Generally speaking, we know that the economic environment is difficult for producers. Be assured that our company (Monsanto) is continuing to invest in technologies that will help in the future – especially after this economy turns around. I’m talking about water use efficiency, lygus tolerance, better yields and better nitrogen efficiency. Until we reach that economic turnaround, I would tell producers to hang in there and be as efficient as possible in every phase of their operations.
Even though cotton prices are pretty low right now, I think the USDA production estimates are high regarding carryover. I don’t think we’ll have as much in storage as people are saying. If we can somehow get a boost in price, it could really improve the situation for cotton farmers. My advice to farmers is to somehow hang on for the next two seasons. That’s when we might see an increase in cotton acreage.
I honestly believe there are things that farmers can do to become more efficient in their production practices, and this ultimately might help cut costs during this difficult economic environment. For example, there is a lot of research data out there on reduction of nitrogen applications. Not only does this practice have potential benefits right now, but it’s something to consider in the future. We all know that input costs have increased dramatically in the last year. Anything farmers can do to reduce those expenditures in this area will be important as we look ahead to a challenging 2009 season.
It’s understandable that farmers don’t have a lot of optimism when it comes to planting cotton today. I would tell any farmer today to think about his land resources, and think about the past decade and what has performed consistently well for him. Even though corn acreage has increased, keep some cotton acres in the mix so that you have some diversity and don’t have too much liability on one crop. We’ve been told that if cotton acres go low enough that we’ll reduce our stocks and price increases will have to occur. We’ll just have to wait and see when that will happen.
The advice I would give producers
is the same advice I will be taking. Stay flexible and leave your options
open. With so much uncertainty, producers will need to make decisions
on what to plant and what inputs to use much later in the process –
as opposed to what they might normally do. With the good sub-soil moisture
and the recent reduction in fuel prices, we hope to see some improvement
in cotton prices in 2009.