AN ECONOMIC STUDY OF THE EASTERN BEET
SUGAR INDUSTRY

Thesis for the Degree IéfrPh. D.
MlCHlGAN STATE UNIVERSITY
Robe” Alton Young
19.63

THESIS

 

,_ ,,A —/’/l’
, I/r/I/fl Th'eflréquiremems for

_2h..D.._.degree W31 Economics

Major of so:

1);” July 9, 1963

0469

LIBRARY

Michigan Sm:
University

 

 

  
 

  
 

LIBRARY

M MW”! 8 I!”
U lei-vanity

ABSTRACT

AN ECONOMIC STUDY
OF THE
EASTERN BEET‘SUGAR.INDUSTRI

by Robert Alton Young

Beet sugar production in the Eastern Region (Michigan. Ohio,
Indiana, Illinois and Wisconsin) has in the last three decades been
characterized by a decline in the level of production. both absolutely
and relative to other areas. The purpose of this study has been to
make an analysis of the factors influencing the industry in order to
determine its future prospects. Changes which provided for increased
supplies of sugar from the sugar beet section.were made in the Sugar
Act in.l962. This new situation raised questions concerning the
possibilities of expansion of beet sugar output in the Eastern Region.
Thus, this investigation was made with special reference toward
evaluation of the feasibility of proposals for expanded production.

The method of analysis was to examine the economic, technical
and institutional factors influencing the supply, demand and price of
beet sugar in the Eastern.Region. The analysis focused on conditions
in.Michigan and Ohio. for in none of the other states has a sugar beet
processing industry survived.

A study of production response for sugar beets was made using
the linear programming technique with variable prices. Production of
sugar beets has undergone a major transformation in the past decade.

The crop enjoys a strong competitive advantage over other typical crops.

Robert Alton Young

on the heavy, level lake-bed soils in East Central Michigan and
Northwest Ohio. However, high hauling costs limit this advantage to
areas adjacent to beet factory locations. The linear programming
analysis showed that supplies of beets would be expected to increase
to the limits of present factory capacity. As large expansion in
processing capacity through erection of new’plants is of questionable
profitability (see below). these supplies are likely to be adequate
for prospective processing capacity.

Beet sugar processors have been faced with rising costs of
labor and other resources. Sugar prices as controlled by the Depart-
ment of Agriculture under authority of the Sugar Act have not risen
as rapidly. Quality of the sugar beets has declined over the last
decade as farmers have increased fertilizer use and adopted mechanical
harvesting techniques. The factories in the Eastern Region are older
and relatively small. However, the construction of new plants entails
a capital outlay of 15 to 20 million dollars.

An analysis was made of the feasibility of construction of
new sugar beet plants. Under Eastern Region conditions. it does not
appear that the returns from such a venture would be sufficient to
justify the investment.

Beet sugar producers in the Eastern.Region supply only a
small proportion of the huge Mddwestern.market for sweeteners.

They are thus "price takers" and their level of returns is influenced
by the behavior of the larger suppliers from coastal cane sugar
refineries and Central and western.Region beet sugar producers.
Increasing output of beet sugar'in other regions has resulted in the

Robert Alton Young

surpluses from these areas being shipped into the Midwest. Price
concessions have been required in order to penetrate these markets.
‘A statistical analysis showed that these supplies have a measurable
impact on returns to Eastern.Region beet processors and growers.
Basis prices in the region are often lower than elsewhere in the
nation. This condition is partially offset by a freight advantage.
It was concluded that the outlook for the beet sugar industry
in the Eastern Region is for neither a period of rapid growth nor for
an immediate demise. A period of favorable prices and continued
technological advances are in the offing fer the sugar beet farmer.
The sugar beet processor can expect a somewhat larger supply of beets
to enable a more effective utilization of capacity. A period of
favorable price levels should exist for several seasons until world
supplies are brought into closer balance with consumption. These
factors should help offset the continued increases in resource costs
and.the decline in the quality of the sugar beets.

AN ECONOMIC STUDY OF THE
EASTERN BEET SUGAR INDUSTRY '

by

Robert Alton Young

A THESIS

Submitted to
Michigan State University
in partial fulfillment of the requirements
for the degree of

DOCTOR OF PHILOSOPHY

Department of Agricultural Economics

1963

(,K)

1

(A1“
\ .

WW5

The author wishes to express his appreciation to the many
people who have assisted with various phases of this study and made
its completion possible.

Thanks are particularly due to Professor Glenn L. Johnson
for his guidance and encouragement throughout the course of the study.

The author is indebted to Dr. L. L. Boger, Chairman of the
Department of Agricultural Economics, Michigan State University, for
arranging the financial resources which made the study possible. Funds
in support of the project were provided by the Marketing Economic
Research Division, Economic Research Service, of the U.S. Department
of Agriculture, and by the Agricultural Experiment Station, Michigan
State University.

Dr. Roy A. Ballinger of the Marketing Economic Research
Division, U.S. Department of Agriculture, assisted with the research
project at a number of points and read and criticized portions of the
final manuscript. /

Assistance and constructive criticisms were generously given
by numerous members of the staff of the College of Agriculture.
Particular thanks are due to Dr. V. L. Sorensen for his help and
guidance during the final phase of the work. Professors Clifford
Ifildreth, Leonard Kyle and Karl Wright criticized earlier drafts.
Milton Erdman and L. S. Robertson of the Departments of Farm Crops

and Soil Science, respectively, gave freely of their time and knowledge.

ii

Appreciation is also expressed to those in the beet sugar
industry who provided data and other assistance. P. A. Reeve and
G. E. Nichol were particularly helpful.

Thanks are given to Mrs. Arlene King, Laura Flanders, and
others of the computing staff for their competent and cheerful
assistance in the compilation, processing and summarization of the
data and computations, to hrs. Lynn Rooks for typing of portions of
an earlier draft, and to Mrs. Helen Rishoi for her patience and care
in typing the final manuscript.

The cooperation of the many growers and processors of sugar
beets and the users of sugar from whom the data was collected is
gratefully acknowledged.

Finally, the author wishes to thank his wife, Lynn, for her
patience and encouragement, during the preparation and completion
of the study and for the countless hours she spent in typing and
proofing the manuscript.

Any errors which remain in the manuscript are the respons-

ibility of the author.

iii

TABLE OF CONTENTS

AKNW T O O O O 0 O O O O O O O O O O O O O O O 0 0

LIST OF m 0 O O O O O O O O O O O O O O O O I O O O O

HST OF APPENDIXE O 0 O O O O O O O O O O O O 04-. O O O 0

Chapter
I .
II .

V.

INmODUCHON C O O O O O O I O O O O O O O O O O

HISTORICAL, ECONOMIC AND POIITICAL BACKGROUND . .

A.
B.

C.
D.
E.

General - About Sweeteners . . . . . . .
Sugar Beet Production in the Eastern
Region................
Economic Characteristics of the Market
forSugar...............
The United States Government and the
SugarIndustry ............
International Markets in Sugar . . . . .

SUGAR BEET PRODUCTION RESPONSE I: TECHNOLOGY
AND R$OURCE ORGANIZA‘HON

A.
B.

C.

IntrOductory O O O O O O O O O O O O O 0

Technical Aspects of Sugar Beet
Production in the Eastern Region .

Resource Organization and Supplies .

SUGAR BEST PRODUCTION RESPONSE II: ANALYTICAL
MODEL.......'...............

A.
B.

C.
D.

Static'Model of Production Response
inSugarBeetS............
Results of the Static Linear Programming
AWSis O O O O O O O O O O O O O O O
Other Influences on Production Response .
Summary and Conclusions from the
Analysis of Production Response . . . .

SUGAR BET PROCESING O O O O O O O O O O O O O O

A.

The Production Process and Input-Output
RelationShiPSeoeoeeeeoeeoo

iv

Page

ii

11
16

30

39
57

69

69

86
96

109
112

112

Chapter Page

B. Returns to Alternative Methods
ofAddingPlantCapacity........ 119

VI. MARKETING, DISTRIBUTION AND DEMAND . . . . . . . . 130

A. Sources of Supply and Channels of

DiStributiOnooeeeeeeeeooeel3o
B. Components of Demand for Sugar . . . . . . 138
C. Sugar Pricing and Prices . . . . . . . . . 145

VII 0 SUMMARY AND CONCLUSIONS 0 e e e e e e o e o e e e 164
BIBLIOGRAPHY e o e e o e e e e e o. e o e o e e e o o e e e 147
MW e e e e e e e o e e e e e e e o e e e e o e e 179

Table

2.1

2.2

2.3

2.4

205

2.6

3.1

3.2

3-3

3.#
3-5

306
4.1

#.2

LIST OF TABLES

Beet sugar factories in operation in the
EaStern Region, 1900-1963 e e e o e e e o o e e e o e

Acreage and production of sugar beets and
production of refined beet sugar, U.S. by states,
SBlGCtedyearseoeeoeeeoeeeeeeeeoe

Wbrld sugar production (in 1,000 of metric tons,
raw value). Crop years beginning March 1 . . . . . .

Selected estimates of price and income elasticity
Ofdemandforsugar......o..........

world centrifugal sugar consumption, 1959 . . . . . .

Wholesale prices of sugar compared with indices
of prices of all foods and of per capita disposable
incomagl935-6200090000eeeeeoooeee

Selected temperature and precipitation data,
three Stations in EaStern Beet area 0 e e e e e e e 0

Expected average yields per acre, sugar beets and
competing crops under improved practices on selected
soil management groups . . . . . . . . . . . . . . .

Acres blocked and thinned per worker per season:
four Michigan Factory Districts, 1955-62 . . . . . .

Classification of Survey Farms by size and type . . .

Land use on surveyed farms: average acres per
fambycrOpSeeeeeeeeeeeeeoeeeooe

Resources on representative farm situations . . . . .

Projected costs and returns per acre to sugar
beets and competing crops, Michigan and Ohio
dismctS. 1966 O O O O O O O O O O O O O O O O O O 0

Selected physical inputs per acre,sugar beets and
competing crops, Michigan and Ohio districts,
projectiontol966 .................

Page

14

15

l?

21

31

52
61

62
6t;

77

78

Table

4.3

4.4

“.5

“.6

4.7

#.8
5.1
5.2

5-3
5.4

5-5
6.1
6.2

6.3

Projected optimal resource organization and
investments-~medium field crop farm without
livestock, Saginaw Valley-"Thumb," Michigan,
1966(Ca561)eoeeeeeeeeooeeoeee

Projected optimal resource organization and
inwestments--medium.field crop farm with.live-
stock, Saginaw'Valley-"Thumb," Michigan,
1966(Ca562)eeeeeeeeeeeeoeoeee

Projected optimal resource organization and
investments--field crop farm, Northwestern
Ohi0.1966eeeeeeoeeoeeeoooeeo

Effect of distance to sugar beet factory on
proportion of farms growing beets, 1960 . . . . .

Distribution of su ar beet farmers by distance
to delivery point factory or railroad loading
point), Michigan and Ohio, 1960 . . . . . . . . .

Measures of variability of gross income per acre
for sugar beets, dry beans, corn, 1946-61 . . . .

Production and related labor requirements for
three hypothetical sugar beet factories . . . . .

Physical inputs and cost assumptions for
hypothetical beet sugar factories . . . . . . . .

Capital investments for three hypothetical plants

Income and expenses per ton of boots sliced,
hyPOtheucalfactorj-eseeeeeeeeeeeoe

Income and expense statement for hypothetical
fac'borieseeeooe-eoeoeeoeeeeeee

United States sugar receipts and production,
bysourceofsupply,1962............

Distribution of direct consumption sugar by
primary distributors, 1962 . . . . . . . . . . .

Domestic shipments of corn sweeteners, selected

years......................

Page

88

9O

93

98

98»

104

122

123

125

131
132

134

Table
6.4

6.5
6.6

6.7

6.8

609

Page

Total and per capita sugar distribution by
primary distributors for consumption in the
U.S.,Selectedyearso.............. 137

Deliveries of sugar by type of buyer, 1949-62 . . 140

Sugar deliveries by type of product or business
or buyer, calendar year, 1962 e e e e e e e e o e 142

Receipts,production and distribution of sugar
by states and regions, October, 1961, September,
1962. 1.000 Me. refined value 0 e e e e e e o e 153

Beet sugar production, U.S., and beet sugar
distribution, East North Central states . . . . . 156

Selected cane and beet sugar wholesale prices,
with tax, by areas, annual average, 1947-62 . . . 159

viii

LIST OF APPENDEXES
Appendix Page

I Chronological History of Beet Sugar
FaCtOries in the EaStern Region 0 e e e e e e e 180

II Table 8 O O O O O O O O O O O O O O O O O O O O O 184’

CHAPTER I
NC N

The Department of Agriculture classifies sugar beet producing
regions as "Eastern," "Central" and "Western." The Eastern Region is
comprised of Michigan, Ohio, Wisconsin, Illinois and Indiana.

The last decade or two has witnessed major transformations in
the conditions under which the boot sugar industry in the United
States operates. Some of these changes are technologcal; others are
the result of economic shifts, and others may be termed political or
institutional. Marv of these have affected the whole of the industry,
but a number are localized in the Eastern Region. As background for
the problem, let us briefly sketch the nature of some of the changes.

Sugar Beet Pmductionw-Tne sugar beet crop has long been
known as a high cost, labor intensive enterprise. In the past two
decades research work by the United States Department of Agriculture,
the land grant colleges and experiment stations and the sugar industry
has resulted in dramatic changes in the production technolog of the
sugar beet. Since the introduction and complete adoption of mechani-
cal harvesting techniques, the heavy demands for migrant labor in the
harvest periods are a thing of the past. Research in plant breeding
and in mechanical and chemical weed control show great promise of simi-
lar elimination of hand labor for "spring work." Per-acre yields are
also advancing due to more intensive use of resources, improved
varieties, and shifts to more favorable locations. These yield

increases are taking place more rapidly in the Eastern Region than
elsewhere, so that state average yields per acre have on occasion
in recent years exceeded those of some of the irrigamd areas of
states farther to the west.

W.—Major technological advances and increased capi-
tal inveth are evident in the processing sector as well. However,
the apparently optimisuo outlook for the beet grower is not completely
mirrored in the Eastern Region processors' situation. be last two
decades have witnessed a decline in the region's sugar production both
relative to other areas and absolutely. Michigan, once a major center
of beet sugar production, has fallen from third among the states in
the middle flairties to a position of seventh in 1962. Factory mmbers
in that state have dropped from sixteen in 191» to five in 1962.
Ohio's rank has also declined somewhat, and the last remaining plant
in Wisconsin did not slice beets in 1962. Even after this reduction
in capacity some processors are unable to contract as much acreage as
their capacity warrants. However, these figures do not tell all the
story. Much of the decline in production and number of factories can
be attributed to inappropriate location of factories relative to raw
material supplies. The remaining factories appear to be in localities
where beets enjoy a more favorable competitive position. New invest-
ment ani fruits of research have increased the daily and annual slic-

ing capacity so that the output of the present eight plants slightly
succeeds that of the 22 plants in Michigan and Ohio in 1925.

Ww—Sugar produced in Michigan and Ohio supplies only
a small portion of the total consumption of these states. About 35
percent of all sugar delivered in Michigan is of local origin, and

the figure is typically between 10 and 15 percent for Ohio. the

five states of the region absorb nearly one-fourth of sugar
deliveries in the U.S. Less than 8 percent of this huge market

is accounted for by the Eastern Beet Sugar Industry. Location in
such a deficit market is favorable to Eastern Region producers, but
other factors operate to reduce this advantage. In recent years there
have been supplies of Central and Western beet sugar in excess of

the demand in those regions. Surplus sugar has come East to Chicago
and the nearby areas, and price concessions have been necessary in
order to penetrate this market mich is also supplied by cane refiners
on the Atlantic and Gulf Coasts. Competition is intensified in
Southern Lower Michigan by a freight rate structure which is more
favorable from certain Rocky Mountain points to that area than to
Chicago. The Southwestern Lower Michigan sugar. market has come to be
known as the “coffin corner“ in the trade.

On the demand side of the marketing picture, the major con-
suners of sugar are now the “industrial users"; the food surfing and
frees-ing, baking, dairy products, cum and beverage industries now
absorb over 60 percent of the United States' annual consumption of
sugar. these new markets pose new problems to the sellers of sugar.
hey denmd a wider range of products which met meet more exacting
specifications.

munch me political front, the sugar industry operates
under what is probably the most complex and extensive set of regula-
tions of an agricultural commodity. A number of important changes
have been put into effect in the Federal sugar regulations, particularly

as they relate to the future growth of the domestic beet industry's
share of the sugar market. he presence of an unfriendly regime in
Cuba, long a major supplier of sugar for the United States, has
required that other sources of supply be found. Among the steps in
this direction has been a change in the provisions of the sugar
legislation which will enable the erection of several new beet sugar
factories in the United States.

Neg
Sugar beets and beet sugar do not account for a large portion

of the farm income of the Eastern Region or even of the producing states
in the Region. However, for the several thousand farmers who grow beets
in Michigan and Ohio, the best sugar processing industry is a major
market, and in the communities in which the processing facilities are
located, the industry is an important part of the local economy.

the changing econodc and technical conditions focused attention
on the value of an econouc study of the industry. In 1961, largely
through the foresight of personnel at Michigan State University, the
present stuck was initiated with the purpose of making an economic
investigation of a nuaber of the problems confronting the Eastern Beet
Sugar Industry. Since that time, the study has taken on a new and
inediate significance. Because of the potential effects of further
shut-downs of plants to the farmers and localities concerned, individuals
and groups at local and state levels have also become concerned that the
down-trend in best sugar factory mmbers might be continuing.

More recently, the provisions in the 1962 Federal sugar legis-
lation for additional sugar beet acreage and plant capacity have resulted

in proposals for construction of new processing facilities in the
Eastern Beet Area. The capital outlay envisioned in these proposals
is of the order of 15 to 20 million dollars. It is obvious that unwise
investment could entail capital losses of large magnitude. The alter-
native of expanding existing facilities also has its proponents. It
is therefore important that a careful analysis of the factors influenc-
ing the outcome of all alternative courses of action be available to

the parties concerned.

W
the foregoing brief discussion of the industry points up

some important characteristics of the Eastern Beet Sugar Industry.
no small proportion of the market which it can supply dictates that
producers in the region are ”price-takers." me market is mainly
influenced by supplies from cane refiners on the Atlantic and Gulf
Coasts and from beet sugar producers to the West.
he conceptual framework appropriate to the subsequent analysis

is the theory of interregional trade, which is the modern refinement
of the theory of comparative advantage. The pure theory may be sma-
marised as follows:

more are a set of regions with different resource endowments

trading in some homogeneous good. Positive transportation costs

exist between regions. Composite supply and demand schedules

are visualized for each region for the product in question.

An equilibrium solution would indicate (a) the net price in
each region, (b) the quantity of exports and imports of the

good in each region, and (c) the volume and direction of trade
in the good between each possible pair of regions.:L

PreliIdnary Considerations
Geographical Area - Enpirical estimation of supply and demand
relations for sugar for each of the several regions of the United States
is an enterprise beyond the scope of this study. the analysis will be
confined to a consideration of such relaflonships for the areas presently
producing sugar beets in the five states of the Eastern Beet Sugar Region.2
Marketing Stage - The price-making forces may be examined at
a number of steps in the channels from farm to consumer. In this case,
the forces affecting both the price of sugar beets and the price of
sugar Idll betreated.

Supply

In the static theory of the firm, the supply relation for a
given product is determined by (a) the price of the product, (b) the
cost of resources required in its production, and (c) the production
function (the relationship between resources and output), given, of

 

1mm- s. Enke, “Equilibrium Among Spatially Separated Markets,”

. Vol. 19. No. 1. January, 1951. 3.. also Ronald Highell
“Jon De m“. ~’. ' .". ‘. - .' '1 CM.’
Mass" Harvard University Press, 193., Chapter 2.

 

231m the field mm» for this project were completed, some
interest in the beet industry has been evidenced in Eastern Region
states not now producing beets (Indiana, Illinois and also New York).
file data in this stuck relating to sugar beet production applies only
to Mchigan and Ohio areas presently growing beets. This information
has some relevance to conditions elsewhere in the region but should be
interpreted with considerable care for such applications.

course, the usual assumptions of a profit-madmizing firm under conditions
of perfect knowledge.l

Uncertainty, fixed factors, capital rationing, nomonetary
goals, multi-product firms and complementary and supplementary relation-
ships are complicating factors which must be taken into account.

mese general principles apply to both the farm and the process-
ing firms in the present case. Accordingly, the analysis of the supply
side of the equation shall consider technical prohction relationships
and the price and supplies of resources for both the production of sugar
beets and competing enterprises and for the processing of the best crop.

Institu‘uonal restraints on sugar supplies are of major
importance in the present case. A thorough examination of Federal
sugar policy thus is necessary for the understanding of sugar supplies
and prices.

Demand

Final demand for a product is considered to be chum by
consumer preferences and incomes. In the case under consideration, it
has been noted that a large proportion of sugar purchases are for
industrial uses. his demand is I'derived" from the demand for the
various sugar containing final products. The nature and elasticities
of these markets differ. Accordingly, the characteristics of each of
these markets require separate attention.

 

1%, m1 0.. In... and Concepts in Supply Analysis," in

Earl 0- M. 9—411:- -. «18.. W Arm.
Iowa, Iowa State University Press, 1 1.

W
The objective of this thesis is, then, to present the results

of a stub of the economic factors influencing the Eastern Beet Sugar
Industry. In view of the current requirements, the analysis will be
carried out in terms of the problems of and potential for expansion of
the acreages of sugar boots and plant capacity in the region.

These objectives will be approached in the following steps:

1. In Chapter II, the historical and economic background will
be described, and the development and operation of the federal sugar
programs will be discussed.

2. InChaptersIIIandIV, ananalysiswillbemadeofthe
projected future competitive position and expected supply relation-
ships for sugar beets in the region.

3. Chapter V will examine certain econondn relations in the
processing sector as they relate to supply and price of sugar.

4. me characteristics of the sugar market Idll be described
in Chapter VI and an analysis made of the special conditions affect-
ing the marketing of sugar in ma... where Eastern beet sugar 1.
sold.

5. In Chapter VII, the estimates and analysis of previous
steps will be integrated and conclusions drawn about the prospective
position of the Eastern Beet Sugar Industry.

CHAPM II

HISMIC, ECONOMIC AND POLIHCAL MWD

A. General - About Sweeteners

be class of compounds which the chemists call I'sugars" or
'saccharides" are members of the larger group of organic compounds
termed carbotydrates (that is, mounds these molecules are formed
from atoms of carbon, hydrogen and oxygen). Sugar molecules have a
unique structure and arrangement of the atoms of these elements .
he simplest sugars, which are called momosaccharides, usually have
five to seven carbon atoms in a molecule and about two hydrogen and
one oxygen atom for each of carbon. A semen example of the mono-
saccharids is dextrose (also called glucose) which has the formula
C5H1205. Honcsaccharides may combine to form higher sugars ('oligo-
saccharides'). me disaccharide of formula 012322011. termed I'sucrose,”
is the product which is co-cnly called Huger." It is a usually
stable combination of the two monosaccharides, dextrose and levulose.
Hencefcrth, unless otherwise specified, in this discussion the term
'sugar' will be used to refer to sucrose in its various forms.

me only commercially important sources of sucrose are the
sugarbeetandsugarcaneplants. As the sucroseisintheplantin
pure form, the process of recovery is one of extraction, rather than
of chdoal modification. The refined product of either process is
chemically identical and only an exhaustive laboratory analysis of

10

the tixw amount of residual impurities can differentiate between the
two. RefinedcanesugarconsumedintheumudStatesisusuallythe
result of two processings. The sugar cane stalks are crushed at a
cane mill, and there a ”raw sugar“ of about 97 percent purity is
recovered. The final refining usually is accomplished in large
refineries located in various large seaboard cities.

The sucrose is usually produced in crystalline form, although
some cane refineries are equipped to produce a liquid sugar which does
not pass through the crystalline stage. In the crystalline form it
maybegrounduptobecome powdered sugar oritmayberedissolvedto
become a liquid sugar. The 'brown' or 'soft' sugars are composed of
very fine crystals of sucrose with highly refined sirups added to give
the special flavor and consistency. when a sugar in water solution is
treated by heating in the presence of acids or certain enzymes, the
sucrose breaks down into its two components, dextrose and levulose.
nae resulting solution has less of a tendency to crystallize than sugar
and is valued in certain industrial uses such as candy-making and
beverage-bottling. This process of breaking down sucrose is called
"inversion,'I all the resulting product is known as 'invert sugar."

Other saccharides of cosmercial importance are those refined
from the hydrolysis of starch (usually cornstarch). Dextrose (identical
to one of the components of sucrose) is a monosaccharide produced by a
complete ludrolysis or conversion. It is not considered to be as sweet
as sucrose but has other useful properties. Partial We of
cornstarch can result in a prochact known as I'corn sirup.‘I It contains
chiefly dextrose, maltose and higher saccharides. Several grades are

11

produced. depending largely upon the total reducing sugar content of
the sirup. his sirup also say be dehydrated to produce “corn sirup
solids“ which has nary uses in industrial food manufacturing.

Certain other organic compounds have been found to has sweeten-
ing properties. Saccharin and certain cyclamates are the nest common
examples. These compounds substitute for saccharides in dietary uses
since they have no caloric content but a relatively large sweetening
power. Hence. they are termed “non-caloric” sweeteners.

Uses of Sweeteners

The main function of sweeteners is as a flavoring. Besides
having an attractive taste in themselves. they enhance and bring out
the flavors of other foods tdth which they nay be combined. hey can
also serve as a preservative. as in Jane or Jellies. In baking.
sugar provides food for yeasts. and the desirable brown color on the
crusts of baked goods comes from the cancellation of sugar from the
heat of the oven.

B. Beet Sugar Production in the lastern Region

he first attempts at beet production for sugar in the United
States occurred in the 1830's in Pennsylvania and later in Massachusetts
and Michigan. Several other efforts got underway in the next three
decades before the California Beet Sugar Manufacturing Conpuv com-
nenced operations at Alvarado. California. in 1870. This factory is
called the first successful beet sugar plant in the United States. for
a factory (since completely rebuilt) is presently operating on the
original site.

12

In the meantime. a number of other factories were estab-
lished. leaning upon the European experience for both equipment and
knowledge. he industry during this developmental stage was given
important encouragement from the Department of Agriculture. James
ulson. who was Secretary of Agriculture under three Prehidents. and
Dr. Harvey W. Riley. Chief Chemist of the Department for nearly 1K)
years. instituted research programs to determine the best locations
and methods for beet production and worked unceasingly to encourage
new capital investment in beet sugar factories. he revenue tariffs
on sugar in the Nineteenth Century provided some protection from cane
sugar imports to the fledgling beet sugar industry. when these
tariffs were repealed for a short period. a bounty replaced them.
Under these influences a great number of best sugar enterprises sprang
up. Seventy-one factories were built during a 10-year period. 1897-
1906.1

Valey's studies indicated that the best climate for the sugar
beetwasinanareawherethemeansmmler temperature fallsbetween
67° and 72%.2 In 1898 he produced a map which delineated the most
favored areas. he regions so designated included the areas near the
Great Lakes. across the Northern Great Plains. below both Eastern and
western Slopes of the Rocky Mountains. ad along the Pacific Coast in
California. It is interesting to note that most of the sugar beet

 

lUnited States Department of Agriculture. Sugar Division.
"..'. ‘ . _ _. ' -- i- Washington. D.C.. 1%1e

20. 3. House of Representatives. 55th Congress. 2nd Session.
Documentlo.3%. S ~- 8-, e-s -
ington. D.C.. Gov't. Printing Office. l898.

 

 

13

operations remaining at the present time are located within the
areas specified 65 years ago by Wiley}

A siseable portion of the industry's development in that
period at the turn of the century was in the Great Lakes area.
particularly in Michigan. (Of the 71 new beet sugar factories
reported in the decade from 1897 to 1906. 22 were in Michigan and
nine were in the other Great Lakes States.) be large expansion in
Michigan was partly a reflection of a bounty of one cent per pound
offered by the Michigan Legislature in 1897.2

Since the early burst of expansion in Michigan. the center of
gravity of beet sugar prochiction has been moving westward. As shown
in Table 2.1. new factories in the region around the Great Lakes
region have ceased operations. Meamdnile. new plants opened and
existing plants expanded capacity in the Plains. Mountain and Western
states. Table 2.2 shows that the decline in production in the Eastern
Region has been even more striking when related to the growth in total
production of best sugar in the United States. California and Colorado
have maintained their position of leadership in total sugar production
while Idaho. Minnesota. Washington and Montana have moved up in the
rankings ahead of Michigan. Beet production in Indiana and ascensin
has ceased and only a relatively small acreage is still produced in
Illinois.

 

ISee. United States Department of Agriculture. Farmer's Bulle-
tinNc. 2060. Nu, - 2 9 . C - Sta . Wash-
ington. 13.0.. 19

2hr an interesting first-hand account of the origin and
development of the beet sugar industry in the Great Lakes area. see
Oviatt. C. R... "Sixty Years in Sugar.” U.S. Department of Agriculture.
A353. W No. 128. December. 1962.

       
     
 

  
 

-.l

   

ll}

m 2.1. BEET SUGAR memes IN ommon IN the mm may.
1900—19631

 

 

 

1900 10 1 1 1 o
1905 20 1 3 1 o
1910 17 2 u 1 o
1915 16 5 a 1 1
1920 l? 5 5 1 1
1925 17 5 4 1 o
1930 16 5 1+ o o
1935 16 5 2 o 0
19116 16 5 2 o 0
19195 11» a 1 o o
1950 13 4 1 0 0
1955 9 3 1 o o
1960 5 3 1 o o
1963 5 3 0 o o

 

lDerived primarily from 0.3.11.1" Sugar Division. W
W Washington. 13.6.. 1961.

15

.soween .32” e5 nevus 33.3:er neeeeo gone! s." Esau «San-lea Dunc a?

.33: go s." neeoeooad she .3 use wean .303 5.8: a."
8.88.1 3.8 .388 Show 8. .388 .13 5 588.3 us announces v.3 53 3315 \u

dean—sauce: .396 neon
.3. an. a8." £3.38 a; :19»... :8... 33.8.: Hans-33m .8983

:33 63.85am can .3 .65 .382 Sam ween shoves: “eons—om}

 

 

and: $13 8.3 838 88.3 mm» 3.8 98.3 a 88.8 Rafi Rm .3. .38
mama 38.." m3 3...... 1.3.." R Ra.“ an. mm 33 :8 8 >133... .850 .3
o Won min an." d 3H mfi 9 8n n3 3 gonad
mama \ can; «in 3a in H8 8n n.” «an Eu 3 songs:
{an an... d 8H mead 3m 2 m8; 8.. an a man on $8.83.
an; “.3 8 an cu m." a 8m 8 «8 88 R 38
an; «as in can; an“ R a8; 8n .3 «NJ as an .35
.5; as 8 SQ." was on m3; 8... 8 and... :8 an anion.
Rn.“ main 5 when new; 8 End in; 8 wand «24 E 3.3
8%.. m8 2. one; 82. 8 n8; n8 8 8a.~ a.” k. stun;
«8.... n8 Mm 88.“... So an inn .8 2. «86 a8 8 833.
8a.... a8; 8 83 E 3 1.8.... 3m 8 tin m8; «Na Susan.
32 85.... .5 «88 1.8; an “an.“ 8.3 and 81» 8.~ Ra 8.83
«8.3 8n... .3 82$ «.8... 8H anus Sn.“ and «in.» «mod «3 €888
.r . a..- an..- n «a. ;.. . . .. a... u .q a. .. w an « --.. .45..- u
83 h 83 n 83 n 83 . o8H. 83 n 83 i .88 n 83 . o8a . o8a . 83 .

.11.. “.66 insane. .. one 7.3.... 1.1-. ”.11.. 7- «1. .. 31.... .4... a
noamuuoamsuaemnuoamnneamnnaem”noninfeamanaemnsoam. teaming.
gamma-ween. one 35.3338“ ems «newsmatem» ewe anew—5.33m” ewe a
veemnaemsmaueaod.»eemaneusn.gasgagagaaeaagag.

E . :. n 1.....-

x 84H Bond»
.35.. B .m. o .38 a Bag .8 2.50808 8.4 .85 38 8 85088.. 9: 836a .~.~ a

 

 

 

16
C. Economic Characteristics of the Market for Sugar

Production and Supply

Cane sugar supplies about 55 percent of the total world market
of 56 Iillion tons of centrifugal sugar (see Table 2.3). the agri-
cultural organizations which produce cane and beet sugar show a rather
remarkable contrast. Both the cane stalk and the boot root are relatively
perishable and bulky so that the sugar fills must be located in the
groping areas. Sugar cane is usually grown in a nonocultural system.
with vast tracts around the raw sugar mills devoted entirely to the
culture of cane.

Sugar beets. on the other hand. typically are included in a
livestock-crop rotation agriculture in temperate climates. he crop
is grown by individual farmers under contract to a factory. nae neces-
sity of growing best: as part of an extended crop rotation nukes it
unfeasible for a factory to own and operate an agricultural operation
of the scope necessary to provide the raw material for a factory. A
factory processing 2,000 tons of beets per day for 100 days must draw
upon 50 to 75 thousand acres of adapted cropland (assuming 16 tons per
acre yield and a rotation of it to 6 years duration). lhe by-prodncts
of the sugar beet harvest (beet tops) and of sugar extraction (beet
pulp and molasses) all find value in livestock feeding operations.

Supply Response in Sugar

Isa-ination of the history of the sugar industry there free
market forces have been allowed to reign show that supplies of sugar
have been very inelastic to increases in price within the production

mm 2.3. m SUGAR PRODUCTION“ (IN 1.000 or MEMO TONS. m
VALUE). (:30? YEARS BEGINNING MARCH 1

 

 

8..

