Economic Feasibility of Narrow Row Spindle

Pic li e r C o t t o n Paul W. Teague

Marvin D. Heilman Ronald D. Lacewell

Agronomic research has shown that cwtton grown on narrower rows (30 in) can exhibit a positive yield response when wniparetl to (:onventionally spaced rows (40 in). While narrow row cotton can easily he harvested with a stripper harvester. spindle pickers are not currently available with that vapahility. Recently. several independent producers devised a conversion procedurv to allow a standard spindle picker to harvest 30-in row cotton. This ec.onornic Ieasibility study of such a conversion in- dicates that narrow row cotton ran I)ro(Iu(:e il higher and more stable net return than conventionally spaced cotton whrii harvested with a converted spindle picker. This applies to the Lower Rio Graride Vallry and can be extrntlrtl to other areas which produce long staple cotton that I-rqiiirrs spindle picking.

INTRODUCTION

The mechanization of American agriculture has been a key factor in technological progress in U.S. agriculture in this century.' The quality and efficiency of machinery used in agriculture has steadily increased over time' and machines and implements are constantly undergoing modifications for specific purposes in an attempt to increase efficiency and profits in farming.

However, agronomic and economic feasibility of a new crop production strategy can be limited by the inability of conventional farm equipment to adapt to the particular new strategy. Inability to plant successfully in heavy residue with a no-till system is an example of farm equipment advancement that was needed to keep pace with agronomic technology. Another example is the case of narrow

Technical Article No. 18937 of' the Texas Agricultural Experimenl Station.

Paul W, Teague is a ReJearcli 4m)citrte. Depurtment of' Agricultural EconomLcs, Texas A & 2.I Dniver\itv.

Marvin D . Heilman is a Soil Scientist, 4gricultural Rpsearch Service. U S . Department of Agriculture. Weslnco, Texas.

Ronald D. Lacewell is a Professor, Depurtment of Agricultural Economics, Texas A & IM lnicersity.

Agribusiness, Vol. 1. No. 1, 25-31 (19851 0 198.5 by John Wiley & Sons. Inc. CCC 0742-4477185/010025-07$04.00

26 TEAGUE, HEILMAN, AND LACEWELL

row cotton (30-in centers) that requires harvesting with a spindle type cotton picker. ' Conventional spindle cotton pickers are not currently capable of har- vesting 30-in rows. (For the purposes of this analysis, narrow row cotton will refer to cotton grown on 30-in centers as opposed to conventionally spaced cotton of 38 to 40 in.)

Test plot research indicates that in the Lower Rio Grande Valley (LRGV) a substantial yield increase can be gained by planting cotton on 30 in centers rather than the more common 38-40-in centers.' A yield increase associated with narrow row cotton has also been documented in the Texas Wintergarden region' and other areas of Texas."" Also, a spindle type cotton picker yields consistently higher quality cotton than does stripper harvesting, especially in moist conditions.' Relatively high humidity and generally moist conditions are prevalent in the LRGV, particularly at harvest.8 This can create a serious lim- itation to stripper cotton harvesting relative to spindle cotton harvesters in that region.

Although a stripper harvester can easily be used on 30 in rows, a standard 2-row spindle type cotton picker is not currently avaiiable from the manufacturer with that capability. Recently, several independent producers have devised a conversion of a standard 2-row picker to accommodate narrow row cotton. Al- though the results are based on LRGV data, i t is generally felt by the authors that the analysis is applicable to most of the long staple cotton production regions in the U.S. which harvest primarily with spindle pickers. The purpose of this article is to analyze the differences in costs and returns associated with narrow row cotton and conventionally spaced cotton and the necessary machine modi- fications required for harvest.

DESCRIPTION OF HARVESTER CONVERSION

Only a general description of the converted picker is presented here. A more detailed description of the mechanical specifications can be found in other published source^.'^^

Basically, converting a standard 2-row spindle type cotton picker to pick narrow row cotton involves moving the picker heads out to 60-in centers and replacing the single rear wheel with a 2 wheel axle on 90-in centers. This allows the picker to straddle one row of cotton and pick every other row. A shield is placed over and around the row not being picked to avoid damaging or losing cotton on that row. This procedure requires some relatively simple modifications of the original equipment and different levels of expenditure for different makes and models of cotton pickers. Table I gives approximate expenditures paid by

Table I. Average Cost of Spindle Picker Conversion.'

