4.1. Historical Perspective on the Secondary Materials Trade
When we now think about long distance trade in secondary materials, electronic waste reprocessing in China or scuttling old ships in Bangladesh often come to mind. Needless to say, numerous production and consumption residuals (e.g., scrap steel, waste paper, plastic and electronics) are now traded between continents. What is less appreciated is how old these trade and innovation patterns are, involving, from their inception, both the production and consumption side of secondary materials trade and re-use.
To give but a few historical examples, the journalist and publisher Peter Lund Simmonds [13
] (pp. 4–7) commented in 1876 that the recovery of shoddy (an inferior quality yarn or fabric made from the shredded fibre of waste woolen cloth or wool clippings), paper, scrap iron and lead was then practised on a very large scale in New England. In his book Industrial Wastes and Salvage: Its Production, Marketing and Utilization
published over half a century ago, the writer and publisher Charles Lipsett covered, among other secondary commodities, the trade in plastic, glass, metal, copper, brass, nickel, stainless steel, lead, zinc, tin, magnesium, iron and leather scrap; wood, fruit, vegetable, brewery, chemical, distillery, textile, cotton and citrus waste; and automobile wrecking and ship breaking. He observed that, owing to geographic imbalances between the production of secondary materials and appropriate processing sites and markets, there was ‘‘a large import and export business” in production residuals in “every industrialized nation’’ [17
] (p. v). West Germany was a large importer of scrap metals, Japan of scrap iron and Italy of woollen rags. U.S. textile manufacturers produced wastes ‘‘for export around the globe, as well as being reprocessed and recycled into industry in the United States’’ [17
] (p. v) (see also Lipsett [14
] (p. 10)). Labor costs often proved significant enough to ensure the profitability of shipping “certain mix scrap to foreign countries for segregation and return[ing] [it] to the generating nation, the cheaper labor costs more than paying for freight both ways” [17
] (p. v). Without the widespread utilization of waste materials, he added, there wouldn’t be sufficient raw materials in the world to supply the needs of industries. Lipsett [17
] (p. 355) further commented that “Yesterday’s waste has become today’s new product or chemical or food, with its own waste which through research and development will become tomorrow’s new economic resource”.
Thus, the case of cottonseed processing, once the initial hurdles were overcome through inter-industry borrowing and innovation, has fit the pattern described by Lipsett [17
]. While certain cottonseed products needed to be processed rapidly over short time spans and geographical distances, thus feeding localized IS linkages, (for example refined cottonseed oil and by-products before winterization and hydrogenation), other cottonseed by-products such as linters were perfectly poised to travel long distances to be processed into a variety of cellulose-based products.
4.2. Industry Structure and the Profit Motive
Similar to petroleum, livestock and cereal grains—and unlike unprocessed residual materials as observed in Kalundborg—the development of most by-products out of cottonseed involved numerous steps through which a complex raw material was broken down into components that were often (re)combined with other materials. Because of the insufficient size and/or early reluctance of domestic consumers, finding profitable markets for cottonseed further implied moving large quantities of material over long distances. The result, in Mullendore’s [66
] (p. 282) words, was that “cottonseed must go through an unusually large number of steps in its passage from the producer to the consumer” and “each step of manufacture and distribution represents a separate and distinct phase of the industry, in many instances as to both location and ownership”.
At the risk of oversimplifying, from its early days the cottonseed value chain was built around the following actors, often physically distant from each other (based on [30
Cotton producers (both large ones who employed seasonal cotton pickers or tenant farmers and smaller independent ones)
produced field cotton;
might have historically taken a portion of cottonseed back home for planting or sold them to an intermediary, or directly to a cottonseed oil mill.
separated the fibre from the cottonseed;
acted as intermediaries between cotton producers and cottonseed processors.
Cottonseed buyers (a.k.a. dealers, brokers or wholesalers)
Crushing mill operators (a.k.a. cottonseed oil mill operators)
collected and stored cottonseed;
produced crude cottonseed oil, cake/meals, hulls, and linters.
refined the crude oil;
produced other by-products in the process.