 

Europe

Beet
Cane

0.8.3 .3.
Beet

North and Central America
including Caribbean

Beet
Cane
Hon-centrifugal Cane

South America
Beet
Cane
Non-centrifugal Cane

m. (including Mainland China
and Oceania)

Beet

Cane

Hen-eentrifugal Cane
Africa

Cane
World Totals

Beet

Cane

Total Centrifugal
Total lion-centrifugal

11.795
35

6.195

2.165
11.950
315

70
6.175
875

2.555

21.200
28.880
50.080

7.4140

.60

10. 520
30

5.967

2, 260
12,405
310

85
6.100
860

1.135
8.675
5.850

2.675

19.970
29.380
“9.850

7.440

l -6

14. 515
35

6.9156

2. 375
13.690
265

65
6.250
930

1.310
5.805

2,1l-OO

25.210
31.1160
56.670

7.000

 

"Source: Food ani Agricultural Organisation. United Nations.
nan... Italy. 19,61.

18

period. However. the output is very responsive to higher prices over
a period long enough for the financing and erection of the necessary
milling and transportation equipment. his relationship has been
particularly true in the case of cane sugar. due largely. no doubt,

to the relatively plentiful supplies of adapted land and of labor in tropi-
cal regions. Wolf asserts that tropical countries can expand output
tithout increasing costs for a considerable range, providing only that
capital is available for mills.1 Declining prices have not resulted in
the equivalent reduction in output and the industry in such cases has
suffered through long periods of low prices follovdng overexpansions.
he theoretical framework developed by Johnson and others provides an
explanation of this behavior.2 Briefly. this analysis shows that where
resources cannot be disposed of at prices equal to their cost of acquisi-
tion. the profit machining firm will not reduce output for some range
of falling prices. 'Ihe size of this range depends upon the difference
between acquisition and salvage prices of the relevant resources. The
case of a sugar mill or a factory demonstrates this property to a
striking degree. Processing facilities. and in the cane areas the
standing cane crops, are resources which have little or no alternative
use when sugar prices fall. When the demand for sugar. and hence the
danand for these resources used in sugar production declines. the

 

Wolf. H. A.. e U Sta s Su ar P ts ct
23.93220 Doctoral dissertation. Univ. of Michigan. 1958. Univ.
marofiln. Ann Arbor. Michigan.

2See Johnson. Glenn 1... "The State of Agricultural Supply
Analysis.” ng 9f Fem Econgmics. Vol. 1+2. No. 2. May. 1960. and
also Edwards. Clark. "Resource Fixity in Farm Organization,” Jggnal
9; Earn: Ecgnggcs, Vol. #2, No. h, November. 1960. and references
cited.

l9

salvage values can be quite low. Thus. it is implied that falling '
prices would have relatively little effect on output and general over-
investnent in sugar facilities are quite likely to be followed by long
periods of chronic heavy stocks and depressed prices. The tendency
toward goverment intervention in sugar industries precluded aw
extensive test of this proposition. for outpat has been reduced by
decree in new countries there the free action of entrepreneurs has
failed to do so.

he aperience of Cuba in the 1920's is illustrative. Extremely

high prices were followed by a short depression which occurred after the
wartime levels. spurring large investments in cans milling eqfipaent
and plantations. Output Jumped some 12 percent between 1923 and 1924
(using 1921-23 as a base period) and 28 percent more in 1925 as the new
fills cane into operation. In the meantim. the high price of 1923
emouraged increases in output elsewhere around the world which caused
the price to collapse while the increases in production were occurring.
m. relatively large (28 percent) increase in output in 1925 had fol-
lowedayearinvdzichpricehaddeclinedbyoverathirdfronthe
average level of 1923. Prices continued to decline. dropping down to
Ml» percent of the 1923 level in 1925 and remained down in 1926. Prodnc-
tion in the leantine did not show a decline until 1926. nearly 2 years
after the first price drop. is suggested by the theoretical analysis.
this decline was finer relative to the price decline. being on the order
of 7 percent. It took action by the Cuban Government to reduce output by
a further 10 percent in the 1927 crop. although the price of sugar was
but m1: of its value u years previously}

 

311.11. H. 1.. 31:. s P c
923- 22.2.3.3.-

 

he most important deterfinants of sugar consumption are
sugar prices and the income level of common. Data on per capita
consumption show considerable variation among nations. nose dif-
ferences are largely explained by the income level of various countries.
Viton and Plgnalosa of the United Nations Food and Agricultural Organi-
sation (FAD) made an exhaustive study of the demand for sugar} They
applied statistical regression techniques to both cross-sectional and
time series data. as well as sumarizing previous efforts in this field.
Sore of their estinates of income and price elasticities are reproduced
in Table 2.1+. The estimates for countries classified asto income level
showed that changes in income at a relatively low level of per capita
income are likely to be associated with a more than proportional change
in sugar consumption. while income changes are likely to have such less
effect on consumtion in the developed countries. It appears that in a
highly developed economy. such as that of the United States. this relation-
ship between incomes and consumption becones relatively stable. In the
estimates shown in Table 2.1+ for three different periods in the United
States. only finer changes have occurred in the income elasticities.
'lhese relationships are also evident in Table 2.5 which presents total
axd per capita consunption for various areas in the world. The neasure-
nent of price elasticity (the effect of change in price on consumption)
also is illnfinating. In low income countries. consunption is quite

 

lViton. A. and Pignalosa. F.. ”bends and Prospects in World

Sugar Consumption." f a1 E . Sta
gee. Vol. II. Nos. 1 and 2. l 0. FAQ. Bone. Italy.

21

TABLE 2.‘&. SHRED ES'IIMA OF PRICE AND INCOME EASTICITI 0F

 

 

DEMAND m2 SU
: Price : Income
= W—
Groups of Countries Classified by Income2
Low Income Countries -1.08 1.23
Medium Income Countries -O.86 0.71;
High Income Countries -O.37 0A0

United States. Selected Year33

1921 - 1938 .o.3o 0.34
1921 - 1938 plus 19% - 1951 -o.26 0.27
1921 - 1938 Plus 19% - 1956 -0.28 0.27

 

1v1ton and Pignalosa. 9343.. See also no, United Nations
Cmdity Bulletin Series 140- 32. W
Wm. Rome. 1961. by the same authors.

2Data from postwar years. Income levels are defined such that
Medium Insane Countries are those with per capita income falling
between $200 U.S. and $500 U.S. Low Income Countries have per capita
incomes below this range. and High Income Countries above it.

alias series analysis.

responsive to price change; the estimated percentage change in
consumption being greater than the percentage change in price. How-
ever. in the higher income countries the change in price has relatively
little effect on the quantity demanded. In the United States. as
iniicated in Table 2.4. the elasticity is estimated to be only about
-0.27; that is. only a relatively small change in the quantity denuded
is associated with a given change in price. These properties of the
demand for sugar suggest that. particularly in high income countries.
prices would be quite volatile. and relatively small deficits or sur-
pluses in supplies would be reflected in rather large novments in

MOOe

22

new 2.5. ms consume» sum CONSUMPTION. 1959l

 

 

 

 

 

: Total : Per Capita
: Consumption : Consumption
h“ : (1.000 metric : (pounds

=w) 1 v
western Europe 10e721 7“
North America 9. 223 105
Central America 1.898 6?
Near East (Asia) 1.310 32
Far East 5.819 16
Africa 2.641 24
Oceania 713 101
East Europe and U.S.S.R. 8.556 62
Mainland China 1.300 4

World « 116.728 36
ISouroe: FAG. United Nations. 8

w Rome. Italy. 1961. Table 12-A and Table 12-B.

u. no United States'Government and the Sugar Industry

s -- a

he main interest of the Federal Goverment in the sugar
trade during the Eighteenth and Nineteenth Centuries was as a source
of income. Inelastic demand and well defined trade channels made
sugar an excellent vehicle for gaining revenues. It is reported
that the sugar duties during the last century made up nearly 20 per-
cent cf all custom collections. A by-product of the tariff was the
protection afforded to the infant sugar cane industry of Louisiana
and later to the Kingdom of Hawaii. (his latter nation was given
duty-free entry under terms of a treaty in 1876.)

In 1890. sugar duties were removed but a two cent bounty on
domestic sugar afforded protection. In 1891}. when the tariff was

23

reinstated. the duty on sugar was explicitly intended to continue
protection of the domestic industry. as well as for revenue.1 Behind
the tariff barriers and with the assistance and encouragement of the
Department of Agriculture. the domestic beet sugar imstry developed.
The Spanish-American War brought new sources of sugar supplies into
the United States' market as the new territories of Puerto Rico and
the Phillipines received chity-free status. and Cuba was afforded a
preferential tariff rate. The economics of these areas. as well as
that of Hawaii. soon specialised in cane sugar production. and their
econofic well-being was dependent upon both United States' policies
and demand for sugar. United States' policy since this time has
always been fomlated with explicit references to the responsibility
for the well-being of these nations.

me industry enjoyed a period of relative stability and growth
up to and through the First World War. However. soon after this time.
the picture changed. In the early 1920's a period of favorable sugar
prices induced large investments in cane producing and processing
capacity. particularly in Cuba. Coincidentally. nationalistic policies
carried out by several European countries brought recovery to the beet
sugar industry in that region. Prices fell rapidly. the supplies
continued to increase and subsequently declined only a relatively small
amount. so stocks began to accumulate in exporting countries. The
United States Congress responded to these conditions by raising the

 

lSee the United States House of Representatives. 53rd Congress.
2nd Session. He s be ttee and Means
Document No. 3. Government Printing Office. Washington. 0.0.. 93.

24

tariff three times in order to protect the domestic boot and cans
iniustries. The Smoot-Hawley Tariff of 1930 raised the Cuban duty

to two cents per pound of sugar. and to two and one-half cents per
pound on sugar from so-called full-duty countries. (Cuban sugar had

a 20 percent tariff preferential. which together with Cuba's advantage
on shipping rates made Cuban chlty the effective rate.) During the
earlier part of the period. the tariff had successfully insulated the
domestic industry in the world market. m the 1930's. with a world-
wide collapse in demand from the depression. heavy stocks of sugar and
continued excess capacity made even the Smoot-Hawley Tariff ineffective.
Insular and continental sugar areas increased production sharply in the
next few years. apparently because the high tariff made sugar a
relatively attractive place to commit resources during the general
depression. even though absolute prices were low. Cuban sugar exports
were cut back severely. but not enough to maintain the market in the
face of increasingly large insular supplies. The general effect upon
the economy of Cuba was calamitous. and the situation eventually resulted
in the Government of that country being overthrown in 1933.

W93:

In 1933. the Tariff Coulission reported that the situation was
"disastrous for both Cuban and American producers.“ and reccnended to
the President that the sugar supplies from all domestic and insular areas
in Cuba be limited. and that duty on Cuban sugar be reduced} The sugar

 

 
  

111.3. Tariff Commission. a- n- ,
lie. 73. Washington. D.C.. Govermaent Printing Cff‘ice. l9

25

industry and the Administration were unable to reach agreement on a
program that year. but in 1934 President Roosevelt sent a message to
Congress asking for legislation which would achieve the following
objectives:
(1) To maintain the existing acreage of sugar boots
and sugar cane in the Continental United States.
but to limit further expansion;
(2) To increase returns to domestic growers;
(3) To stabilise production in the insular areas;
(1+) To check the decline of imports of Cuban sugar
as a means of restoring Cuba's piwer to purchase
America's agricultural products.
Most of the President's recomendations were contained in the Jones-
Ccstigan Act. which was passed later that year as an amendment to

the Agricultural Adjustment Act.

WW2

Most of the general principles embodied in the original sugar
legislation in 193‘! remain in effect to the present time. The present
law is known as the "Sugar Act of 19148." ani it was married in 1951.

 

1'Source: Quoted in Bernhardt. Joshua. W
W Washington. 19%. Sugar Statistics Service.
Po 159-

2A more detailed discussion than found in this section is in
The U. S. Su ar Pro an S or Re rts 121+. August. 1962. For even
more 35-1353 amfiic treahneng of sugar legislation the reader may
consult the following: Dalton. John E.. SugarI A Case Stfl in
Government Control. New York: Macmillan and Company. 1937: olf.
He xe, nose 3 31‘ 1011 and Its In ct on Cuba. Gas (31 e: Bernhardt.
Joshua. e ar us the odor Government. 0 . cit.;
Polopolus. o s. c ure er ormance o e tates
Beet Su ar Indus Under oral otection ntrol. unpub shod
act—orig dissertagon. UHversIfi of fififoraa, Berkeley. 1960;
Turner. Jack T.. The Marketing of Sugar. New York: Richard Irwin.
Ines. 1956s

26

1956. 1960 and 1961. In 1962 it was again amended and extended
through 1966. The following sections will discuss the major provisions
of the present legislation and modifications as they have been made
since 1931}.

Total Quanuty of Sugar to be Marketed

he Secretary is to determine the quantity of sugar which
could be marketed bring the following year. we quantity is to be
such as to result in prices that are not excessive to consumers nor too
low to protect the welfare of domestic producers. is a starting point.
he is to consider the recent past consumption. state of current
inventories. and the effects of expected changes in demand. In deter-
mining the price level. the relationship between the index of prices
paid by farmers and the price of raw sugars is to be taken into consider-
ation. 'lhe initial detenination is made in Dacenber but can be
adjusted throughout the year as changing conditions warrant.

Supply Quotas for Domestic and Persia: Producing Areas

The Secretary is authorised to establish supply quotas to
domestic and foreign areas. the legislation has spelled out the
precise foraula by which these are to be distributed. In the early
years. the quotes were based on fixed percentages of the estinated con-
sumption. (hem of the total consumption was then prorated according
to the original shares. In the Sugar Act of 1948. this approach was
changed by assigning fixed quotas to the domestic areas (Mainland
Beet area. Mainland Cane area. Hawaii. Puerte Rico and the Virgin
Islands). ant the Phillimnes. Host of the balance sent to Cuba except
for a negligible amount. to other foreign countries. Thus. Cuba

27

received nearly all. of the consumption increases and the domestic
areas were prevented from aw over-all growth. me 1952 Amendments
did not change this provision. but in 1956. 55 Percent of the growth
of the market in excess of 8.350.000 short tons. raw value. was
allotted to domestic areas. 'lhe 1962 enactments again changed the
basis. Domestic areas are now assigned a basic quota of 5.810.000
tons. plus 65 percent of requirements in excess of 9.700.000 tons.

no domestic beet and mainland cane areas share such increases in
proporflon to their basic quotas-«roughly on a three-fourths to one
fourth basis. ‘mough Hawaii and Puerto Rico have failed to fill their
quotas on occasion in recent years. a provision is included to increase
their quotas if the size of future crops should visa-rant it.

 

1962 Amendment provided for reserves of acreage sufficient to yield
65 thousand short tons. raw value of sugar. to be committed for new
boat sugar factory areas. or for expansion of existing factories.

This provision represents a major departure from previous policy in
regard to expansion of the boot sugar sector. In the period since the
end of World War II. only four new plants for processing sugar beets
have been erected in the United States. the most recent being in 1951+}
At the present writing (1963). the Department of Agriculture has allo-
cated acreage reserves to new processing facilities in California.
Texas. North Dakota. South Dakota and Arizona for the crop years 1963
through 1965.2 In case this reserve is not utilized for new factories.

 

1Western Sugar Beet Producers Association. Beet Sugar Hand-
M, 2nd Ediuon. San Francisco. 1961.

2Federal Register. March 5. 1963. Cgmmitment 9f Naggnal Sugar
get Agreage Reserze. 1962 and Subsequent Crops. Sugar Determination
851.1. Amendment Three.

28

it is provided that it can be allocated for expansion of capacity in
existing areas.

Ww-The recent developents in political rela-
tions between the United States and Cuba have caused some changes to
be made in the latter country's quota allotments. During the previous
Cuban regimes. substantially all of the United States sugar needs were
provided by the domestic areas. the Phillipines and Cuba. Since the
break-off of diplomatic relations between Cuba and the United States.
Cuba's foner share. which was about one-third of the total quotas.
has been allocated to a rather large number of friexxlly nations. The
1962 Amendments provide Cuba uith approximately 1.5 million tons. The
bill further stipulates. however. that when the United States is not in
diplomatic relations with a particular country the quotas are not
granted. Cuba's quota thus has been designated as a so-callad l"ilebal
Quota.” uhich may be filled by competitive imports from other foreign
producers. mesa importations are subject to an import fee thich
approximates the premium the United States price is over the world price
of raw sugar. than such a premium exists.

The 1962 Amendments also reduce the amount of off-shore ”direct
consumption" (refined) sugar such m be imported. Prior to 1960.
about 650 thousazui tens of direct consunpdon sugars entered the United
States from off-shore (including domestic) producers. his amount has
heenreducedtoaboutZSOthousandtons. thePhillipinesbeingtheonly
‘ non-domestic supplier with more than a negligible amount of direct

consumption sugars.

29

Establishing Marketing Allotments

If a domestic area should have supplies in excess of quotas.
panielq selling might cause an unwarranted decline in price. In
order to promote orderly marketing. the Secretary may allocate the
quota among processors in each area based on past marketing history.

Assignent of Proportionate Shares

1n. Secretary may also divide the quota for a domestic area
among the farmers producing boots or cane. Inzis allotment. known as
a l'proport:l.onate share." may be expressed in acres. tons of cane or
beets. or in tons of sugar. this provision adjusts each area's pro-
duction to its marketing quota and insures that each farmer's share
is equitably distributed in the adjustment. the basis of the share
is usually past history of production. but the Secretary is instructed
to consider the interests of smaller growers and of new producers.
Producers are not required to abide by the assigned share but must do
so in order to receive "conditional payments.” (See below.)

Other Provisions

In addition to the benefits from price maintenance and
stabilization. legislation insures that the growers and workers are
able to share in these gains. Growers' incomes are augnented through
I'conditional payments.“ which are made at a basic rate of $0.80 per
ton of sugar produced. raw value. (This amounts to about $2.20 per
ton of beats.) me rate decreases progressively after the first 350
short tons refined value. to a mnimum of $0.30 per 100 pounds for
tonnages in excess of 30,000 tons. Receipt of these conditional pay-

ments is contingent upon the grower of beets or cane (a) complying nth

30

the proportionate share restrictions. when such restrictions are in
effect. (b) paying his hired workers in full and at not less than the
minimmn rate (which is also set by the Secretary of Agriculture). and
(c) abiding by the minimum age restrictions for juvenile workers.

he program also makes provision for compensation of growers for
disaster losses. Payments can be made in case of reduced yields
(deficiency payments) or in case of actual loss of the crop (abandon-

' ment payments).

Results of the Program

No attempt will be made here at evaluation of the sugar
programs. No lack of such analysis is to be noted. (See references
cited on page 25. footnote 2.)

the level and stability of the domestic sugar price under the
sugar program has apparently achieved the stated objectives of main-
taining the domestic industry. Prices to consumers have probably been
somewhat higher than would have prevailed had the quota system not been
in operation. As is shown in Table 2.6. the price of sugar is advanc-
ing about as rapidly as is the index of prices of all foods but not as
rapidly as the index of disposable consumer income. Substantial
prmldums over existing world sugar prices were received by the insular
cane areas of Puerto Rico- and Hawaii. the Phillipine Islands and. until
recently. by Cuba.

B. International Markets in Sugar
umoshemco and Swerling have commented that the “gradual erosion
of the 'free' market. characterized chiefly by the expansion of preferential

31

new 2.6. WHOLESALE PRICES OF SUGAR COMPARED WITH INDICE OF PRICESI
OF ALL FOODS AND 01" PER CAPITA DISPOSABLE INCOME. 1935-62

 

 

 

 

: Wholesale Sugar : JPrices of : Per Capita
Iear : Price Net Cash : All Feeds : Disposable

Northeast : gloss“ : IBM!
Cents per Pound Index Numbers. 1935-39 =- 100

 

1935-39 (Average) n.67 100 100
19100-111} (Average) 5.13 118 163
1945-49 (Average) 7.03 186 232
1950-51} (Average) 8.32 201 293
1955 8&2 212 323
1956 3.59 212 339
1957 3-97 213 351
1958 9-08 230 355
1959 9.14 219 370
1950 9-2“ 223 376
1961 9.21 2222 385
1962 9.372 221» 3973

 

2|’Source: Sugar Reports lo. 126. October. 1962. Table 19.
2January--Septmnber only.
3Jaxmary-July only.

cane sugar suppliers. has been the outstanding feature of the world
sugar eooncq of the hentieth Century. '1 They define the "free Ilarlcet'I
as that part of international trade in sugar which enjoys no special
privilege or protection in the country of destination. he United
States. thich represents nearly 20 percent of the world' s consumption.
has almost enurely insulated its sugar market from world economic

 

Inmoshenko. v. 2.. Swerling. B. c.. W My...
pe 325s

32

forces since 1931!. Another example of such policies is the United
Kingdom vhich. through the Commomvealth Sugar Agreulent. has arranged
to acquire most of her import needs at a negotiated (premium) price
from Ccuonwealth sources. As a consequence of arrangements of this
nature. the free sugar market represents only a fraction (of the order
of 10 to 20 percent) of total world production. It supplies only
residual requirements of importing countries.

Prices in the free market tend to be rather unstable. his
characteristic has been attributed to the low short-term elasticities
of demand and supply. such that small changes in the balance of produc-
tion and consumption in the residual market are associated with
relatively large flucblauons in price. he narrowness era! the
residual nature of the world market also are important contributing
factors. flmoshenko and Swerling also point out that importing countries
respond to cheaper sugar by increasing protection afforded to domestic
producers. rather than by increasing consumption}

he volatility in world market prices was well demonstrated in
early 1963. when reduced supplies to the free world from Columnist Cuba
and two years of short crops changed the supply picture such that world
prices for. raw sugar skyrocketed from a 20 year low of Just above 2.0¢
per pound (P.0.B. and stowed. Greater Caribbean ports) in late January
1962. to a 1&0 year high of over 12¢ in May 1963.

International Agrements in Sugar
i new International Sugar Agreement was negotiated in 1953 in

 

1m" P0 We

33

order to cope with some of the problems of the 'free' world market.
It.provided for export quotas. with the objective of’keeping prices
within a target "zone” of stabilizedprices.1 The refusal of certain
of the signatories to the agreement (particularly the recent Cuban
regime) to abide by the export quotas has made the Agreement
ineffective.

 

1%. e P0 3230

 

he stated purpose of this dissertation is to analyse the

effects of changes in various technical. economic and political
relationships on the prospects of the Eastern East Sugar Industry.
his and the following chapter will contribute to these objectives
by making an analysis of production response of sugar beats in the
region. O

“Production response'. or “supply response' are eoonodo terms
which refer to the relationships between the total supply of a given
product and the factors or forces influencing that supply. In the
static theory of production. the supply relation is completely deter-
mined by (a) the production functions (the relationship between
resources or factors and output) for the product in question and all
relevant competing products. (b) prices of the products and the capst-
ing products. and (c) costs of inputs or resources. given the usual
static assumptions of a profit maximising competitive firm operating
under conditions of perfect knowledge}

his provides a useful conceptual starting point. However. the
real world situation is much more complex. and accordingly. difficult
to approximate. A number of factors reduce our abiliw to measure

 

13.. Ready. 3. 0.. ~11... and Concepts in Supply Analysis." in

Ends. II- 0.. main ode» WW hu-
Iowa. Iowa State University Press. 1 . for a concise emery of the

theory.
314.

35

preciser the production response for a particular consodity. Among
these are uncertainty and lack of knowledge. capital rationing. non-
Ionetary objectives. technical changes. fixed factors. complementary
and supplementary relationships among products. and nary others.

he problen of production response is of both practical and
methodological interest in the case of sugar beets. is was noted earlier.
the acreage of sugar beets supplied to processors in the Iastern Region
has not always been sufficient to fully utilise existing plant capacity.
Hence. any proposals for expansion of the industry through investment
in plant facilities must demonstrate that the present production relation-
ships will undergo a sufficient shift to fully employ both present and
prospective capacity.

Wont procedure cal-cal: upland in production
response analysis is the application of statistical regression procedures
to tile series data. to neasure staustically the influence of selected
variables upon output. However. the facts presented in Justification
of the stem' seen to rule out such an approach. these facts imply that
the underlying structure being investigated is undergoing shifts. and to
attupt to predict the future on the basis of historical relationships
would be con-mt inappropriate}

in alternative procedure is to construct a detailed static micro-
economic nodel of representative farn situations. nake the necessary

assumptions. Judgments and projections about factor supplies. competing

 

1m: type of approach was applied in Perreault. R. P.. 3:;

Res nse offichianFarnersinEastCen alCoun esto
gelatig moss gf Sugar Beets and Field Beans. Unpublished Ph.D.
dissertation. Department of Agricultural Economics. Michigan State
Murdty. 1956.)

36

(heads. technoloy. and institutions. and determine the effect of
varying prices on output and return to resources under these assumptions.
his technique has been applied using budgeting procedures by Highell
and Blackl and by Schuh.2

In the last decade or so. the linear programing framework
using variable pricing techniques has been increasingly applied to this
sort of problem. his is a mathematical technique which finds the
m (or W of a particular linear function under certain
specified restraints. It is possible. under certain assunptions. to
represent the elenents of the static theory of the firm by a linear
props-ing nodel. Solution of the nodal for given product prices
deterlines the organization of resources and the amount to produce of
each eo-odity which nan-ices profit. Solving for several prices of
a particular product provides estimates of the optinua output of that
product under each of the various prices: that is. a suppr response
function.3

Wimb- sum nodal developed 1-
based on projections of technoloy. product prices and resource prices
for the 5—year period. 1964-1968. For convenience. the projections are
referred to as for the year 1966. the center of the period.

 

lMighell. a. L. and John D. Black.
M Harvard University Press. Cambridge. Mass" 1951.

23mm. 6. 3.. The 31122;: a; a; m the Deg-gt my 3115 as
W- mcmsan Amateurs max-neat
Station Technical Bulletin 259. East Lansing. 195?.

3s» McKee. Dean E.. and L. n. Loftsgard. "Fragraming Intra-
Farn Normative Supply Functions.‘I in Heady. E. 0.. 91:441.. eds..

t S Iowa State University Press. Anes. 1961.
for a discussion of the method.

37

The order of procedure in the remainder of this chapter is as
follows:

(a) Some previous studies of production response in sugar

beets vill be briefly reviewed.

(b) The past. present and future trends in sugar beet produc-

tion technology will be discussed.

(c) Estimates of current resource inventories on "typical"

sugar beet ferns will be presented.

Chapter IV will continue the discussion of production response
with a presentation of the assumptions. results and interpretation of
an analysis utilizing the linear programing technique.

as e s e e.-‘lhe Sugar Division of
the Agricultural Stabilisation and Conservation Service. Deparhsent of
Agriculture. has from tine to tine published neasurenents of responses
of planted acreage of sugar beets to relative prices of sugar and all
other crops. The analysis is in graphic form. and no statistical
neasures are presented. However. the graphic analysis suggests fairly
close relationship between sugar beet plantings. on the one hand. and
the relative price of raw sugar (raw sugar price. New York. 6 nonths
priortotileof sugarbeetplsnting. dividedbytheindeacofprices

room-d tor W .1

‘me work by Perreault2 for Eastern mchigan Counties is the

 

l‘Relationships Between Sugar Prices and Sugar Beet Plantings."
lOl. Septenber. 1960. Co-odity Stabilization Service.
U.S. Dept. of Agriculture. washington. D.C.

erreault. Roger.
esu- - .5 s A- -

Mic

 

38

only known stuw of supply response of sugar beets for the Eastern
Region. Perreault. using a recursive statistical model. treated the
planted acreage of sugar beets in the East Central Counties of mchigan
as a function of (a) the intended acreage of field beans. (b) the price
ratio of sugar beets and field beans the preceding year. (c) the price
ratio of sugar beets to livestod: products the preceding year. (d) the
cost of fall beet labor per year adjusted by the percentage of the
acreage mechanically harvested. and (e) a damn variable representing
weather conditions at planting time. lbs period under stuw was 1928-
1951}. with some years omitted. 'Ihese variables explained about 56
percent of the variation in planted acreage of sugar beets. but only
the ratio of prices of beets and field beans was feund to be statis-
tically significant at the 5 percent level. he analysis indicated that
a 10 percent increase in the ratio of sugar beet to field bean price
italices (1935-39 8 100) resulted in a 3.1 percent increase in planted
acreage of sugar beets. Other variables were tested. including the
yields of both sugar beets and field beans. the acreage of wheat. and
the abandoment of sugar beets in the previous year. None of these were
found to significantly affect the acreage of sugar beets planted.
Although it was not possible to measure their effects. weather varia-
tions at planting tins and uncertainties regarding labor supplies were
major disturbances affecting the acreage planted to sugar beets.
' The low proportion of variation in planted acreage explained
(£2 . .56) suggests that there are nary other factors. each with
relatively small influence on planted acreage. Perreault hypothesizes
that among these are extruaely adverse harvest weather in the previous

39

season. relative prices of crops other than beans. acreage allotments
on other crops. and distance to the factory. The long period of price
uncertainty before final settlement is one of a group of more subjective
factors. which also includes the effectiveness of processor fieldmen in
making contracts for acreage. and the unwillingness of producers to
sacrifice leisure and other satisfactions for the additional income

of beets when returns from other crops are at generally prosperous
levels. or when opportunities for off-farm work are available.

B. Technical Aspects of Sugar Beet Production
in the Eastern Region

m

Sugar beets have but one profitable market. the beet process-
ing factory. me sugar beet factory has but one profitable use. the
processing of raw beets for sugar. In order to protect the investment
both parties have in the crop. marketing is effected under terms of a
contract between grower and processor. 'Ihe agreement makes provision
for the number of acres. the conditions efdelivery. method and time of
pqmsnt. and numerous other details relating to seed. advances for
expenses against the proceeds of the crop. labor promenent and the
like. Some of the major provisions are discussed below. (here are
some variations in contract terms between compaues in the region so
that all ef the following statements may not apply in specific cases.)

megroweragreestodelivertotheprooessorallbeetsgrom
on the acreage contracted. Upon delivery. they are weighed and tared.
(To arrive at a net tonnage. the gross weight is reduced by the amount
of soil or other foreign matter in the load. and by deductions for

1+0

improper removal of tops and crowns.) the processor agrees that all
beets so delivered and accepted at the factory will be processed into
sugar. beet pulp and molasses; such products to be sold at the compatw's
discretion.

The comparw agrees to pay the grower a fixed proportion (usually
about 50 percent in the Eastern Region) of the 'net proceeds' from the
sale of sugar. pulp and molasses. The "net proceeds“ is defined as the
amount received by the compary (less ary differential received from sugar
pookod in other than 100 pound bags) after deducting actual cost of out-
bound freight. brokerage. taxes (including the federal processing tax of
$0.535 per cwt.) and certain other specified marketing menus. The
sugar per ton of beets may be determined by sampling each load. or more
comonly. by the average of all sugar for each factory district.

The grower receives an initial payment. usually in December.
which is based on "the highest rate the company deems Justifiable."
taking into consideration the expected production and returns from the
sale of the products. Other payments may be made. and final settlement
is usually due within 15 days after all products from that crop year are
sold. or on some specified date (usually in October of the year follow-
ing harvest) in the event all products are not sold by that time.

me share feature of sugar beet contracts appears to be unique
to this crop. me arrangement originated in the mirties when proces-
sors were caught between falling sugar prices and a fixed price contract
for beets. be original intention was not that the 50-50 share remain

permanent. but few changes have been made since that time.1’2

 

J“Guam. c. 3-. Wear. M.

2An example of a typical Eastern region contract may be found

in Jackson. Donald. W BBS-1+9. 0.8.
Dept. of Agriculture. Washington. D.C.. March. 1962. Appendix.

 

The primary :gisgn stem of the sugar best is the relatively
large amount of sucrose stored in its roots. Sugar beets may be grown

on a wide range of soils and in an equally wide range of climatic condi-
tions. Actual location of prcchxction of am crop is. of course. deter-
mined by the interaction of a umber of natural and economic factors
such as climate. soils. topograptw. competing crop and livestock enter-
prises. and cost of transportation to and extent of potential markets.

Sucrose is produced in the leaf of the boot as a product of the
process of photosynthesis. Most of it is subsequently stored in the
beet root. he sucrose mutant of the root averages in the neighborhood
of lllv to 16 percent at harvest time. High sugar content is of" consider-
able importance to the processor. and thus to the grower. since a higher
percentage of sugar can greatly increase the efficiency of the factory
operation. Also important to the processor of beets is “purity.“ the
percent of sucrose in the soluble solids of the beet. A high level of
impurities reduces the proportion of available sugar in the best which
can be economically extracted. A high sucrose content is typically
associated with a high degree of purity so that when large quantities
of sucrose are in the beet. a relatively larger proportion of that
present is extracted. A number of climatic. soil and management factors
are known to affect both sugar content and purity and. hence. the most
economic location of sugar beet production.

W.—A groving season of 150 to 200 due is
required to achieve adequate beet tonnage and sugar content. Some
observers indicate that the longer days in northern areas can offset

1+2

the shorter grovtlng period there. Rainfall requirements in non-irrigated
areas are about 15 inches during the growing season.

be critical condition for the econoslical production of sugar
beets is that the environment (be it controlled or natural) is such that
a relatively high level of sucrose is stored in the boot root during the
last several weeks before harvest. These conditions are provided
naturally where there are relatively cool. rainloss autumns. The growth
of the boot is apparently inhibited by the cooler temperatures. but in
the presence of adequate sunshine. sucrose will be produced and stored.
Rainy. cloudy and warm weather in September and October (which are
occasional hazards of beet production in Michigan and Ohio) are conducive
to rapid growth of the boot. which draws off energy rather than increas-
ing sucrose. In hot. arid climates. such as the Central Valley of
California. sucrose storage is induced by limiting irrigation water in
the late weeks before harvest of the crop.

