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- Q&A -

Kenneth Hood –
Cotton’s Eternal Optimist

EDITOR’S NOTE – In a recent interview with Cotton Farming magazine, Mississippi producer Kenneth Hood discusses a wide range of topics affecting the U.S. cotton industry. As one of the industry’s most visible leaders, he is hopeful that the new Farm Bill will help all sectors of agriculture. He also continues to believe that technology will be the key to keeping cotton farmers profitable.

Was it disappointing that the Farm Bill process took so long?

It’s been disappointing for just about everybody in agriculture, and especially for cotton and rice farmers. The global impact on those industries has been pretty dramatic. Without knowing what kind of safety net we would have in the future, it was hard knowing whether to plant cotton this year. USDA’s planting intentions report certainly reflected that trend.

Were there any other aspects of the Farm Bill debate that concerned you?

As I have said many times, cotton has more infrastructure than other crops, and so any kind of policy change has a more dramatic impact on cotton – especially in the Mid-South. In that sense, we aren’t like the other crops.

Based on what you know, how do you feel about the new Farm Bill that the House-Senate conference committee approved?

I think it’s a bill that we can live with, but obviously we have to adjust to these changes. Having said that, we pretty much knew those changes were coming – like the elimination of the three-entity rule and the lower adjusted gross income (AGI) level. Our friends in Congress delivered for us in many areas. Now it’s just a question of adjusting to the new rules and seeing where we go from here. I’m thankful for what we wound up with. I can promise you that it could’ve been a lot worse. The bill will keep us in business, in my opinion.

How do you feel going into the current crop season?

For many months, there was a lot of uncertainty about how to approach this season without knowing the kind of Farm Bill we would wind up with. We also had to figure out a good budget not knowing how this uncertainty would impact crops like cotton which depends on the CCC loan. All of this uncertainty – coupled with the unstable weather – made it hard to market 100 percent of what I thought my production would be.

So, specifically, what will your marketing strategy be this year?

To stay on the safe side, if I’m going to hedge a crop, I’ve got to look at a five to 10-year yield, and try to market under those conditions – especially with the weather we’ve had this year. The Mississippi River is flooding in my area, and that’s caused a fair amount of stress.

How do you respond to the general public and some in Congress who say that farmers don’t need as much government support because of high crop prices?

If we operated in an environment where the only thing we had to worry about was the revenue gained from a crop, that would be a different scenario. But farmers don’t work in that kind of environment. We have other factors to deal with. I’ve already mentioned the weather. Don’t forget that we operate in a global concept of marketing. You have countries that can come in and absolutely ruin the market. That’s why you need safety nets.

When you look at cotton and agriculture's future in this country, what do you see?

The first thing I think about is my children and grandchildren. How are they going to deal with high food prices and all of these other issues? How will all of this affect ag in the United States? We’ve always had the safest and most reliable food and fiber supply in the world. I don’t want to see that deteriorate. That’s why we needed a strong Farm Bill.

Did you ever think you’d see the day when you’d drive through Mississippi and see so much corn acreage?

We’re actually planting corn on our farm, but maybe not the high percentage that a lot of farmers are planting. It’s definitely a sight to see in our state, but that’s just a case of a lot of farmers responding to the market. We are doing all that we can to maintain our cotton acreage, because that’s where all of our infrastructure is. We have two gins and a lot of equipment tied directly to cotton. A farmer can’t change in one year’s time and go 100 percent into something else. Somehow, you’ve got to maintain what you have. We will have 60 percent of our acreage in cotton, with the other 40 percent in corn and soybeans. That’s not the way we’ve always been having a history of 100 percent cotton.

Are you concerned about all of the wild price swings in the futures market today?

Volatility doesn’t upset me as much as the words “false elasticity.” That’s how I would describe the impact of the big commodity and hedge funds. They apparently don’t know that soybeans might not be worth $15 to $20 a bushel. Like I said, I’m more concerned about the “elasticity” of the market than anything else.

Can the marketing cooperatives and merchants weather this storm?

I hope the marketing structure that we have can deal with this situation. All of a sudden, they have more liability because of the costs involved. How does that affect me? It’s probably going to reduce the price that they will be able to pay me – plus adding the responsibility of having to possibly shoulder some or all of the cost of hedging. That is definitely a concern.

Will technology continue to give the U.S. farmer the advantage he needs to stay competitive in the global market?

We simply have to believe that. No question about it. The new technology, however, must be cost-effective and priced at a level where the farmer can afford it. Once the cost of production gets really high, we’ve still got to find a way to maintain yields. That’s when your budgets come into play.

Are you still excited about the new module-harvesting technology now on the market?

This equipment is an exciting technology for U.S. cotton production. The on-board module picker is the kind of technology that will help us cut our production costs. These machines will be more labor-efficient for harvesting and require virtually no support equipment. They have higher harvester speeds and more picking time. You don’t have to waste time unloading the cotton like we did in the past.

Can you believe everything that you’ve seen happen in the cotton industry during the last 47 years?

I continue to be amazed at how the industry has adopted technology. You always hope and reach for the sky, but it’s still amazing to me. It’s also pretty remarkable when this technology is handed over to the producer in such a short period of time.

Some observers say that technology is moving too fast and the market can’t handle all of it right now. Do you agree?

I’m going to use a phrase that my friend Woods Eastland at Staplcotn has used many times through the years. He said that the market always does its job. If technology is too expensive, it will price itself right out of the market. I think these things have a way of taking care of themselves.

Do you have any final thoughts on the state of agriculture in this country?

I am the eternal optimist. And I’m hoping this new Farm Bill will help our country stay strong. By having a viable agricultural sector, the United States can benefit in many ways. It will help our economy as well as be an integral part of the country’s national security. From day one in my farming career, that’s always been the main motivating factor.

Contact Kenneth Hood at (662) 747-2223 or kbhood@tecinfo.com.

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