COTTON GINNING, HANDLING, AND MARKETING IN THE MISSISSIPPI RIVER DELTA REGION
Joseph L. Ghetti and Edward H. Glade, Jr.
July 1978
CONTENTS
Page
Introduction ...... 1 Cotton Varieties and Grades ...... 1 Varieties of Cotton Grown ...... 1 Cotton Grades Produced ...... 1 Seed Cotton Harvesting and Handling ...... 3 Harvesting and Handling Seed Cotton ...... 3 Seed Cotton Required Per Bale ...... 4 CottonGinning ...... 5 GinningCharges and Practices ...... Gin Numbers, Volume, and Capacity ...... 6 Gin Ownership and Revenues ...... 9 Transportation, Warehousing, and Compression ...... 10 Transportation ...... 10 Warehouses and Compresses ...... 11 Merchandising...... 15 Summary ...... 19 COTTON GINNING, HANDLING, AND MARKETING IN THE MISSISSIPPI RIVER DELTA REGION
Joseph L. Ghetti and Edward H. Glade,
Introduction
The Mississippi River Delta region covers parts of four states par- alleling the Mississippi River. These counties lie both east and west of the river and include thirteen counties in Mississippi, eight Louisiana parishes, eleven Arkansas counties, and six Missouri counties (figure 1).
The fertility of the region's land and the availability of major market outlets have made it one of the major cotton production and marketing regions in the Cotton Belt. Although soybeans and rice compete in varying degrees for the use of land, the region normally produces about 20 percent of the nation's cotton crop each year.
Cotton Varieties and Grades
Varieties of Cotton Grown
Deltapine 16 and Stoneville 213 are the most popular varieties; each accounting for about 45 percent of the planted acreage. However, in some parts of the region Deltapine varieties are preferred by most producers while in other parts Stoneville varieties are more popular. Several other varie- ties such as Coker 310, Dixie King, and Auburn M account for a small per- centage of total planted acres.
Cotton Grades Produced
The quality of cotton produced in the region is usually very high.
Strict Low Middling grades account for 41 to 46 percent of the total.
1/ Agricultural Economists, Fibers and Oils, Economics, Statistics, and Cooperatives Service, stationed at the Delta Branch Experiment Station, Stoneville, Miss., and Washington, D.C., respectively. Figure 1 3
About 88 percent of the cotton produced in the region is classified within white designations. Light spotted classifications account for about 10 per- cent, with the remainder classified as spotted, tinged, light gray or gray.
However, nearly all of the light spotted cottons grade Strict Low Middling
(SLM) or Low Middling (LM).
Producers in the region harvested 1.5 million bales in 1975 and
1.7 million bales in 1974. Of this total, over 60 percent stapled 1-3/32 inches (35), over 30 percent 1-1/16 inches (34) and around 4 percent
1-1/8 inches (36). Micronaire or fiber fineness generally measures within
the 3.5 to 4.9 no discount range. Generally, about 80 to 85 percent of all cotton is fairly fine measuring within the 4.0 to 4.3 range. Fiber strength is good and generally falls within 82 Mpsi to 84 Mpsi.
Seed Cotton Harvesting and Handling
Harvesting and Handling Seed Cotton
Machine picking is used almost exclusively in the Mississippi River
Delta region, with an occasional small amount of handpicking and machine
stripping. Spindle type machine pickers harvest nearly 100 percent of the
crop in most seasons. However, machine stripping has begun to make some
inroads primarily because of uncertain weather conditions usually prevail-
ing during the harvest season. In addition, there are indications that the
trend may continue because of the smaller investment cost of strippers and
the cheaper operating cost.
Unlike some areas of the Cotton Belt, gins in the Mississippi River
Delta region own few if any trailers. Traditionally, producers have owned
and maintained their own trailers for transporting seed cotton to the gin.
Moreover, they have assumed responsibility for returning empty trailers to 4 the farm for reloading. Most of the trailers are the older types which hold six bales of machine-picked cotton; but some 10-bale and larger trailers are now being used.
A 1972 study estimated that each trailer used in this region hauled
75.4 bales of cotton to the gin each year. Including labor from harvest to the gin, average cost was reported to be $4.23 per bale. Further, the study reported that the average producer owned nine trailers and traveled five miles from farm to gin.
