OKLAHOMA CITY - Operators of Oklahoma’s 10 regulated cotton gins contend they cannot continue to operate under rates that were set more than four decades ago, and have asked for permission to raise their ginning and bagging charges.
The Oklahoma Cotton Council filed an application earlier this month with the state Corporation Commission for an increase in rates that state regulators established on Sept 28, 1981.
Rates that were set 44 years ago for ginning, bagging and tying cotton have not been modified since then, despite rising equipment, labor, and operational costs, the council notes.
The operators emphasized that the commission has issued no subsequent order modifying rates since 1981, leaving gins to absorb decades of cost increases without regulatory relief.
Cotton gins “can no longer earn sufficient operating income to produce a fair and reasonable return on capital outlay for equipment and operations or reasonable return on the value of their plants, properties, and other assets,” the Cotton Council asserted.
The council asked the commission to increase the rate for ginning “picked, snapped, or bollie cotton” from $2 per hundredweight to $2.75, and to boost the rate for bagging and tying cotton from $7.50 per bale to $10.
The council told the commission they conducted “comparison research” on rates charged in neighboring states and found them “almost universally to be higher than the rates” authorizes in Oklahoma.
Furthermore, even if the commission approves the council’s request, the new, higher rates will still be “lower than the rates charged by many gins in neighboring jurisdictions.”
Nine of the 10 cotton gins still operating in Oklahoma constitute the Cotton Council, said Charity Martin of Altus, the council’s executive and director of member services. Nonetheless, if the Corporation Commission approves the application, all 10 gins will be allowed to raise their rates, she said.
Customers of those gins are cotton producers who operate commercial farming enterprises. They “recognize the economic necessity” of the council’s application “to continue to satisfy the specific costs required to offer the necessary public utility services local ginning provides for producers,” the council wrote.
In addition, all but one of those gins are run as cooperatives, “meaning the vast majority of producers also participate in the economic production” of Oklahoma cotton gins, the Cotton Council wrote. A portion of the higher fees that would be collected by the gins “would conceivably return to the state’s cotton producers/co-op owners in the form of dividends, thus mitigating the effect of the increased rates.”
While most of the gins in the state are pushing for the higher fees, there is at least one that is not, that gin owned and operated by the Carnegie Farmers Cooperative.
“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.”
Additional fees for ginning “will cost the producers,” he said. “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 then cut back on production, there will be fewer bales to gin, which will affect the gin’s bottom line.”
Squires farms north of Carnegie near Alfalfa and is a former chairman of the board at the Carnegie Cooperative and was part of a team that was instrumental in the purchase and construction of their gin north of Carnegie.
The Corporation Commission has not yet ruled on the Cotton Council application.
According to Martin, cotton gins still operating in Oklahoma include:
•CHS Red River Gin in Frederick.
•Farmers Cooperative Mill and Elevator Association, Carnegie.
•Cotton Growers Cooperative, Altus.
•Farmers Co-op Association, Eldorado.
•Humphreys Co-op Gin, Altus.
•Tri-County Gin, Chattanooga- •Motley Gin, Hollis.
•Bi-State Cotton Producers, Minco.
•Farmers Cooperative Exchange, Burns Flat.
•Midwest Farmers Inc., Clinton.
Cotton production in Oklahoma has plummeted in the last four years, data from the U.S. Department of Agriculture’s latest ginning report reflect. According to that report, 538,950 bales were ginned in this state in 2021, compared tol66,600 bales ginned last year.
Nationwide, 14 million bales of cotton were ginned in 2024.
“Ours is a business that’s dependent on volume, and that’s based on the weather,” said David Arthur, manager of the Cotton Growers Cooperative in Altus.
Drought and scorching temperatures are not uncommon in southwest Oklahoma.
The USDA reported that the average weight of cotton bales ginned in 2024, by county, was: Jackson, 493.1 pounds; Tillman, 481 pounds; Grady, 499.2 pounds; Caddo, 483 pounds; Harmon, 478.5 pounds; Washita, 482.3 pounds; and Custer, 488.9 pounds.
The Corporation Commission’s authority to regulate cotton gins dates back to the state Constitution when it was drafted in 1907. Article IX empowers the commission to “fix and establish rates for, and exercise general supervision over, all public utilities” in Oklahoma, the applicants point out.
The First Oklahoma Legislature gave the Corporation Commission authority to regulate public service corporations, those businesses whose services are considered essential to the public welfare.
The legal principle for regulation was established in 1877, when the U.S. Supreme Court upheld a lower court ruling, Munn v. Illinois. The Justices decreed that when a private company’s business affects the community at large, it becomes a public entity subject to state regulation.
Mike W. Ray is a fifth-generation, award-winning journalist who has more than 55years’ experience covering municipal, county, state and federal government in Oklahoma and Texas.