George Lacour’s term as president of the Southern Cotton Ginners Association began pleasantly enough.
In the spring of 2012, soybean futures were around $12 a bushel, corn was under $6 a bushel, and cotton around 90 cents a pound. A producer with a diverse crop mix could make good money on just about any crop.
Then all heck broke loose.
World record cotton stocks and softening cotton demand, coupled with a drought in the Midwest that devastated the U.S. corn crop, changed the entire dynamic.
By the end of the growing season, soybeans were over $17 a bushel, corn was over $8, and cotton had fallen to 73 cents a pound. Cotton’s outlook had turned from bright to bleak in a span of months.
By early fall, the U.S. cotton industry was looking at the possibility for significant reductions in cotton acreage for 2013, perhaps as high as 40 percent to 50 percent, as producers are expected to rush toward the glitter of high prices in alternative crops.
LaCour, his successor Robert Royal, and SCGA are facing what could be a pivotal year in the history of U.S. cotton production. While a significant cutback in acreage is exactly what the cotton industry needs to put fundamentals back in balance, at the same time the cotton industry must find ways to preserve current ginning capacity until this happens.
“Thank God we have the option to plant another crop, so we don’t have to plant cotton for another year, and we can reduce this surplus,” LaCour says. “If we don’t reduce this surplus, we’re never going to get a good price for cotton.”
Back at the Tri-Parish Gin in Lettsworth, La., LaCour and gin manager Peggy Grazeffi are preparing to “run lean and mean for a few years — we’re trying to figure out a way to survive a bad time in the industry.”
Not every gin shares that philosophy, LaCour says. “I’ve seen two gins close because they didn’t think they were going to make money this year. I think that was a very quick decision to make, considering they’ve been in operation for half a century. You don’t give up when you don’t make money one year.”
That’s not all that’s troubling LaCour.
Finding parts to keep gins in tip-top shape has become harder and harder due to industry consolidation. “You used to just run up the road to Rayville, buy a part and come back. Today, if you think you might need a part at some point in the season, you’d better find one now. You can’t go to a John Deere store to buy parts for a cotton gin.”
Gins will likely reduce shifts as less cotton comes off Mid-South farms, LaCour says. Re-employing those workers after a year or more off could be difficult, especially if they’ve found work elsewhere. He wants the SCGA to keep communications open during cotton’s downturn.
“The people who work in a gin are working people — they are people that everybody wants. And with our labor force as short as it is, I think it’s a challenge for our association to create a network to find capable people to help run gins.
“How do we go about trying to keep information on them, share information, and find parts? Losing the parts and losing the people — those are things that worry me the most.”
LaCour doesn’t want to lose inroads into the dairy industry either. With the help of Cotton Incorporated, cottonseed has become a highly-valued feed source for the industry. But with a significant reduction in cotton acres expected in 2013, that market could be in peril if there is a lack of supply.
The SCGA safety program is the cornerstone for the association, and something LaCour thinks about all the time. “I don’t want anybody in this business to get hurt,” he says. “In 2011, the Mid-South had two fatalities. That was devastating. The first thing I pray for is to have a safe year. Also, if we don’t have a good safety program, we can’t keep workers comp insurance rates where they are, much less be able to buy insurance. We’ve got to be safe in this industry.”
Despite the rocky times, LaCour says he thoroughly enjoyed his year as president of the SCGA. “It was fun. It wasn’t as fun as ginning cotton — nothing beats ginning cotton. It’s been a challenge in the sense that I’ve been watching the industry change.
“I have also met some of the most wonderful people. From every grower to every ginner, it’s just a great profession. We have genuine, salt-of-the-earth people in this industry; we all live and breathe cotton. I have a huge amount of appreciation for the SCGA staff. Our executive vice president Tim Price does a wonderful job. We can’t do without Larry Davis and his safety program. It’s a great industry and we have a great organization; I have become really more appreciative of it during my term as president.”
Asked if he’s optimistic about cotton’s future, LaCour thought carefully. “I’m a farmer. I don’t know too many farmers who can be pessimistic. Anytime you put everything you’ve got on the line and wait on a rain, you’d sure as hell better be optimistic. An optimist plants, then waits on a rain; a pessimist waits on a rain and then plants.”
Tri-Parish Gin ginned a little over 19,000 bales in 2012 from about 9,000 producer acres. “We had some of the best grades we’ve had in years, beautiful staple and good micronaire,” says gin manager Peggy Grazeffi.
Despite the good quality and good yields, it won’t be enough to convince growers not to move to corn and soybeans in a big way this year. Fortunately, the gin’s customers aren’t getting too caught up in the rush to grain.
“We have such wonderful producers,” Grazeffi said. “They have really supported this gin over the last three or four years. They know it’s critical that, when cotton comes back, this facility will be here. So they’ve hung in there.”
LaCour also farms rice, corn, wheat, soybeans, sugarcane and crawfish. He’s planning on cutting back on cotton in 2013, but he’ll still plant around 500 acres.
“As ginners, we’re bracing for the worst in 2013. But we have to keep a strong association to help get us through this downturn as best as possible. For years, cotton acreage was determined by the farm bill, then it was the market. In the future, cotton acreage may be determined by ginning capacity. We don’t want that.”
He believes grain prices will eventually collapse, as cotton prices did.
“There are growers who believe grain prices are going to stay high,” LaCour says. “The unreality of that is a good reason to stay in the cotton business. I have sold corn for less than $2 a bushel at the same time cotton was selling for 50 cents a pound and soybeans for $4.
“It won’t stay this way — it’s going to change. It may take a couple of years, but cotton is going to come back.”