The beet seed can sprout at air temperatures near to freezing.
but it does so so slowly as to produce a weakened seedling susceptible
to ”damping off' or ”black root" organisms. Temperatures above '45 degrees
allow a healthy emergence. After a period of conditioning. the plants
become nearly as cold harcw as small grains.1

Sgfl :gmemeptsw-lhe beet survives in a wide variety of soils.
Beets are most often found on soils which are deep. well-drained. and
have good moisture holding capacities. On these soils high yields are

 

lBrandes. E. W. and G. H. Coons. “Climatic Relations of Sugar
Cane and Sugar Beet.“ United States Dept. of Agriculture. Iearlggok _o_f
mm 19b1, Washington. D.C.. Goverment Printing Office. l9hl.

43

obtained without excessive management problems. In the Michigan and
Ohio areas where irrigation is not typically practiced. the heavier
mineral soils with high moisture holding capacities have an advantage
over the lighter soils during periods of insufficient rainfall. Soils
with properties which inhibit deep root penetration. such as high water
tables. repellent soil structures or poor aeration. tend to produce
beet roots of undesirable size and shape.

Climate in the Study Area

In the course of a discussion about difficulties with the best
crop in the spring. a man with long experience in the best industry in
Michigan was heard to remark. "Ibis has certainly been an unusual spring."
After a moment of reflection. he added. "But all springs in Michigan are
unusual.‘' me weather data in Table 3.1 are notable as much for their
range as for their means .

me climate in Lower Michigan and Northwestern Ohio may be
characterised as being humid and continental. Rainfall averages about
30 to 35 inches annually. tith somewhat more than half occurring during
the grating season. Length of the frost-free period averages around
150 days. but with considerable local variation. For example. the
eastern portion of the Michigan factory districts in Sanilac. Huron
and St. Clair Counties have a somethat later spring and somethat more
rainfall. Most of the present growing areas are close to one of the
Great lakes and so enjoy some moderating influences and longer frost-
free periods. me high variation in both rainfall and temperature data
which tr. shove: 1n fable 3.1 are important for the evaluation of the
adaptabiliw of the beet crop to the area. Bad weather in the plant-
ing or harvest seasons may delay or caplicate these field operations.

TABLE 3.]. SELECTED mm PRECIPITAEON mmm STA'IIONS

IN EASTERN BEE?

 

 

 

 

 

 

 

 

 

H9811 Tom 0 ‘03.; _
.Saginaw. Michigan: Sandusky. Mich. : Findlay. Ohio
Month i—Mfil 3 (ii—Hz? ) 3— (W
: Range : :Range : : Range
:Monthly 3 of :Monthly : of :Monthly 8 of
8 t 14.232 z : ions 8 Liana.
December 27.2 21.2-34.0 26.9 22.5-32.6 30.1 20.5-42.0
lime-1" 23e5 15e7-34e2 23e3 16.7-30.4 28e5 12e6-38e6
February 23.7 12.4-30.0 24.4 19.0-31.3 29.1 18.5-38.6
mm 24.8 24.9 29.2
m 32e3 26.2-45.1 52e9 22.4-46.1 37.2 24.4-49.4
1pm 154.8 37.9-52.6 45.6 39.8-52.3 118.2 40.8-51.6
m 56.3 50.0-62.3 55.4 50.8-60.9 59.7 52.9-69.4
sauna 44.5 51.3 48.1
June 66.9 62.0-71.9 66.5 61.1—71.1 70.2 63.7-77.4
July 71.8 67.n.76.1 70.3 67.u_75.6 7M2 68.0-80.1.
August 69.6 65.0-75.0 69.7 66.2-74.2 72.3 66.0-78.2
30mm 69.4 68.8 72.2
SOPtubor 6107 56e8-68e5 62e3 58.1-67.0 65e1 57e3¢71e1
October 51.1 44.1-58.2 52.4 45.9-59.8 53.7 44.9-61.8
NOV“ 37e9 29e9-u6e8 38o? 310743e3 40.4 34.7-50.2
AUTUMN 50.2 51.1 53.1
m 47.3 47.4 50.7

 

Excessively warn. hunid weather prior to harvest has encouraged top

growth at the expense of sugar storage and provided the preconditions

for infestations of the fungus disease. W leaf spot.

Soils of the Study Area

Soils of Lower mchigan and Northwestern Ohio are generally

formed from prinary materials of glacial drifts.

1

Sugar beets have

 

lUniversity of ascensin Agricultural Experiment Station.
Baum: a... 571+. Wm June. 1960.

45

 

 

 

 

 

 

 

 

no :H:

.3

 

 

8.3.8.3 Sfin $698.64 64.66 86.1364 +3.8 a
$4. 34. 86 E33
$6 .86 4M6 36.84 «66 $4646 64.... 83...:
QNeNs goo :NeN gerNmeO gem wheNINHeO geN “3300
844-636 $6 £6.36 86 “46.86 ~66 agnom
.864 86 S6 gm
$6.46 8.... 26-86 26 364.86 36 3&3
344%.“. #6 «46.26 36 86.86 Ra 42.
36.84 644 26.34 26 «66466 86 .56
$64 86 9.6 mag.“
$6.36 :6 36.86 :6 666.36 36 .3.
86.2.6 $6 2.1136 $6 36626 .36 44.34
86.6.4.6 RA «46.36 36 86.36 “64 :93.
R6. 86 £6 .55:
36.. 86 86.86 $4 «3126 $4 E336
$6.36 R6 36446 R4 ““643. 34 has»
36.36 «46 $6.86 84 646.63. 34 3.2.8.6
'43. a . 5.x n 43.3. 5 n 5.x .
cg » guns " owe—em " 35:02 " ownwm " 33:8“ "
Hoax d “$1.565 $9.846 . 58:
.30 .55 Smflofi 53:36 5334: .2395

peanut—co I H.n a

3.3.6.38»: 905m

.864 64 .54. .030 8.4 $343338

33m .8846 6 .4 .8333 438.424 830 8.4 .864 .8483 tum .BOHSm .3 3
.Hmlummmawm_.wnauquomooo .saonsm uona¢93_.m.p and ooaphom nunudpz.aduaaoaz ”adm4504z you ”consom\u

.Ofla §

 

cm." .3." . and omduobd
uhdv oouHJaofim

\m 3 \m \m 83 4&3 «NR «\m mm? 834 64? an} .4284 .8 own
)4 4434 3 Sn 4.4K 364 in» 2? N4} 4434 3% 3m .4234 .8 own

 

nogauomaoa
flag

 

 

 

 

 

 

gagcoo HA a

“7

proven to be especially well adapted to certain of the Hundo-Gley
soils. his group of soils was formed on glacial material in the
nore humid areas of the North Central region on sites that were poorly
drained but not not enough for the formation of organic soils. These
soils were deposited on what'uere then lake beds during the glacial
periods. The Hundc-Gley soils tend to be level. fertile. well supplied
with organic matter. but rather poorly drained. With the application
of practices directed toward maintenance of adequate drainage and
tilth. they are among the most productive of soils. In the North
Central region. large bodies of such soils are found in Eastern North
Dakota. Uestern Minnesota. along the Southeastern portion of the Lower
Peninsula of Michigan. and in the Northwest portion of Ohio.1

The Department of Soil Science. Michigan State University. has
classified Michigan soils into a number of ”Soil Management Groups."
based on the properties of surface texture. slope and degree of erosion
or stoniness of the soil profile to the depth of 3 to 5 feet. Soil
nanage-ent groups are identified by number denoting texture (ranging
firm 0 for clay to 5 for same) and the letter. a. b. c. denoting good.
imperfect. or poor natural drainage.2 Eatpected yields of sugar beets
and capeting crops on selected soil management groups are shoun in
Table 3.2. It nust be emphasized that these yield eetlnates refer to
ilproved practices (including tile drainage) by a grower who has the
necessary equipment and experience and under “average" weather conditions.
He irrigation is assumed.

1:14., p. 32.

zCooperative Extension Service. Michigan State University.
. . A _ _ , C - 3, Extension Bulletin E-159.

 

 

.6056: 3.. ”8.35.3.3 02 .3353 veeceflefio .3 30.335 .350 v5

omecddnv _ fiend—”.390.“ .omednfi. vefinoaaooou assume 3953 36.9 .3505 acoaomenda den 30%.?» no

3.on pace. 5.? 098.9893 Facesuedoa oonodom Haom 05. no women one neveafium .vomvodpoqxoe ed
.3fimuebfls 33m. confined: .pedpcedom 30m nodmdoaum .coevnonom .m .A no 3.9.3 one 03.3.3»de

 

.nmma :32:
.ananm god—3m :0.“ng .ooflfiom cofimnog 2.333000 .mpannepdcp 33m damaged: “condom?

 

mm 9m 3 mm om em 2 $53 as? 33.6
Diced magmas no 358.6
3.30m Jaded £833 om\n .on

3 9n 3 mm om mm in “3%.. been as. 233 o .n .3

on ma 2. 3 om mm 3 2.33. 30.2.9: .3
due: .333” made no eleod pm .3...

mm n5 om m: 03 on 8 383 8.
Hood he? @2393 3.303 em

 

 

 

1% J_,| » 2598 acoaomgez Adam

 

firm e 05 ngdzg AHom 93m 20
”won—H.055 gonna” an 30.5 mama and 9am .584 am 84me 8454 gonna .N.n a

49

A8 would be expected. most sugar beets are grown on the 2c
soils. The reader is urged to note the difference in expected yields
of sugar beets on 2c and other soils in comparison with such differences
in yields of other crops in Table 3.2.

ances S Bee

A considerable amount of published work on sugar beet production
practices is now available.1 However. in order to set the stage for the
specification of the predicted production relationships. we shall review
in detail the more important aspects of technological advance. both
accomplished and projected.

3911 genagemegt‘.—The size and shape of the beet can be adversely
affected by improper drainage. file drain lines at 4 to 6 rod intervals
in the heavy clay loam common in the Eastern Region are very effective
in reducing damage from excess moisture, as well as favorably influenc-
ing the umeliness which certain field operations may be performed. The
analysis of Cook. m..2 in Michigan indicates that the average yield
of sugar beets on tiled land exceeded that from untiled land by 3.1L tons
per acre over the three seasons. 1958, 1959 and 1960. his amounts to
an additional return in excess of W per acre per year. he proportion
of boots grown on untiled land in the region will probably be well below

10 percent in the current (1963) season.

 

1'See for example U.S. Dept. of Agriculture, Farmer's Bulletin No.

2060, Sugar Begt @2529 1% the North Central 3223, Washington. D.C..
GOV'te Printing Office. 19 . 3111 600k. Re Le, Je Fe Dads. and Me Ce
Frakes, 0 Pr uc ac ces f c an Su a Beet e s.
Michigan Agr. hp. Station Quarterly Bulletin Art. 114-38. Feb. 19 2.

2Cook. R. I... at, 5;" 1258.60 Motion fiactices 2f ficflgag
SE3 Est FQOEIS. 22' gte. Table 3e

50

figagew-“Minimum tillage" as developed by Michigan State
University's soil scientists has had the happy result of increasing
yields while reducing the number of field operations. thus reducing
costs. Yield of sugar beets was shown to decline sharply as number
of tillage operations (after plowing) exceeded two.l

Maw-Relatively large quantities of fertilizer are
applied to the sugar beet crop. Typical recommended application rates
might be in the range of 600 to 800 pounds of 5-20-10 analysis fertilizer
per acre. plus additional nitrogen side dressings in amounts depending
upon previous crop history and manuring applications.

It has been shown that a high rate of application in nitrogen
fertilizer can have detrimental effects on sugar content and purity
of the sugar beet.2 The problem is complicated by an apparent effect
of the level of soil moisture upon the relationship. A preliminary
hypothesis by Snydera suggests that relatively warm and rainy late
season weather combined with current levels of nitrogen application
(at a rate of 100 to 120 pounds per acre) serves as an explanation for
low sugar contents in the 1959 and 1961 seasons in the Eastern area.
Relatively lighter rainfalls and cooler temperatures in 1960 and 1962
were associated with more I‘normal" sugar contents in the beat deliveries

those years. which suggests that recomended levels of nitrogen

 

1mg. . Table 8.

28cc for example. Haddock. J. I... et. g" ”The Influence of
Cultural Practices on the Quality of Sugar Beets.“ Jm 2f the

mean Sages: 9f Sugar get Technologists. Vol. X. No. ll», Jan. 1959.

35mm. F. 14.. The Influence of Nitrogen Fertilization on
Yield and Sucrose.“ American Society of Sugar Beet Technolo sts.
1 , x. Ea Me _V s 1963 forthcoming).

 

51

application should be tempered by possible large adverse effects of
atypical weather conditions.

3m establishmgntw-The seed of the sugar beet is character-
istically a "multigerm" form; that is. each seed ball contains several
viable germs. When such a seed germinates. several seedlings sprout
from each seed ball. Experience over the years has shown that the
beats should be spaced approxim3tely a feet apart in the row. There-
fore. hand field operations were required to bring the resulting groups
of seedlings to appropriate stands. These operations are and were
started when the beets were about 1+ weeks old. The first step was
”blocking" which was the removal of soil and beats from the row with a
hoe. leaving beet-containing blocks at the desired interval. Then the
weeds and excessive beats from this block were removed by hand and hoe.
which was called ”thinning” or "singling.“ Such operations required as
much as 31+ man hours per acre. in the 1946 study by Johnson and Wright.1

Ehcperimental work has been done on a number of methods to
reduce the heavy work load for thinning. me first approaches were
aimed at mechanical modification of the seed ball to reduce the number
of germs per segment of the plant. The resulting “segnented” seed was
a major advance as the improved stand often permitted the worker to
operate with a long handled hoe in an erect position rather than on his
hands and knees. Another approach was that of genetically modifying the
seed so that it would have the one germ. his was made possible by a
discovery of plants with true "monogerm" characteristics in 19148. The

 

lJohnson. C~ En and Wright. 15- Tu W
Michigan Circular Bulletin 215. Michigan Agricultural Experiment
Station. East Lansing. Michigan. 191+9.

52

original stock lacked mam of the necessary qualities of yield. sucrose
content. and disease resistance. so a decade of laboratory and green-
house development was required before the first commercial scale
plantings of a satisfactory monogerm variety were made.

11:. successful modification of the beet seed has not resulted
in the complete elimination of ham! labor as had been hoped. Uncer-
tainties from weather and low germination rates require the planting of
several times the actual number of seeds that are needed in order to
be assured of a uniform stand. The hand blocking and thinning opera-
tions are thus simplified but not yet completely eliminated. Table 3.3
illustrates the trend in efficiency of labor utilization.

TABLE 3.3. ACRESBLOCXED AND TEENNED PER mm PER SEASONa FOUR
MICHIGAN FACTORY DISMCTS. 1955-6?

‘

 

 

 

 

1m : W
1955 8.9
1956 8.7
1957 9.6
1958 10.1;
1959 12.5
1960 12.7
1961 14.3
1962 16.5

 

*Data courtesy of Michigan Sugar Company. Saginaw. tachigan.
Refers to foreign national adult males only.

Mechanical methods have been sought to perform these operations.
and mam successful field trials have been completed. However. from

53

a farmer's viewpoint. the economics of these operations are not clear-
cut. for inaccurate machine settings can result in thinning of the stand
to a point which reduces yields below those achieved from hand methods.
In such event. the reduced labor costs generated by the mechanical
methods are quickly absorbed by reduced income.l

Famers have been reluctant to adopt mechanical thinning practices
in the Eastern Region. In the field survey conducted for the present
study. only an insignificant minority reported am such operation in the
1960 season.

The most recent approaches to the problem of establishing an
optimum stand have been in the direction of improvement in planting
techniques and in germination. Frskes. an present results of

.1960 studies in Michigan which indicate that yield and sucrose content
are not significantly different for beet spacings ranging from 50-150
beets per 100 feet of row. Precision planting of the moncgerm seed at

73* so inch intervals would result in a satisfactory stand for germination
rates even below 50 percent. Precision planting equpaent has been

developed which can accurately space seeds and leave the seed in an
environment most conducive to germination.3
Ww-Weeds compete with beats for soil nutrients.

13.. the results reported in Davis. 1. 1n. and Metzler. w. 11..
MW. Colorado state Umv. Em.
Station. Tech. Bull. 3. Fort Collins. 1958. Table 29.

zFraku. main WWI.-
Rastern Umted States and Canada Regional Meetings. American Society
of Sugar Beet Technologists. My, East Lansing. 1961.

n. R. 3.. "What's Happening to Beet Drills.“ W
W. Vol. L. No. 1. 1961. Great Western Sugar Comparw. Denver.
Colorado.

51+

moisture and sunshine as well as interfering in field operations. Weeds
growing between the rows are controlled by the conventional cultivating
techniques. Weeds within the row have been a more challenging problem.
lhey have been dealt with by hand labor. first during the thinning
operation. than in one. two or three hceings subsequent to this. Experi-
mental work in both chemical and mechanical procedures have developed a
number of increasingly successful methods}

One long-time sugar beet researcher has stated. What we must
do is to make the sugar beet as easy to grow as ary field crop; that is.
we want to change the sugar beet from a vegetable crop to a field crop.“
Some researchers in the agronom of the sugar beet are predicting that
the development of precision planting techniques and improved germina-
tion which permit the beet crop to be planted to a stand. when confined
with in-the-row weed control methods. have eventual praise of eliminat-
ing the hand labor traditionally required in the sugar beet field.

Ww-As noted earlier. the sugar beet delivered to
the factory should have its leaves and crown cleanly removed. be free
of dirt. stones and weeds. The crown is both relatively low in sugar
and high in non-sugars; hence. improper or incomplete removal of crowns
will adversely affect the rate of sugar per ton of beets which can be
removed in subsequent factory operations. The “topping“ of the beet
previously was done by hand laborers who followed the l'beet liftera
(which loosened the boots in the ground) and pulled the plant. sliced
off the crown and tops with a knife. and piled the beets for later

 

1Anderscn. R. N.. "Progress and Problems in Sugar Beet Weed

Control." MW America-n Crystal Sugar
Comparw. Vol. XVI. No. 1. l9 2. Denver. Colorado.

55

loading into trucks or wagons. The 1916 study in mchigan by Johnson
and bright reported that the hand operations required 28 man hours per
acre (or about 2.8 hours per ten) for pulling and topping and tho man
hours per acre (or about .5 man hours per ton) for loading} these
operations are now all performed by machines. Under normal conditions
one man with a one-row harvester can perform the operations to place
the topped beets into trucks at a rate of up to 8 to 10 tons per hour.
These advances have not been entirely unlisted blessings. as
machine topping. when not properly applied. can leave more tops and
crane and dirt in the delivered loads than did the hand operation.
Sugar content and purity in the beats that are sliced are thereby
reduced. and heavy tares are charged against the delivered loads.
W.nmsease control has often been
a major problem with sugar beet crops. One of the most expensive
cuseases in the Eastern Region is “damping-off." or "black root“ in
seedlings. his is a fungus infection of the root commonly associated
with cold. damp weather at the time the seeds germinate. U.S.D.A.
plant breeders in Beltsville. Maryland. an). East Lansing. Michigan.
are reporting promising results in breeding resistance to black root
into ccmercial varieties. Also a problem. particularly in Ohio in
recent years. is W leaf spot. a fungus disease of the beet
which thrives in warm. humid weather. Control has been accomplished
largely by breeding resistance into varieties. but significant increases
in both yield and sucrose content were obtained with spray applications
of oil-fungicide mixtures in 1961 and 1962 crop seasons in Ohio.

 

laohnaon and Wright. W. 221m.

56

kgemg fog highs: yieldsw-Research efforts are being
directed toward increasing yields by hydridization. Indications are

that both yield and sucrose content are improved in hybrid varieties.
For example. 1962 tests at East Lansing showed yields of up to 25 tons
per acre and sucrose contents exceeding 1? percent. Plant breeders are
confidently predicting that yield increases on the order of 10 to 15
percent over present commercial varieties will be achieved with the new
mbrids. Programs are underway to develop parental lines with the
necessary disease resistance and qualiw for hybrid seed production.

Another promising approach in search for high yielding varieties
is a relatively new technique of polyploidy. which refers to the increase
(usually doubling) of the number of chromosomes in the plant by applies.-
tion of certain chemicals. the resulting tetraplcid plants are some-
times back-crossed with the usual diploid varieties. resulting in a
triploid. The new varieties developed in these methods appear to have
considerable promise.

Some Michigan growers have reported strinng yield results when
four rows of beets are alternated with four rows of navy beans. Research
is being conducted on this developnent to determine the best row widths.
spacings and fertilizer applications . '

Wan-Recent research by plant breeders has suggested
that sugar beet strains canbe bred which will produce satisfactory
yields of roots and percentage of sucrose and purity as compared with
present comercial varieties even when harvested as much as 1+ weeks
earlier. The successful conclusion of such a research program would
add materially to the length of the harvest season and the processing

5?

campaign. thereby greatly increasing the efficiency of utilization of
capital equipment of both grower and processor. (The difficulty of
storing harvested beets in the periods of warm weather in September
and early October in‘the Eastern Region would limit the acreages where
this innovation would be effective to that which could be processed
during that period.)

C. Resource Organization and Supplies
eld S e - cedures and s
A field survey of sugar beet growers in Michigan and Ohio was
conducted in the latter part of 1961. Seventy-five Michigan growers
who delivered beets to Michigan factories and three Michigan growers
and 13 Ohio growers who delivered to Ohio factories were interviewed.
me objective of the survey was to provide estimates relating to

resource levels and organization and production practices on sugar

beet farms.
Sampling procedureSw-For the Michigan factory districts. the

survey was coordinated with one of those conducted for a study of feed
grain-livestock complex in that area.1 The population surveyed included
all fame located on certain specified soil associations in the Saginaw
Valley and Thumb region of Michiganywhose gross farm sales exceeded
$2,500. but excluding specialty farms such as poultry. fruit and truck
farms. (These excluded types are seldom found in conjunction with sugar
beet growing. so this distinction proved to be of negligible consequence.)
he soil associations chosen were on the lake bed soils adjacent to Lake
Huron and nearly coincides mth the present boundaries of the beet

 

1The results of that study are reported in Lard. Curtis F.,

Profitable Reorganization of Representative Farms in Lower Michigan

and Northeastern Indiana With Special Euphasis 9;} Feed Grain and Live-
stock, unpublished Ph.D. thesis. Dept. of Ag. Econ.. Mich. State Univ..

19 3.

 

58

grovdng area. The survey procedure was an area-segment type. A list

of 76 townships meeting the soil and location criteria was made. new
each township. two segments of two (contiguous) square miles were to be
drawn at random, and all farms meeting the population specifications
therein enumerated. It was determined from census data that approxi-

' mately eight townships would be required to meet the quotas of the survey.
his number was insufficient to insure an adequate geographic dispersal
by random drawing. Hence. the townships were ordered geographically and
every ninth one selected (using a random drawing to select the starting
point).

It was anticipated that the number of sugar beet growers would be
insufficient to meet the pro-established quota of 75 in this initial
sample. Hence, a procedure was devised to fill this quote while main-
taining the property of statistical independence among observations.
the procedure proved necessary as the initial area-segment survey
encountered but 42 operators who grew sugar beets in 1960. 'Dae additional
sampling proceeded as follows: a list of farmers who were sugar beet
growers for the 1960 crop year was obtained from the Michigan office
of the Agricultural Stabilization and Conservation Service.1 A list of
growers comprising every twentieth grower on the A303 roster was obtained.
Addresses of these growers were found and the list was ordered geographically.
Using a random starting point. the growers were then contacted in this
order until the quota was filled. In Ohio factory districts the
procedure followed was identical to that used to fill the Michigan

 

1m assistance of Edward Lunde and his staff is acknowledged.

59

quota except that the sugar companies provided the list of growers.l

Qggtas by gimp-In order to obtain a sufficiently large sample
for each size group in the Michigan districts. a quota system for each
such group was instituted. Sampling was random with the size of farm
variable during the first portion of the survey. From these first l+2
schedules it was estimated that the distribution of farms in the popula-
tion under study by size was as follows:

Small (120 acres or less) 38 percent
Medium (121-180 acres) 36 percent
Large (181 or more acres) 26 percent

The quota for each size group was set at 25. However. an error was

made in keeping the survey records so that when the final nmbers of
farms were tabulated. the precise quotas of 25 observations in each size
category were not met. No attempt was made to sample by size in the
Ohio districts.

Questionnaire and Interviewing Procedure
he survey questionnaire was quite extensive. so it will not
be reproduced here .2 It included questions of the following general
types: ‘
(a) resources-detailed answers regarding quantity and
quality of physical and financial resources were

obtained. including quantity and value of land.
machinery and equipment. buildings and livestock.

 

llorthern Ohio Sugar Compem. Fremont and Findlay. Ohio. and
Buckeye Sugars. Inc.. Ottawa. Ohio.

2See Lard. Curtis F.. Mt" Appendix C. for a sample
questionnaire.

6O

livestock facilities. liquid capital in the fem
of cash or crop inventories. net worth. and
operator. family and hired labor.

(b) production practices and input-output relationships--
these questions dealt with the amounts of inputs. such
as fertilizers and sprays. technology of input combina-
tion. such as loose housing-parlor or stanchion type
dairy operations. and certain production measurements
per unit of input. such as crop yield per acre. rate
of gain. and milk production per cow.

(c) resource demand and supply relations-mother questions
were devoted to obtaining estimates relating to
supplies and prices of inputs when such information
would not be generally available elsewhere. Examples
of such resources are credit from noninstitutional
sources (such as family or neighbors) and land avail-
able for sale or for rent in the farmer‘s immediate
neighborhood. Some questions were also related to
the off-farm Job opportunities for operator and family
labor and of the potential supply of such labor to the
nonfarm econow.

W.—1he interviews for the Michigan factory districts
were conducted in the summer of 1961. In order to have a complete crop
year's data. the production figures obtained pertain to the 1960 crop
year. and resource inventories were as of December 31. 1960. me Ohio
area was surveyed in November 1961. Data taken were thus for the 1961

crop year and resource inventories as of the date of the survey.

Survey Results

The emmerated farms were classified into three size categories
and three type categories. The type-of-farm classification was based
on the I'maJor enterprise" as measured by comparison of gross sales.
be major enterprise types encountered were dairy. livestock (hogs and/
or beef cattle) and field crops. The three sizes of farms were (1) 120

acres or less. (2) 121 to 180 acres. and (3) 181 or more acres. which

61

will be termed ”small." “medium.“ and I'large'I for convenience. The
distribution of farms and resulting classification is presented in
Table 3.1}. In both areas. sugar beet farmers were mostly in the field
crop category-.85 percent in Michigan and 68 percent in Ohio. The
balance. however. have a tendency to be livestock farmers in Ohio and
to be dairy farmers in Michigan. The most striking difference between
the areas seems to be the acres of land operated in the farm units.
Nearly 90 percent of the Ohio farms fall into the 'large" classification
of over 180 acres. as compared to 26 percent reported for the Michigan
sample. Important differences were also noted in the cropping programs
and enterprise organization in the two areas. As illustrated in Table
3.5. in the Michigan districts the major competing crop is seen to be
dry edible beans (usually the small white or pea bean). Farming in the
Ohio districts might be typified as "Corn Belt" in variety. All farms
reported corn and soybeans. and may had some sort of hog or beef
production enterprise.

TABLE 3.“. CLASSIFICATION OF SURVEY FARMS BY SIZE AND TYPE

 

 

: e C x ' es ° *
a ea
Small (120 acres or less) 21+ it 1 29
Medium (la-180 acres) 2]. l O 22
Large (181 acres or more) 19 2 3 2!}
Total 6n 7 a 75
Ohig 3”
Small (120 aiegss or 1388) O 0 g g
Hedi a s 2 O
Larg‘em(£8lz.]:cres ggmore) 9 1 1+ 14
Total 11 1 it 16

 

*Note that the size distribution given here is non-random. due to
the sampling quotas used for fun size. hrors in field survey records
resulted in the size groups failing to meet the quotas of 25 in each
group. See text for discussion.

62

.n.o 55 awed-m
.3333 one econ oodmfluoo no.“ Spam «no.8 .5338 you 33483 nae neon £939 .930 moesaosHm
.aepmoum edema took .39” hp voafion mesa noosHocHh

63.38.50 05 no
omeonos has gnome.» cedaeodfieneao 9.2.3 a.“ mans“ men???» He sense: 3 women nomoflsousm a.“ 235.2}

 

 

 

83 23 3 Rd 33 $3 _ $3 3.3 Added ed
p m cu m 3 mm 3 0 mm mm 2.... n3 3 made one .3.
as 33 so as as vb. as. as as 133 E
s we m 3 am e R 3 mu :3 3 on 386 a
E as as as :3 me as as as 33 so
u S m m mm mm D 8 r: we do as.6 33a 3
3 83 8; Rd 83 83 Rd 83 Amend as
n mm «H .3 mm 0 mm 8 me an 8H 3H d0.6 39E .33
2: 8V 3 2.3 A3 A8 33 Rd 38 $2.5 .3
N e m 3 a o is 2 mm . 3H 3 8H 8.6 3.5 53.2
2: Ge 5 $3 38 vb as 2.3 33 Windham :3
o s N m S e mm m 3 mm. in 3 do u 39E 33.6
3 o o 6 «gig

   

 

 

 

. ”spasm” gauge—om“ e085
odeH. imam. eaofim :Hassm seen?” them. he a shoe «homemade? used one.”
3. 31.616on 659 ,u ”.33. i a, ”3.6” .86. .86.

  
  

5335838

0.....

 

 

 

           

mmoflo Hm Eh am 9534 @454 «gm Eon 20 mm: Q23 .m.m a

63

Four "typical farm situations“ were selected for further analysis
on the basis of the distributions reported in the survey. For the Michi-
gan districts. dairy and livestock farms did not represent a sufficient
proportion of the population to warrant further analysis. Hence. the
three sizes of "Field Crop" farms were designated as representative of
the Michigan districts. All the useable interviews for the Ohio districts
were grouped to form a representative fare situation.

The representative farm situations were defined in terms of the

lean resource endovnents of each category. as shown in Table 3.6.

W
mw-New technologies and more intensive resource use will no

doubt continue to aid the trend toward larger yields per acre of beets.
However. the nest important potential source of increased output of
sugar beets in the Eastern Region is from the additional comihent of
land. Additional land resources which are well adapted for sugar beets
can cone from two sources. given the number of farms. he proportion of
a given fan's cropland devoted to sugar beets may increase. or the pro-
portion of farmers growing beets can increase. The results of the field
survey indicate that the proportion of cropland on sugar beet farms
actually devoted to sugar beets was 16.2 percent (about one sixth) in
the Michigan districts and 12.5 percent (about one eighth) in Ohio. me
proportion of farms located on the appropriate soils is a little more
ditficult to ascertain. he estinates free field survey work done by
on. State Universityl and from the 1959 Census of Agriculture indicate

 

lire: field survey data provided by Dr. Francis Walker. Depart-
ment of Agricultural Economics. Ohio State University. personal communica-
tion. October 30. 1962.

64

TABLE 3.6. RESOURCES ON REPRESENTATIVE FARM SITUATIONS

W
° Ohio

 

 

: . Michigan Districts ; Dis; acts
:Units: Small . Medium : Large : All
: : Field : Field : Field : Ohio
.- = W
(24 farms 21 farms l9 farms
Land:
Tetal land operated Acres 86 155 271 295
Cropland operated ' 75 140 246 276
Cropland owned " 61 100 146 91
Cropland rented “ 14 40 100 185
Labor:
Operator labor Man equiv. 1.00 1.03 1.40 1.08
Deadly labor " .30 .32 .48 .24
Age of operator Years 46 46 42 42
Education of oper. “ 7.5 8.7 9.3 10.9
Crop.Machinery:
Tractors ownedp-
(2 a. 3 plow) Number 1.80 1.95 2.00 1.55
Tractors owned»-
(4'& 5 plow) " .38 0.48 1.47 1.18
8 ar beet harvester--
one row) “ .13 0.42 0.75 .25
5 ar beet harvester--
“fitwo row) " .09 0.05 0.15 .06
Trucks (1.5 tons or
lager) I. 055 096 1050 .88
Livestock & Equipment:
Dairy cows Head (cow) 1 1 6 2
Milking capacity ' 2 2 8 2
Fhrrouing capacity Head (sow) 3 3 2 3
Hog feeding Head (feed.
°8P8¢19Y P183) 15 18 20 33
Beef steer feed.cap. An. units 5 12 17 37
Silo capacity Thus 7 32 50 73
Financial:
Real estate assets $1,000 46.7 51.1 78.7 50.8
Chattel assets
(mach. & livestock) " 7.2 7.7 17.7 14.2
Liquid assets " 3.2 5.4 10.6 13.2
flotal assets " 57.1 64.2 107.0 78.2
1131311112168, real OStO II 4.0 509 1301 205
Liabilities, mach. &
livestock " 0.5 0.5 1.7 1.9
Liabilities, other ” 0.1 0.3 0.8 2.5
Tbtal liabilities " 4.6 6.7 15.5 6.9
Net “firth II 52.5 5705 9105 7103

 

65

that less than 5 percent of the farms in sugar beet producing counties
in Northwest Ohio are sugar beet growers. It appears that there are
ample adapted soil resources in the Ohio districts. and expansion in
this area is but an economic matter of bidding this land away from
alternative uses.

In the Michigan districts. the field survey of the Saginaw
Valley-Thumb cash-cropping region by Lard encountered 42 farms (out of
100 farmers interviewed) who were beet growers} m. 1959 Census of
Agriculture reported 2.425 beet farmers out of 7.610 Class I through
Class V fans (or 32 percent) in the four main Michigan sugar beet
producing counties (Bay. Saginae. Tuscola. Huron). this is regarded
as being consistent ulth the survey estimate of 40 percent of farmers
on the better quality lake bed soils being beet farmers. since there are
large areas in each of these counties which are on the lighter textured.
saw soils.

