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As farmers move from cotton to corn, jobs are lost

Fields of white cotton once stretched as far as the eye could see across the fertile Mississippi Delta, but now many of those acres are flush with green corn stalks. U.S. cotton production peaked in 2005 and has been sliding since as farmers switch from growing fiber to food.

The reasons are many: Corn prices have been strong, and it’s more profitable because it takes less labor to produce. Corn’s lower production costs also make it a less risky investment than cotton. Cotton production dropped about 53 percent in the five-state Mid-South region from 2005 through 2008 as farms converted to corn and soybeans. Job losses followed.

Economists estimate for every three jobs needed to produce cotton, only one is needed to grow corn or soybeans. It’s difficult to say how many jobs have been lost, but the shift is real, and rural economies are feeling the effect, said Darren Hudson, director of the Cotton Economics Research Institute at Texas Tech.

Lost Infrastructure. Some cotton gins have closed. Others have been dismantled and shipped overseas. “It’s sort of a permanent loss in that infrastructure, and it’s hard to overcome that if you go back the other direction,” Hudson said. “It wasn’t the old gins that shut down. It was the new ones because they were leveraged more,” with much higher debt.

Growers using the remaining gins to separate cotton fiber from seeds saw prices go up as gin owners raised fees to cover maintenance costs on old facilities and loan payments on new ones. Some growers also faced higher transportation costs because they had to go farther to find an open gin.

Most cotton jobs are in post-production, and that’s where losses have been greatest. Yazoo Planters Gin Co., near Yazoo City, Miss., went from ginning as many as 20 farmers’ cotton to four, president Bernie Jordan said. While the gin once ran 24 hours a day, seven days a week, it now operates 10 hours per day, five days a week. As many as 30 workers manned the gin when it ran around the clock; now there are no more than 10.

Shift in Focus. “They’re gone for good,” Jordan said of the jobs. “We are in this area traditionally cotton-oriented and the infrastructure is built around cotton. Once the infrastructure goes away, it’s just too expensive to make that investment to get it back.” Since 2006, the number of gins in the U.S. has dropped from 835 to an estimated 700, said Harrison Ashley of the National Cotton Ginners Association.

Jordan, who also grows cotton, shifted his focus gradually. But in the past three years, he went from growing 70 percent cotton and 30 percent grains to 40 percent cotton and 60 percent corn. Part of the incentive came from the ethanol boom, which helped push corn prices to about $4.50 a bushel, nearly double what they were before the Energy Policy Act of 2005 established a renewable fuels standard and mandated use of ethanol in gasoline. Competition among livestock producers for feed for cattle, poultry and hogs also kept corn prices strong.

Cotton prices weren’t weak, but corn required less labor, fertilizer and chemicals to grow and harvest. The shift in production has had a dramatic effect on some rural communities. Fewer workers hauling fiber from the field to the gin yard, bringing it into the gin, running the gin and delivering ginned cotton to warehouses and mills means fewer paychecks. Businesses that supply fertilizer and other chemicals are selling less.

Economic Impact. “You’re reducing the amount of money that’s being spent in the local economy,” Hudson said. And, said Steve Martin, a researcher at Mississippi State University’s Delta Research and Extension Center in Stoneville, “we’re probably just beginning to realize the economic impact” on rural towns.

The Mississippi Delta has been particularly affected because it has ample water. Elsewhere, switching to corn wasn’t as viable an option because it needs much more water than cotton. In parts of Texas where water is very limited, acreage hasn’t shifted as much as it has in the five Mid-South states of Mississippi, Arkansas, Louisiana, Missouri and Tennessee. Texas remains the nation’s leading cotton producer.

But even there, some cotton growers are making the final move, selling their cotton-picking machines, which can cost as much as $500,000. “If you’re the marketing manager of cotton pickers you’re in trouble,” Martin said. “A cotton picker is only a cotton picker, so when producers get rid of those, they’re going to be hesitant to spend what it cost to get one to get back into that business.”

Written by The Associated Press
March 22, 2010

CONTACT: Darren Hudson, director, Cotton Economics Research Institute, Texas Tech University, (806) 742-1921 ext. 272 or darren.hudson@ttu.edu

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