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UNITED STATES DEPARTMENT OF AGRICULTURE Bureau of Agricultural Economics - RATES FOR GINNING AND WRAPPING AMERICAN COTTON, AND RELATED DATA, SEASONS 1928-29 TO 1935-36 By J. W. Wright, Senior Agricultural Economist and W. B. Lanham, Senior Agricultural Economist Washington, D. C. January 1937

RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

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Page 1: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

UNITED STATES DEPARTMENT OF AGRICULTURE Bureau of Agricultural Economics

-

RATES FOR GINNING AND WRAPPING AMERICAN COTTON, AND RELATED DATA, SEASONS 1928-29 TO 1935-36

By J. W. Wright, Senior Agricultural Economist and W. B. Lanham, Senior Agricultural Economist

Washington, D. C. January 1937

Page 2: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary
Page 3: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

BATES FOR GI.NiiING AND vYPFING A1ERICAN COTTON, ABD RLATED DATA, SEASONS 192-29 TO 1935-36

By J. W. Wright, Senior Agricultural Economist, and I. B. Lanham, Senior Agricultural Economist

Contents

Page

Significance of ginning rates and facilities ...............1 Sources of data ............................................ 2 Customs and practices of assessing charges .................2 Rates for ginning and wrapping Amerian upland cotton ...... 3 Rates for ginning and wrapping American-Egyptian cotton .... Seed cotton required per bale of lint ...................... Capacity of gin equipment and volume of ginning ............10 Ownership of cotton gins ................................... 13 Summary.................................................... 17 Tables: Proportionate uce of specified systems of

assessing charges ........................... 19 Estimated avrage charges under specified

systems ....................................27 Rate conversion formulae ................................... 35

nificance of Ginning Rates and Facilities

Under the system of marketing raw cotton that is now most prevalent • throughout- the Cotton Belt, ginning is an item of direct cost to cotton growers

atd is an essential step in the prparetion of their product for market. For the most part, ginning is performed as a specialized comercia1 srvice. The

• instances in which gins are a prt of the farm or pintatioii equimet re relatively few and are limit'd to the larger cotton-producing units. For the Cotton Belt as a whole rlat1vely few gins are owned cooperatively by cotton grewers. In some areas cotton is sold in the eeed by growers, in which case ginning is for the account of the ginners or other parties who have purchased the seed cotton. As a general rule, however, the ginning of cotton in the United States is a public-service function. This being the case, the ginning facilities available and the rates charged for ginning and wrapping cotton are of special significance to growers as well cs to the cotton industry in general.

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This report is designed primErily to make available a series of data relative to rates charged by ginners for ginning and wrapping services during the seasons 1923-29 to 1935-36, inclusive. The rates at which ginning and related services can be performed on a profitable basis, depend primarily upon the equipment required cad the volume of ginning available per unit of gin equipment. The equipment required is influenced by the method of har-vesting used and the consequent condition of the seed cotton to be ginned. Policiea with respect to rates and services are influenced, to some extent, by type of gin ownership. Since customs and practices of assessing charges vary widely from one section of the Cotton Belt to another, the level of ginning rates in the various producing sections are not directly compaab1e. Thus an analysis of rates for ginning and wrapping cotton logically involvs a eonsiddration of such related subjects as customs and practices of assess-ing charges for these services, the types and capacity of equipment available, the volume of ginning available, the quantities and condition of seed cotton involved per unit of glint cotton and the ownership of the gins. Data concern-ing these related subjects have therefore been incorporated in this report.

Sources of Date.

Data relative to rates charged cotton growers for ginning and wrapping cotton have been collected by the Bureau of Agricultural Economics from ginners each year beginning with the season 1928-29. The data relating to the seasons 1928-29 to 1932-33, inclusive, were obtained in connection with a survey of gin equipment which included most of the gins throughout the Cotton Belt. Data for the seasons 1933_34 and 1935-36 are based on about a 10-percent sample of gins selected to provide a cross-section of the rate situation throughout the Cotton Belt. For the season 19314-35 the data collected on a sample basis were sup.emented by data collected by the field organization of the Agricultural Adjustment Administration. The data relating to gin ownership and ginning facilities are based on the survey of gin equipment previously referred to, which was made during the season 1931-32 and 1932-33. In certain instances data collected by the Bureau of the Census relating to the season 1935-36 have been used for purposes of comparison.

