Late spring usually finds Billy Carter planting some 1,600 acres of cotton. This spring, however, has been behind a desk and out in the field promoting the crop and keeping North Carolina cotton producers informed of the changes in the new farm bill.
It's a role change in a way for the Scotland Neck, N.C., cotton industry leader. He's been involved in grower leadership positions with the National Cotton Council, the Southern Cotton Growers, Cotton Inc. and American Cotton Producers for a number of years. Earlier in the year, Carter became executive vice president of the North Carolina Cotton Producers Association (NCCPA).
Even behind the desk, he's taking the same common-sense approach he did in his farming operation and as a leader in the cotton industry.
He believes the cotton industry is at the bottom of a cycle.
The cotton portion of the farm bill will boost incomes for North Carolina producers.
Cotton farmers must place a growing emphasis on marketing.
Quality will continue to be important for both the textile and farming communities.
The obvious question is, why is a lifelong farmer such as Carter behind a desk instead of out in the field?
The answer is economics.
The decision hinged on trends in the industry, he says. The stress of being the only manager on a 2,500 farm, escalating land rent and the need to get bigger all contributed to his decision to park his tractors. “I needed to get bigger in order to stay in farming, but I didn't want to take that step.”
That's about the time when the position at the NCCPA came open.
Rick Holder, president of the NCCPA, believes the state's cotton producers will benefit from Carter's “vast knowledge and experience in all facets of the cotton industry.”
“Billy Carter's experience on the state and national levels of leadership in the cotton industry will be an enormous asset to our association in this full-time position,” Holder says.
Drawing on his past experience as a farmer, Carter believes the cotton industry is in store for brighter days. “We've been at the bottom for a while, but we're not going to go down any further,” he believes. “It wouldn't take much of a yield or acreage loss in the U.S. and problems in China to see cotton back in the 50-cent range.
“There are always peaks and valleys,” Carter says. “Hopefully, this farm program will make the valleys a little easier to get through than they have been in the past.”
Being able to update base acreage is one portion of the new cotton program that will help North Carolina producers. “That will be the single biggest asset to increasing cotton income in the state,” Carter says. “If a producer can go back four years and update his base, that's going to increase income.” Last year only 55 percent of the cotton acres in North Carolina were cotton base.
“The general feeling about the farm bill is positive in regards to North Carolina cotton,” Carter says. He attended National Cotton Council meetings in May designed to explain the new program to producers. “I believe this is a program that will support the U.S. cotton industry and keep us from giving away the whole ball of wax.”
For the future, Carter believes farmers will have to place more emphasis on marketing. “Quality will play a more active role in variety selection at some point in time — and sooner rather than later as the textile industry looks for quality and standards to fit their mill use. The closer the farmer can come to what the textile industry needs, the better off we're going to be.”
When talking about marketing, “you've got to have a plan,” he says. “The way the markets change, a person has to have a plan and stick to it. He may get hurt one or two years out of 10, but he's going to be better off sticking to a plan than trying to out-guess the market.” He likens a marketing plan to a planting plan. “You've got to line up things according to what your financial position will allow you to do.”
It may involve hiring someone to do marketing for you, Carter says, because “making a profit consumes all of your time — it did mine.”
Sitting at his desk in Raleigh, Carter now sees his calling as one of “making life easier for the cotton farmer — keeping everybody abreast of what's going on and how it might affect their operation.”
He's responsible for coordinating the education, promotion, research funding and daily management of the NCCPA. The organization plans to launch a Website later this year. A cotton field day is planned for Sept. 11 at the Upper Coastal Plain Experiment Station in Rocky Mount and the group's annual meeting will be held Jan. 13-14, 2003.
Carter's biggest goal on the other side of the desk these days is seeing cotton profitable again. “I'd like to see smiles on faces of farmers and less worry lines,” Carter says. “And see the textile industry do well. To see the industry thrive.”
“A decision will have to be made as to which crop base to keep and where to assign peanut base. Since peanut base has a one-time assignment, it can be moved to free up owned acreage.”
Another choice, says Smith, is to decide which base to drop by examining which crop bases provide the larger payments. For example, if the corn direct payment is $20 per acre, cotton is $37 per acre and peanuts $38 per acre, then you might give up corn base to meet owned land restriction.
“An added wrinkle to this decision is the counter-cyclical payment. In years of low prices, a counter-cyclical payment may be made on base acres for each crop. Assume that the maximum counter-cyclical payment for corn, cotton and peanuts is $25, $76 and $111 respectively.
