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American Pima: U.S. cotton's Cinderella story
Oct 5, 2005 10:41 AM
By Harry Cline, Farm Press Editorial Staff
Each season the story of American Pima cotton sounds like a broken record: one
record broken after another.
And it is music to the ears of California, Arizona, New Mexico and Far
West Texas producers who grow the Extra Long Staple (ELS) Pima
cotton, an American-grown fiber crop that was not even a blip on the
world ELS radar screen just two decades back. Today U.S. American
Pima cotton is the world leader in export premium.
Since the mid-1980s American Pima production and sales have taken a meteoric rise
like the launch of a Saturn rocket.
American ELS production has gone from less than 100,000 bales in 1983 to roughly
750,000 bales the last two seasons. USDA is projecting a third consecutive 700,000bale plus crop this year. However, Supima believes the government is being too
generous, and the crop will be about 25,000 bales shorter - just shy of 700,000 - due to
weather and insect problems in the San Joaquin Valley.
Regardless of which figure examined, U.S. cotton growers and merchants are
producing and marketing more Pima annually than anyone imagined just a few years
back. And the rocket ride is not over yet.
At the Supima’s 51st annual meeting recently in Coalinga, Calif., the magic number of
1 million bales of annual U.S. production and sales was mentioned as not only a
conceivable, but an achievable next plateau for the Cinderella story of the American
cotton industry.
There seems to be no stopping it, and the biggest benefactor will likely be California’s
San Joaquin Valley, which is in the driver’s seat of Pima’s magical carriage, producing
more than 90 percent of the U.S. Pima crop each season.
SJV cotton future
Pima has become the future SJV cotton. What is remarkable about that is that in 1987,
California accounted for only 1 percent of the U.S. Pima acreage.
Pima has become such a remarkable success that the industry initiated a revision of a
federally funded sale enhancement Step 2-like ELS cotton competitiveness payment
program to reduce the amount of government money paid to support marketing of
American ELS cotton. This comes at a time when the upland cotton industry is fighting
for its economic support in Congress.
Supima chairman Jim Hansen of Corcoran, Calif., speaking at the annual meeting,
detailed a breathtaking manifest of the past 12 months:
--Production of 746,000 bales from the 2004/05 crop, a 72 percent increase from the
previous year’s crop.
--Record U.S. consumption of 850,000 bales, a 15 percent increase that has virtually
wiped out any carryover into this marketing year.
--790,000 bales of U.S. Pima exports last season, a 25 percent increase.
One of the biggest factors propelling this rocket ride is the Supima Association’s
licensing program, which grants textile mills the right to use the association’s highly
regarded Supima label, only if the product is 100 percent Pima. Jesse Curlee, Supima
president, said 80 additional licensees signed up to use the Supima label last year,
bringing the total number of licensees to 300 textile mills worldwide.
Voluntary program
Supima is a voluntary program supported by grower assessment of $3 per bale.
Grower support is now about 90 percent, the highest is has ever been.
“It should be 100 percent. There is no excuse for not paying to support Supima,” said
Hansen.
The big growth in the association’s licensing program comes because premium high
quality cotton products made with ELS cotton is one of the most rapidly growing
segments of the textile industry. ELS cottons also are blended with other lesser
strength upland cottons to improve overall fiber quality and strength.
Licensees have been paying $1,000 annually. Supima increased that by $5,000 this
year and is encountering little resistance. And the association is setting up an auditing
procedure to make sure licensees are using 100 percent American Pima.
With continuing strong demand, no carryover and a crop shorter than last year, the
2005 crop should command strong prices in the $1.20 per pound range to growers.
Pima in the San Joaquin Valley will yield equal to the valley’s traditional premium,
Acala upland cottons with little additional growing expenses. However, it cost more to
roller gin Pima, but that is not enough to deter growers from planting or expanding
Pima acreage.
Curlee said the spectacular increase in American Pima demand has been bolstered by
improved commercial Pima varieties with improved fiber and higher yields. “Improving
farming and harvesting practices now allow American Pima to compete with handpicked Egyptian ELS cottons,” he explained.
Curlee says it is not unrealistic to expect American Pima production to reach 1 million
bales in the near future. “The capacity is certainly there in California” to achieve what
once would have been considered a fairy tale number.
The 1 million bales will not be achieved this season, however, according to Marc
Lewkowitz, Supima executive vice president. USDA is forecasting 725,000 bales on
increased acreage of 261,000 acres this season.
Lower estimate
However, Supima disagrees with the California yield estimate. USDA is forecasting
226,000 acres in the San Joaquin Valley with a projected yield of 1,381 pounds per
acres. This is off the incredible record of 1,532 pounds produced in ideal growing
conditions last season. The USDA yield estimate for this year’s crop that was plagued
by a poor start and insect pressure is just five pounds off the previous record set in
2002. Supima does not believe grower yields will average that much.
Lewkowitz said the California Pink Bollworm program pegs SJV acreage at 231,000
acres. However, he said Supima believes average yield will be more like 1,250 pounds.
“This would result in a production figure of about 600,000 bales in California and
675,000 total in the U.S. Either way, supplies will be tight in 2005/06,” proclaimed
Lewkowitz.
India, Pakistan and China are the biggest buyers of American Pima, accounting for 50
percent of all exported U.S. crop. American Pima now accounts for 45 percent of the
world’s exported ELS cotton.
Peru has become an integral consumer of American Pima. It imports more American
Pima (50,000 bales) than it produces of its own Peruvian Pima. Turkey has doubled its
consumption and Taiwan has elevated its consumption to almost 60,000 bales after a
few years of declining consumption.
While Pakistan is the single largest buyer of American Pima, China has “really come
alive” as an American Pima export market in the past five years. “China values the
American Pima for its consistent quality, lack of contamination, and the value that the
Supima brand brings,” said Lewkowitz.
China is trying to produce ELS cottons, but quality is still far inferior to American Pima
and that is not expected to change.
Chinese textile mill expansion is rampant. “A number of mills (in China and South Asia)
are talking in millions of spindles instead of hundreds of thousands of spindles,” said
Lewkowitz.
On a recent ELS trade mission to China, merchants discovered mills using American
Pima they did not know even existed.
World ELS offtake has exceeded production on an average of 700,000 bales and
drawn down on stocks over the last three years has averaged over 350,000 bales, said
Lewkowitz.
Problem last year
The Pima story became too much of a good thing last year when the industry’s Step 2like program went haywire, resulting in federal cotton competitiveness payments of up
to 83 cents per pound. It was costing the federal government three times what was
budgeted. This was identified as a “program weakness” that allowed high prices and
high payments to influence each other with no market-like self-correcting mechanism.
The industry, through the Supima Association, negotiated a revision in the program.
The result will be Step 2 like payments of likely no more than 20 cents per pound, if at
all, according to Lewkowitz.
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