Can U.S. cotton exports continue at record levels?

By JULIET BRISKIN | Staff writer

January 29, 2004 -- In recent years the United States has exported record levels of cotton, but are these levels sustainable? Does the potential to increase export levels exist, or is the export market for U.S. cotton disappearing?

The prospects and uncertainties for the future of U.S. cotton exports have been the focus of research at Texas Tech University (TTU) and was one of many topics discussed during the 2004 Beltwide Cotton Conferences in San Antonio, Jan. 5-9.

On the final day of the conference, Phillip Peabody of TTU delivered a report addressing some of the issues that must be considered when forecasting the future of the U.S. cotton export market.

"The U.S. has the second highest cost of (cotton) production in the world at approximately $.75 cents per pound," noted Peabody, "and that, coupled with an average productivity rate of around 650 pounds per acre, stiffens up the competition when looking at the long-term viability of exporting U.S. cotton."

Identifying future competition is a key factor in determining the outlook of the U.S. cotton export market. According to Peabody, researchers at TTU have determined the future key players in the export market are Australia, Brazil, and Uzbekistan.

"These are countries that have been identified as having the potential to compete heavily with the United States in markets like China and India," said Peabody. "Analysis has shown that over the next few years we need to watch these countries and follow their government policies regarding cotton production and export."

Another factor to consider when forecasting for the future of U.S. cotton exports is the stability of current and targeted import markets. China, India, and Mexico are currently the largest importers of U.S. cotton and Peabody stressed the need to pay attention to market conditions in each of these countries when evaluating future export opportunities.

"A prime example of a country to watch is Mexico. They are slated to eliminate the Multi-Fiber Agreement in 2005," he explained. "What will the effect of that be on the Mexican textile industry? Ninety-eight percent of the cotton demanded by Mexico comes from the U.S. and if their textile industry experiences a decline in demand, it follows that Mexico's demand for U.S. cotton will decline."

According to Peabody, over the past 20 years the U.S. export market has become increasingly more concentrated. "In 1980, the market was fairly diversified," he said. "In the '90s we saw a decrease in that diversification and by 2003 the export market had become concentrated in countries with booming textile industries and low labor costs."

With a highly-concentrated cotton export market, it is vital that research focus on issues relevant to specific countries. "General analysis is not realistic," he said. "By looking at the specifics of each country we can better determine what the roll of U.S. cotton will be in that given country."