Customs and Practices of Assessing Charges

Customs and practices of assessing charges for ginning and wrapping cotton vary widely for different sections of the Cotton Belt. Data relative to the extent to which each system of assessing charges has been used during the period 1928-29 to 1935-36 are presented in tables 10 to 17 • page 19 to 26.

In the central and western sections of the Cotton Belt, ginning charges usually are assessed on the basis of weight of seed cotton and a separate charge is made for bagging and tiea required for wrapping the bales. This system of assessing charges is used exclusively in Oklahoma, Missouri, and New Mexico, and almost exclusively in Arizona and California.

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The rte per hundredweight of seed cotton depends, to some extent, upon whether the cotton was harvested by hand picking or by snpppinC or machine methods. Usur.11y, but not always, th:re is P differnti 1 in the rate between hFnd-picked cotton and cotton harvested by snapping, the rate being higher in the lttur c.se even though the number of hundredweight of seed cotton ginned per Ole of lint is greater. The reasons usually asincd for the difforontial.aro: (1) that more elaborate cleaning oquip-mont is required, (2) that the inning of that typo of cotton results in extra weu.r and tur.r on gin saws and other regular gin equipment, / and (3) that additional power is required. All of those increase the cost of providing ginning service for snapped cotton.

In most of the southeastern States it is customary to assess ginning chrgos rt a flat rate per bale which includes bagging and ties. Under this system, an extra charge usually is made for bales exceeding 500-pounds in weight.

Ginning charges in a few of the States are assesed on the basis of weight of ginned lint. This is the prevailing method of assessing ginning charos in Georgia and Louisiana and is used to a minor extent in other parts of the Cotton Belt. Under this system the bale wrappings are sometimes included in the charge. In other cases a separate charge is made for them.

The furnishing of ginning and wrapping services under the toll system (that is, in exchange for F. percentage of the seed cotton brought to the gin) is practiced to a. limited, extent in the southeastern States and to a lesser extent in some of the central cotton-producing States. The use of this method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary if they were to collect for their services. With the return of higher prices for cotton and particu-larly for cottonseed, the importance of this method has again declined.

Ginnin, and wrapping services are sometimes performed for cotton growers in exchange for the cottonseodwithout a specific evaluation of either item in terms of money. In actual practice, these services usually are paid for with the cottonseed but the services are charged for at scheduled rates and the cottonseed is sold to the ginner at a definite price per ton, any difference in amount between the two being made a cash transaction.

Rates for Ginning and Wrapping American Upland Cotton

Average rates charged for ginning in each of the cotton-producing States under the various systems of assessing chrrges for the seasons 1928-29 to 1935-36, inclusive, are presented in tablos 18 to 25 , page 27 to 34.

1/ Bennett, C. A., and Gerdes, F. L., Care end Mainlazzmea of Gin Saws and Ribs, U. S. Dpartment of Agriculture, Cir. 393, P. 20.

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14

In most of the States, several methods of assessing ginning and wrapping charges are used. In such cases, the method applicable in any given locality depends primarily on local custom. This situation complicates the comparison of the level of ginning rates in various sections. To make such comperisons it is first necessary to convert the rates, as assessed by the various .systoths, to a common base. This has been done and all rates have been converted to an equivalent rate for a 500-pound gross-weight bale for ginning and wrapping. 2/

Converted average charges for the entire Cotton Bolt for ginning and wrapping upland cotton declined from $5.96 per 500-pound gross-weight bale in 1928-29 to $14.12 in 1931-32. Since the season 1931-32, rates have increased gradually. They averaged $5.014 per bale during each of the seasons 19314_35 and 1935-36 (table i). In most instances, those averages represent a wide

Table 1. - Av.;rage farm prices of cotton, average ginning rates, and relative prices and rates, seasons 1928-29 to 1935-36

Relative (percentage Average rate

of 1928-29) - Average farm per 500-pound

Season : price per : bale for Farm price :Rate per 500- pound . i : ginning and of cotton :pound bale for

wrapping 2/ per pound :ginning and . - . :wrapping Cents Dollars : Percent Percent

