If you are looking at this Website for the first time and wondering; who is United Cotton Growers Cooperative and what do they do? The following article gives an excellent description of our history and who we are today. We recently chose to participate with Texas Tech University in a Celebrate Cotton Day during football season to help bring attention to the value the cotton industry brings to Lubbock, the South Plains, Texas, and the United States. We are one of several hundred gins who exist in Texas to provide this important service to the growers and textile industries of the world. We take the raw cotton harvested by growers, haul it to our facilities where we clean the lint, separate the seed from the lint, package the lint in 500 lb bales and ship it to warehouses where it is stored and eventually sold to merchants and distributed to textile plants around the world. We assist the growers with selling their cotton to merchants and we sell the byproducts from our process. I hope this peaks your interest and causes you to research further what the cotton industry is all about. I also hope you enjoy the article below.
Paul Wilson, General Manager
Competing for Profit, ACC Newsletter Issue XXXIX: May 2012
Story by: Samantha Borgstedt
Published by: Larry Combest Endowed Chair in Agricultural Competitiveness, Texas Tech University
Abandoned cotton gins have become a common sight as you drive through communities of the South Plains.
Mergers, buyouts and consolidations driven by economics have taken place throughout the years causing several gins to shut their doors and others to become larger. Over a period of almost 30 years, eight communities within Hockley County have come together to form the United Cotton Growers Cooperative (UCG).
The board of UCG takes pride in having a gin that is efficient and successful on a number of levels. One step taken in order to improve efficiency was combining all of its plants and offices into one up-to-date location.
"In 2002, we sold the Whitharral plant and moved all our cotton ginning here," Larry Wade, UCG board member recalls. "At one time, we also had four offices. We now have everyone housed here in one office location."
UCG services a large area covering 125 thousand acres and several counties including, Hockley, Terry, Lamb, Cochran and others in the area. Of these acres, approximately 60 percent are irrigated and 25 thousand are in sub-surface drip. The gin has seen changes through its years, including advancements in irrigation, seed varieties, and other inputs.
"In 2002 and 2003 we saw several changes in the farming industry," Paul Wilson, UCG general manager said. "Several of our growers began using picker varieties and more drip irrigation was installed."
Wilson said UCG has adapted to the improvements its producers have made in their farming techniques by making its own improvements to the co-op. Better seed varieties and irrigation techniques have resulted in increased yields and in turn, increased volume for UCG. Wilson said in 2003 the gin’s eight year average sat at around 60 thousand bales. Today, it is more in the 150 thousand bale range.
UCG has handled the increase of cotton by better automating its facility, something they continue to work on as budget allows. The board has been careful in their decision making of gin improvements. They want the gin to be fully utilized and efficient, but are cautious not to make unnecessary expansions that would not create return on their investment.
Wilson said UCG can efficiently process 130 to 140 thousand bales a ginning season. If its producers harvest beyond their capacity, UCG contracts the cotton out to other area gins. "Contracting out the ginning costs us money," Wilson said, "but it does not cost as much as building an additional plant."
Of course 2011 was not a year UCG had to worry about sending cotton out, and the board said if their fields do not get a rain soon, 2012 isn’t looking much better. The board is very supportive of the management team reducing UCG’s expenses as much as possible to maintain a strong financial position in case the drought continues. Their wise decision making, balancing debt and equity, in years past has allowed them to make it through 2011 financially sound.
"The drought has put a hold on both our diversification and growth," Wilson said. "Fortunately, our board has done a good job making wise business decisions so we can financially stand it."
UCG has worked hard to provide a diverse set of marketing options for its growers to choose from. They have hired a financial manager, Tim Bynum, dedicated to educating growers on what marketing options they have and aiding them in deciding what best fits their needs. Whether they opt to participate in a pool, contract their acreage, or sell directly to merchants, UCG can help make it happen. The board agreed that this diversification has made a positive difference equaling several cents-per-pound on their selling price.
Wilson said this diversity in marketing allows UCG to meet each producer’s risk tolerance. He said some grower’s prefer more safety while others like to take a more aggressive approach, and Bynum can make sure to facilitate whichever route they prefer.
While a large portion of the gin’s cotton seed goes to PYCO, it also markets a percentage of the seed as well as its burrs and motes.
UCG has also diversified by providing crop insurance to its members. The board hired an agent conveniently housed at its office building.
"Our board is progressive in its thinking," Wilson said. "Risk management and diversification have moved us forward."
Wilson said the board keeps UCG’s debt as low as possible and in balance with equity. The co-op rotates its stock every three to five years, being careful to stay financially strong and keep its stock paid up.
"It is all about the grower/owner," Wilson said. "Whatever is the best for them is best for us."
The average grower/owner of UCG was reported to be around 55 years of age as of the co-op’s last survey, and while the board has seen a slight increase of young, new farmers the past three years, they remain concerned that the number of producer’s in their area is declining while the number of acres to be farmed remains the same. This is causing producers to be responsible for covering more acreage, resulting in more input costs.
"I never dreamed I would be farming as many acres as I am now," John David Dukatnik, UCG board member said. "Most of our farmers are older in age and will be retiring soon, while there are not many young ones coming back to farm. Those that do return will be taking on a large amount of acres and will need large loans."
Several of the board member’s own sons, including Dukatnik’s, have or will be returning to their family’s farm to become producers, making ensuring the future success of UCG even more important to the board. They are well aware that every aspect of the co-op must be well managed to thrive in the good years and survive those without rain. Through wise decision making they have been able to do this in the past, and by being progressive and diversified, there is no doubt they will continue to be successful.
Paul Wilson, General Manager
Paul began working at United Cotton Growers in 2000. Before working at UCG, he built and managed several gins in Georgia and Texas.