The world has changed and the price U.S. farmers will get for
their cotton has drastically fallen, all in just two short
months.



At Christmas, a farmer could get about 66 cents for a pound of
cotton. Now, that farmer can get only about 59 cents. This isn’t
good
news for farmers trying to decide how much land to plant in
cotton
in 2001.



For each 1-cent drop in the cotton price, Georgia farmers lose
about $9.6 million in income. For each 1-cent drop, Georgia’s
economy loses about $28.8 million, says Don Shurley, an Extension
Service economist with the University of Georgia College of
Agricultural
and Environmental Sciences.



Shurley figures farmers need at least 65 cents per pound just
to break even.



It Looked Good for a
While



Historically, Shurley said, cotton prices tend to improve during
January and February. The fall in prices since December is
unusual.
When prices do fall, they tend to fall later in the growing
season,
closer to harvest. Cotton is harvested in autumn.



In the past two months, world and domestic cotton conditions have
taken a turn for the worse for U.S. growers.



Late last year, the U.S. Department of Agriculture estimated
world
production at 86.7 million bales. (A bale equals 480 pounds of
cotton lint).



Adding the leftover stocks, this would be the smallest supply
since 1996. Leading cotton- producing countries, such as India,
Pakistan and China, were expected to decrease production for the
2000 crop.



That was good news for growers. When the supply goes down, the
price goes up.



However, Shurley said, the latest estimates show world production
at 88.1 million bales. The expected drop in production did not
materialize. So supplies are higher than expected.





Things Don’t Always Go as
Planned



Cotton farmers around the world plan to grow just as much or more
cotton in 2001. This includes U.S. cotton farmers.



Early conservative estimates say U.S. growers will plant about
15.9 million acres of cotton this year, about 400,000 more than
last year. The USDA will release final cotton estimates in
March.



World market conditions look gloomy. Domestically, things don’t
look much better. The U.S. textile industry, which buys 60
percent
of the total U.S. cotton production, is hurting.



“We’ve lost about 1.5 million bales of our own textile
business
since 1997,” Shurley said. That means 720 million pounds
of U.S. cotton in 2001 will have to find a buyer somewhere else
in the world.



Americans still like cotton. In fact, U.S. retail consumption
is growing strong, Shurley said. However, a higher percentage
of that consumption is coming from imports of fabric and finished
products, such as shirts and jeans. This makes U.S. growers
depend
more on exports and foreign textile mills.



If the U.S. textile industry continues to suffer losses, and if
world cotton production continues to increase, U.S. cotton
farmers
face tough decisions in the future.