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In order to make their gins more cost efficient, gin managers The cost for seed cotton insurance is about $.50/bale. There
compare their component costs to industry averages. Also, are also other costs such as office expense, travel,
potential gin investors use cost estimates to help determine telephone, etc. which must be included. Thus, $3.00/bale
the economic feasibility of purchasing ginning systems. was added as miscellaneous costs.
Variable costs from 221 gins for the 1997 crop were
determined by survey and grouped according to cotton Any costs associated with transporting seed cotton to the
production region and according to gin capacity. Fixed gin are not included in these estimates. Independent studies
costs were estimated by using a traditional economic model. indicate that seed cotton transportation costs can add
Straight line depreciation over useful lives of 10 and 20 significantly to ginning costs, and these costs should be
years and a 10 percent annual interest rate were assumed. included in any economic feasibility study.
Property taxes, insurance, and miscellaneous costs were
also included. The cost of seed cotton transportation, which Fixed Costs
gins incur in most areas, are not included in these estimates.
Fixed costs are about the same regardless of how much the
Introduction gin is used. They include depreciation, interest on
investment, taxes, insurance, and salaries for permanent
To be successful, any business must keep costs low. A employees.
good way for a business manager to analyze costs is to
compare each cost component to similar businesses. Also, Depreciation is a large component of the cost of ginning
investors who are considering purchasing an existing gin, cotton. The useful life of new gin machinery should be at
erecting a new or used system, or significantly increasing least 20 years. The useful life of a used gin may be no more
the capacity of an existing gin need estimates of operating than 10 years. Thus, costs are estimated for both 10 year
costs. The total cost per bale for ginning cotton varies and 20 year useful lives. In each case, a salvage value of 10
widely with the total investment, annual volume, interest percent of the initial investment is assumed. Also, annual
rates, labor costs, energy costs, etc. interest costs of 10 percent of the remaining value are
calculated and then averaged over the life of the machinery.
Variable Costs
From previous surveys and informal validation, annual
A survey of actual variable costs from active cotton gins property taxes and insurance on the machinery and
was conducted following the 1997 crop. A total of 221 gins buildings combined are estimated at 1.0 percent of the initial
investment.
419
staff normally varies with the total investment in the gin. 2. Anthony, W. Stanley and William Mayfield, 1984.
Estimates of fixed labor and management costs are included Influence of Bale Volume on Ginning Costs.
in the total costs. Proceedings of Beltwide Cotton Production Research
Conferences, National Cotton Council, Memphis, TN.
Total Costs 3. Wolfe, Wesley, O. A. Cleveland, Earl A. Stennis, and
Craig L. Slay, 1989. GINMODEL: An Economic-
The estimated total cost of operating a cotton gin (excluding Engineering Simulation of Cotton Ginning Costs.
seed cotton transportation costs) are presented in Tables 14, Mississippi State University, Mississippi Agricultural
15 and 16. and Forestry Equipment Station, Technical Bulletin No.
166, Mississippi State, MS.
Obviously the total cost per bale of operating a cotton gin 4. Mayfield, William, 1992. Cost of Ginning Cotton.
decreases with higher annual volumes. However, this Proceedings of Beltwide Cotton Conferences. Pages
incremented decrease in cost becomes smaller at higher 1406-1407.
annual volumes. For example, consider the $2.0 million 5. Mayfield, William, Herbert Willcutt, and Roy Childress,
investment, Southeast gin, 20 year life. With an annual 1996. Cost of Ginning Cotton. Proc. of Beltwide Cotton
volume of 10,000 bales, the estimated cost is $55.17 per Prod. Res. Conf. PP.1609-1618.
bale (Table 15). If the volume increases to 12,000 bales, the 6. To, S. D. Filip and Herbert Willcutt, 1998. Gin Model
cost decreased $5.36 to $49.81 per bale. However, the with Windows-95, a Technology Update. Proc. of
difference in cost between 34,000 and 36,000 bales per year Beltwide Cotton Prod. Res. Conf. PP 1720-1722.
is only $.52 per bale.