1928-29 ........... 17.99 5.96 100.0 100.0

1929-30 ........... 16.79 5.72 93.3 96.0

1930-31 ........... 9.146 5.08 52.6 85.2

1931-32 ........... 5.66 ; 14.12 31.5 69.1

1932-33 ........... 6.52 14.25 : 36.2 71.3

1933-314 ........... 10.17 4.8o 56.5 80.5

19314-35 ........... 12.36 5.04 68.7 94.6

1935-36 __________ 11.10 5.014 61.7 814.6 / Annual avurage for the United States. Agriculturel Statistics, U. S. Department of Agriculture, 1936, table 98, p. 76. 2/ Annurl average for the United States. Compiled from data. obtained from cotton gins.

range in the rates actually charged by individual gins in the various producing sections. The trends in the level of ginning rates during the period studied have followed the general trends of farm prices of cotton but ginning rates have not fluctuated as widely as cotton Drices (fig. 1). 2/ The formulae used for making the conversion of the rates assessed under various systems, to a common base, that is, rate per 500-pound gross-weight bale. are given ornn-ire -- --

S

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hecverted. rat .'qr gimixg and wrapping upland cotton for e*.h. O

the cotton-producing States, as well as the average for all States, for each of the cotton seasons 192-29 to 193-6, inclusive, are given in table 2 and .,are shown graphically in figure 2.

In general, the rates have been higher in the central and western cotton-producing States than in the Southeast throughout the period. Account should be taken, however, of the fact that in most instances the service of ginning in the former group of States requires a larger investment in ginning equip-ment, particularly in the form of cleaners; that power requirements for operat-ing such equipment are considerably greater than for the simpler dystems of ginning equipment usually found in the Southeast; that maintenance costs on gin equipment are greater; and that wages and other items entering into costs of ginning are relatively higher than in the Southeast. The extra equipment permits of harvesting the cotton by methods that are materially cheaper than would otherwise be the case. / Furthermore, a considerable part of the bagging and ties used in the southeastern States are of secondhand materials, / which usually cost ginners somewhat less than the neW materials customarily used in other sections of the Cotton Belt.

In those parts of Arizona, Now Mexico, and nest Texas where pink boll worm control measures are in force, rates charged for ginning include the extra service of sterilizing all cottonseed by steam. In Oklahoma and New Mexico ginning rates are fixed by regulatory authority.

A thoroughly satisfactory comparison of costs to cotton growers for ginning and wrapping services must take into account not only relative costs of harvesting methods employed and the qurlity of bale covering materials used, but also the quality of the ginning service itself. Sometimes such items as prices paid. by ginners for cottonseed and cotton lint as well as other services must be considered..

Under certain competitive conditions ginnurs have adopted the practice of hauling the grower's seed cotton from the farm to the gin and have absorbed the cost of such hauling in the ginning rate. Usually in such cases growers who haul their own sued cotton to the gin have had. a. part of the ginning charge remitted. For the purposes of this study the rates used are based on the delivery of the seed cotton to the in by the grower and necessary adjust-ments in scheduled rates have been made accordingly.

3j Bennett, C. A., and Gerdes, F. L., 0-inning Cotton. U. S. Department of Agriculture, Farmers' Bulletin 179, pp. 12 24. / Wright, J. W., Baggings Used for Covering Cotton Bales. Bureau of Agri-cultural Economics, U. S.' Department of Agriculture. Preliminary Report. 1935. p. 6, table 3. (Mimeographed.)

Page 8: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

6

PERCENT1 I 1928 -29=100

IOO

Ginning rate

80

60

40

Farm price of cotton

1928-29 1929-30 1930-31 1931-32 1932-33 933-34 934-35 1935-36 S DEPARTMENT OF AGRICULTURE MEG 3205 BUREAU OF AGRICULTURAL ECONOMICS

FIGURE I.- GINNING RATES AND FARM PRICES OF COTTON (RELATIVE 1928-29), SEASONS 1928-29 TO 1935-36.

OUR ING THIS PERIOD AVERAGE GINNING RATES HAVE FOLLOWED THE GENERAL TRENDS OF FARM PRICES OF COTTON BUT GINNING RATES HAVE NOT FLUCTUATED AS WIDELY AS COTTON PRICES.

r

DOLLARS PER 500- LB. BALE

6

5

4

3

2

0 OKLA. N.MEX. TEX. MISS. TENN. FLA. GA. ALA.

MO. ARIZ. CALIF. ARK LA. VA. N.C. S.C.

U S DEPARTMENT OF AGRICULTURE MEG 3205 . BUREAU OF AGRICULTURAL ECONOMICS

FIGURE 2.- GINNING RATES: STATE AVERAGES, SEASONS 1928-29 10 1935-36.

