Low price, lack of a safety net, competition, and China stockpile offer challenges to U.S. cotton producers for coming year
The U.S. cotton industry will continue to push for cottonseed designated as an “other oilseed;” Cotton Incorporated sees areas of optimism along with serious challenges; and U.S. cotton acreage will increase for 2016.
Speakers at the National Cotton CouncilΆs annual meeting in Dallas, Texas, painted a mostly grim picture for cotton going into the 2016 season: Low prices; the increasingly likely possibility China will release some of its cotton stocks onto the market this spring; and the Secretary of AgricultureΆs rejection of cottonseed as an “other oilseed” all are challenges facing cotton producers.
Keynote speaker Rep. Mike Conaway, R-Texas, chairman of the House Agriculture Committee, says the cottonseed as an other oilseed issue is not dead. “The fight is not over. The Committee believes the secretary has the authority to make the designation.”
Conaway says he and others on the committee, along with cotton industry representatives, continue to discuss the possibilities with Secretary of Agriculture Tom Vilsack, who, he says, is aware of the importance of cotton and the challenges facing the industry.
“Our lawyers say it is permitted under the farm bill and his lawyers say it is not,” Conaway added in a press briefing following his official remarks. “We tend to listen to the lawyers we are paying.”
Shawn Holladay, president, Pains Cotton Growers, says the industry will continue to push for the oilseed designation, which would offer growers support under the Price Loss Coverage or Agricultural Risk Coverage programs of the Agriculture Act of 2014.
For some West Texas farmers, the “situation is dire. Some will not be able to get financing for the 2016 crop,” he noted. Support under ARC or PLC would offer incentives for lending agencies to finance production costs.
Conaway urged growers to “keep doing what youΆre doing—write letters, communicate and pass any suggestions you have to us. We need action.”
Jody Campiche, NCC vice president, economics and policy analysis, offered more reason for concern, even as a December-through-January survey show growers intend to increase cotton acreage to 9.1 million acres in 2016. See planting report coverage.
Depending on the region, those additional acres will replace wheat, peanuts, corn, soybeans, and grain sorghum. In South Texas, where acreage is expected to increase significantly, the bump will come mostly from acreage not planted last year due to excessive spring rainfall.
Dr. Campiche says cotton consumption has improved over the last five years but not enough to offset the effect of large stocks. She also notes that China is expected to release some of the large stockpile of cotton theyΆve held for several years at prices consistent with 2016 markets. “That will be bearish for prices.”
Challenges going into 2016, she adds, include sluggish demand, low prices for other commodities, and reduced consumption in China. “The outlook is not promising for (cotton) producers in 2016.”
