Economic Trends in the Texas Panhandle
The 2011 drought was clearly the top economic story of
the year across the region. Because of the nature of crop
marketing years and farm household spending, however, the
drought of 2011 may actually affect the regional economy to
a greater extent in 2012.
Cash proceeds for various crops are received beginning at
harvest time and continuing perhaps for months beyond
that as the crop is marketed. The “marketing year” begins at
the typical month of harvest and lasts for 12 months. Farm
household income from various crops, harvested but once a
year, is spent over the course of the year between harvests.
The Texas Agricultural Statistics Service defines the
marketing year for various crops in Texas, and in the
Panhandle it is essentially a month later due to our
geographic northernmost status. For wheat, the marketing
year in the Panhandle is June-May; for corn and cotton it is
September-August; and for grain sorghum it is July-June.
The spending of farm income takes place over the course of
the entire marketing year. This means that the economic
impact of each year’s harvest, which is anywhere from
summer to fall depending on the crop, runs at least halfway
into the following year. In the case of corn and cotton, the
two highest value crops, the marketing year spans the first
three quarters of the following calendar year. This suggests
that the effects of the drought in 2011 may be experienced
largely in 2012.
however, up by over 70% compared to 2009. The estimated
value of the 2011 crop, while higher than in 2000, 2002,
and 2006, was the lowest of the last five years.
Texas Panhandle Wheat Production
90.0
70.0
58.1
60.0
61.2
56.2
48.4
50.0
41.2
40.0
26.6
30.0
35.7 37.8
24.2
18.3
14.9
20.0
10.0
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Corn production in the Panhandle declined by 50% in
2011 compared to 2010, and the 89.7 million bushels
produced was easily the lowest production volume of the last
12 years. The estimated value of that production was down
by about 42% in 2011. Again, however, the value of corn
production in 2010 was a record high, up nearly 60%
compared to the prior year due to high production levels and
high prices. The value of corn production in 2011 surpassed
the first seven years of the decade, but again was the lowest
of the last five years.
Texas Panhandle Corn Production
Crop Production Numbers
200.0
179.5 181.3
180.0
157.9 153.8
160.0
Million Bushels
To assess the results of the drought and its likely
economic impact, we looked at the annual production
history dating back to 2000 for the four major crops in the
Texas Panhandle – wheat, corn, grain sorghum, and cotton.
We assessed the two most important production-related
components – the amount produced (crop volume) and the
estimated value of that production.
Wheat production declined by a staggering 70% in 2011
compared to 2010. However, wheat production in 2006,
another drought year, was actually lower than in 2011. The
estimated value of 2011 production was nearly 60% lower
compared to 2010. The value of the 2010 crop was high,
81.7
80.0
Million Bushels
2011 Drought Will Affect the Happy Economy
in 2012
MARCH 2012
140.0
134.1
100.0
127.5
116.8
120.0
94.1
109.5
111.1
103.1
89.7
80.0
60.0
40.0
20.0
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
The grand total estimated value for these four crops based
on 2011 production and prices was down by 50% compared
to 2010, and was the lowest annual aggregate crop value
since 2006. Prices for wheat, corn, and grain sorghum were
higher in the early months of the marketing year (summer
and fall of 2011, when most of the crop is sold) compared to
2010. So, while production volumes were down even more
sharply, the higher prices helped to support overall
production values.
The regional economy as a whole actually performed
reasonably well in 2011. There are other influences, of
course – the regional oil & gas industry and the recovering
national economy provided considerable upside support to
the economy last year. And even though the drought
actually occurred in 2011, much of the impact to the 2011
overall regional economy from the agriculture sector was the
likely result of the 2010 crop. The combined value of 2010
production for these four crops alone was almost certainly at
an all-time high at over $2.2 billion. In addition, the
number of acres planted to these crops was not drastically
lower in 2011; the act of farming is itself stimulative as the
various inputs are purchased (seed, fuel, fertilizer, etc.).
At 5.5 million bushels, grain sorghum production in the
Texas Panhandle was down by over 75% compared to 2010
and was the lowest in at least 40 years (production history is
only readily available back to 1968). Sorghum production
in the Panhandle has been on the decline for decades, so
that is a large part of the current decline relative to the long
production history. But clearly the drought is responsible for
the sharp decline from 2010 to 2011. Sorghum prices soared
in 2010 and 2011 helping to prop up the value of the crop
somewhat, but even at that the estimated value of the 2011
crop is over 60% lower compared to 2010, and is the lowest
sorghum crop value since 2000.
Texas Panhandle Grain Sorghum Production
40.0
37.3
29.6
30.0
36.2
32.1
30.0
27.9
26.4
23.5
25.0
22.9
19.6
20.0
15.9
15.0
10.0
5.5
5.0
-
Estimated Value of Texas Panhandle
Corn, Cotton, Wheat, and Sorghum Crops
(By Harvest Year)
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Cotton production in the Panhandle was down by about
700,000 bales in 2011, a decline of some 47% and the
second lowest annual total over the last 12 years. The
estimated value of the crop was down by over 56% in 2011
compared to 2010; however, the 2010 cotton crop value was
extraordinarily high, about three times higher than the prior
year. Production conditions were good in 2010, and prices
were high, accounting for the 2010 results. The number of
bales produced in 2011 was especially low given the fact that
a record number of acres (over 1.2 million) were planted to
cotton last year.
Texas Panhandle Cotton Production
1,575.2
1,503.0
Thousand Bales
1,400.0
1,200.0
1,000.0
1,088.0
1,062.0
1,242.2
906.0
800.0
600.0
1,478.0
1,143.0
997.3
918.0
$2,000.0
$1,500.0
$1,000.0
$500.0
$-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Corn
1,800.0
1,600.0
$2,500.0
$Millions
Million Bushels
35.0
780.0
515.0
400.0
Cotton
Wheat
Even though the value of the crop declined by 50% from
2010 to 2011 (about $1.1 billion), not all farm income
comes entirely from crop proceeds. A significant share of
farm income based on the 2011 crop will come in the form
of crop insurance payments to producers, as well as
government disaster payments. While these payments will
not nearly make up the total loss, they will provide
substantial support to total farm income and help to limit
the negative effects of the 2011 drought in 2012.
200.0
-
2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011
Volume 7
Karr Ingham, Happy State Bank Economist
Sorghum
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