TDOC lZTA245.7 a a _ g; B873 j B 1420 NO.1420 November 1982 Economic Implications of Alternative Cotton Production Strategies in the Lower Rio Grancle Valley of Texas, 1975-78 LIBRARY JFaN 1 2 1383 TEXAS A & Wl UNlvERSlTY = ~ j ' - f» » ., 1/ ,1,» ~, .. ~ , -_ y» . , " ‘ The Texas Agricultural Experiment Station, Neville P. Clarke, Director The Texas ASrM University System, College Station, Texas r-- r-- >—w-->--|-—-r—->—-r—-r—-r—~ \l O5 UIUIJROJOJIOMNr-Imdidfim cam-sumo: CJQJBQNDIQP-lb-i Contents INTRODUCTION Characteristics of Cotton Production Conventional Cotton Short-Season Cotton Study Area Objectives Review of Literature METHOD OF ANALYSIS Data Development Statistical Analysis Budgeting Analysis Breakeven Analysis PRODUCTION AND ECONOMIC IMPLICATIONS Production Implications Aggregate Yield Effect Water Practice EiTect Variety EfTect Management Effect Economic Implications Per-Acre Net Returns Breakeven Analysis Breakeven Yields Breakeven Prices Conclusions Limitations of the Study REFERENCES APPENDIX: BUDGETS OF SHORT-SEASON AND CONVENTIONAL PRODUCTION PRACTICES OF COTTON IN THE LOWER RIO GRANDE VALLEY OF TEXAS Economic Implications of Alternative Cotton Production Strategies in the Lower Rio Grande Valley of Texas, 1973-78 AUTHORS R. K. Shaunak, formerly research assistant, Texas A&M University (Department of Agricultural Economics) R. D. Lacewell, professor, Texas Agricultural Experi- ment Station (Department of Agricultural Econom- ics) ]ohn Norman, county extension entomologist, Texas Agricultural Extension Service, Weslaco, Texas INTRODUCTION Many pesticides are produced from fossil fuel and with declining world fuel reserves, the cost of the chemi- cals and cost to apply them for pest control are increas- ing. This cost impact, along with developing pest resistance to pesticides, is providing an ever-increasing incentive for more efficient methods to produce agricul- tural crops. Integrated Pest Management (IPM) is an opportunity to more effectively control pests and more efficiently produce agricultural crops. Cotton is a crop where the potential benefits to producers and society in general appear especially optimistic (Collins, et al., July 1979; Condra, et al.; Masud, et al.; Taylor and Lacewell). The quantities of insecticides used per acre by cotton producers in the Lower Rio Grande Valley (LRGV) of South Texas have been among the highest in the nation (F risbie, et al.). This is due to the favorable climatic and agricultural conditions for several insect pests. Increased insecticide resistance has been a signifi- cant problem. With increasing insect resistance to insec- ticides, farmers tend to increase the number of insec- ticide applications and rates which further irritates the problem. Even with the use of large amounts of insec- ticides, the control of damaging insects often has been less than satisfactory. Until introduction of synthetic pyrethroid insec- ticides in combination with cottonseed oil as a carrier, farmers were unable to control mid- and late-season tobacco budworm, Heliothis virescens (F .), infestations which are often aggravated when beneficial insects and spiders are destroyed by early season boll weevil, Anthonomus grandis (Boheman), and fleahopper, Pseudatomoscelis seriatus (Renter), control measures &iml<||cn where, __ S is the standard deviation and X is the mean yield. Budgeting Analysis Per-acre crop enterprise budgets for irrigated and dryland cotton production with conventional and short- season practices were developed using partial budgeting techniques and modifying published cotton enterprise budgets for the LRGV. These budgets provided the base data for the analysis. The data to modify the published crop budgets for the region between short-season and conventional prac- tices for irrigated and dryland production included yields, insecticide application, quantity of insecticide material, number of irrigations, and fertilizer use. These data were available from ‘the records of each field in- cluded in the study. _ Budgets were built for the periods 1973-75 and 1976-78 to investigate the effect of price and cost changes on economic implications of the alternative cotton production practices over time. The prices of products and inputs were calculated for each period L" averaging the prices received and paid during eacls‘ the 3 years in that period, as listed in the Texas Agricu - tural Extension Service budgets (Extension Economists- Management). Based on the IPM strategy, the short-season pro- duction practice was budgeted for two irrigations as Qimpared with three irrigations for conventional cotton production practice. Further, short-season producers were levied a charge for scouting their fields for econom- ic threshold level of insect pests. Breakeven Analysis Using the crop enterprise budget data, the sensitiv- ity of the alternative production practices to cotton prices and yields was determined through breakeven analysis. Breakeven analysis was used to estimate (1) the price of lint that would just cover variable costs of production and (2) the yields where net returns would be zero at a specified cotton price. At the breakeven point, the revenue generated from the sale of the output just covers the total variable costs incurred in its production, i.e., TR = TVC. Since TR = Py - Y for a pure competitor, Py ~ Y = TVC at the breakeven point where, TR = total revenue, TVC = total variable cost, Py = price per unit of output, Y The breakeven price can be expressed as output. TV Py =_YQ and the breakeven yield as Y___TVC Y The breakeven analysis is useful for indicating relative advantages of alternative cotton production practices. Equations relating the breakeven net return condi- tions between two enterprises have been developed (Collins, et al., March 1979). In this study, breakeven yields and price of cotton will be estimated between alternative cotton production practices, i.e., convention- al production practices compared to short-season pro- duction practices. In general, the breakeven condition is satisfied by equation (1). where l i ¢ j, I\ NR, = per-acre net returns associated with produc- tion practice i, N RJ- = per-acre net returns associated with produc- tion practice j. The net returns, ignoring fixed costs, for a particular cotton production practice (production practice i) are defined as PiL = price of lint per unit of production practice i, Pis = price of seed per unit of production prac- tice i, r, = ratio of seed to lint yield for production practice i, HC, = harvest costs per unit"of production prac- tice i, YiL = lint yield per acre for production practice i, PHC, = variable preharvest costs, including defoli- ation per acre for production practice i. By substituting equation (2) into equation (1) the breakeven condition is defined: Equation (3) can be solved for breakeven price or yield Solving for breakeven price, equation (3) becomes, Y? (4) P? = +HCi—I'iPiS where PiL = price of cotton that would equate production practice i net returns with production practice j net returns. Similarly, solving for breakeven yield, equation (3) be- comes, [(PJ-L+ rJ-PJ-S— HCj) YJ-L- PHCJ- + PHCi] Y? = where Y? = lint yield per acre for production practice i that would equate production practice i net returns with production practice j net returns. The methods discussed above were applied to the basic grower data and enterprise budgets developed to estimate the economic implications of short-season cot- ton as compared