Cotton Profile
Profile revised September 2009 by 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 United States remains a major producer of cotton for the international market, ranking third behind China and India. The United States also remains the leading cotton exporter in the world. Six countries--Brazil, China, India, Pakistan, Turkey and the United States--consume about 80 percent of the world’s cotton (ERS).
Production
Cotton is produced in 17 states from Virginia to California. According to the USDA's Ag Marketing Service, Texas consistently produces the most cotton, followed by Georgia, Arkansas and California.
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 96 percent of U.S. production. The top producers of upland cotton in 2008 were (in order by volume): Texas, Georgia, Arkansas and North Carolina (NASS). The balance of the U.S. crop is ELS cotton, which is mainly produced in California (NASS).
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.
In 2008 U.S. cotton production fell to its lowest level in nearly 20 years. The cotton crop totaled 13.5 million bales (1 bale = 480 pounds), 30 percent lower than a year earlier. Upland cotton production approached 13.1 million bales, and ELS production reached 459 thousand bales, the smallest ELS crop since 2003. The area planted to upland cotton area declined in each region. Production also decreased in every region except for the Southwest where adequate rainfall contributed to the second largest crop in 80 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 (Bt), or pest-resistant and/or herbicide-tolerant, varieties accounted for nearly 80 percent of total acreage, compared with about 50 percent just six years ago. More intensive management systems and increased area under irrigation have also raised U.S. cotton productivity.
Global cotton production in 2008 is estimated at 112.9 million bales, down from 2007’s record but still the fifth largest crop. China, the world’s largest producing country, is forecast to harvest less cotton while India and Pakistan are expected to produce slightly larger crops. (ERS)
China, India, Pakistan and the United States have all adopted Bt cotton seed. The impact in India has been especially remarkable. According to the government of India, genetically modified cotton now accounts for more than an estimated 70 percent of total cotton acreage in India. (ERS)
Prices
In 2008 the average price received by farmers for upland cotton fell to 55.2 cents per pound, while the price for ELS cotton continued rising, reaching $1.13 per pound. The average U.S. price for cotton was 56.6 cents per pound. As a result, the total value of the 2008 cotton crop was $3.5 million. (NASS)
Value-Added Products
Cotton seed is processed into cottonseed vegetable oil for cooking; cottonseed meal, a high-protein supplement for livestock; and cottonseed hulls, a roughage for cattle feed. A ton of cotton seed yields about 320 pounds of oil, 910 pounds of meal and 540 pounds of hulls. (National Cottonseed Products Association)
Cottonseed Oil
Cottonseed oil is one of the country's most important sources of vegetable oil. After being extracted from cotton seeds by presses or by solvents, the oil is used as a salad oil, a cooking oil or a shortening or margarine. In the United States, cottonseed oil is primarily used as a salad or cooking oil. More than one billion pounds of cottonseed oil are produced yearly, placing the oil third in volume behind soybean oil and corn oil.
Cottonseed Meal
Cottonseed meal is valued as a source of protein for livestock, especially beef cattle, dairy cows and sheep. It provides three to six times the protein of most grains. The meal may be sold in the form of meal, cake, flakes or pellets. Some cottonseed meal is also used as a fertilizer for use on lawns, flower beds and gardens. Cottonseed meal competes with other protein meals like soybean meal and sunflower meal.
Cottonseed Hulls
Used mainly as feed for livestock, cottonseed hulls serve as roughage rather than as a supplement. Their bulk makes shipping expensive, so the hulls are generally used in cotton-producing areas. Cottonseed hulls can also be used in petroleum refining and plastics manufacturing.
Exports/Imports
U.S. cotton exports reached 13 million bales in 2008, the smallest in six years, or 3.0 metric tons (MT), an 8 percent decline from the previous year. China was, by far, the largest importer of U.S. cotton, followed by Turkey, Mexico and Indonesia. Upland cotton exports are projected at 12.5 million bales, down from 12.8 million in 2007, while ELS exports have decreased to 500,000 bales.
According to FAS, U.S. exports will likely drop by over 20 percent in 2009, partly because overall U.S. supply is at the lowest level in 11 years. As a result, the U.S. share of world trade will fall from the record set last year to the lowest level in a decade.
The United States has become an export-dominated market; the country imports very little cotton. Nearly half of the 14,737 MT of cotton imported in 2008 originated in Turkey.
Regulations
The 2008 Farm Bill continues to provide various government programs for upland cotton.The programs include the marketing loan program, direct payments, counter-cyclical payments and new average crop revenue election payments. In addition, the Federal crop insurance program aids cotton producers because it counteracts the effects of crop or revenue losses. The new Farm Bill also retains the special competitive provisions for ELS cotton.
Outlook
The current economic slowdown has reduced global trade in raw cotton and consumer demand for cotton products. 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.
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. (ERS 2007)
Sources
Cotton, Agricultural Baseline Projections, Economic Research Service (ERS), USDA, 2009 - The Baseline Briefing Room provides 10-year baseline projections for the agricultural sector. Projections cover agricultural commodities, agricultural trade and indicators, such as farm income and food prices.
Cotton, ERS, USDA.
Cotton and Wool Yearbook: Report, ERS, USDA, 2008.
Cotton Backgrounder, ERS, USDA, 2007.
Cotton: World Markets and Trade, Foreign Ag Service (FAS), USDA, 2009.
Crop Production Annual Summary, NASS, USDA, 2009.
Crop Values Annual Summary, NASS, USDA, 2009.
