In addition to the weather and insects, growers are at the mercy of the international cotton market. Cotton has been traded internationally for over a century. In 1988, almost 40 per cent of US cotton was exported, with earnings offsetting the costs of less than 0.5 per cent of all goods imported into the United States. The profits of growers, once they have brought the cotton to market, depend upon the dollar exchange rate, cotton production in other countries, the import and export policies of other countries, existing surpluses or stocks worldwide, and the demand for cotton. These are huge, well-financed, sophisticated, public and private corporations that develop, market, and technically support the products they produce.
Demand is also age and income related, and is thus governed by changing demographics.
Figure 6.3 illustrates the fluctuation of world cotton supply and demand during a recent 10-year period. The United States produces over one-fourth of the world cotton crop. Most of the Llano cotton is grown for export. The international market trades in inferior-grade cotton more so than the domestic market. The industry has experienced several major market swings in the past decade, and the bottom fell out of the local agricultural economy in the early to mid-1980s.