Newly-elected Congressman Travis Childers, D-Miss., came to the summer meeting of the Southern Cotton Ginners Association to listen to the issues and concerns of the ginner/farmers, and he got an earful about energy prices, spiraling input costs, dysfunctional commodity markets, labor shortages, dangers to cotton's infrastructure, and worries about the future of family farms.
The former Prentiss County chancery clerk, who went through four elections in 63 days to serve the balance of 2008 in the post vacated by Rep. Roger Wicker, R-Miss. — and faces yet another contest in November for a full term — prefaced his Q&A session with the remark, “I want cotton folks to know I'm their friend; I believe in agriculture, and that if we let the family farmer fail, we've failed as a nation.”
Childers said he requested a seat on the House Agriculture Committee because other Mississippi members had moved on to other committee posts and because “Mississippi has a long history of outstanding representation” on the committee, “and I wanted to be sure we had an advocate for agriculture.”
Stewart Tritt, Zion Gin Co., Brownsville, Tenn., a third generation cotton farmer/ginner, told Childers, “With constantly rising energy costs, we're finding it harder and harder to stay in business.
“With declining cotton acres over the past three years, we've gone from ginning 30,000 bales to only 6,000 last year. Our cotton warehouse is getting smaller and smaller. In past years, we've employed 40 seasonal workers; now, we're just in survival mode.
“We sell fertilizer, seed, and chemicals, and government regulations and environmental restrictions have made it more difficult to compete and have made our operations more expensive and harder to finance.”
Tritt said, “We've added non-agriculture-related businesses to try and allow us to hold on to our ag operations.
“But energy is by far the biggest problem; people are having to choose between the gas pump and the grocery store. Costs are moving up so fast, we're having to spend all our time on efforts just to meet expenses.
“We're passionate about what we do, and we want to stay in this business.”
Jeff Lindsey, McCord Gin Co., Gideon, Mo., told the congressman, “We ginned 79,000 bales at our two gins in 2006; in 2007, we ginned 44,000; this year, we expect it will be less than 25,000. This trend, all across the Mid-South, is having a dramatic effect on local economies.”
This year, Lindsey said, “We'll run just one of our gins, and our normal complement of 56 seasonal employees will be cut in half.
“Fuel and energy costs are astronomical. We used to dry a bale of cotton for $1, now it's $6 just for energy.”
Seasonal labor is becoming harder to find, he said, and many Mid-South gins have turned to migrant labor, which has brought on an added set of complex regulations.
Ted Kendall, Gaddis & McLaurin Gin, Bolton, Miss., noted that there were six gins in his area at the end of World War II.
“Now, there's just one. In addition to the problems of declining acres, energy costs, etc., increasing problems with regulatory agencies, labor shortages, and immigration and customs enforcement, are adding complexity and costs to our operation.”
John Carroll, Farmers Gin Co., Inc., Gilbert, La., a fourth generation ginner/farmer, said, “Our volume has gone from 54,000 bales in 2006 to 28,000 last year, and probably 25,000 this year.”
He said volatility on commodity markets has had a significant impact on the ability of farmers, gins, and grain elevators to forward contract and hedge.
“The wild price swings have increased market uncertainty and greatly affected our ability to use these pricing functions.” This has caused local elevators to limit forward pricing opportunities and resulted in increased cost basis, he said.
Fertilizer costs have risen significantly, Carroll said. “Liquid nitrogen that was $300 this year is going to be $600 in 2009. Increases of this magnitude will mean less cotton and corn.
“Even though grain prices are much higher, with these high input costs, our margins remain the same. Inputs are killing producers.”
In March, Carroll noted, “The cotton market was as high as I've seen, but few producers could take advantage of it, because markets weren't functioning as they should. We couldn't hedge our risks. If producers don't have some sort of price discovery mechanism in a fair, open manner, they can't price their products.”
He said many local communities, which have been dependent on the flow-through of dollars in the cotton infrastructure, have felt the economic pinch of reduced cotton acres.
Larry McClendon, Marianna, Ark., ginner/producer and chairman of the National Cotton Council, told Childers that Congress “needs to be mindful” of ongoing trade negotiations and their impact on agriculture.
While the DOHA round of trade talks has focused on “radically reduced supports for U.S. agriculture, particularly cotton,” he said, “we have insisted that any reductions should come with increased market access for U.S. commodities. So far, that has failed to materialize.”
U.S. mill consumption of American cotton has dropped from 7 million bales to only 4 million, McClendon said, “principally due to U.S. trade agreements with China.”
Childers, noting “energy is on everybody's mind,” said Washington, “which talked about it too long but did nothing,” has taken notice and is finally working toward solutions.
“We haven't had an energy policy since Jimmy Carter was president; our only policy has been to let the energy companies get richer and richer.”
He said he has a six-point energy plan, which includes giving farmers and truckers a tax exemption on diesel fuel.
“I personally shop at the grocery store, and I see how the prices of milk, eggs, and everything else have gone up — all due mainly to energy and transportation costs. I don't know a farmer anywhere who's better off as a result of high food prices.
“We've got to quit being so dependent on foreign oil.
“There are a lot of bright minds in this country, and I believe they can come up with ways to solve this problem.”
Childers said trade negotiations have had too many “anti-American push-backs; I think we should look at each agreement on its merits before it's approved.”
Tim Price, executive vice president of the ginner group, told Childers, “In the midst of these very challenging times, there are some very positive things going on, and despite the problems, we believe cotton will come back.
“We need a level playing field, a chance to compete fairly, and ways to deal with input costs.”
Major companies are continuing to invest in new cotton equipment and technology, Price said, “indicating a confidence that cotton will make a comeback.”
He urged Childers to support agricultural research programs. “Now is not the time to pull back on these efforts. Cotton came back in the Carolinas and in the Southeast because of the research that led to the boll weevil eradication program. A strong research program is the bedrock of agriculture's success.”