John Beracca1, J. Matthew Fannin1, and Kenneth W. Paxton2. (1) Louisiana State University, Dept. Agr. Econ., baton rouge, LA 70803, (2) Dept. Agr. Econ., LSU, Baton Rouge, LA 70803
There was a dramatic reduction in Louisiana cotton acreage in 2007. This reduction was in response to market prices of competing crops, primarily corn. Louisiana producers increased corn acreage from about 300,000 acres in 2006 to 750,000 acres in 2007 according to data reported by the National Agricultural Statistics Service. Virtually all of the increase in corn acreage occurred on land previously planted to cotton. The dramatic shift in crop production means that existing gins will likely process less than half the cotton they did in 2006.
This reduction in volume at the gin has implications for local economies. Cotton ginning involves more expenditures per harvested acre of cotton than does the drying and handling of a corresponding harvested acre of corn. This poster estimates the net economic impact on the post-harvest cotton ginning and corn drying/handling industries due to the replacement of cotton acreage with corn. Input-output software is used to estimate the value added processing impact on the state’s economy of this switch in acreage.
Results of the analysis indicate that the direct net effect is approximately a $1.7 million dollar loss in output on the state economy. When indirect and induced effects are included, the loss is more than double this amount.