Recently, module storage and to a slightly lesser extent rick storage of seed cotton have been used in this region. However, significant module and rick storage has not occurred since the 1973 season. Even though a large number of producers own this equipment, most of them seemingly pre- fer to use trailers when available and use the module or ricker system only as a means of reducing the risk of uncertain weather conditions.
During the 1974-75 season for example, only 2 percent of the 1.5 million bales produced in Mississippi were moduled. The smaller 1975-76 crop
(1.0 million bales) resulted in even less bales being moduled, as only one percent of the Mississippi crop utilized modules.
Recently enacted wage guarantees of $2.65 per hour plus overtime pay for all hours worked in excess of 10 hours per day or 48 hours in one week will doubtlessly hasten the shift to module storage. The availa- bility of workers for gin work will also necessitate storage of cotton prior to ginning since in many parts of the region gins can only operate one shift per day.
Seed Cotton Reauired Per Bale
The typical bale of machine-picked cotton in this region requires approximately 1,500 pounds of seed cotton to a bale of lint compared with 5 about 1,300 pounds of handpicked cotton. The 1,500 pounds of machine- picked seed cotton normally results in about 500 pounds of lint, 150 pounds of trash and 850 pounds of cottonseed. Nearly 800 additional pounds of seed cotton are required to produce a standard bale of lint from machine stripped cotton.
Cotton Ginning
Ginning Charges and Practices
Each ginner throughout the Mississippi River Delta region is free to set his ginning charge at whatever level he feels producers are willing to pay. However, competition generally forces most ginners in a particular area to establish rates at about the same level using the same method of assessment. Ginners in the Mississippi River Delta region use a variety of methods in arriving at the final cost for ginning. They are as follows:
1. Ginning for the seed. Using this method, the ginner weighs the total pounds of seed in the bale. He then establishes the price each ton of seed can be sold for ($90 to $100 in 1975) and divides this price by
2,000 pounds. The price per pound is then multiplied by the pounds of seed in the bale to obtain the charge for ginning a particular bale of cotton. Charges per bale using this method ranged from $29.88 to $35.70 in 1975. After the ginning season has ended and at some specified date
(referred to as the settlement date) rebates are usually made from the seed account on a per bale basis. In 1975, rebates ranged from none to
$7.00 per bale depending on profits made from seed sales and the actual cost of ginning.
2. A fixed charge per hundredweight of seed cotton including cost of bagging and ties. Charges ranged from $2.45 per hundredweight to $2.23 over the region in 1975. Seed cotton weights ranged from 1,439 to 1,491 pounds and resulted in charges from $32.09 per bale to $36.53 during
1975.
3. Ginning charges are also assessed in some parts of the region on a per hundredweight of seed cotton plus a separate charge for bagging and ties. During 1975, ginning charges using this method averaged $32.20
(based on $1.69 per cwt. x 1,491 pounds of seed cotton plus $7.00 for bagging and ties) in a few areas and $31.61 per bale (based on $1.61 per cwt. plus $7.84 for bagging and ties) in a few other areas.
4. A fixed charge per hundredweight of lint cotton (net) plus an additional charge for bagging and ties or a larger charge per hundred- weight of lint and no additional charge for bagging and ties. Charges when calculated by the first method resulted in charges of $28.71 per bale in 1975 ($4.97 per cwt. x 4.8 plus $4.85 bagging and ties) for machine-picked cotton using the second method amounted to $29.28 per bale ($6.10 per cwt. x 4.8).
These charges, regardless of the method used, normally include insurance and transportation to the warehouse.
Gin Numbers, Volume, and Capacity
The Mississippi River Delta region has an abundance of ginning capacity. A total of 655 gins were active during the 1974 and 1975 seasons and processed a total of 2,081,761 and 1,540,673 bales during the respective seasons (table 1). Average bales processed per plant were 3,082 in 1974 and 2,352 in 1975 when production was down because of poor growing conditions.