Manufacturer Model Approximate

Cost ~~

John Deere 9900 John Deere 9910 International Harvester 782

Average Cost = $8500.

$10,000. 7500. 8000.

'Source: William Spencer.

FEASIBILITY OF NARROW ROW COTTON 27

producers who have actually converted pickers in the manner described above. These costs may vary given the availability of necessary parts and expertise used in the conversion process. Producers using these converted machines reported no changes in normal operating procedure of these harvesters. Based on the figures in Table I, an average conversion cost of $8500 per machine will be assumed for purposes of analysis in this article.

PROCEDURES To estimate the economic implications of a typical producer adopting the narrow row cotton production strategy, yield data were taken from ongoing plot tests in the LRGV. Inputs, cultural practices, and variety in these tests are identical for each row spacing (30 in vs. 40 in). Each treatment was replicated four times per year.

The basis of the analysis is net returns above total costs for narrow row and conventional row spacing production systems. Crop enterprise budgets were developed by applying the Texas A&M Budget Generator System which is based on the Oklahoma State University Computerized Budget Generator Model. lo Net returns above total costs are calculated for each replicate on each row spacing for the 1982 and 1983 crop years. The net returns for the narrow row cotton reflect the cost of the conversion of the cotton picker depreciated over the useful life of the cotton picker and adjustments in seeding rate. This conversion cost was included in this manner to maintain consistency between the narrow row cotton budget and the conventional cotton budget as computed by the Budget Generator. All net returns reflect changes in harvest costs due to changes in yield. This provided sufficient data for budgeting analysis. Next, an analysis of variance procedure was used to analyze differences in yield and net returns from narrow row cotton versus conventional cotton production.

A crop enterprise budget was also developed for the average yield of narrow row cotton and conventionally spaced cotton. This provides a basic general indication of expected net returns for the two systems. These data provided input to a breakeven analysis. The breakeven analysis (similar to a “payback period” method) was directed to estimating the cotton acreage required to exactly offset the machine conversion expenditure in one year. Breakeven acreages were cal- culated across a range of cotton lint and seed prices. Variable costs were identical except for an adjustment in seeding rate and harvesting costs. The fixed costs for both cases reflect the costs associated with a standard spindle type cotton picker (unconverted). The difference in net returns between narrow row cotton and conventionally spaced cotton is the amount of dollars per acre that can be used to recapture the cost of conversion. This difference is divided into the average cost of converting a standard picker to accommodate narrow rows ($8500). The result is the breakeven acreage required to “pay for” the investment in picker conversion in the first year.

RESULTS

In comparing narrow row cotton to conventional row cotton, there are several factors to consider. This section presents yield, expected net returns, and some measures of risk for the two systems. Last, cotton acreage needed to offset the total cost of equipment conversion in a single year is given.

28 TEAGUE, HEILMAN, A N D LACEWELL

Yield

Yield per acre for all replications over the 1982 and 1983 seasons are presented in Table 11. The narrow row cotton had a greater yield in all plots except two in 1982. The mean yield of lint per acre across years and plots was 846 lbs/acre for the narrow row system and 629 Ibs/acre for the conventional row system. The conventional row average yield compares favorably with the overall average irrigated cotton yield for Hidalgo County, Texas of 591 Ibs/acre for the 1979- 1981 crop years.” This provides strong evidence of an improved agronomic production practice for spindle picker cotton production, since spindle picking is the most common harvesting method in the LRGV.

The study was extended to include analysis of variance with yield as the dependent variable. The results showed that the mean lint yield for narrow row cotton of 846 lbslacre was significantly different ( p = 0.1) from the mean yield of 629 Ibs/acre for conventionally spaced cotton. The coefficient of variation for narrow row cotton was 27.99 compared to 31.36 for conventional row spacing. The magnitude of these coefficients indicates that yietds from the different row spacings tested exhibit similar relative variation from their means.

