Calcot, the Bakersfield, Calif., cotton marketing cooperative and second largest U.S. cotton exporter, is taking its expertise for world marketing of high quality cotton to Texas.
The largest cotton marketing cooperative in the Far West has contracted with a handful of Texas Coastal Bend cotton farmers — primarily the King Ranch and some of its tenant farmers — to market 2005 pre-hurricane baled cotton from about 15,000 acres. It is mostly FiberMax varieties, a style of cotton that has become a competitor to the Acala cotton produced in the San Joaquin Valley.
Calcot chairman Charles Fanucchi of Kern County, Calif., said the Texas farmers initiated contact with the California-Arizona cooperative to enhance the export marketing of their cotton.
“The are about 350,000 acres of high quality cotton produced in the area, and producers there are looking for export marketing expertise to sell this cotton in the world market,” Fanucchi said. Calcot is recognized worldwide for its ability to market and deliver high quality cotton, he said. “The cottons produced in the Coastal Bend area of Texas fit well into our program.”
About 90 percent of the annual production in California and Arizona is exported. Calcot was the first American cotton marketer to sell cotton to China and continues to have a major presence in that market. China is the world’s largest consumer and producer of cotton.
FiberMax, marketed by Bayer CropScience, has made inroads into Acala’s market. Textile mills have discovered that it is a less expensive substitute for Acala. Bayer has established a marketing program to segregate and guarantee the integrity of FiberMax, which nets a premium over other upland cottons.
Calcot marketed a little more than 1 million bales of California and Arizona cotton last season. Sales totaled $400 million. It has marketed more than 2 million bales in the past, but cotton acreage in the West has been declining. Calcot has more than $133 million in assets, the bulk of which are 145 warehouses in three locations, enough to store more 1 million bales under roof. It also has one of the most efficient shipping organizations in the cotton business.
An example of that is that this last summer, 53,000 bales of cotton were successfully exported in 13 days to meet a sales and shipment deadline.
At one time Calcot owned warehouses on the Texas Gulf Coast. “I wish we still had them,” lamented Calcot president Bob Norris.
Calcot attempted several years ago to leverage its assets and marketing staff by moving into seasonal pool almonds. However, it was a disaster, and Calcot quickly abandoned it. When Bob Norris took over as Calcot president about two years ago, he hinted that Calcot may expand into other areas of the U.S Cotton Belt.
With the virtual demise of the U.S. textile industry, exporting has become the dominant outlet for U.S. cotton. However, much of the U.S. cotton falls below what is considered standard export quality –all except FiberMax. The minimum quality for the federal cotton loan is considered discount cotton in the world market.
FiberMax, developed in Australia, caught on first and has enjoyed its strongest popularity in the Coastal Bend of Texas around Corpus Christi, which it is generally dryland grown. Growers there can produce two bales in a good year, according to Norris.
“We want to look at it very hard and hope to do a good job of merchandising cotton for growers there,” he said. If Calcot enjoys success, it could go after more cotton from Texas growers.
Calcot may have been invited in by growers, but Calcot is invading Plains Cotton Cooperative Association’s territory.
Since it was created in 1953, PCCA, based in Lubbock, Texas, has grown to become one of the largest handlers of U.S. cotton, marketing three million to five million bales each year for about 29,000 members in Oklahoma, Kansas and Texas. PCCA also owns a denim mill in Littlefield, Texas, and cotton warehouses in Altus, Oklahoma, Liberal, Kansas and Sweetwater, Texas.
Last year PCCA gross sales topped $1 billion.
Calcot was formed in 1927. It expanded into Arizona in 1955. It now has 1,475 grower members. It once had more than 2,000 members. It once topped $1 billion in sales before Western cotton acreage gave way to more profitable permanent crops and urbanization. PCCA has reportedly not marketed King Ranch cotton in the past.
One cotton expert said this move of Calcot into Texas is a “sign of the times.” Not unlike when modules did away with gin territories, electronic warehouse receipts, electronic marketing and the non-traditional marketing cooperatives run by major merchants, Beltwide Cotton Pool are crossing traditional territorial marketing lines.
Calcot will face a formidable challenge, however, marketing the Coastal Bend cotton this year since classing data from Corpus is reflecting a staple length shorter than in past seasons and a higher leaf.