A Determination of Cotton Market Price Premiums Required to Justify More Lint Cleaning in the Gin Plant

This analysis simulated net returns per bale of cotton for irrigated stripper-harvested cotton for one, two, and three stages of lint cleaning to determine the level of premiums required to justify more cleaning in the gin plant based on a variable price level of cotton lint. Through the examination of total returns, ginning costs, and the cost of lint loss at various price levels, this study shows that with higher levels of market price, increased levels of quality premiums become necessary to make successive levels of lint cleaning cost effective. Specifically, price premiums must be about 57 percent greater to justify two lint cleanings over one lint cleaning if the market price for cotton ginned using only one lint cleaning equals $1.76 per kg than if that same cotton's associated market price equals $1.10 per kg. Similarly, a 56 percent increase in price premiums was required to justify three lint cleanings over two in the gin plant for cotton possessing a market price that equals $1.76 versus $1.10 per kg after one lint cleaning. Thus, the levels of price premiums required to justify more cleaning is directly related to the lint that is lost at each stage of lint cleaning. Therefore, if net price premiums do not increase enough to offset revenue that is negated due to lint loss, less cleaning should be done in the gin plant. The Cotton Foundation 2010.

A Determination of Cotton Market Price Premiums Required to Justify More Lint Cleaning in the Gin Plant Academic Article