Cotton harvest time is drawing to a close and with a new farm bill in place. It's never too early for farmers to think about next year's growing season. In this week's agribusiness report Texas Tech may help keep farmers from losing money.
The 2002 farm bill helps farmers in two ways. It provides planting flexibility and counter cyclical payments. That happens when farmers receive money when cotton prices are low. Now Texas Tech researchers are starting a new project to make help farmers who plant crops other than cotton.
Ag professor Tom Knight is leading research to help farmers keep what's called counter cyclical payments when planting alternative crops on cotton acres. "Say you plant grain sorghum on cotton acres there's a risk of losing your counter cyclical payment, and what we're developing is a risk management tool that will allow you to protect against loss of that counter cyclical payment," says Knight.
The research stems from a half a million dollar grant Tech received this year. Knight hopes that in the next couple of years, the research can help give farmers a better idea about what to expect out of an unstable market. "The futures market provides indication of what the market's going to do but in the end farmers go into a production years and don't know what the price is going to do," says Knight.
Predicting market prices is a gamble, but Knight's goal is to take the new farm bill and use this research to make it more helpful to all farmers. "We thought it was important because of the way it connects in with the farm bill and we thought it was innovative because of the way it connects in with the farm bill in a since that it really does provide protection associated with planting flexibility and counter cyclical payments," says Knight.
The research will be finished in about two years. Knight says a payment program will be developed to help keep farmers from losing money when cotton prices are low and when they've planted an alternative crop.