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The Name of the Game is Diversification

PCCA Expands Beyond Co-ops, Embraces Diversification for Future Growth

by Blair White

PCCA has conducted business exclusively with co-ops since its establishment in 1953. History demonstrates that the cooperative business model provides staying power in difficult times. It’s one of the many reasons why PCCA has seen great success and weathered the storms of the cotton industry time after time. Not once in 70 years has PCCA kept doing something just because that is how it has always been done. As the agribusiness landscape has changed and grower-owners’ operations have begun to take on more diversity, it is time for PCCA to do the same.

If a business does not diversify operations, it guarantees it will not exist one day. Diversification has excellent potential to improve volume and efficiency with the right strategy. PCCA will accomplish this by offering marketing services to all growers, regardless of where they gin.

“This thought originated with our Board of Directors,” said Kevin Brinkley, PCCA President and CEO. “They set the strategy for the company. When it became apparent that diversification had become a permanent trend at cotton gins, they decided that restricting our universe of growers was no longer practical. Telmark gins have requested more marketing choices for years. We can now offer them the full suite of PCCA tools. PCCA was probably the last company that only did business with other cooperatives. It makes sense to open our marketing to any grower because of the shifting landscape at cotton gins.”

It is essential to know that when a grower chooses PCCA marketing through a non-co-op gin and Telmark, it is still a PCCA transaction. Telmark has always offered PCCA’s software services to independent gins, so the infrastructure is already in place for its staff to begin offering PCCA’s marketing options to farmers.

“At this point, we will offer these options to the growers through the gin,” said David Canale, Telmark

Director. “Later, if producers are inter- ested in it and want to do business with us, we may start reaching out to them directly. Getting started, it is going to be directly from us to the gin, to the producer.”

Neither PCCA nor Telmark wants to exclude any gin from this process.

“We love our co-op gins,” Brinkley said. “They are important to the health of the cotton industry in Texas, Oklahoma, Kansas, and New Mexico. They are under intense competition from large, privately owned gins. PCCA is a grower-owned cooperative; we must open our marketing to wherever volume is.”

Even though PCCA is expanding its grower and gin base, there is no need to worry that it will not retain its co-op nature, values, and principles.

“PCCA is 100% co-op,” Brinkley said. “Our owners are our growers. It is very much like a co-op gin that markets cotton to private merchants – that does not make them any less co-op. It is our ecosystem, and we believe in the business model. The evidence is in the trends. There is not a major private merchant that does not own a co-op.”

Moreover, this is just another value-added strategy designed to strengthen growers across PCCA’s service area and beyond.

“We have more demand for our cotton than we can supply,” Brinkley said. “Greater volume translates to greater leverage in global markets. The more cotton we handle, the more opportunity we have to enhance customer relationships. Telmark continues to be a vital link to non-cooperative gins in our service area. Therefore, we don’t have to invent something new in our go-to-market strategy. Every bale that Telmark touches makes the entire area stronger.”

Telmark is PCCA’s wholly-owned subsidiary. Since its creation in 1985, the company has provided PCCA’s software services and online cotton marketing to independent gins. As a Loan Servicing Agent (LSA), Telmark supports and interprets government farm programs.

“Simply put, Telmark is a software company for gin services,” Canale said. “Essentially, those assist the process of getting the cotton located in the field, on the gin yard, into the gin, and turned into a marketable bale of cotton.”

Even though Telmark is an extension of PCCA, it does not operate quite the same. Where PCCA directly interacts with both grower-owners and gins, Telmark’s customers are only gins. This year, they are serving 19 independent gins. Fostering strong industry relationships is a crucial part of Telmark’s business operations.

“Our slogan is ‘When Service and Support Count,’ and that’s the value we add,” Canale said. “We are always available, and if there is a problem, we are there to fix it.”

Though PCCA and Telmark are in separate buildings, Canale said everything between the two businesses is a team effort.

“Every time I talk about Telmark, I always say we can’t do anything we do without everyone at PCCA,” he said. “Everyone has a part to play in all of this.”

PCCA and Telmark are playing the long game when it comes to adding value to grower-owners’ cotton. Looking at unique ways to diversify business operations is vital to that strategy that impacts the present and future.