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Checks in mid-August: Calcot offers cash advance program

It doesn't happen every year, but often cotton producers come to the end of the season needing a little extra cash to “finish” the crop.

That could be for insect control; pre-harvesting conditioning or a little extra for defoliation. Or to get ready for harvest after heavier-than-anticipated expenses early on.

Calcot members can get those few dollars using a unique program just announced by the 1,600-member California and Arizona cotton marketing cooperative.

“One of the things our members have been asking for is getting their money sooner,” said Calcot president David Farley. “We've been exploring a number of options and this is just one of our initiatives.

Calcot's new summer advance program will allow producers to receive three cents per pound in mid-August, instead of waiting for the full regular advance paid on delivery of cotton to Calcot warehouses.

Typically, growers at harvesttime — usually in early October — receive an advance payment for their cotton. The advance is established by the board of directors and is based on a percentage of anticipated value of the cotton, adjusted for varieties, qualities and marketing pool.

“This early summer advance will be extremely useful to members who need to improve their cash flow to finish up the harvest, or perhaps to do one last preventative spraying to protect cotton quality,” said Farley.

Grower's choice

“Regardless, the choice is up to the grower,” he added.

Under the program approved by the cooperative's directors, members must sign up for the option by May 1. However, they do not have to use the option.

The new program will not change the system currently in place; an initial advance, followed by progress payments and a final settlement.

The key difference is that before the new option, growers could not receive an advance prior to harvest.

The program is strictly optional, he said.

The advance payment will be made Aug. 15, and payment based on grower acreage and projected yield. Calcot will use USDA's objective yield survey figures released in early August as the season's base to determine yield limits, which will be calculated at 80 percent of USDA's numbers.

For example, if USDA predicts 1,439 pounds for California, growers in the program would be eligible for payment based on 1,151 pounds.

Interest will be charged on the advance amounts at Calcot's cost of funds, and the early payment will be deducted from the regular advance received upon delivery.

Annually Calcot sells over a million bales of Far West cotton to textile markets worldwide with total yearly sales of about $500 million.

e-mail: hcline@primediabusiness.com

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