to conventional cotton production. PRODUCTION AND ECONOMIC IMPLICATIONS There are many aspects to an appropriate analysis of a new crop production system, such as short-season cotton production in the LRGV of Texas. Of interest is yield, pesticide use, and farmer profit implications. However, an analysis is complicated by annual varia- tions, management level, and irrigation practice. These results focus on a comparison of short-season cotton production and conventional cotton production in the LRCV over the period 1973-78. The two production practices are analyzed with respect to production and economic implications. Production Implications The basic objective herein is to compare yield be- tween short-season and conventional cotton production. This is done in an aggregate sense for general implica- tions. However, the comparison must be extended to consider also the effect of year, irrigation practice, vari- ety, and management. Aggregate Yield Effect An illustration of an annual per-acre comparison of mean lint yields, coefficient of variation of yield, insec- ticide applications, and materials used between short- season and conventional cotton production practices for the period 1973-78 is presented in Figure 2 (see Appen- dix Table 1). An evaluation of annual mean lint yields shows that short-season practice yields are statistically greater than conventional practice yields. Across all years, 1973-78, the mean yield of cotton lint grown by conventional practice is 442.2 lbs per acre, whereas the short-season practice yields 570.0 lbs per acre. As expected, insecticide use and number of applica- tions are substantially higher for the conventional prac- tice. In the period 1973-78, an average of 19.9 lbs per acre of insecticide material were used in the 11.2 appli- cations for the conventional cotton practice (approxi- mately 1.75 lbs per acre per application). Only 7.4 lbs per acre insecticide were used in 7.5 applications on cotton associated with the short-season practice. The coefficient of variation of yield indicates that across all years, the relative variation of short-season production is approximately 7 percent lower than that of conventional cotton production. For the two periods, 1973-75 and 1976-78, analyaL of the data for short-season versus conventional cotton production practice is summarized in Table 1. Analysis shows that only the lint yield of the short-season practice in 1976-78 is statistically different from all other yields. Even though there is no statistical difference, the con- ventional practice yield increases approximately 15 per- cent, from 431.5 lbs per acre in 1973-75 to 494.5 lbs per acre in the period 1976-78. Furthermore, the relative coefficient of variation of yield is much lower in the latter period, for both the conventional and short-season cot-i, ton production practices. Water Practice Effect In comparing the short-season and conventional cotton production practices, the effect of the water prac- tice incorporated, i.e., irrigated or dryland, has been ignored. Because water is an important input in cotton production, an analysis of variance was computed on the rainfall records to form a basis for comparing dryland and irrigated cotton yields. Rainfall data for the months of September through November preceding the produc- tion seasons of 1973, 1974, 1975, 1976, 1977, and 1978 plus the rainfall amounts for the cotton growing season February through July were averaged by location. The analysis of variance showed no statistical difference in mean rainfall by area over the period, except for the production season of 1977, when it rained 13.48 inches during the growing season compared to the mean rainfall of approximately 9 inches. As mentioned earlier, Gerard, et al. , reported that on light to medium textured soil types, rainfall in excess of 8-10 inches can cause significant yield reductions in irrigated cotton. In the period 1973-75, the estimates of insecticide material used and number of applications for the conven- tional practice are statistically greater than the short- season practice. However, there is no statistical differ- ence, in the 1976-78 estimates of insecticide use and applications, between the two production practices. This implies that the conventional cotton production system is evolving to the short-season system. ) The dramatic reduction, over time, in pounds of "I insecticide material used and the number of applications for the conventional cotton production practice is illus- TABLE 1. LINT YIELDS AND INSECTICIDE APPLICATIONS AND USE, OF SHORT-SEASON AND CONVENTIONAL PRODUCTION TECHNIQUES, LOWER RIO GRANDE VALLEY, FOR PERIODS 1973-1975 AND 1976-1978 IRRESPECTIVE OF WATER PRACTICE Coefficient . Lint of Variation Insecticide Insecticide Yielda of Yield Applications“ Use“ (lbs/acre) (%) (no.) (lbs) 197345 Conventional 431.5 (B) 46.6 11.7 (A) 21.8 (A) Short-Season 456.6 (B) 45.7 7.0 (B) 6.5 (B) 197678 Conventional 494.5 (B) 33.1 8.5 (B) 10.8 (B) _. Short-Season 643.5 (A) 28.0 7.9 (B) 8.0 (B‘ 1973_78 Conventional 442.2 (B) 43.8 11.2 (A) 19.9 (AH Short-Season 570.0 (A) 37.0 7.5 (B) 7.4 (B) ‘Means with the same letter are not statistically different among all groups at the .05% level. 6 .1. Pounds Number of Insecticide Lint/Acre Applications 700- 600% 500.. 40C -1 T I T T T? I I I l 7 1973 1974 1975 1976 1977 1978 1973 1974 1975 1975 1977 1973 Coefficient of Variation Pounds of Insecticide of Yield Used/Acre 60 - s01 60 - 30 - I l’ I ‘T I T I Y I’ T I 1973 1974 1975 1976 1977 1978 1973 197k 1975 1976 1977 1978 PK Figure 2. Annual Comparison of Short-Season and Conventional Cotton Production Practices. 7 trated in Figure 3, panels (c) and (d). Insecticide use declines almost 50 percent, from 21.8 lbs per acre in 1973-75 t0 10.8 lbs per acre in 1976-78. For the short- season practice, there is a slight increase in quantity of insecticide used and number of applications during 1976-78, but these estimates are still lower than those for conventional production practices. This slight increase is reflective of increased boll weevil activity in these years. An annual per-acre comparison of mean yields with and without irrigation is presented in Table 2 for the period 1973-78 by year and across all years. No statistical difference is found between dryland and irrigated cotton yields for 1973, 1974, 1975 and all years in aggregate. For 1976 irrigated cotton yield is statistically greater than dryland cotton yield. However, in 1977 dryland yield is statistically greater than irrigated yield. Dryland cotton yield in 1977 was 584.4 lbs per acre compared with 422.9 lbs per acre yield for irrigated. One reason for ‘this may be the excessive rain in the 1977 production season. Irrigated cotton production for each year and across all years, 1973-78, is less variable as shown in about a 2 percent reduction in the coefficient of variation in comparison with dryland cotton production. TABLE 2. AN ANNUAL PER ACRE COMPARISON OF MEAN YIELDS BE VALLEY OF TEXAS, 1973-78 An annual comparison of the per-acre mean yields between dryland and irrigated cotton for both the short- season and conventional cotton production techniqu also presented in Table 2 and illustrated in F igurtedfi. Across all years and for 1974 and 1976 irrigated cotton yields are statistically greater than dryland cotton yields, under the short-season production practice. Only the 1975 dryland yield of short-season cotton is statistically greater than irrigated cotton yield. In 1973 and 1977 there was no statistical difference between irrigated and dryland yields under the short-season production prac- tice. Across all years and for every year except 1975 and 1977, conventional production practice yields for irri- gated and dryland cotton are not statistically different. In 1975, irrigated yield under the conventional practice is about 180 lbs greater than dryland yield. In 1977, be- w.