THE LEVEL OF GINNING RATES IS RELATIVELY HIGHER IN THE STATES LOCATED IN THE WESTERN PART OF THE COTTON BELT THAN IN THE STATES LOCATED IN THE EASTERN PART OF THE BELT.

Page 9: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

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Page 10: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

Rates for Ginning and Wrapping American-jpt1an Cotton

Because of its long fiber, American-Erptian (Pima) cotton is ginned on roller gins as distinguished from the saw gins generally used for ginning upland cotton. Rates for ginning- American-Egyptian-cotton averaged $17.21 per 500-pound gross-weight bale during the seasons 1928-29 and 1929-30 (table 3). The average rate reached. the low point of $11.06 for the season 1931-32. During subsequent seasons the rate has gradually increased to $12.72, which was the average for the season 1935-36.

TWO 3. - Estimated average rates for ginning and wrapping American-Egyptian cotton s seasons 1928-29 to 1934-35

:Rate per hundred- :Rate per hundred- :PLato per 500-pound :weight of seed :weight of seed :gross-weight bale,

:cotton, including :cotton, not :including charge Season -charge for :including charge :for bagging and

:bagging and ties :for bagging and :ties :ties

Dollars Dollars : Dollars

1928-29 ............. . 0.90 17.21

1929-30 .............. .90 - 17.21

1930-31 .............: - 0.75 16.34

1931-32 ............. .50 11.06

1932-33 ............. .53 11.38

1933-34 ............. No 12.56

1934-35 ............. .60 12.50

1935-36 ............. - .60 12.72 Compiled in the Bureau of Agricultural Economics from data obtained from ginners,

Seed Cotton Required Per Bale of Lint

In those cases in which the system of assessing ginning charges is based on a rate per hundredweight of seed cotton, the actual cost to growers at a given rate for ginning a standard-weight bale of cotton lint depends upon the ginning outturn, or the number of pounds of coed cotton required to produce the 'bale of lint, as well as the rate charged..

The ratio of seed cotton to lint varies wid.oy for the various sections of the Cotton Belt. It depends primarily upon the variety of cotton grown and the quantity of extraneous material included with the seed. cotton. The latter is determined largely by the method of harvesting used. For hand-pickod

If

Page 11: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

cotton the average for all cotton-producing States during the season 19314-35 was 1,1423 pounds of seed cotton per 500-pound gross-weight bale (table 14). During the same season the average for snapped cotton was 1,972 pounds, for bollies 2,2142 pounds, and for sledded cotton 2,589 pounds. The proportions of the crop falling in the last three categories are relatively small in most cotton-producing States. The quantity of seed cotton required per 500-pound gross-weight bale averaged slightly less in the southeastern States than in other sections of the Cotton Bolt.

Table ii. - Estimated average number of pounds of seed cotton required per 500-pound gross-weight bale, by States, season 19314-35

State : Picked : Snapped

Bollies : Sledded

cotton--.: cotton : : cotton Pounds : Pounds Pounds Pounds

Alabama ................ 1,357 Arizona ...............: 1 3 1457 1/ - : 2 9 1145 - Arkansas ..............: 1,509 : 1,911 : 2,073 California ............: 1,328 : - :. 2,3314 Florida ...............: 1,14914 Georgia ................ 1,388 Louisiana ............. : 1,1450 - - - Mississippi ...........: 1,516. : 1,9143 Missouri ................ 1,605 2,121 : 2,53 - New Mexico ............: 1,3714 : - : 2,200 - North Carolina ......... l,3b9 Oklahoma ..............: 1,551 : 2,116 2,14114 : 2,529 South Carolina ........ . 1,1403 Tennessee ..............: 111452 : 1,871 - - Texas .................. 1,3714 : 1,902 : 2,185 : 2,678 Virginia ............... 1,368 - - -

United States .....: 1,423 : 1,972 : 2,2142 : 2,589 Compiled in the Bureau of Agricultural Economics from data collected by Agricultural Adjustment Administration. 1/ Amorican-Egyptian cotton 1,912. pounds.

The limited available information 5j indicates that the ratio of seed cotton to lint varies somewhat from year to year, so the above data should be considered as applicable primarily to the season 19314-35. It is believed, however, that for the period dovered in this study of ginning rates, those data are fairly satisfactory for the purposes of this analysis.

