With cotton prices significantly higher than they were a year ago, conventional wisdom would indicate farmers might scrap some of the austerity measures they've adopted for the past few years and pump additional funds into production.
Conventional wisdom would be wrong. Or at least partially wrong. Or maybe just not completely right.
“The reality is that farmers may not see much more money from this crop than they have from the last few,” says Randy Boman, Extension cotton specialist at the Texas A&M Research and Extension Center in Lubbock.
“They'll get more money out of the marketplace,” Boman says, “but the world market price, which defines the A Index also is up and as that index rises, the loan deficiency payment (LDP) drops. It's only about 4 cents a pound now.”
Cotton farmers may have a stronger safety net under this crop than they have since 1996, thanks to somewhat more favorable farm programs, but income may not justify going for broke on production just yet.
Boman says conditions also do not suggest that farmers cut corners that will significantly affect profit potential. And that's where the thinking might get a bit murky.
“I encourage farmers to test their soils and fine-tune fertilizer application based on what the crop will need,” he says.
Energy cost also clouds the financial picture. “That was a big cloud even before war became a near certainty,” he says. “Farmers already faced high prices for diesel, and we have no idea what prices will do once bombs start falling.”
He says anhydrous ammonia costs are up because production requires significant amounts of natural gas and prices for gas have risen considerably.
Boman says moisture remains the highest priority for most cotton farmers.
“We have had virtually no rain in the High Plains since December, so we have many farmers making pre-plant irrigation applications. Energy costs make pre-watering an expensive proposition.”
Boman says some growers may opt to water a little less than usual and hope a rain finishes filling the soil profile before planting time. “Or maybe energy prices will drop some by then.”
“Producers are looking at a lot of ways to manage costs,” Boman says. “They're cutting back on seeding rates, and we've seen that as little as 10 pounds of seed per acre, versus 15 pounds, may produce comparable yields. My data comes from fields that have not suffered hail damage or other environmental problems, such as blowing sand.
“One also must have high confidence in planting-seed quality when seeding rates are dropped to marginal levels.”
Boman says High Plains farmers fall into two distinct categories: dryland and irrigated. Each comes to the field with a different mindset about how to make the crop and what to expect from it.
“Dryland farmers will make a crop as cheaply as they can,” Boman says. “Some will plant black seed (non-transgenic varieties saved from a previous crop) and have no more than $10 per bag in seed costs. Farmers who plant newer varieties and add a seed treatment may spend $15 per bag.”
That's compared to some transgenic varieties that sell for more than $200 per bag. He says many dryland farmers will opt to leave off the seed treatment to save money.
Cost of seed treatment to protect against seedling diseases, Boman says, is a good investment over time. “Seed treatment may not be economical every year, but anything we can do to protect cotton seedlings pays off over the long run.”
Treated seed is pretty much a given on irrigated land. “A lot of growers with irrigation plant transgenic varieties, which come with a good seed treatment package already applied.”
Boman says cotton farmers express a bit more optimism this year as they go into planting season. They do have a better safety net with the new farm bill, but they also continue to watch costs closely.
He says growers should get as much information as possible about variety selections, chemicals and fertility. Results from Extension large plot systems variety trials and Texas Agricultural Experiment Station variety performance tests conducted by Dr. John Gannaway at numerous locations across the High Plains are available from the Texas A&M Research and Extension Center at Lubbock.
These reports are available at your local County Extension offices and from the Lubbock Center Web site located at http://lubbock.tamu.edu.
“Another good source of information is a Monsanto spread sheet that explains the Roundup Rewards program,” he says. “It's available at dealers and shows potential savings opportunities.”
He says farmers who intend to plant transgenic Roundup Ready varieties should look at it. He says another program provides a seed cost calculator. “Growers can compare the costs of varieties that include Monsanto technology.”