In terms 2E1 of this rough physical inventory of adapted soils.
there is no reason why substantially more acreages of beets could not be
grain in either the mchigan or mic districts. Later analysis will
show that other factors in addition to soil resources are important in
the choice of ubether or not sugar beets are included in the crop rota»
tion.

Elana-The relatively heavy labor requirements and their seasonal
distribution continue to be ranked among the major problems in the sugar
beet industry. mu: the harvest period effectively mechanized, the main

 

1M. Ce Fe. Me

66

focus of attention is on the Spring labor requirements for stand reduc-
tion and weed control. mese operations. particularly thinning. must be
performed within a relatively short period for maximum effectiveness.

The thinning operation usually begins some 4 weeks after planting. in
middle or late May, and the [weed hoeing extends into July. This period
is one of heavy labor demands on the operator's time and management
capacity from other enterprises. Planting and weed control operations
must be carried out in the corn. soybean and dry bean crops. Furthermore,
the man hours required to cover an acre are quite large. Even the "hoe
trimming" operation. which is replacing "blocking and thinning" in fields
planted with monogerm seed. requires up to 11 hours. and the hoeings
require some 5 hours per acre. Even though this is a major improvement

from the 30 or more hours reported by Johnson and Wright.1

when the
present-day larger acreages are involved it is still more labor than
most families have available.

The heavy seasonal requirements have been met by the importation
of migrant field workers. mese workers are mostly domestic in origin.
although in previous years there have been some Mexican National workers
imported.

‘Ihe beet sugar companies usually undertake the responsibility for
recrxdtment and allocation of the workers. Some of the expenses. such as
housing. are charged to the grower. but the comparw typically bears the
cost of recruitment and much of the cost or transportation of the migrants
(usually from Texas). bus. the processor. too. has a real interest in

the reducfion of spring labor requirements.

 

lJohnson and wright, 1139ng $333 Beet Costs. Mio- p. 16.

67

The introduction and adoption of monogerm seed and the other
techniques discussed earlier in this chapter have had a marked effect
upon the demand for labor. One measure of these effects is the "acres
blocked and thinned per worker" presented in Table 3.3. Most of the
benefits of this increased efficiency have been conferred on the worker
through increased wage rates. It has been the policy of at least one
compam not to change the contract rate per acre in their district.
he workers absorb all benefits in this case. The minimum wage rates
for field workers specified by the Department of Agriculture for 1963
under the Sugar Act. provisions are $1.05 per hour. up from $0.95 in
1962.1

There have been some indications at this writing (June. 1963)
that the agreemnt with Mexico regarding the importation of field
workers from that country might be discontinued. In such event. the
effects on supply and cost of migrant field labor for Eastern beet
growers are difficult to assess. here will be no direct effect. since
the Mexican National workers are not now important (none in Michigan
beet fields in 1963). However. the removal of this source of supply
of labor may have some influence on the availability of and wage rate
for the ruaining pool of domestic migrant workers.

W.ume net worth of sugar beet growers reported
in Table 3.6 indicates that the typical farm situation does not suffer
from a shortage of capital. Most of the capital is tied up in real

 

1W reprinted from Federal Beam:- or
April 24. l 3. For a more general discussion of farm labor. see
Elterich. J .. M" Persmcgve on fichigg's Fm Lam; grows.
Agricultural Ecperiment Station. Michigan State University. East

Lansing. Michigan. 1963.

68

estate. The typical farmer had very small liabilities in proportion

to his assets. Lending agencies are willing to provide much.more

credit than the farmer appears to wish to obtain. In addition. the
processing companies typically provide both credit (as well as a number
of other services) to growers under contract. The grower can.have a
number of his operations such as thinning and hoeing labor and contract
harvesting and hauling paid for and charged against the crop. The amounts
plus interest are deducted from the first crop payment.

The results of fitting Cobb-Douglas equations to income and
expense data for sugar beet growers suggest that the average grower could
well afford to transfer capital from real estate into cash expenditures.
Lard reports that.Michigan cash crop (including sugar beet) growers
earned an average of $2.60 for every dollar of cash expenses in 1960.1
This provides a return per dollar substantially above the cost of
borrowing at 5.5 percent for real estate mortgage or 7 percent for
chattel mortgage.

 

llard. Curtis r.. Michigan State University. unpublished data.

CHAPTER IV

SUGAR BEET PRODUCTION RESPONSE II - TEE ANALYTICAL MODEL

 

A. Static Model of Production Response in Sugar Beets

The discussion of the previous chapter has covered the
technical relationships of Eastern Region sugar beet production and
some aspects of the present organization and supplies of resources.
The former provide the basis for projecting a production relation
for sugar beets. The latter allowed us to specify representative
farm situations for the subsequent analysis.

In this section. the assumptions and specifications of the
linear programming model will be discussed in some detail. This
will entail the prediction of both resource and product prices for
beets and the relevant competing crops. as well as technical produc-
tion relationships for all of these. Such projections necessarily
involve us in a multiplicity of hazards and possible errors.
Primarily. of course. there is the problem of accurately predicting
prices and production techniques for a future period. Furthermore.
in order to simplify the problem to manageable proportions. we assume
that one set of input-output relationships. one set of product and
resource prices. and but a few sets of resource organizations will
adequately portray the situation for a region. We thereby ignore a
cluster of problems; in particular. intra-regional soil and climate
variability. the effects of scale of operation on resource use and

69

7O

costs. differences in the goals and capabilities of managers. and
behavior in the face of imperfect knowledge.

However. with full recognition of these limitations of the
analysis. we shall proceed. for such restrictions on realism are
necessary in order to reduce the problem to a manageable scope.
After the static analysis is presented. some of the more obvious
limitations will be discussed.

 

programming model may be applied to problems relating to the optimal

organisation of the resources of the firm operating under a free price
system. In this interpretation. usually called I'activity analysis."
we visualize an entrepreneur who has at his disposal fixed amounts
of a number of different resources. These resources can be combined
to produce varied quantities of several different products. It is
known how much of the 1th resource is required to produce a unit of
the 1th product. and how much profit is made for each unit of each
product. If such a problem can be expressed in the linear programming
framework. then a solution in terms of the optimal quantities produced
of each of the 2 products can be found which fill maximise profits.
be major elements of a linear programing problem include :
(l) a linear function

31:]. + 32x2 +eeee+ on?»
to be amused subject to a set of restrictions given

in (2) and (3) below. This function is called the

71

“objective" or "criterion“ function. Coefficients
of the a“ variable of this function in the activity
analysis interpretation are 'net revenues" or 'net
profits“ to a unit of output of the 2‘11 product.

(2) a set of linear equations which give the total amount
of the 1th resource to be used

‘11”‘1 " ‘12‘2 *m” Hair:
The a1 j are called “input-output" coefficients. since
they represent the number of units of the 1th resource
needed to product a unit of product j.
(3) the total use of the ith resource must not exceed the
amount available. so we have a linear inequality in

the form:

‘ ‘
811:1 4' aizxz +eeee+ linxn- bi

me b1 represents the amount of the 1th resource on
hand-:nd are usually called "restrictions.“

To achieve precise results from the application of linear
programming. the problem under stuw must meet or approximate the
assumptions of the mathematic model. These assumptions are as follows:1

1. Additivity and linearity of activities or processes.

2. Invisibility of processes and resources.

3. . limited resources.

 

lfieadw. E. 0. mi Candler. w.. W
Iowa State Univ. Press. Ames. Iowa. 1959. P. 17.

72

4. Production.taking place inla finite number of alternative
processes.

5. Single-valued expectations (that is. resource supplies.
input-output coefficients and prices are known with
certainty).

In.order to express a problem in the activity analysis frame-
work. it must also be assumed that the entrepreneur maximizes a profit
function which can be expressed.in a linear form. None of these
assumptions are precisely met in most activity analysis applications.
including the present problem. Of particular concern are the assump-
tions of the single-valued.expectations and the linearity and additivity
of the activities. However. it should be noted that any alternative
microeconemic approach. such as budgeting. suffers from similar dif-
ficulties and.is much more limited in the range of alternatives and
the degree of complexity which can be undertaken in a reasonable length
of time. The adaptability of the linear programming routine to a solu-
tion on a high-speed computer greatly simplifies the search for a solun
tion to a complex problem.

Furthermore. a model can be modified in a number of ways to
more nearly approach the conditions of the particular problem under
study. For example. additional activities can be added to approximate
segments of a nonlinear relationship. or behavioral responses to
imperfect knowledge or risk can sometimes be handled by special
restrictions on resource use. Such modifications are made. however.
at a definite cost in additional complexity and computing.

The model of a representative sugar beet farm constructed for

this problem was rather large and complex. The final system of equations

73

included 72 equations (resource restrictions) in 121 variables
(activities). The large number of activities can be attributed
mainly to certain methodological considerations. The definition of
a fixed asset proposed by G. L. Johnsonl suggests that resources are
fixed endogenously at levels where the MVP of the resource falls
between its acquisition and salvage prices. In order to incorporate
this concept into a linear programing framework. one or more
acquisition and salvage activities were incorporated into the model
for each of a large number of resource categories. The methodological
import of the model will be reported elsewhere. The present discus-
sion is confined to the implications of this solution for supplies
and the future competitive position of the sugar beet enterprise on
the farms of the Eastern Region.

Enpirical Specification of the Model

Enpirical data assembled for the linear programing problem
included:

(a) technical input-output coefficients

(b) net revenue coefficients for the objective function

(e) resource restrictions.

ec s s .uInput-output coefficients
were developed through a ”synthetic" procedure. Survey results were
combined with experience and judgment of specialists from the Depart-
ments of Farm Crops. Soil Science. Agricultural Engineering. Animal

 

1See for example. Johnson. G. 1... "Supply thctions--Some Facts
and Notions.” in Heady. E. 0.. M... a s

W
“W Ames. Iowa. Iowa State College Press. 1958. p. 74.

74

Husbandry. Dairy. and Agricultmral Economics of Michigan State

University. as well as from representatives from the sugar industry.

Judgments were obtained as to expected production techniques and

levels of various inputs and outputs for the future periods under

consideration. From-these recomendations a “table of operations and

inputs“ was constructed for each crop enterprise. (These tables are

included as appendix tables 3. 4. 5. 6. 7. 8 and 9 in Appendix II.)

Data for livestock production and equipment and for machinery were

obtained from a wide variety of published and unpublished sources.:L
MW.—The first step in this procedure

was to estimate expected input and product prices. These were determined

on the basis of recent past trends and relationships. taking into

account Government programs where relevant. Input .‘ costs were based

on 1961 data. projected on the basis of recently observed trends.

(For examle. fertilizer and seed prices were not assumed to change

from the 1961 levels. while cost of items such as land. machinery and

building materials were projected to 1966 using relevant U.S. Government

or specially constructed indices.) The net revenue budgets reproduced

in Table 4.1 were then derived from prices and the previously mentioned

input tables.

W.ulhese were derived from the field

 

1m of these references are listed in sinion. a. 1.. Some

'11:! e: S c s e- S or =--: e 1 . '1" N

Fangs; States. 1%.-52. Research Report No. 35. Agr. Econ. Dept..

Univ. of 111.. 19 O. and mnton. R. A.. W
Ca . .. f '1‘9 - tand - nt Res.

  
   

Report No. 34, Agr. Econ. Dept.. Univ. of 111.. 1960.

75

survey data as reported earlier. Survey results and secondary data
were used to specify technical and institutional restrictions on
resource use. (Examples of each of the latter two types of restraints
are the manmum proportions of the cropland in intertilled crops and

in the amount of wheat allotment.)

 

The actual model used in the analysis will not be presented
in its entirety from lack of space.1 We will. however. discuss some
of the empirical assumptions of the model and present some of the more
important net revenue budgets an). the input-output coefficients which
were developed in the course of the analysis.

Crop Activities and Restrictions

See Tables 4.1 and 4.2 for assumptions as to inputs and costs
and rebirns for crop enterprises. Appendix Tables 3 through 9 show
the explicit technical assumptions.

mw-Maximm acreage of intertiJled row crops was assumed
to be 75 pOrcent of the available cropland.

W.--Sugar boots were projected to yield 18 tons per
acre in 1966 and to return $12.85 per ton (yield net after tare; return
including Goverment payments of $2.20 per ton). The yield assumption
is a projection of the post-war trend. (Introduction of twbrid varieties
on a large scale would make this projection too conservative.) Acres

 

1"For readers interested in the technical aspects of the problem.
a model substantially equivalent to the one employed here and constructed
cooperatively with this one is presented and described in Lard. M.

TABLE 4.1.

76

1966

PROJECTED COSTS AND RETURNS PER ACRE TO SUGAR EEEJS AND COMPETING
CROPS. MICHIGAN AND OHIO DISTRICTS.

 

 

 

 

HEdible Corn : Corn :

Michigan Dist;;cts

 

: Al-

 

Item : Sugar : Dry: for : for : Oats : Wheat :falfa
: Beets : Beans:Grain:Silage: ° : Hay
INCOME
Yield per acre 18T l8cwt 100bu 18T 80bu 55bu 3.0T
Price per unit $ 12.85* 6.00 1.04 6.50 0.65 1.78 18.00
Gross income 231.30 108.00 104.00 117.00 52.00 97.90 54.00
VARIABLE CASH EXPENSES $ $ $ $ $ $ $
Seed 1.50 2.45 2.40 2.40 3.74 4.83 1.86
Fertilizer 25.20 6.30 13.65 13.65 7.82 15.45 7.02
Other materials (sprays.
etc.) 7.00 1.50 1.00 1.00 0.50 --- ----
Machinery (pro-harvest) 2.49 2.49 2.81 2.81 2.09 1.04 ----
Machinery' harvest) 6.45 1.58 2.98 1.80 0.63 0.63 3.73
Hauling (truck or wag.) 3.80 0.37 1.17 2.95 0.71 0.53 0.37
Beet labor 13.50 ---- ---- --- --- --- ----
Other 1.75 ---- 5.00 --- --- --- ----
Sub-total variable cash
expenses 61.69 14.69 29.01 24.61 15.69 22.58 14.03
Return over variable
cash expenses 169.61 93.31 74.99 92.39 36.31 75.32 39.97
OVERHEAD COSTS
Cash enses
Machinery (dep.. etc.) 31.16 12.34 10.72 12.16 9.60 7.67 16.45
Miscellaneous (phone.
travel. etc.) 8.42 4.08 3.84 4.08 1.84 3.60 2.00
Real estate taxes 5-75 5.75 5.75 5-75 5-75 5-75 5-75
Sub-total cash overhead 45.33 22.17 20.31 21.89 17.19 17.02 24.20
Total cash expenses 107.02 36.86 49.32 46.50 32.88 39.60 40.65
Return over all cash expenses 124.28 71.13 54.68 70.50 19.12 58.30 15.77
CHARGES FOR LAND INVESTMENT.AND OPERATOR & FAMILY LABOR
Land charges 8 5. 576 31.63 31.63 31.63 31.63 31.63 31.63 31.63
Labor charges @ 2. 00/hr. 25.50 16.00 11.30 21.20 6.80 4.80 15.70
Sub-total 57.13 47.63 42.93 52.83 38.43 35.43 37.33
TOTAL CHARGES 164.15 84.49 92.25 109.33 71.31 75.03 77.98
RETURN TO RISK AND humanism 67.15 23.51 11.75 17.67(-19.31) 22.87(-23.98)

 

*Price for sugar beets includes government payments.

77

 

 

 

 

 

TABLE 4.1. Continued
: Ohio Districts (where different;
Item : Corn ' Corn : : : _
. for : for : Oats :Soybeans: Wheat
: grain : Silage : : :
INCOME
Yield per acre 110 bu 19.5 T 70 bu 37 bu 45 bu
Price per unit $ 1.04 6.50 0.65 2.25 1.84
Gross income $ 114.40 126.75 45.50 83.25 82.80
mum CASH EXPENSES $ $ $ $ :3
Seed 2.40 2.40 3.94 3.50 4.83
Fertilizer 14.80 14.80 7.82 7.12 14.15
Other materials (sprays. etc.) 1.00 1.00 0.50 ---- ---
Machinery (pre-harvest) 2.81 2.81 2.09 ‘3.35 1.79
Machinery (harvest) 3.17 1.90 0.63 1.40 0.63
Hauling (truck or wagon) 1.29 3.22 0.59 0.40 0.45
Beet labor --- -- --- --- ----
Other 5 . 50 an an an ..--
Sub-total variable cash expenses 30.97 26.13 15.57 15.72 21.85
Return over variable cash expenses 83.43 100.82 29.93 67.53 60.95
OVERHEAD COSTS
Cash enses
Machinery (depreciation. etc.) 10.85 12.87 9.55 11.82 7.53
Miscellaneous (phone. travel.
etc.) 3.96 4.35 1.62 2.95 2.90
Real estate taxes 4.95 4.95 4.95 4.95 4.95
Sub-total cash overhead 19.76 22.17 16.12 19.72 15.38
Total cash expenses 50.73 48.30 31.69 35.44 34.23
Return over all cash expenses 63.67 68.70 13.81 47.81 45.57
CHARGES FOR LAND INVESTMENT AND OPERATOR AND FAMILY LABOR
Land charges (0 5.5%) 27.28 27.28 27.28 27.28 27.28
Labor charges (0 2.00/hr.) 11.60 22.60 6.70 9.30 4.80
Sub-total 38.88 49.88 33.98 36.58 32.08
TOTAL CHARGES 89.61 98.18 65.67 72.02 69.31
RETURN TO RISK AND mmemmm 24.79 28.57 {-20.17) 11.23 13.49

 

78

.mpoop no wcfioo: use mcacnasp new vegan yonwa psmAMdE_movdflmwv undo: honed .mpoon ueMdm new;

 

 

 

 

 
 

 

 

os.m ms.s mm.m om.HH om.n mm.a os.~ os.m oe.oa me.m oo.m .na.ma .aas asscaeeasce
. use .8an 93.280
oa.o mn.a oe.a om.n mo.m 0 ea. oe.a oa.m mm.m om.a om.m eases Assam my
R3095
m~.H oo.~ OH.H om.m oa.m mm.s mm.H mH.H om.m ca.m om.m 0H.N eases Assam NV
noposya
mm on em mm mm om om om on on em om .ha cum
on em oh so we om om or om om or ems .ha moma
om om om we we 0 om om on on as ow .sa 2 acefiaasaea
moa on ma NH NH m moa ma NH NH mm m.H .ha seem
pmog3umcmon» made ”o «H macaw “ mm "960:3“ mpmo no sawmnmmwgowmmwom "mpoomu «
”them A u how “new ”smash“ “ a new a new a hug “Admamu "
o GoHO o o 0 I o O 0 tags. 83H
. u u o .nhoo . add . . . choc « Shoo.oanadm. . .
«

mmwaupmda dmmwnowz «

 

mme CH zOHHothmm .mBoHMHmHD
OHmo 92¢ z¢UHmoHE .mmomu UZHBmmzco az< memmm depmnmmo< mam mBDAZandonwmm Omaofiqmm .N.# mqmga

79

in the sugar beet crop were limited to that previously contracted.
which typically was about one sixth of the available cropland based
on the farm survey data. It was assumed that moncgerm seed would be
used as well as one pro-emergent spraying for weeds. Migrant labor
was assumed to be hired for one “hoe-trim” thinning and one used hoe-
ing. All other labor was assumed to be performed by the operator and
family or by hiring of seasonal labor where necessary. Hauling costs
were estimated on the basis of eight miles.

W.nne "pea“ or 'navy" bean is the most
important crop competing with sugar beets in the Michigan districts in
terms of both acreage and net returns. A goverment price support
program of the loan-purchase agreement type has been in effect in
recent years. he basic support rate is from $6.40 to $6.90 per curt.
for the 1963 crop. New varieties are expected to contribute to the
improvement of. both been yields and quality in future years. The dry
bean crop uas projected to yield 18 cut. per acre at a price of $6 per
out. Labor requirements for hand hoeing and chopping make this crop
second only to beets as ,a heavy user of labor. but most farms utilise
only fanih' labor for these tasks in contrast to the practices for
sugar beets. The acreage restriction for dry beans in the model was
50 percent of cropland.

mw-In the Ohio districts. soybeans are in the rotation
rather than dry beans. although corn is a more attractive alternative
there under the projected price and yield relationships. Soybeans are
restricted to 50 percent of the cropland in the model. The projections
were for a 37 bushel per acre yield at a price of $2.25 per bushel.

80

Mw-Crop acreage of wheat was limited to that of the allot-
ment level as reported in the farm field surveys. It was assumed that
the type of support program in effect in 1963 would continue to be in
effect during the projected period. (This assumption may prove to be
erroneous.) The soft white winter wheat most commonly grown in Michigan
was projected to yield 55 bushels on the sugar beet soils and return
$1.78 per bushel. The soft red winter wheat of the Ohio area was pro-
jected to yield 45 bushels and return $1.84 per bushel.

'ngw-Corn acreage was restricted to 50 percent of the cropland.
Iields were projected to 100 bushels in mchigan and 110 in Ohio. The
continuation of an acreage diversion program of the form in operation in
1962 was assumed. However. representation of the various alternatives in
the model was difficult and expensive in terms of additional equations.
It was therefore assumed that the operator would not comply with this
.type of diversion program. Net price to the farmer for shelled corn was
projected to be $1.04.

glam-Oats represented all small grains (oats. barley. buck-
wheat and rye) in the model. Acreage was restricted to 50 percent of
the cropland. Price was projected to $.65 per bushel. while yields were
«mated at 80 bushels for Michigan and 70 bushels per acre for the
One districts.

Ww-No liadt was set on acreage of rotation meadow.
Such meadow is assumed to yield 3 tons of hay per acre on the basis of 3
cuttings per season. Net price for baled hay was projected to be $18
per ton.

81

Livestcck Activities

gade A mam-Production per cow for the dairy activities
was projected to be 11,500 pounds (3.5 percent butterfat) of 1.111: to
sell at a price of $4.22 per hundredweight. To the total milk income
of $485.30 is added $71.72 of sales of cull cows and calves for a gross
income of $557.02. Cash expenses (marketing. protein supplement.
veterinary. etc.) were estimated at $88.97 per cow. leaving a net
return to farm produced feed. equipment. labor. management and risk
of $468.05 per cow. (Replacement heifers and calves were assumed to
be a total of 0.90 head per mature cow. Feed inputs per cow (plus
replacements ) were: corn equivalents. 38 hundredweight; hay. 3.28
tons; corn silage. 5.40 tons: pasture (in hay equivalents). 2.77 tons;
soybean oil meal (40 percent). 5.75 hundredweight.

Dairying was of minor importance in the representative farms .
which were all of the Field Crop type. It was therefore assumed that
any investment in additional dairy capacity would be in a parlor-loose
housing system.

Estimates of labor use were based on work at the University of
Minnesota} Estimated labor requirements were 62.81 hours per cow
(again including replacements) for the herringbone parlor system
selected.

Provision was made for increasing the capacity of farms for dairy
production by investment in additional cows. housing. milking parlor and

equipment capacity.

 

13ee references in Hinton. S S cted c 8
WW Mi-

82

Ww-A number of different techniques and methods
were represented in the beef feeding acflvities. Two basic systems
were used: 700 pound yearlings on feed for 180 days and 430 pound
calves on feed for 360 days. For each basic system. alternatives
using local dairy breed steers and alternatives using beef-type steers
were included. For each of these classes. several types of feeding
programs were considered. such as all silage for roughage; all hay
for roughage; and pasture and hay or silage for roughage. Finally. an
alternative utilizing mechanical feed handling with low labor require-
ments was available for certain of the drylot beef steer activities.

The twice-a-year system utilizing yearling steers which was
selected as the most profitable alternative by the program will be
described as an illustrative example. nose steers were assumed to
gain 2.0 pounds per day for a total of 360 pounds in the 180 days.
Their ration consisted of 21.5 hundredweights of corn equivalents.
0.21 tons of hay equivalents and 160 pounds of protein supplement (40
percent). Labor requirements. on the basis of lOO-head lots. were
estimated at 5.3 hours per head. The steers were assumed to weigh 700
pounds and cost $23.75 per cwt. delivered to the farm. They were sold
at 1.060 pounds at $23.50 per cwt. after transportation and marketing
costs.

The model also included activities to represent acquisition of
additional housing and feeding capacity for steers.

W.—Hog production alternatives were of three
classes: confinement farrowing and feeding. confinement farrowing with
portable Qpasture) feeding. and portable farrowing and feeding. 'me

83

subsequent analysis showed the land to be too valuable in crops in
these areas for the pasture alternative. the confinement system
allowed for farrowing in each quarter of the year. It was assumed
that a sow would have one litter of eight pigs. the sow. weighing #00
pounds. would then be sold some time after the pigs were weaned. with
one gilt from the litter saved as a replacement. 'me pigs were assumed
to be grown out and sold at 215 pounds 180 days after farrodng. Feed
requirements for sow and litter up to the time of sale were: 61.7
hundredweight of corn equivalents and 12.3 hundredweight of soybean
oil meal (40 percent). Labor requirements varied with season but
averaged about 13.8 man hours per litter.
the price projection for No. l farrows and gilts. Michigan basis.
was $13.73 per hundredweight. and the enterprise returned a net revenue
of $199.16 per litter to home-produced feed. labor and capital. is
Idth the other livestock enterprises. activities were included to
represent inveshnent in additional farrowing housing and feeding capacity.
WW.«Initial cash holdings were
estimated from survey remrns based on estimtes of cash in bank plus
saleable crop inventories (see Table 3.6). Activities were included
so that additional financing for operations and investments could be
obtained against present real estate and chattel assets. as well as from
dealers for the purchase of machinery and from private sources. Interest
rates were 5.5 percent on real estate mortgage credit. 7 percent on
chattel credit. 12 percent on dealer credit. and 1h? percent on credit
from private sources. Credit on owned real estate was limited to 50
percent of the net value of real estate assets. Restrictions on chattel

84

credit varied with the class of assets; machinery could be borrowed
against up to no percent of the present value. while feeder steers
could be financed up to 100 percent of value. as long as sufficient
home grown feed was available. The model was designed so that borrow-
ing against presently owned assets could be used to finance either
operations or new investments in land. buildings or equipment.

W. «The model provided that the family labor
force could be augmented without limit by hiring of seasonal workers
in any or the six time periods. It was assumed that one hour of hired
labor replaced .6? of an hour of operator labor. be cost of replacing
an hour of operator labor thus came to $2. 02 based on a projected wage
of $1.35 per hour for local seasonal workers.

Initial restrictions on operator and family labor were based
on reported availability. adjusted for age. sex and health. as deter-
mined by the survey.

Activities representing off-farm employment for the operator
in each of the six time periods were also included. Net wage (after
deduction of travel costs) was projected to be $1.99 per hour. Family
labor could be l'sold" at a net of $1.58 per hour. Restrictions on
the quantities of labor sold were based on the average weeks of off-
farm labor obtained in the year covered by the field survey.

Ww-me model provided for acquisition and
disposal of machinery services for tillage. harvesting of small grains
and beans. harvesting of corn and corn silage. harvesting of forage.
and harvesting and hauling of sugar beets. The estimates of initial
capacity for each representative farm were obtained from the average
amount of various types of equipment reported in the survey.

85

Annual overhead cost for sugar beet harvesting equipnent was
projected to be $11.65 per acre. his estimate was reached by sub-
tracting the variable cost of harvesting and a charge for labor from
the projected custom rate of $20 per acre.1 filgar beet hauling was
assumed to be on the basis of an 8 mile trip to the factory. Hauling
capacity overhead cost was estimated at $15.50 per acre.

a ti a s.--he linear programming model
provided alternatives whereby investment capital could be diverted
into purchase of land on a mortgage or under a land contract. as well
as for the renting of land. In order to approximate the empirical
assmption that the supply of land is not perfectly elastic. it was
assumed that 40 acres could be purchased at one price and 1&0 more at a
higher price. he prices in Michigan were estimated to be $575 and
$690 per acre in the 1966 period. and the prices in Ohio were projected
to be $495 and $590. he lower of these prices was reached by project-
ing the average of survey responses regarding value of land owned on
the basis of the Department of Agriculture's index of land prices.

Land could be purchased either on a mortgage basis requiring 50 per-
cent down payment and 50 percent mortgage financing. or on a land
contract basis where only a 20 percent down payment was required. A
question in the field survey questionnaire provided a basis for estimat-
ing both the price and quantities of land available for sale and for

 

lhis method of estimation was used for all machinery acquisi-
tion activifies in order to meet the difficulties involved in estimat-
ing investment costs for durables which are used in more than one crop.
such as tractors or combine harvesters. he technique represents a
“market valuation." Checking this approach against the more conventional
technique of summing depreciation. taxes and insurance and dividing by
acres worked per year for single-use durables (beet harvesters. corn
pickers) showed that the two methods achieved very close results.

86

rent in the neighborhood of each responding farmer. On this basis

it was estimated that each farm operator could purchase 140 acres of
land at the projected price of $575. Up to half of this 1&0 acres
could be purchased on a land contract. In addition to acquisition
through purchase. it was estimated that an additional 80 acres could
be acquired through rental arrangements (#0 at each of the two prices).
The cash rental rate was estimated on the basis of current share rental
arrangements. projected prices and yields. and present distribution by
acres of crops on the farm. Land rental cost was estimated at $33.50
and $39.15 for the Michigan districts and $29.40 and $35.50 for the
Ohio districts.

B. Results of the Static Linear Programming Analysis

General

he method of solution of the model was in a sense determined
by the particular computing facilities that were available. he
ccmmter used was the Model 1601+ produced by the Control Data Corporation.
At the time the computing equipment was required. the available linear
programming routine was somewhat limited in capability. Its variable
price feature provided . solution at axw specific price or net revenue
combination desired. A more advanced “parametric" technique would
indicate corner points or changes in the optimum solution through a
specified range of prices.

Solutions were obtained for each of the four representative
farm situations (see resource organization of the representative farm

in Table 3.6. supra) under a number of different price combinations.

87

In addition to the prices shown in Table n.1, solutions were computed
for prices approximately 20 percent above and 20 percent below these
projections for each of the three crops: sugar beets. beans and wheat.
Solutions which were computed for one Michigan district representative
farm and for the Ohio district representative farm under several of the
more likely price combinations are presented in Tables 14.3. “.1; and
“v.5. respectively. he implications of these results for each enter-
prise are discussed below in terms of the effect of changing price
relationships. changing resource base. and changing enterprise alter-

natives.

}flchigan Districts

he results are presented only for the size farm which was
termed "medium" in the Michigan district. he model was solved under
two situations. I'Case I" will be applied to the situation where live-
stock alternatives were not considered (which corresponds roughly to
the present organization in these strata) and "Case II“ to the situation
where beef. hog and dairy enterprises were also allowed as alternatives.
From the results of the analysis. it will also be possible to show what
the effect of a different resource base might be on the optimal solution.

he results for Case I (no livestock) are presented in Table
ll».3. (Not all. the 27 price combinations which were computed are displayed
in these tables. hose combinations chosen for display are the ones
judged most significant in their implications or those most likely to

occur.)
In Case I. where there was no livestock alternative. there was

no effect on properties: of cropland in sugar beets under am price of

 

dam 3mm 30m 30m 30m endow azmxwoamzu zmdmnhho

w.mm s.~ w.~m m.m~ o.~m ooo.aa erroneom
snooeo eospo Has

s.m o s.« s.m s.m ooo.H« ersoeeom
omoweeoz Hoessso

a.sm s.mm s.sm a.sm a.sm ooo.aa eosoeeom
omemeeoz sesame doom

aHummu

om or or or om oeoe assuoenessq
ow Hm om om om cued cannonsduvmmn
can so: own can can meson sum hoses adsooeom

QHMHDcod mmombommm

o o o o o 0904

88

Efiésfififim
aw om am am am oeoa eeeo
m: o: n: m: m: rhea earn:
an mm one an an sees seoo
msa enH me mad med sees ossom mun oasaem
3m mm hm 3m 3m oped mnoom ammsm

ZOHB<NHzaamo memmmmazm
sm.H so.H s~.a so.H s~.H .sn sea a shoe no ooaea
o~.a oo.e oo.e o~.a om.a .sso sea a ussom mun co ooehd
oe.oa mm.ma mm.~a mm.ma mm.~a so» see a ueoom semen no sense

Amv Aev Any “NV Adv .oz sonsosaesoo ooasd
ammo

 

, AH mmsov some .zsuHmoHs ..mssmae.nnmga<>;zazuosm .Muoamm>ag
a as .38 3mm Eguézasmfifi a: zoflfiuaamo Empower game nauseous

.3 has

89

beets from $10.60 to $15.10 per ton. his was true even when the price
of either dry beans or corn. or both. were at levels 20 percent above
that judged most likely to occur. and when the farm did not own the
specialized beet equipment. he organization represented by price
combination (1}) in Table 4.3. which are the ”most likely" prices. appears
to closely approximate .the present organization as determined by the
survey data (see Table 3.5).

he main differences from present organization of the optimm
solution presented in Table 4.3 are the additional acres acquired by
renting and through purchase. In this case. the capital resources on
the present farms are extensive enough to support an operation of over
tides the present size. under the assumption that up to 50 percent of
real estate assets may be mortgaged. Off-farm work was utilized to
the limit allowed. since there were no livestock enterprises to compete
in the winter months. Labor is hired in the summer season to meet the
demands of the extra cropland.

Case n.-(Livestock activities included.) In this model. the
beef feeding. hog and dairy enterprises were included. he results for
five price combinations are presented in Table “v.4.