‘ cause of the excessive rainfall, the dryland yield is greater than the irrigated yield. Analysis of data for irrigated versus dryland cotton production during the periods 1973-75 and 1976-78 is I summarized in Table 3. During 1976-78, both the irri- gated and dryland yields are statistically greater than in “NEEN DRYLAND AND IRRIGATED COTTON, LOWER RIO GRANDE Coefficient Short-Season Conventional Water Lint Yield“ of Variation Yield“ Yield“ Year Practice (lbs/acre) of Yield (lbs/acre) (lbs/acre) 1973 Irrigated 366.0 (A) 47.6 371.4 (A) 365.8 (A) Dryland 377.4 (A) 50.7 378.7 (A) 377.1 (A) 1974 Irrigated 502.3 (A) 36.2 520.9 (A) 501.4 (A) Dryland 458.2 (A) 37.7 427.8 (B) 478.9 (A) 1975 Irrigated 516.1 (A) 51.2 360.9 (B) 535.9 (A) Dryland 446.8 (A) 55.0 783.4 (A) 353.3 (B) 1976 Irrigated 593.9 (A) 22.8 731.9 (A) 541.4 (B) Dryland 492.0 (B) 28.8 548.8 (B) 460.4 (B) 1977 Irrigated 442.9 (B) 32.8 537.6 (A) 388.6 (B) Dryland 584.4 (A) 37.9 662.7 (A) 571.3 (A) 1978 Irrigated 605.7 32.0 674.2 (A) 519.4 (B) Dryland -- -- -- -- 1973_78 Irrigated 459.9 (B) 43.6 590.3 (A) 443.1 (B) Dryland 452.5 (B) 45.4 503.4 (B) 434.6 (B) “Means with the same letter are not statistically different at the .05% level. The statistical test is valid only within each year among groups. TABLE 3. PER ACRE COMPARISON OF MEAN LINT YIELDS BETWEEN DRYLAND AND IRRIGATED COTTON, LOWER RIO GRANDE VALLEY OF TEXAS, FOR PERIODS 1973-1975 AND 1976-1978 Coefficient Short-Season Conventional Water Lint Yield“ of Variation Yield“ Yield“ Period Practice (lbs/acre) of Yield (%) (lbs/acre) (lbs/acre) 19734975 Irrigated 435.0 (B) 45.6 439.2 (B) 434.8 (B) Dryland 419.2 (B) 48.0 477.3 (B) 397.7 (B) _ Irrigated 546.8 (A) 33.6 648.5 (A) 486.9 (B) 19751978 Dryland 547.4 (A) 34.5 591.5 (A) 534.4 (»- _ 19734978 Irrigated 459.9 (B) 43.5 590.3 (A) 443.1 (ad Dryland 452.2 (B) 45.4 503.4 (B) 434.6 (B) “Means with the same letter are not statistically different among all groups at the .05% level. 8 Number of Insecticide Pounds Lint/Acre Applications 700 ‘" l2 — F — — — — — — — ——SS 60o a f l0 q I ' cow mom I wN 8- r_____--g — Q ¢ ¢ — Q o c <1 lliiiiiid‘ 400 -. 5 q 30o ~ “ “ ZOO ~ 2 ' ‘k 1973-75 1976-78 1973-75 1976-78 (a) <4) Coefficient of Variation Pounds Insecticide of Yield Used/Acre 60< 24 d so - Z0 ~ p 1 Q Q Q Q t¢a1 7.0 .. l6 - _______'-J 1o — P '7 1973-75 1976-78 1973-75 19715-78 (b) (c) C‘ Figure 3. Comparison of Short-Season and Conventional Cotton Production Practices in the Lower Rio Grande Valley of Texas for Periods 1973-75 and 1976-78. 1973-75. However, across all years (1973-78) there is no statistical difference between the irrigated and dryland mean yields, which are 459.9 and 452.2 lbs per acre, respectively. Dryland cotton yield is approximately 2 percent more variable than irrigated yield across all years. An evaluation of lint yield for short-season and conventional production practices with and without irri- gation shows that across all years, only irrigated cotton grown by short-season techniques is statistically (lifter- ent from all other yields (Table 3). In the period 1973-75 there is no statistical diflerence among all yields. In the 1976-78 period only the irrigated cotton grown under conventional practices is statistically different (less) than Irrigated Pounds all other years. However, the absolute yields (lint lbs per acre) under the short-season production practice, irfr‘ pective of water practice, are always greater than yil, of cotton grown by the conventional practice. I The coeflicient of variation of yield shows that the relative variation of the short-season cotton production practice, regardless of the water practice, is lower than that of the conventional cottonjlproduction practice (Table 4). Across all years, the variability of mean yield of irrigated cotton grown by the conventional practice is about 11 percent more than for the short-season prac- tice. In dryland production, the variability of yield grown with the conventional practice is 6.4 percent Lint/Acre t s00 - /\ 700 4 / \ 53 \ / \ / s00 \\ // v’ s00 for‘ 40o 30o 1973 1974 1975 Dryland Pounds Lint/Acre i 800 . 700 < / 600 a I 500 400 300 ‘ s) 1.973 1974 191s Figure 4. Annual Comparison of Short-Season and Conventional Cotton Production Practice 1976 1977 1978 197s 1917 197a -- Ta Yields in the Lower Rio Crande Valley of Texas for Irrigated and Dry/and Cotton. 1O nJ greater than for the short-season practice. e Estimates for the number of insecticide applications . 1d quantity of insecticide material used are presented 1n Table 4. Across the whole period, 1973-78, 11 and 13.3 lbs per acre more insecticide material was used for irrigated and dryland production respectively, under the conventional practice as compared with the short-season practice. Also, the number of insecticide applications was greater for the conventional practice for both irri- gated and dryland cotton. However, comparing the periods 1973-75 and 1976- 78, it should be noted that in the latter period, there is a dramatic reduction in the quantity of insecticide used under the conventional production practice, in both irrigated and dryland cotton. Insecticide use declined over 5O percent from 22.4 lbs per acre to 10.9 lbs per acre, in irrigated cotton and from 15.0 lbs per acre to 10.1 lbs per acre, in dryland cotton grown by the con- ventional practice. Variety Effect Use of semi-determinate cotton varieties along with other short-season production techniques reduces the growing season by 20 to 3O days, thereby offsetting the disadvantages associated with late-season insect infesta- tions and undesirable weather conditions. In this sec- tion, the effect on yield due to the cotton variety planted under both short-season and conventional production practices, with and without irrigation is analyzed. The mean yields of early, intermediate, and late maturing cotton varieties are presented in Table 5. Across all years 1973-78, there is no statistical difference between the yields of the three varieties for irrigated short-season, irrigated conventional, and dryland con- ventional practices. Only in the short-season dryland production practice, the yield of variety 3 (late maturing) is statistically different (less) among the three varieties. However, it should be noted that-except for the late maturing variety in dryland production, the yields of short-season production, irrespective of water practice, are statistically greater than the yields under the conven- tional production practice. Thus, we can conclude that the production prac- tice followed, i.e., short-season or conventional, is the determining factor as far as yields are concerned, while the variety planted is not so critical. TABLE 4. LINT YIELDS, INSECTICIDE APPLICATIONS, AND USE OF SHORT-SEASON AND CONVENTIONAL PRODUCTION TECHNIQUES WITH AND WITHOUT IRRIGATION, LOWER RIO GRANDE VALLEY OF TEXAS C.V. ofb Insecticide“ lnsecticidea Lint Yielda Yield Applications Use (lbs/acre) (%) (no.) (lbs) 1973-75 Irrigated: Conventional 434.8 (B) 46.0 12.1 (A) 22.4 (A) Short-Season 439.2 (B) 43.5 11.9 (A) 11.7 (B) Difference —4.4 2.2 .2 10.7 Dryland: Conventional 397.7 (B) 50.1 7.5 (B) 15.0 (A) Short-Season 477.3 (B) 41.7 1.0 (C) 0.3 (C) Difference —79.6 8.4 6.5 14.7 1976-1978 Irrigated: Conventional 486.9 (B) 34.2 8.9 (B) 10.9 (B) Short-Season 648.5 (A) 25.6 8.7 (B) 8.8 (B) Difference —151.6 8.6 .2 2.14 Dtyland: Conventional 534.4 (A) 35.7 6.2 (B) 10.1 (B) Short-Season 591.5 (A) 32.3 0.6 (C) 0.5 (C) Difference —57.1 3.4 5.6 9.6 1973-1978 Irrigated: Conventional 443.1 (B) 44.0 11.6 (A) 20.6 (A) Short-Season 590.3 (A) 33.2 9.6 (A) 9.6 (B) Difference ‘ - 147.2 10.8 2.0 11.0 Dflland: Conventional 434.6 (B) 46.9 7.2 (B) 13.7 (A) hort-Season 503.4 (B) 40.5 0.9 (C) 0.4 (C) )ifference —-69.2 6.4 6.3 13.3 ‘Means with the same letter are not statistically different among all groups at the .05% level. “C.V. stands for the coefficient of variation statistic. 