Premium Cotton Pays Industry-Wide Dividends

 Premium Cotton Pays Industry-Wide Dividends

Growers who produce premium quality lint open the door to higher earnings. When a geographic area earns a reputation for quality cotton, growers have a better opportunity to increase income.

It’s a demand equation.

“Quality drives the market,” says Jeff Turner, CEO and general manager of Glasscock County Co-op in West Texas. “I mean you never really have anybody that’s coming and looking for poor quality. Cotton buyers are wanting a good quality product and our cotton is a highly sought-after product because of the quality.”

Growers grab on to the premium price opportunity by choosing varieties that have desirable fiber quality characteristics. It’s the science in the profit equation. The other half of the equation is the experienced, timely management growers add. The combination of elite germplasm and skilled management delivers high earning potential.

South Texas cotton grower Lynn Johnson starts the process with Bayer cotton.

“The FiberMax varieties really step up the ante for cottonseed companies because they yield so well and they’re superior quality-wise,” Johnson says.

“Quality is extremely important to the majority of my producers. We’re primarily dryland production so we’re not going to hit a home run on yield every year. So, we lean more towards quality-driven versus pounds because if we market it correctly with that extra kick that we’re going to get on our premium bonuses, it’s going to bring us more money in the end than producing more pounds of cotton that doesn’t have the quality,” says Justin Chopelas, a South Texas crop consultant. “That extra money is pure gravy. And FiberMax excels in the fiber quality department.”

“Quality certainly commands a premium price,” Cotton Incorporated Senior Economist Jon Devine says. Data to back up the impact of quality on grower profit is difficult to compile because marketing scenarios vary. However, the profit advantage of premium fiber can be figured based on the loan value. For example, Devine calculates, a 3-cent premium on a two-bale yield in a 70-cent market brings in $30 more per acre.

Marketing strategies that consider the premium profit opportunity realize higher income for growers.

Growers at Glasscock Gin who grew FiberMax® varieties in 2016 earned more money than growers who chose other varieties. Those numbers are easy to pull, Turner says. FiberMax varieties on average sold 90 points higher than other varieties.

Premium Quality Creates Demand

Growers who produce premium quality also impact demand for U.S. cotton, points out Vikki Martin, Cotton Incorporated vice-president for fiber competition.

“The bottom line at the end of the day is getting the best yield for the inputs that you’re putting into the crop. That’s the immediate goal,” Martin says. “The long-term goal is to provide a product that creates demand.”

Long, strong fiber with 82-percent or higher uniformity is key to increasing demand, which raises growers’ opportunity for profit by impacting market price.

“If you don’t continue to improve your raw material, someone else is going to provide the product that end user wants,” Martin says. “We continue to try to make cotton as good as we can, so somebody says: ‘I really can use cotton to make this product, to make a higher quality product, to make a product that’s more sustainable.’”

Texas, for example, wasn’t always known for producing high-quality cotton. It is today.

“Companies come down here, mills come down here, buyers come down here, and they want this cotton,” Johnson says. “They want the kind of quality cotton that they can spin and make a quality fiber and that’s what really changed with the FiberMax varieties coming in. They come in here and they offer us a premium for the kind of cotton we can now grow.”

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