Cotton Growing Dying in Phoenix -- Good!
I have written a number of articles about the ridiculous subsidies paid to cotton growers in Arizona. The AZ Republic has a semi-nostalgic look at the decline of cotton farming in the Valley, mainly due to the pressure of urban growth. I say: Good! How have we tolerated a situation like this so long:
This year, Arizona farmers planted 215,000 acres of cotton, a 66
percent drop from the 633,000 acres in production in 1981, said Rick
Lavis, vice president of the Arizona Cotton Growers Association."I wish we could grow more and the prices were better," Lavis said.
Cotton averages 55 cents per pound, up from five years ago, Lavis said. But it costs 75 cents a pound to produce, he said.
"Doesn't sound very profitable, does it?" Lavis asked. "If the trend
lines tell us anything, it probably is continuing to be a diminishing
commodity because of urbanization and price. If you're not making back
the 72 cents to 75 cents a pound that it costs to produce it, cotton
growers may say, 'Gee, I need to grow something else.' "A variety of federal subsidies, including guaranteed payments, price
supports and below-market loan rates, keep cotton profitable for
Arizona farmers, Lavis said. When cotton prices rise, subsidies
decline, he said.
You mean at some point when prices are 20 cents under the cost of production, farmers might eventually consider planting something else? Duh. Farmers, generally rational sorts, would have made this decision long ago if it weren't for the enormous federal subsidies mentioned in the last paragraph that keep cotton profitable. And this underestimates the total subsidy, since farmers in Arizona (as well as Southern California) use millions of gallons of subsidized water, ofter priced below cost, usually priced below what we other citizens pay, and always priced below what a true market clearing price would be (which explains why Lake Powell is drying up).
In this post I list information on cotton subsidies -- over $100 million in Arizona just for cotton in 2003, and 2006 appears to be a worse year. And notice the top three subsidy recipients are all Indian Tribes with very, very profitable casino operations. These are not struggling family farms. Most every one of these farmers on the top subsidy list are in cities (Goodyear & Queen Creek for example) that are right at the wavefront of Phoenix expansion and so probably sit on a fortune in real estate. I am sure they are happy to have the USDA pay them a half million dollars a year so they can cover the carrying cost of their land until they find the right developer to buy it for millions.
