A Year's Experience for Cotton under the 1985 Farm Legislation

Carl G. Anderson


Indications strongly suggest that the cotton program, under the 1985 Farm Act, is working even better than many policy makers anticipated. When the marketing loan provisions became effective on August 1, 1986, the level of U.S. cotton prices dropped some 40 cents per pound. As a result, expected U.S. cotton disappearance during the 1986 season may be around 14 million bales, a dramatic turnaround from 8.4 million usage the year before. That would be the largest offtake except for 1979 and 1966 in the last 25 years.

The lower competitive prices are increasing world trade, discouraging foreign production, and increasing cotton usage. Because of strong demand the cotton market is making a remarkable price recovery. The higher price will greatly reduce future government costs of the cotton program. Foreign production in 1986 may drop around 10 million bales under consumption, the largest production deficit in many years. This gap opens the door wide for exporting a large amount of American cotton overseas. A competitive price is necessary but may not be sufficient because foreign governments subsidize their cotton industries.

Reprinted from Proceedings of the 1987 Beltwide Cotton Production Conference pp. 15 - 17
©National Cotton Council, Memphis TN

[Main TOC] | [TOC] | [TOC by Section] | [Search] | [Help]
Previous Page [Previous] [Next] Next Page
Document last modified Sunday, Dec 6 1998