Not long ago California's San Joaquin Valley Acala cotton was the envy of domestic producers across the U. S. Cotton Belt. Textile mills worldwide demanded it and paid a hefty premium for the quality.
“We have made our money in California by producing a cotton no one else could produce,” Craig Stevens, Dunavant of California, Fresno, Calif., told attendees at the recent Central Coast Cotton Conference in Monterey. However, that is now “in jeopardy. Our lead in the world market is being eroded,” said the second generation SJV cotton merchandiser.
Some of the stiffest competition is coming from across state lines, not international datelines.
Texas has become California's chief quality competitor. Stevens said producers, ginners, cotton breeders and others have made tremendous strides improving quality and yield in the past few years. And the quality improvement is coming statewide, from the new FiberMax varieties grown in the Coastal Bend area to the Texas Panhandle where increasingly more picker cottons are being grown.
“The seed companies have done a great job of expanding technology,” Stevens says. “Growers in Texas are having a heck of a lot of fun. Their yields are up. Their prices are up. Their quality is up. They're putting money into farms. It is not just planting for the loan anymore.”
California is no longer alone at the top of the quality domain and “we're going to have to get used to it.”
Comparing averages from the USDA's Visalia and Lubbock classing offices paints a rather interesting, if not ominous, picture of California's imminent challenges. The gaps between quality measurements across the board are becoming increasingly narrow and almost indistinguishable in some cases.
“When customers come to us for SJV cotton the wish range for micronaire is 4.0-4.3,” Stevens says. “Last year the Visalia classing office was averaging 4.25. This year it's 4.26. So we don't have a big change here. Obviously this is a mid-season number for 2007 rather than a final, so that number could change a little, but so far we're on track. No big surprises.”
Uniformity is a percentage measurement that growers don't necessarily get a lot of credit for, but it factors heavily into what the mills desire now that everyone is using HVI measurements to determine cotton's fiber characteristics, according to Stevens. “A farmer can get an extra 25 points in loan proceeds for high uniformity, but it's not factored into any other premiums or discounts in the farmer's invoices,” says.
“However, it means a lot to a textile mill. When you have a higher level of uniform fibers, you have a higher level of confidence in how the cotton is going to perform. Higher uniformity to a textile mill means higher efficiency and that's huge.”
California has always led on uniformity, but that gap is beginning to narrow quite significantly. At mid-season of 2007, the Corpus Christi classing office was averaging 81.5 percent as compared to Visalia which was averaging 82.3, according to Stevens.
“That's a pretty scary number for a merchant in California,” he says. “Roller-ginned Acala cotton at Visalia was at 83.8. That's one of the reasons we are roller ginning more Acala cotton. The roller gin is a little gentler on the fiber.”
Strength has always been another hallmark of California's premier cotton fiber offering. “It is probably the second largest component to our basis,” Stevens says. “California, over the years in the Acalas, has enjoyed 10, 20 and even 30 cents more per pound than any other cotton in the United States, and it's because we have length and strength.”
Stevens credits the San Joaquin Valley Cotton Board, the rigorous testing program, and the efforts on the part of seed companies for focusing on the effort to produce varieties with longer and stronger fiber characteristics. At mid-season, Visalia's classing office was averaging a strength of 33.4 grams per tex as compared to 33.9 last year.
“Lubbock is at 29.5,” he says. “They're on the chart, man! It's spooky. I guess the good news is when the mills come here, they want 30 grams per tex and above. There's nothing with a 2 in front of it. No one in the country can offer a 30 grams per tex or better, so in that respect we still have a good lead, but they're closing the gap there too.”
Finally, it's length that is the real eye-opener and the single largest contributor to California's basis, according to Stevens. The Lubbock classing office average earlier this harvest season was 35.7 with 1.2 million bales ginned.
“They're not done yet,” he says. “Here's the real spooky number. The Visalia classing office was averaging 36.7 staple, and Corpus Christi was 36.5. The increase in the staple length in Texas cotton is dramatic. Granted, we started at a higher point, but our improvement is not nearly what others have made.”
California's has something Texas has not had. It has been called the “X” factor, differences in quality mills can detect that set SJV apart from the rest of the Cotton Belt.
“The X factor is definitely there,” Stevens says. “I think uniformity is the X factor today. It's a measurement that hasn't been around that long. It came along with the advent of the HVI machine. Nobody really used it when the HVI machine came out, but then we started to expand what the machine could do. If I had to pick a number, uniformity means a lot. That's the X factor to the mills.
“Now there are some other things as well. It's a combination of soil conditions, the testing program, etc. But uniformity is where we really stand out from the rest of the country. No one else even comes close to that number.”
Protecting California's “X” factor will be a tough challenge going forward. With other states rapidly closing the gap in quality and yield, California cotton growers will have to pay even more attention to the quality characteristics of varieties that set them apart from the rest of the world as well as the rest of the U.S.
“We need to be aware of the threat that Texas poses and make some good decisions about varieties we plant,” Stevens says. “Obviously you pick yield first. Do me a favor. Pick two high yielders and look at the quality.”
Although California's Pima niche is fairly well protected at the moment, Stevens urges the same diligence there when it comes to quality. He received a cell phone call from a fellow merchant in Arkansas asking him to describe what a field of Pima cotton looked like. After describing the color difference and blooms, the merchant said “I am standing in a field of Pima cotton in Arkansas.”
“Other people want a piece of this Pima pie so make the same decisions with Pima that you do with Acala.”
On the upside, California producers have the long-term advantage of generally predictable and favorable weather conditions as compared to growers in other states.
Over the years, consistency has been a key marketing tool which has been capitalized on by rigorous testing and ever-higher standards for approved California varieties.
“I think we have the San Joaquin Valley Cotton Board to thank for that,” Stevens says. “Not too many varieties have come through the ranks that don't perform consistently year in and year out. By the time you get through that three-year testing period, you've got a pretty darn good seed, and you have a pretty good idea how that seed is going to react, and how it's going to behave.”
“As a merchant we're just trying to figure out ways to maintain a basis for California cotton,” Stevens says. “I know for a fact that if California farmers start getting per pound what Texas farmers are willing to accept for their cotton, we're out of business.”