Total ginning capacity is 6,656 bales per hour and average capacity
10.2 bales per hour. Combined, the 655 gins could process 5,126,148 7
Table 1. Mississippi River Delta Region: Number of gins active, idle, cooperative; total and average number of bales ginned 1974 and 1975 Number of gins : Bales ginned Counties : : : :Coopera-: Total Average :Total : Active : Idle : tive : 1974 : 1975 : 1974 : 1975 Arkansas: Crittenden 33 31 2 1 41,289 29,780 1,332 960 Mississippi 57 54 3 6 87,628 83,426 1,623 1,545 Chicot 9 9 0 0 40,283 37,341 4,476 4,149 Desha 14 13 1 0 43,278 30,011 3,329 2,309 Phillips 38 37 1 5 66,874 29,883 1,807 1,078 Ashley 5 5 0 0 50,280 37,341 10,056 7,468 Drew 4 4 0 0 14,863 13,826 3,716 3,457 Jefferson 29 27 2 1 77,302 77,598 2,863 2,874 Lincoln 10 9 1 1 33,886 25,981 3,765 2,887 Lonoke 16 15 1 1 52,241 43,565 3,483 2,904 Pulaski 7 6 1 0 5,986 3,683 998 614
Louisiana: Catahoula 4 4 0 0 16,190 13,194 4,048 3,299 Concordia 6 5 1 0 15,046 5,717 3,009 1,143 East Carroll 9 9 0 0 56,826 25,179 6,314 2,798 Madison 6 5 1 0 24,933 8,890 4,987 1,778 Tensas 6 6 0 0 39,330 19,374 6,555 3,229 Caldwell 2 2 0 0 13,404 1/ 6,702 1/ Morehouse 13 9 4 1 74,833 58,594 8,314 6,510 Ouachita 4 4 0 0 20,889 14,778 5,222 3,695
Mississippi: Issaquena 3 3 0 0 12,961 5,589 4,320 1,863 Sharkey 14 13 1 0 51,773 38,464 3,982 2,959 Washington 36 35 1 0 126,468 100,525 3,613 2,872 Yazoo 14 13 1 0 91,082 69,604 7,006 5,354 Bolivar 44 41 3 0 100,988 67,106 2,658 1,636 Sunflower 37 33 4 0 156,204 112,048 4,733 3,395 Coahoma 38 37 1 0 121,366 74,098 3,280 2,003 Holmes 17 16 1 0 82,184 58,444 5,137 3,653 Humphreys 13 13 0 0 74,988 52,122 5,768 4,009 Leflore 29 27 2 0 138,350 89,279 5,124 3,307 Quitman 20 19 1 0 48,901 29,342 2,574 1,544 Tallahatchie 21 20 1 0 78,088 56,077 3,904 2,804 Tunica 19 17 2 0 43,883 31,496 2,581 1,853
Missouri: Dunklin 30 30 0 2 64,478 57,367 2,149 1,912 New Madrid 32 31 1 0 78,924 54,429 2,546 1,756 Pemiscott 26 26 0 0 41,336 52,437 1,590 2,016 Mississippi 11 11 0 0 11,174 2,751 1,016 250 Scott 6 6 0 0 8,857 7,372 1,476 1,229 Stoddard 10 10 0 0 18,656 12,962 1,865 1,296
Total and average 692 655 37 18 1,732,857 1,540,673 2,645 2,352
1/ Data unavailable bales during a 906-hour season when operating at 85 percent of their
rated capacities. Moreover, the entire 1974 production could have been
- processed in 368 hours and 1975 production in 272 if cotton were available.
Such excess capacity doubtlessly results in increases in ginning cost.
Gins in the region range from very old plants with capacities of
from four to six bales per hour to highly modern plants with rated capaci-
ties of around 30 bales per hour. Moreover, a number of these plants are
equipped to handle moduled cotton which increases ginning efficiency and
all are equipped with universal density presses which press cotton bales
to about 28 pounds per cubic foot.
Although the total number of gins has declined throughout the region,
gin capacity has remained constant or even increased in some parts as
ginners erected a few new plants and others added larger gin stands and
automatic feed controls to older plants.
Most gins in the Mississippi River Delta region have flat bale presses
that have been modified to produce a uniform size bale which will be
repressed to universal density (IJD) at the compress. However, about 10 per-
cent (61 gins) of the region's plants have universal density presses
capable of pressing cotton to a density of 28 pounds per cubic foot. These
gins processed 475,224 bales or 30.8 percent of the 1975 crop in the region.
Of this total 42,290 were shipped directly from the gin platform to mills
in the East. All other bales, both those pressed flat and those pressed
to universal density, are moved to a warehouse or compress warehouse for
storage and other services needed prior to entering the marketing channels.
Most high capacity gins have automatic strapping devices attached
to the bale press. Although not eliminating the press crew entirely, this
equipment permits a reduction of two to three men. ro
Several operations have heat-shrink packaging equipment. When such equipment is used, cotton bales are placed in plastic wrapping and conveyed through a heated tunnel. Heat in the tunnel causes the plastic wrap to shrink tightly around the bale thus protecting bales from contamination.