Manufacturers of cottonseed products (from livestock feed to a wide range of consumer and industrial products)
derived their products wholly or partly from the output of crushing mills and oil refiners.
distributed finished product to consumer retail outlets and/or industrial customers.
Because of the seasonal nature of cotton ginning and cottonseed crushing, the high cost and difficulty of storing cottonseeds, and the cyclical nature of cotton harvests and markets that determined the volume of cottonseed produced any given year, countless southern entrepreneurs “combined farming, merchandising, ginning, and buying cotton and cottonseed. In order to control seed supplies, many oil mill companies owned cotton gins and loaned money to finance the building of new gins and the modernization of old ones…” [38
] (p. xvii). Some also added other ventures such as cattle feeding, feed and fertilizer mixing, and ice making [38
] (p. xvii). Others yet combined a variety of oilseed milling with cottonseed milling, often moving laterally from work with oilseeds whose fortunes were waning towards the ascendant cottonseed [30
As in other lines of work, intermediaries were sometimes vilified by cotton producers and final consumers as parasitical and untrustworthy. Over a century ago Jenkins [67
] (p. 2) observed that cottonseed meal was often sold as a fertilizer “to dealers in [Connecticut] chiefly by commission houses, which in turn buy it from large and small mills in the cotton-growing regions”. An employee of the Connecticut Agricultural Experiment Station that inspected some of this material, Jenkins was critical of this system because the “houses which sell it to the Connecticut trade never see the meal or have it in their possession. As to its quality they rely on the statements of the mills with which they trade, a confidence which frequently appears to be vain” [67
] (p. 3).
As always in market economies, however, the solution to such problems was the creation of grades, standards and brands. Grades and standards helped ensure that producers of quality output obtained maximum value. Buyers of commodified by-products knew exactly what they were getting for their money without having to inspect every shipment. Handling and transportation could also be accomplished more efficiently by combining the production of similar goods from different producers. In the United States cottonseed came to be graded upon purchase according to a process based on two indexes established by the National Cottonseed Products Association [37
]. The first index is the quantity index for oil and ammonia content (calculated differently for upland and pima cottonseed). The second is the quality index for impurity content, seed moisture content, and amount of free fatty acids that, in addition to a numerical value, comes with labels such as Prime Quality, Below Prime Quality, Off Quality and Below Grade (which does not get a numerical grade) [61
] (pp. 60–61). The grade is then determined by “multiplying a quantity index by a quality index and dividing the result by 100” [61
] (p. 60) with high grades of cottonseed scoring above 100 and low grades scoring below, always within their quality bracket. In 2016 US prime quality cottonseed
was defined to contain, by analysis, “not more than 1.0 percent of foreign matter, not more than 12.0 percent of moisture, and not more than 1.8 percent of free fatty acids in the oil in the seed” [68
]. Thus, a Prime Quality batch of upland cottonseed may get a grade of 92.40 if its oil content is low, and a Below Prime Quality batch of upland cottonseed may be graded at 97.5 if it is high in oil but also high in moisture and free fatty acids index [37
]. The development of modern brands for mass-produced commodities and products (e.g., Crisco) similarly allowed final consumers to economize on the time they would have otherwise been required to spend establishing the trustworthiness of multiple anonymous producers.
Although addressing past nuisance problems and avoiding fines probably played a role in the very early days of the industry, the creation of value out of cottonseed was primarily driven by competitive pressures, be they from other cottonseed-related businesses or else producers of substitute products. Ransom [48
] (p. 145) thus noted that, from the perspective of Georgia cottonseed oil refiners, competition between a large number of interests was involved in the “purchase of the seed and the sale of the by-products” and that they had to compete “with each other for the crude oil, and with the refineries operated in other parts of the United States, the packers of the West and European buyers”. However, while competition might have been fierce (and thus insured that useless intermediaries were eliminated), at the turn of the twentieth century it was often the case that “nothing but the utilization of the cotton-seed waste saved the industry from bankruptcy [as many] a cotton grower secured enough extra for the cotton seeds just to make both ends meet” [69
] (p. 457) (see also Deasy [51
] (p. 347)) .
