What is in this article?:
- You can’t short-change a cotton crop.
- “Our biggest fear this year is the market.”
- Tweaking a few things to improve efficiency.
COTTON PLANTING was just about half done in late May for Wesley Butchee, Gaines County, Texas farmer.
Market a question mark
“Our biggest fear this year is the market,” he says. He says cotton “enjoyed high prices” for two years. “Funds came in and destroyed the market. They knocked producers out, and it was hard for us to price cotton. If the buyer can’t price cotton, the grower can’t either.”
He says cotton farmers have to figure out a price to sell, and they may be looking at oversupply.
Contracts are hard to find, especially acreage contracts. “Buyers want bale contracts,” Butchee says. “But weather is a big if for yields.”
He says acreage contracts have not been offered. “I’ve had acreage contracts for years and always delivered my cotton, even when I over-produced.”
Not being able to lock in a price on at least part of his acreage makes it difficult to figure returns. Production costs, he says, are excessive. “Fuel and fertilizer are still high, and we have no way to hedge those costs. The cost/price squeeze is worse than it was five years ago.”
He says the precipitous rise of cotton prices two years ago to $2 is misleading. “Producers got a lot less than that. Most farmers averaged from 82 cents to 85 cents a pound. And production costs tripled.”
He said holding cotton until harvest could be tough on farmers, especially if they end up putting cotton into the loan. “The loan is a program that keeps us from losing too much,” he says. “It’s below the cost of production. And we have to pay it back when the cotton comes out.”
Butchee says he tries “not to be dismal, but we have to be careful about what we do out here.”
He says farmers face a lot of perils they can’t control. “Farm programs were put in place years ago to balance out against foreign governments. We can’t control China, and that’s a big factor in the market.”
He says farm organizations are helping with the politics of agriculture and “keeping producers in business.” It’s critical for more than just farm families, he adds. “Agriculture and medical centers are what keep Lubbock’s economy going.”
He’s also concerned about the weakening of farm programs. “We no longer have a safety net,” he says. “We need a counter cyclical payment option but we’re not going to get it. We can’t grow cotton at a loss. We also need to see production costs come down.”
Available credit is also a key. “Most of agriculture runs off borrowed money, and we have to maintain the ability to secure loans.”
He has production tools to rely on.