Mid-South Cotton Growers Infuse Local Economies
November 16, 2011 From the Memphis Commercial Appeal
With the fall harvest almost complete, Mid-South cotton growers expect decent profits even though prices have plunged from spring’s extraordinary peak, analysts say.
Cotton slated for December delivery traded Wednesday at 97.14 cents per pound on the Intercontinental Exchange, compared to $2.15 per pound in March.
In spite of the price drop almost all growers can profit, and in turn aid the Mid-South with a $6 billion economic infusion from the cotton crop, according to the National Cotton Council.
Bid up by demand abroad, cotton reached the highest price in March in 140 years of official records. The run-up hasn’t showered cash on all farms, however. When prices began rising a year ago, many growers locked in sales contracts for their crop, missing the March peak.
“It’s still one of the best market opportunities in many years,” said Gary Adams, vice president for economic and policy analysis at the Memphis-based National Cotton Council. “This may turn out to be a good year where they have an opportunity for both good yields as well as good prices.”
Although the price has dropped, it has exceeded 85 cents for most of the last year. That’s above the 75-cent range considered the break-even point for profits for many growers.
About 1.7 million acres of cotton are currently farmed in Arkansas, Mississippi and Tennessee, but cotton long ago faded as Memphis’ economic leader. The metro area produces goods and services of all kinds worth $65 billion per year.
Still, the crop remains part of the city’s lore, linking traders and shippers to a global business. And because about three-fourths of the crop is exported, cotton is one of the key goods in the Mid-South that brings in new cash from around the world. That’s considered a prosperous avenue compared to relying only on local wages to sustain the economy.
Arkansas, Mississippi and Tennessee farms are expected to produce 3.4 million bales this season, 27 percent more than last year’s harvest of 2.7 million bales, according to U.S. Department of Agriculture forecasts. A bale weighs 480 pounds.
Yields are the same as last year in Arkansas, 996 pounds per acre, while Mississippi is down slightly to 952 pounds, and Tennessee is holding even at 853 pounds.
Farms in the three states along with producers in Alabama, Louisiana and Missouri would harvest a cotton crop worth about $2 billion this year, up from $1.4 billion last year, Adams’ trade group estimated.
Once the cotton changes hands and the profits are spent on supplies and other goods and services, the impact on the six states would reach $6 billion and support 30,000 jobs, the trade group says.
Overall, farms in America’s 17-state cotton belt are forecast to produce 16.3 million bales this year, down from last year’s 18.1 million bales largely because of Texas’ drought. Growers are now completing the harvest. In Mississippi, for example, farmers have cleared 95 percent of the crop, said Darrin Dodds, Mississippi State University assistant extension professor.
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