However, this method of wrapping bales has never gained widespread accep- tance. Others use a variety of wrapping material such as jute, sugar bagging, plastic sheets, burlap bags and cotton bagging. Another method becoming more and more prevalent is to strap the bale without wrapping and transfer to a warehouse for wrapping. The normal cost for this service has been about $3.75 per bale.
Gin Ownership and Revenues
Independent or privately owned organizations predominate the
Mississippi River Delta region with a few owners operating more than one gin. Of the 655 active gins operating in the region, only 18 are known to operate as cooperatives. Most, however, rebate a portion of profits at the end of the season and in this respect are similar to cooperatives.
Those plants located in the Missouri portion of the region are mostly owned by large land holders who rent to producers. Normally these pro- ducers are required to process their cotton at the land owners gin.
Most gins in the region derive practically all of their revenue from ginning cotton. A few gins, however, provide some goods and services such as planting seed, fertilizer, herbicide and grain storage. About
15 percent of the gins also operate cotton mote processing and baling equipment in conjunction with the ginning operation. These gins are exceptions, however, since most producers in the region prefer to purchase seed, fertilizer, herbicides, and other goods through local dealers or cooperative supply outlets. 10
Transportation, Warehousing, and Compression
Most cotton produced in the Mississippi River Delta region moves directly to a warehouse or compress following ginning. In recent years, however, a few gins have begun to make direct shipments to eastern mills by truck. Usually, though, cotton is still owned by the producer and may or may not be committed to a specific market. Moreover, ownership may change several times prior to the bale being shipped.
Transportation
Following ginning, the baled cotton is moved almost immediately by motor truck from the gin platform to a warehouse or compress for storage and other functions that facilitate orderly marketing. However, a few gins located on rail sidings ship baled lint by rail under the rail transit privilege. Some gins make no specific charge for hauling but include it in the ginning and/or bagging and ties charge. Ginners in the region indicated these charges ranged from about $0.50 to $1.25 per bale in 1975 depending on the distance traveled. Three gins--Hollybrook and Howard at Lake Provi- dence, Louisiana, and Mer Rouge Gin at Mer Rouge, Louisiana--are located next to warehouses and transport cotton to the receiving area by lift truck three bales at a time. These gins do not make a separate charge for this service.
As stated earlier in the report, approximately 43 thousand bales of the region's cotton were shipped directly from the gin platform to mills located in the east thereby bypassing the warehousing sector.
Distance from gins to available warehousing space varies from a few feet to an estimated 20 miles. However, some ginners, producers, and merchants for personal and business reasons bypass local warehouses and/or compresses and transport bales considerably longer distances to such 11
locations as Pine Bluff, Little Rock, and Helena, Arkansas, and Greenville,
Mississippi. Although the total volume handled in this manner is unknown,
it is not felt that a significant volume of the region's cotton is involved.
Shipments of cotton to the Southeastern mill area from the region are
made by truck and rail. Until recently, rail shipments accounted for about
60 percent of total shipments but truck shipments appear to be increasing
each year. Typical truck and rail rates from various warehouse and/or
compress points are shown in table 2.