11 TABLE 5. COMPARISONS OF- MEAN YIELDS OF DIFFERENT COT- TON VARIETIES, LOWER RIO GRANDE VALLEY OF TEXAS Irrigated Lint Yield” Dryland Lint Yieldb Variety“ SS‘ CON‘ SS‘ CON‘ ---------------------------- --(lbs/acre) ----------------------------- 1973-1975 1 538.6 (A) 475.8 (B) --- 420.0 (B) 391.6 (B) 865.8 (A) 3 656.8 (A) 436.2 (B) 363.0 (B) 389.2 (B) 1976-1978 1 681.1 (A) 461.2 (B) 744.0 (A) --- 2 638.3 (A) 459.5 (B) 540.7 (A) --- 3 591.3 (A) 508.3 (B) --- 534.4 (A) 1973-1978 1 594.8 (A) 475.7 (B) 744.0 (A) 420.0 (B) 638.3 (A) 409.0 (B) 671.1 (A) --- 3 609.6 (A) 444.0 (B) 363.0 (B) 456.6 (B) ‘Variety 1, 2, and 3 correspond to early, inermediate, and late maturing cotton cultivars respectively. ‘Means with the same letter are not statistically different among all groups at the .05% level. ‘SS and CON refer to production practice irregardless of variety, and SS is short-season production practice and CON is conventional production practice. Management Effect Each producer participating in this study was classified according to his management capabilities as subjectively evaluated by agronomists and entomologists who are familiar with these producers. Management levels 1, 2, and 3 are designated to producers with high, average, and poor management capabilities, respec- tively. The effect on yield due to the management levels for short-season and conventional production practice, with and without irrigation, is presented in Table 6. In the period 1973-75, only the yields of irrigated cotton for both short-season and conventional practice, associated with management level 1 are statistically dif- ferent from all other yields. However, the short-season yields, irrespective of water practice, are greater than conventional practice yields for each management level. In the period 1976-78, only the conventional yields of management 3, for both irrigated and dryland cotton, are statistically different (less) than all other yields. Across all years, 1973-78, short-season yields are greater than the yields of conventional practice, for both irrigated and dryland cotton production. Yields of man- agement level 1 for all production options and manage- ment level 2 for irrigated short-season cotton are statisti- cally different (greater) than all other yields. Irrespective of the production option, management levels 1, 2, and 3 indicate a declining yield level which implies a declining managerial ability. Economic Implications The previous section provides data that indicate a yield advantage for the short-season cotton production 12 TABLE 6. COMPARISONS OF MEAN YIELDS OF DIFFERENT MAN- AGEMENT LEVELS FOR COTTON PRODUCTION, LOWER RIO. GRANDE VALLEY OF TEXAS “I w. Irrigated Lint Yieldb Dryland Lint Yieldb Management Levela SS‘ CON‘ SS‘ CON‘ ------------------------- "(ilbs/acre) -------------------------- 1973-1975 1 1340.0 (A) 597.1 (A) --- --- --- 482.7 (B) 489.7 (B) 455.8 (B) 3 410.1 (B) 402.0 (B) 442.3 (B) 331.2 (B) 1976-1978 1 787.6 (A) 602.7 (A) 744.0 (A) --- J 570.1 (A) 540.0 (A) 540.7 (A) 626.6 (A)‘ 3 612.0 (A) 455.5 (B) 513.4 (B) 1973-1978 1 808.1 (A) 597.7 (A) 744.0 (A) --- 570.1 (A) 494.2 (B) 495.6 (B) 475.2 (B) 3 489.6 (B) 414.6 (B) 442.3 (B) 402.8 (B) “Management levels 1, 2, and 3 refer to producers with high, average, and poor management capabilities, respectively. “Means with the same letter are not statistically different among all groups at the .05% level. ‘SS and CON refer to production practice irregardless of variety, and SS is short-season production practice and CON is conventional production practice. practices compared to conventional production prac- tices. However, a critical issue is the effect on costs and returns of producers and what economic incentive exists for cotton farmers. The economic analysis considers per- acre profit for the different production systems over the two periods 1973-75 and 1976-78. This is followed by sensitivity analysis in the form of breakeven yields and prices. Per-Acre Net Returns Crop enterprise budgets were built for the two periods, 1973-75 and 1976-78 to investigate the effect of price and cost changes on economic implications of the alternative production practices over time. Budgets of short-season and conventional production practices are presented in Appendix Tables 2 through 9. A per-acre comparison of net returns between short-season and conventional cotton production prac- tices, with and without irrigation, is presented in Table 7, for the two periods 1973-75 and 1976-78. First, net returns by production and irrigation practice are com- puted by considering only the variable costs (Table 7). Results indicate that dryland cotton production, for both short-season and conventional practice, is more profitable than irrigated cotton production. Returns above variable costs associated with the short-season cotton production practice, with and without irrigation, are greater than expected net returns under the conven- tional production practice. The results indicate that dry- land short-season cotton production is the most profit- able cotton production strategy, with estimated per-acre net returns of $154.08 and $190.48, for 1973-75 a 1976-78, respectively. @ Comparing the two periods, only the net returns associated with the conventional irrigated cotton produc- ggimry) tion practice declined from 1973-75 to 1976-78. Returns bove variable costs for the short-season irrigated cotton iroduction practice improved the most over the two periods, increasing by $62.50, from $61.42 per acre in 1973-75 and $123.92 per acre in 1976-78. Comparing the returns per acre above total costs (Table 7), the results indicate that dryland short-season production has the highest net returns of all production options, $93.42 per acre in 1973-75 and $117.31 per acre in 1976-78. Again, the conventional practice with irriga- tion is associated with the lowest net returns. In fact, the irrigated conventional cotton production practice incurs net losses of $34.78 per acre and $65.64 per acre, in TABLE 7. COMPARISON OF PER-ACRE NET RETURNS FOR ALTER- NATIVE COTTON PRODUCTION OPTIONS, LOWER RIO GRANDE VALLEY OF TEXAS Irrigated Dryland Period SS3 CONa SS“ CON“ -------------------------- --(dollars) ----------------------------- Returns Above Variable Costs 1973-75 61.42 48.88 154.08 96.39 1976-78 123.92 29.93 190.48 141.23 Returns Above Total Costs 1973-75 — 22.24 — 34.78 93.42 35.73 1976-78 28.35 — 65.64 117.31 68.06 “SS and CON refer to production practice irregardless of variety, and SS is short-season production practice and CON is conventional production practice. 