After three years of rising fuel costs and falling cottonseed returns, many cotton ginners are beginning to wonder what it will take to restore their operations to profitability.
Using 2005 dollars for comparison, ginners have reduced their operating costs by about 50% in the last 30 years, says Thomas Wedegaertner, director of cottonseed research and marketing at Cotton Incorporated.
If ginners want to improve profitability, he adds, there are two ways to do it: They can find a way to decrease fuel costs or new ways to increase the value of their product.
“We've gotten these gins about as efficient as we can get them so far. A major change in ginning where we might reduce costs by $20 a bale or so will take something revolutionary, another Eli Whitney or similar innovation,” he says.
Wedegaertner acknowledges that seed weight per bale has become a major concern for many ginners, especially in areas where new varieties with higher lint turnout and smaller seed production have become popular.
Despite the problems with smaller seed, U.S. cottonseed production has been climbing in step with the larger lint cotton crops of recent years. After dipping to 6.18 million tons in 2002, cottonseed production has climbed to 2005's 8.3 million tons.
Cottonseed oil mill operators face many of the same problems as cotton ginners, he said. They're fighting rising fuel costs while enduring falling vegetable oil and meal prices.
Cottonseed oil, which is a “high quality, very stable” cooking oil, typically commands about a 5¢ premium over other vegetable oils such as soybean oil and palm oil, according to published prices. That premium may mean that cottonseed oil crushers could miss out on the increasing demand for soy oil for biodiesel, however.