Warehouses and Compresses
Total warehouse and/or compress space in the Mississippi Delta region
is 3,924,220 bales with about 54 percent corporately owned, 40 percent
privately owned, and the remaining six percent cooperatively owned. Only
six counties are without any warehousing space (table 3). One company,
the Federal Compress and Warehouse Corporation, is by far the largest
company operating in the region, controlling nearly all of the corporately
owned space. Staple Cotton Cooperative located in Greenwood, Mississippi,
is the largest cooperative operating in the region with 171.3 thousand
bales of capacity. Two warehouses, H & W (22,500 bales) and Hollybrook
(27,500 bales) located in Lake Providence, Louisiana, are gin-warehouses
providing services for a limited number of stockholders. Neither warehouse
has compression equipment; however, all gins utilizing these facilities
have a universal density press. The Louisiana Warehouse (90,000 bales
capacity) at Mer Rouge, Louisiana, is owned and operated by nine stockholder
gins in Morehouse Parish. Two of the affiliated gins are located adjacent
to the warehouse. Cotton is transported from one by a conveyor system
directly into the receiving area as it is ginned. Although the Louisiana 12
Table 2. Mississippi River Delta Region: Truck and rail rates by origin and primary destination, 1975
Destination Origin New Orleans : 200A : 201B : Atlanta : Danville
------Dollars per bale
Truck rates:
England, Ark. 4.75 6.90 5.80 -- 7.25 Osceola, Ark. 3.75 6.60 5.50 -- 7.25 McGhee, Ark. 4.00 6.90 5.80 -- 7.50 Pine Bluff, Ark. 4.75 6.90 5.80 -- 7.50 Blytheville, Ark. 4.50 5.50 5.75 4.60 -- Kennett, Mo. 5.00 6.25 4.75 5.25 -- Hayti, Mo. 5.00 6.25 4.75 5.25 -- East La. -- -- 6.50 4.60 7.50 All Miss. points -- 5.25 5.50 4.00 --
Rail rates:
England, Ark. 5.00 7.75 7.10 -- 7.75 Osceola, Ark. 5.55 7.35 7.00 -- 7.40 McGhee, Ark. 5.25 7.95 7.10 -- 7.95 Pine Bluff, Ark. 5.50 7.95 7.10 -- 7.95 Blytheville, Ark. 5.55 7.35 7.00 6.05 -- Kennett, Mo. 5.65 7.95 7.10 6.25 -- Hayti, Mo. 5.55 7.40 7.00 6.10 -- East La. -- -- 7.20 5.85 8.00 All Miss. points -- 6.85 6.43 5.57 -- 13
Table 3. Mississippi River Delta Region warehouse space: Total, independent, coporate, and percent corporate ownership
Percent Counties : Total : Independent : Corporate : corporate Arkansas: Chicot 37,500 0 37,500 100.0 Desha 90,000 0 90,000 100.0 Phillips 171,500 0 171,500 100.0 Ashley 60,000 0 60,000 100.0 Drew 0 0 0 0 Jefferson 175,000 0 175,000 100.0 Lincoln 0 0 0 0 Lonoke 52,500 15,000 37,500 71.4 Pulaski 60,000 60,000 0 100.0 Crittenden 145,500 127,500 18,000 12.4 Mississippi 422,500 222,500 200,000 36.4
Louisiana: Catahoula 0 0 0 0 Concordia 52,500 0 52,500 100.0 East Carroll 92,100 50,000 42,100 45.7 Madison 37,500 0 37,500 100.0 Tensas 10,000 0 10,000 100.0 Caldwell 0 0 0 0 Morehouse 90,000 90,000 0 0 Ouachita 25,000 0 25,000 100.0
Mississippi: Issaquena 0 0 0 0 Sharkey 30,000 30,000 0 0 Washington 291,650 1/ 291,650 0 0 Yazoo 81,800 0 81,800 100.0 Bolivar 165,000 37,500 127,500 77.3 Sunflower 359,000 297,000 62,000 17.4 Coasham 272,000 107,000 165,000 60.7 Holmes 0 0 0 0 Humphreys 67,900 0 67,900 100.0 Leflore 390,270 2/ 215,270 175,000 44.8 Quitman 90,000 0 90,000 100.0 Tallahatchie 22,500 7,500 15,000 66.7 Tunica 45,000 0 45,000 100.0
Missouri: Dunklin 177,500 177,500 0 0 New Madrid 165,000 60,000 105,000 63.6 Pemiscott 125,000 0 125,000 100.0 Mississippi 37,500 37,500 0 0 Scott 82,500 0 82,500 100.0 Stoddard 0 0 0 0
Total 3,924,220 1,825,920 2,098,300 53.5
1/ Includes 75,000 bales cooperatively owned. 2/ Includes 171,500 bales cooperatively owned.
14
Cotton Warehouse is equipped with compression machinery, it is seldom used
since all affiliated gins have universal or standard density presses.
- With the exception of the three gin-owned warehouses, most facilities
in the area are quite old and inefficient for storing and handling cotton.
A few plants were constructed in the late 1890's and some around the turn
of the century. Most are 30 to 50 years old, poorly designed, and uneconomi-
cal to operate. However, most have made some improvements in recent years
which allows better use of mechanical handling equipment. Also, a number
of firms have installed automatic receiving, weighing, and sampling equip-
ment which has resulted in a reduction of the labor force and increased the
efficiency of the receiving operation. Some automation has also been
achieved in pressing but it is still a labor intensive operation.
