Cotton classing fees will rise by 20 cents this season, to $1.85, according to Larry Creed, director of the Dumas, Ark., USDA Cotton Classing Division office that serves much of the Mid-South region.
The increase comes on the heels of a 20-cent rise in the 2004 season to $1.65.
A shrinking reserve fund for the Cotton Classing Division has necessitated the increases in the classing fee, Creed said at one of the regional meetings of the Southern Cotton Ginners Association at Clarksdale, Miss.
“Over the years, we've been required to retain a system reserve to cover unexpected costs and shortfalls in the classing operations,” he said.
“Every year for 11 years, the classing operation had lost money, and it was necessary to increase the classing fee in order to help restore the system reserve.”
He said USDA and cotton industry officials agreed on a boost in the fee, but decided to implement it over two years rather than all at once.
“The classing division has made a lot of changes to reduce costs,” Creed said, “but operational expenses have continued to increase.”
Over the past decade, the division has consolidated operations, reducing both the number of classing offices and employees. At the same time, he noted, costs of operations have steadily increased — a major one being transportation/fuel costs related to hauling samples from gins to classing offices.
And the cost of high volume instrument (HVI) classing equipment has increased sharply, Creed said, rising 70 percent from 1997 to 2004. Personnel and leased space costs have also risen, while interest earnings on funds have gone down.
The Dumas office will have 35 HVI lines in operation this season, he noted, up from 31 last year. “Last year's record crop kept us hopping, and with the four additional HVI lines we should be in position to handle a big crop this year.”
USDA's classing system, Creed says, is “the best in the world, and we will continue making the investments necessary to improve the system to meet the needs of growers and the industry — and we'll also continue striving to keep prices as low as possible.”