2020 Could Have a Massive Decline in US Cotton Acerage

Posted by Lillian Frasier on Tuesday, February 4th, 2020 at 2:19pm.

In the past century, cotton acreage in the United States has fluctuated immensely. From 46 million acres set aside for cotton in 1925, to only 10.8 million acres in the mid-eighties, the amount of cotton within the United States has definitely seen its ups and downs. 

As of 2019, there were approximately 14 million acres across the country dedicated to cotton, about 6 million of these acres within Texas alone. Now though, there is a fear that in the upcoming years cotton acres will begin to plummet.

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How big of a decline will that be?

Professor John Robinson, who teaches at Texas A&M University and specializes in cotton marketing, has predicted a decline of 2 or even 3 million acres within the next year. This would bring the size of the cotton acreage in the United States down by over 20% to just around 11 million acres. 

While this is only a prediction, there are factors indicating this decline that began building in 2018 and have yet to be resolved.

 cotton-feild-flower-dawn-harvest-production

 

What is causing this decline?

US cotton prices have dropped by 30% since the trade dispute within China began a few years ago. The 25% tariff makes the cotton coming from the US much less competitive compared to countries such as India, Brazil, and Argentina for Chinese producers. 

The National Cotton Council announced in a recent meeting that the market share of China’s cotton imports has fallen, “from 45% for the 2016 and 2017 crops, down to 18% for the 2018 crop.” 

Currently, this decline in market shares is continuing, which means much less cotton will be produced within the United States as a result.

 cotton-feild-flower-dawn-harvest-production

 

What are the economic implications for Texas?

If we assumed that this decline was evenly spread across all of the cotton-producing states, that would mean that Texas alone would lose around 1.3 million acres. 

With a profit of around $147 per acre, that means the Texas economy stands to lose 1.9 million dollars worth of output. Needless to say, this would be a massive drain on our economy.

It also should be considered that the cotton industry, including the products cotton is used in, produces about $24 billion annually for Texas. This is by no means a small proportion of the Texas economy as a whole. In fact, it almost accounts for a tenth of all Texas’ annual production

Looking at potentially losing so much of the Texas cotton production does not boast much confidence. This just proves the necessity of stemming the Chinese tariffs sooner rather than later, not only for the US as a whole but for our home state of Texas in particular.

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