5j McWhorter, C. D., and Ballinger, R. A., Relative Economic Advantages of Harvesting Cotton by Picking and Snapping in Western Oklahoma. Oklahoma Experiment Station Bulletin 227, 1935, pp. 14 - 15.

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Capacity of Gin Equipment and Volume of Ginning

A comprehensive oppraisal of the adequacy of the facilities available for ginning cotton involves both quantitative and qualitative considerations./ In this study primary consideration is given to capacity of equipment. Ade-quacy, from the standpoint of quality of ginning service, is only an incidental part of this analysis.

As the basis for an analysis of gin capacity in relation to volume of cotton to be ginned, various units of gin equipment are available but none of them are entirely satisfactory. The usual method, and the simplest one, for estimating the adequacy of ginning equipment in a given area consists of a comparison of the number of ginning plants in the area with the number of bales of cotton to be ginned. Obviously, variations in the number of gin stands per ginning plant and the number, typo, diameter, and condition of gin saws per stc.nd make a compaTison of this nature somewhat unsatisfactory from the standpoint of determining adequacy of equipment in any given area. Other units of gin equipment avrilablo for this purpose are the gin stand and the gin saw. In either case, the number of bales to be ginned per unit of ginning equipment indicates, approximately, the extent to which a given area is supplied with ginning facilities. For this purpose the gin saw is perhaps the most satisfactory unit since most of the, gin saws now in use are of standard 12-inch diameter. Volume of ginning per gin plant, per gin stand, and per gin saw have been calculated, by States, for the season 1935-36 and arc presented in table 5.

Obviously the time factor is important in a. consideration of gin capacity in relation to volume of sinning, Unfortunately, data are not available as a basis for calculating volume per gin-saw hour or other com-bination units of time and equipment.

Average volume of ginning per unit of equipment was greatest in California, Arizona, New Mexico, and Missouri (fig. 3), In North Carolina, South Carolina, and Virginia, the volume of ginning per unit of equipment was relatively small. The situation in the latter group of States, as dis-closed by these data, is exaggerated to some extent because the proportion of idle plants is relatively large in those States. The small volume in Oklahoma and Texas is attributable largely to the fact that in those two States the cotton crop for the season to which these comparisons apply was much smaller than normal.

The qualitative aspect of ginning service, as well as the extent, merits some consideration in connection with this phase of the analysis. The available data are not adequ .to for determining definitely the extent to which relatively high ginning rates have, in actual practice, made it possible for ginners to maintain their equipment in a condition for high quality service: or. vice versa, the extent to which low rates are rosonsiblo for 6/ Bennett, C. A., and Gerdes, F. L., Ginning Cotton. U. S. Department of Agriculture, Farmers' Bulletin 174g, 1935, pp. 1 - 116.

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Table 5. - Cotton production, gin capacity, and average volume of ginning per gin plant, per gin stand, and per gin saw, by States, season 1935-36

Cotton : Gin equipment 2 Volume

unit of ginning per of equipment_

States : produc- : Gimiing : Gin per per :per

tion : : plants : stands saws :ginning :Plant _

:gin :stand

:gin :Saw _____

Bales 1/: Number: Number: Number :Bales 1/:Bales 1/:Bales 1/

Alabama ......... :1,061,314; 1,339 : 14,1434 ; 326,720; 793 : 239 : 3.25 Arizona ......... :116,31423': 144 14/ : 208 : 15,970: 2,6)4)4 : 559 : 7.2$ Arkansas ........: 857,156: 1,232 : 14,123 : 311,1450: 696 : 208 : 2.75 California ....... 239,8)48: 75 : 383 : 30,970: 3,198 : 618 : 7.74 Florida .........: 26,632: 61 : 135 : 9,610: 436 : 197 : 2.77 Georgia .........:1,062,526: 1,615 : 5,227 ; 330,300: 658 : 203 : 2.79 Louisiana .......: 556,288: 735 : 2,369 : 177,700: 757 : 235 : 3.13 Mississippi ..... :1,259,1482: 1,1406 : )4,6o : 3149,960: 896 : 2714 : 3.60 Missouri ........: 173,979: 158 : 538 : 111,810: 1,101 : 323 : 14.16 New Mexico ......: 71,835: 46 : 203 : 15,730: 1,562 : 3514 : 14.57 North Carolina 574,201: 1,199 : 3,248 : 233,5145: 1479 : 177 : 2.141 Oklahoma ........: 564,982: 914 : 14,073 : 307,1490: 618 : 139 : 1.84 South Carolina ..: 7)4)4,132: 1,1434 : 3,747 : 272,110: 519 : 199 : 2.73 Tennessee .......: 316,509: 1459 : 1,1490 : 111,860: 690 : 212 : .2.83 Texas ............ 2,960,7714: 3 9 564 :16,090 :1,200,980: 831 : lS4 : 2.147 Virginia ......... 27,246: 111 : 203 : 14,190: 2145 : 1314 : 1.92 U. S. Bureau of the Census. 1/ Equivalent 500-pound gross -weight bales. 2/ Includes idle as well as active gins. 31 Upland cotton only. 14/ Saw gins only.

