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Battle to preserve SJV Pima production

It was a packed ballroom at Harris Ranch Restaurant, Coalinga, Calif., for Supima's recent 53rd annual meeting — unusual for a San Joaquin Valley (SJV) cotton meeting these days.

Times are good for American Pima cotton, even though SJV cotton acreage has tumbled more than 500,000 since another Pima meeting was held in the same room about 20 years ago.

The irony of that first gathering was not lost on those who were at both meetings discussing the same subject, SJV Pima cotton.

One of the key topics this year was how to sustain American Pima cotton production in the valley for a world clamoring to make the world's finest garments out of America's finest cotton.

The meeting called two decades ago in the very same ballroom by the valley's largest cotton producer, J.G. Boswell, focused on stopping a fledgling San Joaquin Valley Cotton Board research effort that could have possibly led to the introduction of Extra Long Staple Pima cotton in the valley.

Several Kern County growers wanted to grow Pima, enticed by the $1 per pound price. Several seasoned cotton breeders said it would thrive in the valley.

Boswell and Northern SJV producers were concerned that the introduction of the ELS species could jeopardize the protective one-variety/quality law governing 1 million acres of Acala cotton and the Acala premium that had been in place for decades.

Fast forward to 2007. Acala cotton has all but disappeared from the valley with just 185,000 acres this year, the victim of more profitable alternatives and stronger competition from uplands produced elsewhere in the world. Pima cotton is the No. 1 cotton in the valley. And the new chairman of Supima is Jeff Elder, vice president of marketing for Boswell.

California is the largest ELS cotton-producing state in the U.S., turning out more than 95 percent of the 2007 crop headed for another record bale count, breaking the one set last season. The U.S. is the largest world exporter of ELS cotton.

Admittedly, SJV Pima acreage is small, 261,000 acres this year compared to the one million acres of Acala in the mid-80s. However, many believe SJV cotton acreage would be zero without Pima.

It can be argued that roller gins built to process ELS are actually saving Acala cotton. An increasingly larger percentage of Acala is roller ginned, netting producers a premium price that is keeping Acala in the ground and in the world marketplace.

Twenty years ago, the debate was over whether to kill Supima or let the industry as a whole decide if there is a place for it. History has proven the doubters of 1987 wrong, and they are obviously glad. The biggest benefactor of SJV has been Boswell, which exclusively grows ELS cotton as the country's largest Pima producer.

At this year's annual Supima gathering, the talk was once again the possible demise of SJV Pima, but the emphasis was on how to prevent a downturn in ELS acreage.

Jesse Curlee, longtime Supima president, said for years Egypt and lately, China, have been American Pima's biggest world competitors. Now it is almonds, pistachios and processing tomatoes, all three major SJV crops that offer more income today than short or long staple cotton.

When Pima first nudged a foot in the door, the competition was Acala. However, as soon as it was realized Pima at roughly $1 per pound could produce yields equal to Acala going for about 75 cents per pound, the competition ended.

The competition is far greater this time. Not only is Pima up against more profitable permanent and vegetable crops, this year it is competing for irrigation water in the wake of a federal judge's ruling that water supply for the prime Pima production area of the 600,000-acre Westlands Water District could be sliced by 90 percent. There is a fear that available water will be used for high value crops at the expense of cotton, upland and Pima alike.

Keeping Pima competitive

“We have to do something to make American Pima stay competitive with other crops in the valley,” said Curlee. This means increasing demand and thereby increasing the price to producers. “We cannot stand still. The future will change, and we have to change with it in looking for new opportunities for Supima.

“We need to be resourceful and open to new ideas, and we need to gain more knowledge about our customers,” he added.

This comes from Supima's chief executive officer who has led the transformation of an industry from a minute segment of the cotton industry in Arizona that focused primarily on making thread, to an industry that has created worldwide acceptance of Pima textiles as the finest cotton in the world.

This year American Pima cotton producers will virtually sell out all of their production once again, a projected record of 809,000 bales.

The vast majority of those bales will go to spinners, textile manufacturers, wholesalers and retailers who pay $5,000 per year for the right to place Supima labels on their products, identifying them as 100 percent American Pima. This will bring in about $1.5 million to Supima. This represents roughly half of the association's budget. The other half comes from a voluntary $3 per bale grower assessment. Jim Hansen, outgoing board chairman of Corcoran, Calif., said almost 100 percent of Pima growers pay the assessment.

Two years ago, Supima raised its licensing fee from $1,000 to $5,000 to raise more promotion money, as well as weed out some undesirable licensees. There was fear that increasing the licensing fee would significantly reduce participants and income, but as of today, the number of licensees is back to where it was just two years ago — 274.

Supima is working closer with retailers and brands than in the past. It used to work almost exclusively with yarn spinners. Supima sponsored two New York City trade shows for manufacturers offering Supima products. Also, for the first time, Supima will have its own booth at a huge Paris textile/fashion trade show later this year. It is winning awards for its advertising campaigns.

China is the biggest buyer of American cotton, including American Pima. China is the largest producer of ELS cotton, producing 800,000 bales annually, up sharply from 300,000 of a few years back. “Suddenly China has become our biggest competition for ELS sales in the world. We used to talk about Egypt. Now it's China,” he explained.

Supima in China to stay

However, Curlee believes Supima — thanks to its licensing program — will continue to be a major player in China even with the huge stock of domestic ELS cotton.

“Chinese ELS cotton is priced 10 cents per pound less than U.S. Pima, which has an effect on world Pima prices. Chinese mills also use more Chinese ELS cotton. However, if the mills spin and manufacture products for a Pima licensee, it must be with 100 percent Pima cotton,” explained Curlee. This is keeping American Pima in Chinese mills. The association is spending considerable amounts to audit mills to make sure they are not substituting non-Pima for American ELS cotton.

This year China is expected to import 166,000 bales of American Pima. Last year it was 250,000.

Curlee said China is exporting as much as 95 percent of the products made with American Pima, but he expects that to change with the growing middle class in China. “China is becoming a high-end textile market.”

A respected research organization estimates that by 2012, 95 percent of the textile apparel made in China will be consumed in China. “I don't know that I believe that. I am not convinced China will stop making apparel for the rest of the world.”

Nevertheless, China is a growing consumer market and Supima is evaluating whether to enter it with a promotional campaign similar to the one in the U.S.

“India also has a growing middle class. If you are in the textile business, you had better be in China and India with some kind of promotional effort,” he explained.

Marc Lewkowitz, Supima executive vice president, said global demand continues to be strong. Early export demand for the 2007-2008 crop is “very robust.” Through the middle of August, almost 300,000 bales had been registered for export from the estimated 800,000-bale crop. This level is almost three times what was reported at the same time last year.

“Additionally, export sales reports for the 2006-2007 crop year indicated that 652,000 bales have been sold and exported,” he added. This is the second largest export sales figure on record.

Besides China, the other four largest importers of American Pima are Pakistan, India, Indonesia, and Japan. They account for about 75 percent of American Pima exports.

Lewkowitz agrees with the California pink bollworm program 2007 acreage estimate of 261,000, the same as USDA is reporting. Arizona, Texas and New Mexico make up the rest of the 293,000 acres planted in the U.S.

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