Every year, it’s the same story for Mid-South cotton producers. An average crop just doesn’t seem to cut it anymore.
To offset the significant expense it takes to plant, produce and pick a cotton crop, each and every year, you have to grow one better.
Since 2004, most Mid-South cotton producers have regularly done just that. Beginning in 2004, Arkansas cotton producers had a surprising run of five straight years of average yields exceeding 1,000 pounds. Louisiana increased its average yield every year from 2004 to 2007, going from an average of 867 pounds per acre to 1,034 pounds.
On the other hand, input costs have paralleled those yield increases, keeping profit margins razor thin.
Despite the latter, expectations for 2009 were high, even as the wet spring forced Mid-South producers of cotton, corn, rice and soybeans into some of the latest plantings in recent memory.
Then in September, came a truly miserable two-month stretch of rain, muck and mud that reminded Mid-South agricultural producers once again that providing the world with food, fuel and fiber is one heck of a risky business.
Loss estimates are still being documented, but as of mid-November, losses for all crops in Mississippi and Arkansas totaled almost $800 million, a figure that is sure to rise.
Many Mid-South cotton producers experienced 50 percent reductions in yield, plus quality losses. What makes it worse is that few areas of the Mid-South were spared the ruinous rains. Ask any Mid-South cotton producer and you’ll hear the same answer — this one hurts.
Ben Guthrie, a farm manager on Panola Company, Ltd., near Newellton, La., says it’s difficult to quantify cotton losses because no harvesting occurred prior to the October monsoon which halted harvests and dashed yields.
“We think we lost 300 pounds to 400 pounds of cotton. We believe we had 1,000 pounds to 1,100 pounds on the crop and ended up picking 650 pounds. We had not only hard-locked bolls, but we had a lot of big, fluffy, pickable bolls that shattered on the ground.”
Guthrie said 17 inches of rain fell on the region in October, a month traditionally dedicated to the picking of cotton and harvesting other crops.
For Guthrie, it was the second cotton crop disaster in a row. In 2008, damage caused by two, late-season hurricanes and three tropical storms dropped his average yield to 547 pounds per acre. He was expecting twice as much. “So we made in two years what we normally make in one year.”
On top of that, Guthrie and other producers pumped significant dollars into what were very promising crops. “It’s terrible for the cotton industry in north Louisiana and south Arkansas,” Guthrie said. “We were hoping to use 2009 to help us dig out of a hole.”
Guthrie says the farm will refinance for 2010, “but we’re going to have to downsize our labor force some and cut corners any way we can. We’re going to have less cotton and more corn and beans. We’re going to have to make some adjustments.”
Cotton producer Stephen Logan, who produces cotton, corn and soybeans in Gilliam, La., said 37 inches of rain fell on the region in September and October.
“After all was said and done, we ended up with 595 pounds of cotton, which probably was about half a crop. And of course the quality was terrible. Out of the entire crop, we had only two 41s (which is base color grade on the CCC loan premium and discount schedule), and the rest was worse. It was an ugly crop year.”
Cotton gins usually continue to process cotton long after the last boll of cotton is picked. But this year, due to reductions in cotton acreage and a short crop, gins were often waiting on producers.
“We were through picking on Nov. 22, and our gin got through on that same day,” Logan said. “The gin was waiting on the last picker to come out of the field. They ginned it and they were done.”
He’ll be farming again in 2010, but there will be little margin for error this time around.
“We’ve already met with our banker. Everything looks good on paper, except for cotton. Hopefully the price will edge on up a little bit. We need an 80-cent futures price, to net us somewhere around 70 cents.”
Like Guthrie, Logan’s 2008 yields were cut in half by hurricanes and wet weather.
Dow Brantley, who farms rice, corn, soybeans and some cotton in England, Ark., says the crop season “was a struggle from start to finish. We were planting the last few days of the cotton planting window. We had a decent growing season, then we had the big rains starting in September and October.”
Brantley estimated that 1,000 pounds to 1,100 pounds of cotton were on the plant when the rains came. “When we picked, all we had was about 850 pounds. We didn’t lose as much quality as we had thought.”
Rice yields were also off considerably, but corn and soybean yields were among the best the farm has ever had.
