U.S. China trade negotiations impacts West Texas cotton industry

Trade negotiations affecting local cotton

LUBBOCK, Texas (KCBD) - Trade negotiations between the United States and China halted this week, forcing many American industries to face uncertainty, including agriculture.

Steve Verett, Executive Vice President of Plains Cotton Growers, said the market does not like uncertainty. Whether that is the stock market, or the futures market on commodities.

“What’s happening is affecting a lot of people and causing a lot of angst,” Verett said.

Tariffs made U.S. cotton more expensive to China, so now China does not want it.

The first round of tariffs were introduced a little over a year ago, but the halt in negotiations this week has American farmers feeling nervous.

“They see their prices deteriorating from the crops that they’re growing, and all of their input costs are at least what they were or continue to increase, so it’s just really putting them in a real price squeeze,” Verett said.

The U.S. government said it will come in with market facilitation payments, or money for farmers, to help offset this, but Verett said farmers would much prefer a fair market price.

Verett said West Texas is still growing and producing cotton, because most farmers already made plans to. But, because of the tariffs, the cotton is not going anywhere. A lot of it has ended up in storage.

“We’re basically not selling anything to China, is what it amounts to. Because, when they instituted the tariffs, it made it non-competitive. So, all of the ag commodities, China is now trying to source that from somewhere else,” Verett said.

In the case of cotton, a lot of it is coming from Brazil.

Verett said the reality is the U.S. produces a high-quality cotton that the world wants and needs.

“It has just really disrupted the trade right now, and it’s going to take a while for that to settle out,” Verett said.

In order to see stability in the cotton industry, Verrett said the U.S. needs to come to a successful resolution in the negotiations with China.

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