2013 Ginning Survey Shows Continuing Trends, Plus a Few Surprises

From Cotton Grower Magazine – August/September 2014

 

Rather than another “same song, second verse” scenario, the 2013 Cost of Ginning Cotton survey did provide a few surprises for the industry.

“The survey allows us to look at the entire industry from both a research and regulatory standpoint,” explained Tommy Valco, cotton technology transfer coordinator for USDA in Stoneville, MS. “It gives us insight into what’s going on and helps us better direct our ginning research activities.”

The 2013 results were based on 119 usable surveys from the Southeast, Mid-South, Southwest and West, representing roughly 21 percent of total U.S. production. And, in many ways, the survey confirmed several suspicions.

“In 2013, we ginned 12.5 million running bales of cotton,” said Valco. “That’s a very low number. And the number of gins, to no surprise, continued to drop. We registered 610 gins operating throughout the U.S. Cotton Belt last year, with a ginning average of 20,526 bales per gin.”

By comparison, 682 gins operated in 2011, with average production of 22,218 bales. In 2012, the gin number decreased to 671, but the ginning average increased to 25,000 bales per gin.

Variable operating costs based on five categories – bagging and ties, repairs, electrical costs, dryer fuel cost and labor (both seasonal and full time) – also showed expected increases over the last survey. On average, those operating costs totaled $24.88 per bale in 2013, up $4.00 per bale over survey numbers from 2010.

“Total variable costs went up quite a bit over the past three years,” pointed out Valco. “Repairs were up quite a bit thanks to a big season in 2012. A lot of that shows up in the survey numbers, and we just didn’t have the overall volume of bales to help reduce those costs. Labor costs also showed a good increase.”

Because of the small crop, the average ginning period dropped to 56 days in 2013, with hourly output measured at 27.2 bales per hour.

“On average, that’s a lot of cost that gins have to incur over a relatively short time period,” stated Valco.

So much for the givens. The surprises came from some unexpected numbers.

“When we conducted the 2010 ginning survey, very few people – maybe five percent – were using round modules,” reported Valco. “Now, nationwide, we’re up to 22.5 percent usage (50 percent in the Mid-South, 42 percent in the Southeast).”

The other survey surprise came in gin size. “Gins reporting 15,000 bales or less usually represent the lowest percentage nationally,” said Valco. “Now, 45 percent of the gins reporting were 15,000 bales or less. That represents the type of season we had in 2013 and also indicates that consolidation will likely continue as gins look at their economics and start to analyze where cotton production in their area is trending.”

Energy costs per bale also show variability from region to region, especially from gins handling stripper harvested cotton in the Southwest and roller gins in the West. Based on the survey findings, the USDA Ginning Lab is now working with several gins across the Cotton Belt to monitor total energy use and look for possible savings options.

Valco noted that the survey recognizes the gin-to-gin variability in equipment, arrangement and physical construction. But the constant is management. And he challenged ginners to look for ways to improve their bottom line by increasing capacity, volume or value; reducing labor and operating costs; and potentially adding new services to generate additional revenue.

“All things considered, our industry is doing a pretty good job,” he said. “We all know that as we increase volume, we can reduce annual costs and our overall per bale cost for labor. The more cotton that ginners can push through the gin – and the faster they can do it – will help their overall bottom line.”