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Mid-South Ginners Upbeat About Future

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EDITOR’S NOTE: The Southern Cotton Ginners Association (SCGA) recently conducted its summer meeting in Little Rock, Ark. Tim Price, SCGA executive vice president, reviews the meeting and discusses several issues confronting the ginning industry in this interview with Cotton Farming.

How do Mid-South ginners feel about the current cotton crop season in light of the floods and excessively hot temperatures during the summer?

Sometimes a less-than-stellar start to a season doesn’t mean you can’t have a great crop year. Even with the flooding on the Mississippi River, what we have seen is some amazing resilience by farmers to recapture their crops.

What was the mood of ginners who attended the summer meeting in Little Rock?

Most of them were still talking about the aftermath of the flood and how it has affected farming and ginning operations. But there were plenty of other issues being discussed, such as the Farm Bill and the volatility with cotton prices.

Are ginners ready for the changes that might be forthcoming in the 2012 Farm Bill?

We’ve been saying for a long time that someday we’d face some big changes in farm policy, and that day has arrived. I’m just glad we have been discussing this Farm Bill moment and these issues for many years and are somewhat prepared for what might happen as Congress deals with the deficit.

What about the cotton flow issue as it pertains to Mid-South ginners?

Our industry has a system that has worked well through the years. But, because of our unique storage system, it has come under some scrutiny. Basically, we are an industry that is learning how to respond to customers who want fast deliveries. Not only does this require having the product, but being where transportation can be expedited quickly.

What are the different ways that the industry is competing in the global market?

We’re not storing cotton just for the purpose of warehousing or storage. We are storing it for the market. In other words, when we move cotton to overseas markets, we are competing in terms of quality but also in how quickly we can deliver it to that customer.

How does gin ownership add value to the cotton crop?

I tell USDA this all the time. If you want to look at a model for value-added agriculture, look at how farmers own gins. This has been going on for decades. Gins here in the Mid-South are owned mostly by farmers. They are part of the group that adds value to the crop by processing the cotton. They add value again if they are involved in storage and exporting of cotton.

Are there additional examples of vertical integration that help gins?

The addition of warehouses to ginning operations is a perfect example of vertical integration, and this is definitely a plus. But, when one part of this chain suffers, it has a ripple effect on everything. The international cotton flow situation must remain efficient because it is crucial in how we deliver cotton to the overseas markets.

What about ginning infrastructure?

This was another topic discussed at our meeting in Little Rock. Our organization has been looking at this for a long time. We’ve expanded a survey that we’ve been sending out for several years. We’re getting good information on the ownership situation at gins as well as how gins are making upgrades to handle the new harvesting and moduling systems. I think it is encouraging that gins are responding to technology in this area. Overall, this is a healthy sign for gins as they make the tough decisions about the future.

What did the industry learn from the historic Mississippi River floods?

Our speaker at the meeting on this topic was Larry Banks, formerly with the Army Corps of Engineers. His message was direct and to the point. The river’s flood control system was bent, but it didn’t break. The bad news is that because it didn’t break, it wasn’t deemed a disaster, meaning that government funding to rebuild some important infrastructure will be more difficult to secure.

Will there be any long-term impact on agriculture because of the floods?

The future impact on agriculture could be quite significant. Our challenge is to make sure that needed infrastructure is rebuilt and that long-term improvements in this critical system are completed soon.

What about changes in insurance programs that affect ginners?

As the value of commodities almost doubled in price, the investment in cotton on the gin yard almost doubled as well. The traditional insurance policy to cover your gin stocks was not designed to readily address this increase in value. However, both gins and insurance providers have responded in an adequate fashion.

This was a reminder that business relationships with insurance companies need to be continually evaluated and strengthened, and this is why we also push safety programs.

Was global cotton marketing discussed at the summer meeting?

We had an excellent speaker on this topic. Kelli Merritt, a Texas producer, merchant and broker, gave us an update on how the drought is affecting Texas cotton production. Since she is also a merchant and broker, she gave us an overview of how the entire production chain works – from the producer all the way to the end-use consumer.

What was the mood of the ginners at the conclusion of the meeting?

Farmers and ginners are optimistic by nature, and they always reflect that kind of mood. Every person walked out of that meeting with a spring in his step. I believe most of them thought the industry would survive its various challenges even better than they had expected. There was a real sense that the industry was “on the rebound.”

Contact Tim Price in Memphis, Tenn., at (901) 947-3104 or via email at tim.price@southerncottonginners.org.

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