West Texas cotton farmers face “a continuation of the challenges we faced in 2011,” said Plains Cotton Growers President Brad Heffington following the annual PCG annual conference recently in Lubbock.
Last year, Heffington said, was the driest on record for the Texas High Plains. “One of the consequences of that is that our underground moisture situation is still pretty dire. But I do see some changes in the weather pattern, from an old farmer’s perspective. We’ve had a few showers, and it feels like a more normal rain pattern. But we need some rain, not just showers, to get our crop going.”
Heffington, who farms near Littlefield, said most people are pretty optimistic after seeing some showers following a 12- to 18-month stretch with virtually none. “If we can get a good planting rain and some timely rain during the summer, that’s how we make our living on the High Plains. We are a rain-deficit area but, fortunately, most of our rain comes in the growing season. We’re cautiously optimistic that weather patterns are changing. If you have experience in this industry, you can see the changes.”
He’s not as upbeat about cotton prices, however.
“We went from a record high price that most producers couldn’t take advantage of—because they didn’t have a crop in 2011—to a 40-percent drop in the price of cotton from this time last year. Our input prices keep rising as they do every year—seed and fuel, especially, our labor and our equipment expense—I really can’t comprehend sometimes how much that goes up each year.”
He said at the current price of cotton, with futures in the low 90-cent range, “we can make a profit at average yields. Everyone is pretty excited about that. But we are a little worried about how that price will hold if there is a cotton crop across the world, and we start building supplies after a deficit period.”
He’s also worried about contracts, or, to be more exact, a lack of contracts from merchants. “We have commodity prices that will probably rise a little going into planting,” he said, “but if we get a crop growing and things in the world seem to be average, we could have a significant price decline by harvest. Without pricing opportunities—forward contracting, cash contracting—it’s a little concerning. I’ve been doing this for 24 years, and most of the time we’ve had at least a portion of our crop priced at planting time.”
He said merchants do not want to forward price anything right now because of the volatility of the last few years. “That’s the biggest thing that has me worried right now. I always have faith that it’s going to rain, but I’m worried about selling it right now.”
He’s likely to worry a little more about the rain and getting the crop in later. “It’s just our nature to be optimistic most of the time.”
Water regulations are another challenge. “Our water district has been progressive in implementing conservation practices. There is a lot of debate on that.”
He said Plains Cotton Growers is working with the water district to find common ground on implementing regulations and particularly finding reasonable means of measuring water use.
“The problem is that they are transitioning from a conservation district to more of a regulatory agency.”
He said “the devil is in the details and everyone is trying to sort those out. The water district is listening a little more and trying to understand the impact some of these rules will have on producers. I think they are open to discussion. Farmers want to be conservationists but at the same time it’s hard (to understand) some of the regulations with metering and reporting. Even if we get away from metering, it will take a tremendous amount of time. I have more than 120 wells myself and figuring (water use) on all that is going to take longer than it takes to figure out my income taxes.”
He also acknowledged that if farmers have to install meters by 2016 the economic impact will be tremendous. “Installation cost is about $2,000 a meter. You can do the math on my wells and see that it’s a significant dead cost on my operation. It’s not going to improve the efficiency of my operation or the profitability; it’s just going to monitor what I’m doing on my land.
“It’s a little hard for producers to swallow all that. As I said, most producers want to be conservationists, but we also still want our property rights and the ability to grow our crops. I fully believe as time goes forward producers will use innovation, new technology and other things,” to save water.
“We probably use half the water we did 10 years ago—some places because that’s all we have left since it’s (the water table) dropped. The mother of invention is necessity, and as time goes on we’ll continue to adopt new technology where it’s feasible.”
In the meantime, he’s working with his electric co-op to devise a system to measure kilowatt usage to help measure water use.
Heffington said he’s always excited to start a new year. “And we’ve had some rain so we are looking forward to getting started.”