Ups and downs in cotton prices worry SC farmers

The Associated PressFebruary 25, 2013 

— Carl Brown Jr.’s home is surrounded by soil that will later turn into snow white fields of cotton. A wreath decorated with some of the fluffy fibers hangs above his fireplace, and a few long stems with the soft blooms stick up from a vase in the corner of his sitting room.

During the summer months, it isn’t hard to find fields of cotton lining the highways in Aiken County. The cotton industry, which has a long, lucrative history in this area, is still going strong.

But, although cotton farmers throughout South Carolina experienced a record year in 2012, there’s concern about the future of the industry in the United States in general as worldwide production has also spiked.

Brown, a member of the state Cotton Board, said 2012 was a good year for him and many other local cotton farmers. Brown harvested approximately 1,000 acres and last year’s yield was above average.

According to Clemson University, an average of 918 pounds of cotton per acre was produced in 2012, which set a state record – an average South Carolina crop produces about 750 pounds per acre.

But, according to Brown, cotton is about 80 cents per pound. The price is down from an average of $2 just two years ago. The high price of cotton put pressure on mills and merchandisers, which caused a bit of panic.

“It really hurt us. The cure for high prices is high prices,” Brown said. “Two-dollar cotton was something nice to contemplate, but the reality was we’d be better off if it didn’t get that high because our customers would have been able to cope with it much better.”

In today’s market, the United States is the third largest cotton producer in the world, with India ahead at second. China is the No. 1 producer and consumer of cotton, Brown said.

Brown said two out of 10 cotton bales are used in US mills as the textile industry is declining around the country. In the 1970s and 1980s, about seven out of 10 bales were used in the United States, he said..

“Every 100 bales I produce, 80 of them have to be put in a container to be shipped,” Brown said. “That’s an average.”

The Chinese government supports its cotton prices at about $1.30 a pound, and it can buy cotton on the world market for approximately 80 cents.

The product can then be used more cheaply than what’s produced by their own crops in China, Brown said.

What really has cotton farmers concerned is the fact that China is stockpiling its cotton supply. Brown said it’s been indicated that China has nearly enough cotton reserved that, by the end of this year, it may not need to purchase cotton from other countries, which could negatively impact farmers in the United States.

“If they start releasing these reserves, we could see 50 cent cotton,” Brown said. “If cotton price were 50 cents right now, and the production costs remain the same, you might as well park your equipment, pay your rent (of the fields) and take a vacation.”

With cotton prices dropping and the costs of seed, fuel and fertilizer going up, this business is a tough one, Brown said. Brown remembers paying $5 an acre for seed in the 1970s. Now, it’s more than $80 an acre for seed.

Brown has been in the cotton business for several decades and he’s seen the industry experience some highs and lows. An influx in cotton production in South Carolina is due to several factors, he said. The extermination of the boll weevil, which feeds on the buds of cotton, started in the 1980s in South Carolina, Brown said.

Genetically-modified cotton, which has also helped deter pests, has also contributed to increased production, Brown said.

This year, the weather was a big contributor to cotton production.

Cotton, which is typically planted in late April or early May, grows well in warm, moist soils. South Carolina experienced more rainfall and more moderate temperatures during the late summer.

Though the future of the industry is uncertain, there is one thing about American cotton that makes it stand out – it’s a good, strong product and US farmers have high standards, Brown said.

For example, in South Carolina, cotton’s brightness, strength, fiber length, uniformity and more are all examined to determine its grade, Brown said.

“US cotton is well-respected in overseas markets for its quality,” Brown said. “You get what you pay for.”

 

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