2004_cotton_survey

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2004 Organic Cotton Survey

 

2003 U.S. Organic Cotton Production & the Impact of the National Organic Program

on Organic Cotton Farming


by Sally Pick, Consultant to the Organic Trade Association;  Holly Givens, Organic Trade Association
Project number: 01-995; December 2004

 

Survey background
In 2004, the Organic Trade Association mailed a survey to forty-one farmers in seven states (Arizona, California, Kansas, Missouri, New Mexico, Tennessee, and Texas) who were thought to have grown organic cotton in 2003 and believed to represent all 2003 growers of organic cotton in the United States. The intent of the survey was to examine the impact of the National Organic Program which was implemented in October of 2002, to determine the level of production of organic cotton in 2003 in comparison to past years, and to explore ways in which organizations and agencies can provide organic cotton farmers with the resources to be sustainable over the long-term. Farmers were identified by contacting accredited organic certifying organizations and agencies in the U.S., and by asking organic farmers if they knew of other organic cotton farmers. The survey was funded by Cotton Incorporated.

 

A total of twenty-eight farmers from all seven surveyed states responded to the survey or were contacted by telephone. Of the twenty-eight respondents, twenty-two farmers returned their completed surveys and six answered the survey by phone interviews. Only twelve of the respondents qualified for the survey because they grew organic cotton in 2003. One of the surveys indicated that weather prevented them from harvesting in 2003, and another farmer is in a boll weevil eradication program and has not grown organic cotton for several years as a result. These twelve surveys included farmers who harvested organic cotton in 2003 but not those who planted in that year who had no harvest. Of the twelve surveyed, nine are members of the Texas Organic Cotton Marketing Cooperative (TOCMC) and three farm independently of this cooperative. In 2003, TOCMC had a total of 18 farmers growing organic cotton in Texas, compared to the 20 members of TOCMC identified by OTA as growing organic cotton in 2002.

 

Ten out of twelve surveyed growers have farms of over 300 acres total and nine farm organically on over 300 acres. All but two of the farms have been in operation as a certified organic farm for at least six years and as long as fourteen years. Two farmers have been farming as certified organic farms for two years. All twelve grew upland cotton in 2003.

 

Ten of the twelve farmers reported gross farm sales of over $100,000, while seven reported gross sales from their organic cotton of over $100,000, and three reported $50,000 to $99,000 in gross organic cotton sales.

 

Acreage and Production of Organic Cotton
ACRES PLANTED & HARVESTED
Overall sales of organic fiber finished products saw a growth of 23% in 2003, totaling $85 million in sales, according to OTA's 2004 Manufacturer Survey.1 In contrast to this growth, according to results of the survey of organic cotton farmers, the amount of U.S. organic cotton acreage that was planted in 2003 decreased by 55 %, from totals of 9,044 acres planted in 2002 to 4,060 acres planted in 2003. Based on the results of this farm survey, twelve farmers planted 3,690 acres of upland cotton and 370 acres of pima cotton. The majority of 2003 organic cotton was grown in Texas and limited acreage was grown in New Mexico and Missouri. For confidentiality purposes, the data do not specify acreage grown on a per state basis.


Table 1 highlights trends in acreage of organic cotton planted. The data for 2003 acreage planted include only farmers who also harvested in 2003. Two farmers noted that they were hailed out after planting; because they did not harvest their crops, the data were excluded in the survey report. One farmer said in a follow-up telephone call that he did not plant in 2003 "mainly because...there were no buyers that were interested." This same farmer explained that in 2004, he sold organic cotton directly to a mill but that the general lack of interest from buyers and the low organic cotton prices have been a disincentive for growing organic cotton.


The 2003 acreage listed in Table 1 includes only acres indicated on the survey replies, including nine TOCMC members, but not additional acreage from Texas Organic Cotton Marketing Cooperative farmers who did not reply to the survey. TOCMC does not have their members' acreage information available. In 1993, the total acreage of organic cotton planted was 12,402. In ten years, planted acreage has decreased by 67%. By comparison, the 1999 figures show 16,785 acres planted, 76% higher than 2003 acreage planted. OTA's 2003 Beltwide Presentation, listed in the reference section below, provided the acreage data for 2002, 1999, and 1993.


Table 1. Estimated U.S. Organic Cotton Acreage Planted: Trends
Acres Planted in 2003
  
 4,060
 
 Acres Planted in 2002
 
 9,044
 
 Percent Change
2002 - 2003
 
 - 55%
 
 Acres Planted in 1999
 
 16,785
 
 Acres Planted in 1993
 
 12,402
 
 Percent Change 1993 - 2003  -67%


In 2004, a total of 4,186 acres of upland organic cotton (including 650 acres on farms that did not grow organic cotton in 2003) and 488 acres of pima organic cotton were planted. Total organic cotton acres planted in 2004 equals 4,674.


