Case Study: Punkin Center Gins
Arbol’s Area Yield Program (AYP) is Already Changing Lives and Saving Businesses
“…the sixty-six hundred bales we ginned was just about enough to pay the light bill…with very little cotton there was no income so this (settlement from Arbol) was going to be a large chunk of the income that comes in for my bank this year.”
Al Crisp first started working at a cotton gin at the age of fourteen in southern Texas at the Smith Gin COOP in Odem. He immediately became hooked on cotton. After hearing how big cotton was in West Texas, Al moved to Lubbock after finishing college to take a job with the Texas Cotton Ginners Association. Shortly after, he was managing three gins as a plant manager for Odonnell COOP.
In 1999 when Al was twenty-five years old, he bought Punkin Center Gins. Today, he runs the business alongside his wife Kasha. Punkin Center Gins is a family-owned and operated cotton gin and processing facility located in Lamesa, Texas. The business itself was established nearly a century ago in 1926. Punkin Center refines cotton into products like cotton seed, cotton mote, and five-hundred pound bales of cotton.
Cotton is at the heart of every cotton gin’s success. Simply put, a cotton gin can’t prosper financially without cotton to process.
Al heard about Arbol’s Area Yield Program (AYP) for cotton after several consecutive challenging years for cotton in his area due to weather.
“We had had several bad years back-to-back-back, and I was worried we weren’t going to have a crop,” he explained.
To establish a safety net for his business as protection against another missed crop, Al enrolled Punkin Center Gins in Arbol’s first-of-a-kind Area Yield Program for cotton. Arbol’s Cotton Yield Program leverages independent climate data from dClimate and smart contracts to provide protection for businesses in the cotton industry against yield losses.
Having key pieces of risk infrastructure in place, like insurance and parametric protection is critical for agribusinesses because of the adversity caused by weather. Without risk management products in place, even the most successful agribusinesses can suffer.
John Coleman, Arbol’s Head of Structuring, added: “We are proud of Al’s decision to enroll in our Area Yield Program for Cotton and thrilled to offer a product that literally saved his business. The financial threats of weather are real and growing for millions of farmers but businesses can transfer these risks using simple, easy-to-understand products like Arbol’s Area Yield Programs.”
Businesses like Punkin Center can take out a policy covering specific counties, and when the applicable dataset indicates cotton yields are below the elected trigger, an automatic, rapid payout is triggered. AYP is backed by tamper-proof U.S. Department of Agriculture data from dClimate, the first decentralized network for climate data and Arbol’s exclusive source for cleaned, standardized, and independent climate and weather data. Arbol’s Area Yield Programs allow gin operators and other cotton businesses to get paid quickly and objectively based on independent data as a hedge against bad weather impacting yield.
According to Al, Punkin Center only processed sixty-six hundred bales of cotton last year. To put that in perspective, that represents only enough cotton for just a little bit over a week’s worth of ginning during a normal year.
“When you get down to it, the sixty-six hundred bales we ginned was just about enough to pay the light bill,” he added. “And so with very little cotton there was no income so this (the settlement from Arbol) was going to be a large chunk of the income that comes in for my bank this year.”
Al remarked that a program like this has never been made available before: “This is something that hasn’t been offered before since I’ve been in this business. And so I saw how the insurance programs helped the farmers, and so I thought it would be wise to look into that, and it turned out it was the right idea.”
“It looked like all of the signs were pointing towards us having some trouble with another missed crop, and I don’t think I could have afforded another missed crop.”
He added: “I mean it was something that is going to end up saving my business.”
To learn more about Arbol’s parametric protection products and programs, visit our website or reach out to us directly at info@arbolmarket.com to learn more about coverage options for your business.
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