Characteristics and Production Costs

of U.S. Cotton Farms, 2007

line, diesel, fertilizer, and labor per planted acre. Low-cost producers made fewer trips across their fi elds, reducing

machinery use and ownership costs per unit. Most low-cost producers in 2007 farmed in the Southwest, where favorable

weather boosted their yields.

• Operating costs per acre did not vary signifi cantly by the size of the cotton enterprise. Operators with larger cotton

enterprises generally did not have lower costs per planted acre or per pound, despite economies of scale. Many

operators with smaller cotton enterprises minimized their ownership costs by relying on custom work to avoid the

purchase cost and maintenance of expensive cotton harvesters. Providers of custom work supply their own machinery

as well as labor to accomplish a task.

• Most cotton production takes place on very large farm operations, with half of the cotton production occurring on

farms with annual gross sales of $1 million or more. Those farms had the highest average cotton yields per planted

acre and the highest average per acre costs. They were more likely to irrigate their cotton acres than smaller cotton


• Cotton farms vary considerably in the degree of reliance on cotton. Operators with the larger cotton enterprises often

had less commodity diversifi cation on their farms. They depended more on cotton compared with operators with

smaller cotton enterprises. In contrast, operators of the largest U.S. farms who included cotton in their production

mix had more commodity diversifi cation and were less dependent on cotton than operators of smaller cotton farms,

since many operators of the largest farms growing cotton had small- to mid-size cotton enterprises.

How Was the Study Conducted?

Cotton producers were grouped by cotton production costs, region, cotton acreage, and typology to examine the variation

in characteristics and production practices of U.S. cotton farms in 2007. Farms were ranked by the operating and

ownership costs per pound of cotton lint to analyze the factors associated with low and high cotton production costs.

We analyzed the characteristics of cotton farms by major cotton production areas to gain insights into regional shifts in

cotton production. Cotton farms were grouped by the size of the cotton enterprise (planted acres) and size of the farm

(gross farm sales) to determine whether size offers advantages or disadvantages.

The data we analyzed came from ERS’s farm-level production cost estimates for cotton and the cotton version of the

2007 Agricultural Resource Management Survey (ARMS)—a joint effort conducted annually by USDA’s National

Agricultural Statistics Service (NASS) and ERS. These two data sources are tightly intertwined since the cotton version

of ARMS is one of several data sources used by ERS to compute cotton production cost estimates. Several NASS reports

provided secondary data for estimating cotton production costs.

For our purposes, a farm is considered a cotton farm if 1 or more cotton acres were planted with the intention of

harvesting the cotton for lint, with cottonseed as a byproduct. Therefore, data from producers who planted cotton with

the intention of harvesting the cotton for commercial seed are excluded from our analysis. In addition, yield and cost

data per acre are based on planted acres rather than harvested acres


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