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Cotton prices surge, growers amp up production in 2011

By TIM THORNBERRY
Kentucky Correspondent

MEMPHIS, Tenn. — When one thinks of major crops in the United States, it’s safe to presume images of corn and wheat fields pop up – but another crop, cotton, is making news as planting intentions increase and world supplies decrease.

Foreign producers such as China have seen their production numbers fall, while cotton prices have surged on commodity markets setting the stage for producers here to brush off their planting machinery and sow cotton on acres once used for other crops.

To understand where the crop stands, it helps to understand the organization behind it. According to information from the USDA, “the Cotton Research and Promotion Act of 1966 authorized a national cotton research and promotion program that is both industry-operated and funded, with oversight by the U.S. Department of Agriculture.

“The Act allows the Secretary of Agriculture to establish a board of cotton producers and importers or their representatives. The Cotton Board is responsible for carrying out an effective and continuous program of research and promotion in order to strengthen the competitive position of cotton by expanding domestic and foreign markets for cotton, improving fiber quality, and lowering costs of production.

“The program, including USDA administrative costs, is financed through producer and importer assessments, not taxpayer dollars.”

By law, the Cotton Board cannot have any government contact. That is the job of the National Cotton Council, the lobbying arm of the cotton industry in the U.S., said Brad Robb, vice president for communications at the Cotton Board.
The third entity of the industry is that of Cotton, Inc., the sister company of the Cotton Board that is funded by the assessments collected by the Board. It conducts the agricultural and marketing research. If you are familiar with the slogan, “The Fabric of Our Lives,” that is from the work of Cotton, Inc.
Once king of the South as far as agriculture goes, cotton took a downturn in the early 1970s thanks in part to the development of man-made fibers such as polyester.

“Cotton’s share of the retail market had dropped to almost 32 percent in the United States because of the introduction of those man-made synthetic, oil-based manufactured fibers,” said Robb. “Our old CEO of Cotton, Inc. said then that cotton was going the way of the buggy whip.”

With that cotton growers banded together and the marketing program including the cotton seal was created to counter the decline. By the end of the 70’s cotton use was again on the increase.

“Right now cotton’s share stands at 60 percent,” said Robb. “There are a lot of commodity checkoff programs in the country, but cotton is the benchmark and the most successful program as far as turning a program around.”

Robb added that the cotton industry would like to see that share grow and has used new textile technologies to create easy-care fabrics. But nowhere has the technology been more important than on the farm including research to reduce the use of pesticides.

“Producers use to have to really spray heavily to kill the boll weevil, but the Boll Weevil Eradication program finished up a couple of years ago and that eliminated sprays every year,” said Robb. “Monsanto came out with gene technology placed in cotton varieties that once a bug bites that cotton plant it dies. We’re spraying not one percent or more, but .1 percent of what we used to spray so we have a much more sustainable product now, farm-wise, than ever before. Sustainability is the key word for cotton today.”

While growers are seeing an upswing in production, the textile industry itself is suffering from cheap labor oversees. Most of the cotton produced here is slated to be sent out of the country.

“Ninety percent of the United States’ cotton is exported. At least eight years ago, our textile industry almost dried up because of the low wages that textile workers in foreign countries get,” said Robb. “They’ll work for pennies a day and the U.S. textile industry can’t compete with that. We’ve had to resign ourselves to the fact that our textile industry for the most part is not going to be here.”

Robb added that there are still many automated yarn spinners here, and that niche mills are beginning to pop up, but for the most part the industry is a fraction of what it used to be.

With that said, the main component to the equation right now is that the use of cotton remains on the increase and because it has, Robb said the price of cotton is strong due in part to lower carry-over supplies.

“Right now cotton prices are really strong because the world’s carry-over is so low. China had a horrible year growing cotton, they’ve had floods in India and the Australian crop is still water challenged,” he said

Robb pointed out that all these factors are pointing toward a big increase in cotton production for the coming year.

“When you’ve got cotton and .90, .95 and even a dollar a pound, you’re going to see a lot of people grow cotton,” he said.

And while the South has been the traditional home of cotton, there are some surprising places where cotton is being grown such as Kansas, Missouri and Kentucky. If the bottom line is any indication, there may be more states jumping on board. According to information from the National Cotton Council, the annual business revenue stimulated by cotton in the U.S. economy exceeds $120 billion, making cotton America’s number one value-added crop.

1/19/2011