Analysis of the impact of the round bale harvesting technology on optimal gin industry structure on the Texas Southern High Plains

Date

2018-05

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Abstract

A Ginning Industry Assessment was sent to active cotton gins in 16 counties on the Texas Southern High Plains in order to analyze the current structure and determine the optimal. There were 28 gins, out of 76, who returned the completed survey representing at 37% response rate. The data collected was then analyzed and used to run a least cost optimization model. A comparison of the costs associated with conventional modules and round modules was conducted. Survey results showed the average transportation cost for round and conventional modules were $0.32 and $0.38 per bale per mile, respectively. Currently, 23 of the 28 responding gins received more than 90% of their cotton from within a 30-mile radius of the gin itself. As hypothesized, excess capacity was present in each of the four size groups of gins on the Texas Southern High Plains. The hourly excess capacity for groups one through four were 1.51, 6.41, 10.00 and 47.28 bales per hour, respectively. The results of the cost minimization optimization model concluded the current industry structure was not operating a cost minimization levels. According to the model, the optimal structure would be comprised of 26 gins total with gins classified in each of the four gins size groups. The optimal structure included six gins in group 1 (size 0-25 bph), two gins in group 2 (size 26-45 gins), nine gins in group 3 (size 46-70 bph), and nine gins in group 4 (size  71). In conclusion, this study showed that even without taking into account the new round module technology, the ginning industry on the Texas Southern High Plains is not operating at cost minimization levels. Should the industry transition to the optimal, it could possibly result in cost savings for the industry as a whole. However, this study did not take into account outside components, such as personal preference. Regardless of what the optimal structure is projected to be, it is likely the actual will vary from the results. This is because growers have the option to take their cotton to one gin over another for many reasons. This factor alone could be the reason the current ginning industry is structured as it is and is so far from the projected optimal.

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Keywords

Cotton, Ginning industry, Optimization

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