On Monday India announced they're immediately banning all cotton exports out of the country. This means huge economic impacts for producers right here in the South Plains and it could generate millions of dollars in extra revenue for our local economy.
India is the second largest cotton exporter, just behind the United States. China, one of the biggest buyers of cotton, usually buys from India because it is closer and cheaper to ship the cotton, but now they'll be relying more on the U.S.
"With our biggest competitor dropping completely out of the market, that's big news for us," said Jay Yates, with the Texas AgriLife Extension.
Yates says 25% of the nation's cotton is produced here in the South Plains, and out of the entire nation's cotton 75% is exported. "Do the math and we represent a large number of the cotton that's exported," he said. "All of our news for cotton has been bad so far this year, but this is the first little glimmer of good news."
Some area producers have already sold what little was left from last year's cotton crop. For those who haven't they can expect to sell their cotton at a higher price. When India announced its ban, cotton prices shot up four cents to 92 cents a pound.
"Those who still have some cotton left were pretty excited about this news. This could be that chance to get what little cotton they had last year sold," said Yates. "As we look to next year's crop, as what most farmers are doing, it could offer the opportunity to lock prices in."
This isn't the first time India has put a ban on cotton exports to protect their local textile industries. Back in 2010 they banned exports, and with other economic factors the price of cotton jumped to $2.00 a pound. While Yates says that's unlikely to happen again with this ban, he does think cotton prices could reach $1 pound.
"If this price rise were to have some staying power it could mean some pretty significant returns if we make a crop - which it needs to rain," laughed Yates.
Yates says over the next few months with the ban and with prices rising, the South Plains economy could possible see billions of dollars trickling down into our economy.
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