According to this farm survey, a total of 4,060 acres of organic cotton were harvested. Because the survey results exclude acres planted in 2003 that were not harvested, the harvested acreage is identical to the acreage planted, as is the individual breakdown of harvested acreage by state and upland and pima cotton.


BALES HARVESTED
The total number and breakdown of 2003 harvested bales of organic cotton identified between this farm survey and the TOCMC data are in Table 2. Survey data show a total of 3,260 bales of organic cotton harvested in 2003, with 2,664 bales of upland cotton and 596 bales of pima. This excludes the two respondents who harvested 80 acres and 700 acres respectively but did not report the number of bales harvested in their surveys.


TOCMC reported a total of 2,498 bales of upland organic cotton from their farmers. Accounting for duplication among the survey respondents from Texas who belong to TOCMC, the survey identified an additional 612 bales of upland cotton and 80 acres harvested which were not converted on the farmer's survey into bales. A total of 3,110 harvested bales of upland cotton were identified between this survey and TOCMC's data, for 2003. Texas harvested the largest number of bales, with New Mexico and Missouri harvesting significantly fewer bales. The harvest data is not provided on a state-by-state basis to ensure the confidentiality of farmers who responded to the survey.


TOCMC farmers grew an additional 922 organic bales, but because the cotton was of lower quality, the producers sold them to conventional markets, and this data was excluded from TOCMC's totals. Including this 922 bales, the total number of bales of upland organic cotton harvested in 2003 comes to 4,032. Adding in 596 bales of pima cotton harvested, the total bales of organic cotton harvested is 4,628; this excludes 80 acres harvested but not converted to bales in the survey.


Table 2. Harvested bales of organic cotton in 2003
 Source of data on harvested bales
 
Total bales harvested
 TOCMC upland organic cotton data
 
 2,498
 
 TOCMC upland organic cotton grown by members but not sold to cooperative  922
 
 OTA farm survey upland organic cotton data, excluding TOCMC upland cotton data  612
 OTA farm survey pima organic cotton data  596
 Total harvested bales of organic cotton in 2003
 
 4,628

Comparing the 4,628 total bales harvested in 2003 to the last available data on total bales harvested in 2001, 9,897 bales, the total number of bales decreased in two years by 53%. This is likely the most accurate reflection of the overall change in production in organic cotton because it reflects data from all TOCMC members. The total acreage planted and harvested only reflects 2003 data from the survey respondents because TOCMC data on acreage is unavailable.

Impact of the National Organic Program on Organic Cotton Farmers
The U.S. Department of Agriculture's National Organic Program (NOP) was fully implemented in October 2002, creating federally standardized regulations for organic agriculture. It was hoped that the rule would positively affect the marketing of organic products, improve economic opportunities for organic farmers and other businesses, standardize paperwork, improve the ease of trade, and level the playing field across the organic industry.


In response to the survey question, "Are there specific aspects of the NOP that are problematic for you?" eight respondents answered "yes." One farmer stated in a follow-up telephone call that he is "not seeing a lot of difficulties," resulting from the implementation of the NOP's rule. He was, however, concerned the prior year when acid de-linted seed was being reviewed for its use in organic production because machinery that can spread non-de-linted seed is not being manufactured. It was decided that acid de-linted seed is currently allowed for organic farming.


Since the NOP rule was implemented, no farmers increased their acreage devoted to organic production. Five decreased their acreage, one preferring the higher prices and stronger market for organic peanuts to the unstable market for organic cotton. Another farmer, responding to a buyer looking for transitional cotton, planted cotton on land transitioning to organic certification; due to limits on his total acreage without pesticides, imposed by the boll weevil eradication program in his state, he had to cut back on his certified organic cotton acreage. On seven farms, the acreage in organic cotton has remained the same since the NOP rule was implemented.    
                                         

Two of the twelve farmers plan to increase their organic cotton acreage in the next five years. One farmer anticipates increased acreage in organic cotton because he has specific international buyers asking for this product. The other explained that the increase reflects his effort to expand his farm as a whole, increasing all crop acreage to what he considers to be a normal sized farm. Five respondents plan to decrease their acreage in the next five years. One explained that the "organic cotton price fluctuates" and as long as the organic peanut market is strong or until a strong, dependable organic cotton market develops, he plans to decrease his organic cotton production. Five farmers plan to keep their acreage at the same level. Based on the data provided by farmers anticipating changes in their acreage, the potential exists for a maximum net decrease in acreage of organic cotton of 635 acres over the next five years.


