Farmers who chose to plant cotton this year found themselves in the proverbial high cotton, as prices soared to historic levels, reaching as high as $1.50 a pound. Projections have cotton priced at $1.40 in March of 2011, and about 96 cents a year from now, when Texas farmers will be selling it.
That recent history and those projections have a lot of grain farmers contemplating the notion of becoming cotton farmers too. As a result, cotton acreage is expected to increase in Texas and across the country. Texas is already the largest cotton producer in the country with almost a quarter of the nation’s cotton production in the Panhandle.
About 6 million acres of Texas land was planted in cotton in 2010, an increase of about a million acres over 2009. In the eastern and southern regions, including the Lower Rio Grande Valley and the Southern Blacklands, 672,000 acres were planted in 2010. That acreage is expected to increase again in 2011.
Jason Johnson, an agriculture economist with Texas AgriLife Extension, said recent prices are up 200 percent over the low and are as high as they have been since 1870 or, to put it in perspective, six years after the Civil War.
"Cotton has gone from below 70 cents to $1.50, and could run back down to 50 or 60 cents," he said. "The normal supply-and-demand factors aren’t at work here because if they were, prices wouldn’t be as high as they are now. Price volatility gives the opportunity to do something. As a producer, I don’t mind that."
The state’s cotton specialist, Gaylon Morgan, said that the South Plains, the most prolific cotton producing region in the state, enjoyed not only high prices but exceptional yields this year.
"There was very little abandonment of fields this year," he said. "They had pretty good weather conditions. Some farmers lost some cotton to hail, but overall it was a good year for about everybody."
Morgan said that people considering cotton for the first time should realize that issues such as compliance with the Boll Weevil Eradication Plan, the management of "volunteer" cotton and seed availability will have to be addressed.
"We’ve made good progress with the boll weevil and we don’t want to go backwards because one field wasn’t accounted for," Morgan said.
Part of the Boll Weevil Eradication program includes the destruction of any non-commercial or "volunteer cotton" that takes hold in empty fields or in fields planted in other crops. The only exception is for cotton research, demonstrations or education. The volunteer cotton can be destroyed through cultivation or herbicides.
The boll weevil program is primarily producer-funded, and it’s not the only extra cost associated with growing cotton. The Risk Management Agency (RMA) of the U.S. Department of Agriculture estimates the cost of cotton production at between $345 and $389 per acre. At 80 cents a pound and assuming a yield of 600 pounds an acre, the producer could expect to show a good profit with cotton, Johnson said.
"If a farmer can lock those prices in and can produce 600 pounds, it could be a good move," Johnson said. "The important thing is to know beforehand what it’s going to cost you to plant cotton before you make that decision."
Along with that decision comes other decisions, such as which varieties to plant and whether to plant conventional cotton or the more popular biotech varieties. The transgenic varieties accounted for 93.4 percent of the state acreage in 2010. Transgenic acreage has gradually increased from 87 percent of the state acreage in 2007 to where it is today but Morgan added that some of the conventional varieties have also produced good yields of high quality cotton.
The FiberMax variety was the most common variety on Texas cotton farms this year, Morgan said. A list of varieties and the results of variety trials is available at http://varietytesting.tamu.edu.
Factors to consider when choosing a variety are yields, weight and the limiting factors to production at each location, Morgan said. New varieties are in the pipeline and researchers are working to solve emerging problems with cotton, such as glysophate resistant water hemp in cotton.
"Remember too that 80 percent of our cotton is exported, so you have to keep in mind fiber quality," Morgan said.
Morgan said that the most common questions from producers about the high cotton prices concern the question of whether or not to grow more cotton if they have grown it in the past, or whether to switch part of their acreage to cotton if they haven’t grow it recently or ever.
The general public has a different concern.
"They want to know what the impact of these prices on clothing will be," he said. "It’s not as much as people think. You can make 215 pairs of blue jeans from a bale of cotton. That might increase the cost 60 cents to $1.20. A lot of people worry that prices like we’re seeing now will send the cost of clothing through the roof, and that’s just not the case."