If anyone does not need to be reminded that times are tough right now, it is you. Those of you on the farm are seeing it everyday as we are. Most of our members struggled through this past season with disappointing yields coupled with disappointing prices and high expenses. That is certainly not a great formula for success. PCCA is feeling some of that also as you might well expect.
With volume down in our Marketing Division and a cotton price which declined throughout most of the season, it has been a difficult time to own cotton and expect to make any money. Coupled with the loss of government Step 2 funding in December, which basically eliminated our export opportunities, this season has proved one of the most difficult to market your cotton in some time. Even our hedge strategies, which typically provide a safeguard against price fluctuations, were ineffectual this year as the New York futures prices, world prices, and our spot prices did not consistently move in the same direction. Suffice to say it was a tough year in the cotton business, but you already knew that.
Well publicized troubles in the textile industry and with our major denim customer, Levi Strauss & Co., make “tough” a fair description for our Textile Division this year as well. We have certainly had more downtime than we would like at both Littlefield and New Braunfels. The Asian financial crisis has taken its toll on U.S. textile and apparel manufacturers as cheap imports have flooded our stores in this country eating up dollars that have typically gone to domestic producers. No surprise there either.
However, there are some bright spots. First, the National Cotton Council was able to reach unanimous agreement among all seven segments of the cotton industry to work for additional Step 2 funding from the Congress. Support has been offered by congressional leaders and leaders in the USDA, which is encouraging. However, anything that costs money is a tough sell these days, and the jury is still out as to whether or not we will get that funding in place anytime soon, if at all. There would have been no chance to get anything done, however, if all segments of the industry had not been able to finally reach an agreement on this important topic. Our willingness to stand united is the only thing that gives the cotton industry a decent chance to get important issues like this moving in the Congress, and I shudder to think where we would be if we didn’t have a forum like the National Cotton Council in which to build consensus.
Another bright spot is the recent moisture that we have received. Historical March precipitation numbers are not impressive, so anything we get this time of year is considered a bonus. Maybe we can get off to a decent start this coming season.
Finally, in spite of tough times in the textile world, we are having a profitable year in our Textile Division. In fact, if the last four months of our fiscal year (which ends June 30) come anything close to our projections, we could very well have record margins in our Textile Division this year. I hope that materializes because it could not come at a better time for most of our membership.
Yes, we are all having “tough times,” but conventional wisdom says that out of challenging and difficult times often come the greatest and most creative products, processes, and solutions, because we have no choice but to find better ways to accomplish our objectives. I suspect that this time will be no different, and we will look back on it some day as a period of great progress.
In the meantime, please know that we at PCCA are doing everything in our power to make every dollar we can for you during this difficult period. That is the only reason we open our doors every morning.