1973-75 and 1976-78 respectively. It is re-emphasized that these data refer to the light to medium textured soils of the LRGV. Also, year to year variations are critical, thus, an analysis over several years may reveal that irrigating cotton is not profitable in aggregate but for a specific year it may very well be the most profitable alternative. These economic indications provide general directions, but there are many specific and unique situations which must be considered. Breakeven Analysis The economic analysis was extended to include estimating a breakeven yield and a breakeven price between the alternative cotton production practices. The per-acre net returns for each alternative cotton production strategy was calculated by deducting total variable costs from gross receipts. The per-acre net returns, for the two periods 1973-75 and 1976-78, are presented in Table 7. Breakeven Yields A comparison of breakeven yields for the alternative cotton production practices in relation to expected or base yields of these practices is presented in Table 8 and 9, for the periods 1973-75 and 1976-78. The breakeven yield of one production practice in relation to the expect- ed base yield of another production practice, represents the yield where per-acre net returns are equal for both practices, with a given cotton lint price. For example, in the period 1973-75 (Table 8), for a 439 lbs per acre base yield of short-season irrigated cotton, and the cotton lint TABLE 8. BREAKEVEN COTTON YIELDS OF SHORT-SEASON AND CONVENTIONAL PRODUCTION PRACTICES FOR IRRIGATED AND DRYLAND, 1973-75, LOWER RIO GRANDE VALLEY OF TEXAS“ Base for Comparison Breakeven Lint Yield by Specified Practice“ Production Lint Yield Price SS (lrr) CON (lrr) SS (Dry) CON (Dry) Practice‘ lbs/acre EB/lb (lbs/acre) SS (lrr) 439.0 .45 439.0 465.7 260.3 315.5 CON (lrr) 435.0 .45 408.3 435.0 230.2 284.9 SS (Dry) 477.0 .45 659.8 686.6 477.0 536.1 CON (Dry) 398.0 .45 521.6 548.3 341.3 398.0 “The analysis assumes a price of $95.00 per ton of cottonseed. bYield required for the production practice listed that equates net returns to the base identified in the first three columns to the left. ‘SS and CON refer to production practice irregardless of variety, and SS is short-season production practice and CON is conventional production practice. lrr‘ refers to cotton grown with irrigation and Dry is cotton grown without irrigation. TABLE 9. BREAKEVEN COTTON YIELDS OF SHORT-SEASON AND CONVENTIONAL PRODUCTION PRACTICES FOR IRRIGATED AND DRYLAND, 1976-78, LOWER RIO GRANDE VALLEY OF TEXAS" Base of Comparison Breakeven Lint Yield by Specified Practiceb Production Lint Yield Price SS (lrr) CON (lrr) SS (Dry) CON (Dry) Practice‘ lbs/acre $/lb (lbs/acre) SS (lrr) If 649.0 .51 649.0 702.9 443.7 495.7 CON (lrr) 487.0 .51 439.9 487.0 236.0 285.6 SS (Dry) 592.0 .51 798.0 856.4 592.0 645.5 534.0 .51 687.1 742.2 481.6 534.0 e analysis assumes a price of $80.00 per ton of cottonseed. “Yield required for the production practice listed that equates net returns to the base identified in the first three columns to the left. ‘SS and CON refer to production practice irregardless of variety, and SS is short-season production practice and CON is conventional production practice. lrr refers to cotton grown with irrigation and Dry is cotton grown without irrigation. 13 price of $0.45 per lb, the conventional irrigated cotton practice would need a lint yield of 465.7 lbs per acre to maintain a breakeven relationship with the short-season irrigated cotton production practice. Similar interpreta- tions can be made for all other breakeven yield relation- ships. Thus, the short-season dryland practice would need a lint yield of only 230.3 lbs per acre (compared with its base yield of 477.0 lbs per acre) to maintain a breakeven relationship with conventional irrigated cot- ton practice with a base yield of 435 lbs per acre, and cotton lint price of $.45 per lb (Table 8). Short-season dryland cotton had the least breakeven yield of all cotton production options in the period 1973-75. Both dryland options would need to yield well below their average estimated yields to maintain a breakeven relationship with the irrigated options. For the period 1976-78, the conventional irrigated cotton practice would need to yield significantly above its estimated base yield of 487 lbs per acre to maintain a breakeven relationship with all other options. Again, short-season dryland cotton had the lowest breakeven yield of all cotton production options. Short-season irri- gated cotton would need to yield only 439.9 lbs per acre (which is well below the expected base yield of 649 lbs per acre) to maintain a breakeven relationship with the conventional irrigated cotton practice. The implication is that the short-season dryland cotton production practice could produce well below its average yield and still have per-acre net returns compar- able to all other cotton production alternatives. Breakeven Prices The breakeven price relationship between short season and conventional production practices, with a k without irrigation are presented in Tables 10 and 11. During the period 1973-75, breakeven price rela- tionships between all production options indicates that short-season dryland cotton production has an absolute advantage over all other options. For example, with the cotton lint price of $.45/lb, and an estimated base yield of 477 lbs per acre for short-season dryland practice, a lint price of $.60/lb for conventional dryland cotton would be needed to maintain a net return breakeven relationship. During the period 1976-78, analysis of breakeven‘ price relationships among all cotton production strategies indicates that conventional irrigated cotton practice has the greatest absolute disadvantage. With the cotton lint price of $.51/lb, and an estimated base yield of 487 lbs per acre for conventional irrigated cot- ton, lint prices of $.37 per lb for short-season irrigated, $.24 per lb for short-season dryland cotton and $.30 per lb for conventional dryland practice would maintain a net return breakeven relationship. Again, short-season dryland production has an absolute advantage over all other options. These data indicate that even if the short- season cotton production practice under dryland has some quality loss, there can be a large price decline for the cotton produced with the short-season system and it will still produce a net return comparable to the conven- tional production practice. TABLE 10. BREAKEVEN COTTON PRICES OF SHORT-SEASON AND CONVENTIONAL PRODUCTION PRACTICES FOR IRRIGATED AND DRYLAND, 1973-75, LOWER RIO GRANDE VALLEY OF TEXAS“ Base for Comparison Breakeven Price by Specified Practiceb Production Lint Yield Price SS (lrr) CON (lrr) SS (Dry) CON (Dry) Practice“ lbs/acre $/lb ($/lb) SS (lrr) 439.0 .45 .45 .48 .26 .36 CON (lrr) 435.0 .45 .42 .45 .23 .33 S5 (Dry) 477.0 .45 .66 .69 .45 .60 CON (Dry) 398.0 .45 .53 .56 .33 .45 “The analysis assumes a price of $95.00 per ton of cottonseed. “Price required for the production practice listed that equates net returns to the base identified in the first three columns to the left. ‘SS and CON refer to production practice irregardless of variety, and SS is short-season production practice and CON is conventional production practice. lrr refers to cotton grown with irrigation and Dry is cotton grown without irrigation. TABLE 11. BREAKEVEN COTTON PRICES OF SHORT-SEASON AND CONVENTIONAL PRODUCTION PRACTICES FOR IRRIGATED AND DRYLAND, 1976-78, LOWER RIO GRANDE VALLEY OF TEXAS“ Base for Comparison Breakeven Price by Specified Practiceb Production Lint Yield Price SS (lrr) CON (lrr) SS (Dry) CON (Dry) Practice‘ lbs/acre S/lb (S/lb) SS (lrr) 649.0 .51 .51 .70 .40 .48 CON (lrr) 487.0 .51 .37 .51 .24 .30 SS (Dry) 592.0 .51 .61 .84 .51 .60 CON (Dry) 534.0 .51 .54 .74 .43 .51 “The analysis assumes a price of $80.00 per ton of cottonseed. "Price required for the production practice listed that equates net returns to the base identified in the first three columns to the left. ‘SS and CON refer to production practice irregardless of variety, and SS is short-season production practice and CON is conventional production practice. lrr refers to cotton grown with irrigation and Dry is cotton grown without irrigation. 