Much of the cotton grown in the United States now will be produced by the larger farms that benefit the most from efficiency and economies of size. The more efficient farming operations grow cotton for a cost of 60 to 70 cents per pound. But, given expectations of farm prices, at best, in the 66 to 69 cent per pound range, producers who have costs of 70 cents and above find it difficult to cover costs and be profitable. Too, cotton tends to offer some of the lowest returns to variable costs for alternative crops across cotton regions. The supply of U.S. cotton depends largely on price, acreage planted, soil characteristics, climatic factors and resulting yields.
Producers have a delicate problem of reaching a balance between supply and demand.
The need is to produce a stable supply of cotton at prices that will provide a competitive return to labor, capital and management without encouraging major shifts to alternative sources of fiber. Consumption Increase Likely to Slow Domestic use of cotton will likely continue to trend upward but at a much slower pace than in the last decade. Competition with imported cotton apparel and man-made fibers will be stronger because of trade liberalization, weak foreign currencies and plentiful foreign textiles. Textile exports from the U. S. face stiff competition. The U.S. demand for cotton fiber is derived from consumers buying apparel, home furnishings and industrial products.