PCCA’s Seasonal Marketing Pool Puts Southwest Growers on the Map
By Blair White
In the 70s, big creative ideas were happening everywhere. Bell bottom pants and orange-brown color pallets were all the rage. Shag carpet was a staple in American homes. Who didn’t have big tinted glasses and Farrah Fawcett hair? A 1973 milestone that shaped the future of cotton was the formation of American Cotton Growers, PCCA’s sister cooperative. ACG was the first step toward a pool marketing revival long overdue.
Editor’s Note: Cotton marketing pools existed long before the creation of ACG and PCCA’s purchase of its denim mill. PCCA offered pool marketing from the very beginning. The co-op offered an “A Pool,” and a “B Pool” producers could elect to use. The A Pool was for growers who grew cotton eligible for the CCC loan, while the B Pool served those who grew cotton outside of the USDA program that governed planted acres of cotton. In the 50s and 60s, pool marketing became less attractive to growers due to changing farm policy and faded into the background for several years. During this time, PCCA developed other marketing options for its members.
Then – ACG is Formed
In the 70s, USDA released a study on optimizing cotton gins, confirming the efficiency and effectiveness of what they dub “super gins.” Super gins are large, high-capacity gins created by merging several smaller ones. The idea began to take hold in the countryside, and before long Crosbyton, McAdoo, and Wake Co-op gins came together to form American Cotton Growers.
In the early years, ACG began blending its farmers’ ginned cotton to achieve higher qualities and higher prices for them. It only made sense that later ACG would build a denim mill to help secure a market for their producers’ cotton. In 1975 the idea of building a denim mill gained traction, and ACG expanded to include 26 gins. These gins were the catalyst for change and provided financial support to build the mill in Littlefield, Texas.
ACG’s pool kept the denim mill fed with cotton. The growers of ACG agreed that a certain amount of the cotton would be “pooled” to go to the mill. This approach helped secure a place for their cotton and helped them lock in a good seasonal average price for the bales. All of the denim mill’s profits were shared among those producers. When these actions formally became a marketing pool, ACG and PCCA signed a joint management agreement stating that PCCA’s executive team and marketing staff would manage the ACG pool, and ACG would pay them for their services.
It may have taken nearly 20 years, but pool marketing began to make a come- back. Producers across the plains saw the profitability and advantages ACG members received from the denim mill and wanted those too. So, in 1987, PCCA purchased the ACG denim mill. The co-op’s former pool structure stepped aside, and in the summer of 1987, PCCA began offering pool marketing services to West Texas and Oklahoma producers. Due to the purchase’s timing and the pool’s new formation, the South Texas crop was already being harvested. PCCA began to offer South Texas pool marketing services in 1988. It quickly became the most popular marketing option around.
It’s no secret farming in the 80s was incredibly tough. Though it came about at the end of the decade, PCCA’s market- ing pool provided strength in numbers to farmers experiencing some of the most challenging economic conditions in rural history.
“Inside the seasonal marketing pool, PCCA producers expect to get a good marketing-year average price,” explained Grady Martin, PCCA Director of Sales. “If you do that, you’re never going to hit the highs, but you’re never going to hit the lows. You’re going to just smooth out those peaks and valleys.”
Now – Changes Ahead
Over the years, PCCA’s pool has remained much the same. The proven system has brought success to the co-op and its grower-owners time and time again. However, the winds of change have begun sweeping cotton fields as multinational cotton merchants created pools to compete with PCCA.
The Grower Choice Pool is a new marketing option developed by PCCA. It does not replace the regular season- al pool, nor is it a completely separate pool. Grower Choice is an option a pool member can use to set the price on a portion of their production. To use the Grower Choice option, a producer must be a member of the seasonal pool.
“Over the past few years, some producers have said they would like to go out and be able to assign a price for some of the cotton they are delivering to the pool,” Martin said. “Grower Choice allows the producer who is a member of the seasonal marketing pool to set a number of bales (up to 50% of their APH) and fix the price on those bales. The remainder of the bales are sold in the seasonal marketing pool.”
Other changes have come with the Pool Committee structure and the development of new marketing options. At the Board of Directors’ direction, PCCA is expanding how it can market a bale so growers can customize their operations even more.
“PCCA has always tried to be on the leading edge of technology,” Martin said. “Over the years, technology has improved to the point where almost every producer carries a smartphone in their pocket. As a result, some of PCCA’s marketing programs need to be updated a little bit. The board has directed PCCA to develop additional grower-preferred marketing options such as the Grower Choice Pool, PCCA Direct®, and PCCA Direct On-Call.”
No matter the change that comes down the pipeline, PCCA’s ultimate goal is to add value to grower-owners’ cotton so they can keep their family farms operating for generations to come.
“I think it’s important that we remember that this cooperative was started by growers,” said Keith Lucas, PCCA Vice President of Marketing. “It is directed by growers and governed by growers. The growers have a say in it, they have ownership, and there is transparency. All profits go back to our growers, and that is another very important part of a cooperative because we are not a private organization that gives you as much as we want to give you and then keeps the rest. We give you all of the profits we make.”
Change is challenging, but it’s also necessary. PCCA and ACG’s founders knew it when they started shaking the industry up with unmatched, bold ideas. PCCA carries on their legacy today. The future is unprecedented, but it is exciting to watch it unfold.