14 »-'- of resistance t0 insecticides in the LRGV have caused u)“ Conclusions The incidence of pest populations and development concern about levels of insecticide use and costs of production for cotton. Conventional cotton production practices prolong crop maturation and thus delay har- vesting until late August or early September. These factors affect yield, costs, risk, quality of lint, and farmer profit (Gerard, et al., 1977; Larson, et al., 1975). In an effort to gain effective control of insect pest infestations and maintain per-acre yields, an IPM strategy that encompasses short-season production prac- tices has been incorporated by several LRGV producers in recent years. The IPM strategy switches production from an indeterminate (conventional) cotton cultivar to a semi-determinate (short-season) cotton cultivar, incor- porates certain cultural techniques, and uses field scout- ing for deciding on need of insecticide application. Short-season production results in an early fruit-set and a reduction in the growing season by 2O days or more and enables cotton producers to circumvent the disad- vantages associated with late-season insect infestations and undesirable weather. The cotton producer is concerned about profit and risk. If the new IPM program increases profits and/or reduces risk, the cotton producers have an opportunity to improve their economic condition. Two major compo- nents of profit are yield and insecticide expenditures. The results support the conclusion that by shifting to a short-season practice from the conventional practice (a) there is a significant reduction in insecticide use, (b) the mean lint yield is increased and (c) risk, as measured by the coefficient of variation of yield, would decrease. Thus, with the short-season cotton production practice, net returns would be higher than with conventional practice. This economic incentive should induce more growers to transfer to the short-season (IPM) strategy. Analysis of the data, 1973-78, for cotton production with and without irrigation in the LRGV indicates that dryland production is more profitable than irrigated cotton for both short-season and conventional practices. Average net returns above variable production costs are highest with the short-season dryland cotton production practice. This outcome is primarily due to reduced levels of irrigation, insecticide use, and insecticide applica- tions. The implications of the study are that if one strategy is to be followed over several years, then the dryland short-season practice is clearly advantageous. However, there may be specific years, when subsoil moisture normally created by fall rains and subsequent spring rainfall is inadequate, where it would be more profitable to irrigate under the short-season production strategy. Secondary benefits of the short-season cotton pro- duction system in the LRGV include a more consistent lint quality since the cotton is harvested before August. flugust rainfall often delays harvest, reduces the quality -f the lint and aggravates the overwintering boll weevil problem when the conventional cotton production prac- tices are incorporated. With the short-season cotton harvested before August, the stalks can be destroyed earlier. Eventually, as more producers incorporate the short-season practice, there would be a reduction in overwintering boll weevils and more effective biological control of bollworms and budworms due to the expected reduction of insecticide treatments for boll weevil con- trol. This suggests that less insecticide would be in- troduced into the environment and costs of cotton pro- duction in the LRGV would be lower. Short-season cotton production practices in the LRGV of Texas ap- pears promising as a viable system and an improvement over the conventional cotton production practice. Limitations of the Study Although there is evidence supporting the short- season production practice, it is important to emphasize the shortcomings and limitations of the present analysis. First, the data in this study refer to light to medium textured soils only. Other soil types may be more condu- cive to irrigated cotton production. There is need to reflect yield differences and associated harvesting cost differences among soil types. Year-to-year variations are critical. Analysis over several years may reveal that irrigating cotton is not profitable in aggregate, but for a specific year it may very well be the most profitable alternative. The economic indications in this study pro- vide general direction, but there are many specific and unique situations which must be considered. This study lacks explicit consideration of quality of lint associated with the short-season versus conventional cotton pro- duction practice. Additional work is needed on ranges of quality between the alternate production practices. A final caution is emphasized. The 6 years con- sidered in this analysis may not have been typical with regard to insect-pest problems. The quantity of insec- ticide applied under the short-season production prac- tice may be underestimated, while the yield may be overestimated. However, professionals associated with cotton production in the LRGV are confident that the directions are correct, i.e., time should prove the short- season cotton production practice will be associated with less insecticide use ‘and greater yields as compared to conventional cotton production practices. 15 REFERENCES Carlson, Gerald A. “A Decision Theoretic Approach t0 Crop Disease Prediction and Control.” American journal 0f Agricultural Economics, 52(1970): 216- 223. Collins, G. S., R. D. Lacewell and M. D. Heilman. “An Economic Comparison of Corn and Grain Sorghum Production: Texas Lower Rio Grande Valley. ” Texas Agricultural Experiment Station MP-1403, March 1979. Collins, G. S., R. D. Lacewell and J. Norman. “Economic Implications of Alternative Cotton Pro- duction Practices: Texas Lower Rio Grande Valley.” Southern journal 0f Agricultural Economics, Vol. 11, No. 1, July 1979. Dallas Morning News, The. “Texas Almanac.” A. H. Bale Corporation, 1977-78. Extension Economists-Management. “Texas Crop Budgets.” Texas Agricultural Extension Service MP-1027, 1979. F risbie, Ray, Roy Parker, Roger Bradshaw, Bill Bux- kemper, Bill Bagley, and John Norman. “Texas Pest Management Annual Report, 1973.” Texas Agricul- tural Extension Service, 1973. Gerard, C. J., B. W. Hipp, and S. A. Reeves. “Yields, Growth, and Management Requirements of Select- ed Crops as Influenced by Soil Properties.” Texas Agricultural Experiment Station B-1173, pp. 6-7, January 1977. Hall, Darwin C. and Richard B. Norgard. “On the Timing and Application of Pesticides.” American journal of Agricultural Economics, 55(1973)I 198- 201. Heady, Earl O. Economics of Agricultural