Agricultural Finance: From Crops to Land, Water and Infrastructure

Chapter 9Cotton, Timber and Wood, Pulp and Paper, Wool

‘There is no time in modern agriculture for a farmer to write a poem or compose a song.’

Masanobu Fukuoka, microbiologist, farmer, and philosopher

9.1 Cotton

Cotton is a hot-weather crop. In the USA, cotton production stretches from Georgia through Arizona and California and covers more than 14 million acres. California cotton is among the best-quality cotton in the world. Cotton is also grown in Latin America and Asia. Cotton exporters include a variety of nations such as Kazakhstan, Pakistan, and Australia. China also produces a large quantity of cotton and alternates from being an importer to an exporter depending on its crop size and domestic usage. China is today the world's biggest producer and consumer of cotton and the USA is the top cotton exporter.

Cotton prices in the USA are affected mostly by world prices, but they are also subject to government programs such as the US ‘Step I: Export Subsidy Program.’ This program is variously applied as it must be voted each year by Congress.

Because cotton is such an important US crop, the USDA gives a very complete report that includes supply and demand figures for the USA and the rest of the world.

Cotton is used primarily for clothing fiber and is used more in developing countries as their economies improve:

• For decades, only US grown cotton used to be accepted for the physical settlement of the ICE Cotton Futures contracts; it is not the case anymore. This is going ...