References
420
Table 1. Cotton ginning cost survey for Southeast (1997) - 15 or less bales/hr
Bales Average Drier Drier Fuel Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) ($/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($/Bale)
1 2,163 9 -- 3.31 -- 2.29 9.76 6.19 6.09
2 1,071 5 -- 3.78 L 0.68 8.35 2.92 8.64
3 5,471 11.5 52.8 3.93 N 0.47 10.99 3.25 1.37
4 5,940 12.5 61.8 4.13 N 1.94 8.70 4.17 3.21
5 6,060 13.5 -- -- N 0.51 9.07 3.23 1.32
Table 2. Cotton ginning cost survey for Southeast (1997) - 16-24 bales/hr
Bales Average Drier Drier Fuel Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) ($/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($/Bale)
6 11,166 18 4 2.80 L 0.51 10.22 3.15 4.48
8 12,619 16 37.8 2.38 L 1.16 8.17 3.15 3.96
10 13.000 22 33.3 2.23 -- 0.72 8.89 2.80 7.00
12 15,249 18 41.8 2.47 N 0.95 7.90 3.80 2.62
13 16,000 16 -- 5.36 -- 1.05 8.44 4.23 4.57
Table 3. Cotton ginning cost survey for Southeast (1997) - 25 and above bales/hr
Bales Average Drier Drier Fuel Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) ($/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($/Bale)
7 12,000 30 38.1 2.53 L 1.03 8.75 3.00 3.50
20 22,326 28 42.4 2.78 N 1.04 9.41 2.50 4.59
21 23,535 36 37.2 2.37 L 0.56 9.31 3.00 3.19
23 25,542 25 40.2 2.13 L 1.45 7.53 2.95 0.44
25 30,086 27 -- 2.23 -- 0.62 4.59 2.86 2.49
421
Table 4. Cotton ginning cost survey for Mid-South (1997) - 15 or less bales/hr
Bales Average Drier Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Drier Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) ($/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($/Bale)
1 6,262 7.0 43.0 2.71 N 1.30 12.35 3.50 4.72
7 12,775 12.0 32.2 1.28 N 1.16 9.94 3.38 2.33
8 9,402 14.0 -- 5.24 N 2.33 8.40 1.441 4.73
10 5,172 14.0 48.9 5.38 N 1.64 9.85 1.771 1.84
12 18,319 13.0 -- -- N 0.83 8.38 -- 1.20
Table 5. Cotton ginning cost survey for Mid-South (1997) - 16-24 bales/hr
Bales Average Drier Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Drier Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) ($/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($/Bale)
2 14,098 19.3 41.0 3.12 N 0.82 8.60 3.25 4.83
4 16,218 18.0 36.5 2.55 N 0.68 8.85 3.02 5.72
5 24,829 21.0 37.2 3.56 N 1.15 5.64 2.95 7.05
6 22,362 20.0 36.7 3.64 N 1.18 10.90 2.80 5.90
9 21,769 20.0 43.0 3.58 N 0.52 4.59 3.00 8.54
422
Table 6. Cotton ginning cost survey for Mid-South (1997) - 25 or more bales/hr
Bales Average Drier Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Drier Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) ($/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($/Bale)
3 21,385 33.0 51.9 4.03 N 0.72 7.46 1.511 3.71
15 46,193 32.0 37.2 3.55 L 1.35 6.55 4.06 2.90
19 34,746 36.0 40.3 3.79 L 1.01 7.88 1.631 5.02
20 21,473 26.0 51.3 3.79 L 1.16 5.30 -- 2.84
22 30,099 29.0 50.0 5.92 L 0.50 3.10 2.75 3.19
423
Table 7. Cotton ginning cost survey for Southwest (1997) - 15 or less bales/hr
Bales Average Drier Drier Fuel Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) ($/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($/Bale)
1 1,071 12 -- -- N 1.49 7.46 3.90 1.87
