Wednesday, March 30, 2011

Cotton and Crop Prices Jumping

Limited supplies of corn, soybean and wheat have sent their prices very high in the past year. Primarily, this is due to the fact that corn is not only used for human dietary consumption, but also for biofuel. Wheat last year in Russia was ruined because of drought, and drought is also threatening China’s wheat crop. China is the world’s largest producer. Usually farmers have responded to the prices by using more land to grow those food crops. However, this year many in the southern states are growing cotton. Cotton prices have increased due to the demand for clothes- for the world’s population and cotton has had some bad harvest seasons which limit supply. Now there is an “acreage war between rival commodities used to feed and clothe the world’s population.”

Farmers are making the switch to cotton, because of course they are compensated better for growing cotton. The fear is that many farmers will follow this trend, and many more people will go hungry- as those in the poor countries can barely afford food right now. It is predicted that there will a 19% increase in acreage for cotton. The price of cotton reached $2.20 per pound which is up $ 1.43 per pound from last year. Farmers are counting on the price staying around $1.00 per pound- as the price is expected to fall. The regular cotton growing states are North Carolina, Mississippi, Tennessee and Texas. However, there is a particular region in Texas that is not a usual cotton grower- the Panhandle region. Cotton is usually not grown there because of the area’s conditions – it is not friendly to growing a crop like cotton, because cotton requires a long growing season. Farmers there usually tapped the Ogallala Aquifer for watering the corn crops. However, cotton is an attractive crop because there may be water restrictions because the aquifer has been depleted. The local gin- Moore County Gin is preparing to clean 90,000 acres worth of cotton this year- as they have gotten notice from about 40 farmers that are growing cotton for the first time this year. The Moore County Gin is building an expansion to handle the extra load.

First the staple crop of corn is used as biofuel, drought and natural disaster ruined wheat and so the people of the world- particularly the poor- have been denied food. Now, cotton is king of the market and the demand is for clothing? Although clothing is a necessity, it would seem that food would be the primary need. One needs food and water to survive, however, clothes are not a life and death necessity as there are large portions of the world that wear very little clothing due to the climate of the region. It appears to me that the increase in cotton demand is driven by the quickly developing/ developed countries. Industrialization tends to lift people out of poverty therefore it’s an increase in demand for goods such as clothes, gadgets and devices- particularly China and India comes to mind. It seems like a vanity issue. Given the uncertainty of the market do you think that it is worth farmers to forsake the staple crops of corn, soybeans, and wheat to answer the call of the clothing industry? Although I understand that farmers have to make a living too . . . Should there be regulations on how many acres used for a single crop? On the other hand locally there may be some benefits, such as a need for more farm hands to grow and pick the cotton, and gin workers to clean the cotton. However, what happens when cotton is no longer the cash crop? It is a tradeoff for short term success/ profits where as people will always have a demand for edible crops. If there is a food crisis, should the government ban exports on staple crops?

--Nia Govan

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