In recent years a number of cotton gins in the area have begun the
practice of baling cotton "naked"- ' and shipping it to warehouse facilities
for further processing. Upon entering the warehouse, all required samples
are cut before packaging material is placed on the bale, thus eliminating
the practice of cutting holes in the packaging material. This process
results in a neater looking bale and eliminates contamination of the cotton
during shipment. Warehouses offering a packaging service use burlap or
plastic materials formed into a bag which is slipped over the bale and
provides a complete covering once the open end is closed. A capital outlay
of from $50,000 to $60,000 is required for necessary equipment, thus reduc-
ing the number of firms financially able to offer this type of service.
Gins are currently charging $3.75 for this service including packaging
material.
2/ Gins baling cotton "naked" press the bales and place bands on the bale without covering. These gins are usually equipped with universal density presses and automatic banding equipment. Use of this equipment and packaging "naked" greatly reduces labor requirements at the press. 15
Charges for other services such as receiving, compression, storage and shipping are generally the same throughout the Mississippi River Delta region. Federal and Union compress and/or warehouse companies, because of
their dominance, act as price leaders. The tariff charges of independent and gin affiliated warehouse firms are generally the same as the price leaders or only slightly different.
Even though some differences occur in charges for a particular service in other parts of the region, total charges are nearly always the same.
Average per bale charges for major warehousing services throughout the region were about as follows in 1975: receiving $1.30 per bale, storage
$1.00 per bale per month, compression $3.75 per bale and shipping $2.50 per
bale. Based on average storage of 4.5 months, total charges are $12.05
per bale. Additional services provided such as resampling, reweighing,
branding, marking, rebanding, or recompression would add additional charges
to the total.
Merchandising
Producers in the region use a variety of methods in merchandising
their cotton. Merchants, cotton factors, commission buyers, mill buyers,
ginners, and cooperatives are all utilized to some extent. Crop contracting
is also used in some years to market a large segment of the crop. During
the 1974-75 season, for example, about 7 percent was placed in the Commodity
Credit Corporation's loan program, 22 percent was forward contracted, 61 per-
cent was sold through marketing agents, and producers retained title to about
10 percent until the following year.
Cotton marketing in the northern part of the region, particularly
in the Missouri segment, is probably a bit unique when compared with the 16 rest of the region. Ginners, for example, play a major role in most trans- actions either as agent for the farmer or by contracting with the farmer for his production. Ginners also act as agents for merchants in contracting acreage on a fee basis of $0.75 to $1.00 per acre. Generally, when ginners contract to buy from farmers, they immediately sell an equal amount of acreage to a merchant. Occasionally, ginners in the northern part of the region will carry and market the cotton for their own account. Ginners in this part of the region purchased 97 to 100 percent of the 1971, 1972, and
1973 crops as baled lint. Ginners, however, purchased only 6 percent of the 1974 crop, largely because of the depressed cotton market. With rising prices in 1975, ginners purchased nearly 96 percent of the crop in this part of the region as baled lint. Ginners in the remainder of the region purchase very little cotton.
Forward contracts have been used extensively in the past and have ranged from 2 to 89 percent of the crop in various parts of the fixed price and basis price.
Fixed contracts are based on a stipulated price per pound and contain certain conditions on micronaire ranges, below grades, excessive grass bark, and discounts off the contract for reduction bales regardless of grade and staple. All fixed price contracts have a cutoff date, but most in use give the buyer an option to buy the unharvested cotton at a lower price. Prices for unharvested cotton are usually based on a specified number of points above the loan rate after the cutoff date.
Basis contracts differ from fixed price contracts in that prices are tied to Commodity Credit Corporation loan rates. This type contract specifies a given number of points above government loan rates with final settlement determined by the green card class. Basis contracts normally 17 are written to cover all cotton produced and do not have a cutoff date.
Basis contracts are based on December cotton futures price less 500 points for a wide range of qualities. Discounts are made for unfavorable micro- naire and undesirable grades. Under contracts used in 1974, for example, grade 41 (strict low middling), staple 34 (1-1/16 inches) prices were cal- culated at 300 points off December futures price. For all other qualities
Commodity Credit Corporation loan differentials were used to determine price.
Many producers in the region market their crop through the Staplcotn
Cooperative Marketing Association headquartered in Greenwood, Mississippi.
This association was founded in 1921 and has handled approximately 21 million bales of cotton since its inception. Present membership consists of about 2,500 Mississippi, Arkansas, Louisiana, and Missouri producers.