Reflecting on the “many useful things about the cotton plant besides the fibers”, geographers Galloway Keller and Longley Bishop [56
] (p. 245) considered it yet another successful case of by-product development in which “much that originally went to waste and was a great nuisance to the producer has now become of value and a source of profit”. “The more keen the competition between industries”, they observed, “the more necessary does it become to save in every possible way, in order to make profit” [56
] (p. 245). The various uses of the cotton plant, including cottonseed, provided thus yet another “excellent illustration of the tendency in modern industry to let nothing go to waste, but to find uses for what was hitherto been looked upon as of small value” [56
] (p. 247).
4.3. Long Distance Trade
From the origins of the trade (i.e., relatively small scale shipments of pima cottonseed cake from the US Atlantic coast to British mills), distant markets proved extremely significant in the development of the cottonseed value-chain. In an age when unpaved land transportation was at best slow, ineffective and extremely costly (Deasy [51
] (p. 348) described roads as being “little more than trails”) and warehouses lacking climate control machinery, much of the movement of cottonseed between plantations, ginning and crushing operations first centered along the waterways—especially around the Mississippi River and its navigable tributaries—and only proved profitable over relatively short distances because of the perishability of the cottonseed. Nixon [52
] (p. 81) thus observed that, for a couple of decades after the industry took off, cottonseed-oil operations “hug the lines or points of water transportation” with the mills being concentrated in locations such as New Orleans, Memphis, Nashville, Natchez, Savannah and Charleston (see also Deasy [51
] (p. 348)).
Some early processing operations, however, were located far from cotton fields, a result of their owners having first gained experience with, and then progressively moving away from, crushing other materials such as flaxseed, and taking advantage of the transportation routes of the time. As Wrenn put it [30
] (p. 8): “For several decades flax cultivation had been declining in the United States because of the widespread availability of inexpensive, easy-to-clean cotton textiles. Linseed-oil mills began to experiment with various oil seeds in their search for additional raw materials.” Once the extant oil mills could be retrofitted with efficient hullers to handle upland cottonseed, that is, between the late 1850s and 1860s, little stood in the way of re-tooling an oilseed mill for cottonseed processing. Notably, shifting from processing one type of seed to another took ample advantage of other industrial linkages established for the flax, sesame or castor bean oil trade, such as warehousing logistics, mill workforce contracting, by-product sales, and the all-important transportation to and from the mills via the waterways. For instance, in New Orleans the entrepreneur A. A. Maginnis switched from manufacturing linseed oil from flaxseed to cottonseed crushing in 1856 while a St. Louis producer of linseed and castor oils followed suit the next year. In short order, western Ohio linseed-oil manufacturers, the center of flax growing up to that point in time, bought cottonseed and had it shipped up the Mississippi and Ohio Rivers in boats that had previously carried goods from Cincinnati to southern ports and plantations. Flaxseed mills in the New York City and Providence areas also switched to cottonseed processing and oil refining at the time as they could also benefit from reasonable freight rates from ships returning from southern ports. In short order though, most northern operations either closed or relocated closer to their main input [30
] (pp. 8–9).
As could be expected, much valuable material was left to rot far from navigable water ways. Ogden [50
] (p. 12) thus insisted at the time that the claim of a large surplus of cottonseed available for processing was “true in the abstract [but] false in the concrete” because its existence owed to “the lack of transportation facilities and their unequal distribution over the broad area of cotton culture”. He was nonetheless confident that “sooner or later this difficulty [would] be remedied [when] the South [became] netted and fretted with railroads” and that, when this was the case, “every tonne of surplus seed will be utilized and help to swell the tide of general prosperity”.
