Monday, March 4, 2024

California Cost Of Ginning Much Higher Than Other States

california ginning labor costs
California’s ever-increasing minimum wage has contributed to its higher per-bale ginning costs.

The cost of ginning cotton is an important concern for producers and ginners. Every three years, the U.S. Department of Agriculture Agricultural Research Service conducts a survey of ginning costs by region.

Data from the survey allows gin management to compare their operation to regional and national data. It also provides information about key variable costs as a component of the overall cost of ginning cotton. The data helps to identify trends of gin operation and document how the adoption of new technologies in cotton harvesting and ginning has affected ginning cost.

USDA-ARS has released preliminary results of the most recent survey conducted in 2019. While a cost discrepancy is expected for the West compared to the rest of the Cotton Belt, the significant amount of the discrepancy was not.

The results clearly demonstrate the un-level playing field between California and the rest of the Cotton Belt. The largest impacts are felt in labor costs as a result of California’s high minimum wage and electricity costs, which were heavily affected by California’s energy and environmental policies.

electricity costs
California’s energy and environmental policies contribute to a higher cost of ginning than other regions of the Cotton Belt.

Overall, cotton gins in California have costs more than $14 per bale higher than any other cotton growing state. That is up more than $4 per bale from the last comparison in 2016, when the discrepancy was only $10 per bale.

In the charts shown here, California makes up 90% of the West cost numbers. In looking at labor costs, California was more than $6.73 higher than the next highest region and more than $7 higher than the beltwide average.

Upon reviewing electricity costs, California is $4.88 higher than the next highest region and $4.73 higher than the beltwide average.

The survey was conducted for the 2019 cotton crop, which produced 19.4 million running bales (USDA-NASS, 2020) and 5.9 million tons of cottonseed (USDA-NASS, 2021). This crop was harvested from 11.6 million acres with an 823-pound-per-acre average yield.

In 2019, there were 531 operating gins, averaging a little more than 36,500 bales per gin.

The California Cotton Ginners and Growers Association provided this information.

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