2 1,464 10 46.2 7.13 N 1.29 16.35 5.00 8.20
3 1,685 13 52.5 4.24 N 0.74 5.53 3.90 3.33
4 2,861 8 36.9 4.87 N 0.39 16.46 4.04 6.25
5 3,003 12 30.9 4.02 L 0.51 9.07 3.23 1.32
424
Table 8. Cotton ginning cost survey for Southwest (1997) - 16-24 bales/hr
Bales Average Drier Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Drier Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) ($/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($Bale)
24 7,848 16 53.4 4.14 -- 0.96 6.52 3.60 7.52
30 9,527 17 40.5 2.58 N 0.99 6.30 2.86 2.57
32 9,728 17 49.7 4.08 N 0.57 9.63 3.82 8.50
33 9,908 18 51.7 4.19 N 0.59 8.23 3.50 4.55
41 11,728 18 33.7 2.42 L 0.55 7.12 4.25 2.34
Table 9. Cotton ginning cost survey for Southwest (1997) - 25 or more bales/hr
Bales Average Drier Drier Fuel Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) (KWH/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($/Bale)
23 7,464 28 50.2 3.80 L 0.48 4.04 3.83 3.83
51 16,561 25 33.8 2.52 L 2.06 5.13 -- --
59 20,049 27 34.8 2.05 N 0.69 6.89 3.90 6.47
60 20,130 40 35.5 2.50 N 0.22 6.40 3.75 6.22
63 21,404 31 29.8 2.34 L 2.21 7.66 3.35 2.07
Table 10. Cotton ginning cost survey for California (1997) - 15 or less bales/hr
Bales Average Drier Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Drier Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) ($/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($/Bale)
4 5,586 14 52.8 6.64 L 1.59 12.73 2.95 4.34
7 18,988 10 43.6 4.50 N 0.74 5.79 3.26 5.37
8 11,708 10 55.5 4.54 N 0.59 4.61 3.20 3.16
9 14,537 12 54.6 4.75 L 0.59 10.16 3.25 1.63
12 23,732 14.5 50.3 4.03 L 0.84 4.19 3.92 3.37
425
Table 11. Cotton ginning cost survey for California (1997) - 16-24 bales/hr
Bales Average Drier Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Drier Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) ($/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($/Bale)
1 50,776 24 51.9 3.60 N 0.59 4.70 4.00 4.92
5 30,587 17.5 42.4 3.19 L 2.11 6.51 3.27 5.12
6 37,391 19.1 43.0 3.53 N 1.21 6.15 3.03 3.56
10 14,322 16.5 52.6 4.07 -- 0.00 6.80 3.40 2.59
15 26,639 22 47.7 3.79 N 0.47 3.83 3.50 3.90
Table 12. Cotton ginning cost survey for California (1997) - 25 or more bales/hr
Bales Average Drier Seasonal Bale Pkg.
Gin Ginned Ginning Rate Electricity Usage Electricity Cost Fuel Drier Fuel Cost Labor Material Cost Repair Cost
No. (No.) (Bales/Hr) (KWH/Bale) ($/Bale) Type ($/Bale) ($/Bale) ($/Bale) ($/Bale)
2 31,346 25 53.3 3.81 N 0.21 6.39 4.21 4.41
3 31,347 25 53.3 3.81 N 0.21 6.39 4.21 4.41
11 33,936 38 57.6 5.16 N 0.29 5.13 4.00 5.00
13 34,465 30.9 38.6 3.18 N 0.64 3.23 3.27 4.10
16 45,685 29.5 54.5 4.26 N 0.70 4.95 3.40 3.17
Table 13. Average electrical usage and variable costs by region, 1997.
Electricity Drier Seasonal Seed Cotton Total
Capacity Usage Cost Fuel Labor Bale Pkg. Repair Ins. & Misc. Variable
REGION Gins (Bales/hr) (Avg.) (kw/Bale) ($/Bale) ($/Bale) ($/Bale) ($/Bale) ($/Bale) ($/Bale) ($/Bale)
SOUTHEAST 10 15 or less (10.5) 43.3 3.46 1.26 10.01 3.99 3.12 3.00 24.84
16 16-24 (19.4) 40.5 2.70 1.18 8.57 3.44 4.29 3.00 23.18