In time the railroad came and new cottonseed mills were built at railroad centers in order to gather inputs from a wider catchment area. Interestingly, Brooks [54
] (p. 312) observed that in the early years of the industry “river cotton seed produces a little more oil than railroad seed, and there is often a corresponding difference in their values”. He added that while seed could be shipped by rail in bulk, bags were required for river shipping which added to this mode of transportation costs.
The financial arrangements between cotton growers and ginners varied over time. Ransom [48
] (p. 23) observed that in the early stages of the industry the mill operator would return “to the farmer the products of his seed, after deducting an amount sufficient to cover the cost of production and a reasonable profit”. Three decades later, Deasy [51
] wrote that cotton producers would usually get bales of lint back upon completion of ginning operations to dispose of as they wished, while the bulk of the seed was bought on the premise by the ginner. Seed would then be purchased from many other small operations, gathered until one or more railroad cars were filled, and shipped in bulk to crushing mills. From there crude oil was barreled and shipped to more distant refineries.
In the early twentieth century demand for cottonseed was sufficiently strong that, for a time, “many small mills [were] erected near the cotton fields, and these get their seed from the neighboring producers” ([56
] (p. 245); see also [48
] (p. 68)). Ransom [48
] (p. 19) believed that smaller operations would prove viable on account of their proximity to cotton fields that would allow them to market their seed locally “without freights… where they are needed by the farmers, stock-raisers and dairymen, at least expense than their larger competitors” and that these advantages would “probably be sufficient to sustain these small mills in any competition coming from the larger interests”. This being said, many “operating refineries at centrally located points” controlled crude oil plants “located at the sources of the seed supply” [47
] (p. 37) and, as Carlson [53
] (p. 405) observed a few decades later, “like all new industries, cottonseed processing appears to have attracted many who expected to make quick fortunes” but ignored broader logistical and commercial considerations. Over time a number of these small mills did not survive the consolidation that followed changing market demand, improved processing technologies and the advent of trucking. By the early 1950s, all processing plants in the cotton belt states were distributed on the basis of the local volume of seed production. As a result of the low density, bulkiness and perishability of cottonseed, it was then typically uneconomic to ship them “for crushing purposes more than 200 to 300 miles as a maximum” [53
] (p. 405).
If whole cottonseeds did not travel far, their by-products typically would. From an early date cottonseed cake and meal not only found a ready market both in the south and other sections of the USA, but also in much of Western Europe. Brooks [54
] (p. 330) thus observed that “much of the Chicago and Kansas City dressed beef shipped to all parts of America in refrigerator cars is simply concentrated cotton seed meal and hulls” while “many farmers near enough to the mills” were then feeding cottonseed products to dairy cows in “dairies near the larger southern cities”. Additionally, many early purchasers of cottonseed meal were located in northern European countries such as Denmark, England and The Netherlands where cheap American livestock feed (that included both cottonseed products and other cereal grains), combined with other animal feed from Eastern Europe, profoundly altered the nature of local agricultural productions. The case of Denmark is illustrative in this respect (see Brandt [70
] and Henriksen [71
] for a more detailed treatment).
In the second half of the nineteenth century Danish farmers reacted to the availability of cheap animal feed imports by specializing in more lucrative livestock and dairy productions, in the latter case imported feedstuff proving absolutely essential to expand production from summer to year-round dairying. Although limited quantities of American cottonseed meal had been bought before, Danish imports took off after a near failure of the Russian sunflower crop and a drastic reduction in the availability of sunflower cake [48
]. A few years later Ransom [48
] (p. 57) could thus write admiringly of the “famous Trifolium dairy in Denmark”, at the time the largest in the world, where “15,000 head of milk cows are fed on cottonseed meal”.
As a result of this open-trade policy, between the mid-1870s and the mid-1920s, the Danish cattle herd doubled, the pig herd increased six-fold and the chicken flock fourfold. By 1938, the British (56%) and German (20%) markets absorbed more than 76 percent of Danish exports, then mostly consisting of butter, eggs, lard and bacon. By embracing free trade Danish farmers not only discovered “the fields of production in which they had the best opportunity to compete successfully with the farmers of the world, but they also were able to develop their own abilities, their agricultural production and marketing plants to almost functional perfection”, the result being “a most remarkable degree of culture and the art of decent living” [70
] (pp. 271–273).
