Published on 12/13/01

Market Shift Threatens U.S. Cotton Growers

Around the world, the demand for cotton shirts and britches has never been better. The U.S. industry that turns cotton into products like these, however, is in major economic trouble. And their stress means U.S. growers are having to depend more than ever on foreign buyers.

This trend, if it doesn't change, will create more volatility in the already unpredictable prices growers get, said Don Shurley, a University of Georgia Extension Service economist.

"If (U.S. growers) are going to keep growing and producing cotton at the levels we are now, we'll have to export it," Shurley said.

Bumper Crop

This year, U.S. growers expect to produce about 20 million bales, 17 percent more than last year. (A bale is 480 pounds of cotton lint.) Georgia growers expect to grow 2.2 million bales, making 2001 one of the best production years on record.

Due to competition from foreign companies and a strong U.S. dollar, the textile industry in this country has decreased cotton purchases since 1997 by 3 million bales, about 30 percent.

"Again, unless growers cut back production, they'll have to make up those 3 million bales in exports," Shurley said.

Big Exports

This year, it just so happens, the United States is on a record pace to export almost 10 million bales of cotton, 3 million more than last year.

The last time the nation came close to exporting this much cotton was in 1994. This was because poor production in other countries left the United States the only country with cotton to sell, Shurley said.

That's not the case anymore.

U.S. growers are selling overseas not because they're the only ones with cotton. They export because that's the only way to get rid of their cotton. This puts them at the mercy of world prices and competition.

Prices Low

Currently, growers can get about 32 cents per pound for cotton. This is well below the about 65-70 cents it costs to grow it. Prices ranged from 60 cents to 80 cents over the past few years and haven't been this low in decades.

"The point is: unless there is some sort of supply shock, world prices will not get higher," Shurley said.

"The economic environment is hostile," said Roy Bowen, president of the Georgia Textile Manufacturers Association.

Textile Woes

Bowen told growers at the 2001 Georgia Cotton Production Workshop in Tifton, Ga., that in the past few years, 75 U.S. textile factories have shut down, including two in Georgia. And the current economic crisis has further weakened the industry.

Since Sept. 11, 12,000 U.S. textile workers have lost their jobs, including 7,200 in Georgia. About 15 percent of textile workers lost their jobs in 2001.

Help could be on the way. The farm bill being debated in Washington has some provisions to address the problems of the textile industry, strengthen U.S. cotton exports and improve the income safety net for farmers, Shurley said.

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