338.1 
 Un33ers 
 no.273 
 
 UNIVERSITY 
 
UNIVERSITY OF 
 ILLINOIS LIBRARY 
 AT URBANA-CHAMPAIGL 
 AGRICULTURE 
 
3 3 $ * t h / C 
 
 Ur 
 
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 Economic Research Service, U.S. Department of Agriculture 
 
 in cooperation with 
 
 Cotton Economic Research, University of Texas 
 
 and 
 
 Agricultural Economics and Sociology, Texas A & M University 
 
 SHIPPERS' COSTS OF ASSEMBLING AND DISTRIBUTING U.S. 
 
 COTTON, BY TYPES AND SALES OUTLETS, SEASON 1964-65 If 
 
 Purpose, methods, and limitations of study .--The study covered in part by this re¬ 
 port was largely designed to provide current detailed estimates of the major costs of 
 marketing American lint cotton. These and the related data are needed for measuring 
 changes in marketing costs, to help find ways of increasing cotton marketing efficien¬ 
 cies, and for evaluating existing and proposed policies and programs affecting cotton. 
 Information was obtained mainly from a sample of the cotton shipping firms and market¬ 
 ing associations located in the 15 markets designated for establishing official price 
 quotations for U.S. cotton. The cost estimates reflect, within reasonable limits, var¬ 
 iations in the kind, amount, rates, and efficiencies of the services involved in assem¬ 
 bling cotton, in all 4 regions and important market trading areas of the Cotton Belt, 
 and delivering it to customers throughout the world. This summary includes estimates 
 for all cotton purchased through the Cotton Belt and shipped to 9 specified outlets. 
 
 (See table on reverse side of this sheet.) 
 
 Costs for shipments to all outlets combined .--The weighted average total cost per 
 bale to shippers of assembling and distributing American cotton to all outlets combined 
 during the 1964-65 season was $17.14. About 49 percent of this total was accounted for 
 by transportation and related costs. The other costs and their approximate percentage 
 of the total were: Carrying costs, 14 percent; compression, 10 percent; overhead, 9 
 percent; selling, 6 percent; warehouse services other than storage, 6 percent; buying 
 and local delivery, 4 percent; and miscellaneous, 2 percent. 
 
 Costs for shipments to domestic outlets .--Shippers 1 total per bale costs for 
 cotton shipped to all domestic outlets combined averaged about $13.56. Of this, trans¬ 
 portation and carrying costs accounted for about 39 percent and 19 percent, respectively. 
 Shipments to New England mills had the highest average cost for any domestic outlet-- 
 $16.84—and those to Alabama-Georgia mills the lowest--$ll.44. The average for Group 
 201 mills, to which about one-third of all shipments were made, was $14.89. 
 
 Costs for shipments to foreign outlets .--The estimated costs for shipments to all 
 foreign outlets combined averaged $23.24 per bale. This is $9.68, or 71 percent, above 
 the average for shipments to domestic outlets. The average for shipments to Europe and 
 Japan, the 2 largest foreign outlets, was $21.08 and $23.77, respectively. The highest 
 estimate--$29.64--was for cotton which went to India. 
 
 The differences in the total costs for the various outlets, domestic and foreign, 
 were largely accounted for by transportation and related services. Of the 9 outlets 
 for which estimates are reported, transportation and related services varied as a per¬ 
 centage of the total cost from 31 to 61 percent. To a relatively small but significant 
 extent, the differences in costs for domestic outlets compared with foreign outlets 
 were also affected by compression cost, including patches and marks, and by selling costs. 
 
 
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 2 - 7.3 
 
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 1/ A weighted average of estimates by regions and by market trading areas are con¬ 
 tained in the following reports: ERS-261 (1965), Southwestern region; ERS-264 (1965), 
 Midsouth region; ERS-266 (1965) , Southeastern region; and ERS-271 (1965) , Western 
 region. 
 
 ERS-273(1965) 
 
 Washington, D.C., January 1966 
 
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UNIVERSITY OF ILLINOIS-URBANA 
 
 338 1UN33ERS C002 
 
 ERS WASH DC 
 2731966