While Some Economies Suffer, Cotton Prices Rise to High Levels

It was once said that more cotton was grown in the West Texas Panhandle than most of the "deep south combined", Texas high plains became the mother of cotton in the USA for many years. 

by Ben B. Boothe, Editor, Boothe Global Perspectives

In 2022, the PCCA, an excellent COOPERATIVE (existing to protect the prices of cotton in Texas, Oklahoma, Kansas and New Mexico), reported their warehouse division handled its 4th crop ever harvested, while shipping 60% more rail cotton than the prior year.  Its team supported gins and distributed more than $1.300,000,000 (BILLLION DOLLARS) of payments to growers.   While Russia and Ukraine fight and destroy food crops, Texas and the Southwest continues to grow millions of acres of grain crops, fiber, and livestock feed.    Indeed, it plus the great "farm belt" of central USA, and the specialized food crops grown in California, make the USA self-sustaining for food and grain crops. One of their great secrets, are the "Cooperatives", in America. 

Cooperatives allow farmers to band together, combine resources and create capital for farming.  They have been huge successes in the USA. Remember the word:  Cooperatives. As a cooperative, it is owned by farmers, a system long used in West Texas, that has been very successful over the last 80+ years.  We have seen agricultural communities create farm cooperatives, for cattle, wheat, and a number of grain and fiber "cooperatives" capital sources.  I recall speaking for a cattleman's association in Amarillo, and a cattleman stood up and called a group "communists" and those present groaned.  Many of the farm communities, simply historically didn't have the capital or bank lenders necessarily to take care of farming financial needs..."Cooperatives have been a successful part of the farm economies in the USA." 

The Plains Cotton Cooperative helped PCCA growers to average receiving $1.10 per pound for cotton in 2022.   Not bad considering the prices in Augus of 2021 were about 72 cents per pound of cotton, and by June of 2022, the price had risen to 90.30 per pound of cotton,  The PCC (Plains Cotton Cooperative handled 5,089,047 bales of cotton, not bad for a home grown "Cooperative" where the farmers own it and provide the capital, which circles around and finances cotton farmers, often when banks or investors cannot fill the demand. 

As the world faces demand and shortages (some caused by wars such as we see in Ukraine vs Russia and some caused by general disruptions or competition from India, China, Russia and smaller irritants such as North Korea, Brazil and other nations...cooperatives create capital for farm industry. 

The American farmer and the typical farm used to reflect poverty or difficult times.  But farmlands these days represent equity and prosperity.  Farmers are tough and seem to know the secrets of survival and creativity during hard times. In many places if a farmer owns one section of land (640 acres) his financial statement shows a value of a million dollars per section.  In some areas of the farm belt, where there is irrigation or enough rains for crops that require moisture,  values of farms multiply.  Other sources from the land for grazing, oil and gas income, hunting, and specialty crops,  and other creative uses, make farmlands more valuable. 

But farming  is a complex business with multiple challenges, and multiple skills needed to properly farm and manage farm operations. Favor and encourage your farmers, they are a solid foundation of a good economy and have been for the last 150 years in America.  The numbers, risks and returns have vastly increased over the years.  And when a dry spell or market decline comes, the risk/reward ratios come back, with the financial statements of farmers, their lenders and investors taking the high risks...sometimes offsetting those high rewards.