It’s High Cotton but High Costs

Once Valledupar's main economic produce; Cotton

With the next Arizona cotton harvest just around the corner, expectations on cotton prices are cautionary as the costs to grow cotton climb.

By Julie Murphree, Arizona Farm Bureau

Arizona cotton farmers are beginning to make plans for this year’s harvest. And, if you’re curious about cotton because you see it as you speed by in your air-conditioned vehicle, we’re still a few weeks away from watching the big cotton pickers going down the rows of white, fluffy cotton.

In fact, according to our Arizona cotton farmers, “squaring” has occurred on 90% of the state’s cotton acreage. Squaring describes the little square bud of a cotton blossom that eventually turns into a boll that holds all that valuable white cotton. And, 65% of the state’s cotton acreage has set bolls. In fact, some bolls are even beginning to open.

The cotton crop this year? It’s good, according to cotton farmers I talk to and my own visual on fields I drive by (We farmed cotton for years in Maricopa and Pinal counties).

If you watch commodity markets you’ve noted that all food and agriculture commodities across the board have gone up. In fact, looking at commodity prices might make the average Joe long for a John Deere, right? Well, not so fast.

It’s expensive to grow cotton. It takes dedication, serious analysis of your business financials and a strong faith in good weather (or you just like to gamble). Oh yeah, you need to be a good farmer.

Dan Thelander, Maricopa and Pinal County cotton farmer and current president of the Arizona Cotton Growers’ Association pointed to the possibility of a new price plateau for commodity prices. “Crop prices in general might rise to a new plateau reflecting the higher costs of production,” said Thelander. “I recall my first year of farming in 1974. I sold half my cotton crop for $.70 per pound and the other half for $.55. More than 26 years later, again I sold half my crop for the same $.70. I forgot to polish my crystal ball. Farmers in the U.S. have seen productivity increases, but those have not really kept pace with the higher cost of production. Government farm supports have made up the difference for most producers in recent years. But with growing concern about the budget deficit, farm programs will come under increasing pressure. Hopefully, the market will allow Arizona farmers to make a reasonable profit without as much government assistance.”

Yes, prices for cotton have reached well above $1.00 a pound. Though we’ve seen somewhat of a drop from its high, $1.00 a pound cotton doesn’t mean that our Arizona cotton growers are in “high cotton.”

Consider the Arizona farmer with 2,300 acres of cotton. This farmer’s costs for a recent crop year include more than $300,000 in soil enhancement costs, $141,000 in fuel costs (includes gas, oil, diesel, etc.), $216,229 in water costs and $546,000 in land rental, excluding labor which is often the biggest expense. This cost breakdown represents the farmer’s major costs for a particular year, and not some of the additional costs that can be incurred such as unexpected equipment repairs and more. Every farm budget must build in for the unexpected.

Granted, costs vary depending on the farm and certainly because of size of operation. But the next time you whiz by in your car and wonder how much that cotton farmer will make off his crop this year, just be glad you’re not spending more than $100,000 on your fuel costs.

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