Trade War's Forgotten Farmers Get Crushed in U.S. Cotton Country
Trade War's Forgotten Farmers Get Crushed in U.S. Cotton Country

Trade War's Forgotten Farmers Get Crushed in U.S. Cotton Country

A- A+
Το περιεχόμενο του άρθρου δεν είναι διαθέσιμο στη γλώσσα που έχετε επιλέξει και ως εκ τούτου το εμφανίζουμε στην αυθεντική του εκδοχή. Μπορείτε να χρησιμοποιήσετε την υπηρεσία Google Translate για να το μεταφράσετε.

Marvin G. Perez 

American cotton farmers are having such a difficult year that even a potential trade deal between the U.S. and China is likely to offer them little comfort.

That would have been unthinkable just a few months ago for Jeremy Brown, a fourth-generation cotton grower in Texas who began the year full of optimism. While a spring deluge was disrupting planting of other crops such as corn and soybean, it brought welcome moisture to typically dry soil in the Lone Star state. Prices were also rallying after a smaller crop the previous season.

Then the weather turned, with scorching heat damaging crops. The persistent trade war between Washington and Beijing choked U.S. exports to China, the world’s top cotton buyer. Global output boomed with help from Brazil, which is eating into American market share. Now, even though the farmers are included in a multi-billion dollar aid package to mitigate the impact of tariffs, the outlook for demand and the harvest is bleak.

“It’s just horrible,” 39-year-old Brown said from Lubbock, Texas, the heart of U.S. cotton.

While soybeans have become a poster child of the trade war, with everyone from U.S. President Donald Trump to Treasury Secretary Steven Mnuchin opining over the oilseed, cotton is one of the unsung victims of the tit-for-tat tariff battle. Only about 14 million acres of the fiber were planted across states including Texas, Georgia and Mississippi in the current season, compared with 76.5 million for soybeans and almost 90 million for corn.

The U.S. is the world’s top shipper of the fiber and more than three-quarters of the domestic crop goes into exports, which are heavily dependent on Chinese purchases. Even if Beijing and Washington strike a deal, the outlook for global demand is shaky and the harvest isn’t looking encouraging.

The favorable rain early in the season gave growers the confidence to sow a crop that’s forecast to be 13% larger than the previous year. But while the area planted was larger, the amount farmers will get from each acre -- the yield -- is being hurt by the summer’s heat.

a screenshot of a video game: Asian nation has cut U.S. imports amid trade war and as its economy slows© Bloomberg Asian nation has cut U.S. imports amid trade war and as its economy slows

“This is the worst crop I ever had,” said Brown. “It’s not just me, everybody around here is going through the same. The summer turned so hot and dry. My yields are 50% to 60% off. The cotton is just not there. The quality is not good.”

Whatever demand is prevailing across the globe is increasingly drawing exports from Brazil, where a slumping local currency is making its supply more alluring versus U.S. fiber. That means less revenue across the board for American suppliers, particularly in Texas, the biggest U.S. cotton producer and where it’s key to the agricultural economy.

The forecast supply from this season’s crop is expected to boost domestic stockpiles to the most since 2009. That will weigh on cotton futures, which fell 8.2% last year and are down about 10% this year. They are trading near 65 cents a pound, down from about 93 cents in June 2018.

“This is going to be one of most stressful, if not the most stressful year, financially, for growers,” Shawn Wade, the director of policy analysis and research at Lubbock-based Plains Cotton Growers Inc., a group that represents farmers across 42 counties. Even with the Trump administration’s aid to farmers to mitigate the impact of the trade war, producers will struggle to break even and meet debt payments, he said.

a screenshot of a cell phone: U.S. will have large stockpiles even as China replenishes its ebbing reserves© Bloomberg U.S. will have large stockpiles even as China replenishes its ebbing reserves

Brown, the farmer, estimates his yield this year will be about 800 pounds (363 kilograms) per acre, down from 1,500 in the prior period. Meanwhile, Jon Whatley -- a 50-year-old fourth-generation farmer -- planted 2,800 acres and reaped about 1,000 pounds an acre, considered above average. Yet, current prices barely cover his costs and he plans to reduce inputs, labor and eliminate new equipment purchases.

China imported as much as 9.1 million 480-pound bales from the U.S. in 2005-06, but took only 1.6 million last year, said Jon Devine, an economist with Cary, North Carolina-based researcher Cotton Inc. So there is room for growth if the trade dispute is resolved, he said.

“If we don’t see prices get back up over 70 cents in the next few months, we can expect decreases in acreage for 2020-21,” Devine said. In its baseline projection for 2020, the U.S. Agriculture Department estimates a decline in American cotton plantings of almost 13% versus this year.

“The 2019 growing season began with the promise of ample moisture and potential productivity, but it ended with challenges,” said John Robinson, a professor of agricultural economics at Texas A&M University who has tracked the market over a decade. “Foreign and U.S. crops are still large enough to result in large, fundamentally bearish ending stocks. I don’t see what will change that. Even a trade agreement, if it were to happen, wouldn’t.”

Brown is still holding out hope for a deal.

“China is a huge buyer of cotton. At the end of the day is all about supply and demand, and you gotta have demand,” he said. “I am hopeful when all is said and done, we will have a better deal for cotton.”


Πηγή: Bloomberg

Tags

newsletter

Εγγραφείτε στο καθημερινό μας newsletter