In Press: AAEC’s Hudson warns tough cotton year could bring huge losses
By: Norman Martin
This month Darren Hudson, a professor within Texas Tech's Department of Agricultural & Applied Economics, was featured in a timely cotton-related economics article by Brandi Addison, a reporter with the Abilene Reporter-News. Here's part of the takeaway.
This year's struggling cotton crop − amid an unwavering drought and economic hardships with the rapid rise in production costs − could impact the regional economy in a major way, with estimated net losses of more than $1 billion, says Darren Hudson, Texas Tech's Larry Combest Endowed Chair for Agricultural Competitiveness.
He estimates that the High Plains and parts of West Texas will, at most, produce about 2 million acres of cotton this year − slightly less than half of last year's 4.5 million acres − and that number continues to sink. With the High Plains and Rolling Plains region producing between 5 and 8 percent of the global cotton crop, the loss is roughly a 3 percent dip in total global production.
While many cotton farmers are unlikely to see the same paycheck they saw with last year's crop, which landed above the 10-year average in total acreage, Hudson notes that farmers with crop insurance will fare far better than those without. Earlier this month, he co-published a study that details the regional economic benefits of crop insurance during drought.
"We're probably approaching 65 to 70 percent of abandonment," Hudson said. "Farmers with crop insurance will only experience about a 35 percent (financial) loss − that's still pretty substantial."
With a regional production loss of about 65 percent − which he determined is the most-likely scenario − Hudson said the region could face a $2.1 billion loss in total economic activity and more than 17,100 job cuts across the region. Even with crop insurance, he estimates that the region will see a total loss of $1.2 billion and about 9,200 job cuts.
"We could be losing a billion dollars of regional economic activity across the High Plains," Hudson said. "That crop failure is such an important component to the regional economic system. When we say $1 billion, we're talking about its impact on restaurants, car dealerships; any place that money usually filters through system will disappear.”
Hudson, who joined the Davis College faculty in 2008, received his master's and doctorate degrees from Texas Tech. His research broadly focuses on agricultural policy and trade, economic development, marketing and consumer demand, and behavioral economics.
CONTACT: Darren Hudson, Professor, Larry Combest Endowed Chair for Agricultural Competitiveness and Director of International Center for Agricultural Competitiveness, Department of Agricultural & Applied Economics, Texas Tech University at (806) 834-0546 or firstname.lastname@example.org
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