Cotton shrinks in state

With prices low, farmers growing other crops

Machines pick cotton in a Chicot County field during last year’s harvest in this photo provided by the University of Arkansas System Division of Agriculture.
Machines pick cotton in a Chicot County field during last year’s harvest in this photo provided by the University of Arkansas System Division of Agriculture.

— Arkansas’ cotton gins are looking at a grim future with an expected plunge in cotton acreage this year as farmers turn to more-profitable crops such as soybeans and corn.

Two of the three cotton gins in Phillips County are considering forgoing cotton processing this year, said Robert Goodson, a county extension agent with the University of Arkansas Division of Agriculture. One of the gins processed about 40,000 bales of cotton last year.

The ginners’ decision to curb operations comes as cotton acreage in Phillips County is expected to drop from an average of 35,000 acres last year to 5,000 acres this year, Goodson said.

The decline in cotton acreage in Phillips County is following a state and national trend. Cotton acreage in Arkansas is expected to hit an all-time low this year.

The National Cotton Council of America estimates that Arkansas’ cotton plantings will drop to an estimated 221,000 acres, down 62.9 percent from the 595,000 planted last year and far below the previous record low of 320,000 acres planted in 1983. Cotton fields totaled more than 2.7 million acres in 1947, according to records kept by the U.S. Department of Agriculture.

“The gins will especially suffer due to the lack of acres,” Goodson said, which will reduce the amount of full- and part-time labor needed to grow and process the crop. The 43 cotton gins in the state separate cotton fibers from seeds.

While cotton production in Arkansas has declined in recent years, production has increased elsewhere in the country.

Arkansas produced an estimated 1.27 million 480-pound bales in 2012, down from 1.28 million in 2011. Overall U.S. production for 2012 is estimated at 17.4 million bales, compared with 15.6 million bales for 2011.

One company that uses cottonseed to make oil, Planters Cotton Oil Mill Inc. in Pine Bluff, is looking at possibly laying off some workers because its production will be hampered if ginners process less cotton, said John Fricke, president of the company.

“There is the possibility, when you have a reduction like this you could see layoffs,” he said. “If we have a modified run time, we could see a need for not as many people.”

Fricke said the plant employs 85 people.

“You will see that our seed stock supply, by virtue of acres being down 50 percent, should be down 50 percent as well,” he said. “It’s going to have a big impact on us and others. I just hope it’s not a long-term effect.”

Arkansas farmers are cutting back on cotton this year, because market prices dropped 30 percent to about 66 cents per pound in 2012. In 2011, the price of cotton was about 95 cents per pound, according to the U.S. Department of Agriculture’s National Agricultural Statistics Service.

Nationwide, the average market price for cotton last year fell 21.8 percent to 73 cents per pound, which is expected to decrease cotton plantings this year by 26.8 percent to 9 million acres.

Also, China is putting pressure on U.S. cotton farmers by stocking reserves, according to the National Cotton Council.

“They are just holding it so it’s cotton that is not available to the market,” said John Robinson, professor for the Department of Agriculture Economics at Texas A&M University. “So the price that we have now is artificially high, so people are wondering what will happen if the Chinese government releases that cotton.”

He said that market distortion is creating uncertainty about future cotton prices.

“If they were to dump it, prices would plunge,” Robinson said, adding that if that were to happen, there would be even less cotton grown in 2014 and 2015.

Arkansas’ U.S. Rep. Rick Crawford, a Republican who serves on the House Agriculture Committee, said farmers in general need a long-term farm bill that would give them more certainty about federal support.

“The biggest threat facing cotton farmers and farm families across the country is the uncertainty that comes for short-term farm policy,” he said in an e-mail.

The current farm bill, which was extended to Sept. 30 as part of a budget deal reached by federal lawmakers in January, governs food assistance to poor families and crop subsidies to farmers. The current bill was signed into law in 2008, and lawmakers have been unable to agree on a long-term renewal of it.

China’s cotton inventory and other stores will help minimize the less-cotton grown immediate impact on consumers, said Kim Kitchings, vice president of corporate strategy for Cotton Inc.

“In this case right now we have some inventories and not a shortage of cotton,” she said. “[The low-crop impact] depends on how long this shift away from acreage continues.”

Farmers are shifting their focus from cotton to crops such as soybeans and corn, which have increased in price and cost less to grow.

In 2012, the market price of soybeans increased by 17 percent to $14.40 a bushel, and corn rose 11 percent to $6.95 bushel, according to the statistics service.

“Because of the market price received, they are just more attractive to grow versus cotton right now,” said Tom Barber, associate professor and extension weed specialist for the University of Arkansas. “In a lot of places, it might also be cheaper to grow.”

Goodson said more-profitable crops such as soybeans and corn will replace cotton in many fields in Phillips County. The county, which normally has about 225,000 acres of soybeans, is projected to have 230,000 acres this year. Corn is predicted to increase from 35,000 acres to 50,000 acres.

Cotton requires more machine labor than other crops do, which adds to the cost of growing and harvesting it. So while soybean and corn prices have become more profitable for farmers, cotton has become an expensive investment, said Randy Veach, president of the Arkansas Farm Bureau.

“Instead of making those investments now, they can actually move the other direction into a grain operation and not have to make that big investment and keep up with equipment needed for cotton,” Veach said.

Veach, who has a 3,000-acre farm in Manila, said he will be planting corn, soybeans and some wheat in fields that used to grow cotton.

“We’ve probably cut back on cotton about 50 percent last year, and it will be about the same this year,” he said.

Veach said that while he is cutting back on cotton, he doesn’t think Mississippi County, where his farm is and where about a third of the state’s cotton is grown, will see a decline in acreage this year compared with the rest of the state.

“What you are going to see is the decline in cotton acreage in the rest of the state is going to be real significant, but in my town there is going to be a lot of cotton grown,” he said. “The reason the cotton is really entrenched in our county, in Mississippi County, is we have large gins.The land is really suited for cotton.”

But, he said, other areas of the state might see their cotton gins close. They are expensive to rebuild, and that will make it difficult for the counties to get back into growing cotton in the future.

Butch Calhoun, Arkansas’ secretary of agriculture, said he is concerned about the drop in Arkansas’ cotton acreage, especially if it means that the state will lose some cotton-growing infrastructure. He said he has already heard of one gin that has shut down.

“Last year was the first year since the ’40s that we had more corn than we did cotton,” he said. “What we need is the price on cotton to rebound so we can replant the acres because we have some of the best cotton acres.”

Front Section, Pages 1 on 03/03/2013

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