9:92 enLezE-isesw-As in Case I. when sugar boots are priced
at the expected level of $12.85 per ton. there is no change in the
proportion of crop acreage grown in beets. (The differences in acreages
between Cases I and II are due to the different quantities of land
acquired under the various price combinations.) However. when sugar
beet prices are lowered to $10.60 per ton and bean and corn prices are
favorable. the most profitable combination of enterprises does not

include sugar beets. This change from the previous case is a consequence

TABLE 4.4. PROJECTED OPTIMAL RESOURCE ORGANIZATION AND INVESTMENTS--

9O

MEDIUM FIELD CROP FARM WITH LIVESTOCK. SAGINAW’VALLEY.

"THUMB.“ MICHIGAN. 1966 (CASE II)

 

 

Price Combination No.
Price of Sugar Beets
Price of Dry Beans
Price of Corn

ENTERPRISE ORGANIZATION

Cropping Program
Sugar beets

Edible dry beans
Corn

Wheat

Oats
Rotation.meadow

Livestock Program
Grade A Dairy

Yearling steer feeding
Hogs

RESOURCES ACQUIRED

One-Use Inputs
Corn

Hay
Seasonal labor

U t

$ per ton
$ per cwt.
$ per bu.

Acre
Acre
Acre
Acre
Acre
Acre

Head
Head
Litter

Bu.
Tons

Man hrs 0

Durable Resource Investments

Land-purchase

Land-rental

Milking capacity

Beef feeding capacity

Hog farrow. & feed.
capacity

Credit

Real estate mart.
borrowed

Chattel mort. borrowed

All other credit
borrowed

Ofquarm employment

—__

Acre
Acre
Head
Head

Litter

$1.000
$1.000

$1.000

Hours

(1) (2)
12.85 12.85

7.20 7.20

1.24 1.04
33 31
143 128

39 33
43 38

29 9

0 l7

2 2
122 208

2 2

O 5.011
32 0
910 1.039

76 40

8O 8O

0 O
43 86

0 0
31.6 26.9
12.0 15.7
22.6 11.6
558 481

(3)
12.85

6.00
1.24

30
30

121

36
19

303

1,088

25
80

134

23.4
15.7

11.6

438

(4) (5)
12.85 10.60
6.00 7.20
1.04 1.24
30 O
30 139
119 69
36 41
0 28
24 0
2 2
312 202
2 2
802 0
2 1+9
1.120 1.013
20 65
80 8O
0 0
138 82
O O
22.1 28.6
15.7 15.7
11‘ O 6 22 O 6
427 42.1

91

of the added value of corn acreage when corn can be fed on the farm.
Furthermore. when the model is solved for a resource base which has no
inventory of Special beet equipment (that is. harvesting and hauling
equipnent must be purchased). with beet. bean and corn prices at $10.60.
$6.00 and $1.01}. respectively. the beet enterprise becomes somevdlat
marginal (i.e.. the estimated MVP of an additional acre of sugar beets
is near zero).

The value of corn to the livestock enterprise also changes the
competitive relationship between corn and dry beans. Compare Tables
4.3 and 4.4. mth livestock included. corn takes over most of the
acreage at these prices at the expense of dry beans.

ves enter ses.--The most profitable use of labor. feed
and capital was in a yearling steer operation. However. investments
would be necessary to embark on such an enterprise. for very little
beef feeding equipment is currently available in this area.

giggly-Abe hog enterprise appears to be profitable at these
prices if there are farrotdng and feeding facilities present. It did
not appear to pay to invest in additional capacity beyond that small
amount presently available .1

Mw-The dairy enterprise also was not sufficiently profit-
able to warrant additional investment. although present capacity is
utilized in the model.

ksources acggigedw-As compared with Case I. the demand for
capital and labor in the beef enterprise reduced the optimal land

 

1For a detailed analysis of the interrelationships between
the corn and livestock enterprises for this rayon. see Lard. pp. 31. .

92

acquisition. Credit use was modified accordingly. with less mortgage
credit acquired. but with considerably more chattel credit. used for
financing the feeder steers.

Off-farm employment was not quite so attractive in the presence
of the demand for labor from livestock in the winter. Capital limited
the size of the winter feeding operations. so there still was time for
several weeks of off-farm work remaining. even with the large beef enter-

prise.

Ohio Districts
Some of the results for the Ohio district representative farm

situation are presented in Table 1!. 5. As in the Michigan districts.
the sugar beet crop appears to have a strong competitive advantage over
typical alternative crops. Soybeans are less profitable in Ohio than
dry edible beans are in Michigan. Hence. even under the highest prices
for soybeans and corn and a lower price for sugar beets. the beet crop
is not forced out of the solution as was the case in the Michigan
situations. The profitability should be sufficient to bid in new
growers. since the marginal value of an additional acre of sugar beets

considerably exceeds the cost of new equipment.

the es

Remarks on the Appropriateness (or lack thereof) of the Assumptions
Predictions about prospective resource organization based on
the results of the static analysis must be tempered by judgments as to
the degree to which the assumptions of the static model are or will be
a«I-'>.'p:l.‘ox:l.mated by existing conditions. A number of these deserve comment.

93

TABLE 4.5. PROJECTED OPTIMAL RESOURCE ORGANIZATION AND INVESTMENTS--
FIELD CROP FARM. NORTHWESTERN OHIO. 1966

 

 

(l)
12.85

2.20

1.04

26.1

32-3
4.6

Unit
Price Combination No.
Price of Sugar Beets $ per ton
Price of Soybeans $ per bu.
Price of Corn $ per bu.
ENTERPRISE ORGANIZATION
Croppipg Progpam
Sugar beets Acres 45
Soybeans Acres 135
Corn Acres 89
Wheat Acres 51
Oats Acres 5
Alfalfa Acres 32
Livestock Proggam
Grade A dairy Head 2
Yearling steer feeding Head 474
Hogs Litter 8
RESOURCES ACQUIRED
One-Use Inppts
Corn Bushel 9.333
Hay Tons 21
Seasonal labor Hours 2.458
Durable Resoppce Investments
Landppurchase Acres 0
Land-rental Acres 80
Milking capacity Head 0
Beef feeding capacity Head 183
Hog farrowing and
feeding capacity Litter 0
edit
Real estate mortgage
borrowed $1.000
Chattel mortgage
borrowed $1.000
All other credit
borrowed $1.000
Off-farm.emplqyment Hours

——

260

(2)
12.85

2.20

1.24

49
149
100

5?

19

292

2.135

45
80

90

36.3
16.1
0.6
260

(3)
12.85

2.60
1.24

49
1A9
100

57

19

292

2.135

45
80

90

36.3
16.1
4.6

260

(‘0
12.85

2.60

1.04

#5
135
89
51

32

47:.

9.333
21
2.458

80
183

26.1
32-3
4.6

260

(5)
10.60

2.60
1.24

149
100

57
19

292

2.135

#5
8O

90

36.3
16.1
4.6

260

94

Resmge supplies.--The projected optimal organizations imply
a large demand for land and for labor. Although some allowance was
made for an imperfectly elastic supply of land in the model. it is
the opinion of the writer that the supply of land is much less elastic
than the assumptions would indicate. Accordingly. the farm size is
not likely to be doubled as is implied by the analysis.

Supplies of seasonal labor were assumed to be perfectly elastic
in the analysis. This seemed to be a reasonably accurate assumption
with respect to local summer help under the present organization.
However. the increase in demand for labor implied by the added land
and livestock operations moves the situation out of the range of the
assumptions. Reliable labor is more difficult to locate in other
seasons. (This is particularly true for the sugar beet harvest where
relatively large amounts of labor competent and reliable enough to
trust with the harvesting and hauling equipmentare required.)

Ww-me model assumed that credit supplies would
be based on the usual practices of institutional lenders. However. the
survey data indicated that farmers in effect prefer a much lower ratio
of debts to total assets than the limits imposed by lending agencies.
Thus. the demand for resources. land in particular but also for labor
and capital equipment. would be much less than implied by the model.

 

some doubt that the Field Crop farmers in Michigan districts will continue
to have the opportunity to work seasonally off the farm as in the past.
Tmporary labor is more and more expensive to employers as fringe benefits

become a larger portion of wages.

 

95

s ack ed e vesto e ses.-The
assumptions of the static model (perfectly elastic labor supplies.
single valued expectations. and the particular set of relative prices
of resources and products which were chosen) contributed to the apparent
advantage of large scale beef feeding operations. Although a detailed
analysis of this question is beyond the scope of the present stuck. the
implications of the static model should be interpreted carefully. First
of all. feeding of purchased steers is notably risky. Second. typical
sugar beet farmers are not experienced Idth this operation. Third. the
assumptions of the model in regard to costs of feeders and sale prices
of fat steers. while consistent with the experience of the (relatively
favorable) period 1961-62. are somewhat optimistic when compared to the
previous 10 years experience in the Corn Belt feeding areas. In the
writer's judgment. the degree of shift of resources by sugar beet farmers
into beef feeder production implied by the static analysis is thus over-
stated. A

ms of the Sta del r Su Beet Pr ucti n Res nse

The inference to be drawn from this static analysis is that the
projected net returns to sugar beets provide this. crop with a substantial
net revenue advantage over principal competing crops. It further implies
that the suppr relationship will shift to fully utilize capacity avail-
able for processing. Returns are sufficient that profit maximizing
firms with single-valued anticipations would be expected to commit new
' resources to sugar beet production.

This result is rather divergent from the recent experience where
beet supplies were insuffident to fully utilize processing capacity.

96

(The short supply however is limited to a few factory districts and is
not widespread so the point should not be overemphasized.) In order to
test the static model. the problem was recomputed under assumptions
about yields and prices approximating conditions in the immediate past
growing seasons. The results of this analysis were similar to that
reported previously for the projected conditions. i.e.. the expected
supplies of'beets would exceed present capacity; however. the advantage
fromeeets is not so large or clear-cut.1 (This is equivalent to saying
that the technical relationships projected here imply a greater change
for sugar beets than for competing crops in 1966 relative to present
conditions.)

~To summarize: Static analysis indicates a shift in the supply
response relation for sugar beets in the Eastern Region. Application of
this model to previous conditions incorrectly forecasts (i.e.. over-
estimates) supplies actually forthcoming under those conditions. It
appears that the static model must be modified and supplemented before
any strong conclusions are drawn.

In the next section. we shall consider a number of factors
hypothesized to influenoethe production response of sugar beets.

C. Other Influences on Sugar Beet Production Response
The brief comments on theoretical considerations at the beginning
of Chapter III provide a starting point for additional discussion.of
influences on supply or production response. Among the difficulties

 

1Technical coefficients were not changed. There is thus some
bias in that present conditions are favorably represented. This is
not thought to be serious. The projected changes are mostly in
increased yields and reduced cash expenses. both of which are expressed
in the net revenues.

A: —<

97

explicitly assumed away were nonmonetary goals. response to imperfect
knowledge. and distance from delivery points.

Some of the above factors are amenable to analysis with the
available data; a few directly. others in a more oblique fashion. In
the remainder of this section. we will examine some of these problems.

The Effect of Dismce {mm Deliven Ppint 9n Neg Memes to Sugg Begts
The most important influence on the decision to grow or not to

grow sugar beets. given appropriate soil and climatic conditions. is the
distance from the farm to the factory. This proposition is well demon-
strated in Tables 4.6 and 4.7 which report findings of the field survey
described in Chapter III above. The population sampled was composed of
farms located on the level lake bed soils where sugar beets are well
adapted.

Beets are generally delivered to the factory by truck. However.
there are several areas some distance from a factory from which the
growers truck the beets to a railroad loading point. and they travel
the remaining distance in railroad cars. In most. but not all of these
cases. the grower pays the actual rail freight charges involved.
Deliveries by truck are sometimes complicated by problems of insufficient
capacity at the factory or receiving stations. During periods of good
weather. the number of loads farmers would deliver must sometimes be
restricted by temporary allocations of delivery privileges. Trucks may
also at times be forced to wait for some time before being unloaded.
these problems are on the way to being mitigated by additional investments
in receiving facilities. Waiting times are thus being reduced resulting

in a more efficient use of trucks.

98

TABLE 4.6. EFFECT OF DISTANCE TO SUGAR BEET FACTORY ON PROPORTION OF
FARMS GIOWING BEETS. 1960*

 

 

 

 

Distance to Haul : Number of : Number : Percent
Road Miles : Observations : Grom‘ g Beets : Grgvdng Beets
0 - 5 l9 16 84
6 - 10 5 4 80
ll - 15 29 15 52
16 - 20 15 4 27
21 - 25 12 3 25
26 - 30 0 0 0
More than 30 ‘ 20 0 0
Total 100

 

I"Source: Random Sample Survey of Economic Class I - V Farms.
Saginaw Valley. Thumb Region. Michigan. 1961. (See Lard. Prpfitable
kprganizatipn...o . c t.. and Chapt.‘ III. supra. for details of
sampling procedure.

TABLE 4.7. DISTRIBUTION OF SUGAR BRET FARI~1ERS BY DISTANCE FROM
DELIVERY POINT (FACTORY OR RAILROAD LOADING POINT)
IN MICHIGAN AND OHIO. 1960*

 

Ead files 399 Delivegz Ppint : Numbep of Farms : Cumulapive Pgrcent

O - 5 23 26

6 - 10 17 46

ll - 15 28 78

16 - 20 10 90

21 - 25 8 99

More than 25 1 100
Total 87

 

*Source: Random Sample Survey of Sugar Beet Growers. Michigan
and Ohio districts. 1961. See Chapt. III. supra. for details as to
sampling.

99

The effect of distance to the factory on net return to the
farmer is from two sources. First. we have the actual additional
cost per mile fer labor. fuel. lube repairs. and "user cost.“ The
second effect is also important but more difficult to measure. As the
time required for a round trip increases. the size of the crew of
trucks and drivers required increases also to efficiently utilize the
capacity of the harvesting equipment. Individual farms seldom control
this much labor or trucking capacity. and it may be difficult and
expensive to acquire them.

The static analysis of the previous section assumed a single-
valued cost for transportation of beets to the factory or delivery
point. In the earlier discussion. it was assumed that the beets were
hauled a distance of 8-10 miles. Although the hauling costs are masked
by the way the data are presented. they approximate $1.50 per ton. On
this basis. hauling costs amount to about 12 percent of the total
revenues. which is a larger proportion than for fertilizer. or for
hand labor. or for harvesting. In this section. effect of additional
distances on costs and returns will be demonstrated.

Nb first.make the (not unreasonable) assumption that costs involved
in loading and unloading a truck are independent of distance to the
delivery point. so the additional cost of an extra mile from the factory
is just the additional cost of the truck and driver for the extra mile in
each direction. Some assumptions as to costs are detailed below:

100

Variable costs of truck per mile:

Fuel and lube $0.048
Repairs 0 e050
"User" cost 0,;02

Sub-total $0.20
Driver at $1.80/hour. 30

mphp-additional cost per
mile for labor 0.06

Tom $0e26

For each additional mile to the loading point. trucks must travel two
miles on a round trip for a variable cost of $0.52. Assume 7 tons per
load:l

== 30-72 = $.07u3

Cost per ton per mile

we assumed earlier that hauling costs were $1.50 per ten for
distances up to 10 miles. For 20 miles. the cost would then be $2.24.
and for 30 miles. $2.98 per ton.

For the 18 ton yield as projected. hauling costs are $27.00.
$#O.#l and $53.82 per acre for 10. 20 or 30 miles. respectively.

A better than average yield or efficiency of other operations
must be obtained to offset the higher hauling costs for beets over the
longer distances. Blosser's recent work in Ohio supports this proposition.
He notes that the farms reporting higher yields also had a longer average

haul.2

1The "average" load will probably exceed this size. with the
‘trend toward tandem rigs. although this size is thought to be more
typical. The larger trucks would achieve a per ton cost somewhat lower

'than the above.

2Blosser. R. H.. Qgsts and.Returns from gzoducing Sugg; Beegs in
2&3. Research Bull. 923. Ohio Agr. Exp. Station. Wooster. Ohio. 19 2.

101

The inference to be drawn from this analysis is that net revenue
to sugar beets is strongly affected by distance to delivery point.
(This explains the relationships exhibited in Tables 4.6 and 15.7.)
be competitive advantage of sugar beets is reduced rapidly as the
distance to the factory increases.

Furthermore. the rate at which the proportion of farmers grow-
ing beets declines at distance from the factory beyond 10 miles (see
Table 4.6) suggests that factors other than Just the hauling cost per
mile (analyzed just above) are of considerable importance. The most
obvious of these are the costs of obtaining relatively large supplies
of higher quality labor and hauling equipment for the short period
required for the best harvest.

V a n e S Beet uc

One of the most commonly cited influences on sugar beet produc-
tion response is that of risks in production and price. It is suggested
that large risks are involved in the production of sugar beets which
inhibit the response of growers to the favorable price and net income
relationships which exist in the Eastern Region. This proposition is
tested in the following discussion.

The government programs have removed most of the aggregate price
fluctuaficns in sugar. There remain some reaonal influences on the
level of and variability in net prices to beet sugar (which will be
discussed in some detail in Chapter VI). The apparent variability in
prices received by growers for sugar beets is due largely to quality
differences. The price of beets is based on the recoverable sugar per
ton of beets. which in turn depends on the sugar content and purity of

102

the beet. These factors typically exhibit rather wide fluctuations
in the Eastern Region. However. there is a marked inverse relationship
between tons of beets per acre and recoverable sugar per ton of beets;
that is. high yields are associated with low sugar content and 1123
m. Thus. although either of these variables can and do fluctuate
widely from year to year. the total sugar per acre. and hence. the gross
income per acre. is much more stable (see Column 9. Tables 1 and 2.
Appendix II).

Two measures of variability are used here. The first measure
is the Coefficient of Variability.

v=0' 100
T‘ ’

which is just the percent the standard deviation (0") of a series is of
its mean (i). It measures the degree of variation from a long term
average.

The other measure used is a form of “link relative." It has the
more desirable properties of measuring year-to-year variability. The
assumption that the degree of risk in the decision-maker's mind is I
measured by his experience with year-to-year variations seems to be a
better approximation to the decision-maker's environment than a measure-
ment of the deviation from a long term average. n1. lids-relative measure
of variation used here is constructed as follows. First. determine the
percent each year's observation is of the preceding year's observation.

That is. find the link relatives:

{1. 2 f2 3
X0 (100) . X1 (100) . 2 (100) . xt-l. etc.

103

where the subscript i_of each observation refers to the iFh‘time period
(;.= 0. 1. 2.....n). Some of the resulting values are less than 100.
Take the reciprocal of these so that all numbers are greater than or
equal to 100. The measure of variability used here is achieved by taking
the unweighted.means of the indices and.subtracting 100 from this value.
An.index of 0 thus indicates no year-toqyear variation.

The variability'measurements were calculated for sugar beets in
both.Hdchigan.and Ohio. and for comparative purposes. for dry beans and
corn.in.Michigan. The basic data for corn and beans were for the East
Central Counties (where most of Michigan's sugar beets are produced). in
order to be on a comparable basis for at least the Michigan beet produc-
tion. The variable chosen for the comparisons was gross income per
acre. (Similar measures applied to either price or yield per acre series
would reveal somewhat higher variability in the case of sugar beets.
However. because of the aforementioned.inverse relationship between price
and.yie1d. such measures are judged to be misleading.1

.The results of the measurements are presented in Table 4.8.

They do not support the hypothesis that income per acre from sugar beets
is subject to significantly greater variability than are the principal
competing crops. In fact. there is some evidence to indicate the
relationship is changing to the advantage of the sugar beet crop. The

15 link-relatives were grouped into three consecutive 5-year periods for

 

1There is also some doubt as to whether an aggregate series as
used here can be an appropriate measure of’year to year variability. One
has the intuitive feeling that aggregation would tend to meek a consider-
able portion of the year-to-year variation experienced by individual
farmers. No data are available to check this hypothesis.

104

each crop. For sugar beets in Michigan during the period 1947-51. the
average year-to—year variability (link relative method) was 18.4 percent.
In the second 5 years. this measure dropped to 15.4 percent. and the
third 5 years to 8.4 percent. The comparisons are more striking for

the Ohio series. which changed from 27.0 percent in the first 5-year
period to 6.4 percent in the latest 5 years.1 Similar comparisons for
corn showed no trend. and an increasing variability was observed for

dry beans.

TABLE 4.8. MEASURES OF VARIAEELIT'I OF GROSS INCOME PER ACRE FOR SUGAR
BEE‘E. m BEANS. OWN. 19446-61"

 

 

 

: Edible : Corn: Sugar Beets° Sugar Beets
: Beans. : : c : Ohio
Link Relative Index 12.1 20.0 14.2 13.9

Coefficient of Variation 13.6 18.0 16.8 12.9

 

*Data used for corn and dry beans were yield per harvested
acre of East Central Counties. Michigan and State average prices.
Michigan. 1946-61. as reported in Michigan Agricultural Statistics.
Michigan Department of Agriculture. Lansing. various annual issues.
Data for sugar beets was taken from U.S.D.A.. Sugar SEflsggs. Vol.

II. op. cit.

Another measure of risk which is of interest is the proportion
of planted acres which are harvested. or conversely. the rate of
abandonment. 'mese figures are presented for sugar beets in the Eastern
Region in Appendix II. Tables 1 and 2. It is interesting to note that
these series also exhibit a trend toward less variability in the most

recent periods.

 

lMost of these variations were increases and therefore neither
unexpected nor undesirable.

105

The proportion of acres abandoned is a somewhat less useml
measure of variabth than might appear at first glance. The acres
of beets which are abandoned usually go into dry beans or soybeans.
and very few resources are completely lost. In fact. some observers
feel that much of the crop that is abandoned in Michigan would produce
as good or better an income in beets as it would in beans. even though
the stand of boots may appear a little sparse at bean planting time.

The abandonment and deficiency payment provisions of the Sugar Act
tend to reduce losses sustained by growers prior to harvest. albeit at
some cost in "red tape.“

Some consideration was also given to the alternative of measuring
net income per acre instead of the gross figures. However. the variations
in cost are thought to be considerably outweighed by variations in the
yield and price series. Furthermore. there seems to be no convenient
method of establishing a series on production costs.

ac 3 cs a a
The statement is often heard that sugar beet growers are in
some sense "a peculiar breed.” different in attitudes and outlook than
their neighbors. Should some such differences be demonstrated. it might
have some implication for supply response. No part of the questionnaire
was devoted to questions on individual attitudes or preferences. so no
direct test of these notions can be applied.
There are some data which might throw some light on the question.
however. The portion of the field survey conducted in conjunction with
the Feed Grain Study; provided observations on 42 beet growers and 58

_

13ee p. 57. suEa.

106

non-beet growers in the Michigan districts. Certain variables which
were thought to be of possible influence on supply response were com-
pared by standard statistical procedures. It was hypothesized that
characteristics such as age. education. not worth. and work off the
farm might influence goals or risk preference and hence. production
response on sugar beets. Among the variables tested were age of
operator. education of the operator. amount of operator and of family
labor available at particular seasons. weeks worked at and income from
off-farm Jobs. investment in land and in equipment. and net worth.

The beet grower group tended to have somewhat more family and operator
labor. somewhat more machinery investment. somewhat higher net worth.
and less land operated. However. there was no significant difference
between the means of the two groups for these or for am other of the
variables when tested statistically at even the 20 percent level.

a- e nal V a Nat nme t
One of the necessary simplifying assumptions of the analysis was

that a single technical relation could accurately represent the region.
Some of the overcapacity problems of the region are known to be due to
differences in natural and institutional enviroment from that
Impothesized. For example. the weather data (Table 3.1) shows that
the temperature and rainfall conditions in the planting season in Sanilac
County. Michigan. are much different from that from other parts of the
region. This same area is generally considered to have much poorer
drainage than elsewhere in the Michigan districts. (Legal barriers to
general drainage programs have recently been lifted. and there is hope
that these conmtions will change.) Other factory locations are thought

107

to be less than optimal with respect to favorable soil associations.
The data of Table 4.6 demonstrate that a few miles can make a rather
large difference in boot supplies.

W

Perreaultl suggested a list of factors which he hypothesized to
be of small individual influence. Motheses about off-farm work. age.
net worth and other variables have been examined with inconclusive
results. A number of other hypotheses are suggestive but difficult to

measure because of their subjective nature.

large Capital Investment

It is hypothesized that the large investments involved in owner-
ship of specialized planting. harvesting and hauling equipment is a
deterrent to entry into the sugar beet business. It is quite true that
investments are much larger. on the average. than for other crops (see
Table 4.1. gm). Furthermore. this cost would be very much larger
per acre for a small enterprise than for the average. However. other
considerations suggest that this factor should not be weighted too
heavily. An active market for custom services exists in the region.
It is usually possible to hire these services without incurring the risk

of costly excess machinery capacity.

Non-monetary Goals
If a farmer has goals other than that of musing profits.
there are a number of reasons which might cause him to limit or refrain

lPerreault. The Acreage fiespgnse of mcggg ragga... 92. g .

108

from the production of sugar beets. Among these fight be included the
producer's unwillingness to participate in the government program.
Another notion frequenth heard is that nary farmers do not wish to
lose the authority over their operations which is implicit in the
language of the production contract. Other famers are unable or
umdlling to effectively supervise the figrant worker crews required
in production of the crop. The production of the crop also may involve
a large amount of strexmous labor. perhaps under unpleasant weather
conditions during the harvest. (Similar conditions are not uncommon
during the hunting season. yet the marginal utility of the latter is
high enough for nary to keep them from the beet fields.)

Specialized Technical Skills Required

Crop and soils specialists who have had a long association with
sugar beet production emphasize that special technical skills are neces-
sary for successful cultivation of the beet crop. It is implied that
inexperienced growers fight be unable to attain the average yields and
resource uses that are projected here and therefore would not be likely
to comit resources into beet production except at very favorable prices.

It is undoubtedly true that sugar beet production presents a
number of problems which are different from and more complex than occur
in production of competing field crops. Again. the amount of influence
this factor exerts is difficult to measure. The previous discussions of
trends in technology and the measurements of variability suggest that
the importance of these difficulties is declining and that the trend

may be expected to continue.

109

D. Sumary and Conclusions from the
Analysis of Production Response

In Chapters III and IV it has been shown that:

(a)

(b)

Rapid technological advances have greatly increased
yields and reduced costs in Eastern Region sugar

beet production in the nearly two decades since

World War II. Additional increases in yields and
reduction in costs are anticipated in the years ahead.

Although the sugar beet crop requires very large

" supplies of both migrant and family labor and sub-

(c)

(d)

stantial expenses for machinery. equipment and other
inputs. its average return per acre on adapted soils is
considerably more favorable than that for ary major
competing crop under present or projected price
relationships .

However. there is evidence to indicate that this strong
competitive advantage of sugar beets over competing crops
is limited to a particular subset of the lake-bed soils
in the Eastern Region. Mien the yield relationships for
soils other than the 2c classification (Table 3.2) are
compared with the costs of production shown in Table
4.1. it is indicated that the advantage of beets nearly
vanishes.

Distance to the sugar factory is demonstrated to be a
major factor influencing the individual farmer's choice
of crops. The beet crop is relatively bulky so that

hauling accounts for a large proportion of the production

110

costs. Furthermore. the added trucks and drivers
required to efficiently support the harvesting crew
may often be expensive and difficult to acquire for
the short harvest season. Thus. few farmers haul
beets in excess of 20 files.

(e) There are a. number of other factors which make this
crop somewhat of a Spefial case. They are thought
to affect production response but in a manner difficult
to measure. Therefore. a static model of the profit-
maximizing firm has some shortcofings as an analytical
tool.

(f) The changes in technology of sugar beet production have

6 reduced the importance of some of the special hard-to-

measure characteristics. Thus. income variability has
been reduced to the point where most of the year-to-year
changes are upwards and thus not undesirable. “binning
labor is on the farm for only half the time of a few
years ago. Harvest and delivery bottlenecks are being
eliminated by increased factory receiving facilities.
Resistant varieties improve the chances of having a
satisfactory gerfination. stand and yield.

Implications
The implications of the model were that the supply of sugar
beets would increase to a point to fully utilize existing and prospective

Necessing capacity in the projected period.

111

In view of the considerations just noted and also because of
the likelihood of favorable prices in sugar for the next few years.
this projection seems realistic. This increase in output can be
supplied from present producers by relatively small changes in the
present rotations and the eXpected increase in yield per acre.

However. should processing capacity be increased substantially.
as has been proposed. the answer is somewhat less clear. In a sense.
such projections are extrapolations beyond the data. The static
analysis indicates that new farmers would be bid into beet production.
However. in view of the difficulties in accounting for the subjective
factors discussed earlier. subjective judgments as to the behavior of
the important variables are required.

In view of the data on transportation costs and personal
opinions and judgments concerning the preferences and goals of farmers.
this writer is not of the opinion that a large proportion (say over 20
percent) of the present non-beet growers on the adapted soil associa-
tions would supply beets under the projected price and technical
relationships.

CHAPTER V
SUGAR BEET PROCESSING

Some background discussion on the development of the sugar
beet processing industry in the United States and in the Eastern
Region was presented in Chapter II. In Appendix I there is a
chronological history of all sugar beet processing enterprises in
the Eastern Region. This chronology shows that most plants in the
region. including those presently in operation. were erected around
the turn of the century. Of the 34 enterprises launched since 1897.
only eight remain. These plants have. in general. increased daily
and annual output to a large degree over the years. However. they
are still. on the average. of smaller capacity than the average of
plants elsewhere.

The present chapter will be devoted to an analysis of some
economic aspects of the processing of sugar beets. Consideration
will be given first to production techniques and input-output
‘ relationships for the industry. A later section will exafine the
relative attractiveness of alternative methods of expanding plant

“pacify.

A. The Production Process and Input-Output Relationships
The process of extracting sugar from the beet root involves
the following steps :1

lSee McGinnis. R. A.. ed.. W. Reinhold
Publishing Corp.. New York. 1951. for a detailed analysis of every
Phase of sugar beet processing.

112

113

(a) washing and slicing the beet into thin strips called
"cossettes."

(b) Removal of the sugar from the cassettes by diffusion
(essentially.the cossettes are soaked in hot water.
causing nearly all the sugar to move from the cassettes
into the water).

(c) Partial purification of the resulting diffusion juice
by successive treatment with calcium.oxide (lime).
carbon dioxide. and sulfur dioxide. and filtration of
the resulting precipitates. (The lime and carbon.dioxide
are produced at the factory's lime kiln from limestone.)

(d) Concentration of the purified juice by boiling in
evaporators.

(e) crystallizing the sugar in the resulting sirup by boil-
ing it in a partial vacuum.until it is supersaturated
so that crystals form.

(f) Separating the resulting mixture into crystals and sirup
by centrifuging.

(g) Drying. sizing. packaging and storing the final product.

The sirup from the first centrifuging still contains a considerable
amount of valuable sugar. It is boiled and crystallized twice more.
The sugar resulting from second and third boilings is not of commercial
quality. so it.is remelted and re-enters the process. The sirup from
the third centrifuging is called "molasses." The solids in molasses
are around 60 percent sugar. but the recovery of this sugar by boiling
and centrifuging is not economically feasible. Beet.mo1asses is

llllr

usually sold for livestock feed or for use in the production of yeasts
and other microorganisms. It also may be subject to other types of
process for extraction of the remaining sugar. The most common of
these is called the Steffens process. which is used in a number of
factories in the United States. although by none in the Eastern Region.

The other by-product. the exhausted cassettes or pulp. is
pressed and usually dried for sale as cattle feed.

Waste disposal is a major problem of beet factories. McGinnis
reports that the waste disposal problem from a 2.000 tan per day (non-
Steffen) factory is roughly equivalent to that from a city of 125.000
population}

The processing season (or "campaign” is about 100 days duration.
beginning around October 1 when the beets have reached a sufficient size
and sugar content. The harvest is largely completed by November 1.

The length of the processing season in the Eastern Region depends upon
the period which the beets may be stored in the factory pile. Toe beets
lose sugar through respiration and from such factors as bacterial
infections from physical damage or freezing and thawing. 'nxe amount

of sugar extracted per ton of beets sliced thus declines as the season
progresses.

The factory usually maintains some permanent force of about
100 the year around. These include the executive. supervisory and
office personnel. a part of the factory work force (which performs
the necessary inter-campaign maintenance). and an agricultural staff

 

lMcGinrds. Beet Sggg gechnolgg, 92. 9y... p. 471.

115

who are responsible for the details of acquiring the beet crap. The
remainder of the factory crews are hired only for the period of the
campaign.

New technolggz.-Although the basic process for extracting
sugar has not changed for war years. a large number of greatly improved
methods and equipment have been developed. The most important of these
is the continuous diffuser which eliminates as may as 15 men per shift
in replacing the batch-style diffusion batteries. Continuous techniques
for mam? other phases. including carbonation and centrifuging for
intermediate sugars. have been developed. Automatic control systems
for may operations have been introduced. A number of developments in
beet storage have contributed materially to a lengthened campaign in

recent years.

Input-Output Relationships and Measures of Efficiency

The list of physical inputs required for operation of a beet
factory is too long to cover in detail here. Brief comments shall be
offered on those of major importance.

§_e_§_t_§_w-The amount and proportion of sugar extracted from the
beats depends both upon the quality of the beat and the factory equip-
ment and operating techniques. The amount of sugar extracted per ton
depends primarily upon the percent of sugar in the beat. The propor-
tion of the sugar in cassettes which is finally bagged is further
dependent upon the purity of the beet (that is. the proportion of
sucrose to total soluble solids in the beet) and the final purity of
the molasses (the proportion of sucrose to total solids in the molasses).
Cottrell states the point succinctly:

116

For aw particular combination of soluble non-sugars found in
factory sirups there is a ratio of sugar to non-sugars which
represents the limit beyond which sugar cannot be economically
crystallized by ordinary factory processes....If for example.
it is found impractical to crystallize sugar beyond a point
where the purity of the final molasses is sixty. then it is
evident that each 100 pounds of dry substance in molasses
contains 60 pounds of sugar and #0 pounds of non-sugars....
every pound of non-sugars has prevented the crystallization
of 1.5 parts of sugar.1

Losses of sugar other than that in the molasses generally
amount to a quite small percentage of the sugar. According to
Cottrell. they may be reduced to less than 0.03 percent of the weight
of the beets in non-Steffen operations.2

Eon-Steffen factories average about 80 percent recovery of
the sugar in the cassettes. Factories equipped with the Steffens
process for treating molasses can achieve an extraction rate of over
90 percent. ’me Steffens process is not universally used. More than
half of the most recently established factories in the United States
have not included it. The indications are that under the usual price
relationships between sugar and molasses. the process does not make

3 The comparison (of extraction rates

adequate returns on investment.
between regions thus must be made with care. The Eastern Region shows
a much lower extraction rate as compared with other areas. at least
partly because of the absence of any Steffens operations.

