Delta Business Journal
Hank Reichle: Improving U.S. cotton demand as President and CEO of Staplcotn
By Becky Gillette
Henry N. “Hank” Reichle worked his way up through the ranks at Staplcotn, the nation’s largest and oldest cotton producer’s cooperative, for fourteen years before he was chosen to become President and CEO in 2018. He was hired in 2004 in a dual role in marketing and accounting when Staplcotn was handling the highest volume it ever had, selling 4 million bales of cotton per year.
Volume was up, but headwinds were building. The cotton producers who own Staplcotn were seeing their market change as the amount of cotton being used by spinners in the U.S. was shrinking as the textile industry continued offshoring.
“Staplcotn had to make a choice to either focus more on selling directly into the export market or rely on selling a significant portion of its production in the spot market to other cotton shippers,” says Reichle. “The greatest value for its members would come with a greater focus on exports, so that is what Staplcotn did.”
Within a year and a half, he was assigned full-time duties in marketing and was tasked with increasing the organization’s export sales.
“Selling Staplcotn was not hard,” says Reichle. “Executing export sales is more manual than domestic shipments. We grew our export sales rapidly, more than double in two years, but excellent management in our sales operations department and warehouse division meant we never missed a beat and became more broadly known around the world as a reliable supplier with good quality and volume.”
U.S. cotton production is lower now than it was when Reichle began his cotton career. Reichle says anybody who knows anything about agriculture right now, specifically row crops like soybeans, corn, cotton and rice, also knows all of the crops are a challenge for profitability right now.
Why is that? Reichle points to several factors: The cost of producing crops is much higher than just five years ago. The overall inflation experienced in the U.S. has been exacerbated in farming. At the same time, the price for row crop commodities has fallen. And production in other countries—particularly Brazil and Argentina–has seen a huge expansion at the same time that world demand is not growing as fast.
“China and other emerging market economies are not growing as fast as they were more than a decade or two ago,” says Reichle. “Worldwide supply has increased faster than demand. That is not specific to just one crop but soybeans, corn and cotton, in particular. Brazil has brought in thirty-seven million more soybean acres in just ten years. That is the equivalent to about three Iowas in terms of new production. Iowa is one of top producers of soybeans in the U.S. The vast majority of soybeans in Brazil come from areas where there are ‘safrinha’ (double crops). When they bring in a new soybean acre, they bring in other crops, too, mostly corn and cotton. Specifically for cotton, during those same ten years, the cotton acreage in Brazil increased 120 percent. Cotton acres more than doubled.”
Brazilian agriculture also has enjoyed the advantage of heavy investment to build the infrastructure to get crops to export markets easily.
As geopolitical tensions between the U.S. and China have been growing, China has turned from the U.S. to purchase more commodities from Brazil. Brazil recognized that and increased the pace of new production to meet the opportunities they saw including in China.
“That puts us in a position across all U.S. agriculture to realize we are in a different supply and demand climate than we were over the past twenty years,” says Reichle. “Each ag commodity is going to have to figure out how it is going to compete when there is a less stable relationship with China and increased Southern Hemisphere supply. Hopefully that changes, but it is not very stable now because China has put tariffs on U.S. cotton in retaliation for the tariffs the U.S. has put on Chinese products.”
The solution is to channel more of the agricultural goods produced in the U.S. back into the country and with close trading allies. One prior, successful example of that is that about twenty years ago, the U.S. started encouraging ethanol production from corn. The ethanol that is mainly blended into gasoline creates a better market for corn while promoting energy independence.
“That policy leverages the collective consumer purchasing power of the largest economy in the world for its farmers and the environment benefits too,” says Reichle. “For U.S. cotton, we need to capture a greater share of our retail demand for apparel, home textiles, and consumer products. Unfortunately, the U.S. doesn’t have the ability today to fully assemble a lot of the finished apparel and textile products sold to U.S. consumers. Sen. Cindy Hyde-Smith has introduced the Buying American Cotton Act which would provide incentives for manufacturers in other countries to purchase U.S. raw cotton or U.S. cotton yarn and use it in products that are headed for retail back in the U.S. The handler of the final good that is ready for sale would receive the benefit. In order to take advantage of the benefit, they would ensure their supply chain uses U.S. cotton rather than just cotton from anywhere.”
