Cost of Ginning Cotton

In order to make their gins more cost efficient, gin managers compare their component costs to industry averages. Also, potential gin investors use cost estimates to help determine the economic feasibility of purchasing ginning systems. Variable costs from 221 gins for the 1997 crop were determined by survey and grouped according to cotton production region and according to gin capacity. Fixed costs were estimated by using a traditional economic model. Straight line depreciation over useful lives of 10 and 20 years and a 10 percent annual interest rate were assumed. Property taxes, insurance, and miscellaneous costs were also included. The cost of seed cotton transportation, which gins incur in most areas, are not included in these estimates