Calcot, the nation's largest cotton marketing cooperative, is getting out of the almond business after only two years.
The Bakersfield, Calif.-based cooperative that markets almost 60 percent of the cotton produced in California and Arizona, plans to shut down its almond cooperative by June 1.
This will force about 80 producers and 10 to 11 million pounds to seek other marketing arms for the 2001 crop.
Calcot moved into almonds as part of its long-range strategy to spread fixed costs over a larger base, according to Calcot president Tom W. Smith.
"Unfortunately, an aggressive sales policy and an incorrect estimate of receipts, both occurring at the wrong time, produced low returns in last year's marketing."
Although this season's are "shaping up better than our first year," Smith said Calcot's almond division has not made the "financial contribution to our long range strategy that we envisioned."
Calcot will handle about 10 million pounds of almonds from the 2000 crop, less than two percent of the state's total production.
"We could not achieve the level of almond volume necessary to be a factor in the marketplace, and it did not look like we would in the foreseeable future," said Mark Bagby, Calcot's director of communications.
"We had a lot of interest from almond growers, but we never could get a commitment for large volumes," said Bagby. Calcot handled almonds from only about 80 producers, even though about 500 of Calcot's 1,800 cotton grower members are also almond producers.
The June 1 target for shutting down the almond operation coincides with the lease termination of the Golden Gem almond facility near Delano, Calif.
The venture into almonds was the first non-cotton commodity Calcot has marketed since it was formed in 1927. Many almond hullers are sited on the same properties as cotton gins, especially in the Southern San Joaquin Valley. California produces all of the nation's almonds.
When Calcot made the decision to move into almonds, cotton's future did not look very bright with acreages in California and Arizona declining because of low prices. Grower prices remain low for cotton, but acreage in both states has rebounded since Calcot opened its almond program. This year cotton is expected to reach one million acres in the San Joaquin Valley, a level many predicted would never be reached again. Historically, SVJ cotton acreage has been about 1.5 million acres annually. It has dropped in recent years because of low prices and high production costs.
Calcot has handled as many as 2 million bales of Western cotton in a season, 700,000 more than it handled from the 1999-2000 crop. Calcot will market much more this season as yields rebounded in both states. And, with the 1 million acres predicted for 2001 in the San Joaquin Valley, the cooperative's cotton handle should increase again. Arizona's acreage is not expected to increase this season, even though growers in that state also had a good year in 2000.
The rebound in cotton acreage and production had no direct bearing on closing the almond program, said Bagby. "The almond and cotton divisions are totally separate. Almonds had no impact on cotton," he said. "The rebound in cotton was not cited in the discussions about almonds. However, it may have been a factor in the minds of some directors."
Although cotton prices remain low, it is one of the few crops where there is a potential for profit because of federal government support programs.
There is instability in the statewide almond marketing infrastructure that is not in the cotton industry where there are fewer marketers. That surprised Calcot. In cooperatives, there is a sign out period when members can leave the cooperative. Growers can sign up as a cooperative member any time. A big sign-out for Calcot would be 100 or its 1,800 members.
There are many more almond marketers than cotton merchandisers and there is also much more switching of growers to different marketers each season with promises of better returns.
It is not unusual to have the majority of almond producers opt out of a marketer during the sign-out period and go shopping for another outlet.