Research at Texas Tech Vital to Continued Upswing in Cotton Production
In cotton's long history as a staple commodity and essential component to the economy in Texas, and especially the High Plains, it's not unusual to see gins running well into January and February with numerous modules still on their lots waiting to be processed.
There were recent times, however, where it was unusual. The popularity of other crops and the movement toward planting and harvesting crops that require less water meant a reduction in the planted and harvested acreage of a crop in cotton that has been so crucial to generations of families in the state.
Now, however, it appears cotton is making a strong push back to the top of the agricultural mountain. In just the last two years, the number of acres of cotton planted in the United States has increased by almost 2.5 million to more than 10 million, and thanks to outstanding yields in most areas of the country, that number is expected to grow even more for 2017.
“Conventional wisdom is that the yield out here in 2016 was significantly higher than people thought it would be back in August because we had that really good, warm fall,” said Darren Hudson, a professor and Larry Combest Chair in the Texas Tech University Department of Agricultural and Applied Economics. “So conventional wisdom says that will push prices down because we got more cotton than we thought we would. But the prices continue to go up, which means there is something else going on out there in the market that isn't particularly affected by the larger-than-anticipated crop.”
The work of researchers at Texas Tech and its College of Agricultural Sciences & Natural Resources plays a critical role in the production of cotton, both from an economic and biological standpoint.
Predicting the marketplace
Hudson is a member of the Food and Agricultural Policy Research Institute (FAPRI) through the University of Missouri. FAPRI is a consortium funded by a congressional grant from the chief economist of the United States Department of Agriculture that assists in setting crop estimate projections each year.
Early estimates for 2017, according to the annual Cotton Grower Acreage Survey, call for a further increase in the nationwide number of planted acres for cotton to more than 10.8 million, with an increase in Texas to just shy of 6 million acres.
“If we get 500,000 to 1 million additional acres planted, that will probably put some downward pressure on price,” Hudson said. “It depends on how much we make. If we add 500,000 acres but went back to historical rates of abandonment (the amount of cotton that is planted but not harvested due to factors such as severe weather conditions), the net increase in production will be small, and the effect on market price will be pretty low if anything at all.
“If we have another crop like this year, we could see significantly more cotton, which should put pressure on price. The most likely scenario will be a drop in farm prices this coming year because of additional production, but then we're back on a path where we see a gradual increase in price over the next several years.”
Hudson said two factors are linked to whether planting the additional acres becomes economically advantageous for farmers. The first factor is overall economic growth in the country, which right now has been more robust than originally predicted, around 3 percent in the last quarter of 2016. That could provide some pressure seen in the price of cotton.
The other factor, Hudson said, is the rise in polyester prices due to a number of smaller factors. He said as polyester prices continue to rise, more and more manufacturers will trend back to substituting cotton into their fabric mix.
“We don't even have to have a large increase in the total demand for apparel,” Hudson said. “But if the fabric mix changes, we could see that. What you don't want to see is too much of it because then the cotton price begins to rise relative to the polyester price, and we just go back in the other direction.”
Hudson said there seems to be enough strength in the price of polyester that the price of cotton will also rise, but will remain in a “sweet spot” of keeping the fabric mix where it is not trending more toward cotton.
Another factor in cotton production is when and where the price of cotton is set. Hudson would like to see more cotton producers take advantage of committing to planting cotton with the intent of selling it at a set price determined before it is planted. That protects farmers from being too adversely affected if the price drops after planting. Plus, manufacturers desire to sign up cotton producers as quickly as possible in order to set up and stabilize supply chains.
However, that approach doesn't have much momentum because, at current prices, cotton producers are willing to gamble. They could plant the extra 500,000 acres and, if the cotton crop of India takes a downturn due to a lack of monsoon rains, for example, then the price of American cotton would rise due to the supply chain being disrupted.
Corn and sorghum futures have also dipped after a big push toward planting the crops that do not require as much irrigation.
“In this area, especially, corn is a risky crop because it takes a lot of water, and a lot of farmers are on the margin of having enough water to be able to grow corn crops,” Hudson said. “When corn prices were really high, they would risk it because, even at diminished yields, it would still be more profitable. But now there's no real comparison for our area.”
Cotton prices also could be affected by the actions of a Donald Trump presidency still in its relative infancy but that has also had difficulty fulfilling some of its campaign promises, such as repealing the Affordable Care Act.
One of Trump's biggest campaign promises was to renegotiate what he termed bad trade deals, such as the North American Free Trade Agreement (NAFTA) and the Trans-Pacific Partnership (TPP), which never saw the light of day. But Hudson said trade agreements like NAFTA and others have generally proven prosperous for agriculture in general.
“Renegotiating those may not be in the best interest of agriculture,” Hudson said. “We've gotten pretty good deals out of those. What he's doing is making free trade agreements with big future customers of cotton like Vietnam, Bangladesh and Thailand, those places that have seen exponential growth in cotton consumption.”
