By Brad Haire
University of Georgia
The U.S. government will send little to no price-support help
to
cotton farmers this year. But cotton farmers don’t mind. They
don’t need any help this year.
Averaging around 70 cents per pound, cotton prices are the
highest they’ve been since 1997, said Don Shurley, a cotton
economist with the University of Georgia Extension Service.
Important but volatile
World cotton prices can be volatile. But cotton is important to
Georgia and other producer states, adding billions of dollars a
year to their economies. That’s why the government steps in
from
time to time when prices swing low, Shurley said, to help
cotton
growers stay in business.
Cotton and many other crops have price-support programs funded
through the U.S. farm bill. Many complicated formulas determine
if and when and how much money the government will send to
cotton farmers.
Essentially, when world cotton prices fall below 65 cents,
farmers get government payments that help ease the price shock.
When cotton prices are high, as they are this year, growers get
no help.
Farmers don’t have to think back too far to remember low cotton
prices.
Low
In 2001, an oversupply of cotton in the world plunged average
cotton prices to a dismal 31 cents per pound, Shurley said. In
2002, prices rebounded only slightly to average 45 cents per
pound.
Due to low prices and poor yields brought on by drought, the
2002 Georgia cotton crop, on its own, was worth only about $338
million, Shurley said.
Through programs called loan-deficiency and counter-cyclical
payments, though, Georgia farmers got another $202 million in
government price support. This made the 2002 crop worth about
$540 million.
High
The 2003 Georgia cotton crop is expected to be worth about $722
million on its own.
“This year, because prices are much better,” Shurley
said, “government spending will be greatly reduced.”
Cotton money, he said, filters from farmers’ hands into the
rural economies where the crop is grown.
Economists figure that for every cotton dollar spent by a
farmer
for such things as equipment, chemicals, loan payments and
land,
three more dollars are generated throughout the economy.
The 2003 Georgia cotton crop is on pace to generate about $2.1
billion in economic activity in Georgia.
“This year’s cotton crop will definitely be a boost for
Georgia’s economy and the local, rural economies where cotton
is
grown,” Shurley said.
Cotton prices are up because demand is as strong as ever and
supplies are shorter. They have remained high and stable in the
past month because China, a major cotton-producing country, had
a bad crop and is buying more than expected this year.
