THE AUSTRALIAN cotton industry is hoping to put a tough year behind it, with a plummeting price and allegations regarding improper use of water making the headlines for all the wrong reasons.
The good news for the sector is that producers are likely to stick with the crop and that they may be rewarded with prices significantly better than expected a month ago.
Adam Kay, Cotton Australia chief executive, said the early estimates were that Australia was likely to produce over four million bales of cotton in the upcoming season once again.
“We’re estimating hectares planted to irrigated cotton area to remain steady this season, although at this stage dryland hectares will be down due to the dry season in northern Australia,” Mr Kay said.
He said production issues in the US, where the entire cotton market is anxious watching the progress of Hurricane Harvey, which is set to hit key cotton producing regions and dump damaging amounts of rain, could send world prices for cotton higher.
The extent of Harvey’s damage to cotton will depend on the path of the hurricane once its makes landfall.
If it veers north and east into the Mississippi Delta, a major cotton region, as some projections suggest, the damage will be more severe.
The concern has seen benchmark New York cotton futures soar by 70 cents a pound, bringing markets substantially off contract lows set in July.
Mr Kay said it was good news for Australian cotton producers, even though the daily variations in the market are not a big factor for them.
“Even when the prices were low on the futures it was not panic stations for Australian growers as they had a lot of the crop forward priced already.”
“Our growers are sophisticated marketers and they make use of spikes in the market, such as the rally earlier in the year, they are even happy making sales a season or two in advance if they feel it is appropriate,” Mr Kay said.
Cotton prices have laboured since a US Department of Agriculture report earlier in the year which lifted US cotton production to an eleven year high.
But the poor international pricing has been far from the only concern for the Australian cotton industry.
Cotton producers were at the centre of allegations of water theft aired on the ABC’s 4 Corners program earlier in the year and the debate has since broadened to question whether cotton, with its water requirements, is a suitable crop at all in the arid Murray-Darling Basin.
Mr Kay said he felt some of the commentary surrounding water issues did not reflect an adequate grasp of the cotton industry.
“First of all, we do not condone water theft or manipulation of the rules in any way, shape or form and if the claims are substantiated, and at present they are only allegations, we support throwing the book at offenders.”
“However, suggestions that cotton is an environmentally irresponsible crop do not reflect what farmers do.
“They are, by definition, always going to look for what delivers the most bang for their buck in terms of water inputs.”
“There are a number of summer crops available to growers with irrigation and the fact they are choosing cotton in such large numbers at present suggests it is delivering the best returns for growers per megalitre of water.”
He said irrigation in the Barwon-Darling section of the Murray Darling Basin was at a sustainable level.
Citing NSW Government data he said an average of 3500 gigalitres of water flowed down the Barwon-Darling system and just 198GL was used for irrigation.
“The vast majority of water in the system is maintained for the environment,” he said.
He said the benefits of the cotton industry could be seen by the growing geographic spread of the production of the crop.
New varieties, better suited to colder conditions, have meant the crop is now grown as far south as Victoria.
The NSW Riverina is emerging as a new home for the crop.
“Many of the guys who used to grow exclusively rice with their irrigation are now looking at planting some cotton,” Mr Kay said.
“From an industry perspective its great to have that geographic spread.”
Cotton Australia expects a number of new growers in the Lachlan, Murrumbidgee and Murray Valleys to grow cotton for the first time this year.
There are good water allocations for this year in all three irrigation districts, meaning growers can plant with confidence of having sufficient water to finish the crop.