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Texas Agriculture Archive

March 5, 2004

Cotton: New rules, more acres

By Lana Robinson
Field Editor

Cotton gets more complicated, with USDA's Risk Management Agency enacting new insurance rules and China's role making more of an impact in markets. Still, cotton remains an attractive crop for many parts of Texas going into the 2004 planting season. In fact, cotton acreage is increasing in the Northern High Plains.

"We'll have an extra 50,000 acres totally new to the cotton growing area, as well as a new gin proposed in Carson County," said George Caldwell, Texas Farm Bureau associate director of Commodities and Regulatory Activities. "Producers are switching over from corn and grains that have taken more water. They have some varieties that require a shorter growing season and use less water. Cotton is a good alternative crop. It will be beneficial in their area."

Caldwell noted that a zone referendum of a boll weevil eradication program will occur in that region later this year.

"Since they haven't grown much cotton in the past, they're in a position, with so few weevils, of going into the program as a 'suppressed' area right off the bat," he added.

The ability to control boll weevil populations has made a big difference across the state, said Caldwell.

"In the Coastal Bend, for example, especially with aflatoxin concerns, cotton is a very good alternative. With successful boll weevil eradication programs, and the Roundup Ready cotton, growers have been able to come back in to work a clean and manageable crop. In the past, they didn't have the hand labor to work a crop on weed control. Also, the Bollgard gene to control bollworm has really helped. All these technologies and factors have come together to make cotton really favorable. Another thing cotton has going for it is it will go easily into the government loan program," he suggested.

Caldwell said, overall, 2003 was a pretty fair year for cotton, although some areas in West Texas received a lot of hail damage.

"Producers there seem to be optimistic again this year regarding the marketability of cotton," he said.

As for cotton quality, Caldwell said farmers are always growing for high quality, but quality is affected by the length of the season and other factors over which they have no control.

"Producers are trying to plant for better spinning traits. All of our producers are working on that for marketability," said Caldwell.

Kody Carson of Littlefield, current Texas Farm Bureau Cotton Committee chairman agreed.

"The mills scream about wanting higher quality cotton, but don't want to pay for it," he observed.

Carson recently returned from an American Farm Bureau Federation Commodity Advisory Committee Meeting in Irvine, Calif., where the idea of a nationwide boll weevil eradication and maintenance program was evident.

"One of the reasons is that several states, like Tennessee, have eradicated boll weevils but are bordered by states like Arkansas, where there are spots without a program," Carson explained. "In order to stay weevil free, they would like to see a national focus. Also, they would like to see eradication efforts toward the pink bollworm tied in with boll weevil eradication. Arizona, California, and New Mexico, as well as around El Paso, have problems with this pest. They'd like to have pink boll worm eradication programs like the rest of the Belt has for boll weevils."

Carson's zone, Southern High Plains/Caprock Eradication Zone, is into its fourth year of the boll weevil eradication program, which is critical there, he said.

Other discussions at the February AFBF Commodity Advisory Meeting centered on the Central American Free Trade Agreement (CAFTA) and other foreign trade issues. Carson believes, too often, U.S. cotton gets the short end of the stick in trade negotiations. This time around, there is already talk of giving up the Step 2 bargaining program, which will hurt U.S. cotton exports.

"AFBF brought in economists who talked about the projected increase in U.S. plantings and worldwide plantings. It ended up that this really depends on whether or not China is shooting straight, and what their weather is going to do. Brazil, in the Mata Grosso area, where they grow soybeans and cotton—we were told they could double cotton production if they wanted to in two years," Carson reported.

Export demand varies because of both policy and foreign supply-demand developments that shift without warning. Officials representing foreign countries buying and selling cotton carry significant market influence.

"China is becoming a bigger player every day in the markets," said TFB's Caldwell. The amount they are able to produce and the amount we have been able to export to them are factors. They have a growing demand. It's pretty key to our exports. It's hard to say to what degree that will continue. It depends on how their crop comes, and how they expand. That's hard to project. Those numbers are not easily secured."

Carson said, Beltwide, water rights issues are a big concern. California, Arizona, Texas—even Louisiana and other states that seem to have a lot of water by comparison—are paying close attention to water.

"Locally (Lamb County), we're stuck in a situation of declining water. Cotton is not an option. Cotton is the only option. You either plant cotton or nothing. It's almost to that degree. Dryland or minimum irrigated wheat has very little potential for profit here," he said.

Carson noted the change in government funded insurance (RMA), which prohibits insuring a second crop unless you take a 65 percent reduction on the first crop, will hurt producers. Despite efforts of some cotton groups to change it, Carson said, "I think the new structuring is pretty well a done deal. That's what the guy who addressed the whole group (AFBF) on row crops indicated."

The Lamb County cotton grower said cotton appears to be in the second or third year of the down trend in a five to seven year cycle.

"Farm Bureau's position is that they should leave the farm bill alone, that they should leave loan rates structured like they are," he said.