Profile revised March 2008 by Vikram Koundinya, graduate student, Iowa State University and Diane Huntrods, AgMRC, Iowa State University.
Overview
Cotton is the single most important textile fiber in the world, accounting for about 40 percent of all fibers produced. The U.S. share of the global cotton trade averages about 40 percent, and the United States is still the leading supplier of cotton on the international market, followed by India and Uzbekistan.
Two types of cotton are grown in the United States: American upland (Gossypium hirsutum) and American pima (Gossypium barbadense), or extra-long staple (ELS) cotton. The predominant type of cotton grown is upland, which accounts for about 97 percent of U.S. production. The balance of the U.S. crop is ELS cotton. This type is mainly produced in California.
Production
Cotton is produced in 17 southern states from Virginia to California. According to the USDA's Ag Marketing Service, Texas consistently produces the most cotton, followed by Arkansas, Georgia and Mississippi.
As production became increasingly concentrated, the USDA grouped cotton-producing states into four regions. The Southwest region (Kansas, Oklahoma and Texas) typically produces the most upland cotton. The Delta region (Arkansas, Louisiana, Mississippi, Missouri and Tennessee) generally ranks as the number two producer of U.S. upland cotton, followed by the Southeast region (Alabama, Florida, Georgia, North and South Carolina, and Virginia). The West (Arizona, California and New Mexico) usually produces the least amount of upland cotton.
Upland cotton production in 2006 approached 21.6 million bales (1 bale = 480 pounds), the third largest on record, and ELS production reached 765 thousand bales. Upland production rose in only one region, the Delta. The Delta crop totaled 8.2 million bales, or about 40 percent of the U.S. cotton crop. In the Southwest, upland production reached 6.1 million bales. Production in the Southeast and West was down slightly, at 5 million and 1.4 million bales, respectively.
According to the USDA, upland production in 2007 is expected to reach nearly 18.2 million bales. Of that amount, cotton production in the Southwest is expected to reach nearly 8.5 million bales. The Delta is expected to produce 5.3 million bales, the Southeast 3.2 million bales and the West about 1.3 million. Production of ELS cotton is expected to reach a record 832 thousand bales. The total 2007 crop is forecast to reach 19 million bales, the smallest U.S. cotton crop in 4 years.
Recent technological advances—like biotechnology, variety improvements, and the success of the boll weevil eradication program—have increased cotton productivity across the United States. In 2005, upland cotton planted to biotech (pest resistant and/or herbicide tolerant) varieties accounted for nearly 80 percent of total acreage, compared with about 50 percent just 6 years ago. More intensive management systems and increased area under irrigation have also raised U.S. cotton productivity.
The world’s largest cotton-producing countries are China, India and the United States.
Exports/Imports
The United States remains the leading cotton exporter in the world, accounting for 40 percent of global cotton trade over the last 5 years. As of 2006, the largest U.S. competitor is now India, which overtook Uzbekistan in 2006. U.S. cotton exports reached 13 million bales in 2006, 4.6 million below the 2005 record and the lowest in 4 years. U.S. cotton exports for 2007 are forecast at 14.5 million bales.
The top three foreign exporters in 2007 were India, Uzbekistan and Africa.
The United States has become an export-dominated market; the country imports very little cotton. In 2006 19 thousand bales, nearly equal percentages of upland and ELS cotton, were imported. U.S. cotton imports for 2007 are forecast at 15 million bales.
The top three foreign importers in 2005 were China, the European Union-25 and Indonesia.
Regulations
The 2002 Farm Act provided various government programs for such major crops as upland cotton. The programs include the marketing loan program, direct payments and countercyclical payments. In addition, the Federal crop insurance program aids cotton producers because it counteracts the effects of crop or revenue losses.
Outlook
Global competition, uncertain worldwide demand and the changing global fiber market provide many challenges for the U.S. cotton industry.
Trade policy has significantly affected clothing demand and production, which, in turn, has affected cotton fiber use, trade and production around the world. In 2005, world trade in clothing was dramatically changed when certain import quotas were ended. These quotas were part of the Multifiber Arrangement (MFA), an international trade agreement instituted in the 1970s. Removing the MFA quotas increased clothing imports by the United States and the European Union, reduced clothing and textile production in those countries and increased cotton imports and textile production in China, India and Pakistan. As imported cotton products increasingly replace U.S. goods, U.S. mills use less cotton and the U.S. textile industry continues its decline. However, U.S. clothing imports contain significant amounts of U.S.-grown cotton.
In addition to more competition from India, Chinese imports of cotton are falling as credit tightens and slowing world economic growth limits Chinese mill demand for cotton. The recent increase in cotton prices has further reduced demand.
The introduction of genetic engineering and other agricultural technologies has kept the cost of growing cotton in check, while the price of the petroleum used for synthetic fibers has soared. Compared to polyester prices and other agricultural products, world cotton prices have declined, leading to increased demand for and use of cotton.
Sources
Baseline Briefing Book, Food and Agricultural Policy Research Institute (FAPRI), University of Missouri-Columbia and Iowa State University, 2005.
Cotton, Briefing Room, ERS, USDA.
Cotton Backgrounder, ERS, USDA, 2007.
Profile created May 2003 and revised March 2008.