Georgia Cotton Farmers Encountering Low Prices, Which Are Expected To Continue In 2016

Dec 30, 2015
By Clint Thompson 
Cotton is dumped into a trailer at the Gibbs Farm in Tifton on Wednesday, Oct. 30, 2013.
Cotton is dumped into a trailer at the Gibbs Farm in Tifton
University of Georgia Cooperative Extension cotton economist Don Shurley says that Georgia cotton farmers can expect prices to remain low for their crop until worldwide demand improves.
“There’s plenty of evidence to support consumer preferences have changed,” Shurley said. “If the demand for cotton does not improve significantly, especially when you consider that China is sitting on more than 60 million bales of stocks, we just won’t need as much cotton grown as we used to until demand improves.”
Shurley will give a detailed report on Georgia’s cotton crop at three of the 2016 Georgia Ag Forecast events in January 2016. He will speak in Bainbridge, Georgia, on Monday, Jan. 25; Tifton, Georgia, on Tuesday, Jan. 26; and Macon, Georgia, on Thursday, Jan. 28.
Georgia Ag Forecast seminars are also set for Carrollton, Georgia, on Thursday, Jan. 21; Cleveland, Georgia, on Friday, Jan. 22; and Alma, Georgia, on Friday, Jan. 29. UGA agricultural economist Sharon P. Kane will speak about the Georgia Agriculture Tax Exemption, or “GATE.”
Cotton prices may improve by the time the Ag Forecast seminar series begins. Shurley said Georgia cotton farmers have encountered prices between 62 and 67 cents per pound for almost a year. This is well below the 80 cents per pound for which most farmers strive.
“It seems like every time we get the opportunity to rally up in the upper portion of that range and break out, the market fails to maintain it,” Shurley said. “Most growers were looking for 70-cent cotton for 2015, but it never happened.”
Shurley is unsure whether prices will start to climb over the next couple of months. One certainty is that by the time Ag Forecast meetings are held, Georgia farmers will likely be planning for the upcoming growing season. The information presented by UGA Extension experts during the seminar series could have a major impact on planting decisions.
“Certainly by the time we get to Ag Forecast, they’ll have to be thinking about what to do. Many of them are probably doing that already. It’ll kind of depend on what prices are doing at the time,” Shurley said. “There’s nothing on the horizon that would indicate that prices are going to change, but you never know.”
Loan deficiency payments (LDPs), which are authorized by the 2014 farm bill, are one beacon of hope for Georgia cotton producers. LDPs are designed to assist farmers when commodity prices are too low. Shurley said that the payments are based off of the world price of cotton, which tends to move with the U.S. price. When the U.S. price gets low like it is now, the world price will go down as well, which triggers the LDP program to go into effect.
Though the current cotton price may be 64 cents, with LDPs and a producer’s good grades on his cotton with high fiber quality, farmers could gain an additional 9 to 10 cents per pound.
Shurley stresses that the key to making a profit in cotton farming is getting demand turned around, which he believes to be a difficult task, considering the rapidly increasing interest in man-made fibers.
“Consumer preferences have changed. The apparel industry has come up with a lot of new things that attract the consumer,” Shurley said.
However, Shurley still believes that the country’s cotton acreage will go up next year. At least 500,000 acres in Texas were intended for cotton this year, but failed to produce because of weather-related conditions.
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