It has been tough being a Calcot director over the past few years, admits cotton producer John Benson of Brawley, Calif., even in the Imperial Valley where there are few cotton producers.
"Brawley is not that big — growers can find you," chuckled Benson.
Calcot has experienced hard times and bad headlines over the past few seasons. However, a leaner and meaner Bakersfield-based marketing cooperative just finished up one of its most successful seasons in recent years, and Benson need not fret about facing disgruntled fellow Calcot members this fall as he walks the streets of Brawley. It is much brighter picture for Calcot.
The final settlement for base San Joaquin Valley Acala pool, 81.52 cents per pound was the third highest in Calcot’s history. Its final base seasonal pool for desert upland was 74.57, the fifth highest since 1973 and the final Pima prices in both states (1.29.32 and 1.27.72) were the highest ever.
Like the Prodigal Son’s father, Calcot’s new chairman, Kern County, Calif., producer Charles Fanucchi used the occasion of the cooperative’s 77th annual meetings across California and Arizona to welcome back some of those wayward members and proclaim that Calcot’s field staff has enrolled new growers and new acres over the past few months.
"We’re still here — receiving and selling cotton in our 78th year," said Calcot’s chairman, Bob Norris. Calcot is "strong, successful and we’ve got the numbers to prove it and we’re ready to talk to anyone who wants to be part of this success."
Calcot marketed 900,000 bales last season with sales of $440 million. Its final settlement to its 1,400 members totaled almost $36 million. It marketed roughly one-third of the West’s 2003-04 Pima and upland cotton bales.
The 2003 crops numbers represent an unprecedented challenge of a 40-cent price swing in the market in a single season, double what would be expected, said Norris. Within that volatile market, Calcot seized on the "numerous opportunities" to capture good prices.
There have been only four years when the range of highs and lows had been higher, said Norris.
China continues to be the 800-pound gorilla in the cotton market and the world’s largest producer and consumer of cotton made its presence felt in 2003, importing 8.8 million bales of cotton; 5 million from the U.S. That is 35 percent of the total U.S. exports.
Norris said Calcot has perhaps the "best reputation" in China as a preferred supplier. Calcot was the first American company to sell cotton to China more than 30 years ago.
"Unlike some others, all of our sales were shipped (to China) and just importantly, paid for. Some other marketers were not so fortunate," said Norris.
Some of the other final 2003-04 settlement prices for other grades include:
-- 77.52 for California Upland. These are cottons comparable to California/Arizona desert uplands.
-- 92.52 for roller-ginned Ultima, a high quality Acala.
The challenge will not lessen this season with the prediction of the largest crop in U.S. history, 20.9 million bales. Texas is expected to account for about a third of that, thanks to a record crop estimate of 7 million bales.
"In 138 years of production records, Texas has had only one crop larger than 6 million bales. Only time will tell if the state’s High Plains region gets the warm, clear fall it needs to achieve that number," said Norris.
Ideal weather has blessed California cotton producers like it has in Texas. Record yields are expected for both Acala and Pima. Arizona is also expected to have a good crop.
Move to No. 2
If the numbers prove out, California will move into the No. 2 spot among cotton producing states.
"Recent hurricanes in the Southeastern U.S. have no doubt hurt the crop there, although I suspect the primary damage will be to quality. That could open some marketing opportunities for quality Far Western cotton," said Norris.
Even though problems are reported with the Chinese crop, China is the only place where trouble is reported. The world crop is projected to be a record 106 million bales. "The entire northern hemisphere crop is quite large," said Norris.
Record consumption predications are hopeful, but it will not be enough to offset production. The world is adding about 6 million bales to ending stocks. "The pressure in this imbalance is reflected in current cotton prices," said Norris.
Like the cruise director on the Titanic, Norris said there is good news in that: cheap cotton prices will make cotton a bargain priced against polyester.
"I expect to see low prices for some time," said Norris. China will again be the key to the 2004-05 export season. However, he does not expect China "in the market in a big way anytime soon."
He also reminded the 250 growers at the Visalia, Calif., annual meeting stop that a year ago he expected to see low prices. Futures prices peaked at almost 85 cents a pound about a month after he made his low price prediction.
Farm program aid
Fortunately, the U.S. farm program will allow producers to weather low prices. Norris admits the program has come under "a lot of bad publicity lately and we expect to see and hear more about it from the WTO and others."
Calcot’s president acknowledged that growers are worried about the farm program, but he believes the program will remain intact "for the foreseeable future.
"The National Cotton Council, the U.S. Trade Representative’s office and the entire U.S. cotton industry, including Calcot, are working on this issue. You can rest assured that we will work to protect your interests," pledged Norris.
In closing, Norris, like Fanucchi, acknowledged Calcot’s difficulties in the recent past. "Those difficulties are mostly behind us and our goal is to keep improving. It’s time to tell everyone that Calcot is successful and headed in the right direction and Calcot is the leader in marketing Far Western cotton."
Norris has been on the job as president a year, although he has spent his entire professional career at Calcot. He replaced David Farley who was fired by the board after eight months on the job and just prior to last year’s annual meeting.
Fanucchi had high praise for his predecessor chairmen, Arizona grower Bruce Heiden and before him California producer John Pucheu, for guiding the cooperative through tumultuous times.
Fanucchi called Norris "the right guy at a critical time in Calcot’s history." Calcot’s performance this season, he said, reflects that.
Fanucchi said the reduction in Western cotton acreage has prompted changes at Calcot.
"There is simply less cotton in the West than there once was. Calcot’s percentage of the handle has not changed, but Calcot is handling less cotton," he said.
That has led to a reduction in staff from 140 employees 10 years ago to 86 full-time employees.
"One thing Bob has emphasized to the board and to the staff is that the cotton industry is changing and that Calcot must adapt and change as well," said the board chairman.
Fanucchi expects Calcot to handle more than 900,000 bales this season because higher yields and a slight acreage increase will bring in more bales to Calcot’s three warehouse locations. The chairman also acknowledges Calcot is looking for other ways to increase volume. One of those Norris has suggested is taking Calcot’s cotton marketing program outside of California and Arizona.
The only problem still on the Calcot plate is the wrongful termination suite filed by Farley. Fannuchi called it "friviolous," and pledged Calcot will not settle with Farley. The trial is not expected to begin until 2005.