Economic repercussions of new cotton/corn mix

Corn may be king in the Mississippi Delta this year, but it remains to be seen what will be the impact on the area’s economy as a result of the large-scale decline in cotton acres.

If acreages and prices for the two crops in the 2001-2005 period were adjusted to reflect this year’s corn/cotton mix (two-thirds more corn, one-third less cotton), the farm gate value of production would have been reduced by about $72 million each year, according to a study by Steve Martin, associate Extension specialist in agricultural economics at the Delta Research and Extension Center, Stoneville, Miss.

“Most of the money from crop production goes to pay someone else — for fertilizer, seed, chemicals, labor, aerial application, equipment, etc.,” he said at the recent joint meeting of the Delta Council’s Ginning and Cotton Quality Improvement Committee and the Southern Cotton Ginners Association.

“If these amounts are reduced significantly, it can have an impact across the entire economy, including the number of jobs created — from tractor drivers to teachers to employees at local businesses.”

In the 2001-05 period, Martin says, the average yearly cotton acreage in the Mississippi Delta counties was 874,000. This year it’s just 680,000 in the entire state. Corn acreage during those years averaged 258,000; this year, farmers planted 980,000 acres statewide.

Nearly 75 percent of Mississippi’s cotton crop is produced in the Delta region.

The value of corn and cotton during the period averaged $534.9 million per year. But if those figures were adjusted to the corn/cotton mix for 2007, the farm gate value would’ve been only $463 million annually — $72 million per year less as a result of the higher corn plantings and lower cotton acreage.

When generally accepted economic multipliers are applied, the impact on the economy is even more eye-opening.

“Historically for Mississippi, the multiplier for cotton has been about 2.5, and for corn 1.33,” Martin says. “These multipliers are usually based on two factors — how much goes into growing a crop and how much of the processing of that crop takes place within the state.

“If we apply the 2.5 multiplier for cotton during the 2001-05 period, we get an average per-year economic impact of $1.3 billion.”

Using those multiplier figures on acreages adjusted for a 2007 corn/cotton mix, the average annual economic impact would have been only $883 million — $363 million less each year due to less cotton, more corn.

While the prices of corn, cotton, and soybeans will continue to be a key influence on farmer planting decisions in the future, Martin says the increased interest in corn does provide some agronomic benefits.

“We’ve talked for years about the value of corn as a rotation crop for cotton, and there are also benefits to corn in a rotation with cotton.”

And he says, “We’re fortunate here in the Delta to be able to grow several major crops, and the increased attractiveness of corn also allows farmers greater diversity in their cropping choices.”

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