Printer Friendly

Principle of verticality: controlling product from the cotton field to the gin propels the harvest of bigger profits.

CHARLES "BOE" ADAMS left the sprawling cotton patch that categorized his Mississippi County home to ply his trade in the insurance business.

In that field, Adams made a fortune over several decades before retiring as a top executive with the A.L. Williams Co. in Atlanta.

He returned to Leachville with ideas of "vertically integrating" a large-scale cotton operation by controlling production from the fields to the gin.

Making money as the product moves up the processing chain is the beauty of the integration strategy. Toward that end, Adams built what is described as the world's highest-capacity cotton gin.

The project, which processes 63,000 acres of cotton in northeast Arkansas and southeast Missouri, topped $8 million in capital investment.

Construction began in October 1991 and was completed in time for the 1992 harvest, when the facility ginned 123,000 bales of cotton.

The company is in the process of building an 880,000-SF cottonseed storage facility. Adams has scouted out the idea of developing a mill for producing cottonseed oil.

"We've talked about it and done some research, but that's about the extent of it," says Ronnie Kennett, vice president of land management with Adams Land Co.

That type of project would require outside investors, and Adams is examining other high-dollar processing opportunities, too.

Adams also is looking at a local spinning mill, a project valued at upwards of $50 million. Such a venture is deeper than he can bear to reach in his pocket alone.

This facility would produce an estimated savings of $30 per bale produced by his gin just on handling and transportation costs alone.

The gin project preceded Adams' moving to Leachville, where he built a house as big as the downtown Little Rock post office. At least, that's the measuring stick used by some.

Adams began moving his money home in 1985 after buying the B.C. Land Co., which refers to Boynton Crossover.

The community, like the railroad that once crossed through it, is gone. At its peak, the 68-year-old company owned 65,000 acres of farmland when John Hoyt was at the wheel.

Adams bought 27,000 acres of cotton, leased to farmers that would feed his ginning operation. In one big multimillion-dollar transaction, Adams became one of the largest farmland owners in Arkansas.

Adams Land Co. quickly joined the rank of the agri-elite in terms of land ownership in Arkansas--names like Lee Wilson & Co. in eastern Mississippi County, the Pugh and de Yampert/Currie families in western Ashley County, Tiller & Co. in eastern Drew County and E. Ritter & Co. of eastern Poinsett County.

Another Vertical Endeavor

Mark Shelton is well-acquainted with profit potential of vertical integration. Shelton runs Barnett Farms, with thousands of acres of Jefferson County farmland north of the Arkansas River.

In addition to farming cotton, Shelton has interests in ginning cotton, warehousing cotton and milling cottonseed oil.

"For cotton, we're vertically oriented," Shelton says. "For grain production, we work with Riceland Foods."

Shelton owns the Wabbaseka Gin Co. with partner Sonny Freeman. They are also part of a 10-member group of farmers and investors banded together to finance the Arkansas Cotton Warehouse Co.

The 352,000-SF storage facility in Altheimer, which holds raw bales for shipment to the gin and processed lint for use by the textile mill, is now expanding to 400,000 SF.

But the highest and most expensive rung in Shelton's vertical operation is a $15 million cottonseed oil mill, reportedly the first new one built from the ground up in America during the past 50 years.

Shelton is among a group of 45 investors from southeast Arkansas and north Louisiana backing the Planters Cotton Oil Mill in Pine Bluff.

The first run of cottonseed oil is expected in October. The new plant will be capable of processing more than 300,000 tons of product.

Shelton first became involved with oil production 15 years ago as part of the old Planters oil mill facility purchase. The relatively healthy oil is in demand for blending with other oils by large outfits like Nabisco Brands Inc., Frito-Lay Inc. and Riceland Foods Inc.

"Producing food and fiber, we've got to integrate our operations," Shelton says. "It's the only way to survive.
Arkansas Farm Commodities
Ranked by Value of 1992 Production(*)
 1. All Poultry $2,000,254
 Broilers 1,529,660
 Eggs 264,974
 Turkeys 196,650
 Farm chickens 8,970
 2. Soybeans 583,968
 3. Cotton and Cottonseed 583,968
 4. Rice 503,242
 5. Cattle and Calves 342,141
 6. Hay 138,342
 7. Wheat 136,850
 8. Hogs and Pigs 120,556
 9. Milk 109,393
10. Grain Sorghum 66,994
* All figures in thousands.


"Generally speaking, the cost of production is more than we can sell our crops for. By getting into processing and other things, we start picking up the middleman's money, so to speak."

After ginning, the seeds also are sold by the train car and barge load for feed. Cottonseed, high in protein, is a favorite among dairy producers.

Likewise, cotton hulls are shipped out for use in feed, fertilizer and other products.

Cottonseeds destined for an appointment with the oil mill crusher are reginned to remove the remaining lint, which is baled and sold.

The next step in further integrating cotton operations in Arkansas is a spinning facility to convert lint into textile fiber. Reports are circling that an unidentified group has narrowed its choice for a new plant to Texas and Arkansas.

"Boe" Adams is among those waiting to see if that historical event materializes. Adams will begin drumming up support for a consortium effort if the project, like others before it, bypasses the state.
COPYRIGHT 1993 Journal Publishing, Inc.
No portion of this article can be reproduced without the express written permission from the copyright holder.
Copyright 1993 Gale, Cengage Learning. All rights reserved.

Article Details
Printer friendly Cite/link Email Feedback
Author:Waldon, George
Publication:Arkansas Business
Date:May 31, 1993
Words:945
Previous Article:Country contenders: KDDK poses first real threat to KSSN's solid grip.
Next Article:Fat of the land: future lean for appreciation of East Arkansas cropland.
Topics:


Related Articles
Egypt: king cotton revives.
AT CLOSING NEWS.
UNRAVELING THE COTTON INDUSTRY.
The Beltwide Cotton Conferences: global champion of cotton technology transfer.
Cotton: the huge moral issue.

Terms of use | Copyright © 2016 Farlex, Inc. | Feedback | For webmasters