The cotton sector will be witnessing testing times.
Over 1500 participants are gathering during March 30-31, as part of the Texas Cotton Gin shows in Lubbock before the beginning of the planting season in May in the High Plains of Texas.
While there were mixed opinions due to many uncertainties in the industry, stakeholders are hoping for better weather to move the cotton industry forward.
The economy is playing a significant role resulting in low demand for textile items. Inflation has resulted in a rise in input costs slowing down the consumption of textiles and other commodity items.
“Cotton sector will have 1-2 years of tough times,” stated Shankar Venkatachalam, President of Bajaj ConeEagle LLC, which has its ginning machinery running in over 20 countries.
Cotton producers, bankers, insurers, and other stakeholders are hoping that there will be timely rains in the High Plains for a better season this year. “Last season has been brutal for the ginners,” opined Steve Moffett, Senior Vice President at Lubbock Electric. In his over four decades in the industry, Moffett stated that the drought last year coupled with inflationary pressures has put the cotton sector under stress. Many gins did not run at their full capacity indicating less economic activity in the High Plains of Texas.
This season, the industry is hoping for rains soon in the High Plains of Texas. “If the weather does not cooperate, the industry will have a different trajectory,” stated Stoney Jackson, President of Lubbock-based Texas Agribusiness Insurance, who has been in the insurance business for 44 years. If the situation persists, a lot of small gins may close and we may see more consolidation, added Jackson.
Sales of new clothing are not happening due to economic factors. “In a weak economy, people buy food and not clothes,” stated Stoney Jackson. Insurance and inputs costs are going up, which again adds stress to the sector. In the last few years, due to an increase in insurance claims, premiums are going up as high as 30-60%, which puts stress on the industry making it unviable in challenging times, added Stoney Jackson. Irrigated acres may permanently switch to food crops such as corn and milo, added Jackson.
The industry is hoping that with timely rains in Texas and a good handle on the inflation, there may be a turnaround for the cotton and textiles sector.
Given the stressful and uncertain times, it is resilience and hope, which can move the industry forward.
By Seshadri Ramkumar, Professor, Texas Tech University, USA