Cotton

By Ben Baker

As Southwest Georgia’s No. 1 crop, cotton is definitely king. At the Georgia Cotton Commission in Perry, Executive Director Taylor Sills and his staff keep a watchful eye on this ancient crop.

This year is proving to be a rough one. Mr. Sills said he spoke to one farmer who said this is the most expensive crop he has ever grown and it is the most expensive for his father and his grandfather, even factoring in inflation.

“To grow, inputs are way up,” he said. “UGA economists said - and these numbers are back in the spring - it would take $1,200 to $1,300 to grow an acre of cotton. That was $200-$300 up then.”

No doubt with the harvest yet months away, the price is higher.

“A lot of it is diesel. A lot of it is fertilizer. A lot of that comes from overseas, Russia and Belarus. That situation has put things into a tailspin,” he said.

Weather has a lot to do with yields, so getting a per-acre yield depends on the weather. The US Department of Agriculture is predicting an average harvest of 914 pounds per acre this year for Georgia. Mid July, the market price for cotton was 1.09 per pound and that was down about 40¢ over the past few months. That comes to about $996 per acre for the cotton.

Running those numbers shows some farmers stand to lose money this year.

The situation is not that simple. Irrigated cotton generates higher yields than dryland cotton. Irrigated cotton is also more expensive to produce.

Fortunately, cotton is more than just the fibers. Cotton seed is a valuable commodity as well. Prices as of this article were around $170-$180 per ton.

BANKING

In South Georgia, cotton and peanuts are the biggest part of banking. While direct loans and financial services to banks accounts for a sizable chunk of rural bank business, Mr. Sills said the rollover effect is even greater.

Rollover means the number of times a dollar is used in a community before it leaves the area. While a farmer may borrow money from a bank, he will spend that to buy fuel, fertilizer, seed, hire people to help with the crop and other expenses. The farmer will take his profit to pay himself, his household bills and with some luck set some back to help grow the next crop. All the money he spends goes out to salaries for people working where the farm does business, taxes for those people and their businesses and so on.

“A farmer’s money makes more revolutions in a community than you might think,”

he said.

Cotton as a cash crop generates more than $200 million in the South Central Georgia region. “That is in cotton and cotton seed alone. It even trickles into communities like Macon and Atlanta. In any given year, cotton represents a billion dollars in farm value,” Mr. Sills said.

The Georgia Bankers Association has an ag committee to discuss ag markets and the potential impacts to the banking industry.

“A lot of our farmers can’t do it without lenders. Some can, but they are few and far between,” he said. The same can apply to community can apply to community banks that rely banks that rely on farmers and the loans they take out. Rural banks that can live without farmers are indeed few and far between.

COTTON PROGRAM

For a while King Cotton was not in the Farm Bill for price supports. It got back into the 2018 Farm Bill, but it also comes with something called a PLC, Price Loss Coverage. The PLC only kicks in when the price of lint, the ginned fibers a farmer sells, hit a certain point.

“We are still a long ways from triggering the PLC payment. We are outside of the farm safety net. As of right now, the cotton program is not citing taxpayers much of anything,” Mr. Sills said. anything,” Mr. Sills said. THE PRICE OF JEANS A good way to look at cotton is in the price of jeans. Of course, the price is going to vary of jeans. Of course, the price is going to vary hugely. Just to use a round number, say the hugely. Just to use a round number, say the average cost is $25. average cost is $25. Figure a pair of jeans weighs 2.25 pounds. With cotton at $1.09 a pound, pounds. With cotton at $1.09 a pound, the farmer gets about $2.45 per pair the farmer gets about $2.45 per pair of jeans. of jeans. If a bale of cotton weighs 500 pounds, you can get 222 pairs of jeans from that bale, with maximum efficiency in the manufacturing process. Reality says the process sees some waste, which means fewer jeans from that bale. Because the farmer is paid by weight, he still gets about $2.45 per pair of jeans.