ItΆs been the topic of conversation in coffee shops and farm offices for at least a couple of months. And, as cotton producers across the Belt prepare to plant this yearΆs crop, those same conversations continue. Will higher prices translate to additional planted cotton acreage in 2013?
Most of the experts say “yes.” Industry leaders and farmers were certainly talking about this possibility at last monthΆs Mid-South Farm & Gin Show in Memphis, Tenn. The talk continues even now as producers in many regions are just weeks away from final planting decisions.
Nobody is saying that the additional cotton acres will drastically cut into corn and soybean acreage, but any increases in cotton will be welcomed in many circles.
By late March, cotton prices had inched into the 87-cent range. Most marketing analysts say that price level should be enough to increase cotton acres. But others say the price levels need to move into the 90- to 95-cent range for large acreage switches.
“Anytime we can see an increase in cotton acres it is a plus,” says Darrin Dodds, Mississippi Extension cotton specialist. “I have talked to some local dealers in our state, and they say they are seeing some cotton acres coming back because of the price increase.”
Agreement With NCC Report
Dodds agrees with the National Cotton CouncilΆs planting intentions report issued in February. That report projected 199,000 planted acres for Mississippi in 2013. He says itΆs relatively easy to understand the potential acreage shifts.
When a producer can receive an attractive rebate from a gin ($50 per bale) and then couple it with 86- or 87-cent cotton, “at least it puts it into your thought process,” says Dodds.
Although cotton acreage reductions are projected for all regions of the Belt, the most significant dropoff is predicted for the Mid-South. While it might seem difficult for an outsider to understand, Dodds says this decrease in cotton acreage is due to the regionΆs flexibility in what it plants.
In the Mid-South, there is more access to irrigation, and producers know how to take advantage of market prices by switching acres among cotton, corn and soybeans.
Dodds doesnΆt claim to be an economist, but he says the feedback he is receiving from some producers is that it will take a price between 95 cents and a dollar for producers to become significantly committed to cotton.
“The 86- to 90-cent range is enough to keep a few more acres,” he says. “To really have an impact, I am hearing that we need to get between 95 cents and a dollar.”
However, other factors must be weighed in the final equation, according to Dodds. Better cotton prices and attractive gin rebates are positive signals for planting more cotton. But, as he points out, additional scenarios affect the cost of planting cotton.
Expensive To Grow Cotton
In the Mississippi Delta, for example, it costs about $650 to $750 per acre to grow cotton, according to Dodds. This includes spraying for plant bugs, troublesome resistant weeds, as well as applying defoliants and other inputs. While corn can also be an expensive crop, its higher prices can more than offset many of its input costs. CottonΆs biggest competition for acres might be soybeans.
“You can grow an entire soybean crop in the Delta for $300 an acre if you have good access to water,” says Dodds. “When you go to a lender in a tight economy, thatΆs definitelya consideration.”
Another factor that could impact how much cotton acreage can be regained in any region might pertain to availability of equipment. Many producers have already sold their planters and harvesters when they switched to grain crops and may not deem it wise to reverse their decisions.
Dodds believes every production region has a distinctive and unique way of growing cotton. That is brought about because of different environments such as soil types, water availability, grain competition and other factors. So, the motivation to produce cotton can be very different in the Southeast, Mid-South, Southwest and the West.
“My advice to producers is to keep cotton in the mix,” says Dodds. “There is still a potential for profit in this price range.
“Also keep in mind that cotton can hang on in tougher environmental conditions when compared to many other crops.”
