The Oklahoma Cotton Council’s application to state regulators for a rate increase intended to relieve the financial strain on cotton producers has its proponents and its opponents.
In pre-filed testimony, Phil Bohl, chairman of the Cotton Council, told the Corporation Commission that the “dramatic contraction” in the number of cotton gins operating in Oklahoma “has reached a critical minimum.”
Cotton growers “face greater costs to transport their product farther and farther just to reach the nearest gin,” said Bohl, a cotton producer. The remaining gins, in turn, “are faced with volumes of cotton which have met - if not exceeded - their reasonable capacities” to process.
Expenses borne by cotton gins, such as labor costs, electricity bills, the price of propane used for heat critical to the ginning process, the price of equipment, and costs of facility maintenance, have risen since 1981, when the “two significant sources of revenue for the gins” was set by the Corporation Commission.
During the intervening 44 years, the ginning industry “met these challenges by attempting to innovate or increase productivity,” Bohl said. Tri-County Gin in Chattanooga “has trimmed its permanent workforce to an absolute minimum,” he said. In fact, Tri-County “does not even have a full-time ginner.”
Much of the skilled labor employed in cotton ginning is migratory, “moving from south to north as the season goes,” said David Arthur, manager of Cotton Growers Cooperative in Altus. “Much of the labor force anticipates moving northward as the season progresses, with the intent of maximizing days worked in the year.”
If Oklahoma gins cannot complete the volume of work needed before those workers are set to move on, “the cost of labor to remain in Oklahoma and forego opportunities for work going later into the year as it moves north will increase.”
Many gins could not survive over the past four and a half decades, resulting in consolidation “which has reduced the number of gins by more than 87%” in the last 45 years, Bohl testified: from 79 cotton gins in 1981 to 10 in January 2026.
The increase in volume that the remaining gins must process “has greatly accelerated wear and tear” on their equipment.
Bohl uses the Tri-County Gin, which was built in 1979. Consequently, he said, maintenance is “more frequent and thus more expensive, and equipment-replacement capital expenditures are required more frequently.”
Because the cotton gins’ revenue streams from ginning and bagging/ tying are capped “in a landscape of ever-increasing costs,” Bohl said, the gins “continually struggle with ... maintaining sufficient capital reserves to cover” those costs.
Oklahoma cotton gins have aging equipment
“Our gin has equipment or systems that are upward of 35 years old,” said Jantz Bain, manager of Farmers Union Cooperative Gin in Humphreys. Replacement “would be cost prohibitive.” However, maintaining aged equipment - “which only gets older and more worn year after year” continues to become more and more expensive “as repair labor increases in cost and parts for older equipment become harder to obtain.”
Tri-County Gin needs maintenance and upgrades “that would cost in the neighborhood of $2 million,” said Bohl.
“In order to do what we could to increase productivity, with the goal of increasing revenue from ginning,” approximately seven years ago the Humphreys gin “took on debt to undergo a $5 million equipment upgrade,” Bain testified. “While our gin increased productivity in the amount of cotton processed, we are still servicing a large amount of that debt.”
“I am aware of a ‘regional competitor’ Texas gin which has ... voluntarily built in a $5-per-bale surcharge for its services, expressly to maintain capital reserves for future needs and allow for future capital upgrades,” Arthur said.
The status of the cotton ginning industry “is not one of equilibrium,” he lamented. If any more gins close, cotton producers would have “less choice in where their crops are ginned” and would incur “greater costs to transport their cotton longer distances.”
The process of ginning cotton requires “a great amount” of electricity, which is “another dynamic, somewhat unpredictable cost that gins must bear and which they have little ability to pass along to their customers,” Bohl said.
Tri-County Gin is operating with its original electric system installed 46 years ago, Bohl said. “We estimate that replacement of the electrical system would cost $1 million, and other necessary equipment upgrades would cost another $1 million.”
Additionally, “the longer it takes for gins to process” cotton, “the longer it takes for those producers to be paid” for their cotton, he said, which has a “negative impact on the cash flows of Oklahoma cotton producers.”
Bain said the Humphreys gin has approximately 1,500 members; about two-thirds are cotton producers and one-third are owners of land on which cotton is produced. “Our gin is 100% member-owned; we have no private investors and we do not issue preferred stock.” Membership in the Oklahoma Cotton Council is two-thirds producers and one-third gin operators, Bohl told the Corporation Commission. “I can testify the constituent members of the council unanimously approved the council’s filing of the application for the rate increases.”
Bohl said Tri-County Gin in Chattanooga has approximately 100 members, “50 being cotton producers and the other 50 being owners of land on which cotton is grown.” Support for the rate increase is “widespread through Tri-County’s membership.” One gin is opposed However, there is at least one cotton farmer and one cotton gin that are not in favor of a rate hike: Farmers Cooperative Mill & Elevator Association of Carnegie.
“It might sound good, but in our opinion it will adversely affect the cotton producers in our area,” Carnegie farmer Barry Squires said. “The increased fees for ginning will affect the bottom line, with cotton selling for just 63 cents a pound.
“The additional fees for ginning will cost the producers. They are already spending high amounts of money on fuel, seed, fertilizer and herbicide. The gins do not need to add to this challenge by increasing ginning fees. Furthermore, if farmers cut back on production, there will be fewer bales to gin, which will affect the gin’s bottom line.”
“The Cotton Council’s understanding is not that the Carnegie gin opposes the requested rate increase, but rather it may be hoping to enjoy the benefit of the increased rates without participating in the council’s application efforts,” Bohl told the Corporation Commission.
If state regulators approve the application, all 10 gins will be allowed to raise their rates, Cotton Council Executive Charity Martin noted.