Grower voting underway on CPCSD sale

San Joaquin Valley cotton growers have until Oct. 31 to approve or reject the sale of the assets and seed inventory of the 70-year-old California Planting Cotton Seed Distributors (CPCSD) to Bayer CropScience (BCS) for almost $16 million.

CPCSD’s board has approved the sale. Now it is up to growers to seal the deal.

Ballots have been mailed to CPCSD’s 1,500-members. However, any SJV cotton grower is eligible to vote and at CPCSD’s annual field day recently in Shafter, Calif., CPCSD President Bill Van Skike was actively soliciting eligible grower voters to cast ballots because without at least 313 grower ballots (“a quorum”), the vote will not be valid.

CPCSD’s annual director elections do not attract that many growers and CPCSD’s leadership is concerned enough ballots will not be turned in.

If at least 313 vote, the sale will be accepted or rejected by a simple majority of voters.

More details about the pending sale of the non-profit corporation to one of the world’s largest agricultural chemical companies were outlined at the field day. It is a very unusual deal. CPCSD will continue to exist under the BCS umbrella. BCS has agreed to pay $14 million for CPCSD assets and germplasm plus the $1.5 million seed inventory and other reimbursements totaling $286,000.

BCS has agreed to continue CPCSD’s SJV cotton breeding program, retaining at least 14 of the 23 current CPCSD’s employees. Most of the employee cuts will administrative. Van Skike has said he is one of those cuts.

BCS has agreed to fund the breeding program at a level of at least $500,000 annually, provided SJV cotton acreage does not fall below 400,000 acres. Current acreage is 528,000, a drop of 200,000 acres from two years ago.

A little more than half of this year’s acreage is Pima cotton; the first time in history Pima has exceeded Acala. Pima acreage is expected to grow substantially in ’07, likely at the expense of Acala cotton.

Extra Long Staple Pima is selling for almost double the current upland price with unprecedented demand worldwide for SJV Pima.

If BCS fails to spend $500,000 per year for SJV cotton breeding, CPCSD may purchase back the cotton seed breeding program.

CPCSD would buy it back with $9 million to $10 million that will left after about $3 million in CPCSD debts are paid and other expenses associated with the sale are covered. This money will be left in an interest-drawing account.

One of the most unusual twists to the CPCSD sale is that interest will be used to fund SJNV cotton research, generating $900,000 to $1 million annually for that research, according to Van Skike.

Board chairman and Fresno County cotton grower Don Cameron said the research funding would be directed by the current CPCSD board, which becomes an advisory board to BCS if the sale goes through. It will meet at least once a year with BCS about the SJV breeding program. Although details of this research fund are to be worked out, Cameron expects much of the money to be directed toward Pima production research conducted by the University of California and USDA.

Currently there are no major funds available for Pima research. Cotton Incorporated allocates funds back to individual states for research determined by grower panels in each state. However, since Pima is not assessed to support CI’s activities, Pima research is not eligible for these state support funds.

“Pima is a very important issue in the valley,” noted Cameron and CPCSD research funding would become even more critical since Pima is expected to dominate SJV acreage in the near future.

As part of the deal, CPCSD will also maintain ownership of the 80-acre research farm at Shafter, Calif., and lease it to BCS.

If the sale is approved by grower balloting, the BCS takeover will likely be finalized late this fall.

CPCSD was formed in 1936 to be a non-profit seed distributor. It got into the seed breeding business in about 1977 when USDA ceased Pima breeding.

Later, CPCSD purchased a delinting and bagging operation, which has processed not only CPSCD varieties, but more recently FiberMax varieties which were produced for seed by CPCSD for Bayer, which is now the second largest cotton seed company in the United States.

CPCSD was forced to sell because it could not compete with other major, well-funded national seed companies selling in the valley. CPCSD accounted for almost 30 percent of the Acala market last season and 14 percent of the total acreage, but the acreage had become too small for CPCSD to exist without outside financial support. CPCSD also did not have an approved Pima variety until this season and has basically been shut out of that rapidly growing market until now. CPCSD sold only 25,000 bags of seed this season. Poor spring weather was a factor in that as growers switched to other crops with a delay in cotton planting.

The field day was a low-key affair compared to past CPCSD Expo events. However, the annual field tour of the research facility at Shafter was business as usual.

Vice president of research Steve Oakley detailed ongoing research in 8,500 research and nursery plots not only in California, but also in other states as well for the non-Acala uplands CPCSD is developing.

Breeder Hal Moser is in charge of the CPCSD Pima breeding and transgenic programs and detailed efforts ongoing to quickly release cottons with not only the Roundup Flex technology, but also the Liberty Link (LL) over-the-top Ignite herbicide resistance technology from Bayer.

Oakley is hopeful a Pima RF will be available to enroll in the San Joaquin Valley Cotton Board trials next year. It has looked stable in the greenhouse and small plots. Moser said it would be sent to a winter nursery this winter for more testing. A Pima LL with tolerance to the Bayer broadleaf herbicide Ignite is also in the pipeline after Pima RF, according to Moser.

Moser is also crossing and screening varieties for resistance to Race 4 Fusarium, a growing, serious problem in the Valley that he says can only be alleviated through variety fusarium resistance. Only one variety, Phytogen 800, has tolerance to this newly identified fusarium race.

He has been making crosses for several seasons and if those crosses look promising this season, he said CPCSD could have a fusarium-resistant Pima within three years.

Moser is also working on introducing Bollard II technology into CPCSD uplands as well as other technology traits. Moser said the BCS acquisition would speed up CPCSD’s biotech program.

Sales vice president John Palmer said CPCSD is moving forward with new varieties for the valley.

Cobalt is CPCSD’s first Pima variety, approved for release last spring. Palmer calls it an early maturity variety like Deltapine 340 with good fiber properties. It topped the ’05 University of California yield trials.

Daytona RF is an Acala with the Roundup Flex gene allowing for herbicide use over the top until seven days before harvest. SJVCB approval will be sought next March.

Acala Fiesta RR, approved this spring, also will be a major CPCSD for ’07.

Ultima Roundup Flex, a premium Acala should be approved for ’08.

e-mail: [email protected]

Hide comments


  • Allowed HTML tags: <em> <strong> <blockquote> <br> <p>

Plain text

  • No HTML tags allowed.
  • Web page addresses and e-mail addresses turn into links automatically.
  • Lines and paragraphs break automatically.