Tuesday, November 17, 2015

Cotton, once king in the South, expected to hit 150-year lows in some Southern states

Cotton farming continues its steady decline, especially in the South, where it was once king, Chris Prentice reports for Reuters. Harvesters in Mississippi, Tennessee, Alabama and Arkansas this year expect to harvest some of their smallest crops since the year after the Civil War ended. Overall, U.S. farmers this year planted the fewest acres of cotton since 1983, according to the U.S. Department of Agriculture. There are now 18,000 cotton farms in the U.S., a 50 percent drop in the past 20 years.

"The farm law that passed last year phased out payments to farmers of many crops, leaving growers more exposed to market conditions," Prentice writes. "This year marks the first the U.S. cotton farmers are getting by without a subsidy program that had long been the subject of a trade dispute between Washington and Brazil. Washington paid $300 million to Brazil to settle the subsidy squabble and agreed to stop subsidy payment programs to cotton farms that totaled about $576 million in fiscal 2013, according to Congressional Budget Office estimates."

It's now getting too costly to grow cotton, Prentice writes. The price of cotton is currently about 60 cents, down 35 cents from 2014 highs. Also, demand is down, "with global consumption down 9 percent from a peak of 122.5 million bales nine years ago. The industry's most pervasive worry ultimately is not cost, but consumption. Cotton has struggled to recover demand lost amid price spikes in 2008, 2010 and 2011, which drove consumers toward clothes made of other fibers, such as polyester and nylon." (USDA map)

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