The projected large acreage cut in peanuts and the continued downward spiral in cotton acreage in the Southeast is creating economic problems for rural economies from Henry County, Ala., to Bertie County, N.C.
At a time when politicians preach loudly about restoring the rural economy, it appears small businesses in dozens of towns and counties that depend on cotton and peanuts as integral parts of the local economy will be further damaged by these projected acreage cuts in 2013.
The ripple effect carries over to government and Land-Grant university research and Extension programs, which are already financially stressed due to the ongoing recession and recovery.
If history is a good indicator, tearing down the infrastructure of an industry is considerably easier than building it back.
There is a real possibility that peanut acreage could be cut by half from historical levels of the past decade.
Cotton may see another 15-20 percent cut in acreage, driven by uncertainties over foreign markets and depressed prices. These economic realities continue to influence growers to find alternative crops.
At biggest risk are farmers, but few usually consider the risk to major agricultural companies which bear the majority of the weight for the infrastructure of these crop-based economies.
Lee Rivenbark is vice-president of global cotton and U.S. seed operations for Bayer CropScience. Though now headquartered in Lubbock, Texas, he grew up on a farm near Columbia, Ala., in Henry County and at the epicenter of cotton and peanut production in southeast Alabama and southwest Georgia.
The Bayer executive knows first-hand the impact reduced cotton and peanut acreage has on businesses both big and small.
He understands the realities of a global marketplace, especially on the U.S. cotton industry, and says maintaining a workable infrastructure that is so critical for cotton and peanuts won’t be easy and solutions will likely come slowly.
“Once a peanut sheller or cotton ginner goes out of business, these operations are usually gone for good,” Rivenbark says. “When these businesses are gone, in small towns like my hometown, car dealerships, banks, restaurants and most other businesses suffer and the rural enterprise is severely challenged to maintain sustainability for the business end of these crops.”
While global companies are often blamed for lagging rural economies, companies like Bayer CropScience play a key role in helping to revitalize rural enterprises in towns and counties across the country.
By providing the tools for farmers to grow crops more efficiently, these companies are supporting local seed and agrichemical companies, and providing income for farmers and agri-businesses that is primarily spent in rural areas to support rural businesses.
Rivenbark says global corporations are better able to withstand market fluctuations, but when an industry loses more than two million acres it hurts everyone.
To sustain those kinds of economic hits, a company, large or small, has to have a strong commitment from the top. “Bayer CropScience has established cotton as a core crop, so we have a commitment to stay in the cotton business,” Rivenbark says.
Bayer CropScience is a major player in most crops grown in the U.S. because of its involvement with high tech traits and crop protection. However, in its latest strategic plan, vegetables, rice, canola, soybeans and cotton were selected to be the company’s core crops globally.
Rivenbark says that in 2007 Bayer CropScience bought Stoneville, a major supplier of U.S. cottonseed. At the time of the purchase, U.S. cotton acreage was booming, at around 15 million acres.
This year, just six years after the purchase, U.S. cotton acreage is predicted to be around 9.1 million acres. It takes a long-term commitment from the top for a company to sustain those kinds of acreage cuts, he adds.
With every cottonseed company in the country developing new and better varieties, growers have more options for buying high quality cotton seed than at any time in history.
Rivenbark says Bayer CropScience understands that market reality and began making plans more than a decade ago to help the company sustain such market fluctuations.
“In the late 1990s, we began to call on foreign cotton mills in an effort to establish premium markets for FiberMax, and this work has now carried over to our Stoneville brand.
“We want to help growers market these traits to the world’s largest cotton-using countries,” Rivenbark says.
“I’ve had plenty of people tell me, ‘Lee, you’re wasting your time chasing U.S. cotton all over the world.’ But I believe we have to think a little outside the box to give our growers every edge they can get to sell their cotton for a premium price,” he adds.
“The Bayer CropScience Certified FiberMax Program began when these varieties first hit the market. The mills saw the difference in the spin-ability of FiberMax cotton early on. So did cotton gins.
“We have a team of people within Bayer CropScience who travel to cotton mills all over the world to promote our high-quality cotton. Mills want quality cotton, and they want U.S. cotton.
“We have this program in place to help foreign cotton buyers understand these advantages and influence them to buy more U.S. cotton first and more FiberMax and Stoneville cotton second,” Rivenbark says.
“Cotton farmers are using this marketing edge to sell their cotton and to get a premium price for their crop. This extra money goes back into the rural economy and helps small businesses that provide the infrastructure for U.S. cotton to stay in business,” he adds.
It’s a challenge for all the seed producers in the U.S. cotton industry to provide enough high-quality seed to growers every year, despite the ups and downs in acreage
“We are already planning our seed supply for the 2014 crop,” he says. “Right now, we are looking at slightly more than 10 million acres next year.
“We don’t see anything on the horizon that will prevent acreage from rising slightly next year, but we have to monitor global information in order to keep these projections accurate.
“Communities that depend on cotton depend on companies like ours to get the right variety, with the right traits, in a bag of cottonseed and in the right quantity.
“In most cases, an acre of cotton or peanuts produces much more revenue than grain crops in the Southeast. So, having enough high-quality seed directly reflects on a farmer’s ability to make a profit and to subsequently contribute to the rural economy in which he farms and lives, the Bayer CropScience executive says.
Cotton and peanuts have been King and Crown Prince among crops in the Southeast for a long, long time.
Keeping the infrastructure that supports these industries that are so valuable to small towns across the region will be more difficult as both crops face major issues going into the 2013 crop season.