From Chickens to Cotton: How Vertical Integration in Cotton Ginning Could Impact Land Prices in Texas

Posted by Richmond Frasier on Saturday, August 10th, 2019 at 2:02pm.

 

Pat Pilgrim knows a thing or two about scales of efficiency. Taking his father Bo Pilgrim's (of Pilgrim's Pride) model of vertical integration production from chicken farming to cotton ginning, Pat's PPF Gin in Cooper, Texas is bringing life back to the cotton production in the northeast land market region. 

Here's the big takeaway from the "Turning Soil, Northeast Texas Croplands Evolve" article from the Texas A&M Real Estate Center's Erin Kiella, John, Robinson, and Charles E. Gilliland:

 "Pilgrim's program offers contracted growers a predetermined price for cotton while providing planting seed, fertilizer, other chemical inputs, agronomic consulting, picking/hauling, ginning, and warehousing services. According to Texas A&M AgriLife planning budgets (agecoext.tamu.edu/resources/crop-livestock-budgets/), the most likely (least variable) of these input costs represents at least 50 percent of total cotton production costs traditionally paid by farmers. This represents a substantial sharing of the financial risk of cotton production. Pilgrim also selects the cotton variety planted each season, focusing on the needs of the end product."

And...

"Reflecting these agricultural production realities, land markets in the nine counties studied showed increased volatility in price and volume beginning in the 2000s (Figures 4 and 5). Although the region is heavily influenced by recreational land purchases from nearby metropolitan areas, those purchases are characterized by smaller acreage sold at higher per-acre values."

Check out the associated links below for access to the full article and other related topics.

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