Recently, a unique presentation was made by marine-cotton insurers to outgoing International Cotton Association President. Using a scale model fire extinguisher fitted with a metal plate “slip,” a salutation from Ecom’s marine cotton insurers was inscribed to the outgoing ICA President. The slip was given in the tradition of our marine market, where coverage is bound when 100% of the underwriters “scratch” (initial) the slip. In this case we also included as clause paramount: “Our Very Best Wishes.”
When Ferocious Fires Stunted Exports
Some of us remember back to Anton’s first job in Paraguay in 1977, when that country’s cotton export cotton volume consistently outgrew all available logistic support. Back then, ferocious fires at pre-shipment and port warehouses far too often punctuated the interest in the hand-picked and high-grade Paraguayan crop.
So when Anton began work at the Esteve gin located well outside of Asuncion, he sometimes found that wall-mounted fire extinguishers of this very same style were the only recourse available for warehouse fires. Insurers were justifiably interested in Anton’s progressive, hands-on approach to risk management; and as it turned out, we would not be disappointed.
In the 35 years since then, neighboring Brazil has become a cotton powerhouse, making tremendous strides in both the cotton quality and volume produced in the interiors of Mato Grosso and Bahia states.
It was in this arena – where the evolution of cotton “estiba” yards were needed to fit hand-in-glove with the opening of new Brazilian cotton frontiers – that Anton proved his leadership of the Ecom cotton group. His leadership included being our serious and steady partner in risk management.
New Brazilian Cotton Frontiers
We began with a basic estiba building block of 130 bales, and then both of our teams drew upon a combined loss experience of over 60 years.
Led by Anton, we arrived at a consensus over the many design factors, which ranged from clear space, drainage, water supply and hydrant spacing, just to name a few.
These factors would later constitute a standard for a highly protected estiba “super yard,” which can safely accommodate 330,000 bales of cotton. Underwriters were then lobbied for agreement. Since that approval in 2003, excellent results have validated the rating rationale applied to proper estiba yards. Rating is equivalent to traditional warehouses with massive construction and fully automated sprinkler systems.
The expansion of the Brazilian cotton crop has in no small part relied upon the success of these proper estiba yards as one of the key risk control factors, expanding finance to producers and stabilizing logistics to mills.
Who is your really, really good neighbor?
In fact, the fire-fighting resources of the Ecom estiba “super yards” were put to unexpected use some years ago when smoke and alarms sallied forth from a neighbor’s yard less than 1,000 meters away.
Ecom scrambled their own powered water tanker trucks and nitrogen foam units to save the less-well-prepared facility of their neighbor/competitor. This was no small favor, considering that at today’s prices, that neighbor’s full yard was on its way to becoming a total loss of over $125 million!
Today’s big picture
Today’s global cotton merchant must balance an ever-growing number of logistic commitments against competitive “cost to land” cotton prices needed for delivery to well-informed overseas mills. However, because merchants seem destined to carry inventories and finance risk within their forward book like never before, now is time for the type of hands-on cooperation that helps to secure the physical side of cotton risk.
Congratulations, Senhor Anton!