lack of maintenance of equipment and consequent inferior service. However, when the level of ginning rates for the various cotton-producing States is compared with the percentage of rough-ginned cotton (as in fig. 14 and table 6)

• some relationship is indicated between level of rates and quality of ginning service. There is a tendency for the percentage of rough-ginned cotton to be high in those States where the level of ginning rates is relatively low. Other factors that may affect this relationship and that cannot be segregated are weather conditions prevailing during the harvesting and ginning season and staple length of cotton ginned. In general, weather conditions are more favorable from the standpoint of harvesting and ginning in those States that show a relatively small percentage of rough-ginned cotton. On the other hand, the longer staple grown in these States increases the difficulty of ginning.

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VOLUME PE GIN SAW

BALES)

7

6

5

4

3

2

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U S DEPARTMENT OF AGRICULTURE MEG 32056 BUREAU OF AGRICULTURAL ECONOMICS

FIGURE 3.- VOLUME OF GINNING PER GIN SAW: STATE AVERAGES, SEASON 1935-36.

WITH THE EXCEPTION OF TEXAS AND OKLAHOMA, BOTH OF WHICH HARVESTED UNUSUALLY SMALL COTTON CROPS FOR THE SEASON 1935-36, THE VOLUME or GINNING PER UNIT OF GIN EQUIPMENT WAS LARGEST IN THE STATES LOCATED IN THE WESTERN PART OF THE COTTON BELT.

12

I

GINNING RATES

(DOLLARS PER BALE)

6

5

PERCENT OF ROUGH

GINNED Ginning Iff Percent of rough

rates ginned cotton COTTON

24

: It

IIHMIIHIIII!MIIi;Ii nhrI,HIiuJEIuJ.duuut[IEIEL:

MO. N.MEX. ARIZ. Miss. LA. : FLA. I GA. ALA.

OKLA. TEX. ARK. CALIF. TENN. VA. N.C. S.C.

U.S DEPARTMENT OF AGRICULTURE MEG 32057 BUREAU OF AGRICULTURAL ECONOMICS

FIGURE 4.- GINNING RATES AND PERCENTAGE OF ROUGH-GINNED COTTON, 3-YEAR AVERAGE 1933-34 TO 1935-36.

THERE IS AN APPARENT TENDENCY FOR THE PERCENTAGE OF ROUGH —GINNED COTTON TO BE HIGH IN THOSE STATES WHERE THE LEVEL OF GINNING RATES 18 RELATIVELY LOW.

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Table 6. - Ginning rates and percentage of rough-ginned cotton, by Statos, 3-year average 1933-34 to 1935-36

:Averago ginning :Average percentage State :rate per 500-poun0of rough-ginned

:ros.-weight bale :cotton Dollars : Rank : Percent : Rank

Missouri ........... 6.70 : 1 7.97 : 9 Oklahoma ........... 6.11.5 : 2 10.08 : 7 Now Mexico 6.28 3 5.99 11 Texas .............: 6.12 : : 5.21 : 13 Arizona ........... . 5.31 : : 3,71 : 15 Arkansas ........... 5.18 b : 5.32 : 12 Mississippi 5.17 7 : 6.65 : 10 California ........: 4.91 : 8 : 2.56 : 16 Louisiana .........: 14.77 9 : 10.68 5 Tennessee .........: 14.66 10 14.144 :14 Florida. ....... 14.142 : 11 : 19.05 2 Virginia ........... 14.36 12 : 10.22 : 6 Georgia ............ 3.62 13 12.33 : 14 North Carolina ....: 3.55 14 : 8.35 8 Alabama ........... . 3.141 15 114.70 : 3 South Carolina . . ..: 1.17 : 16 : 1.39 Based on samples classed for estimating grade and staple of the crops.

