Grain farmers in Arkansas and Mississippi have faced a staggering blow this year due to the default of Turner Grain Merchandising and 10 related broker companies that have failed to pay farmers for their grains. Ag officials have said the total losses could range from between $20 to $50 million.
Cotton growers in the region who are members of Staplcotn of Greenwood, the oldest and one of the largest cotton marketing cooperatives in the country, have an advantage in that they are represented by a cooperative that cuts out the middleman and has the producer’s best interest in mind.
“Anyone who contracts with a third party to sell their crops always bears the risk that their counter party does not perform,” said Staplcotn president & CEO, Meredith Allen. “To mitigate this risk, producers need to look to the financial strength and reputation of the counter-parties they use to market their crops. Staplcotn has a 93-year proven track record that speaks volumes.”
Allen said today the cooperative is as strong financially as it has ever been. Unlike private businesses, its sole purpose is to serve the producer.
“The board of directors is comprised of cotton producer-members who, through policy and oversight, make sure management runs the company conservatively with producer interest as the number one priority,” Allen said.
“Staplcotn is 100 percent member-owned and the only way to be a member is to be a cotton producer. Our mission statement emphasizes that our charge is to enhance our members’ incomes. Through the hedging of price risk in the cotton futures market and our global sales expertise, we seek to return an above average price for our producers.
Warehouses are licensed and bonded to meet the requirements of the Commodity Credit Corporation of the U.S. Department of Agriculture. Competitive tariffs are charged for handling and storage. The earnings from the warehouses are returned to the warehouse patrons at the end of each fiscal year.
Allen said that until 2006, cotton acreage in Mississippi and the neighboring states of Arkansas and Louisiana was pretty stable. Since that time, growers in those states have responded to relatively high corn and soybean prices by decreasing their cotton acreage and replacing it with corn and soybeans. Producers in this three-state area were able to grow more soybeans and corn than other states in the cotton belt due to their good soil, climate and irrigation capacity.
“This year, growers in the region increased cotton acreage compared to the previous year (2013) because prices for corn and soybeans were less of a premium over cotton,” Allen said. “The outstanding cotton yields in Mississippi and Louisiana last year (both set all-time records) also made growers take a second look at growing cotton. While most other cotton producing states in the southeast saw relatively flat cotton acreage, Mississippi acreage increased over 40 percent.
Growers planted an estimated 420,000 acres of cotton, an increase of 133,000 acres from 2013. Yield was expected to set records again.
Allen said those higher yields have been made possible by technological advances in farming and ginning practices and seed genetics.
In 2013, the average Mississippi cotton yield was 1,203 pounds per acre, which is 179 pounds more than the previous record set in 2004. That represents an increase of 17.5 percent.
“The 2014 crop looks like it will yield close to last year’s record,” Allen said. “We have producers that now budget to make 1,200-1,300 pounds per acre that were budgeting only 1,000 pounds three to four years ago. Outside of seed genetics, other advancements in technology such as precision farming, integrated pest management, harvesting equipment and even in ginning means more efficient use of inputs and less lost lent in harvesting and ginning.”
Allen said another reason for higher productivity is that producers are enjoying the benefits of crop diversification. For example, cotton rotated with corn, soybeans or peanuts helps both crops involved yield more, improves the overall fertility of the land, and helps battle plant disease.
Cotton has long been considered a particularly important crop in the Delta because of the required investment in infrastructure and the number of jobs created. But infrastructure has declined considerably from the time in the 1980s when the state was producing cotton on a million acres. Allen said while a lot of the cotton infrastructure has been lost, Mississippi is still positioned well to be a significant player in the U.S. cotton industry.
“Despite less cotton being grown in Mississippi in this new era, we still have ample gin and warehouse capacity,” he said. “Mississippi is still the U.S.’ third largest production state behind Texas and Georgia. Acreage may vary from year-to-year as producers respond to price signals, but I expect cotton will always be produced in Mississippi on 300,000-500,000 acres.”
Staplcotn represents about 14,000 farm accounts in 11 states. It provides a range of services to our members, including domestic and export marketing, cotton warehousing, and agricultural financing available through Stapldiscount, the lending arm of Staplcotn.
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