Cotton co-op continues growth trend
Oct 2, 2002 12:00 PM, By Cecil H. Yancy Jr. Farm Press Editorial Staff
If you were a founding member of the Carolinas Cotton Growers Cooperative in 1922, your cotton would have found a good market during the coming Depression. If you were a member of the nation's second oldest cooperative in 2001, you would have gotten an extra five cents per pound above the national price.
Amid challenging times in different centuries, the nation's second oldest cooperative continues to put more profit in the pockets of cotton growers in North Carolina, Virginia and South Carolina by growing for the right reasons and educating growers about the vital need of the co-op, says the president of the Carolina Cotton Growers Cooperative.
“The cooperative is healthy and poised to grow with the same integrity and optimism our founders began with in 1922,” Mike Quinn, co-op president told a gathering of members at the group's 80th annual meeting. “We will continue to grow, but for the right reasons.”
Those “right reasons” include new marketing strategies, computer automation, and better use of the Internet. Reinstating the seasonal pool, has also paid off for the cooperative.
“We manage risks,” Quinn says. “We've developed a hedging strategy to take advantage of the natural ups and down of the market, while eliminating the risk of inaction or over reaction.”
In the V-C area, the cooperative has a 30-percent market share of the cotton grown in the area, selling the crop through a seasonal pool. “The reality is more mills could go out of business in the U.S.,” Quinn says. “We hope the industry has stabilized, however.”
In the near-term, Quinn says prices are “stuck in the 40s, but December has the ability to go over 50.” There could still be some prices in the high 30s before the year is over, however, because of large carryover stocks.
Despite the possibility of low prices, Quinn says the co-op is dedicated to “squeezing every bit of equity out of the market and generate income to the producer.”
Combining the latest technology with its mission statement of “maximizing our members' profitability by adding value,” the cooperative is “poised to grow.”
Since 1996, the co-op has doubled volume every two years, says Matthew Williams, the co-op's vice president of finance. Last year, the co-op sold the largest inventory of cotton in its storied 80-year history, more than half a million bales from 66 gins in Georgia, South Carolina, North Carolina and Virginia.
Sales of the 2002 crop began in May of last year, with an estimated 70 percent committed for delivery. For the 2001 crop, the co-op returned more than 61 cents per pound to growers and over the past four years on average got producers 5.44 cents more per pound than the national price, Quinn says.
The addition of automation has allowed the co-op to handle larger volumes of cotton by speeding up the process of getting cotton from producers to the mills at a reduced cost per bale, says Donald Robinson, the co-op's vice president of operations. Hand-held scanners check the bales in the warehouse, and allow the co-op to process electronic receipts from providers. The co-op can automatically select shipments from warehouses that are closest to the mill where the cotton is headed, and provided the specific quality needs the mill requires.
The co-op uses the Internet to process USDA eligibility, loans, direct deposits to producers and mill deliveries.
Born out of necessity in 1922, the CCGC provided cotton growers in the V-C with a market where none had existed before. In fact, the first signup of 339,595 bales for cooperative marketing was for the crop two years previous in 1920.
“It's interesting when you look back and see the influence that the co-op has had through the years,” says Keith Lucas, the vice president of marketing. In preparation for the 80th annual meeting, Lucas spent two weeks compiling historical notes about the co-op.
The co-op announced its first premium, a 14-cent per pound draw, for bales weighing more than 500 pounds on Oct. 26, 1923. With the exception of 1943, the cooperative has sold cotton for its members every year since its founding.
In 1924, the co-op exported 300 bales on consignment to several European countries.
A long-standing relationship with Wachovia Bank, which continues today, started with a $250,000 loan in 1925. “We are able to count on the numbers with Carolina Cotton Growers Cooperative…which makes it a pleasure to deal with the management team of the co-op,” Jerry Bowen, Wachovia Bank senior vice president, said at the 80th annual meeting.
The board of directors includes Dale W. Player, vice chairman; John G. Balfour, Jr.; Jay Brinn, Larry W. Chesson, Lance V. Everett; David Grant; W. Ken Page; Norman F. Perry Jr.; Glenn Sperling; and A.T. Thompson Jr. Former North Carolina ag commissioner James A. Graham and Marshall Grant are advisors to the board.
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