“By adding the counter-cyclical payments to the direct payment, the total potential payments for each crop base would be $45, $113 and $149 per acre for corn, cotton and peanuts respectively. The only guaranteed payment is the direct payment. Remember that a low average season price triggers if and how much of a counter-cyclical payment is paid. So, what prices do over the life of the farm bill determines which base will pay more.”
The major adjustment for many Georgia peanut farmers will be making involve planting decisions and deciding what to grow from year to year, says Smith. As a result of the new peanut program, peanut prices will be more responsive to the market. Instead of quota determining supply, market prices (and loan rate) for peanuts and competing crops will be the major factor in how many peanuts are planted.
“Looking at individual decisions, knowing one's cost of production will be very important in accurately projecting and making enterprise decisions. Using University of Georgia Extension budgets as an example, 2002 variable costs for irrigated and non-irrigated peanuts are budgeted at $461 and $404 per acre respectively. Total economic costs are budgeted at $703 and $556 per acre, excluding land management.
“Using a 3,500-pound yield for irrigated peanuts and a 2,500-pound yield for non-irrigated peanuts, the price required to cover total costs — or the break-even price - is $402 per ton and $445 per ton, respectively. When the market isn't offering prices to cover total costs, producers need to at least cover their variable production costs. In this case, the break-even price above variable costs is $263 and $332 per ton, respectively. The price received from a contract or the market loan needs to be above these prices at a minimum.”
To compare with other crops such as cotton, look at the returns above variable and total costs for each crop, advises Smith.
Direct and counter-cyclical payments in the new farm bill are not tied to production, he says. “These payments will be received whether you plant peanuts or cotton. This is the new wrinkle of farm programs — planting flexibility. So your planting decisions should be based on the market and your cost of production, not program base payments.”
Summing up the changes in the new farm bill, Smith says the safety net has been increased for program crops, and peanuts now fit under that same policy.
“Though change sometimes is stressful, it also brings new opportunities. By utilizing the marketing loan, producers can have more control over marketing their peanuts. This can be done collectively through cooperatives, for example.”
Access to storage, he adds, will be important in maintaining beneficial interest for marketing loan purposes. “The Georgia grower is agronomically competitive in growing peanuts, so we expect peanuts, along with cotton, to still be grown predominately. An opportunity to emphasize quality is possible under the new program. “Given current trade policy and future direction, the new peanut program will make U.S. peanuts much more competitive and greatly reduce the threat of imports taking large portions of U.S. market share. Recent increases in domestic demand have gone to imports. Georgia producers and the United States now have the opportunity to recapture this market share.”
Currently, there are three buyout bills in Congress. Mike McIntyre, D-N.C., Walter Jones, R-N.C., and Richard Burr, D-N.C. each introduced bills in the U.S. House. The Jones, Burr and McIntyre bills have the $8 and $4 provision. The McIntyre bill includes FDA regulation of cigarettes, and limits production to the traditional tobacco-growing areas.
A bill sponsored by Virgil H. Goode, R-Va., doesn't include FDA regulation, while calling for the $8 and $4 provision.
Tobacco industry representatives also talked about possible legislation from Ernie Fletcher, R-Ky.
“We're hoping for a buyout, but realize time is running short to get anything done this year,” says Lionel Edwards, general manager of Stabilization. “This is an election year.”
Whether a quota buyout comes in 2002, it will likely have to be attached to some other bill. “We're not going to have enough votes to have a buyout in a separate bill,” Shepherd says. “It's going to have to be tacked onto something else — probably FDA.”
Philip Morris, the nation's largest cigarette manufacturer, supports FDA regulation of cigarettes.
Talk of a House bill calling for FDA regulation of cigarettes as a drug delivery device, however, “would put us out of business,” Shepherd says.
Given the current environment, Helms' top aide says he's glad the discussion didn't take place in context of the farm bill debate. “Senator Helms said achieving a buyout would be the most difficult thing in his 30-year career in the Senate,” Rouser says.
Calling it an issue where “we can't afford to strike out,” Rouser says supporters of tobacco in the Congress must wait on the “right pitch.”
“Whether or not that right pitch comes depends on what is done on FDA,” he says.
“No one side can afford to be greedy,” Rouser says. “Otherwise, it will fall apart.
“Just remember, we're waiting for the ‘right pitch’ to come,” he says.
Work on a buyout could come in September, Rouser says.