“I sure hope our senators and congressmen can help us with some disaster funds. We sure could use it,” Brantley said.
Curtis Stewart, president and gin manager for Dumas Gin in Dumas, Ark., says that today producers and ginners alike are overwhelmed by indecision at a time when they would normally be preparing land and settling on crop mixes for spring.
“It’s a long winter, and nobody really knows what’s going on. There are so many variables. You plug them all in and think you have an answer, and something else changes. And a lot will depend on what ag lenders tell producers. The producer may be gung ho, but can’t go.”
Stewart says ginners were financially affected by the delayed season because they often had to pay contracted employees even though cotton wasn’t running through the gin. In addition, lower-than-expected volume due to the short crop has significantly cut revenues.
Bryan Jones, president of the north region for Bank Plus, which provides ag loans for producers in Humphreys, Holmes and Yazoo counties in Mississippi, was perhaps one of the first ag lenders to know there was a problem with Mid-South crops. That’s because Jones is also a farmer, producing cotton, corn and soybeans around Tchula, Miss.
Jones says the rains cut his cotton crop yield “by more than half. We had as good a crop as I’ve ever had around Sept. 1, and we just watched it go away. It was a disaster any way you look at it. My dad always talked about how bad the 1957 crop was, but I think this was worse.”
Jones says reductions in Mid-South cotton acreage due to higher corn and soybean prices have been reverberating through the countryside for several years. “We’ve already cut back our gross revenues so much, now that cotton is a second or third crop instead of the main crop. It affects all the small businesses in our small towns, like the automobile dealers, the tractor dealers, parts stores, entomologists. There is just not as much money involved in the production of grains as there is in cotton.
“On top of that, you have this disaster, and I’m wondering who is going to farm next year. Each situation is going to be different. Hopefully, the lenders will help some, and maybe some of the (input providers) can help out too.”
Jones’ plan for his own farm won’t be much different from what will be worked out for farmer-customers of his bank. “I’m going to have to liquidate some assets to settle up and get together a plan for another year.”
In 2008, an effort by Sens. Mary Landrieu, D-La, Blanche Lincoln, D-Ark., Thad Cochran, R-Miss., and others to approve assistance for the hurricane losses was not successful in spite of strong support by the National Cotton Council and other groups, suggesting that this year may again be a challenging environment.
During a recent meeting this year with key members of Congress, Jay Hardwick, NCC chairman, and Newellton, La., cotton producer, conveyed concerns that growers, ginners, warehousemen, cottonseed handlers and related agribusinesses have about the significant financial losses resulting from the rain-delayed harvest of cotton and other crops in the Mid-South and Southeast regions, particularly in Alabama, Arkansas, Mississippi, Tennessee and Louisiana.
Current farm law includes a permanent disaster assistance program, the Supplemental Revenue Assistance Program (SURE). However, many farm groups and farmers say the program has significant shortcomings some of which are due to budget constraints placed on the program:
• SURE payments for 2008 losses will not be available until early 2010, and 2009 losses cannot be made until late 2010 or early 2011;
• Payment rates based on revenue shortfalls and tied to crop insurance coverage will provide very little meaningful financial assistance to growers with significant losses and none to growers with shallow losses; and
• There are no provisions to assist ginners, warehousemen and other businesses for their disaster-related losses.
Guthrie noted that SURE isn’t as advantageous for diversified operations because a high yield in one crop can offset a low yield in another crop, which is exactly what happened to Guthrie this year.
“Even though we lost half a cotton crop, we had decent corn and soybean crops, so we didn’t qualify. But we had most of our money tied up in the cotton.”
Legislation to provide timely disaster assistance to producers facing severe crop losses from this fall’s heavy rains and floods has been introduced by Arkansas Rep. Marion Berry and Mississippi Rep. Travis Childers. See http://deltafarmpress.com/cotton/disaster-assistance-1203/.
Arkansas Sen. Blanche Lincoln, chairman of the Senate Committee on Agriculture, and Mississippi Sen. Thad Cochran have introduced http://deltafarmpress.com/legislative/farm-aid-1123/index.html.
The disaster relief being proposed “would be very helpful,” Logan said. “It could be a saving grace.”
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