There's bad news and good news concerning Georgia's cotton quality, says Don Shurley, University of Georgia Extension economist. The bad news is that Georgia growers do have quality problems. The good news is that the quality problems probably are not as bad as some people think.
“We do have challenges in Georgia, but they're probably not as great as we think they are,” says Shurley. “However, the fiber quality issue remains very important.”
Growers need to understand that two out of every three bales now produced in the United States are being sold to the export market. “It's an entirely different ball game, and we need to compete both in terms of price and quality on the export market,” he says.
Several merchants at this year's Beltwide Cotton Conferences spoke about how some of the textile mills in foreign countries have more advanced and efficient technologies than some U.S. mills, says Shurley.
“Given that, and given that two out of three bales that we produce are going to the export market, we need to be concerned about our competition, not only in the United States but also worldwide. We need to compete in terms of both price and quality,” he says.
Exports drive the U.S. cotton market, he continues. “We currently have about 19 million bales off-take in the U.S. crop. About 13 million of those bales are going overseas and about 6 million are going to U.S. mills.
“Some analysts think that because of export competition and the decline of the U.S. textile mill industry, our market may drop down to 15 or 16 million bales. The major question, if this happens, is where will that 3 million-bale reduction come from. We don't want it to come from Georgia, but we do have quality challenges that need to be met,” says the economist.
Producers — through their cost of production — and merchants — through discounting — are having an impact on who grows cotton, says Shurley.
“If a grower has quality problems, and he continually gets hit three or four cents per pound for those problems, he either has to be able to absorb that economically, or it'll have an impact on his ability to produce cotton profitably, and he'll have to move on to another crop,” he says.
Growers may not always know the relationship between what they're doing on the production side and how that affects quality, says Shurley. Therefore, making any changes that would improve quality may be a “big mystery,” he says.
“We may make some decisions about varieties based on quality. But I would argue that most variety decisions are related to yield. We may make decisions on when to harvest and when to defoliate, perhaps based on quality considerations, but 90 percent or more of what a grower does is still yield oriented.”
What can a grower do, says Shurley, if he is told that he has a problem with staple or color.
“There is a disconnect, perhaps, between what needs to be changed on the production end and improving quality. That's another reason we're talking about research that's aimed at improving quality as well as yield.”
There are quality standards for different characteristics, says Shurley. Merchants use the term “long and strong” to describe a fiber that is 35/32 or longer and 29 grams per text or greater, he says.
For micronaire, 3.5 to 4.9 is the accepted range, he says, and above 4.9 is high micronaire. High uniformity is anything that is 83 or greater, he adds.
Quality discounts have cost Georgia cotton growers in terms of farm income in recent years, says Shurley. However, this past year was much improved, he says.
“Without question, our continuing problem in Georgia is staple length. Much of the color depends on weather conditions. But staple length is a different story. Even in a good year like 2003, which was our best year in many years with favorable growing conditions, we still lost almost $5.5 million due to staple length. But that is better than previous years.
“Our total losses in recent years have ranged from $20 million to over $40 million. Total quality losses this past year were about $10.4 million.”
Looking at premiums that were paid this past year, Shurley says Southeast growers at one point were paid only 20 cents per bale for a 31 versus a 41 color.
“If you had a 35 staple, you received a little under $3 per bale for it. The trend we see is that the market may not always pay for quality, but it will discount you for poor quality. Growers can rightfully argue that they're not getting paid for the good cotton they produce. But they are, in effect, getting paid, because they get discounted if they don't have the quality — it's a kind of negative award.”
Discounts are sizeable for short staple and high micronaire, he says. In comparing the Southeast with the north Delta and the south Delta, discounts are fairly uniform for short staple, he says. For a longer staple, the north Delta isn't getting paid quite as much as the Southeast. However, growers there are getting paid for color while Southeast growers are not, he says.
Shurley compares the Southeast — Macon, Florence and Birmingham classing offices — with the Mid-South — Memphis, Dumas and Rayville, but not with Texas or California.
“If you start comparing us to any Texas locations — whether it's Corpus Christi or Lubbock — you've got stripper cotton thrown in there to varying degrees, and you can't make a good comparison. Also, you can't make a direct comparison with Texas cotton because it is grown in entirely different weather conditions. West Texas and Panhandle cotton isn't grown in nearly the humid conditions of Southeast cotton, and humidity and weather have a larger impact on color grade than we may have originally thought.”
California and Arizona also do not make a good comparison with the Southeast because of the irrigation in Far West cotton, he says. “Their cotton will demand a price premium compared to our cotton. They'll get a premium even if the quality is similar to ours. In terms of competitiveness in the market, you're basically looking at other Southeastern locations and the Mid-South.”
In looking at color — 41 or better — in the last five years, the Southeast is not that much different than other locations, says Shurley. “We tend to fall short on the 31s, the lighter cotton. And it is now in higher demand, particularly for the export market. We need to have some concerns there. In terms of 41s or better, the percentage of our crop is really not that different from other locations. On the 31s the Macon office is behind other Southeast locations and certainly behind the Mid-South.”
The Southeast, says Shurley, doesn't have much of a problem with strength if you look at the trends and data from the past five years. The industry, he adds, would classify Southeast cotton as “high strength.”
Staple averages, he says, can be misleading. “If you look at staple length, there doesn't appear to be a whole lot of difference. But if you look a little closer, you'll see that this is where the Southeast has a problem. If there's a major quality problem, this would be it. Merchants like ‘long and strong’ 35 or better staple.
“On average, we're not that different from other locations. But when you start breaking it down and looking at a 35 or higher, 34 percent of our crop is in that category compared to over half at Memphis and the other Southeast locations.”
If you look at a 33 staple, which is considered a short staple, almost 30 percent of the Southeast crop averages short staple compared to the Mid-South, says Shurley.
Turning to uniformity, only 7 percent of the cotton at the Macon classing office had a uniformity of 83 or higher. The percentages were almost three times that amount in other locations, he says.
“Looking at uniformity that is 79 or lower, we're higher than other locations in terms of the percentage of our crop that falls in that category.”
The Mid-South, says Shurley, has as bad or worse a problem with micronaire as the Southeast. “You never hear much about it, but we're not the only ones with high micronaire problems. Over the years, about 17 percent of our crop has been high micronaire. Memphis, Dumas and Rayville all have been considerably higher than that.”
Cotton, he says, is not bought and sold based on only one quality characteristic. “It's not bought based on staple, color or micronaire alone. It's bought based on all of those characteristics put together. This past year, if I had been a merchant looking for bales of cotton that were color 41, staple 34, with good strength, micronaire in the right category, and decent uniformity, 19.5 percent of the Georgia crop would have fallen into that category.
“If I was a merchant looking for a 31 color, with a longer staple, strength at least 26 or higher, and good micronaire and uniformity, only 10 percent of the Georgia crop would have met my specifications. We produced 2 million bales of cotton in Georgia last year and less than 10 percent or 200,000 bales were the equivalent international standard. That is our challenge.”
In other parts of the Southeast, this standard was met by more than 30 percent of the cotton at the Memphis classing office, 21 percent at Florence, 20 percent at Birmingham, 25 percent at Dumas, and 21 percent at Rayville.
“You can see why merchants are challenged to find the cotton they need from Georgia. The major challenges for Georgia cotton continue to be staple length and uniformity.”