Net Returns

Crop enterprise budgets were developed based on the yield of each replicate in the test. Net returns above total costs were calculated with a lint price of $0.77/ Ib and seed price of $115/ton (Table 111). These prices are considered to be representative of the 1983 crop year and all costs are in 1983 dollars. A constant price for both years was used to remove variation in net returns due to market forces. The budgets reflect a slightly higher seeding rate required to plant nar- rower rows and harvest costs are adjusted for yield differences. The fixed costs associated with narrow row cotton reflect the cost of picker conversion. The average per acre net returns over the 2-year period indicate that the expected net returns are $304.29 for narrow row cotton and $57.40 for conventional row cotton.

Table 11. 1583 Season in the Lower Rio Ciaride Valley:’

Narrow Row dnd Conventional R o w Cotton Yield Data from 1982 and

Yield

11)s Lint per ..\rre Year Replicate ( W i n R o w s ) (40-111 Rows)

1582 1 72.5 ,386 1982 2 774 398 1982 3 449 70 1 1982 4 52.3 566 1983 1 1083 807 1983 2 1047 610 1983 3 1111 873 1583 4 1057 693 - -

,?,, = 846 (LBSiA) .?,,, = 629(LBS/A)

“Source: Marvin Hellman.

FEASIBILITY OF NARROW ROW COTTON

Table 111. Lower Rio Grande Valley.

Net Returns from Narrow Row and Conventional Row Cotton in the

Year Replicate 30-in Rows 40-in Rows

29

1982 1 198.23 - 157.05 1982 2 247.43 - 134.53 1982 3 - 10.84 116.67 1982 4 47.01 1.11 1983 1 403.30 201.40 1983 2 497.00 66.42 1983 3 547.35 253.48 1983 4 504.85 111.74

x,, = $304.29 x, = $57.40

In calculating net returns from each plot, there were two plots with negative values for conventional row production compared to only one negative net return with narrow row production. The highest net returns in the sample were $547 per acre and $253 per acre for narrow row cotton and conventional cotton, respectively. An analysis of variance procedure with net returns as the dependent variable indicates a significant difference in net returns ( p = 0.01) between narrow row cotton and conventional cotton. Fisher's least significant difference (LSD) test" indicates that the mean net return per acre for narrow row cotton of $304.29 is significantly higher ( p = 0.05) than the mean net return for con- ventionally spaced cotton of $57.40.

The coefficient of variation is a measure of relative variation that can be used as a measure of risk. The coefficients of variation associated with net returns from narrow row cotton and conventionally spaced cotton are 70.94 and 268.13, respectively. The narrow row coefficient is only 26% of the coefficient for con- ventional spacing. This indicates that a narrow row production strategy produces dramatically less variation in net returns and the implication is that it is less risky.

Breakeven Acreage Analysis

The results of the breakeven acreage analysis are presented in Table IV. These figures are based on a 2-year average yield for narrow row cotton and conven- tionally spaced cotton of 846 and 629 lbs of lint per acre, respectively. A low of 48 acres is required to fully recapture the picker conversion investment at a lint price of $0.82/lb and seed price of $120/ton. At $0.62/lb of lint and $loo/ ton for seed, 66 acres of cotton are required. The lint price of $0.77/lb and seed price of $115/ton, which was used in the budgeting analysis produced a breakeven acreage of 55.5 acres of cotton. Thus, based on this analysis, a relatively small cotton acreage is needed to fully recover the total cost of con- verting a spindle picker for narrow row cotton within one year.

CONCLUSIONS

This analysis, based on 1982-1983 yield data indicate that a narrow row (30 in) cotton production system can be more profitable and yield a more stable

w

0

Tab

le IV.

Bre

akev

en A

crea

ge A

naly

sis.

Seed

L

int

Pric

e Pr

ice

Net

Ret

urns

' (p

er to

n)

(per

Ibs)

30

-in

Row

s

$120

$0

.82

$272

.39

115

0.77

22

5.80

11

0 0.

72

179.

20

105

0.67

13

2.61

10

0 0.

62

86.0

2

Net

Ret

urns

40

-111

Row

s

Bre

akev

en

Acr

eage

D

iffe

renc

e (a

cres

)

$95.

