On the Cotton Farm: Stockpiling and Fearing Big Losses From Trade Fight
23 July 2019 - 2:09AM
Dow Jones News
By Kris Maher | Photographs by Andrea Morales for The Wall Street Journal
AUBREY, Ark. -- When cotton farmers meet at the Aubrey Country
Store & Grill, a lunch spot surrounded by farmland in the
Mississippi Delta, the talk inevitably turns to global trade these
days.
Cotton exports to China have tumbled, and the domestic price for
the crop has fallen roughly 30% since China slapped retaliatory 25%
tariffs on U.S. farm commodities last summer. Stockpiles of U.S.
cotton are forecast to be the highest in a decade.
"If China decided it was going to start buying some cotton it
would be a game changer," said Ramey Stiles, a 60-year-old cotton
farmer who lives in nearby Marianna, Ark., in Lee County, an hour
southwest of Memphis, Tenn.
He and other farmers talking over hamburgers and salads at the
country store recently said they are hoping for a swift resolution
to the trade spat with China, the world's biggest importer of
cotton.
Progress toward a trade deal with China has appeared stalled as
the Trump administration determines how to address Beijing's
demands that it ease restrictions on Huawei Technologies Co., The
Wall Street Journal has reported.
Farmers have been promised some help in a $16 billion package of
aid to protect them from the impact of the trade dispute, but
cotton growers don't know how much aid they will get.
By mid-July, many cotton farmers who would have normally sold
half of the current year's crop have yet to market any because
cotton prices are hovering in the low-60-cent-per-pound range,
below the cost of production in many cases, farmers said.
Jim Jones, who farms 4,500 acres of cotton with his son Caleb in
Palestine, took out loans to buy two used baler pickers, for
$450,000 each, earlier this year when news of a potential trade
deal between the U.S. and China temporarily sent cotton prices
higher.
"Chunk of money, isn't it?" said the elder Mr. Jones of the
machines he purchased. "It's going to be a struggle." He said he
hasn't been sleeping well for weeks.
Farmers who said they voted for President Trump remain
supportive. They back his decision to place tariffs on a range of
Chinese products, but if there isn't a deal this year many won't
survive, they said.
"I haven't heard anyone start cussing Trump about these
tariffs," said Billy Don Hinkle, who grows 6,000 acres of cotton in
Aubrey with a crew of eight men.
Meanwhile, farmers are saving money any way they can.
Harris Swayze, a cotton farmer in Yazoo County, Miss., drove
three hours to Aubrey last week to buy a used water tank for a
cotton picker at Bennett Tractor Parts, which has used machinery
lined up on the grass outside the store.
"If you need a part and don't want to pay the extraordinary
prices of the dealer, you come up here," Mr. Swayze said.
Gary Bennett, a co-owner of the parts company, said his business
is up about 20% from last year. "They're saving a buck every way
they can," he said of farmers in the region.
Mr. Hinkle said he saved labor costs by having his own workers
repair a 67,000-pound cotton picker, rather than have it done at
the dealer.
Mr. Stiles planted peanuts for the first time this year and
invested in a shelling facility being built in Jonesboro. He is now
hoping that diversifying his crops will help if cotton prices don't
recover fully.
Larry McClendon, who co-owns a big cotton gin in Marianna and
grows the commodity himself on 12,000 acres, said 90% of the cotton
he processes is grown by farmers who borrow money each year to
farm.
Sitting in his office with a window looking onto the gin's
machinery, he said current conditions are especially hard on a
farmer with a young family. "He wakes up under pressure and goes to
bed under pressure," Mr. McClendon said. "If he lets his foot slip,
he's done. He's got a gun to his head."
Write to Kris Maher at kris.maher@wsj.com
(END) Dow Jones Newswires
July 22, 2019 11:54 ET (15:54 GMT)
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