The bill has been introduced in the U.S. Senate and is expected to be introduced soon in the U.S. House.
“This is our industry’s number one priority and Staplcotn will do our part to try to bring this bill into law,” says Reichle. “There is still a lot of work to do, but I do think it will happen at some point. We are cautiously optimistic. It will be a game changer for Southern U.S. agriculture and textile manufacturing when it passes. In many places, cotton is the best crop to grow, and it is a good rotation crop, especially for peanuts. Cotton is very important to the entire Southern agronomic situation and our yarn-spinning mills who are under intense competitive pressures.”
Another thing the incentives could do is reduce the price gap between natural cotton and synthetic polyester. Polyester is cheaper now, but that difference would change with these incentives.
Stanford Medicine reports that public concerns over the health effects of microplastics are growing. “In the past year alone, headlines have sounded the alarm about particles in tea bags, seafood, meat and bottled water,” it stated. “Scientists have estimated that adults ingest the equivalent of one credit card per week in microplastics.”
“People are coming to realize we have a plastics’ issue in this world,” says Reichle. “Polyester is plastic. That is mainly what is on the store shelves. People are becoming more interested in natural, biodegradable products such as cotton.”
Reichle travels a lot to meet with producers, textile mill customers, industry advocacy groups and governmental officials in his job. While the work is challenging, he considers himself fortunate to do it. Reichle credits his predecessors in the current job, Woods Eastland and Meredith Allen, plus former Chairman of the Board Mike Sturdivant, with mentorship and giving him the opportunity to run Staplcotn.
Reichle was born and reared in Columbus. After graduating from the University of Mississippi with a Bachelor of Accountancy degree, his first job as an auditor with Ernst & Young gave him exposure to a few companies that dealt with commodities. He found cotton trading very interesting. He then went to work with what was then a cotton trading startup, The Seam.
“I went there in 2001, worked there for a few years, gained a lot of exposure and was fortunate to work with a lot of smart people,” says Reichle. “After a few years, I talked to Staplcotn to see if there were any jobs in Greenwood. I was interested in living in a smaller town in Mississippi. At that time, Staplcotn was growing each year and needed another person.”
“Having a brain that works in numbers is a great asset in the cotton business,” says Eastland. “He was a CPA. When you are using the future’s market, it all boils down to numbers. Hank has a unique combination of personality and intelligence. It is very important to have that combination. That is in addition to his leadership personality that serves him well as head of Staplcotn. He has a great reputation with the industry. He works very hard at Staplcotn, which is very fortunate to have him.”
“Hank’s ability to lead Staplcotn in these very complex and rapidly changing times is unmatched,” says Allen. “Our farmers are very fortunate to have Hank at the helm of Staplcotn, as well as in leadership positions throughout the cotton industry. He is also well respected in Washington D.C. and is a great advocate for U.S. agriculture.”
Reichle says he is fortunate to work with a great team, and that he couldn’t do the job without the support of his board, executive team and staff. “I have a lot of help; a lot of people make me look good.” he says.
Another top Delta ag leader who admires Reichle’s work is Delta Council President, Clint Dunn. Dunn says, as CEO of Staplcotn, Reichle brings extensive experience from his long-standing career in the cotton industry.
“He manages the company with efficiency and effectiveness, guiding both his executive team and the organization in consistently prioritizing the interests of producers,” says Dunn. “Hank is dedicated to creating value for growers through participation in programs like the U.S. Cotton Trust Protocol, Regen-Agri, and the Better Cotton Initiative. By putting growers first, he offers crucial support during the cotton industry’s current challenges.
“As a leader in the industry and key proponent of the Buying American Cotton Act, Hank and his team have spent countless hours advocating on behalf of the industry,” says Dunn.
Reichle is currently the National Cotton Council cooperative vice-president and is a past-president of Cotton Council International. He also serves as the current Chair of the Memphis Branch of the St. Louis Federal Reserve Bank board and as a director of Delta Council. Ag-related boards he serves on include The Seam, the U.S. Cotton Trust Protocol, AMCOT, Wildwood Cotton Technologies, and the National Council of Farmer Cooperatives. He and his wife, Merritt, live in Greenwood and have three sons.