98

61.3

3 26

.68

- 7

.97

-42.

62

$176

.41

164.

47

152.

92

140.

58

128.

64

48.0

51

.6

55.5

60

.4

66.0

'Net

ret

urns

wer

e ca

lcul

ated

usi

ng th

e ov

eral

l av

erag

e yi

eld

for

narr

ow r

ow c

otto

n an

d co

nven

tion

ally

spa

ced

cott

on o

f 846

and

629

Ibs,

resp

ecti

vely

.

4

m 4 0

C

m

3: z P

z 4

z U E F n 2 m

r

r

FEASIBILITY OF NARROW ROW COlTON 3 1

stream of net returns than a conventional row (38-40 in) cotton production system. The yields from narrow row cotton, while significantly higher than con- ventional cotton, exhibit about the same relative variability as yields from con- ventionally spaced cotton. This research is applicable to the Lower Rio Grande Valley region, but suggests that other areas that produce long staple cotton that requires spindle picking could also benefit from this type of production strategy.

The major limitation of this study is a lack of observations on yield. It is the authors’ contention that 2 years of data with 4 replications per year is adequate to indicate a yield difference sufficient to warrant investigation; more data would provide better statistical grounds for any conclusions. However, research on narrow row cotton has shown a similar positive yield response over the last 15 years.

The picker conversion is the major equipment modification necessary to adopt this technology. There is no consideration of costs involved in converting tractors and other tillage equipment to cultivate 30-in rows. While these adjustments are relatively minor, there would nevertheless be costs involved. Also, it might be necessary to convert other row crop enterprises to narrow rows to allow the use of the same equipment on different crops without requiring special modifications. Any income tax costs or benefits associated with the purchase and improvement of farm equipment were not included. The picker conversion cost is relatively small compared to the total cost of the cotton picker or other motorized equipment. However, there would be some minor adjustment in the producers’ balance sheet and income statement as a result of this capital expenditure and the accompanying income tax effects.

REFERENCES 1. E. Heady and L. Tweeten, Resource Demand and Structure of the Agricultural Industry, Iowa

State University Press, Ames, IA, 1963. 2. L. Fettig, “Adjusting Farm Tractor Prices for Quality Changes,”/. Farm Economics, 45, 599-

611 (1963). 3. M. D. Heilman, “Yields of 30 inch vs. 40 inch Row Spacing in Cotton in the LRGV 1982,

1983,” unpublished data. 4. R. D. Lacewell, J. M. Sprott, G. A. Niles, J. K. Walker, and J. R. Gannaway, “Cotton

Grown with an Integrated Production System,” Tram. Am. SOC. Agricultural Eng., 19(5), 815- 818 (1976).

5 . I. W. Kirk, A. D. Brashears, and E. B. Hudspeth, Jr., “Influence of Row Width and Plant Spacing on Cotton Production Characteristics on the High Plains,” Texas Agricultural Ex- periment Station, MP-937, December 1969.

6. L. L. Ray and E. B. Hudspeth, “Narrow Row Cotton Production,” Texas Agricultural Ex- periment Station, Current Research Report No. 66-5, TA-5564, September 1966.

7. W. Spencer, “We Did It!”, Cotton Grower, May, 60 (1983). 8. R. K. Shaunak, R. D. Lacewell, and J. Norman. “Economic Implications of Alternative

Cotton Production Strategies in the Lower Rio Grande Valley of Texas, 1973-78,” Texas Agricultural Experiment Station Bulletin No. B-1420, November 1982.

9. H. Barnes, “Growers Modify Spindle Pickers for Narrow Rows,” Farm J. , August, 12 (1983). 10. D. P. Kletke, “Operation of the Enterprise Budget Generator,” Oklahoma State University,

Agricultural Experiment Station Research Report P-790, August 1979. 11. Texas Department of Agriculture, Texas County Statistics, Texas Crop and Livestock Reporting

Service, 1979-1981. 12. A. D. Rickmers and H. N. Todd, An Introduction to Statistics, McGraw-Hill, New York,

1967, pp. 222-224.