and Environmental Sciences.