Cotton gin operators squeezed by prices, weather

LITTLE ROCK, Ark. — Cotton gin operators in Arkansas are in a tight spot.

Since 1.2 million acres were planted in 2006, cotton acreage has declined steadily to 500,000 acres this year — a drop of 57 percent. This year’s harvest will be much smaller than expected with an estimated 30 percent lost from seemingly endless rainstorms in the past month.

Moreover, the price of cottonseed — the sale of which is critical for the gins — is down sharply since it briefly touched $300 per ton in 2008. The average price in September was $168 per ton, and some gin operators got far less. The forecast for this year’s forecast was $230 per ton.

John Whitehurst, manager of Delta Grain and Gin Co. in Dermott, said he received just $130 per ton for a load of seed.

“That’s bad,” said Whitehurst, whose gin took in its first cotton this week, more than a month later than usual.

Cottonseed has long been a staple food for dairy cows, but the industry last year shifted to alternative feeds because of higher prices. Compounding this, many milk producers went out of business in 2008.

In the past, gins dotted the farmland of the east Arkansas Delta region. While some smaller operators are still ginning cotton, now many of the gins in Arkansas are larger operations.

“We’ve gone to a model of mega-regional gins that serve multiple counties,” said Scott Stiles, an economist with the University of Arkansas Cooperative Extension Service.

In the far southeast Arkansas town of Portland, a town of 300 people, there are three gins in business.

The gin at Portland Gin and Warehouse Inc. also only began running this week, office manager Sheila Vines said.

“We were expecting 18,000 bales this year, before the rain,” Vines said. “Our farm manager says maybe (10,000 bales) this year, if it quits raining.”

Farmers brought in enough cotton for 14,500 bales in 2008.

Growers were able to harvest for a few days early this week, but steady rain halted that on Wednesday and Thursday.

Vines said the gin may get more cotton on Saturday, but only if sunshine and wind dry out the cotton so it can be picked.

Vines said 16 or 17 migrants work at the gin each fall. With less cotton coming in and low prices for the seed, there was less money to go around.

The seed prices are important to gin operators because that’s where they make their money. Farmers don’t pay the gins, but they may get a rebate if the gin has a good year selling seed, which is highly unlikely this year, Stiles said.

Extension service cotton specialist Tom Barber said the weather this year — a cool, wet spring that delayed planting followed by the persistent rain that has damaged the harvest — may give farmers pause when choosing what to plant next year. This year’s 30 percent loss translates to 3/4 of a bushel left on the ground for every acre planted.

“It depends on what commodity prices do. This year left a bad taste in (cotton growers’) mouths with all this rain,” Barber said. But if corn and soybean prices don’t improve, Barber said Arkansas cotton acreage could increase a little next year.

Stiles said the state’s cotton gins need more than a slight increase in planting in 2010.

“The acreage is down 16 percent from last year, then there’s a below-average yield. That hurts volume (at the gins). The weather hurts the seed quality,” Stiles said. “Not good.”

Some cotton has been soaked for so long that seeds are sprouting in the bolls. Some bolls rotted or wouldn’t open. Growers can spray to force the bolls open, but the short intervals between rains made spraying a risky proposition. Some cotton that can be harvested brings a lower price because its quality is diminished.

Whitehurst said rain and flooding have devastated cotton, soybean and rice farms in his area.

“It’s pretty sad, we’ve had some crops under water here,” he said.

There is a chance of more rain Sunday, while showers or thunderstorms are possible all next week. Whitehurst said it would be hard for some gins to hang in there.

“That’s what I’m worried about right now,” Whitehurst said. “We’re taking a beating.”