The question has become almost automatic for anyone from Mississippi. Few in the cotton industry can believe reports that some Delta counties could increase their 2001 cotton acreage by 30 to 40 percent.
So, it was almost inevitable that Bruce Brumfield, a cotton producer from Inverness, would be asked to put a figure on any increase following his presentation at the USDA Outlook Conference.
Brumfield, a member of the 21st Century Commission on Production Agriculture, and former president of the National Cotton Council, took his time answering the question. “One thing's for sure — it will be easier to see after Feb. 28,” he said, referring to the crop insurance signup deadline for Mississippi.
(At the Outlook Conference, USDA economists cited a 20 percent decline in crop insurance premiums for higher levels of “buy-up” coverage as a factor in a projected 3 percent increase in Beltwide cotton plantings in 2001.)
Then, as he frequently did when he served as Council president, Brumfield brought the question to the local level by citing numbers from the ginning operation in which he is a partner to help put the situation in perspective.
Brumfield noted that Duncan Gin served 42,000 acres of cotton in 1995. By 1998, that had dropped to 18,000 acres. In 1999, it rose to 20,000 acres and, in 2000, to 24,000. “We could be up 40 percent this year,” he said, “but we still won't be back where we were.”
Some of 1998 decrease was due to the new flexibility of Freedom to Farm, but the financial stress of three years of low prices and adverse weather conditions have also constrained acreage.
“Any farmer will tell you Congress and the taxpayer have been very generous to agriculture in the last three years,” he said. “From the turn-row, we don't see much future over the next two or three years without continued support.”
A board member at a local bank, Brumfield has seen little improvement in farmer balance sheets this year; in fact, there has been a substantial deterioration in credit quality.
So, why will more cotton be planted when prices are falling? Because cotton farmers believe it offers them the best option under the desert-like weather conditions they've endured. And, because they are optimists who believe weather and prices must improve.
Contrast that with the merchant community, which has become more bearish in the face of the market's inability to crawl out of its lows despite what appeared to be an improving worldwide stocks situation.
“Everyone was bullish back in December,” said a merchant attending the Outlook Conference. “But, we have become more apprehensive after the last two or three weeks. If this market couldn't make 70 cents with all it had going for it in December, then how can we expect it to do it next year when acreage will be higher.”
One analyst recently suggested that it might be better for producers to take their AMTA payment and buy 62- and 63-cent calls and not plant in 2001. As tempting as that might be this spring, it would be totally out of character for cotton producers, especially those in Mississippi.