You can't be an “average” cotton producer and expect to make money this year — average in the sense of yields.
In Alabama, the five-year average cotton yield is 645 pounds per acre, with a low range of 492 pounds and a high range of 772 pounds. That average, says Auburn University Extension Economist Max Runge, won't be good enough this year.
“When you compare these averages with the budgets, there's no way you can make money. In other words, you can't be average,” said Runge, speaking at the recent East-Central Alabama Cotton Production Meeting in Lee County, Ala.
According to the Auburn University Enterprise Planning Budget for this year, an Alabama cotton producer will have about $435.18 per acre in variable costs this year, including large increases for fuel and fertilizer. When you add the fixed costs, including machinery, irrigation, land ownership, and general overhead, that figure increases to $532.18 per acre.
“At today's cotton prices, there isn't a whole lot of money there,” says Runge. “When you're spending that kind of money, there are no unimportant things that you'll do in growing cotton.”
Marketing cotton, he says, isn't nearly as enjoyably as driving a tractor across a field, but it is as important. “You need to work as hard marketing your cotton as you do with everything else,” he says.
While input costs have continued to rise and market prices have slumped, cotton yields in the United States have improved in recent years, says Runge. “Because of some of the technology we're paying for, our yields have gradually increased. And over the last few years, they have gone up quite a bit. So we're still producing a lot of cotton, even though we're producing it on less acreage,” he says.
U.S. growers need for cotton demand to remain strong if prices are to improve, he says. Going into 2006, the U.S. carryover is about 7 million bales.
“There's a lot of cotton out there. We're looking at somewhere between 21.5 million and 23.5 million bales of cotton produced, and we have to do something with that cotton. With that in mind, the prices won't look that great. You need to work extremely hard marketing your crop this year, and you need to think about having a good portion of your crop sold before you plant it. You have to work to produce cotton, and you have to work at marketing,” he says.
Runge urged growers to adopt a systems approach when producing cotton, including soil testing, scouting, rotating and other things that'll make an operation more efficient.
In reviewing Alabama's cotton crop this past year, growers averaged 749 pounds per acre over about 550,000 acres, says Dale Monks, Auburn University Extension cotton specialist. “This is our third good year in a row as far as the state average, even though some of our growers experienced problems this past year,” says Monks.
There were a lot of reports of boll shed this past year in Alabama, he says, especially in July. “Some varieties were accused of boll shed more than others, but we saw it in all varieties in our plots. Some thought it was due to too much moisture. We saw three hurricanes or storms in the southwest part of the state, and some growers in Mobile County were hammered hard. For the most part, however, it was a good overall year,” he says.
There was concern in Alabama in 2005 over cotton harvest conflicting with peanut harvest, but lint quality was about the same this past year as it was in 2004, he says.
Looking ahead to the 2006 crop, Monks urged growers to pay special attention to variety selection.
“We have a lot of varieties coming out, and a lot has been said about Roundup Ready Flex, which allows growers to continue spraying Roundup later into the season. But when growers ask me which Roundup Ready Flex variety they should plant, I don't have a good answer. We just don't have enough experience with the variety to make a recommendation,” he says.
“If you have a problem where you're consistently spraying over-the-top after the four-leaf stage, then that's where Flex will help the most. I would suggest being limited with Roundup Ready Flex. There's nothing wrong with taking a look to see how it fits in your system,” he says.