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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.