I knew cotton played big in Georgia, but I was surprised to learn just how much economic weight King Cotton throws around, pumping a $2.5 billion waterfall into the state’s economic flow each year. But will it continue to do so?
Cotton is Georgia's No. 1 row crop in farm-gate value and it comes in second or third each year in total agriculture value. Georgia’s poultry and egg production, worth $4 billion, has securely kept the No. 1 economic value rank in Georgia ag for many years.
Cotton’s farm gate value is about $1.5 billion each year. That’s real money, but its monetary swing is even heavier and farther when you consider broader economic factors. That’s what the University of Georgia Center for Agribusiness and Economic Development did. They considered cotton’s economic footprint, and it’s a considerable one.
The Georgia Cotton Commission funded the study. The report concluded last summer but Sharon Kane with the CAED gave the results at the commission’s annual meeting on Jan. 22.
The study charts cotton production economic impact in Georgia from the farm level backward, looking at things like the value of cotton and cottonseed production, the purchases necessary to generate production (inputs and agricultural services), and household spending by farmers and support industry employees.
This study doesn’t look at cotton’s economic impacts from the farm gate forward, which would consider things like textile manufacturing, shipping and exporting, cottonseed processing, and all the other things that take place before a piece of cotton fiber rubs up against someone’s birthday suit. You figure all of that economic factoring and cotton’s impact is likely much larger. But this particular study didn’t take that figuring on.
The report uses the 2011 cotton production value, or $1.5 billion. Adding in all the above gets you the additional economic contribution of $2.5 billion, meaning a dollar’s worth of cotton production ends up being worth about $1.64 as it grows, ebbs or flows through the economy.
Georgia cotton production is supported by an infrastructure that includes ginning and warehousing, transportation, input supply outfits, machinery and equipment sales and service, financing and other job-generating enterprises. The study figures cotton gets credit for about 15,400 jobs in Georgia.
Cotton production has declined in some areas of the Southeast in recent years. I’ve heard farmers and experts say corn and soybean still grab cotton acres and infrastructure away from cotton in Tennessee and the Delta.
Cotton is one of those crops with major geopolitical ramifications. On the world stage, cotton is too often the rope being tugged by two or more countries locked in a world trade dispute. And one country’s cotton hording or buying can make bad prices good in a week or vice versa. And if you throw the market speculators into the mix, that pricing game can get crazy. Prices can shoot up 10 cents per pound in a week just to go down 15 cents the following month. I say all of that to say cotton production, or should I say cotton marketing, isn’t for the faint of heart.
Will cotton remain the top row crop for Georgia? Well, cotton’s foothold in Georgia is strong, as this study shows. When other commodity prices follow the bull, or go high, Georgia growers respond and cotton acres can and do come into play and go to corn or soybeans, but not as much as in other states.
Georgia cotton acreage usually stays above 1 million planted acres. Yes, it dipped to and below the one-million-acre mark in ’07 and certainly in ’08, but then it skyrocketed on high prices to 1.6 million acres in 2011. Since then, acreage has dropped and leveled out, hovering in the 1.2 to 1.3 million acre range.
In an average market year, if there is such a thing, cotton growers grow cotton, and sticking with historic crop rotations in the long run often pays off for growers. In Georgia, cotton and peanuts -- sprinkled with corn for financial flavor -- play well together. That said, with corn prices with “4” in the front and beans prices lower, too, well … like I said, cotton farmers grow cotton and corn, and soybeans need to compete high to grab those cotton acres.
But the market’s going to have to earn those cotton acres. And even though China is reported to be sitting on a cotton stockpile tall enough to supply the world with all the cotton it needs for more than three-quarters of a year, it’s good to remember at this time those are bales not supplying the market now. Or another way to put it: a bale of cotton in hand is better than two rotting in a warehouse in China.
Will cotton remain strong in Georgia? Sure, there will be more than 1 million acres planted again in the state in 2014, and I’d bet it will more like 1.2 million acres. But the market’s got to put the money down to get those acres. Prices in the low-80s won’t do it. Prices in the higher 80s will.
Even in a crappy growing season, like 2013, growers with the technology today can still pull off good yields. With the cotton I saw early and mid-summer in 2013 in Georgia, I’m still surprised the state’s average in 2013 was 850 pounds per acre. … but then again, I was surprised at just how large cotton’s economic footprint is in Georgia but I shouldn’t have been.