Changes in Southern Cotton and Peanut Producing Regions

Abstract

Changes in Southern Cotton and Peanut Producing Regions Relevance of the Topic Texas and Georgia are the major cotton and peanut producing states. These two crops compete for the same crop land, where peanuts usually rotate with cotton on a 3-4 year cycle (Texas Peanut Producers). The Farm Security and Rural Investment Act of 2002 shaped current farm policy, specifically enacted major changes to federal peanut policy. Prior to the 2002 farm bill, price supports and a quota system limited production, which elevated farm prices and supported farm income for peanuts (Shields, 2015). The 2002 policy allowed peanuts to follow the same policies as other program crops, where farm payments were made when the prices or crop revenue dropped below the guaranteed level (Shields, 2015). The Agricultural Act of 2014 introduced addition modifications to peanut farm policy. Produces are eligible to receive payments through either the Price Loss Coverage (PLC) or Agricultural Risk Coverage (ARC), but most producers chose to enroll in PLC. PLC payments depend on reference prices potentially making peanuts more attractive to plant than other covered crops, such as cotton. U.S. cotton production has been declining since its peak in the mid-2000s. This declining trend may be due to changes in farm policy, substitute products such as polyester, or changes in markets for substitute crops. In response to the WTO case between the U.S. and Brazil, The Agricultural Act of 2014 excluded cotton as a covered crop under both PLC and ARC, unless growers reallocated base acres—other than generic base (former cotton) acres—using a one-time option based on 2009-2012 plantings. Cotton producers also have the option for enrollment in Stacked Income Protection Plan (STAX), which is under Title XI: Crop Insurance of the 2014 farm bill. Currently cotton producers are requesting that cottonseed be considered as an “other oilseed” to offer assistance to the low cotton prices. Data and Methods Descriptive and graphical analysis of data focuses on USDA National Agricultural Statistics Service (NASS) yearly production, market and price data. Prices received by farmers are in nominal prices. The objectives of this research are to: 1) Describe current market trends in the U.S. cotton and peanut industries 2) Identify recent changes in farm policy for cotton and peanuts and 3) Discuss possible reasons for changes in production of both cotton and peanuts. Potential for Generating Discussion This analysis is presented in poster format and will generate substantial discussion between AAEA members. The visuals and results are interpreted through visual graphics of comparison between market trends and changing farm policies. Analytical reasoning and commodity market information provide explanations for potential changes in these commodity markets. References Farm Journal- Ag Web. Flood of Chinese Cotton Sends Prices Tumbling Most in Six Weeks. April 15, 2016. http://www.agweb.com/mobile/article/flood-of-chinese-cotton-sends -prices-tumbling-most-in-six-weeks-blmg/. Date Accessed: April 18, 2016. Shields, Dennis A. U.S. Peanut Program and Issues. Congressional Research Service. August 2015. Date Accessed: January 14, 2016. United States Department of Agricultural- Economic Research Service (USDA-ERS). Ash, Mark. Oil Crops Outlook. July 15, 2013. Date Accessed: April 19, 2016. United States Department of Agriculture- Farm Service Agency (USDA-FSA). Base Acre Reallocation, Yield Updates, Agricultural Risk Coverage (ARC) & Price Lose Coverage (PLC). 2014 Farm Bill Fact Sheet. September 2014. Date Accessed: January 14, 2016. United States Department of Agriculture- Foreign Agricultural Service (USDA-FAS). GATS database. United States Department of Agriculture- Risk Management Agency (USDA-RMA). Stacked Income Production Plan (STAX) for Upland Cotton. RMA Fact Sheet. August 2014. Date Accessed: December 18, 2015. United States Department of Agriculture- National Agricultural Statistical Service (USDA NASS). Quick Stats.