Hudson said consumption has risen in those countries due to lower wages luring cotton spinning production out of China, and that the TPP would have solidified that relationship with China. But he added Trump is naïve to think he's going to open up trade agreements and renegotiate them with the intent of giving the U.S. all the advantages because countries like Canada and Mexico have their demands, too, and are going to negotiate in their best interests as well.
For Hudson, however, there's something else to consider.
“I think the bigger issue for agriculture and cotton, because we are so export-oriented, is what happens to the value of the U.S. dollar,” Hudson said. “Some of the trade agreements he wants to renegotiate will likely strengthen the value of the U.S. dollar compared to other currency, which means our exports will be less competitive worldwide.
“There are some of those things that are just unknowns that are hard to model.”
Biology and technology
In addition to economic factors, Texas Tech also plays a key role in the technological advancements made on a daily basis that help produce bigger yields.
Mostly, that comes in the form of enhancements in varieties of cotton as well as in herbicides used to control weeds and pests that destroy cotton crops.
“We are continually testing cotton varieties to see how well commercially available products perform in fields with a history of certain pests,” said Jason Woodward, an associate professor of plant pathology in the Department of Plant and Soil Science. “For example, root-knot nematode resistance was identified 40 years ago; however, yield and quality was lower than commercially available varieties. We are currently evaluating varieties that have improved nematode resistance in addition to high yield potential and better quality, which makes them more productive on some of those acres that may have been marginal in the past.”
While the various varieties of cotton are important, the biggest possible advancement in terms of weed and pest management could come in the development of herbicides that were originally discovered 50-70 years ago.
Pete Dotray, a Rockwell professor and Extension Weed Specialist in the Department of Plant and Soil Science, said there are unique cotton germplasms that were initially available last year and will again be planted this year that can be sprayed with new registered herbicides that won't harm the crops while killing many difficult-to-control broadleaf weeds, including glyphostate-resistant Palmer amaranth.
Herbicides 2,4-D and dicamba, he said, were discovered and first used in the but were harmful to any cotton grown close by. But through biotechnology and proof of concept research, some of which Texas Tech has been involved in, cotton germplasm exists that will tolerate both those herbicides, similar to the development of Roundup-resistant cotton 20 years ago.
“We've got folks who are ready to plant cotton seed and spray these new formulations of dicamba and 2,4-D in a way that has never been seen before,” Dotray said. “We've made a point to highlight the new herbicides at all multi-county and single-county meetings this spring to discuss the benefits of this new technology, which includes the ability to control glyphostate-resistant Palmer amaranth, which first showed up on the High Plains in 2011.”
But Dotray said there is an initial small window for these herbicides to be used correctly in order for this technology to be available long term. Within two years, he said, the new herbicide technology could be removed from use if it is not used correctly in the initial launch years.
Dotray added the new advancements do not mean old, trusted methods of weed control and herbicide use are becoming obsolete, but that this just provides a new option for farmers, and the key will be figuring out how to get them to co-exist to the betterment of the cotton industry.
Woodward said the advancement in the germplasm that can tolerate these two pesticides may open up acreage on the Northern High Plains that previously had issues growing cotton where 2,4-D was used in other crops.
Certain pests associated with competing crops also have played a factor in the uptick in cotton production. The increase of the sugarcane aphid, Woodard said, has hurt the popularity of planting sorghum and given rise to the popularity once again of cotton.
Dotray said there doesn't appear to be much technology in the pipeline in terms of discovering a brand new herbicide in the near future, but Woodward feels there is an opportunity to look for advancements in the cotton genome and unlock the potential within different types of crops.
“Resources available at the federal level are being used to fund research related to better understanding what is going on at that genomic level,” Woodward said. “I think that is where some of the fruits of the labor from the last several years will come into play.
When it comes to research of that nature, Texas Tech's partnerships play a crucial role in providing funding. Texas Tech has very strong relationships both with Bayer CropScience. Monsanto, BASF, DuPont and Dow Phytogen.
“As cotton continues to expand in this region and in importance, I think those sectors of the cotton industry need to continue to collaborate and work together, and we are part of training the next generation of producers and the next generation to be employed by our industry partners,” Dotray said. “This is a great opportunity for us to more easily sit around the table and talk about what the challenges will be and the things we'll have to do to solve these problems.”
Dotray said that relationship works both ways because it allows those companies to use students as resources and provide them valuable experience that will be crucial toward gaining employment in the field after graduation.
That next generation will be tasked with being forward-thinking when it comes to future innovations, whether it's in the physiology of the crops themselves or the development of technology that allows for the most efficient pest and weed control possible.
“I think we're doing a good job of controlling the pests, or in my case, controlling the weeds,” Dotray said. “The next step may be instrumentation that will rapidly identify the different weeds that are growing in the field, and at the same time injecting the appropriate herbicide or herbicide mix that will best control each individual weed. I am seeing some potential advances in this idea already and the future may not be too far away.”