Pool Marketing
The pool marketing alternative offered by PCCA to its members has grown throughout the years in both volume and popularity. This attractive marketing alternative allows producers to focus on cotton production, leaving the crop marketing to trained professionals, with added oversight of a committee of pool members.
The Concept
PCCA's Marketing Division is responsible for selling the pool cotton, with guidance and oversight from the Marketing Pool Committees. Cotton is sold to U.S. textile mills, foreign textile mills and the cotton merchant trade, only after analyzing each offering price and comparing it to the equity goals established by the Committee. PCCA staff monitor farm program benefits, futures markets and other hedging mechanisms, and all cost factors on a daily basis to optimize total returns to members. All farm program benefits related to marketing are processed by PCCA staff and distributed back to the members in the payments for their cotton. Unlike some other pools, PCCA pays full loan premiums and has the added capability and flexibility to make further quality adjustments during the year in case market differences vary significantly from loan differences.
Payments
Prior to harvest, an initial advance payment is set by PCCA's Board of Directors. The amount of the advance is decided by a number of market factors. Cotton that is eligible for the loan is advanced the loan value as a minimum. Cotton not eligible for the loan does not have a guaranteed advance, but is usually fixed at a reasonable discount to the loan level with adjustments made later in the year. Periodic progress payments are made throughout the year as cotton is sold. After PCCA's year-end on June 30 each year, a dividend is declared and book credits of approximately $1.50 per bale are allocated, which should be retired in later years.
Costs
Pool members receive the full value achieved from the sale of their cotton less an administrative fee composed of the costs incurred in marketing. PCCA's fee is the lowest among pools who disclose their fees, and is generally one or two dollars a bale below the cheapest competitor. Year-in and year-out, PCCA pool members will pay much less for marketing than they would selling through other avenues, and they will always receive the full benefits of price achieved, quality and weight gains, and any savings in shipping and handling costs.
Grower Input
Each pool has a Marketing Pool Committee of representatives elected from among its members. The Committees meet with PCCA staff on a regular basis, where they receive market reports, discuss sales strategies, and authorize the marketing division to sell cotton according to current conditions.
Participation
Members wishing to participate in the pool sign a marketing agreement which can be obtained through local coop gins or from PCCA's Grower Services Department. This marketing agreement is a contract for acreage, not for a specific number of bales. The contract can be for whole-farm or tracts. The agreement remains in effect from year to year unless it is cancelled by the member during the one-month "sign-in / sign out period" each year, which is in January for the South Texas pool and in April for pool members in West Texas/Oklahoma/Kansas.