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Mid-South farmers and ginners are coping with “unprecedented times” as they try and adjust business models to high commodity prices, higher production/operating costs, and changing demands for crops, says David Blakemore, Campbell, Mo., producer/ginner/warehouseman.
Mid-South farmers and ginners are coping with “unprecedented times” as they try and adjust business models to high commodity prices, higher production/operating costs, and changing demands for crops, says David Blakemore.
The Campbell, Mo., producer/ginner/warehouseman was part of a panel discussion at the annual meeting of the Southern Cotton Ginners Association held in conjunction with the Mid-South Farm & Gin Show.
“I’ve seen three cotton depressions in my short career,” he said. “We’ve been through many up and down cycles — the up cycle we’re in now is just another, and it will change. The next cotton depression will probably be sooner rather than later.”
Borrowing from a Bob Dylan song, “The Times They Are A’Changin’", Blakemore, who was 2010 SCGA Ginner of the Year, says, “The people we do business with are also changing — there is a generational shift going on in agriculture, with a combination of older farm customers and newer farmer customers.We have to adapt to new business models that will involve ongoing adjustments to the crops we grow and the acres we plant.
“Prices, too, are changing. Commodity prices are higher, but they are coupled with higher input costs and higher land costs. Cash rent is increasing, regardless of whether it’s dryland or irrigated ground.”
Everyone will need to play close attention to their balance sheets, Blakemore says.
“Improving your balance sheet does not necessarily mean retained earnings. Watching your balance sheet means more than your borrowing ability — it's important to have cash on your balance sheet. You have to be prepared for a future that will likely get much worse."
In 1989, Blakemore notes, the U.S. ginned 12 million bales; by 2005, that had jumped to 26 million bales; but in 2009, with the broad scale switch of acres to corn and soybeans, cotton bales ginned had dropped back to 11.7 million, almost where they were 20 years earlier.
“Cotton will come back,” he says, “but not like before. Cotton came back in North Carolina and Georgia after eradication of the boll weevil. The two states grow more cotton now than they did at the bottom in the late 1980’s and early 1990’s.
“But, we’ve lost infrastructure. The market may make cotton stage a comeback of sorts in the short run, but we have to be prepared for a market that can get much worse in the longer term. Look, for example, at what happened to our textile industry."
Blakemore says his ginning operation is “doing what every gin should be doing — everything we can to maximize our value to the grower.” Among other things, he says, “We’re bringing gin trash back into the gin and cleaning it — all with the ultimate goal of providing the most value we can to the grower.”