Foreign markets played an even more significant role in providing early outlets for American cottonseed oil. As mentioned before, American consumers were originally not fond of vegetable oil. On the plus side, upland cottonseed oil had many advantages over alternatives (including pima cottonseed) then available to European mills and consumers. Furthermore, parts of Europe were then struggling with a shortage of vegetable oils and dairy products. As Ransom [48
] (p. 35) put it, a “butter shortage, almost a famine, already exists, and it is said that in some parts of Europe the people have not seen real butter in twenty years”. As a result, “during the early years of its manufacture cottonseed-oil was almost entirely exported to foreign countries, and export figures for those years represent very nearly the production of the country” [47
] (p. 23). Ransom [48
] (pp. 10–11) later observed that, despite increased home consumption (albeit more than made up for by increased domestic supply), cottonseed products had “invaded the great olive groves of Europe and Asia” and were then “competing on equal terms” with their production. Brooks [47
] (p. 362) further observed that the best grade of upland cottonseed oil (“summer yellow”) was used in many European countries (at first mostly Holland) in the preparation of dairy and lard substitutes and in salad oil while the inferior grade were converted into soap (at first mostly in France).
Although the evidence presented in this section is but a glimpse of the rich history of the development of the cottonseed by-product industry, access to distant markets provided consumers in many locations with superior products than would have been the case if recovery linkages had remained local. Long-distance trade also made food production and provisioning more resilient overall while lessening the environmental impact of residual materials otherwise destroyed locally and substituted by (if at all possible) less efficient alternatives in other locations. Baffes [59
] (p. 4) provided additional evidence for these claims by observing that until the mid-1980s in most West and Central African cotton producing countries the cottonseed typically “went to waste with no value attached”, but that as a result of improved transportation and a more diverse economic base cottonseed oil is now consumed by humans and the cottonseed meal by animals.
Another way to look at some of these issues is the tension in Chad, Burkina Faso and Benin between ginners who “believe they can sell seed at a higher price if they export” and crushers who argue that “government should mandate that ginners sell only to local industries at prices they can afford” [72
] (p. x). Although not a perfect antecedent, one can get a glimpse of the negative impact of a coerced local use of residuals by examining earlier calls for greater consumption of cottonseed products in the American South. Ransom [48
] (pp. 10–11) thus believed that doing so would “make the South the great cattle-raising section of the Union” and argued that “if a general policy of feeding some cattle on every farm was adopted by our farmers it would lead to the establishment of packing-houses, and this would make the South the great livestock section of America” rather than being a net importer of beef. (Ransom also suggested how, by relying on abundant cottonseed meal, Georgia could become a top producer of mules and work horses, a proposal that would soon be put to rest by Henry Ford and other automobile pioneers...) Ransom’s vision became a reality in the Southwest (i.e., Texas), but not in the Southeast as the region would eventually specialize in other types of meat animals. Suffice it to say that in recent years Georgia, Alabama, Arkansas, North Carolina, Mississippi and Texas have been the top US states in terms of (chicken) broiler production [73
]), but that as of 2015 only Texas was a significant beef cattle producing state (13.14% of total US production, the largest in the nation), while Alabama (27; 1.36%), Georgia (30; 1.16%), Mississippi (31; 1.01%) and other southern states were marginal producers [74
]. Texas also turned out to be the only southern state of significance in terms of milk cows [75
]). Devising policy interventions on the basis of a single input would have thus arguably ignored the importance of many other factors and alternative use of scarce resources, in this case from land use (reflected in its price) and climate to the proximity to markets. Had resources been arbitrarily diverted to cattle rearing, both cottonseed producers and consumers of cottonseed-based products would have been unnecessarily harmed.