Of the two respondents who saw a change in profitability of their farm, two increased their profits by 40%, and one farmer cited the production and sale of organic peanuts as the reason for this increase.


It is not clear that changes in acreage can be attributed directly to the effects of the NOP rule, although a number of challenges were highlighted by the survey in response to a question regarding difficulties resulting from aspects of the NOP rule. Five, or 42%, of respondents have difficulties sourcing agricultural inputs that comply with the rule. Three of the respondents replied that finding consistency in the interpretation of the rule by certifiers is a challenge. Two noted an increase in paperwork and two find it challenging to keep informed of NOP rule changes. Table 3 provides a complete list of responses to this question.


Table 3. Difficulties resulting from the NOP rules
Difficulties from NOP rules
  
 # Respondents  % Responding to category
 
 
Sourcing ag. inputs that comply with rules
 
 5
 
 42%
 
 Finding consistency in interpretation of rules by certifiers  3  25%
 Keeping informed of rule changes
 
 2  17%
 Increasing paperwork/record keeping  2  17%
Complying with regulations for farm practices
  
 1  8%
 Marketing/distribution complications  1  8%
 Other: competitive certifiers that do not test plant tissue & soil residue for prohibited materials  1  8%


On a follow-up telephone call, one farmer expressed his view that the decrease in organic cotton acreage has "nothing to do with NOP." The problem, as he sees it, is that the U.S. organic cotton growers "cannot compete with foreign growers." Companies prefer to buy international cotton at a lower price than they would pay in the U.S. to increase their margins, according to this farmer. Another farmer who did not grow organic cotton in 2003 but completed his survey, reinforced this perception, noting the need to develop "a national market for organic in [the] U.S. instead of off-shore," to improve the long-term sustainability of organic farms.

In assessing how the NOP rule has affected costs related to organic farming, six farmers saw an increase in inspection costs, three had increased paperwork, and four saw increased seed costs. Of the three noting an increase in paperwork, they each worked longer hours to adjust to this change. The cause of the increased paperwork was identified by two farmers as documenting attempts to source organic seed and by one farmer as keeping detailed records.


Impact on Sales & Marketing
Looking at sales and marketing trends, nine respondents replied that as a result of the NOP rule, marketing their products has not changed. One remarked that it is "easier especially in Europe with standardization." Nine farmers sell their organic cotton directly to the TOCMC, two directly to a mill, and one to a conventional market. One converts and sells its cotton as a finished product. Five sell 50% or more of their cotton in the U.S. and three sell 50% or more to international markets. Data provided by respondents on the percentage of organic cotton sales made to domestic and international markets are in Tables 4 and 5 below (not all farmers responded to these questions on the survey).


Table 4. Percentage of organic cotton sales to domestic market
Percentage of organic cotton sold to domestic market
  
 # Respondents
 
 0%
 15%  1
 50%  2
 95%  1
 100%  2

Table 5. Percentage of organic cotton sales to international market
 Percentage of organic cotton sold to international market
 
 # Respondents
 
 0%  1
 50%  2
 85%  1

Eight, or 67%, of respondents checked off "selling excess product at reasonable prices" as their biggest challenge in getting their organic cotton to market. Three indicated their biggest challenge as finding a market that will pay value-added costs of organic products. One grower not growing organic cotton in 2003 wrote that his biggest challenge in getting his cotton to market has been "finding a stable market." Price data reported by the farmers underscore this concern for stable markets. The survey data indicated that the average price per pound received by farmers showed a wide range, from $0.69 to $1.40 for upland cotton.

Seven respondents felt that the NOP rule has helped them by standardizing organic regulations. However, one farmer felt that the new rule "watered down our certification" because this farmer's certifier uses higher standards than what is required by NOP rule. Five felt that the new rule increased consumer awareness and demand for organic products and validated organic farming to the consumer.


COTTON QUALITY CHARACTERISTICS
Quality characteristics of the cotton are presented in the farm survey data. The quality of the cotton affects the marketability and price of the cotton sold on the market. The TOCMC harvest pool chart included with the data provides upland cotton quality pools as defined by TOCMC; these pools represent different levels of prices that growers received based on the pool for which their cotton qualified. Pool number one is the highest quality cotton and received the highest price per pound. The greater the pool number, the lower the market price. To give an example of the pools, pool one cotton has a staple length of 36 or longer, a micronaire of 3.7-4.5, leaf or trash content of 2 or better, strength of 27.0 or better, and a color grade of 11 or 21.


Upland cotton with a staple length of 32 or longer can be spun and easily marketed for blending programs where it is mixed with longer staple conventional cotton. 33 staple upland cotton is typically used for t-shirts, denim and terry cloth. Longer staple lengths command a higher price for apparel and are used in finer yarns. The survey data include a TOCMC Quality History Summary of crops marketed by the cooperative.