The single year high was 932,000 bales and the low prior to 1975 was
300,000 bales during 1957. Over 400,000 bales were marketed during 1974.
Although producers throughout the region are members of the association, about 70 percent of the total volume handled each year is produced in
Bolivar, Sunflower, Coahoma, Holmes, Humphreys, Leflore, Quitman,
Tallahatchie, and Tunica counties in Mississippi. The remainder is produced in Louisiana (15 percent), Arkansas (10 percent), and Alabama
(5 percent). The marketing association also operaties 17 field offices.
Staplcotn uses several operations in their marketing operation with the bulk of their marketing being carried out under forward contracts, seasonal pools, and call pools.
Under the association's forward contracting option, the producer decides upon the price he will accept. Sales are made under "hog round" or "gin run" contracts when prices reach the level specified. 18
The seasonal pool option is designed to even out the wide fluctuations in prices throughout the year and to return a fair average price to pro- ducers. Stable prices are obtained through orderly sales, blocking cotton into selected categories and by fitting different qualities within the pool into sales to firms with narrow raw material requirements. Producers do not fix prices under this option but receive the average price obtained for all cotton placed in the pool.
A third option, the call pool, allows the producer to fix the price on a portion of his cotton prior to harvest. Sales are made based on a fixed number of bales with prices based on SLM (strict low middling),
1-1/16 inch staple after the delivery price is adjusted, according to individual contracts, for quality variations.
Cotton classers type all bales marketed by Staplcotn.--' Bales are then placed in even running lots by type and all other functions necessary to land cotton at mills or export points are performed.
In addition to cotton marketing services, Staplcotn also offers producers production loans, warehousing facilities for cotton and grain, fertilizer, insecticides, herbicides and other chemicals.
A number of other firms and individuals also provide marketing outlets for the region's cotton. W. B. Dunnavant, H. J. Murff, W. H. Kennedy,
Holmes and Barrier, and L. T. Barringer to mention a few all are sizable cotton merchants operating within the region. Most local buyers seldom
3/ Type samples are drawn from one or several bales and are shown to buyers as representative samples of the actual cotton in the bale(s). If a transaction materializes, the seller agrees to deliver bale(s) equal in quality to the type represented by the sample. 19 buy large volumes of cotton for their own account but rather act as agents for individual producers or larger merchants such as those mentioned above.
Fees for their services average about $2.00 per bale.
Forward contracting is also used by individual producers who are not members of Staplcotn. However, crop contracting has declined substantially in the past few years because of declining prices and uncertainty surround- ing the market.
Most cotton not contracted for is sold on "actuals.' 4/ Form 1 (green cards or government class cards) information is also used in many sales.
Some buyers in recent years have made all purchases on Form 1 information alone.
Summary
Cotton ginning, handling, and marketing facilities are strategically located throughout the Mississippi River Delta region; generally in close proximity to production. High yields and good quality characterize pro- duction throughout the region and the demand for the region's cotton by domestic and foreign mills is high.
Cotton ginning facilities in the region range from very old plants with capacities of four to six bales per hour to highly modern plants with rated capacities of about 30 bales per hour. The volume of cotton handled per gin averaged 2,352 bales in 1975. Average hourly capacity per gin was
10.2 bales during this period.
Ginners in the region use several methods in arriving at the cost for ginning. Charges ranged from $29.28 to $36.55 per bale during the 1975
4/ "Actuals" is a term used in the cotton trade to denote a sample of cotton drawn from the bale for examination by the buyer. The seller agrees to deliver the identical bales which the sample represents. 20 season. These charges, regardless of the method used, included fire insurance and transportation to the warehouse. Most cotton nves directly from the gin to a warehouse or compress but recently a few large gins have
begun to make direct shipments to eastern mills by truck.
Adequate warehousing space exists within the region. Charges for
warehousing services for 4.5 months (including receiving storage, com-
pressing, and shipping) averaged $12.05 per bale in 1975.
Producers in the region use a variety of methods in merchandising
their cotton. Merchants, cotton factors, commission buyers, mill buyers, ginners and cooperatives are all utilized to some extent. Staplcotn, a
producer owned cooperative, is the largest single outlet in the region, marketing over 400,000 bales in 1974 for its 2,500 members. This firm,
also, provides nearly 200,000 bales of warehouse space to its members.
Federal Compress and Warehouse Company, however, is the largest single supplier of warehousing space and generally acts as the price leader in
establishing warehousing charges.