Production and Resource Use. Englewood CliiTs, New Jersey: Prentice Hall, 1965. Lacewell, Ronald D. “Economic and Energy Implica- tions of Integrated Pest Management.” Mimeog- raph, September 1978. Lacewell, Ronald D. and C. R. Taylor. “Economic Anal- ysis of Cotton Pest Management Programs.” Texas A&M University, Department of Agricultural Economics TA-15972, 1980. Larson, J. L., R. D. Lacewell, J. E. Casey, L. N. Nam- ken, M. D. Heilman, and R. D. Parker. “Impact of 16 Short-Season Cotton Production on Producer Re-iu turns, Insecticide Use, and Energy Consumption — Lower Rio Grande Valley of Texas.” Texas Ag- ricultural Experiment Station MP-1204, June 1975. Masud, Sharif M., Ronald D. Lacewell, C. Robert Tay- lor, John H. Benedict, and Lawrence A. Lippke. “An Economic Analysis of Integrated Pest Manage- ment Strategies for Cotton Production in the Coast- al Bend Region of Texas. ” Texas Agricultural Exper- iment Station MP-1467, 1980. Namken, L. N. and M. D. Heilman. “Determinate Cot- ton Cultivars for More Eflicient Cotton Production in the Lower Rio Grande Valley.” Agronomy jour- nal, 65(1973): 953-956. National Oceanic and Atmospheric Administration. “Climatological Data: Texas." Environmental Data Service, National Climatic Center, Asheville, North Carolina, 1972-1978. Norman, John. Entomologist, Texas Agricultural Exten- sion Service, Weslaco, Texas. Personal communica- tion, July 1979. Pimentel, D., L. D. Hurd, A. C. Belloti, M. J. Forester, I. M. Oka, O. D. Sholes, and R. J. Whitman. “Food Production and the Energy Crisis.” Sciences, 1820973). 443-449. Sprott, J. M., R. D. Lacewell, G. A. Niles, J. R. Walker, and J. R. Gannaway. “Agronomic, Economic, Ener- gy, and Environmental Implications of Short- Season, Narrow-Row Cotton Production.” Texas Agricultural Experiment Station MP-1250C, Feb- ruary 1976. Texas Agricultural Extension Service. “Management of Cotton Insects in the Lower Rio Grande Valley of Texas.” Texas Agricultural Extension Service B- 1210, May 1979. Texas Crop and Livestock Reporting Service. “Texas Cotton Statistics.” U.S. Depatment of Agriculture, 1970 to 1978 issues. Texas Crop and Livestock Reporting Service. “Texas Field Crops Statistics.” U.S. Department of Agri- culture, 1970 to 1978 issues. Texas Crop and Livestock Reporting Service. “Texas Prices Received and Paid by F armers." U.S. De- partment of Agriculture, 1971 to 1979 issues. APPENDIX BUDGETS OF SHORT-SEASON AND CONVENTIONAL PRODUCTION PRACTICES OF ‘COTTON IN THE LOWER RIO GRANDE VALLEY OF TEXAS APPENDIX TABLE 1. AN ANNUAL PER ACRE COMPARISON OF MEAN LINT YIELDS AND INSECTICIDE APPLICATIONS AND USE, BETWEEN SHORT-SEASON AND CONVENTIONAL PRODUCTION PRACTICES, LOWER RIO GRANDE VALLEY OF TEXAS, 1973-78 Coefficient | - -d b Lint Yieldb of Variation . nsectlcl e Year System (lbs/acre) of Yield (%) Application Pounds 1973 CON 367.2 (A) 47.9 11.4 (A) 21.1 (A) SS 363.0 (A) 48.5 5.3 (B) 10.1 (B) 1974 CON 501.7 (A) 36.2 12.6 (A) 23.7 (A) SS 507.4 (A) 35.8 11.0 (A) 6.9 (B) 1975 CON 495.2 (B) 53.3 9.6 (A) 13.1 (A) SS 647.4 (A) 40.7 4.9 (B) 6.0 (B) 1976 CON 532.3 (B) 27.9 9.5 (A) 1_4.7 (A) SS 703.3 (A) 21.2 9.3 (A) 11.5 (B) 1977 CON 439.2 (B) 38.1 7.7 (A) 8.5 (A) SS 550.1 (A) 30.4 6.8 (A) 8.1 (A) 1978 CON 519.4 (B) 34.5 7.6 (A) 4.3 (A) SS 647.2 (A) 26.6 7.3 (A) 3.7 (A) 1973_78 CON 442.2 (B) 43.8 11.2 (A) 19.9 (A) SS 570.0 (A) 37.0 7.5 (B) 7.4 (B) ‘CON refers to the conventional cotton production system and SS to the short-season system. “Means with the same letter are not statistically different at the .05% level. The statistical test is valid only within each year among groups. 17 APPENDIX TABLE 2. IRRIGATED COTTON, ESTIMATED COSTS, AND RETURNS PER ACRE, SHORT-SEASON MANAGEMENT, LOWER RIO GRANDE VALLEY, TEXAS, 1973-75 Price or Value or Unit Cost/Unit Quantity Cost 1. Gross Receipts from Production: Cotton Lint lbs $ .45 439.00 $197.55 Cotton Seed ton 95.00 .35 33.25 Total $230.80 2. Variable Costs: Preharvest y Seed lbs $ .30 20.00 $ 6.00 Fert. (60-40-0) acre 20.00 1.00 20.00 Herbicide acre 6.06 1.00 6.06 Insecticide acre 19.88 1.00 19.88 Custom Spray appl 1.38 12.00 16.56 Field Scouting acre 2.00 1.00 2.00 Water Charge appl 3.00 2.00 6.00 Machinery acre 5.79 1.00 5.79 Tractors acre 12.63 1.00 12.63 Irrigation Machinery acre 1.25 1.00 1.25 Labor (tractor & machinery) hour 2.00 7.14 14.28 Labor (irrigation) hour 1.75 4.00 7.00 Interest on Op. Capital dol .09 58.73 5.29 Subtotal, Preharvest $122.74 Harvest Costs Defoliant acre $ 3.00 1.00 $ 3.00 Custom Spray appl 2.00 1.00 2.00 Gin, Bag, Ties bale 30.37 .91 27.64 Z Machinery acre 10.86 1.00 10.86 Labor (tractor & machinery) hour 2.00 1.57 3.14 Subtotal, Harvest $ 46.64 Total Variable Costs $169.38 3. Income Above Variable Costs $ 61.42 4. Fixed Costs: Machinery acre $26.27 1.00 $ 26.27 Tractors acre 8.89 1.00 8.89 Irrigation Machinery acre 3.50 1.00 3.50 Land (net rent) acre 45.00 1.00 45.00 Total Fixed Costs $ 83.66 5. Total Costs $253.04 6. Net Returns $——22.24 18 APPENDIX TABLE 3. IRRIGATED COTTON, ESTIMATED COSTS, AND RETURNS PER ACRE OF CONVENTIONAL MANAGEMENT, LOWER RIO GRANDE VALLEY, TEXAS, 1973-75 Price or Value or Unit Cost/Unit Quantity Cost 1. Gross Receipts from Production: Cotton Lint lbs $ .45 435.00 $195.75 Cotton Seed ton 95.00 .35 33.25 Total $229.00 2. Variable Costs: Preharvest Seed lbs $ .30 20.00 $ 6.00 Fert. (60-40-0) acre 20.00 1.00 20.00 Herbicide acre 6.06 1.00 6.06 Insecticide acre 25.96 1.00 25.96 Custom Spray appl 1.38 12.00 16.56 Water Charge appl 3.00 3.00 9.00 Machinery acre 5.79 1.00 5.79 Tractors acre 12.63 1.00 12.63 Irrigation Machinery acre 1.25 1.00 1.25 Labor (tractor & machinery) hour 2.00 7.14 14.28 Labor (irrigation) hour 1.75 6.00 10.50 Interest on Op. Capital doI .09 64.00 5.76 Subtotal, Preharvest $133.79 Harvest Costs Defoliant acre $ 3.00 1.00 $ 3.00 Custom Spray appl 2.00 1.00 2.00 Gin, Bag, Ties bale 30.37 .90 27.33 Machinery acre 10.86 1.00 10.86 Labor (tractor & machinery) hour 2.00 1.57 3.14 Subtotal, Harvest $ 46.33 Total Variable Costs $180.12 3. Income Above Variable Costs ‘ $ 48.88 4. Fixed Costs: Machinery acre $26.27 1.00 $ 26.27 Tractors acre 8.89 1 .00 8.89 Irrigation Machinery acre 3.50 1.00 3.50 Land (net rent) acre 45.00 1.00 45.00 Total Fixed Costs $ 83.66 5. Total Costs $263.78 6. Net Returns $—34.78 19 APPENDIX TABLE 4. DRYLAND COTTON, ESTIMATED COSTS, AND RETURNS PER ACRE OF SHORT-SEASON MANAGEMENT, LOWER RIO GRANDE VALLEY, TEXAS, 1973-75 Price or Value or__ Unit Cost/Unit Quantity Cost a. 1. Gross Receipts from Production: Cotton Lint lbs $ .45 477.00 $214.65 Cotton Seed ton 95.00 .38 36.10 . Total $250.75 2. Variable Costs: Preharvest Seed lbs $ .30 20.00 $ 6.00 Fert. (40-30-0) acre 13.90 1.00 13.90 Herbicide acre ' 4.82 1.00 4.82 Insecticide acre 1.81 1.00 1.81 Field Scouting acre 2.00 1.00 2.00 Custom Spray appl 1.38 1.00 1.38 Machinery acre 4.80 1.00 4.80 Tractors acre 5.39 1.00 5.39 Labor (tractor & machinery) hour 2.00 3.76 7.52 Interest on Op. Capital dol .09 23.81 2.14 Subtotal, Preharvest $ 49.76 Harvest Costs Defoliant acre $ 3.00 1.00 $ 3.00 Custom Spray appl 2.00 1.00 2.00 Gin, Bag, Ties bale 30.37 .99 30.06 Machinery acre 9.15 1.00 9.15 Labor (tractor & machinery) hour 2.00 1.35 2.70 Subtotal, Harvest i $ 46.91 Total Variable Costs $ 96.67 3. Income Above Variable Costs $154.08 4. Fixed Costs: Machinery acre $19.50 1.00 $ 19.50 Tractors acre 3.66 1.00 3.66 Land (net rent) acre 37.50 1.00 37.50 Total Fixed Costs $ 60.66 5. Total Costs $157.44 6. Net Returns $ 93.42 20 APPENDIX