Educational and Economic Resources
Educational and economic challenges and opportunities are evident in the survey results. Seven respondents felt that their extension agents were not knowledgeable about organic practices, representing an opportunity for expanding educational resources on organic production at extension. Six farmers reinforced this perception, indicating that there has not been an increase in educational resources about the NOP at extension since the rule was passed.  Farmers have stayed current with organic standards using the methods indicated in Table 6 below.


Table 6. How farmers stay current with organic standards
Methods for staying current with organic standards
  
# Respondents
  
 % Respondents
 Communicate with other farmers
 
 8  67%
 Read Organic Trade Association resources
 
 7  58%
 Read trade publications   4  33%
 Check related websites  2  17%
 Other methods: TX Dept. of Ag. Guidelines, organic conferences
 
 2  17%


Organic cotton farmers have used a range of government agencies and programs in relation to organic production, namely, five used the organic certification cost-share program, three used the Farm Service Agency, three used EQIP, three used the Natural Resources Conservation Service, and one used Cotton Incorporated.

When asked what would prevent conventional cotton farmers from adopting organic farm practices or entice them to adopt organic farm practices, they responded with the information in Table 7 below.


Table 7. Barriers to and incentives for adopting organic farm practices
What prevents conventional cotton farmers from adopting organic farm practices/would entice them to adopt these practices    # Respondents
 Price  2
 Good price  1
 Reliable market  1
 Fair Trade
 
 1
 Use of chemicals  1
 Concern about not using pesticides  1
 3 year entry period  1
 Transition  1
 Too much hand labor  1
 Paradigms  1

Among the responses to the question regarding what could be done to improve support for the long-term sustainability of organic farms, a summary of the farmers' responses listed in the survey data includes improved marketing and development of reliable markets, demand for products, consumer education, and keeping regulations to a minimum and allowing the market to drive the industry.


Conclusions
It is clear from this survey that overall organic production has declined significantly since its peak production of 24,625 acres planted in 19952 to 4,060 acres planted in 2003. Farmers anticipate a further decrease in acreage for organic cotton of as much as 635 acres in the next five years. This represents a 16% decrease of an already small number of total acres. The most accurate reflection of production changes, total bales harvested, showed a decrease of 53% from 2001 to 2003.


The NOP rule was identified as creating some difficulties for farmers, including some increased costs, the sourcing of agricultural inputs, increased paperwork, and inconsistencies in interpretation of the rule by certifiers. Opportunities exist for connecting farmers with agricultural inputs for organic production, clarifying policies and regulations related to the labeling of agricultural inputs that are approved for organic farming, and developing more standardized interpretations, by certifiers, on the grey areas of NOP.


However, the larger economic pressures appear to be the most significant barriers to organic cotton production. As confirmed by the responses in Table 7 and by other survey data, inconsistent and low prices and weak markets present significant challenges to growers of organic cotton. Farmers are seeing an enormous variability in the price they receive for their organic cotton, an indication of unstable markets.


Organic cotton production in the U.S. is in decline and without significant market changes, this decline is likely to continue. To sustain and expand production of this organic crop, growers will need a stronger, more consistent market. Opportunities for creating such a long-term market for organic producers include consumer education and developing increased demand for organic cotton grown in the U.S.


Acknowledgements
This survey would not have been possible without the generous input provided by farmers growing organic cotton, who took time out of their busy schedules to complete the farm survey and respond to phone calls regarding the survey. Special thanks to the organic cotton growers who shared their field expertise in the design of the survey questions.


Many thanks to Anita Morton, of Texas Organic Cotton Marketing Cooperative, for her patience, expertise and multiple e-mail correspondences in helping to design the survey and providing data on the Texas Organic Cotton Marketing Cooperative, which were invaluable to developing an accurate estimate of 2003 organic cotton production data.


For his expertise in helping to craft the questions on cotton quality characteristics, thanks to Gene Frye of Parkdale Mills.


Deep appreciation is extended to Dr. Richard Levins, Professor Emeritus of the University of Minnesota, who contributed his clarity and expertise in survey research to the development of this survey report.


Kudos to Sandra Marquardt for laying the groundwork for this year's survey and for her excellent research in prior years on organic cotton production and marketing trends.

Of course, thanks are extended to Cotton Incorporated for making this survey possible through a grant to the Organic Trade Association.

 

 
References
Organic Trade Association. 2004. The OTA 2004 Manufacturer Survey Overview.

Organic Trade Association. 2003. 2003 Beltwide Presentation, Organic Cotton: Production and Marketing Trends in the United States and Canada - 2001 and 2002.

 

 

 

 
 
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