Reasoning
According to the author the Soybean growers are planning to shift from Soybean to Cotton because at present the price of Cotton is high and it is expected that it will remain high. This high price is because of less supply but not increased demand. The farmers are shifting from soybean to cotton in order to increase their income SIGNIFICANTLY over the next few years.

Now the question is to find a flaw(calls into question) in the reasoning.

(B)Tests of a newly developed, inexpensive pesticide have shown it to be both environmentally safe and effective against the insects that have infected the cotton crops.

A new pesticide has been developed which can effectively control the pest population and is inexpensive. This pesticide will control the pests. Therefore the cotton supply will automatically increase. So, if the supply is already increased can growing more cotton will be a profitable deal? No, if this happens then cotton prices will go down and the farmers' plan(SIGNIFICANT increase in income) will not be successful.

This is indeed calling the reasoning into question. Hence, CORRECT.

(C) In the past several years, there has been no sharp increase in the demand for cotton, and for goods made out of cotton.

There is no sharp increase in demand but the supply is reduced because of cotton spoiled by the pests. So, even if the demand is not increased still the price will be high because of less supply.

Hope it's clear now.

-tathastuGMAT