Delta farmers are facing the new year with plenty of worries: drought
conditions, higher production costs, lower commodity prices, and uncertainty
over government assistance.
"Because things are still so stressed economically, many believe that
Congress will do some sort of special economic assistance package, but it's
hard to know what will happen, especially with the political situation in
Washington," says John Macquire, representative of the National Cotton
Council.
In the last two years, government payments, from programs such as
AMTA(Agricultural Market Transition Act), and emergency assistance sources
have accounted for roughly 50% of net farm income, according to NCC. For
many farmers, it's made the difference between a positive and negative cash
flow.
"We must have that additional AMTA payment or we're going to be in trouble,
and so is almost everyone else," says Bill O'Neal, a farm manager of 3,000
acres of cotton and 300 acres of beans for Reeves Neblett in Shelby. "It's a
necessity for us to survive, never mind making money."
Emergency assistance packages since 1998 have provided an annual average of
$8.5 billion, while other financial support, in the form of marketing loan
gains and AMTA contract payments, added another $13 billion for 2000.
"Commodity prices and the cost of production are our two main problems -
one's too low and one's too high," O'Neal says. "We're cutting expenses
everywhere possible, even places where we've already cut back. For example,
even though we're cutting down on tillage operations, we already have a lot
of no-till. Fuel is so high that we are cutting back on the trips across the
field. We are trying to cut back on equipment repair costs, but there aren't
a lot of places to cut back there. We don't really know what to expect this
year as far as insect control goes. The season will determine that."
The strong dollar has hampered export prices, says Mike Sturdivant, Jr., a
Glendora farmer and member of the Federal Reserve Board.
"It's nice having a strong economy, but the strong dollar really hurts us
when we try to export our crops," he says. "That, coupled with trying to
decide what we're going to do about a new farm program in the future, is
going to be very key as to how farming and agriculture proceed down the
road."
According to a December report by the USDA's Economic Research Service, the
U.S. cotton demand for 2000/2001 is expected to slightly exceed production,
with stocks remaining steady, and raw cotton exports are projected to
rebound to the highest level since 1995/1996.
"We won't back off the cotton crop because that's what pays our bills,"
Sturdivant says.
Farmers should begin implementing cost-cutting measures on cotton crops
early in the season in preparation for a lack of rain, says Dr. Anthony
Mills, technical service manager for the Mississippi division of Monsanto
Corp.
"I'd cut out all unnecessary tillage trips on cotton crops in the spring,
starting with cultivation," Mills says. "But it's not just the rain, it's
the whole farm economy. Expenses must be cut as much as possible. That's the
name of the game now. If you don't know exactly what you're getting for the
input, you need to ask yourself a critical question - do I need this in the
system?"
Cotton production requires extremely high input costs, which often cannot be
determined until crops have been planted, O'Neal says.
"Until we get into the season, we won't know what we have," he says.
"However, we are in the boll weevil program, and with Bt cotton, our
insecticide cost is way down and we hope that continues."
Corn and cotton rotations depend on the effects of nematodes, Sturdivant
says.
"If we have nematodes, we plant corn and put cotton in two years later," he
says. "We'll probably cut back the beans and either grow more corn or milo,
and that is a change for us.  We grow conventional cotton conventionally. We
are keeping our eye on others, but we don't see where it (low tillage) works
in our operation the same as it does for others. We have a lot of overhead
with a  gin and grain storage and we can't back off our production. The only
equation for us is to cut costs and increase the revenue and that's really
all we can do."
Dry land soybeans don't look favorable this year, says Mills.
"If I was a dry land farmer who had nothing but soybean ground, I would
start thinking about planting very early, by mid to late March or the first
of April," he says. "I'd go with group 4 soybeans and hopefully beat the
drought. Even if I was growing irrigated soybeans, I would go with group 4
to cut irrigation expenses as much as possible."
O'Neal says he's already cut back to about 300 acres of soybeans and moved
them to non-irrigated land.
"We will irrigate 80% of our cotton land and 100% of our corn land," O'Neal
says. "We won't plant any dry land corn. There's a little more to be
positive about with cotton, but rice and beans are plainly in bad shape. We
will probably cut back some on rice and plant more cotton on that land."
Hugh Warren,  executive vice president of the Catfish Farmers of America,
says catfish growers are entering the new year with relatively soft prices
and heavy inventories.
"On the positive side, feed prices should remain steady due to the continued
depressed market for corn and soybeans," he says. "There continues to be
some growth in the industry from expansion of existing farms and new ponds
being developed in East Mississippi. That expansion is evident in feed mill
plants as they increase their capacity."
Catfish farmers hope to have a stronger marketing position in 2001 to
underpin prices, Warren says.
"We have almost no exports, but we are trying to develop the Canadian
market," he says. "We will continue to promote our catfish through
aggressive promotion and advertising."
Even though many farmers are looking at crop insurance, Sturdivant says he
would not consider it in 2001.
 "I understand the economics of wanting to stay in business, but it becomes
accepted farm policy and that's not the road to travel in the long run,"
Sturdivant says. "We're just trying to avoid it because, down the road, it
just means higher premiums for everyone, and later on we may really need it.
I'm not sure what the answer is. It's a Catch-22 situation."