Moore has argued that the rate of recovery achieved will depend

 

lCottrell. R. H.. Beet Sugar Egnomics. op. cit" p. 142.
id.. p. 146.

3Personal communication. H. M. Bauserman. Stearns-Roger Mfg.
Co.. Denver. Colo.. May 24. 1963.

117

upon the particular variant of the share contract in force at a given
factory. The processors whose share allows him but 50 percent of any
increment of sugar extracted would not find it to his advantage to
extract as much sugar as would the processor who received the entire

marginal unit.1

The Eastern Region contract is of the former type. This
may account for a part of the differences between regions. although the
proposition would be extremely hard to test because of the variation

in the primary factor influencing recovery rates. the amount of
impurities in the beets.

_L_a_}_:_>_9_r_-,.-Generally speaking. the labor required per unit (whether
measured inputs of beets or‘ output of refined sugar) depends on the
particular types of equipment installed in a factory and the scale of
the operation. as well as on the quality of the beets. Kinsley reports
a mean of .86 man hours per ton and a range of .62 to 1.29 man hours per
ton of beets sliced in a study of six United States beet factories in
1.952.2

flaw-Several million gallons of fresh water per day are
required for fluming. washing. diffusion and for the boilers. The
amount of fresh water used depends upon the degree of recirculation.
particularly in the fluming.

Mw-Large quantities of steam are required at a number of

different points in the extraction process. Accordingly. beet sugar

 

lMoore. J. R.. "Economic Implications of Share Contracts for
Contracts for Sugar Beets.” ognal of gm Econogcs. Vol. XLIV. No.
2. May. 1962.

zKinsley. a. T.. Case St\_1_dy Data on Prguctivity and Factogy
Pegfgrmance: Beet Sugar gefinigg. BIS Report No. . U.S. Dept. of

Labor. Washington. D.C.. February. 1953.

118

factories are equipped with a large capacity boiler system for the
production of steam to be used in the evaporators. vacuum pans. and
various juice heaters. Steam is also usually used to generate the
plant's electric power. A system designed for the most efficient use
of steam can make rather large economies in fuel consumption. The
average reported by Kinsley was about 220 pounds of coal to boilers
(basis 10.000 BTU per pound of coal) per ton of beets. but the most
efficient plant achieved a rate of less than 160 pounds.1 Pulp dryer
coal requires an additional 75 Pounds of high grade coal per ton of
beets (14.000 BTU per pound). Cake is the usual fuel in the lime
kilns. although some use of natural gas is reported. Cake is required
at a rate of 10 to 20 pounds per ton of beets.

mesgnew-A good grade of lime rock is required for conversion
to calcium oxide. A typical quantity would be at a rate of 100 pounds
per ton of beets processed.

mw-Lesser quantities of a number of other materials are
required in the extraction process. including sulmr. diatomaceaus
earth (for use as a filter aid). soda ash. filter cloth. activated
carbon. bags and the like.

The efficient and profitable operation of a given beet factory
depends. among other things. on an adequate volume of high quality beets.
Both quality and volume have been and are problems of Eastern Region
processors. The content of sugar and the extraction rates have been

somewhat lower on the average than in other regions.2

_

111nm. Table 8.
ZSugar Statistics. Vol. II. gm" Tables 20, 21 and 22.

119

More of a problem has been volume of beets supplied. It was
shown in Chapters III and IV that a most important determinant of the
relative profitability of the beet crop to the farmer was the quality
and fertility of the soil. Furthermore. the importance of transporta-
tion costs for beets indicates that a processing plant must be located
in immediate proximity to large bodies of favorable soils in order to
obtain adequate supplies without incurring special costs or subsidies.
he history of declining factory numbers in the Eastern Region appears
to be in large part attributable to the location of many of the plant
sites in areas where the soil characteristics do not provide a margin
of advantage to the beet crop. A chronically low volume of production
is financially disastrous to a firm with the high overhead costs for
capital equipment and permanent staff involved in beet production.

B. Returns to Alternative Methods of Adding Plant Capacity

The recent interest in the possibilities of expanding beet
sugar production in the Eastern Region suggests that some consideration
be aven to alternative methods for achieving such ends. The problem
is of rather a complex nature. and the subsequent analysis may reflect
a larger probability of error than the author considers desirable.

There exists no public information on the detailed costs of
operating a beet factory. The operating firms naturally do not publish
amr such information. (The Sugar Division of the Department of Agri-
culture has this type of data for purposes of administering the Sugar
Act but only on a confidential basis. and "outsiders" such as the

author are not permitted access.)

120

The procedure followed here was to construct a fairly detailed
budget of the operating requirements of three hypothetical sugar plants.
To arrive at estimates of operating costs. assumptions were made as to
the quantities and unit costs of various categories of inputs. includ-
ing beets. labor and materials. and capital equipment. These assumptions
are presented in Tables 5.1. 5.2 and 5.3. The resulting income and
expenses will then be compared as to their rate of return on invested
capital.

Certain specific and limiting assumptions are required for this
analysis. The capital investment in a sugar plant must be recovered
over the plant's operating life of 40 or more years. The cost of the
various other resources. labor. coal. lime rock and various and sundry
operating supplies may be expected to increase over time. The use of
present prices. as was done in this analysis. is equivalent to the
assumption that sugar prices and the efficiency of resource utilization
will change at rates sufficient to precisely offset expected increases
in costs for other purchased resources.

Q§§2_I,-In this instance. we assume a hypothetical plant with
a capacity'of 1.600 tons daily. It is proposed to remodel the existing
facilities and equipment to reach a capacity of 2.400 tons. Assumptions
as to the investment required are listed in Table 5.3. It is assumed
that a continuous diffuser will be installed and equipment purchased to
replace and add to existing yard. beet end and sugar end facilities.

A bulk storage silo for 100.000 hundredweight is included. Labor and
material input assumptions are shown in Tables 5.1 and 5.2. respectively.
This plant would draw'on 15.000 acres of beets at present.yields.

121

TABLE 5.1. PROIXJCTION AND RELATED LABOR REQUIREMENTS FOR THREE
HYPOTHE'HCAL SUGAR BEET FACTORIES

 

 

: Factory : Factory : Factory

: No. 1 : No. 2. : No. 3
Operation : 2400 tons/day : 3000 tons/day : 4500 tons/day

: (partly modernized : (modern : (modern

= W a segment) : e e t

 

 

 

Men.§§guired per 8 £92; Shift

Beet Ehd

Handling (fumes. trash
catchers. beet
washers) 7 5

Slicing (picking table.
knife filters.
weighers)

Diffusion"

Carbonators

Filters. Laundrymen

Evaporators

Utility

Fwwm

V

HNHVNH?
wacwwm
HNHmHHm

Sugar End
Boilers. Crystallizers.
Helpers
Granulators
Centrifuges. Melters
Packaging. Warehouse
Utility
Fbreman

|...n

O\ \1 (DV UV) l—‘l-‘waNU
N

O‘O you l-‘NO‘P'N-P'

lime Kiln

Boiler House

Laboratory (chemists.
samplers)

Pulp Dryers

Maintenance (machinists.
mechanics. electricians)

General (sweepers. janitors.
supply handlers. etc.)

H
O\ \O O\O\ #«F’ HHNPNN
|'-’

G)
N
2%
H
O
H

Average per Shift

Average Production and
Related Labor per Ton of
Beets Sliced .82

S9

 

 

 

‘ljllllll'lll .
‘1

122

 

N300. Naoo. N300. 00.0m cos

no. no. no. n~.s cos
amo. amo. amo. on.ma cos
mo. mo. Ha. om.m cos
an. mm. mm. as.m asoa
ea:

 

eoo m mecca a sea to moan:

 

oxoo
xoom 08.3

.pa\sem coo.sav
gowns mesa o» aaoo

A.na\pam ooo.oav
maoflaom as dean

some..." confined
Be cofioseohm

 

thaw, ” anew. “ sec ago» co: m “ Anaemia
\mc3 00m! a . \acop 000.0 « Aeoaaeosoa « had a
Autopoem 333 » Annapoeh 323 « heaped.“ wcflmdnav ” mowed «

page H
m .02 huopoem « N .02 heapoem “ H .02 heapoem a .

83H

 

3504..“ 30% swam ggsoa é mzounomzamg amoo 924 HDiZH Aden—”mam .N.m an.

123

.dflameo msfiesado use used mo 03”.; mead H.333 aaneuaaasau no ed....eb Ho fiestasoh

.hdso scan—pegs." 302W

 

 

 

000.mH 0nu.ad 003.: \mpsosueonsH omeua><
mafia” mains 034 358
0Nm 00M “N gonna use eadosamsdpsoo
mm mm 0H smdeon use msduoosawsm
00m 00m ma eefiudflaaem soavoenumsoo huesodsea
Reg: 966 8m A62: as .85 ads .ooafio .ESSBJ
.wsdwexoed semen .hopeaesom .saaaon .sadx
osda .usa semen .uso poop .omeos emery
Aeosafiflmfi 333050 handguns
000.N 00H.N oom “asap sass use oesosowez semen
.omsosases use nehwu sass .sopesosom
use seaaoo .eesos sHHx esda 9soon
losope use some asdsoes .eese msawexaea
.2335 boosts: e5 Sacco is
semen use noon wsausaosa .msauaasn.saesv
emsauaaem
000.m 000.: 0mm A.opa .eassam .msoomeH annex
.haadse have: .psosmdswo wsa>daooa
use 33.3 .msflroefiwea .useav
asasmaswo use museh buosoeh
aseaaon 000
lHalqo noises ” 3 8 u so 08 w o u t

3oz » saz . on heu\sop 000 no " aevH
m .02 auopaem « N .oz hsopoeh “ soapauue an wsdaouosam «
u » Kmm .oz hhopoem

I!“

agedh doflgog Ea mom mazEHEZH Asa—Ha .n.m 3mg

124

Case I; and Case law-These are hypothetical new plants.
Assuming that a site could be acquired suitably located with respect

to supply of beets and water. on a rail spur and with sufficient
acreage for waste disposal and beet storage areas. costs might be as
in Tables 5.4 and 5. 5. Each plant is assumed to have the following
types of equipment: continuous diffuser. continuous first and second
carbonation system. and automatic centrifugals. None of the special
processes (Steffens. ion exchange. or continuous adsorption) are included
in the cost of equipment. (Each of these improves quantity or quality
of sugar extracted at an additional cost in capital and materials.)
Bulk storage bins are included to the extent of 200.000 and 300.000
hundredweight. respectively. The labor requirements assumed do not
reflect a particularly high level of automatic controls.1 These plants
would draw on 19.000 and 28.000 acres of beets. respectively. for 100
days of operation (current yields).

The additional investment in Case III as compared to Case II
was estimated by a method reported by Chilton.2

The assumptions with respect to performance rates imply a some-
what greater efficiency in use of labor and fuel in Cases II and III than
in the remodeled plant. It is assumed that extraction rates of sugar

 

1Data on costs and input-output relationships which provided
the basis for estimation for new plants were generously provided by H. M.
Bauserman. Stearns-Roger Mfg. Co.. Denver. Colorado. Personal Comunica-
tions. April 1. 1963. and May 24. 1963.

ZChilton. c. E.. "'Six-Tenths Factor' Applies to Complete
_ Plant Costs." in Chilton. C. E.. ed.. Cost Estimation in the Process
Industries. New York. McGraw-Hill Book Co.. Inc.. 1 0. p. 282.

125

TABLE 5.4. INCOME AND EXPENSES PER TON OF BEETS SHW-HPOMECH
FACTORIES

 

 

: Factory No. 1 : :
:(Ehcisting factory : Factory No. 2 : Factory No. 3
z

: remodeled) : (New facto ) (New factory)
: 2.400 Ensldaz 3 2.000 @352; 1 5.529 mmlm

 

Income - Net Proceeds i Er Tgn 5 a; Ton § a: Ton
Sugar 240 lbs. per ton
@ $8.00 per curt. 19.20 19.20 19.20
Dried Pulp 103 lbs. per
ton @ $33.00 per ton 1.70 1.70 1.70
Molasses 96 lbs. per ton
@ $22.50 Per ton 1.08 l008 ;:08
' 21.98 21.98 21.98
Expenses (not including
marketing expenses)
Payments to Growers (50%) 10.99 10.99 10.99
15% of excess of
$7.50/th. .18 .18 .18
SUb-tOtal 11017 11.17 1101?
Production and Related
“bar 2003 1054 1031“
Fuel to Boilers 1.05 0.76 0.76
Pulp Dryer Coal 0.54 0.54 0.54
Coke 0.13 0.13 0.13
Limestone 0.21 0.21 0.21
General Property Taxes 0.17 0.50 0.44
Depreciation 0.92 1.93 1.65
All Other Expenses 3.44 3.36 3.20
Total Expenses (excluding
Federal income tax) 19.66 20.14 19.44
Income Less Ehcpenses 2.32 1.84 2.54

 

126

 

 

 

Axe» osoosd use weapons“ anomonv

 

mm.m m&.¢. mu.ma asosveo>sH omewo><.so shaver no open
Axes aeoasa
086:; 8063 Somme esteem .5235 2830 282s ooz
25 as 80 om 0 we eefiesoheon
Segre; 80.02...” Seek. osoosH asses
"nuances sonflo we “once"...sosmma 408 ea 38 moose so peso
3 034 ooo ewe someones. 850 3
8°de 0863 08:3 ease heroes Hetero
80.8 08.16 084m 88.823
086m 806m 086m 880
80.3“ 8043 80.34 eons use use deco
805a ooodmm Scene esofiom nos deoo
828m. 80.32 08$? “reassess
. e33 eooeaoe one sofloseoea
oooémoé 80435» 08.89% soaksfla a 228.8 3 Barge
eoesodxm
Sergei 08.:me Sesame» erase ooz
80.8: ooormfl I ooo m consumes a
memmeaos .muaooosm poz
ooofiea 8°.on 8°63 e3\oo.m$ a
mass peas .muoooosa paz
80.39% 8208.3 0868i 68393 e
semen mo modem .muaooosa aoz
OSOOGH
league 8%: a 33308.? a 3% or scale "
Ahuooaem sozv a Ahuoaaem.3azv . Asoauesfisneuos eaoev a
m .02 hwopoem a N .oz auouoem » Aesopoem msaumaumv a
a a H .oz hwoaaeh «

 

 

chumz<u Han ooauummHMUBo<fi AdUHHmmHomHm mam Hzmzuadamrmmzmmuw nz<_m2002H .n.w Manda

127

per ton of beets sliced would not differ among the three plants.1

Income and Expenses for the Ebrpothetical Case

Tables 5.1+ and 5.5 present an analysis of income and expenses
for the three cases under certain assumptions as to costs. revenues and
performance rates.

It is assumed that the beets are of 15 percent sugar content.
and 80 percent is recovered (8+0 pounds per ton of beets). This sugar
content is somewhat lower than average but in line with recent trends
in the Eastern Region. Income per unit is based on net proceeds (which
is gross income less marketing costs and federal processing taxes. as
specified in the grower-processor contract).

Payment to growers is based on the typical Eastern contract. which
allocates to the grower 50 percent of net proceeds from sales of sugar and
byproducts plus an additional 15 percent of net proceeds for sugar above
$7.50 per hundredweight. Quantity and cost of beets and other inputs are
as in Table 5.2. The category of ”all other expenses” includes the factory
costs of acquiring beets (including agricultural department. fieldmen. labor
procurement. and beet transportation), general admirdstrative and overhead
expense. insurance. state franchise and business taxes and general operat-
ing supplies (including maintenance). It does not include amv charges for
interest or depreciation. Wage rate, including fringe benefits, is $2.2m
per hour.

be final figure represents gross pre-tax profits. Interest
charges were not included in order to estimate a rebarn on total capital.

 

lie noted earlier. the amount of sugar entering the factory
Ihich is not recovered is either in molasses or in factory losses (the
latter of uhich are of minor importance). Accordingly, there is no
apparent reason to assume factory design has am parfictflar influence
on recovery rates.

128

The resulting estimate of rate of pro-tax returns to average
investment is derived by dividing net income by average investment.

(Average investment includes both property and operating capital.)

Implications

The results derived in Table 5.5 suggest the following conclusions:

1. A plant investment in replacing and adding to existing
facilities is likely to provide an adequate return on investment. Such
an expansion can be carried out with little risk of developing capacity
exceeding the probable supply of beets (see Chapter IV).

2. Investments in the smaller new plant would be likely to
achieve certain efficiencies in use of labor. materials and maintenance.
However. the much larger expenses for depreciation tend to offset these
other advantages. The resulting net returns. even for a larger scale
enterprise. appear insufficient to attract capital.

3. me larger scale hypothetical new plant achieves additional
and significant economies. However. because of the large investment
per unit capacity. the rate of return. when 52 percent federal income
taxes are deducted. appears to be modest at best.

The analysis of Chapter IV does not imply that a supply of beets
sufficient to operate this larger plant at full capacity (28,000 acres)
could be found arwwhere in the Eastern Region without prior cessation
of operation on one or more existing plants.

These conclusions would be different should conditions other
than those assumed occur. For example, a capital contribution by
growers. as is reported to have occurred elsewhere. could materially
change the attractiveness of investment in new plants. An equivalent

129

procedure would be to reduce the portion of the net proceeds returned
to the grower under the terms of the contract. Changes in the price of
sugar and in the quality of sugar beets are also possibilities which
could change the rates of return. A longer processing season through

improvements in beet storage techniques would have a similar effect by

spreading overhead over a larger volume.

CHAPTER VI

MARKETENG. QLSTRIBUTION AND DEMAND

The purpose of the present chapter is to describe the
characteristics and practices of the marketing and distribution of
sugar with special reference to the EasternhRegion. ‘Another purpose
is to analyze the forces determining prices and net returns to

growers and processors of sugar beets.

A. Sources of Supply and Channels of Distribution

The total distribution of sugar in the United States
approaches 10 million tons (raw‘value). (The legislative apportion-
ment of these supplies was discussed in Chapter II.) About one third
is supplied by mainland growers and another 20 percent from domestic
off-shore sources. including Hawaii. Puerto Rico and the Virgin
Islands. The balance. slightly less than half. is provided by ship-
ments from a number of friendly countries. Prior to the recent and
continuing unpleasantness with Cuba. that nation and the Phillipines
(both of whom had preferential trade arrangements) were the main source
of the balance. Table 6.1 shows the sources of supply for the calendar
year 1962.

grimégg gastributiqgs
All sugar distributed.in the U.S. originates from one of four

classes of organizations which are called "primary distributors." These

130

131

 

 

 

 

 

TABLE 6.1. UNITED STATES SUGAR.RECEIPTS AND PRODUCTION--BY SOURCE
OF SUPPLY. 1962*
: Short Tons. : Percent of
: RaW'Value : Tgtg;
Production
Mainland Cane 763.192 7.9
Domestic Beet 2,515,052 26.0
Subtotal 1.228.245 12.2
Receipts of Refineries and Importers
Offshore Domestic
Hawaii 1.078.501 11.2
Puerto Rico 756.81“ 7.8
Virgin.Islands 10 0 0.1
Subtotal £513,065 gig;
Offshore Foreign
Cuba 0 O
Dominican.Republic 869,866 9.0
Mexico 389.083 4.0
Phillipines 1,210,158 12.6
Brazil 397.839 #.1
India 147,274 1.5
Australia 160.915 1.?
British west Indies 181.161 1.9
Republic of China 109.30# 1.1
Peru 530.781 5-5
Other Foreign Countries 533,252 5.:
Subtotal 4....1225216 .4246
Total Offshore 653221628 66.1
Grand Total 9.653.943 100.00
I"Source: Sugar Reports No. 130. February. 1963. Tables 6. 7 and 9.

are:

processors, and refined sugar importers.

Cane Sugar Refiners

These firms customarily refine purchased raw cane sugar.

cane sugar refiners. domestic beet processors, mainland cane

Their

132

supplies of raw materials are the "off-shore raw sugars” and the
domestic raw sugars from Florida and Lousiana. Most refineries are
located in sea ports of the Atlantic. Gulf and Pacific coasts.

Domestic Beet Processors
These are the firms who produce refined sugar from sugar beets.

Mainland Cane Processors

These organizations customarily produce and distribute sugar
which has been processed by them from sugar cane. (Most mainland cane
sugar is produced in the form of raw sugar and subsequently sold to
refiners for final processing. so this group is of negligible size.)

Importers

'Ihese firms distribute imported refined sugar. The 1962 Amend—
ments to the Sugar Act have sharply reduced permissable imports. so this
group is of declining importance. In Table 6.2 the proportions of the
total distribution of sugar which comes from each of these sources are
indicated.

TABIE 6.2. DISTRIBITION 01“ D T CONSUMPTION SUGAR BI PRIMARY
DISTRIBUTORS. 196 a

 

 

 

 

 

 

 

: Quantity :
Item : Short Tons. : Percent
: Rag Value :
Raw Cane Sugar Refineries 7.051.387 72.3
Beet Processors b/ 2.415.671» 21+.8
Mainland Sugar Cane Processors 49.661 0.5
Importers 32¢. 248 11,1}
Total 9.851.670 101.0
Less Expert and livestock Feed 22.18]I 1.0
Continental Consumptiongl 9,751+.lI-89 100.0

 

Table continued on following page.

133

Table 6.2 - Continued
9‘] Source: Sugar Repgrts No. 130. February. 1963. Table 2.

PIA number of cane processors who also refine purchased raw
sugar are classified as refiners.

9] Includes deliveries to armed forces at home and abroad.

Mating floducts
A wide variety of products compete in the market for sweeteners.

including honey. maple sugars and.sirups and the various nonpcaloric
sweeteners. The group of major importance other than sucrose is

the corn sweeteners. Table 6.3 provides some indication of the
magnitude of the consumption of this class of products. By way of
comparison. the 1962 consumption estimate for corn sweeteners (about
28 million hundredweight) is about 16 percent of the deliveries of
refined sugar (on a weight basis) and a somewhat smaller proportion
on a value basis. Dextrose in the early 1960's has been quoted at a
price in the neighborhood of 20 percent less than that of sugar (on a
dry weight basis).1

elsfsbu

Most sugar. whether it is intended for industrial or household
consumption. is handled through a broker. A number of firms specialize

in the single commodity. sugar. They bring buyers and sellers together.

 

13.. P.M.A.. U.S. Department of Agriculture. cgmggggve Rela-
gggs Among Sugg and Cgrn Sweeteners. Ag. Info. Bull. #8. Washington.
D.C.. 1951. for a discussion of this general subject. Also a series
has been published in 1963. bringing this study up to date. See for
example. Ballinger. Roy A.. and L. C. Larkin. Sweeteners Used by the
C ndus C P in

  
 

AER 20. U. S. D. A.. Washington. D. C.. 19 3. Other publications in this
series will deal with Baking. Beverage. Confectionary and Dairy Product
classifications .

134

TABLE 6.3. DOMESTIC SHIPMENTS OF CORN SWEETENERS. SELECTED YEARsé/E/

 

 

Year : 1 000 c basis : Year : 1 000 cwt. basis
1936 11.169 1957 20.869
1940 12.309 1958 22.897
1944 20.044 1959 23.861
19u8 16,516 1960 2h,732
1956 20,994 1961 25.431
1962 27,9u2

 

9‘] Sources: l936-48-adapted from PMA. Ag. Info. Bulletin No.
48. C m etitive Rela ons Amo Su a and n Sweeteners June.
1951. 1933-1952 §asa:_fisaszia.93. 10?. 131.

l3/Includes Refined Corn Sugar (dextrose). Corn Sirups (mixed
and unmixed. dry basis). Corn Sirup Solids. and Miscellaneous Corn
Sweeteners.

as well as provide services to both. such as information. data and
advice on market dealings;L

The sugar destined for the consumer market is sold by the
primary distributor. usually operating through the services of a broker.
into wholesale and retailing channels. Large retail chains often buy
directly from a primary distributor. by-passing the wholesaler.

Sugar destined for the industrial market follows similar
channels. except that few industrial users deal with a retail organiza-
tion. The largest buyers typically deal directly with the primary

distributor. although the details of the sales are handled through a broker.

 

1'mrrm‘. Wear. 221.21% p- 122.

135

12925 and Packages of Sugar
The expanded markets for sugar require an increasing number

of grades. forms and packages for sugar. For example. Cottrell lists
no less than 21 grades of sugar available in 100 pound bags. Most of
these are pure sucrose in a wide variety of crystal sizes. ranging
from several grades of powdered sugar to those of very coarse crystals.
There are several brown or soft grades of sugar. ranging from light
yellow to dark brown. Certain special grades for industrial uses are
differentiated which must meet exacting specifications with respect to
impurities.

In addition to these grades. there are the mamr forms of
packages available. In the consumer packs (those of less than 50
pounds). there are various sizes of bags. cartons or individual service
packs for powdered. granulated. brown or cube sugars.

For industrial users. the most common package is the 100 pound
paper bag. However. in recent years. a trend toward bulkhandling is
evident. particularly for the larger user. Dry sugar in bulk can be
utilized in plant operations with efficient mechanical handling equip-
ment and storage bins. Large consumption is required in order to off-
set the initial heavy capital outlays. Special truck and rail cars are
used for delivery. hey are unloaded by gravity or screw conveyors.

Sugars in liquid forms are being utilized even more rapidly than
the dry bulk techniques. Industrial consumers who eventually must have

 

lCottrell. Beet Sugar Economics. op. cit.. p. 314.

136

the sugar in.liquid solution. such as beverages. canned fruits and
sirups find that large savings in.1abor and convenience are obtained.
Liquid sugar is delivered in Special tank trucks or rail cars and
stored in large tanks. Metered pumps convey it directly into the
production process with great economies in the requirements for labor.
Liquid sugars are provided in a number of grades and concentrations.
It also may be all or partly "inverted" (that.is. the sucrose is all
or partly'broken down into its component monosaccharides by chemical
means). Liquid sugar is also offered in.mixtures with corn sirups.
Pzactices of Eastern.Region Beet Processgrs filth Respect Lg Ggade and
Eggg,

Beet processors in the Eastern Region supply only a small
portion of the sugar consumed there (see Table 6.4). Thus. they have
been able to dispose of their products within a close proximity to
the producing areas without resorting to the expense and complication
of a wide range of grades and packages.

The general practices of producers vary widely among the
primary distributors in.Michigan and Ohio. One firms sells all its
output,in.100 pound bags. while on the other extreme. over 50 percent
of other distributors' outputs are in consumer packs. (These last are
a marked departure from the beet.industry norms where 80 percent of
production is sold in packages of more than 50 pounds.) Consumer size
packages distributed by Eastern.Region beet processors are usually
confined to 5. 10 and 25 pound bags of white. granulated sugar. The
market for brown and the small packages of granulated sugars is left

to the cane distributors. Powdered sugars are included in some cases

137

TABLE 6.4. TOTAL AND PER CAPITA SUGAR DISTRIBUTION BI PRIMARY
DESTRI UTORS FOR CONSUMPTION IN THE U.S.. SELECTED
YEARSaS

 

 

 

 

: Distribution of Sugar. figw'Vglue
Calendar Year : 1.000 Short Tons. : Raw'Value
: Raw Values : Pounds peg Capitg
1900 2.660 69.9
1905 3.154 74.9
1910 4.015 87.0
1915 4.555 91.7
1920 4.895 91.9
1925 6.548 114.0
1930 6.858 111.4
1935 6.634 104.3
1940 6.891 104.3
1945 6.041 86.3
19 5012/ 8,279 109.2
1955 8.399 101.6
1956 8.904 105.9
1957 8.734 102.0
1958 9.030 103.8
1959 9.181 103.6
1960 9.261 102.9
1961 9.611 105.0

 

9‘] Sources: Sggag Reports N9. 126. October. 1962. Table 5.
Sugg; Statistics and Related Data. Vol. 1. U.S. Dept. of Agriculture.
ASCS. Washington. D.C.. 19 1. Statistical Bulletin 293.

ElUnusually large distribution due to outbreak of hostilities
in.Korea. Large quantities carried over to following year.

in the industrial lines of beet sugar producers but not usually in con-
sumer size packages. For industrial users. there are. in addition to
the 100 pound bags. sugars available from some. but not all. distributors

in both liquid and.dry bulk. (One firm is in the process of installing

133

large bulk storage bins on its plant sites.) In general. the large
number of crystal sizes and grades offered by cane refiners and the
larger Western beet producers is not available from Eastern Region.beet

processors.

Seasonalipy in Supply
Most beet sugar is produced. as has been seen. in the months of

October through January. The peaks in sugar demand. however. are
typically in the summer months when food processing and beverage con-
sumption are at their highest.1evels. Beet sugar sales follow roughly
the same pattern as does the industry as a whole.

In order to alleviate storage problems. beet processors are
tempted to move sugar into markets toward the end of the beet campaign.
December was at one time the peak month of beet sugar deliveries. This
tendency is not evident,in the data on deliveries for the period 1960.
1961 and 1962. however. This perhaps reflects the increasing amount of
bulk storage constructed by beet processors. Most processors try to
distribute their stocks evenly throughout the year in order to be able
to supply needs of established outlets at any time. During the price
scare in.Hay. 1963. one Eastern processor went so far as to refuse large
orders at well above market prices in order to insure that he could

provide for regular customers throughout the season.

B. Components of Demand for Sugar
The previous discussion of grades and classes of sugar mentioned
some of the eventual consumers of sugar products. In this section. the

characteristics of these outlets will be examined in more detail.

139

Consumption of sugar in the U.S. has become quite stable when
measured on a per capita basis. This characteristic of demand is quite
important in the successful administration of the Sugar Act. As shown
in Table 6.4. the annual per capita consumption has settled down to a
figure of about.104 pounds. raw“value (or 97 Pounds when measured on a
refined basis).

The Trend Toward Industrial Consumption
As is well.known. the income elasticity for services and “con-

venience” products has led to larger and larger sales of foods which
are sold in partly or completely prepared forms. This. in turn. has
had an effect on the sugar market. as the main sources of buying power
have shifted. Table 6.5 demonstrates some of these changes. The gross
deliveries to industrial users have nearly doubled over the lh-year
period shown. while the consumption in nonindustrial uses was nearby
identical in 1962 to the figure reported for 1949.

The industrial.market is undergoing important changes as it
grows. Larger volumes of sugar have made feasible the labor-saving
bulk handling techniques for either liquid or crystalline forms of
sugar. The industrial users' specifications for sugar have beome quite
exacting. Trade associations of users. such as the soft drink and the
canning industry. have set up standards for special sugar grades in
cooperation with the sugar industry. These standards may specify limits
on chemical or bacterial impurities. For example. minute amounts of
particular residues occasionally found in both beet or cane sugars can
cause a "flee" or cloudiness in clear soft drinks which reduces consumer

acceptance to the product. Another example is the specific needs of the

.moms noguo Haw use monovm Hampom .mnoaamoaogz .modpspaumcH moodaomH\m

.modapmsosdrooomucoz use mcfiuoonm
use mcdqceo .momeno>om .mpodponm muden .mum:oupoomqoo .noxem on muo>daoo moosaocH\m

.aN magma .mema
mdpmpm as am .mmm :apoaaem
Hecavmapwpm .oaspasoanm4 Ho .pdon .m.D "mafipnom codpwnwaanmpm haddoeaoo "moondom

 

£982 :5 .oz .3 as .H 40> .38 efiaaom e5 8

lfiO

 

 

 

  

 

  

  

Icoz

  
  

 

 

\m
www.mma m.¢e mom.mm H.mm mam.mm meme
mon.mma m.ee meo.Hw m.nm mm:.:m Home
mms.mea e.ee moa.mm w.mn mmm.om some
mam.eea m.me onm.mm N.Nm mem.mm mama
mom.eea ~.on 3:3.Nm m.me mom.am mmma
moo.mma m.ms mea.mm H.Hm mmm.am mmma
HNm.HeH m.om wee.am s.me nme.mm mama
mmm.mna m.Hm see.mm ~.ws emm.mm mama
eam.mea o.mm mmw.mm e.e¢ Hmo.me :mma
mmH.~mH m.mm ome.am m.w¢ mme.om mama
mma.eea m.mm mme.aw ~.ss mmm.:e mama
mmm.mmH m.mn www.mm ~.:s mmm.ae Hmma
emo.ona m.mm mmm.wm m.me msm.mm. omma
mmm.ema «.mm Hom.mm m.as m-.mm mama

u we a no » omen: . amp 9 u ‘Imwo “
H308 » #Gooyom u HdmémfigH « abouhom « Hd @934an « .HdoH

 

 

HI!

 

was Hmzvonccdm 000 H

In!

\mmmumema .mmwam mo mama mm macaw mo mmHmm>Humn .m.e mamas

141

canning industry. Certain bacteria. termed "thermophilic" which can
survive the high temperatures in the preserving process must be
eliminated from the sugar used.

