Editor's note: See video with Arkansas farmer Scott Matthews, including him showing how dry his soil is at: https://www.dtnpf.com/….

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MARIANNA, Ark. (DTN) -- Arkansas rice and cotton farmers are confronting one of the most difficult economic environments in decades. Weak prices, rising input costs, drought conditions and structural market failures are forcing producers to rethink what -- or whether -- they plant this spring.

For many farmers, the decisions come down to minimizing losses rather than turning a profit.

"We're doing a whole lot of work to break even or lose money," said Nathan Reed, a farmer near Marianna, Arkansas, and current president of the National Cotton Council (NCC).

DTN spoke to Reed at his farm on Wednesday. Friday, he was at the White House event where President Donald Trump addressed farmers.

MARKET CHALLENGES FOR COTTON AND RICE

Hunter Biram, an agricultural Extension economist at the University of Arkansas, said upland cotton has lost about 35% of its price since 2021, going from 91 cents a pound down to under 60 cents a pound.

Rice has seen a similar price drop going from $16.69 per cwt down to about $10.50 per cwt.

Meanwhile, operating expenses excluding rent have risen by 29% for rice and 48% for cotton since 2021, Biram said.

"It's really hard to talk about, and anytime I go to a producer meeting, I think everybody just wishes that I wasn't there," Biram said. "I always start off my presentation by saying, 'I know you don't want to hear this, but you need to hear it because it's influencing planting decisions.'"

Cotton acreage in Arkansas alone is projected to drop sharply, with industry estimates pointing to roughly a 30% decline. That would reduce planted cotton acres from 520,000 down to roughly 350,000.

Arkansas also is responsible for the bulk for the country's long-grain rice production, but acreage is expected to drop sharply this year. Last year, farmers in the state planted 1.25 million acres -- roughly 63% of the country's total long-grain rice. This year, early estimates say projected acreage could fall to 925,000 in the state -- the lowest since 1983.

Biram noted USDA's Prospective Plantings report may not fully reflect changes in acreage because the farmer survey went out before the war in Iran began, which has driven up diesel and fertilizer prices.

Biram said he expects a lot of farmers will shift acres to soybeans because of lower input costs. Soybean acres could be up 400,000 to 700,000 acres in the state.

"We're probably going to see well over 3 million, maybe 3.3 million acres of soybeans in Arkansas," Biram said.

COTTON LEANS INTO BACA PROPOSAL

While corn and soybeans can lean on biofuels to help domestic demand, cotton and rice lack similar demand drivers.

The cotton industry has been promoting the Buy American Cotton Act (BACA), which would provide tax credits to incentivize the use of U.S. cotton and potentially reinvigorate some domestic textile production.

"Cotton is not sustainable right now at the price it's at," Reed said. "These tax credits allow cotton to raise the price some and make it profitable ... Long term, if we can boost domestic consumption, BACA is the thing to do that."

Reed highlighted Americans consume 20 million to 24 million bales of cotton annually, which is twice as much as U.S. farmers produce. But only about 10% of U.S.-produced cotton is actually spun domestically. Under BACA, the more processing done in the U.S., the higher the tax credit becomes.

"If we consumed one-and-half to two times the amount of corn we produce, where would the price of corn be?" Reed said. "How do we capitalize on that? With BACA, that's what it does ... It essentially offsets the difference between American cotton and the rest of the world and provides a little bit of a premium."

The House version of BACA has more than 60 sponsors and Reed noted he's been spending more time in Washington to press the case for the bill.

The cotton industry also is looking to change consumer choices by highlighting some of the risks that come from synthetic materials such as microfibers. Unlike synthetic fibers, cotton fibers are natural and break down more easily, while synthetic microfibers have been compared to "forever chemicals." The industry is pointing to medical studies about the long-term impact of accumulating microfibers in the bloodstream. NCC created a website, www.plantnotplastic.org, to press its case.

"That's going to be a big deal and that's actually part of the MAHA (Make America Healthy Again) movement because they're promoting actual natural-fiber clothing," Reed said.

OLD-CROP RICE QUAGMIRE

For Scott Matthews, who farms near Weiner, Arkansas, rice is his main money crop. He described the current situation with long-grain rice as a "quagmire."

"If we don't fix the long-grain white rice industry, the industry is gone," he said.

At the moment, Matthews is also concerned about drought. The U.S. Drought Monitor shows a large swath of the state is in D3 (extreme drought) conditions with some counties facing D4 (exceptional drought). (See https://droughtmonitor.unl.edu/…) An Arkansas weather analyst on social media posted the state is 25 inches behind on moisture heading into planting season.

"We're in an unbelievable drought and I've never seen anything like this in my life," Matthews said.

Not having that moisture at planting time for rice affects the stand and herbicide, which won't activate without water. So, rice farmers could be faced with starting irrigation now and firing up the diesel generators this early in the year. Diesel prices have gone from $2.20 a gallon in January to $4.32 a gallon earlier this week.

"We're 100% irrigation and I know I'm going to have to irrigate right off the bat. It's a long time to harvest," Matthews said. "You really can't make a plan. We need some weather cooperation because right here I can't plant if it's two weeks from now and I don't have any moisture."

Matthews said he was fortunate enough to lock in his nitrogen needs at $560 a ton but the price now is closer to $800. He noted a lot of rice and cotton farmers didn't have the liquidity to lock in a price earlier. "That's the difference of whether you are going to plant a crop or not," Matthews said. "In a year when you are broke, the last thing you want to do right now is add inputs."

As dry as it is, the markets should be sending farmers a signal by pushing up rice prices; but that's not happening because long-grain rice stocks are at 37 million cwt -- that's 1.68 million metric tons or 82 million bushels -- the highest since 1986. That's essentially double the stocks from 2023.

"Normally, with the weather we are having, the market would normally be driving up the price but there's too much rice out there," Matthews said.

Long-grain rice is still dealing with large volumes of carryover from the 2024-25 crop, and it's affecting farmers in multiple states. Weather challenges caused significant quality problems and producers have struggled to sell it ever since. Exports have fallen and prices have gone from an average of $15.90 per cwt in 2024 down to bids under $8 per cwt -- if buyers can be found.

"There is still a lot of the '24 crop in the bins in Arkansas -- a whole lot," Reed said. "It's been in bins for a year-and-half now and it's degraded a lot in quality and they don't know what to do with it."

Reed added, "Unfortunately, I just ended up selling a bunch of mine for dog food just to clear it out."

Farmers who can't find a market for their rice also haven't been able to file claims under the Supplemental Disaster Relief Program (SDRP) because they can't actually prove quality losses for a crop they haven't sold.

RICE FOR AID?

One possible option to reduce the rice stocks would be through USDA buying at least some of the grain to use for humanitarian aid. DTN asked USDA about that possibility. A spokesperson commented USDA is working to build international markets, but rice also is a commodity used in the Food for Peace program. Still, the USDA spokesperson noted, "Importantly, Food for Peace is not simply a stocks disposal system, but a market-driven way to ensure that where American taxpayer dollars are purchasing rice, it comes from American farmers, not foreign competitors. These humanitarian assistance programs are an important complement, but not a replacement for commercial opportunities that the Trump administration is furthering every day."

More DTN coverage on cotton:

-- "Challenging Year for Cotton Growers," https://www.dtnpf.com/…

Chris Clayton can be reached at Chris.Clayton@dtn.com

Follow him on social platform X @ChrisClaytonDTN

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