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Cotton and Water Subsidies Net Bumper Crop of Cotton in CA

Tri-Valley Herald

California farmers ready for record cotton harvest
By Jerry Hirsch
Los Angeles Times

Saturday, November 06, 2004 - California cotton farmers are poised for a
record harvest this season, a production surge that should help mitigate the
effects of low commodity prices.

Officials at the U.S. Department of Agriculture expect growers in the
Golden State to set a U.S. record for the most cotton per acre: 1,465
pounds, about double the national average.

As Tim Thomson surveyed the cotton he grows on both sides of Interstate 5
near Buttonwillow last week, he was glad to see a giant crop -- as much as
1,750 pounds per acre.

John Pucheu is eying a similar bounty on the 2,600 acres he farms west of
Fresno.

The big harvest is a good thing for growers such as Thomson and Pucheu, who
need the extra revenue to help offset plunging world cotton prices. "It's
better to have a big crop when prices are low than to have a poor crop when
prices are low," Thomson noted.

Many of the state's 1,500 cotton farmers also are bound to take advantage
of various federal farm subsidies. Based on market prices, they could fetch
up to 20 cents a pound from government support programs, which would allow
most to turn a small profit.

Although the harvest has just begun, California growers are expected to
pick about 2.4 million bales of both Acala and higher-grade Pima cotton this
fall. Most of it will wind up in Asian textile mills.

Cotton is big business in California, the leading agricultural state, with
nearly $30 billion in annual farm revenue.

Overall, California is expected to account for about 11 percent of the U.S.
cotton crop this year and about 2 percent of global output. The state, which
sells about $1 billion of cotton fiber and seed annually, trails only Texas
in domestic production.

California is home to the world's biggest cotton grower, J.G. Boswell Co.,
whose operations are concentrated mainly in Kings County.

California is hardly the only cotton region where production is surging,
thanks to near-perfect weather conditions around the globe.

USDA officials estimate that the 2004-05 worldwide crop will hit a record
107 million bales, a 14 percent increase from a year ago. The domestic
harvest also is expected to be a record -- more than 20 million bales. (Each
bale weighs 480 pounds.)

About the only trouble spot is the Deep South, where a series of hurricanes
dumped rain on the region's cotton fields, undercutting the size and
damaging the quality of the crop.

Farmers there could find themselves in precisely the nightmare scenario
that Thomson laid out -- facing a poor crop in a soft market. Said Pucheu:
"Someone else's disaster is good for the ones who didn't have it."

Production on his farm in the tiny town of Tranquillity is shaping up to be
the best in more than a decade.

Likewise, Thomson thinks his yield per acre will be at an all-time high.

Scott Sanford, a USDA analyst, explained that California farmers tended to
benefit from a variety of factors: good weather, sophisticated irrigation
systems and savvy management of fertilizers and pesticides.

Calcot, a giant Bakersfield-based marketing cooperative, paid 81.52 cents a
pound for benchmark cotton in 2003-04. That was the third-highest price in
the 77-year history of the group.

Longer-fiber Pima cotton drew just shy of $1.30 a pound, a co-op record.

Yet despite those favorable prices, the cotton business is often beset by
volatility.

Cotton futures prices ranged from a high of nearly 83 cents a pound to a
low of 43 cents during the past year. At the end of last week, the price of
California Acala stood near 53 cents a pound.

Prices could well keep drifting downward in light of the gigantic harvest
under way.

The USDA estimates that this year's crop will add about 6.5 million bales
to the global surplus. By the end of the season, the amount of cotton
sitting in storage will equal 40 percent of what the world's factories and
mills use in a year.