These changes create certain difficulties for the producer of
sugars. To obtain a liquid beet sugar. it must be remelted from dry
sugar which adds somewhat to costs for this product. The large invest-
ment in bulk storage facilities for both dry and liquid sugars return
little to the processor in the form of increased efficiencies in handling.
They are necessary expenses in order to retain the firm's cmmpetitive
position in his natural markets. The sugars produced to high specifica-
tion are more costly. for they may require special agents. or they may
reduce the rate of factory operation. The tendency to store sugar in
bulk silos means that all sugars in the silo must meet the standards of
practically all users. Thus. the sugar sold for household and other

consumption meets specifications well beyond what is actually required.1

Com. ve ends n the ndus a1 Users Market

In view of the increasing importance of the industrial demand
for sweeteners. a field survey of various types of users was conducted
as a portion of this study. (Table 6.6 shows the types of buyers of
sugar and the quantities taken by each.) Although the relatively larger
portion of Eastern beet sugars marketed in consumer packs makes this
analysis somewhat less important than anticipated for the present problem.
some general impressions are of interest and will be recorded.

 

1Cottrell. R. H.. Speech delivered to meeting of California

Beet Sugar Technologists. February 21. 1959.

142

..mh0»dbflhpmdo muqsaad an moaho>aaoo Ho poached N.mm

 

 

 

haopmsaxowddu upcomowdom .dw edema .mme .goudz .HMH .02 .m» 0 mm e um «condoms
mmm.am o msm.ma wee.ma “somaxuumgsv xasm ea moauosaaon
oHH.mm new msm.m: mmm.m “.mna on case umoHV «seam
oudm Magmaoo ca moauourflnon
www.mma mme.m Num.e~H ama.ms mmHmmsaqma A4309
mom.mm wee.m mmm.oe mmo.ma Hapoa.nsm
eaa.~ m Hmn.a 0mm moaocoma,pcaaquo>oo
msavsaocH moauo>aaon nonpo AH<
mme.m~ awn mam.ma mnm.n monopm sauna .muoooao assume
mmm.om smo.m Hem.mm edemaa “tonnes .m¢apcoogg.m~¢moaoez
Sm; m mam; S 803333 .mpfigfimom .mafiom
Hddfimfivcmlnoz
mam.mm mma.m nmm.oe mma.mm Haooannam
Hmm.a sea sms.a mm apogeOhm eooa.:oz
m:m.m 0mm mma.s 0mm some coca tango use aaaapaaz
omm.ma NHH.H mo~.m oam.m mosuommum .moaaaoe .maae
.mooom sonoyh .ooappom .oocsoo
mms.em mm: moe.o~ mmm.m momuuo>om
mmm.m one mmm.m mmm.m nauseoum awash ecu smote ooH
www.ma mam m-.~H mmm.e mooseoam eopaaom muocoaoooocoo
HH¢.N~ mam mom.sa mma.m nauseoum
.. eoaaaa ecu Haouoo .muoxam
as use:
0: 0 o 000
IIIIIAMMdHI; 1.0.n eons SH “ case somwll ”

 

 

amme .m<mw.m<azmndu .mmwbm mo mmHZHmDm 26 Hoonomm ho MAME mm mmHmmsHumn madam .w.m mumda

1“}

Some “0 firms were contacted in.Michigan and Ohio; all but
three of these granted interviews. The wide range of production
techniques and scale of operations preclude any statistical testing
of estimates. Accordingly. the results will be reported in the form

of verbal impressions.

User Attitudes With Respect to Competing Products

Most respondents regarded beet and cane sugar as identical
products. They thus purchased sugar solely on the basis of price.
taking beet sugar at the usual discount when it as available. For
very large customers. it appeared that cane sugar was not priced higher
than beet sugar. Two classes of exceptions to the general use of beet
sugar were noted. All liquid sugar users contacted utilized only
industrial grades of cane sugars. since this type was available only
from cane refiners throughout,much of the region. For reasons cited
earlier. local beet processors do not emphasize liquid sugar and tend
to sell it only to avoid the loss of large accounts. The other exception
involved two candy manufacturers who reported unsatisfactory results
with beet sugar. When pressed for details. both admitted that these
experiences dated back to the Wbrld War II period.

Corn refiners are obviously competing aggressively for the
sweetener market. Unlike most sugar producers. they tend to differentiate
their products with brand names. They appear to have a vigorous sales
program backed by technical and research staffs. Evidence of their
increasing penetration was observed in all categories of users.

Some questions were posed which aimed at determining effects of

change in relative prices. Some of these were concerned with possible

144

effect of various prices among sweeteners upon the amounts of each
sweetener used. Other questions were to determine the probable
response to changes in relative costs of sweeteners and other inputs.
Most respondents asserted that they would not change recipes or
formulae in the event of price changes in.material. This apparent
inelasticity of response to changing prices should be interpreted with
some care. Many of the interviewees had no authority to vary recipes.
It also appeared that most had never considered the question. never
having experienced anything but stability in the price relationships

of sweeteners. It would be much.more illuminating to repeat the inter-

views now that changes in sugar prices have occurred.

a of oduct
One case of incompletely refined beet sugar (from an Eastern
Region plant) was encountered. The sugar in solution was cloudy and
gave off a "beet" odor. No other respondent could recall any case of
quality problems in any sweeteners in his experience in the past.5 years.
which would seem to speak rather well for suppliers of sweeteners in

general.

Seasonality
Beet sugar seemed to be available only seasonally on the

eastern fringes of the area; this was not regarded as a problem. since

adequate supplies of cane were always available.

Services
Technical services did not appear to be a competitive factor in

the dry sugar market where most beet sugar is sold. However. liquid

145

sugar sellers have made available special services to help acquire

and hold customers. Some instances of assistance by liquid sugar
distributors in financing the bulk storage tanks and distribution
systems were encountered. The customer paid back the cost over a long
period by adding a small amount to each delivery. This keeps the
customer in the “fold.” at least.unt£l the tank is paid for. Liquid
sweeteners must be treated with special care. for they are subject to
mold and bacterial contamination. Thus. some liquid sugar manufacturers
make a practice of providing periodic cleanings and inspectionsof the
storage and distribution facilities. This service also retains custo-
mers. for if the customer buys from.more than one distributor. neither
is likely to accept the responsibility for problems. Once the firm
has acquired capital equipment for liquid sugar. the asset.is "fixed.”
and he is likely to be a long-term.customer for this form.of sweetener.

Too cal Advances S e a U as

Over a third of the firms contacted used bulk storage for all
or part of their sugar needs. None of those with bulk storage used
beet sugar. primarily because of its limited availability. as noted
earlier. Not surprisingly. bulk handling was associated with large
annual usages and with products requiring liquid sweeteners in their
production process. i.e.. soft drink bottlers and fruit processors.

C. Sugar Pricing and Prices
The price paid by a sugar consumer depends on a number of
factors. The general level of sugar prices is influenced. within
limits. by the administrative policy of the United.States Department

146

of Agriculture. A relatively large portion of the delivered cost of
sugar is represented by transportation charges. Thus. the distance
from.a producing point affects delivered price to a consumer. Finally.
local and regional competitive factors have resulted in geographic
variations in sugar prices. ‘wa shall discuss the influences of these

in some detail.

The General Levelvgf Sugar Prices

As was mentioned in connection with the discussion of sugar
policy in Chapter II. the general level of sugar prices is administered.
within certain limits. by the Department of Agriculture on authority
granted to the Secretary to determine the total supplies of sugar to
be marketed. The language of the Sugar Act. as amended. allows the
Department broad discretionary power in this matter. The determination
shall be made so as to provide "such supply of sugar as will be con-
sumed at prices which will not be excessive to consumers and which
will fairly and equitably maintain and protect the welfare of the
domestic industry...."1

The relationships between the United States' market price and
the world market price. combined with Cuba's willingness to forego
short-term gains in order to maintain long-term access to the United
States' market. provided the means for this control. The residual
nature of the world market for sugar resulted in world market prices
being much lower than the prices prevailing in the United States' market.
On the few occasions when rising international tensions (such as the

Korean and Suez crises) sent world prices to levels above those in the

 

lU.S. House of Representatives. 87th Congress. 2nd Session.
Conference Report on Sugar Act Amendments of 1262. House Report No.
1957. Government Printing Office. washington. D.C.. June 29. 1962.

147

United States. the former Cuban regimes continued to supply sugar to
the United States' market in quantities sufficient to avoid any undue
influence on the United States' prices. However. since Cuban sugar
has been replaced in the United States' market by a large number of
suppliers. the price of sugar has followed that of the world market
in the first instance encountered of rising world prices. Thus. under
the present operation of the Sugar Act. the general level of sugar
prices in the United States can be said to be dependent on that in
world markets when the price in the latter is high.

In view of the elasticity of sugar supply over the longer run.
it appears that the conditions of short supply in world markets
experienced in 1963 cannot be considered to greatly influence the
longer term outlook for the general price level of sugar in the United
States. Hence. it is appropriate to return to the experience under
the Sugar Act for guidance on long term price expectations.

The language of the Sugar Act quoted above provides the analyst
with no clear notion of what might be expected for the general price
level of sugar. the terms "excessive to consumers" and ”welfare of
the domestic industry" are subject to varying interpretations. depend-
ing somewhat upon one' s point of view. The 1962 amendments to the law
do explicitly mention that the relaflonship between price of raw sugar
and the parity index is to be taken into account. Similar but not
identical concepts (whole price of refined sugar and the B.L.S. Cost
of Living Index) were in the previous law. A check on the trends in
the relationship between these latter two variables over the past decade
shows that the supplies to the United States' market have been such

148

that the price of sugar has risen at a rate somewhat less rapid than
that of the Consumer Price Index.1

Sugar Division officials. when queried on this subject. were
loath to admit any specific policy with respect to the relationship
between wholesale refined sugar price and the consumer price index.
However. examination of the data in the decade 1952-62 suggests that
a one point increase in the CPI is associated with a change of about
0.67 point in the index of wholesale refined sugar prices. The
relationship does not appear to be random (i.e.. this relation is
approximated each year. rather than being an average of a period of
years).2

In the 1962 amendments. as noted earlier. the variables to be
considered were changed to the price of raw sugar. and the Parity
Index (Index of Prices Paid by Farmers). The rate of increase in the
Parity Index has been of sindlar magnitude of that of the Consumer
Price Index.3

It is therefore concluded that the general level of sugar
prices will over the longer run increase at a very moderate similar
rate (excepting. of course. during periods of shortages in the world

market) .

 

lsugg karts 1,26. October. 1962. Table 18. The Consumer
Price Index stood at 128. while an index of wholesale sugar prices
was at 120 for the year 1962. (19147-119 = 100 for both indexes.)

2Sugg Remts 126. October. 1962. Table 18.
3fluid. . Table 13.

149

lbs Basing-Point Method of Priming

Commodities such as sugar which (a) are generally standardized
or undifferentiated and (b) for which freight costs are a significant
part of delivered price. are typically sold on a "basing-point" pricing
system. his method of pricing insures that delivered prices of a
standard commodity at any geographic point are equal for all distributors
in the market. (Mth a standardized comedity. quoted prices must be
equal. or the seller having a higher price will move none of his product.)
A-basing point is usually the location of one or more major sellers.
This center of distribution will originate most of the sugar sold in
the surrounding area and so will tend to “make the market." The price
of sugar in the territory 2111 be the quoted "basis price“ at the
distributing center. plus freight charges from the basing point to the
destination. Sellers at any basing point tend to quote the same price.
For each basing point there is a natural territory. for which freight
rates are lower from the territory's basing point than from am other
basing point.

‘Jhe result of this system is that the price at am point in the
territory is the basis price plus the freight rate from the basing
point for any shipper. whether his sugar originates from within or with-
out the region. his situation makes possible "freight earnings" or
"freight absorption. " depending on the location of the seller and the
destination of the sugar.

Freight absorption occurs when sugar is sold outside the
shipper's own basing point territory. His freight charges are by
definition higher to am point in the other territory than from that

150

territory's basing point. However. in order to meet the market price.
he must not quote more than the other territory's basis price plus
shipping charges from its basing point to the location in question.
Assuming that basis prices for each territory are the same. as is
usually the case. then he must "absorb” some of the freight charges
from his own location to the point of sale.

Freight earnings can arise when a seller (usually a small
producer who does not materially affect the market) can ship for less
to a destination than can other sellers at the basing point. The
seller bills the purchaser for the basis price plus the freight rate
from the basing point (which is called the ”prepay"). However. he only
pays the actual freight from his own location to the destination. He
can do this since he has no reason to quote a lower delivered price
than that from.the basing point. The difference saved between freight
charges or "prepays' and actual shipping costs are "freight earnings."

Under what might be termed normal market conditions. Eastern
beet producers enjoy freight earrings on sugar sold in their territory.
They originate but a small proportion of the sugar in their territory.
which is in the Baltimore basing-point territory. Thus. they earn the
difference between shipping charges from Baltimore and actual cost of
freight. Prepays into Michigan from.Baltimore are on the order of 60
to 65 cents per cwt. Actual freight costs of‘Michigan producers may be
but half of this. It is. of course. advantageous for these producers
(or any other. for that matter) to confine their sales to markets near
the factories. The seller is always faced with the choice between
price concessions in the nearby market or absorbing larger freight

costs to more distant points.

151

Price Discount on Best Sugar

Beet sugar has traditionally quoted at prices below that for
cane sugar in the same market. This differential is usually about
$0.20 per cwt.. basis 100 pound bags. Some of the reasons for this
date back to a period when production techniques were such that the
quality and purity of beet sugar was sometimes inferior to that of
cane. This condition has for the most part been overcome. Another
explanation offered is that beet sugars are not always available in
the range of grades and packages that are desired. nor are they avail-
able over the complete season. In order to penetrate a market dominated
by cane sugar. beet sugar price has been set at a point below that
quoted for cane. In recent years. the differential has been eliminated in

the Pacific Coast states but is usually quoted in the North Central market.l

che foerengals 9n cgnsumer sized packages.--Interviews with
persons in the sugar trade indicate that a two-price system may be develop-
ing in the industrial and consumer markets in this region. Differentials
of industrial yades below consumer packs are often greater than the dif-
ferences in costs of baggng. Brand preferences of consumers may make this
possible. It is more difficult for sugars from other regions to penetrate
the consumer market with unfamiliar brands and packages than to compete in
the undifferentiated industrial market. It was noted earlier that the
Michigan processors sell up to 60 percent of their output in consumer size
packages. They are thus partially insulated from the competition in the
industrial grades.

 

lSugar pricing is more complex than this brief discussion.
would imply. For treatment of taxes. cash discounts and other details.
see Cottrell. R. 11.. Best Sugar Econogcs. Caxton Printers. Inc..
Caldwell. Idaho. 1952. Chapter XX or Turner. Jack T.. Marketing 9f
Sugar. Richard D. Irwin. Inc.. Homewood. Illinois. 1955. Chapter XII.

152

Regional Markets and Sugar Prices

The price received for Eastern beet sugar is influenced to
a great extent by the regional trade flows in sugar. The five states
of the Eastern beet region (also termed the "East North Central" area
in other contexts) consume nearly 25 percent of the deliveries in
the Continental United States. (See Table 6.7.) The beat sugar
production in this area supplies but a fraction of this demand. Hence.
the supply must be shipped in from elsewhere. much of Table
6.7 shows that Mid-Atlantic and Louisiana cane mills and refiners. the
California area (beet and cane refiners). and the Mountain area beet
producers have surplus sugar which cannot be absorbed in their own
reaons. Some of the production from each of these surplus regons
finds its way to the North Central deficit areas. Chicago. because of
its large population. because of its being a major center of industries
who use sugar. and because of its role as a market and transportation
center. is the hub and focus of the North Central sugar market.

The ability of all of these regions to participate in the
North Central sugar markets is influenced by the freight rate structure.
Rail rates on carload lots of sugar have been adjusted by the various
carriers in order that the Chicago and central markets are retained
for shippers from their respective regions. Thus. for example. sugar
from a California point enjoys freight rates to Chicago roughly equiva-
lent to that from New Orleans. although the distance involved is much greater.1

 

lSee Fair. M. L. and E. W. Mlliams. Economics of Transpgrta-
tion. Revised edition. Harper and Bros.. New York: 1959. for a
discussion of the evolution of rail freight rates on sugar.

153

 

 

 

 

 

 

 

 

N932 .H.o-N..HwH 8.2% name 953 and...“ arm .3 2528
ruin- e m mam.“ mass
«86 Rash o H.Hn 3.53 8a.? mafia .--..-- guesses
#3.. .l. ..nfllm m NmHjm. redefine: rum;- rmm .H ..-.-.. 3338
wnm mum; . swim comes 39H. mmoH ------- HaaHoeHeeHz
«m3. Sag: amafim eEeoeHHeo $.18 coma $33 Reissues
S. S --..- Seed «cad- moad .-.-.-. treason
oHN.H- 2N; II... 22:33
as}: “ohm 33: 2328: «.34... read ma seeped
Nani mm 3w; wages:
an n2. «ma a3: Ho .e. a .em $98 032394 mason
3N- arm ..-... oousz 2oz Nmafloo - WIN-loo H -.-.-.. other, e33
8H- mNH ---.- eeeeoz «84..- H86 mHm eHoneHs
Rim men and 2352 NE;- 3w. H mm HHHoeeo fieom
Roi Nan 89m 23H HmHJ. $1.: on HHHoeeo 5.82
mine Ham; $05 8238 man 6 HmH. a SS: 8.132
new- new ...... 283 sum;- oan. n mafia fiancee
Re 33 0S5 eeHaoHa
2a....- Nmm.~H «mac. H328 Baez .2 Re. mmr .-.---. eBSHoo ...a poised
«3...... NW mad -I 383 fleom mew. mew .-.-..- oneseHon
«Hm- mHm ...... Head 5qu
man; «9. H 83.. efiennoz m 3. 35.8 3nd: cage-qua
mum .e. rue. e ...... Heoomeea .Hmw . n .m.HN..N.H. aw esseHaefioa
Sm 8a.... main flotsam.“ mm~.~H ~oH.mH Heném to» .52
«SH- «9. H ....-- 3.5a unde- mnH.m --..... tees. ...ez
NEH- swim a3 aeoH
man «and moms gauze 32
«when- H .9 Rafi H4528 amoz .m lullmo - Idmo I. ..... .- Hosts,
3H .1 «mm; flow-H .l eHEoeeHa oHn- on ..-..-- HeHeH 38am
Sha- amew 8m oHeo man- man -..-..- ephemera 3oz
«mm;- ooes find merges Rim 81m mead 39.3532:
narra- nmmra ..-... «53 are. ame .--..- 23%
3a.?- wfién l...- eHoaHHHH mmnH- Rn; .-....- preseason
u . u . aomom
ho :lgma .05 30.3.. ‘3 ussm « ho a Iguana. .05 4.3.3.. ” .65 mssm

“gang“

.2603 a

-36on «

m§> Rafi—Ham :an coo...”
\flNmmH egmHMImeH mmmoaoo .mzonnoflm 92¢ madam Hm 35m .3 ZOHHBEmHQ nzd zofloonommdamg .56 g

 

 

.‘lyl ...i

151+

TABLE 6.1}. Continued

 

3‘] Sources: Production an! Receipts. Mainland Cane Production

from Sugar Remrts 115. Table 5; Sggar Repozts 118. Table 5. and Sggar
Repggts 122. Table .

Beet area production-U.S. Beet Sugar Association. Offshore
raws (converted to refined basis) from Sgga: fipggts 120. Table 30.

and Sugg Remzts 1.3:}. Table 26.

Offshore Direct Consumption Sugars - Sggg Repgzts 120. Table
31. and Suga; Remrts l3}. Table 27.

Distribution—83g” Remrts 118. Table 16. and Sugg; Repggts
122. Table 16.

13! Production and receipts include raw sugar shipped to inland
points for refining.

The basis price for sugar in the Eastern beet and Chicago West
territories has often times been somewhat lower than that quoted at sea-
board refinery points in recent years. This is not surprising. in view
of the competition of surplus sugars from all the surrounding regions.
‘Jhus. the sugar market of Chicago and vicinity has been called the "great
dumping ground of homeless refined sugars."1 as sugar is shipped in by
producers in other areas. in order to avoid ruining their home markets.2

The declines in Midwestern price have been generally attributed

 

lCottrell. get Sgga; Eggnggcs. op, gt" p. 336.

2n... behavior of this market appears to be explained by the
notion of price discrimination in imperfect markets. The relatively
high transportation costs to an extent insulate each producing area
from others. and in the large competitive market in the North Central
states each producer would face a demand of greater elasticity. It
pays the firm to equate marginal cost with marginal revenue in each
market. and the price would be lower in the more competitive market
with the greater elasticity of demand. See Boulding. K. E.. Econgrgc
My 3rd ed.. Harper Bros.. New York. 1955. p. 611.

155

to the competition of increasing supplies of beet sugar. Growth of out-
put in the Western and Central states' beet areas has outpaced popula-
tion growth. and these sugars have had to penetrate the Midwest in search
of markets. Price concessions have been necessary in order to effect
this penetration. in addition to the freight absorption required to
market Western and Central beet sugar in the Midwest. Table 6.8 demon-
strates the relationship between total beet sugar production and market-
ings of beet sugar in the East North Central states.

Another element which should not be overlooked is that the North
Central Region is the point of origin of almost all corn sweeteners.
which intensifies the competition for the sweetener market.

Effects on the Eastern Region

The effects of these competitive conditions on the basis price
and net proceeds to beat sugar have been of considerable concern to the
Eastern beet producer. A number of factors are thought to contribute
to the particular effects on the region. First. the Eastern producers
are price takers. even in their home markets. Hence. the competitive
behavior of major cane and beet suppliers is the major influence on the
market. Also. the structure of transportation rates is such that a more
favorable freight absorption from other beet areas can be obtained for
sugar sold in portions of Lower Michigan than in. for example. Illinois.l

Thus. beet sugar is shipped into Southern Michigan in competition with

 

leeskin. s. a. (Lamborn and Co.. Sugar Brokers. Saginaw.
Mich.). Markng Michigan Beet Sugar. Speech at Sugar Best Day. Michi-
gan State University. January 28. 1958 (processed).

156

TABLE 6.8. BEET SUGAR PRODUCTION. U.S. AND EEET SUGAR DISTRIBUTION.
EAST NORTH CENTRAL STATES. 1914-9-62

 

 

: Beet Sugar : : B. Sugar Deliveries

Crop Year : Production : Calendar : East North gjntral
(beginning Oct. 1) : U.S. ° Year : States
41.000 mast—la. : 0 s e ed

1948 1 . 227 1949 (+53
1949 1.503 1950 573
1950 l . 883 1951 568
1951 1.1.2.0 1952 1.37
1952 1.419 1953 554
1953 1.750 1951+ 595
1954 1.868 1955 ' 579
1955 1.617 1956 62.1
1956 1.843 195? 762
1957 2.068 1958 829
1958 2. 068 1959 823
1959 2. 151 1960 779
1960 2. 313 1961 l . 010
1961 2.263 1962 902

 

2‘! Source: Adapted from U.S.D.A.. Sugar Division. Sugg

Statisggs and Related Data. Volume E. Washington. D.C.. 1959.
Table 2. and Sugar figmgts 125. September. 1962. Table 29.

yEast North Central States are msconsin. Illinois. Indiana.
Michigan. 0hio--Source: U.S.D.A.. Sugar Division. Sggar Statistics

and Related Data Volume I. 1961. Table 12. and Sugar Reports 1;} .
February. 1963. Table 18.

15?

local sellers. There is also the influence of truckers who avoid
empty runs back from Chicago by purchasing sugar at cut rates and
hauling it back to Michigan for a small margin. Furthermore. the
long existence of a beet industry in the Eastern Region assures the
acceptability of the beet product in this area. a consideration which
does not always hold true in areas further East which have had little
or no experience with beet sugar.

The actual effects of these forces on net proceeds are some-
what difficult to demonstrate. The actual price may be considerably
below that listed. due to unannounced discounts and allowances. A
Sugar Division official. in response to a query from the author concern-
ing the reliability of the various price series on sugar. replied as
follows:

....The extent and variety of unannounced discounts and
allowances have increased markedly and the development of

a comparably reliable adjusted price series for more recent
years seems out of the question.

For many years. the Michigan producers have quoted a lower
price in the Southwestern Michigan ”coffin corner" market. For
example. a trade publication in late 1962 stated. "Michigan beet
processors list $9.15 in the lower peninsula of Michigan. and $8.80
in the Southwest corner of the state."2

The United States Department of Agriculture price series for

 

lPersonal conmmnication. July 25. 1962. Herbert G. Folken.
Program Analysis Branch. Sugar Division. U.S. Dept. of Agriculture.

2Lamborn Sugar-Market Report. Vol. XL. No. I+5; (weekly)
Lamborn and Co.. New York. Nov. 5. 1962.

158

Eastern beet sugar does not include the price required to meet competi-
tion in the Southwestern part of Michigan. Hence. this quotation
reflects the extent of these influences only when the competitive
area extends throughout Michigan's lower peninsula. This occurred. for
example. in 1961 and the average basis price for Eastern beet sugar was
below the Chicago-West figure for that year. (See Table 6.9.)1

Effect 9f competitive factgrs on net prgceeds ’29 Eastegg beet
producerswg-The above difficulties with the official price series led
to a search for other relationships. The variable of most interest to
the beat industry is "net proceeds."2 The Department of Agriculture
does not compute a separate series on net proceeds for individual
regions. However. an approximation for the Eastern.Region was developed
by use of other available data. The Department does publish series by
regions on (a) payments to growers per ton of beets ard (b) on recovery
of refined sugar per ton of beets. These data and assumptions as to
the typical Eastern region arrangements for sharing net proceeds pro-

vide a basis for an approximation.3

 

1’In that year. the initial U.S.D.A. consumption estimate
(measured on a per capita basis) was somewhat larger than had been
typical. Prices in all regions suffered. but the effect was greatest
in the marketing area for Eastern beet sugar. See Table 6.9.

2The concept of "net proceeds" was introduced in Chapter III.
It refers to the return per cwt.of sugar after specified marketing
and shipping charges have been deducted. In effect. this is the net
price shared by grower and processor.

3The resulting series is no more than an approximation. file
basis for payment includes the share of by-products. The amount of
pulp and molasses derived per ton of beets varies somewhat from year
to year. as do their prices. Also. in some years special bonuses may
be included in the payment to growers. which would be unaccounted for
due to lack of data.

.ueosmsoaae use upssoemdb awe pounce use shunned
pmwaeam new .eOHnd veaebHHeo ebaweo ha .moeHud veaepfiaoo.mmm .mwen .QH ooH .meednd «Hmem\m

159

 

  
  

 

 

 

 

.0 up mm e am
H. 1143;... 3 .fimmw .H .Ho> .Idneo efi.lflm.mfl.slm .593»? to ...Ed .ms .838}
ao.m mm.m nH.m no.m mH.m ow.m me.w NwaH
mm.m mm.m ou.m m~.m 0H.n oe.m on.o HomH
mu.m am.m mm.w mm.m nH.m ms.m on.w ommH
Ha.m am.w mm.m mm.m mo.n mm.m su.o mmmH
Hm.m ww.w mm.m wo.m oo.n mm.m mm.w mama
mw.m Nh.m Nm.m mm.m Hm.~ mH.m :~.o mmmH
mm.m wm.m mm.m om.m mw.m mm.m mo.w wmma
mn.m am.m me.m om.m so.~ mm.m ma.m mmmH
om.m mm.m on.w mm.w mm.m mm.m mo.w nmma
mm.w Nn.m om.w om.w m:.m mm.m mm.w mmma
Nr.m Hr.w Hm.m mm.m om.~ «h.w h~.e NmaH
wH.w NH.m wm.m mm.m mm.m mm.m no.0 Hmma
~m.a om.a oo.m oo.m ao.~ oo.m mm.m ommH
Hw.m mm.m Ho.m Ho.m wH.N mm.m Hm.m mama
- - I I -.~ ha.m sm.m mamH
I I I I wo.~ mm.m HN.w mama
“mmmMWAmmfihmnmmw
snowmen u a . «
onmeH0h3 » edsmeaomx « oasmoaohz aoHemoHoaz “ campus ”oflemoaogz uxaow.soz « use»
nemsm poem“ usmsm poem” aemsm oneoaaemsm endouaeedvonoomauwsmsm edeoaaemsm.smma
oosdmom “ vosflom a wear—Gem a .38—Hum “ .muosfiwom a oosflom a a
mh-armH
.mu4mm>¢.A49224 .mdmm<.wm .xga meHz .mmonm andmmgomz mdwsm 9mmm 924 made amaomumm .m.o mHm¢H

3m.

 

‘1" Pa

 

160

An attempt was made to measure the various influences on this
approximation to net proceeds by statistical techniques. It was
hypothesized that net returns (which is denoted N) were influenced
by (a) the general price level for sugar (denoted Ps)' and (b) the
supply of best sugar (denoted Ob). and (c) a random component (denoted
u).

N: f (P50 013' 11)

A number of variables were tested before arriving at a final combina-
tion. Due to the provisions of the Sugar Act. the general price level
of sugar was assumed to be predetermined. Since the wholesale cane
sugar price was the variable defined by the legislation until mid-1962.
it was used as an independent variable to represent the general price
level of sugar in the equation.

Several variables were tested as measurements of beet sugar
supplies. including total beet sugar production and per capita and
total beet sugar deliveries to the East North Central Region. The
variable which contributed most to the explanation of the variation in
the dependent variables was total deliveries to the East North Central
Region. Each of these variables was fit by standard least squares
techniques to equations of linear and logarithmic form. The logarithmic
form explained the largest proportion of variance in the dependent
variable.

The resulting equation. based on time series data for crop years
1949-1961 was:

log N = .1944 + .9258 log Ps - .1493 log Qb
{-26) (.33) (~07)

112: .tI6

161

(Numbers in parentheses are standard errors of the regression coefe
ficients.)

The signs of the coefficients were as hypothesized. The
regression coefficients were tested to determine if they were
significantly different from zero. The 1; statistic was calculated
to be .74 for the intercept. 2.84 for the coefficient of sugar price.
and 2.04 for the coefficient of beet sugar deliveries. Thus. the
coefficient of sugar price is the only coefficient significant at the
5 percent level.1

Taking derivatives of the equations for the region (at the mean)
it was found that a 100.000 ton increase in.deliveries of beet sugar to
the East North Central Region was associated with a $0.18 decline in
net proceeds per cwt. in the Eastern Region and a $1.00 change in the
wholesale price of refined sugar in New York was associated with a $0.71

change in net proceeds.

The necessity for utilizing an approximation probably accounts
for some of the relatively low explanatory values encountered (R2 =
.46). The effect of these same independent variables on net proceeds
to all beet sugar delivered in the United States was also measured as
a matter of curiosity. The resulting regression coefficients were of
similar magnitude to those estimated for the region but were all

significant at the one percent level. and the coefficient of determina-
tion was relatively large (R2 = .85).

 

1The value of 3 must exceed 1.81. 2.23 and 3.17 for signifi-

cance at the 10 percent. 5 percent. and one percent levels. respectively.
(Ten degrees of freedom.)

162

The statistical analysis indicates that the increasing supplies
of Western beet sugar have an important influence on prices and net
returns to Eastern beet sugar producers. The announcement of plans
to construct additional facilities in Central and Western beet growing
areas indicates that this problem is likely to become more serious in
the future. unless beet sugar producers in those areas are able to
enlarge their share of markets close to their producing areas.

Conclusions

In summary. then. the net proceeds from the sale of Eastern
Region beet sugar are influenced by (a) the general level of sugar prices
in the United States. (b) the average distance from the factory to point
of delivery. (c) the quantities of sugar (particularly beet) which are
marketed in the region. and (d) the proportion of sugar distributed
in consumer markets.

The effects of these factors vary over time. largely with the
supplies and competitive behavior of the larger elements in the market.

ca us an n.--‘ll1e inferences to be drawn from the

previous discussion is that expansion of output in Eastern areas at a
rate faster than the normal growth of the market could be expected to
decrease "net returns” per bag to some extent. The larger outputs
would have to be sold in more distant markets at additional transporta-
tion costs. More intense competition would likely be encountered.
particularly in the industrial sectors of these markets. Price conces-
sions might be required to penetrate consumer markets in areas not
presently familiar with the brands.

163

However. even a large increase in production in the Eastern
Region (relative to present levels) would not change the region's
role as price-takers in the large Midwestern sweetener market. The
major influences on prices (aside from the government) will continue
to be the competitive actions taken by the large suppliers to the

market.

CHAPTER VII

SUMMARI AND CONCLUSIQNS

Sum—m

Beet sugar production in the Eastern Region (Michigan. Ohio.
Maconsin. Illinois and Indiana) in the past. three decades has been
characterized by a decline in the level of production. both absolutely
and relative to other areas. Michigan and Ohio contain the only
remaining production locations in the Region. Recent developments.
in particular rapid technological advances in sugar beets and changes
in the federal statutes governing the sugar industry. have raised
questions concerning the feasibility of expanding beet sugar production
in the Region. The purpose of this study has been to examine the trends
and changes in the economic. techniml and institutional factors
influencing the industry and which determine the advisability of
expanding output. The analysis has focused on the present producing
localities in the Eastern Region. although there is some relevance to
the other states.

W.ume domestic sugar irmstry operates under a
complex system of governmental controls . The Sugar Act authorizes the
Secretary of Agriculture to determine the supply of sugar which will
result in prices which are fair to consumers and will serve to maintain
the domestic industry. These goals are implemented by a quota system
whereby each producing area. domestic or foreign. is assigned a quota

16h

165

which it may sell in the United States' market. For mam years the
quota arrangement operated effectively to stabilize prices at reason-
able levels. This form of program can successfully stabilize prices
only when world supplies are large relative to consumption. as has
been the case during most ofpthe past four decades. When the world
stocks of sugar became relatively small in the early months of 1963.
the United States' price of sugar followed the rapid advance in the
international market. since nearly half of United States' needs are
purchased from foreign sources. be short run inelasticity of sugar
supply and long lead time required for adding processing capacity
indicate that world supplies will be relatively short for at least two
to three years.

flaw-Juan beet production in
the Eastern Region. as elsewhere. has undergone a dramatic transforma-
tion in the period since World War II . Formerly the heavy seasonal
demands of the crop for labor were met by importation of migrant field
workers. However. the introduction and adoption of mechanical harvesters
some years ago eliminated the need for the migrant labor in the beet
harvest period. The development of monogerm seed varieties and
mechanical stand reduction techniques have reduced by half the demand
for field workers in the spring thinning period over the past six seasons.
Chemical and mechanical means are reducing field labor for weed control.
Technologists are predicting the eventual elimination of migrant labor
requirements. Along Idth these reductions in costs. the returns per
acre have increased as yields have approximately doubled since the period
1947-49. In recent years. this advance has been partially offset by

166

lower receipts per ton due to lower sugar content and purity of the
beets. The lower quality of the beets has been attributed to less
accurate topping by mechanical harvesters and high levels of nitrogen
fertilizer application by growers.

