Submitted to: National Cotton Council Beltwide Cotton Conference
Publication Type: Proceedings
Publication Acceptance Date: 1/1/2003
Publication Date: 4/14/2003
Citation: Holt, G.A., Simonton, J., Cantu, A.M., Beruvides, M. Economic feasibility of manufacturing fuel pellets from cotton products. Proceedings of Beltwide Cotton Conferences. Joint Cotton Ginning/Cotton Engineering Conference. CD-ROM. Memphis, TN: National Cotton Council of America. 2003. p. 2537-2542.
Interpretive Summary: Byproducts from a cotton gin have not traditionally been considered a reliable revenue generator. Instead, the approximately 2.25 million tons of byproducts generated each year have been viewed as a cost liability to gins and producers alike. In this paper, a study was undertaken to determine the feasibility of constructing and operating a facility to process cotton byproducts into fuel pellets for use in commercial pellet stoves and boilers. The analysis was performed as a new operation at a commercial cotton gin that averaged 50,000 bales per year production. The analysis incorporated cost of constructing the facility as well as variable costs of transportation, labor, manufacturing, power, raw material supply, and maintenance. The evaluation used was performed by modeling the variable costs and assessing their effect on a specified return on investment (ROI) of 15%. Results from the forecast model indicate the probability of obtaining a 15% ROI to be 29.95% and 54.4% depending on whether the product was shipped to market by either truck or on rail, respectively. All analyses performed included the costs of shipping the product to market from a production plant located near Lubbock, TX. The market locations evaluated in this study were Albuquerque, NM, Denver, CO, and Kansas City, MO.
Technical Abstract: Waste, or byproducts, from cotton ginning facilities has not traditionally been considered a viable source of revenue, but considered a cost liability. It was estimated that in the U.S., there were over 2.25 million tons of cotton byproducts generated each year across the cotton belt. Last year Texas produced 4,153,866 bales of upland cotton. From the bales produced, there was an estimated 750,000 tons of waste produced in the ginning process. The purpose of this research was to explore the cost feasibility of creating a fuel pellet operation utilizing gin byproducts from marketing, transportation, and manufacturing aspects. Economic analyses and modeling were conducted on the estimated costs and revenues to determine the feasibility of the project.