Data relative to volume of ginning per ginning plant are available for the seasons 1928-29 to 1932-33 and arc given in table 7 in the form of a fre-quency distribution by volume intervals. Most of the ginning plants in Alabama, Arkansas, Florida, Georgia, Louisiana, North Carolina, South Caro-line, and Virginia ginned fewer than 1,000 bales per season during the period under consideration. Relatively few gins in these States as well as in Oklahoma ginned in excess of 2,000 bales per season. None of the gins operat-ing in Virginia during that period ginned as many as 2,000 bales per season. In Arizona, California, New Mexico, and Missouri very few gins had a volume smaller than 1,000 bales per season whereas a relatively large proportion of the ginning plants in those States had a volume of ginning in excess of 2,000 bales per, season.

Ownership of Cotton Gins

It is not possible to demonstrate by statistical means that rates charged for ginning service are directly affected by the typo of ownership of the gins, but it is obvious that policies with respect to rates and services are influenced to some extent by the related interests of gin owners. In somo instances, the rates actually charged are based not on costs of performing the service but on tho interests of the owners with respect to side-line activities such as the purchase of cottonseed and cotton lint or the ownership of the

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14

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Page 17: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

ME

15

For the Cotton Belt as a whole, almost one-half of the cotton gins are individually owited, about oAIe-fourth are owned by partnerships, one-fourth are owned by corporations, and a minor portion are owned cooperatively by cotton growers (table ). This general situation did not change materially from 1932 to 1935, the two years for which data relative to ownership are available.

The situation with respect to gin ownership within some of the individual cotton-producing States varies materially from that of the Cotton Belt as a whole. Almost three-fourths of the gins in Florida are individually owned. Individual ownership also predominates in Alabama, Georgia, South Carolina, and Virginia. In Mississippi and North Carolina individual ownership of gins increased substantially from 1932 to 1933- There are relatively few individually owned gins in Arizona, Calif 0mm, Oklahoma, and Missouri.

Almost one.-half of the gins in Tennessee are owned by partnerships. This type of ownership is less prevalent in other States. It increased somewhat between 1932 and 1935 in Arizona, Mississippi, Missouri, and New Mexico and decreased materially in Louisiana.

The corporation type of gin ownership predominates in Arizona, California, New Mexico, and Oklahoma. Relatively few gins are owned by corporations in the southeastern States. For the Cotton Belt as a whole this type of ownership declined somewhat in importance from 1932 to 1935-

From the standpoint of number of plants, the cooperative ownership of gins by cotton growers is of minor importance for the Cotton Belt as a whole, but this type of ownership is found to some extent in most of the cotton-producing States and is rather prevalent in the western States, particularly Oklahoma, New Mexico, Arizona, and Texas. Furthermore, the proportion of total ginnings handled by cooperatively owned gins is rela-tively important in some of those States because of the high average volume of ginning per plant under this type of ownership. For example, only about 11 percent of the gins in Oklahoma are cooperatively owned but the coopera-tive plants gin approximately 20 percent of the cotton grown in that State. For the Cotton Belt as a whole, the cooperative type of ownership declired slightly between 1932 to 1935. However, it is not known to ahat extent gins which In reality are owned cooperatively by cotton growers but vthh hiv been incorporated, are reported by the Bureau of the Census nc3e-: t!. of "corporation owned".

1/ Ballinger, R. A., and Soxman, R. C., Some Economic Problems of Cotton Gins in Oklahoma. Oklahoma Experiment Station Bulletin No. 231, 1936, table l(, p.27.

Page 18: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

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Page 19: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

17

Summary

The ginning of cotton is performed primarily as a commercial service. It is an essential step in the preparation of the cotton grower's product for market. As such, rates charged for ginning represent a significant item of cost to growers.

Customs and practices in assessing charges for ginning and wrapping cotton vary widely for different sections of the Cotton Belt. In the central and western sections, the charges usually are assessed on the basis of the weight of the seed cotton involved, a separate charge per bale being made for bagging and ties. The rate per hundredweight of seed cotton is usually higher for cotton harvested by snapping than for picked, cotton. It is customary in the Southeast to make a flat charge per bale for ginning and wrapping. The prevailing method of assessing ginning charges in Georgia and Louisiana is on the basis of weight of lint cotton. This system is used to a limited extent in other States in the central and eastern part of the Belt. The "toll" system of ginning is used to a very limited extent in some of the southeastern and central cotton-producing States.

