Texas leads the nation in cotton production and produces about 25 percent of the nation's cotton. Cotton is the top cash crop in Texas, generating $1.6 billion annually for farmers. The crop has a statewide economic impact of $5.2 billion, including money generated by supporting industries associated with harvesting, transporting, processing and marketing cotton. Cotton ranks third behind the beef and nursery industries, making up 8 percent of all of the state's agricultural cash receipts, according to Texas Agricultural Statistics in 2002.

In 2004, Texas cotton producers harvested a record 7.5 million bales on approximately 5.8 million acres. The previous record crop was in 1949 when 6 million bales were produced on 20 million acres. Upland, the most common type of cotton grown, accounted for over 99 percent of the production. Modern technology played a major role in the record crop. In recent decades, productivity in cotton production increased dramatically. Increased use of fertilizers, improved pest management, and improved cultivars have contributed to the enhancement. Currently, cotton production is facing challenges, such as increasing costs of production, shortage of irrigation water, and increased public concern on the impacts of agricultural production on the environment.

When comparing Texas cotton production to other cotton production regions in the nation, there are significant differences in yield and production costs. Many factors, such as weather, water, soil, topography, labor and other input costs, management practices, and etc., have contributed to the disparities among different regions. This primary objective of this study is to evaluate the comparative advantage of upland cotton production in Texas.

This study will quantify the comparative advantage of upland cotton production by comparing Texas cotton production to other states in the nation and by comparing different districts of Texas by using three different indices: Efficiency Advantage Indices (EAI), Scale Advantage Indices (SAI), and Aggregated Advantage Indices (AAI). The study will help to understand the performance and advantage of cotton production in different regions. It would also help to understand the limiting factors of cotton production among regions and the regional disparity and economical constraints.