Cottonseed changes to impact Georgia economy

Future changes in cottonseed technologies could be costly to Georgia farmers and the state’s cotton industry and general economy, according to a recent study conducted by the University of Georgia Center for Agribusiness and Economic Development.

Cotton is now ranked as Georgia’s No. 1 row crop in acreage and farm income. However, the elimination of currently available single-gene Bollgard technology could lead to declines in cotton productivity, resulting in losses to the state’s cotton industry and economy, according to the study, conducted by Archie Flanders, Don Shurley and John McKissick.

The total economic output loss to the Georgia economy due to changing seed technology could be $128.32 million, say the economists, with changes in the Georgia cotton industry having economic impacts throughout the state’s economy.

Due to expected declines in production, Georgia cotton producers are expected to lose $54.65 million in income, which averages approximately $59 per acre. Reduced yields also will contribute to lost revenues associated with ginning, marketing, classing and storing cotton.

Monsanto, which owns the single-gene Bollgard technology, has opted not to re-register the variety with the Environmental Protection Agency due to insect resistance concerns. The registration for Bollgard (B1) is set to expire on Sept. 30, 2009. EPA will allow growers to plant carryover seed in 2010 as long as the seed is purchased and delivered by Sept. 30, 2009.

The study estimates employment declines by 808 jobs as declining cotton production has impacts in other sectors of the state economy. Employment declines in the agricultural sector are concentrated in ginning but also extend to other agricultural support industries including those related to cotton marketing.

According to the study, a decline in the services sector of 255 jobs occurs because of decreased spending. Decreased employment in the trade sector is concentrated in retail trade as demand decreases due to declining income.

Losses in total state wages and benefits are pegged at $78.87 million. Income to farmers declines by $54.65 million which averages $59 per acre.

Diminished economic activity and income losses also impact tax revenues collected by state and local governments. State tax revenue losses are estimated to be $2.36 million, and local governments in the state have declining revenues of $1.84 million.

As expected, economic impacts associated with a change in cottonseed technology are concentrated in rural Georgia counties with economies that are dependent on cotton production.

Georgia continues to be a national leader in cotton production, ranking second in the United States in cotton acres planted and typically third in total cotton production. This past year, Georgia accounted for 9.5 percent of U.S. acres harvested and 8.7 percent of U.S. production.

In 2007, Georgia and U.S. cotton acres decreased due to high prices and relatively high net returns from corn and soybeans, but cotton remains the state’s largest crop in acreage and value. Georgia farmers planted 1.03 million acres of cotton in 2007. Cotton acres in the state reached a high of 1.5 million acres in 1995 and again in 2000.

The 2007 Georgia crop is valued at an estimated $550 million of lint and cottonseed. Cotton production in the state had a $1.4 billion economic output impact on Georgia’s economy in 2006 and led to 11,700 jobs. Cotton production composes more than 1 percent of the total economy in 46 Georgia counties. Of these 46 counties, total economic output impact from cotton is greater than 3 percent of the economy in 21 counties, greater than 7 percent in 10 counties, and greater than 10 percent in three counties.

Of last year’s total acreage, more than 92 percent was planted in B1 varieties, reports the University of Georgia study. More than 83 percent of the state’s cotton acreage is planted in the DPL 555BR variety, which contains the single-gene Bollgard technology. DPL 555BR has proven to be a consistently high-yielding variety in the University of Georgia Official Variety Trials.

Newer two-gene Bt varieties such as Bollgard II and WideStrike have not yet gained widespread acceptance among growers, but Extension cotton specialists and industry leaders are encouraging farmers to begin planting a portion of their cotton acreage in these insect-resistant varieties.

Bollgard II was commercialized in 2003 and WideStrike was commercialized in 2005.

“From an insect resistance management standpoint, the move from the single-gene Bollgard technology to two-gene Bt cotton technologies is advantageous,” says Phillip Roberts, University of Georgia Extension entomologist.

“In terms of insect control, both Bollgard II and WideStrike are superior to Bollgard. The two-gene Bt cottons have a broader spectrum of activity and increased efficacy,” says Phillips. “However, the potential of caterpillar damage remains and both technologies should be scouted and treated on an as-needed basis. We have evaluated these technologies for several years and have a general understanding of insect control performance. However, as these cottons are planted on tens or hundreds of thousands of acres, we will learn more.”

Growers, he adds, should consider planting a portion of their acres to varieties with Bollgard II or WideStrike technology. “Growers need to gain experience in how these two-gene technologies and varieties perform on their farms and in their production systems,” he says.

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