In view of the diversity of methods of charging for the services of ginning and wrapping cotton, it is not feasible to compare the level of rates in different States or localities without first converting the rates charged under the various systems to a common base. In this study, rates have been converted to = equivalent rate for ginning and wrapping a 500-poimc1. gross-weight hale.

Averge charges for the entire Cotton Belt for ginning and wrapping upland (-,cttoA d.ecliiwd from $5.96 per 500-pound gross-weight bale in 192-29 to $4.12 in 131-2. Since then, rates have inorsaa4 gruJ.ly. They a7era;ed. *5.04 per bale during the seasons 1934-35 rnd l9 5-3b.

In general, rates have been higher in the central and western cotton-producing Stat.s than In te Southeast during the period for which data are available. Bitt the services performed by ginners are not entirely cosarable for the various areas.

Rates for ginning and wrapping American-rptian c.tton averaged $17.21 per 500-pod gross-weight bale for the season 1928-29 and 1929-30. The rate declined to $11.06 per halo for the season 1931-32. During later seasons the rates for ginning this type of cotton have gradually increased. The average rate was $12.2 for the season 1935-36.

The quantity of seed cotton required for a standard-weight bale of lint varies wi.e1y for the different sections of the Cotton Belt. It depends primarily upon the variety of cotton grown and the method of harvesting used. For hand-picked cotton the average for the season 1934-35 for all cotton-producing States was 1,423 pounds of seed cotton per 500-pound gross-weight bale. The average was slightly less in the southeastern States than for other sections of the Cotton Belt. The average for snapped cotton was 1,972 pounds, for bollies 2,242 pounds, and for sledded cotton 2,589 pounds.

Page 20: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

12

In general, the percentage of rough-ginned cotton ig higher in those States in which the level of ginning rates is relatively low. It is not known to what extent this situation is attributable to made ate or poorly maintained gin equipment, to weather conditions, or to other factors.

For the Cotton Belt as a whole approximately one-half the cotton gins are individually owned, about one-fourth are owned by partnerships, one-fourth are owned by corporations, and a relatively few are owned cooperatively by.cotton growers. The individual typo of ownership predominates in the Southeast and the corporation type in some of the western States, but in other sections of the Cotton Belt there is an absence of any definite pattern with respect to gin ownership. The cooprativo type of gin ownership is found to a limited oxtcnt in most of the cotton-producing States but is more prevalent in Oklahoma, Now Mexico, Arizona, and Texas than in other States.

Page 21: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

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40

Page 37: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary

35

Rate 0onveion Fotzulae

Formulae for conversion of charges for ginning and wrapping cotton, assessed by various systems, to a common base; that is, rate per 500-pound gross-weight bale

System of assessing charge Formula

Per bale including bagging and ties .......R = 500 r

Per bale not including bagging and ties ..: R = 500 (r +bj

4 Per hundredweight seed cotton including

bagging and ties .......................R

Per hundredweight seed cotton not including bagging and ties ............: R = r1N + b

Per hundredweight lint cotton including bagging and. ties ......................: R 5r2

Per hundredweight lint cotton not including bging and tLes ............: R = 5r2+ b

Seed cotton toll including bagging and. ties .................................. =

[} (5.)3

Seed cotton toll not including bagging and ties ..............................: R 4] [p(5 -Q)]+b

IM

Percent of cottonseed given for ginning including bagging and ties : R

PS n - - 17]}

[ {( ............ 20

B = rate for ginning and wrapping per 500-pound gross-weight bale. r = rate per running bale.

rate per hundredweight seed cotton. r2 = rate per hundredweight lint cotton. W = average weight of bales. b = separate charge for bagging and ties. N= number of hundredweight of seed cotton required for a 500-pound gross-weight

bale S a number of pounds of seed ctton required for a 500-pound gross-weight bale.

t pounds toll per hundredweight seed. cotton. P State average farm price per pound for cottonseed, period. September to

December, inclusive. p State average farm price of cotton during months of September to December,

inclusive. S rn Percent of seed cotton given for ginning and wrapping.

Page 38: RATES FOR GINNING AND WRAPPING AMERICAN COTTON, … · method of assessing charges increased materially during the depression years, because in many instances ginners found it necessary