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Better Calcot days forecast after tough past two seasons

Calcot's 75th annual meeting could have been characterized as a resounding chorus of “Happy Days are Here Again” from the cooperative's leadership had it not been for the subdued tenor of the annual gathering.

Calcot chairman and Buckeye, Ariz., cotton producer Bruce Heiden, the cooperative's outgoing CEO Tom Smith and his successor, Australian David Farley cited a plethora of reasons in pronouncing that better days are ahead for the cooperative and Western cotton. They sounded as if they were trying to convince themselves of that as much as they were Calcot's 1,700 members.

It has been a “tumultuous” two years for Calcot and Arizona and California cotton producers, Heiden admitted. For anyone to be anything more than subdued would get them labeled the cruise director on the Titanic.

Smith only underscored the wake from the past two seasons with another reminder that cotton prices for the 2001 crop fell to prices lower than during the Great Depression. Digging out will be a long process. “Things are not normal yet,” Smith said in his final report to the membership after 25 years as CEO and a 45-year Calcot career.

Large loan deficiency payments largely saved the day in 2001, putting final prices in the “barley acceptable range for most growers,” said Smith and allowed Calcot to pass out $21 million in final settlement payments. Most of the cooperative's growers should received full final settlements. Last year many were told they had to pay back overadvances to the cooperative.

1.4 million bales

Calcot sold 1.4 million bales last season, about 45 percent of the West's production, for $537 million.

Acala cotton in Calcot's Seasonal Pool, grade 21, (also known as strict middling), inch and an eighth staple, will receive a final payment of 5.19 cents for a final price of 70.29 cents per pound.

Cotton one grade lower, (31 or middling) with the same fiber length, will receive a final 4.75-cent payment for a final price of 69.85 cents per pound. Those two grades made up the vast majority of cotton marketed through the Seasonal Pool, and averaged together Calcot's final Acala price for the 2001-02 season is 70.07 cents, which Smith said is “very good considering the unusual marketing climate of last season.”

Some of the other SJV styles and final prices included roller-ginned Ultima, almost 80 cents per pound; SJV “California Uplands” about 63 cents per pound; Grade 2 SJV Pima, almost 85 cents. California/Arizona uplands brought about two cents per pound less than similar non-Acala styles produced in the San Joaquin and desert Pimas were about two cents below comparable SJV Pimas.

Farm bill important

As Calcot moved into the 2002-03 marketing season, Heiden proclaimed the industry is coming out of the downturn and “better times await us as an industry and as a cooperative.” However, Calcot is taking a cautious approach to that turnaround, advancing growers only the amount of the government loan.

“Looking ahead to next season, Smith noted the passage of a new farm bill was extremely important to cotton's future in California.

“The San Joaquin Valley particularly needs to maintain a critical mass of cotton production in order to maintain its role as a major high quality cotton supplier for the world's textile industry,” he said. “Getting the bill passed … was a major victory for the Far West. “I am very proud of the role your board officers played in influencing the position our two California senators took, which was a major step in getting the issue resolved in your favor.”

Senators Dianne Feinstein and Barbara Boxer withstood substantial criticism from some environmental groups for their stand on passing the farm bill.

On the fundamental side, Smith's successor Farley cited a downturn in projected 2002-03 world production, creating for the first time in many seasons world production far below world consumption. A projected world consumption of almost 97 million bales, about 2 million bales more than last season is being pushed by record low prices.

That along with political unrest, wars and drought in African nations and Australia that are direct world competitors to Western U.S. cotton are improving the marketing prospects for California and Arizona sales.

Farley in position

Farley succeeded Smith on Oct. 1. He's been on the job for four months familiarizing himself with Calcot and its members. Heiden called Farley energetic, dynamic and impatient. The decision to hire Farley over two Calcot insiders and a third highly respected cotton marketer was controversial. He is the first Calcot outsider to be CEO in more than 30 years. Smith will remain active in Calcot for the next year as a consultant to Farley and the board.

Heiden defended the Farley hiring by saying the search committee and directors “felt the time was right for a distinct change, that it was time for a different look and a different structure.”

He compared Farley's hiring to the hiring in 1944 of Russell Kennedy, an “outsider from Texas.” As CEO Kennedy is credited with molding Calcot into one of the largest and most influential cotton marketing cooperatives in the world.

While Farley was hired to change directions, Heiden made it plain the Calcot board “is taking even more responsibility than in the past. The board as a whole is digging and asking more questions than ever. I think this is healthy and that we are going in the right direction,” he said.

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