March 4, 2010
Many farmers are shifting to cotton production due to pricing and water-use concerns.
Southwestern cotton farming will rebound with a nice growth spurt over the next few years, the most recent national analysis suggests.
From the early ‘90s to mid-decade, national cotton production was running full bore, jumping more than 11 percent. That pattern stopped in 2006, said Darren Hudson, lead author of the new analysis and director of Texas Tech’s Cotton Economics Research Institute in Lubbock.
“Earlier this decade, many farmers moved from a pure cotton monoculture to rotations that included corn and soybeans, partly because of agronomic reasons but primarily due to price movement,” Hudson said.
Reduced cotton acres ultimately meant lower cotton production. Average number of bales processed per gin in the United States dropped from a high of 26,920 bales in 2006 to 17,453 in 2008.
Texas Tech researchers are now forecasting that while 4.6 million acres of cotton will go into the ground here in the Southwest region this season, they’re predicting that number should climb to 5.57 million acres by 2018.
The analysis uses data from the Texas Tech World Fiber Model, a long-term series of projections founded on assumptions about normal weather patterns, current trade policies, and stable economic fundamentals such as population and income growth, and prices for crops in market competition with cotton.
“Texas, Oklahoma and Kansas will be leaders,” Hudson said. “We may not be near when we were at 12 or 13 million acres nationally, but the Southwest region will still be a dominant region.”
One reason for the change is a shift back to cotton from corn, partly because of the price ratio, but also because of water-use concerns. Farmers can still make a crop on dry land with cotton, he said.
There’s also hope for other parts of the Cotton Belt, Hudson said. In some areas, production might shift from peanuts to cotton.
Separately, the Texas Tech economists found that over the next 10-15 years, global production will most likely begin to transition away from current production leaders. China and India are large producers of cotton now, but have large and hungry populations to feed.
“How can they rationalize using acres to produce an industrial crop when they need food?” asked Hudson.
A plateau in ethanol production also will help in a transition back to cotton acreage. Alternative crops like corn and soybeans still have high prices, but not nearly as high as they once were relative to cotton. Farmers are transitioning back, Hudson said, due primarily to fossil fuel prices and the fact that ethanol has lost much of its market luster.
Key to cotton’s new growth will be domestic and international policy decisions.
“Policy will drive planting decisions more so than anything else,” he said.
CERI provides cotton economic analysis for policymakers and others interested in agricultural economy. The group conducts economic research on all aspects of cotton production, marketing, trade and processing.