• Professor & Extension economist at Texas AgriLife Extension Service in Lubbock, Texas.
• Raised on cotton farm near Roscoe, Texas.
• Graduate of Roscoe High School.
• Received undergraduate, master’s and doctorate degrees from Texas Tech Univ.,
University of Florida and Oklahoma State University.
• Has held current position at Texas AgriLife since 1984.
In 2010, we have been blessed with a great cotton crop in the Lubbock area, and it looks like we will produce eight million bales in Texas. A bumper crop and a good price made for a good Christmas in this area, especially in a year when we have had mostly open weather during the fall, and all our cotton was off the stalk, but our farmers were able to enjoy the holidays with their families. Even a few area gins were finished ginning by Christmas, and the classing offices were also able to take off Christmas day.
With current price expectations in the Lubbock area, we will likely plant even more cotton next year. We planted a very high percentage of our dryland acres to cotton in 2010, but we could increase some. From Plainview north, corn near $6 per bushel would compete well with 90-cent cotton for irrigated acres, so if we see some improvement in corn prices, irrigated cotton in that area may not increase as much as some are expecting.
For dryland production in the Lubbock area, it probably takes sorghum around $12/cwt to take acres away from cotton with expectations of 90 cents per pound. I think this will be an exciting year to be working with our farmers as they make their decisions in agricultural markets with relatively low ending stocks and prices that will likely offer multiple profitable opportunities.
Already in the last month, we had an opportunity to sell the 2011 cotton crop for more than 90 cents per pound. I have shown very little restraint in encouraging our producers to contract at least half of their 2011 crop. That is more than most area producers will receive for this year’s crop, but with the current tight stocks and talk of spot prices over $1.40 per pound, it may be easy to let a very profitable pricing opportunity pass us by.
I really do believe what we teach in our Master Marketer program is always good advice. We teach that you should be prepared with accurate cost information and use it to determine what prices that are being offered mean to you. When you know what a price will do for your bottom line, you will be better prepared to make sound marketing decisions.
Having just been through another Thanksgiving season, I would like for all of us to remember some of the many things for which we can be thankful as it relates to cotton. Aside from current favorable price expectations and finishing up a large crop, we should remember where we were 25 years ago compared to now.
In 1984, when I came to Lubbock, our 10-year combined dryland/irrigated average yield was about 328 pounds and by 2004 for the same region it was above 500 pounds and has continued to increase since then. Irrigated yields have almost doubled since 1984.
We have had a great working relationship between USDA, universities and private companies in research – coupled with the educational efforts of Extension and consultants – that has driven this change. Higher yields from new varieties, more efficient use of water and reduced tillage production systems have all helped to hold the line on costs. We have eradicated the boll weevil and johnsongrass and use much less diesel, labor, insecticides, and our tractors last longer. I think the cotton industry in Texas as well as from California to New York is a model of cooperation that has worked to keep the cotton business viable and thriving after many trying situations. All these factors have helped our producers sustain their operations through good years and bad years and become more optimistic about the future.
But of all these changes in cotton in my area, the most remarkable change has been in quality. When I first started teaching marketing workshops in 1985, Dr. Carl Anderson and I could often be heard saying that we do not produce the same quality of cotton as the base grade on the loan chart or traded on the futures market, but at least five cents below the standard. Now, when I illustrate the same pricing strategies, I use those same words that we do not produce the same quality as the base grade on the loan chart or traded on the futures, but that it is usually five cents above! What a difference.
It has been many years since I have heard anyone refer to our “mattress” cotton in Texas, but, instead, we now produce some of the best and most reliable cotton qualities in the world.
Jackie Smith is a professor and Extension economist for the Texas AgriLife Extension Service in Lubbock, Texas. Contact him at (806) 746-6101 or firstname.lastname@example.org.