TABLE 5. DRYLAND COTTON, ESTIMATED COSTS, AND RETURNS PER ACRE OF CONVENTIONAL MANAGEMENT, LOWER RlO GRANDE VALLEY, TEXAS, 1973-75 Price or Value or Unit Cost/Unit Quantity Cost 1. Gross Receipts from Production: Cotton Lint lbs $ .45 398.00 $179.10 Cotton Seed ‘ ton 95.00 .32 30.40 Total $209.50 2. Variable Costs: Preharvest Seed lbs $ .30 20.00 $ 6.00 Fert. (40-30-0) acre 13.90 1.00 13.90 Herbicide acre 4.82 1.00 4.82 Insecticide acre 14.53 1.00 14.53 Custom Spray appl 1.38 8.00 11.04 Machinery acre 4.80 1.00 4.80 Tractors acre 5.39 1 .00 5.39 Labor (tractor & machinery) hour 2.00 3.76 7.52 Interest on Op. Capital dol .09 34.00 3.06 Subtotal, Preharvest $ 71.06 Harvest Costs Defoliant acre $ 3.00 1.00 $ 3.00 Custom Spray appl 2.00 1.00 2.00 Gin, Bag, Ties bale 30.37 .83 25.20 Machinery acre 9.15 1.00 9.15 Labor (tractor & machinery) hour 2.00 1.35 2.70 Subtotal, Harvest $ 42.05 Total Variable Costs $113.11 3. Income Above Variable Costs $ 96.39 4. Fixed Costs: Machinery acre $19.50 1.00 $ 19.50 Tractors acre 3.66 ‘ 1 .00 3.66 Land (net rent) acre 37.50 1.00 37.50 Total Fixed Costs $ 60.66 5. Total Costs $173.77 6. Net Returns $ 35.73 21 APPENDIX TABLE 6. IRRIGATED COTTON, ESTIMATED COSTS, AND RETURNS PER ACRE OF SHORT-SEASON MANAGEMENT, LOWER RIO GRANDE VALLEY, TEXAS, 1976-78 Price or Value or... Unit Cost/Unit Quantity Cost .- 1. Gross Receipts from Production: Cotton Lint lbs $ .51 649.00 $330.99 Cotton Seed ton 80.00 .52 41.60 - Total $372.59 2. Variable Costs: Preharvest Seed lbs $ .40 20.00 $ 8.00 Fert. (60-40-0) acre 27.00 1.00 27.00 Herbicide acre 6.63 1.00 6.63 Insecticide acre 35.46 1.00 35.46 Field Scouting acre 3.00 1.00 3.00 Custom Spray appl 1.75 9.00 15.75 Water Charge appl 3.50 2.00 7.00 Machinery acre 7.37 1.00 7.37 Tractors acre 19.06 1.00 19.06 Irrigation Machinery acre 1.50 1.00 1.50 Labor (tractor & machinery) hour 3.13 6.19 19.37 Labor (irrigation) hour 2.63 4.00 10.52 Interest on Op. Capital dol .09 79.49 7.15 Subtotal, Preharvest $167.81 Harvest Costs Defoliant acre $ 3.95 1.00 $ 3.95 Custom Spray appl 2.00 1.00 2.00 Gin, Bag, Ties bale 39.17 1.35 52.88 Machinery acre 16.96 1.00 16.96 Labor (tractor & machinery) hour 3.13 1.62 5.07 Subtotal, Harvest $ 80.86 Total Variable Costs $248.67 3. Income Above Variable Costs $123.92 4. Fixed Costs: Machinery acre $28.72 1.00 $ 28.72 Tractors acre 13.35 1.00 13.35 Irrigation Machinery acre 3.50 1.00 3.50 Land (net rent) acre 50.00 1.00 50.00 Total Fixed Costs $ 95.57 5. Total Costs $344.24 6. Net Returns $ 28.35 22 APPENDIX TABLE 7. lRRlGATED COTTON, ESTIMATED COSTS, AND RETURNS PER ACRE OF CONVENTIONAL MANAGEMENT, LOWER RIO GRANDE VALLEY, TEXAS, 1976-78 Price or Value or Unit Cost/Unit Quantity Cost 1. Gross Receipts from Production: Cotton Lint lbs $ .51 487.00 $248.37 Cotton Seed ton 80.00 .39 31.20 Total $279.57 2. Variable Costs: Preharvest Seed lbs $ .40 20.00 . $ 8.00 Fert. (60-40-0) acre 27.00 1.00 27.00 Herbicide acre 6.63 1.00 6.63 Insecticide acre 43.30 1.00 43.30 Custom Spray appl 1.75 9.00 15.75 Water Charge appl 3.50 3.00 10.50 Machinery acre 7.37 1.00 7.37 Tractors acre 19.06 1.00 19.06 Irrigation Machinery acre 1.50 1.00 1.50 Labor (tractor & machinery) hour _ 3.13 6.19 19.37 Labor (irrigation) hour 2.63 6.00 15.78 Interest on Op. Capital dol .09 87.13 7.84 Subtotal, Preharvest $182.10 Harvest Costs Defoliant acre $ 3.95 1.00 $ 3.95 Custom Spray appl 2.00 1.00 2.00 Gin, Bag, Ties bale 39.17 1.01 39.56 Machinery acre 16.96 1.00 16.96 Labor (tractor & machinery) hour 3.13 1.62 5.07 Subtotal, Harvest $ 67.54 Total Variable Costs $249.64 3. Income Above Variable Costs V $ 29.93 4. Fixed Costs: Machinery acre $28.72 1.00 $ 28.72 Tractors acre 13.35 1.00 13.35 Irrigation Machinery acre 3.50 1.00 3.50 Land (net rent) acre 50.00 1.00 50.00 Total Fixed Costs $ 95.57 5. Total Costs $345.21 6. Net Returns $—64.64 f 23 APPENDIX TABLE 8. DRYLAND COTTON, ESTIMATED COSTS, AND RETURNS PER ACRE OF SHORT-SEASON MANAGEMENT, LOWER RIO GRANDE VALLEY, TEXAS, 1976-78 Price or Value or Unit Cost/Unit Quantity Cpst 1. Gross Receipts from Production: Cotton Lint lbs $ .51 592.00 $301.92 Cotton Seed ton 80.00 .47 37.60 Total $339.52 2. Variable Costs: Preharvest Seed lbs $ .40 20.00 $ 8.00 Fert. (40-30-0) acre 18.70 1.00 18.70 Herbicide acre 6.20 1.00 6.20 Insecticide acre 3.21 1.00 3.12 Field Scouting acre 3.00 1.00 3.00 Custom Spray appl 1.75 1.00 1.75 Machinery acre 6.46 1.00 6.46 Tractors acre 12.86 1.00 12.86 Labor (tractor & machinery) hour 3.13 4.30 13.46 Interest on Op. Capital dol .09 35.28 3.17 Subtotal, Preharvest $ 76.72 Harvest Costs Defoliant acre $ 3.95 1.00 $ 3.95 Custom Spray appl 2.00 1.00 2.00 Gin, Bag, Ties bale 39.17 1.23 48.18 Machinery acre 13.81 1.00 13.81 Labor (tractor & machinery) hour 3.13 1.40 4.38 Subtotal, Harvest $ 72.32 Total Variable Costs $149.04 3. Income Above Variable Costs $190.48 4. Fixed Costs: Machinery acre $23.54 1.00 $ 23.54 Tractors acre 9.63 1.00 9.63 Land (net rent) acre 40.00 1.00 40.00 Total Fixed Costs $ 73.17 5. Total Costs $222.21 6. Net Returns $117.31 1% y 24 APPENDIX TABLE 9. DRYLAND COTTON, ESTIMATED COSTS, AND RETURNS PER ACRE FOR CONVENTIONAL MANAGEMENT, LOWER RIO GRANDE VALLEY, TEXAS, 1976-78 Price or Value or Unit Cost/Unit Quantity Cost 1. Gross Receipts from Production: Cotton Lint lbs $ .51 534.00 $272.34 Cotton Seed ton 80.00 .43 34.40 Total $306.74 2. Variable Costs: Preharvest Seed lbs $ .40 20.00 $ 8.00 Fert. (40-30-0) acre 18.70 1.00 18.70 Herbicide acre 6.20 1.00 6.20 Insecticide acre 17.49 1.00 17.49 Custom Spray appI 1.75 6.00 10.50 Machinery acre 6.46 1.00 6.46 Tractors acre 12.86 1.00 12.86 Labor (tractor & machinery) hour 3.13 4.30 13.46 Interest on Op. Capital dol .09 46.84 4.22 Subtotal, Preharvest $ 97.89 Harvest Costs Defoliant acre $ 3.95 1.00 $ 3.95 Custom Spray appl 2.00 1.00 2.00 Gin, Bag, Ties bale 39.17 1.11 43.48 Machinery acre 13.81 1.00 13.81 Labor (tractor & machinery) hour 3.13 1.40 4.38 Subtotal, Harvest $ 67.62 Total Variable Costs $165.51 3. Income Above Variable Costs $141.23 4. Fixed Costs: y Machinery acre $23.54 1.00 $ 23.54 Tractors ac re 9.63 1 .00 9.63 Land (net rent) acre 40.00 1.00 40.00 Total Fixed Costs $ 73.17 5. Total Costs $238.68 6. Net Returns $ 68.06 n‘ 25 ACKNOWLEDGEMENTS We would like t0 express our sincere appreciation . t0 all who contributed to this study. Ray Frisbie signifi- cantly improved the manuscript through editorial sug- gestions, and Richard Conner provided encouragement and advice. We are also indebted to Richard Shumway for editorial suggestions. We are indebted to Glenn Collins and Dan Hardin for their assistance in developing appropriate computer programs. Finally, we are most grateful to Dianne Miller for her diligence and patience in typing several drafts of this manuscript. This paper was supported in part by the Environ- mental Protection Agency through a grant (EPA Cooperative Agreement No. CR-806277-O2-0) to Texas A&M University. The findings, opinions, and recom- mendations expressed herein are those of the authors and not necessarily those of the Environmental Protec- tion Agency. Mention of a trademark or a proprietary product does not constitute a guarantee or a warranty of the product by the Texas Agricultural Experiment Station nor imply its approval to the exclusion of other products that also may be suitable. All programs and information of The Texas Agricultural Experiment Station are available to everyone without regard to race, ethnic origin, religion, sex or age. 1.8M —— ll-82 N