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Signs of upturn in Pima demand

The 20-year meteoric ride for American Pima cotton in California’s San Joaquin Valley spiraled down over the past two seasons, as production and consumption nosedived right along with the world economy.

Since Pima was officially introduced into the Valley in the mid-1980s, it has literally been an uninterrupted rocket journey, as the world textile industry embraced the high quality Extra Long Staple cotton from the San Joaquin and the Supima marketing program behind it.

There were hopes that Pima cotton would somehow skirt the current world recession. Unfortunately, it did not, as Supima President Jesse Curlee told 125 people at the 55th annual Supima meeting at Harris Ranch in Coalinga, Calif. Curlee admitted growers and marketers have been “spoiled” by the unprecedented success in the 20-year union of American Pima cotton, the San Joaquin and Supima. Everyone expected the rocket to continue skyward. However, it faltered just like most agricultural commodities.

Whether it was the reality of people’s net worth tumbling 20 percent to 50 percent over the past year or the psychology of the economic downturn among the well-to-do, sales of Supima luxury items have tumbled right along with other retail products. And with it has come a sharp decline in Pima cotton prices, roughly 20 cents a pound from September 2008 to now.

Curlee says in past recessions, the wealthy have seemingly not altered their buying habits. They have this time. It resulted in a worldwide Extra Long Staple cotton production slide from an average of about 3 million bales between 2001 and 2007 to less than 2 million bales the past two seasons. Offtake fell to less than 2.5 million bales last year. It reached 4 million bales three of the six years prior to 2008.

U.S. planted acreage this season fell to one of the smallest on record, just 146,000. California makes up about 65 percent of that. SJV acreage, according to USDA, was only 127,000. However, the California Department of Food and Agriculture pink bollworm surveyors say it’s only 118,975 acres, down from almost 153,000 in 2008. In seven of the last 10 years, it has been more than 200,000 acres.

While the recession has played a major role in the decline in demand, Pima acreage in the Valley has also been impacted by the shortage of irrigation water caused by three years of drought and the loss of water to judicial environmental rulings.

California accounts for 90 percent of U.S. ELS production.

The uncharacteristically slow demand since the economic downturn began in September 2008 resulted in the lowest export sales of 232,000 bales last season, the lowest since 1986-1987 when the Pima cotton era began in the Valley. The U.S. accounts for more than 50 percent of ELS exports worldwide.

This large and sudden sales slowdown resulted in a very big carryover – the largest in seven years, even though 2009-2010 production is down sharply.

However, Curlee and the leadership of Supima see no rocket crash. They already see signs of a turnaround. That leadership is so convinced the second phase of the Supima rocket is about to fire that the organization’s directors approved a deficit budget for the coming year.

“In my 25 years with Pima, I have never been more excited. This is not the time to hunker down,” Curlee says.

There are solid reasons behind the optimism. Export sales have picked up lately.

Supima licenses all elements in the textile chain from the mill to the retailer to use the name Supima on 100 percent American Pima products.

Licensees, who pay $5,000 annually for the right to brand their products with the Supima label, increased by 26 last year and are expected to approach 375 by the end of the year. The association’s licensee income is now greater than the per bale assessment for its grower members.

Curlee and Supima Executive Vice President Marc Lewkowitz say this continued interest in Supima licensing is a sign of turnaround growth in the future for Pima products.

Supima has promoted American Pima cotton primarily to the textile trade with a limited consumer ad campaign. “We really do not generate enough income for a major consumer campaign,” explains Curlee.

However, natural fiber, premium quality cotton products have long been a favorite of retailers like Brooks Brothers, which will be launching a major campaign with a line of Supima products in its catalog.

Even bigger has been the announcement by Bloomingdale’s, one of the nation’s premier retailers, that it is putting a Supima section in 18 of its stores. It will feature many different labels of Supima products.

“It has been surprising and encouraging to still see the interest in the Supima brand in this down economy,” says Buxton Midyette, Sepia’s vice president of marketing and promotion based in New York City.

Midyette has been a major factor in Supima’s success in recent years. He spearheads an annual, exclusive Supima trade show in New York where Supima licensees are invited to the hub of the fashion world to market their Supima branded Pima cotton products. This now includes Supima’s own runway fashion show where young designers compete using Supima fabric apparel.

Another major new initiative is a Supima social media marketing campaign directed by Lewkowitz. Supima will utilize Facebook, YouTube and Twitter for a new branding initiative. It will feature product giveaways for people who use Supima products for events like weddings planned via these social media.


TAGS: Cotton
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