13 25 or more (32.4) 41.9 2.46 1.25 6.26 2.92 3.04 3.00 18.93
MID-SOUTH 18 15 or less (12.7) 44.2 3.50 1.42 8.65 3.51 3.89 3.00 23.97
28 16-24 (19.4) 39.4 3.33 1.06 7.10 3.22 4.54 3.00 22.25
19 25 or more (31.8) 41.9 3.35 0.82 5.27 3.38 3.83 3.00 19.65
SOUTHWEST 48 15 or less (11.7) 49.6 3.86 0.96 10.14 3.73 5.12 3.00 26.81
23 16-24 (19.1) 48.4 3.21 0.96 7.35 3.70 5.15 3.00 23.37
19 25 or more (31.2) 43.3 3.05 0.97 7.58 3.70 5.33 3.00 23.63
CALIFORNIA 6 15 or less (12.3) 50.4 4.72 0.83 7.33 3.33 3.74 3.00 22.95
12 16-24 (19.4) 46.4 3.72 0.89 5.02 3.54 3.21 3.00 19.38
8 25 or more (30.2) 49.1 3.85 0.56 4.88 3.69 3.86 3.00 19.84
426
Table 14. Estimated total cost of ginning cotton, 19971, 15 or less capacity bales per hour
Total Fixed Labor & Southeast Total Cost Mid-South Total Cost Southwest Total Cost California Total Cost
Investment Management Annual Volume ($/Bale) ($/Bale) ($/Bale) ($/Bale)
(Millions $) (Thousand $/Yr) (Thousand Bales) 10 Yr Life 20 Yr Life 10YrLife 20YrLife 10 Yr Life 20 Yr Life 10 Yr Life 20 Yr Life
0.5 50 4 56.71 51.09 55.84 50.22 58.68 53.06 54.82 49.20
5 50.34 45.84 49.47 44.97 52.31 47.81 48.45 43.95
6 46.09 42.34 45.22 41.47 48.06 44.31 44.20 40.45
7 43.05 39.84 42.18 38.97 45.02 41.81 41.16 37.95
8 40.78 37.96 39.91 37.09 42.75 39.93 38.89 36.07
Table 15. Estimated total cost of ginning cotton, 19971, 16-24 capacity bales per hour
Total Fixed Labor & Annual Volume Southeast Total Cost Mid-South Total Cost Southwest Total Cost California Total Cost
Investment Management ($/Bale) ($/Bale) ($/Bale) ($/Bale)
(Millions $) (Thousand $/Yr) (Thousand Bales) 10 Yr Life 20 Yr Life 10 Yr Life 20 Yr Life 10 Yr Life 20 Yr Life 10 Yr Life 20 Yr. Life
1.0 60 8 50.05 44.43 49.12 43.50 50.24 44.62 46.25 40.63
10 44.68 40.18 43.75 39.25 44.87 40.37 40.88 36.38
12 41.09 37.34 40.16 36.41 41.28 37.53 37.29 33.54
14 38.54 35.32 37.61 34.39 38.73 35.51 34.74 31.52
16 36.62 33.80 35.69 32.87 36.81 33.99 32.82 30.00
2.0 100 10 64.17 55.17 63.24 54.24 64.36 55.36 60.37 51.37
12 57.34 49.81 56.41 48.91 57.53 50.03 53.54 46.04
14 52.46 46.03 51.53 45.10 52.65 46.22 48.66 42.23
16 48.80 43.18 47.87 42.25 48.99 43.37 45.00 39.38
18 45.95 40.95 45.02 40.02 46.14 41.14 42.15 37.15
427
Table 16. Estimated total cost of ginning cotton 19971, 25 or less capacity bales per hour
Total Fixed Labor & Southeast Total Cost Mid-South Total Cost Southwest Total Cost California Total Cost
Investment Management Annual Volume ($/Bale) ($/Bale) ($/Bale) ($/Bale)
(Millions $) (Thousand $/Yr) (Thousand Bales) 10 Yr Life 20 Yr Life 10 Yr Life 20 Yr Life 10 Yr Life 20 Yr Life 10 Yr Life 20 Yr Life
3.0 150 12 70.17 58.92 70.89 59.64 74.87 63.62 71.08 59.83
16 57.36 48.92 58.08 49.64 62.06 53.62 58.27 49.83
20 49.68 42.93 50.40 43.65 54.38 47.63 50.59 43.84
24 44.55 38.93 45.27 39.65 49.25 43.63 45.46 39.84
28 40.89 36.07 41.61 36.79 45.59 40.77 41.80 36.98
4.0 170 12 84.75 69.75 85.47 70.47 89.45 74.45 85.86 70.66
16 68.30 57.05 69.02 57.77 73.00 61.75 69.21 57.96
20 58.42 49.42 59.14 50.14 63.12 54.12 59.33 50.33
24 51.84 44.34 52.56 45.06 56.54 49.04 52.75 45.25
28 47.14 40.91 47.86 41.43 51.84 45.41 48.05 41.62
428