Cotton Links

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Watershed Year

By Jess Barr
Monroe, La.

The Louisiana cotton industry experienced a watershed year in 2008, in more ways than one. Producers had already planned to reduce cotton plantings due to higher anticipated returns from corn and soybeans before a wet spring brought planting problems and prompted a further shift in cotton acreage. This combination of events helped reduce Louisiana cotton plantings to 285,000 acres – the lowest level since records began in 1866.

A summer drought followed, stressing crops and reducing cotton yields. Then the rains returned! A wet frontal system in mid-August brought excessive rainfall to many areas.

This system was followed by a string of three hurricanes – Fay, Gustav and Ike. Hurricane Gustav was the worst. It blew cotton from plants in southern areas and flooded southern, central and northeast cotton fields with 10 to 20 inches of rain. What Gustav largely missed, Hurricane Ike damaged. Many Louisiana cotton fields received more than 30 inches of rainfall between early August and early September, which caused severe hardlock and boll rot. This combination of events prompted USDA to cut 220,000 bales from our estimated crop, and many producers reported a yield loss of at least a bale per acre. To make matters worse, the weather also hurt crop quality.

In testimony before the Senate Agriculture Committee on Sept. 24, Commissioner of Agriculture and Forestry Mike Strain stated that “Louisiana agriculture faces unprecedented losses from Hurricanes Gustav and Ike. This is the largest natural disaster affecting agriculture, aquaculture, forestry and fisheries in our history.”

Several producers, with many crops under their belts, commented that this combination of events was worse than Hurricane Rita in 2005 and Hurricane Audrey in 1957.

Louisiana cotton producers aren’t the only ones hurting from the reduced crop. Our cotton infrastructure is also suffering. Due to reduced volume, seven gins decided not to run in 2008, with three closing after the damage from Hurricane Gustav was realized. The gins that are operating have reduced staff and are handling a small volume.

Many analysts are projecting another decline in cotton acres for 2009, as reduced demand prospects and adequate world stocks limit cotton prices. Economists and farmers alike are commenting that prices currently support more grain and less cotton for 2009.

However, the recent downturn in commodity prices may be the first step to restoring cotton area. Cotton never participated in the commodities boom fueled by a falling U.S. dollar and strong world grain demand, as ample world cotton supplies limited any price increase. Many producers are anticipating a fight for grain acres later this winter, but what if it does not materialize and grain prices hold steady or even decline? With no commodity showing a distinct return advantage, cotton should warrant consideration.

Louisiana has seen reductions in cotton acreage before, as have many Mid-South states. In the early 1970s, the lure of better returns prompted producers to move cotton acreage into soybeans. It lasted a couple of years before cotton acreage rebounded. It is noteworthy that both of these short-term lows in cotton acreage followed major recessions in 1973-74 and 1980-82.

While some increase in grain acreage may be here to stay, Louisiana producers will move back to cotton as profitability returns – and it will. Hopefully, 2008 will mark the turning point for Louisiana cotton acreage, but we may have to suffer through one more year of reduced plantings before the economic cycle adjusts. Cotton has a long history in Louisiana of being the crop that pays the bills. Stick around, cotton will be back!

– Jess Barr, Monroe, La.

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