Resqupce ligitatigns.-—A study of resource requirements for
sugar beet production indicates that the supply of well adapted soils
is sufficient for a relatively large expansion of sugar beet acreage.
However. the distribution of these soils with respect to present or
potential factory locations. when the costs of transporting beets are
considered. is likely to discourage large additional acreages in the
Region. No other resource appears to be limiting. but their prices
are expected to continue to rise.

Ezgguctign.zespgnse.-An.inalysis of Eastern.Region production
responses for sugar beets using linear programming with variable prices
indicated that under reasonable projected prices. prospective technolo-
gies and reasonable resource costs. sugar beets enqu a substantial
competitive advantage over other typical crops. This implies that
supplies of beets are likely to expand to the limit of present factory
capacity. his large expansions in factory capacity are of questionable
profitability (see below). sugar beet supplies are likely to be
adequate for prospective processing capacity. These results are
qualified by analysis of other factors influencing sugar beet production
response. The evidence indicates that the costs of transporting beets
to a factory or loading point is of major importance in determining
whether the beets are to be included in the cropping system. Relative
prices of sugar beets and other crops (particularly dry beans and corn)

l6?

and the presence of "fixed" specialized durables (trucks and har-
‘vesters) are also important determinants of production response.

Other factors hypothesized to influence production response in sugar
beets do not appear to be significant. Variability in total returns
per harvested acre and proportion of acreage abandoned have both

shown marked declines in recent.years. The degree of variability

in returns to sugar beet production.is no greater than that for ccmpet-
ing crops.

Ergcessing of gugg; beets.-Sugar beet processing utilizes an
expensive plant for a relatively short processing season. A year
around staff is maintained for administration and inter-campaign
maintenance and to aid farmers. This burden of overhead costs cannot
be met unless a full volume of beets is available relative to process-
ing capacity. The relatively large cost of transporting beets indicates
that factories must be located in the midst of large bodies of adapted
soils in order to achieve a satisfactory supply of beets. The decline
in number of factories in.recent.years in the Eastern Region can largely
be attributed to the inability of unfavorably located.plants to increase
annual volume of beets processed in the face of stable sugar prices
and rising costs of'materials and labor.

Expansion of existing factory capacity appears to have feir
potential in most,locations. Construction of new’plants would appear
to be a questionable investment.in the Eastern.Region. even.in.the
unlikely prospect of developing the necessary large supplies of beets

at one location.

168

Marketing and demand.--he Eastern beet sugar industry supplies
but a very small portion of the large East North Central sugar market.

Producers in a deficit area would be expected to enjoy a considerable
advantage. particularly for a product for which transportation costs
are a significant factor. However. the freight advantage is at times
offset in parts of the Eastern Region's market area by basis prices
lower than that prevailing elsewhere in the nation. his price structure
is a consequence of strong competition for the sweetener market among
sugar suppliers from areas to the East. South and West. as well as from
Midwestern corn sweetener producers.

he cost of transporting refined sugar is sufficiently large
that each region is partly isolated from the others. his permits a
degree of price discrimination in the deficit Midwestern markets. As
a consequence of the large number of suppliers in that market. the
demand facing each individual seller is more elastic than that in his
home area. Thus. the price in the Midwestern market is generally lower
than elsewhere.

he nature of the market for sugar is changing. Over half of
all sugar supplies are now consumed by industrial users. Per capita
direct domestic consumption is decreasing. Commercial users demand
more varieties and grades and maintain more exact specifications for
their purchases. Consumer packages now represent less than one third
of the consumption. Some Eastern Region producers take advantage of
a favorable acceptance of beet sugar by local consumers and market over
half their output in consumer sized packages. This policy reduces some
of the impacts of price and quality competition prevalent in the
industrial grades.

169

Because of increased freight costs or from price concessions
associated with penetrations of new markets. large scale expansion of
output in the region would be likely to result in some reduction in
net return per unit of sugar to both farmers and processors. These
factors are of less importance than the competitive behavior of the

large suppliers in the Midwestern market (given the level of sugar
prices).

Conclusions
At this writing. the prospects for the beet sugar industry

in the Eastern Region are not for either an immediate demise or for
a period of rapid growth.

Sugar beet growers.--The outlook for the next half decade
for sugar beet growers appears to be a period of relatively favorable
returns to beet production. A better than average price situation
appears likely for at least the next few crops. Technological advances
are reducing costs and.inconveniences and are eliminating variability
of returns in‘beet production. There appears to be a strong likeli-
hood that hybrid varieties will be available in commercial scale
toward the end of this period. No comparable advantages are foreseen
for the principal competing crops in the region. Thus. it appears that
the crop will become more appealing to farmers who have not previously
grown.beets. The resulting increases in output are not expected to
be large relative to present and prospective processing capacity.

\

Sugar beet p;ocesso;s.--Recent years have brought higher costs

for nearly all purchased inputs. labor. equipment and fuel. Competitive

170

conditions and goverment policy have not permitted equivalent increases
in sugar prices. These problems are compounded by the adverse trend in
the quality of the beets received in recent years. Offsetting factors
for processors are the expected period of relatively favorable prices
and the likelihood of increasing supplies of beets to enable more
effective utilization of capacity. Possibilities appear to exist for
continued moderate expansion of plant capacity and modermzation of
factories in the more favored locations.

The feasibility of making a large increase in capacity by con-
struction of new plant facilities turns on a number of points. Even at
full capacity for a large scale factory. a significant improvement in
the quality of the beets would be required to attain returns sufficient
to justify the investment. Furthermore. it is doubtful that such large
supplies of. beets could be acquired at any location in the region with-
out the elimination of operations at one or more of the present plant
sites. Given the pattern of distribution of favorably adapted soils
and the relatively lesser cost per unit of capacity of expanding exist-
ing plants. it appears that new plant construction would not be
economically feasible.

BIBIIOCRAPHY
Books

Bernhardt. Joshua. The Sugar Industry: and the Federal @vernmen .
Washington. D.C.. 1948. Sugar Statistics Service.

Boulding. K. E.. Ecgnomic Analysis. 3rd ed.. New York: Harper
Bros.. 1955'

Brandes. E. W.. and Coons. G. H.. "Climactic Relations of Sugar Cane

and Sugar Beet.” U.S.D.A.. Yearbook 9f agriculture. 191+l.
Washington. D.C.: Gov't Printing Office. 1941.

Chilton. Cecil. ed.. Cgst Esmtion in the Process Indusges.
New York: McGraw-Hill. l9 0.

Cottrell. R. H.. Beet Sugar Ecgnomics. Caldwell. Idaho: Caxton
Printers. 1952.

Dalton. John E.. Sugar. A Case Stugy in vaernment Contrgl. New
York: I'IacMillan & Co.. 1937.

Fair. M. I... and mlliams. E. W.. Ecgnflcs g; kanspgrtag'gn.
Revised ed.. New York: Harper Bros.. 1959.

Heady. E. 0.. et. al.. A cultural Ad ustment Prob ems n a o
Econom. Ames. Iowa: Iowa State College Press. 1958.

. "Uses and Concepts in Supply Analysis." in Heady. E. 0..
___2let- .. 6018-. MW; Ames. Iowa:
Iowa State Univ.. 19 1.

. and Candler. W.. gear Pregammigg News. Ames. Iowa:
Iowa State Univ. Press. 1958.

Johnson. G. 1... "Supply Functions-«Some Facts and Notions." in Heady.

E. 0.. et. al.. monitural Adjustment Emblems in a Grow-
W Ames. Iowa: Iowa State University Press. 1958.

McGinnis. R. A.. ed. . Beet Sugar Technglgg. New York: Reinhold Pub-
lishing Corp.. 1951.

McKee. Dean E.. and Loftsgard. L. D.. ”Programming Intra-Farm Normative

Supply Functions." in Heady. E. 0.. et. al.. eds.. Agricultural
Supply Functigns. Ames. Iowa: Iowa State Univ. Press. 19 l.

172

173
Highell. R. L. and Black. John D.. Interreg’onal Competition in
Amculture. Cambridge. Mass.: Harvard Univ. Press. 1951.

Turner. Jack T.. Marketing of SugarJ Homeweod. 111.: Richard D.
Imn. Inc.. 19330

Wolf. H. A.. The U.S. Sugar Pglig and Its Mot 9n Cuba. Doctoral
dissertation. Ann Arbor. Mich.: Univ. of Mich. microfilms.

1958 .

U.S. Beet Sugar Association. The Beet Sugar Sign. U.S. Beet Sugar
Assoc.. Wash. D.C.. 1959.

Van Hook. Andrew. Sugar. Its PrgductignI Technolog and Uses. New
York: the Ronald Press. Co.. 1949.

mlson. G. Lloyd. flgilggad fieight Rate Stacture. Traffic Service
Corp.. waShe D.C.. 1951c

U.S. Government Publications

Ballinger. Roy A. and Larkin. L. G.. Sweeteners Used m the Cannigg
Indus ° Thei Com etitive Position n the United States.

A.E.R. - 20. Wash. D.C.: U.S.D.A.. l9 3.

Jackson. Donald. Econ mics of S ar Beet Marketi E.R.S. - 49.
Wash. D.C.: U.S.D.A.. 1932.
. et. al.. Marketin 5 ar Beets. A.M.S. - 137. Wash. D.C.:
U.S.D.A.. 1953.

Jones. P. E.. and Thomason. F. G.. Competigve Reggons Amogg Suga;

   

and 99:3 Sweeteners. Ag. Info. Bull. No. 148. Wash. D.C.:
U.S.D.A.. P.M.A.. 1951.
Kinsley. R. T.. Case Stugz Data; ‘o'n‘firoducjivity arflfiacgggz Performance:

Beet Sugar Refmirng. B.L.S.. Report No. 3. Wash. D.C.: U.S.
Labor Dep't. 1953.

Lax-kin. L. 0.. Farm and Retail Pricesjgr Beet Sugar. A.M.S. - 421:.
Wash. DeCe: UeSeDeAe. Aet‘leSe. 19600

. and Updike. Alma. Metigg Harm fgr Sugar. Marketing
ResearCh Report 31].. Wash. DeCe: UeSeDeAe. AeMcSe' 1959e

Lill. J. G.. Su ar Beet cum the N rth Central States. Farmer's
Bull. No. 20 0. Wash. D.C.: U.S.D.A.. 1954.

 
 

Oviatt. C. R.. "Sixty Years in Sugar." Sugar Repgrts. No. 128. U.S.D.A..
A.S.C.S.. 1962.

174

Poats. Frederick J.. Marketigg Liggid Sugar. Wash. D.C.: U.S.D.A.. 1953.
U.S.D.A.. Agricultural Marketing Service. Nglasses Market NewsI Annual
3%”. 1262. Ael‘IeSe - 79. WaShington. D.C.. 19 20

. Agricultural Marketing Service. Sugar Beets 1224-1952.
wash. D.C.. 1954.

. Agricultural Research Service. Su Rese h f the U.S.D.A.
and Qggperatigg Agencies. Wash. D.C.. 1932.

. Economic Research Service. Econgmics of Sugarbeet Marketing.
3.1110 NOe “’9. Wash. De Ce. 1962e I

. Sugar Division. Beet Sugar Factogies in the U.S.. wash.
D.C.. 1961.

. Sugar Division. "Relationships Between Sugar Prices and Sugar
Beet Plantings." Sugar Repeats 10;. Wash. D.C.. 1960.

. Sugar Division. Sugg; Egpgrts (monthly). Wash. D.C.

. Sugar Division. Sugar Statistics and figlated Data. vol. I.
wash. D.C.. 1961.

. Sugar Division. Suga; Statistics and Related Data. vol. II.
Wash. DeCe 9 1959e

. Sugar Division. Sugg; Act of 124§ as Amended. Wash. D.C.:
Gov't Printing Office. 19 2.

. Sugar Division. Sugar Determination 851.1. Amendment 3.

Committment of Natigyg; §gg§g Beet.Acreage Reserve. 1262 and
Subsequent C2925. Reprinted in Federal Register. March 5. 1963.

. Sugar Division. Sugar Detegginatigg 862.3I wages Rates:
Sggar Beets. Reprinted in Federal Register. April 24. 19 3.

. Sugar Division. "The U.S. Sugar Program." Sugar Repgg .
NO. 1214’. waShe DeCe. 1962e

. Statistical Reporting Service. Annual 9:92 Summagy. 1962.
Wash. D.C.. 1962.

U.S. House of Representatives. 53rd Congress. 2nd Session. Tagiff
Heagiggs befgze the Committee on way§ and.Means. Document No.
43. wash. D.C.: Gov't Printing Office. 1893.

. 55th Congress. 2nd Session. Document No. 396. Spgoial

Repgrt on the Beet Sggar Industgy. wash. D.C.. Gov't Printing
Office. 189 e

175

. 87th Congress. 2nd Session. Qggflerence 3629;; 9;; Suga;
Act Amendments gf 126 . House Report No. 1957. Wash. D.C.:
Gov't Printing Office. 1962.

. 87th Congress. 2nd Session. Committee on Agriculture.

History and Qperagons 9f the U.S. Sugar flagram. Wash. D.C.:
Gov't Printing Office. 19 2.

. 87th Congress. lst Session. Committee on Agriculture. S e
3:.ng 9n Sggar. Wash. D.C.: Gov't Printing Office. Feb. 14. l l.

U.S. Tariff Commission. Report to the Ezesident 9n Sugar. Report No. 73.
Wash. D.C.: Gov't Printing Office. 1934.

Articles and Periodicals
Anderson. R. N.. "Progress and Problems in Sugar Beet Weed Control."

Qastal—ized Facts About Sugar. Amer. Crystal Sugar Co.. Vol.
XVI. No. 1. Denver. Colo.. l9 2.

Baker. T.‘W.. Haskell. D. R. and Resch. I. A.. "Factory Treatment of
Process liquors Using Activated Carbon in a Continuous Process

to Improve Sugar Quality." Part I. II. S ar A unar

May. June. 1961. Vol. 56. No. 5 (monthly). Baltimore. Md.
Barmington. R. B.. "What's Happening to Beet Drills." keggh the Leaves.

Vol. L. No. 1. Great Western Sugar Co.. Denver. Colo.. 19 1.
Cook. R. L.. Davis. J. F. and Frakes. M. 0.. 1958-60 Production Pracgces

of Michigan Sugar Beet Farmers. Mich. Agr. EXP. Sta.. Quarterly
Bull.. Art. 44-38. Feb. 19 2.

Edwards. Clark. "Resource Fixity and Farm Organization." J .F.E.. Vol. 42.
No. 4. Nov. 1960.

Farmers and Manufacturers Beet Sugar Association. Sugg get J93 .
(periodical) Saginaw. Michigan.

Haddock. J. L.. et. al.. "me Influence of Cultural Practices on the

Quality of Sugar Beets." Jgp;n_a; 9f the Amer. Sgc. of Sugar
Beet Tech.. Vol. X.‘ No. 4. Jan.. 1959.

"History of the Michigan Sugar Company. 1906-56." Pi neer News. Saginaw.
Mich.. March-Aug.. 1956.

Johnson. G. L.. "The State of Agricultural Supply Analysis? J.F.E.. Vol.
“'2. N00 2. Flay 1960e

Lamborn Sugar-Market Re ort (weekly). Vol. KL. No. 45. Lamborn and Co..
New York. 19 2.

176

Mich. Dep't of Agr.. Micggan Afloultural Statispics. Lansing (annual).

Moore. John R.."Economic Implications of Share Contracts for Sugar
Beets. J.F.E.. Vol. XLIV. No. 2. 1962.

University and Ebcperiment Station Publications

Blosser. R. H.. Cost ofjroducing Crops in Northwestern Ohio. Research
Bull. 923. Ohio Ag. EXP. Sta.. Wooster. Ohio. 1962.

. Costs and Reggns from Su arbeets in Ohio. Bull. A.E. 334.
Ohio Ag. Exp. Sta.. Wooster. Ohio. 1962.
Davis. I. F. and Metzler. W. H.. Su ar Beet Labor in Northern Colorado.
0010. State Univ. Exp. Sta.. Tech. Bull. 63. Ft. Collins. 1958.
Elterich. J.. Johnson. G. L.. and Call. David. PerSppctive on Michigan's

Farm Labor Problems. Ag. Exp. Sta.. Mich. State Univ.. East
Lansing. Mich.. 19 3.

Hinton. R. A.. Improvipg Livestock. Labor and Capital Information for
Farm Development and Management. Research Report No. 34. Ag.
Econ. Dep't. Univ. of Ill.. 1960.

 

. Some Original Sources 9; Selected Budgeting Information from

the North Central StatesI 1245-52. Research Report No. 35.
Agr. Econ. Dep't.. Univ. of Ill.. 1960.

Johnson. C. E. and Wright. K. T.. Reducing Sugar Beet Costs. Michigan
CirCUlar Mle 215, l'flChe Agr. PbCp. Stan. EaSt LanSlng. 19490

Lard. C. F.. Profitable Reorganization of Representative Fame in Lower
Michigan and Northeastern Indiana with Special Emphasis on Feed
Grains and Livestock. unpublished Ph.D. dissertation. Mich.
State UniVe. EaSt LanSing. 33110110. 19630

Michigan State University Cooperative Extension Service. Extension Bull.
E-159. Feptilizer Recommendations for Micppgan Caps. 1963.

Schuh. G. E.. fps Sppply pf 1‘11}; in the Detrpit Milk Shed as Affected 91
Cost of Producgon. Mich. Agr. Exp. Sta. Tech. Bull. 259. 1957.

Tinley. J. M.. Economic Factors Affecting the Sugar Beet Ipdustgz. Calif.
Agr. Exp. Sta. Ser.. Circular 413.

Univ. of Wise" Agr. Exp. Sta.. Bulletin 544. Sega of North Central
Begon. 1960.

Wright. K. T.. Sugar Beet Cpsts and Returns. Special Bull. 305. Ag. Exp.
Sta. Mich. State Univ.. East Lansing. Mich.. 1940.

177
Other Sources

Bauserman. H. M.. Denver. Colorado. personal communications, April 1.
1963 and May 24. 1963.

Brooke. M. David. Marginal Productivities offiIanuts or; Cash Crop Farms
in the Thumb and Sa na Valle Area of Mic an. unpublished
M.S. thesis. Michigan State University. 1958.

Cottrell. R. H.. S eech delivered to meetin 0 California Beet Su ar
Technologists. Feb. 21. 1959 (unpublished mimeo).

Folken. Herbert G.. personal communicapipn. July 25. 1962. Program
Analysis Branch. Sugar Division. U.S.D.A.

Food and Agricultural Organization. United Nations. Production Yeapbook.
1261. Rome. Italy. 1961.

Fbod and Agricultural Organization. United Nations. prld Sugar Ecopppy
in.§igppes. 1880-1959. Rome. Italy. 1961.

Frakes. M. G.. et. al.. How to Grog Sugar Beets With Np Labor. Anerican
Society of Sugar Beet Technologists. Pppceedings. East Lansing.

Mich.. 1961.

Kweskin. S. R.. (Lamborn and Co.. Sugar Brokers. Saginaw. Mich.). Marketipg
Mic an Beet Su ar Speech at Sugar Beet Day. Mich. State Univ..
Jan. 28. 1958 (processed).

Michigan weather Service and U.S.‘Wgather Bureau. Cooperating. Climate
pf MichiganI p1 Stations. East Lansing. Mich.. 1963.

Perreault. R. P.. The Acreage Resppnse pf'Micpigan.Fagpers in.East

Central Counties to the Relative Ppices of Sugap Beets and
Field Beans. Unpublished Ph.D. dissertation. Dep't of Ag.

Econ.. Mich. State Univ.. 1956.

Pierce. L. T.. State climatologist for Ohio. Columbus. Ohio. personal
cpppunicapion. June 13. 1963.

Polopolus. Leonidas. Spppcpppp and Pepgppmapce pf the United States Beet
S a ndus Unde Federal otection and Control. unpublished

Ph.D. dissertation. Univ. of Calif.. Berkeley. 19 0.

Snyder. F. N.. "The Influence of Nitrogen Fertilizer on Yield and Sucrose."
American Society of Sugar Beet Technolo sts. Proccedin s of the
Twelfth Eastern Regional Meeting. 1963 forthcoming).

U.S. Beet Sugar Association (Compilers). Beet Sugar Contracts. 1962.
Washington. DeCe. 19620

178

Viton. A. and Pignalosa. F.. Ipends and Pposgcts 1.9 World Sugar Cpnsump-

tipn. monthly bull. Agr. Econ. and Statistics. Vol. IX. Nos. 1 and
2. F.A.O.. Rome. Italy. 1960.

Walker. Dr. Francis. personal communication. Dep't. of Ag. Econ.. Ohio
State Univ.. Oct. 30. 1962.

Western Beet Sugar Producers. Inc.. Beet Su ar Handbook. San Francisco.
Calif.. 1961.

APPENDIX I

canouomcxcu. HISTORY or BEET 30cm rue roams
IN THE mm REGION]-

Early Trials: 18;§-;822

White Pigeon. Inch. 1838-40 Black Hawk. Wise. 1870-75
Fond du Lac. mac. 1866-70 Freeport. Ill. 1871-72
Chatsworth. Ill. 1866-71

15221

MENOMONEE FALLS. WISC. Erected by Visconsin Sugar Co. Capacity. 500
tons. Dismantled in 1932.

Eli

BAY CITY. I'DZCH. Erected by Michigan Sugar Co. Capacity. 500 tons.
Machinery moved to Waverly. Iowa. in 1907.

1.829.

ALMA. MECH. Erected by Alma Sugar Co. Original capacity. 600 tons.
Dismantled by Michigan Sugar Co. in 1959.

BAY CITY. MCH. Erected by Bay City Sugar Co. Capacity. 600 tons.
Dismantled by Michigan Sugar Co. in 1941.

BENTON HARBOR. MICH. Erected by Wolverine Sugar Co. Capacity 350 tons.
Machinery moved to Kitchener. Ontario. in 1902.

C539. MICH. Erected by Peninsular Sugar Refining Co. Original capacity.
00 tons 5nd present capacity. 1.450 tons. Present owner. Michigan
Sugar COe

HOLLAND. MICH. Erected by Holland Sugar Co. Original capacity. 350
tons. Dismantled by Lake Shore Sugar Co. in 1952.

KALAMAZOO. MICH. Erected by Kalamazoo Beet Sugar Co. Capacity. 500 tons.
Machinery moved to Madison. Wisconsin. in 1905.

WEST BAY CITY. MICH. Erected by West Bay City Sugar Co. Original
capacity. 500 tons. Dismantled by West Bay City Sugar Co. in 1943.

 

lSource: U.S.D.A.. Commodity Stabilization Service. Best Suga;
Factories in the U.S.. Washington. D.C.. 1961.

2Underlining indicates factory in operation for the 1963 season.

18Q

181

129.9

MARINE CITY. MICH. Erected by Marine Sugar Co. Capacity. 350 tons.
Dismantled in 1928.

FRDIONT. OHIQ. Erected by Continental Sugar Co. Original capacity.
350 tons and present capacity. 1.300 tons. Present owner. Northern
Ohio Sugar Co.

1201

BAY CITY (SALZEJRG). MICH. Erected by German-American Sugar Compamr.
Original capacity. 400 tons and present capacity. 3.200 tons. Present

owner. Monitor Sugar Division of Robert Gage Coal Comparw.

LANSING. MICH. Erected by Lansing Sugar Co. Original capacity. 800
tons. Dismantled by Michigan Sugar Co. in 1953.

SAGINAW. MICH. Erected by Saginaw Sugar Co. Capacity. 600 tons.
Machinery moved to Sterling. Colorado. in 1905.

1202

CARROLLTQN (SAGINAW‘Q. EOE. Erected by Saginaw Valley Sugar Comparw.
Original capacity. 00 tons and present capacity. 1.500 tons. Present
owner. Michigan Sugar Co.

%$}~IEI.L. MICE. Erected by Sanilac Sugar Refining Co. Original capacity
00 tons and present capacity. 1.100 tons. Present owner Michigan Sugar

Co.

MT. CLEMENS. TECH. Erected by Macomb Sugar Co. Original capacity. 600
tons. Dismantled by Franklin County Sugar Co. in 1951.

SWING MICH. Erected by Sebewaing Sugar Refining Co. Original
capacity. 00 tons and present capacity. 1. 500 tons. Present owner.
Michigan Sugar Co.

1292

EAST TAWAS. MICH. Erected by Tawas Sugar Co. Capacity. 600 tons.
Machinery moved to Chaska. Minn.. in 1906.

means. HIGH. Erected by Menominee River Sugar Co. Original capacity.
1.000 tons. Dismantled by Menominee Sugar Co. in 1955.

W0. MICH. Erected by Owosso Sugar Co. Original capacity. 1.000 tons.
Dismantled by Michigan Sugar Co. in 1948.

ST. LOUIS. MICH. Erected by St. Louis Sugar Co. Original capacity. 500
tons. Dismantled by Lake Shore Sugar Co. in 1955.

182

1204

CHIPPEWA FALLS. WISC. Erected by Chippewa Sugar Refining Co. Machinery
moved from Kalamazoo. Mich. Dismantled in 1934.

JANESVILLE. WISC. Erected by Rock County Sugar Co. Machinery originally
erected at Dresden. Ontario. in 1902. Capacity. 600 tons. Moved to
Quebec in 1941.

1295.

RIVERDALE. ILL. Erected by Charles Pope. Operated in 1926. dismantled
later. possibly 1927.

BLISSFIELD. MICH. Erected by Continental Sugar Co. Original capacity.
600 tons. Dismantled by Northern Ohio Sugar Co. in 1957.

MADISON. WISC. Erected by United States Sugar Co. Machinery moved from
Rochester. Mich. Capacity. 600 tons. Dismantled.in 1924.

1206

CHARLEVOIX. MICH. Erected by west Michigan.Sugar Co. Capacity. 600 tons.
Machinery moved to Ottawa. Ohio. in 1912.

1219.

PAULDING. OHIO. Erected by German-American.Sugar Co. Original capacity.
700 tons. Dismantled by Great Lakes Sugar Co. in.1952. (Present owner.
Paulding Sugar Co.. has announced intentions of reopening this plant in
1964 or 1965.)

1211

ELNDLAY. OHIQ. Erected by Continental Sugar Co. Original capacity. 600
tons and present capacity. 1.250 tons. Present owner. Northern Ohio
Sugar CO e

1212

OTTAWA. OHIO. Erected by Ohio Sugar Co. Machinery originally erected
at Charlevoix. Mich.. in 1906. Original capacity. 600 tons and present
capacity. 1.400 tons. Present owner. Buckeye Sugar. Inc.

TOLEDO. OHIO. Erected by Toledo Sugar Co. Capacity. 1.000 tons. Dis-
mantled in 1941.

1220

MT. PLEASANT. MICH. Erected by Columbia Sugar Co. Original capacity.
1.200 tons. Dismantled by Michigan Sugar Co. in 1951.

183

GREEN BAY. WISC. Erected by Green Bay Sugar Co. Original capacity.
600 tons. Present owner. Menominee Sugar Co. (Ceased operations after
1961 season.)

APPENDIX II

185

.muooaoom .oom .oz Adam .ooom .HH .Ho>

 

.opcoShwm ucoscaobom moosaocH\m

.modmmd msoaam> .mp 0 mm no am one .mmmH
upon reorder use we mauopm as m ..m.m.o ..<.Q.m.o “coasom\m

 

 

 

 

     

 

 

 
 

 
 

    

 

sea.ma 10.1ma em.na m ma mom m.n~ m mm m.mo o.mo mmm.m coma
mom.oa mo.mma Ho.aa n.ma mmm.a H.Nm m.om 0.1m H.ma Nom.m mmma
omm.oa Hm.mom mo.ma m.ma NHH.H m.a~ o.~m o.am m.mm emm.m mmma
ema.ma om.maa mm.ma o.ma mom m.o~ c.1m 0.0m n.1m moo.m mama
mmm.o~ ma.moa mo.ma o.HH emo m.ma a.om o.mo m.me omn.m enma
1mm.aa mm.wma mm.ma m.oH new m.ma m.om H.oe o.mo mmm.m mmma
«mm.m mo.moa mm.ma o.NH Hmm «.ma m.mm «.1e 0.0a mmm.o omma
mam.m No.0ma mm.mH m.HH can m.HH o.mm m.o: m.mm som.m mama
mem.m mm.mea ww.ma m.oa mmn m.NH o.mw m.mo o.mm omm.n mmma
mmo.m Eamon“ mail” M12” mom “in mém inn m.mw 36.3 Han
omo.oa mm.moa ma.oa a.oa omo.a m.ma m.om m.am m.a~a oom.m onma
mmm.oa mm.mma o~.oa m.m mom m.aa m.mm 0.0m m.om nmm.o mama
moo.m mm.moa m~.ea m.m an: 1.0H o.~w H.Nm ~.mo mmm.o mama
moa.m o1.moa mo.ea a.e woo o.oa «.mm o.ee m.mm ome.e mama
Hmm.ma ma.aoa Ho.ea m.m 1am N.HH ~.om m.mm e.moa mam.m coma
ooa.m am.maa om.ma a.m mmo H.m 0.1m o.am o.mm mmo.m mama
owo.m oo.oma mm.oa m.m own m.m m.mm «.mm «.mo mma.m mama
Hmo.o om.mm om.ma m.e mmm m.m m.mm o.mo m.mm woo.o mama
mmm.oa m~.mm mo.oa w.m mmo.H m.m m.ma m.HHH o.ooH mmo.ma mama
mam.m so.mm mH.m m.oa oHo.H m.m m.mm m.mm o.ooa mmm.oa Homa
omn.m No.1a mH.m H.m .Nmo.a m.m o.am «.maa m.~ma enm.NH coma
mmo.m mm.mo Ho.m o.m mmo.H m.m m.nm H.0NH m.m~a mmo.ma mama
...n.. u..... ----u N.@ moo.a m.m m.mm o.NNH o.ama mmm.ma mmma
---uu- -....- ---n- m.m mom 1.a H.mm m.ea m.mm mmm.oa amma
.qOmwm cm .m woos .9 oooa moooa oomwm
ous>uoao< nomumpCo mm mood mm am Hymn m” mm mm ed mopmobuoopcmamum mm A
Show a osoocH“ sea a oflofiw A poem" moped ” oopcmam a sham homeoaodn Ho « a
fleece“ mocha » pom u .>< «umwdmu .Amm « mowm “emerged“ «nonadzu meow one
\H OH u . m " .dw “ am 1 ,.e n u o u m u N u H «

\melmmmH .z<onon mom moHHmHagym zoaaopaomm mmobm swam ozm.ammm debm amaomqmm .H mqm<9 xanzmmmd

.mpcoshdm ecoscao>om moosaocH\m
.mosmmw msoaae> .mp 0 mm he on use .mmma
.mumzhnom .edN .oz .Hasm .pmpm .HH .Ho> .epma copeaom use medpmfipepm am am ..m.m.o ..<.n.m.D "condom\m

 

186

 

 

 

   
 
   

 

 

  
 

 

mom.a oe.oo~ oa.ma e.oa mum m.om m.em o.- m.m~ Ham coma
mao.m oo.oaa mm.oa o.ea 1mm m.HN m.om m.am m.~m omo.H mmma
000.: mm.mma oa.ma H.1a mom m.ma m.om m.HN H.mm Hoa.a mama
ome.m mm.mma mm.ma m.ma mew m.ma o.wm m.am m.~m oeH.H mmma
mmm.~ mm.mma mo.ma ~.~H mma o.ea m.em m.oa m.ma mao.a emma
mom.m om.mmH mm.aa m.mH mam m.na m.~m o.ma o.ma oeH.H nmma
oam.~ mo.1ma oo.HH N.oa mom m.ma 1.1m N.ma o.ma ooa.a omma
moo.~ mm.oma mo.oa o.mH mma H.NH a.ow m.ma m.ma NmH.H mmmfl
moo.~ mm.mea m~.ma H.HH and o.aa m.wm m.HH o.mH oHo.H Nmma
mmm.a . om.HmH ma.ma o.oa mma m.HH «.mm a.~a 1.1H moo.a Hmma
Nam.m mm.mma mm.ma o.~a aam N.oa m.ma o.mm m.om mma.m onma
mmm.m mm.eoa mm.ma m.oa mmm m.oa m.mm m.mm m.om mmm.m mama
ooo.m mo.mma mm.oa m.NH Hoe m.m m.om o.ma 1.1H amm.a mama
aim ding 8.3 «a. and mm now new mom 18$. mama
mem.m mo.moa mo.eH o.m mum m.m m.mm e.mm m.mm mmo.~ mama
ooo.m eo.moH no.1a m.m mom m.m m.am m.om m.m~ oas.~ mama
Hmo.a mo.oma He.oa m.m mHH 1.0 o.mm e.ma o.ma amm.a mama
moo.a oe.mm om.oa H.e om o.m n.1m o.aa o.am QNH.~ mama
mmm.n mN.HHH am.m o.~a mmm m.m m.mm m.ao H.Hm oom.o mama
aow.m mo.moa mm.m H.HH ma: m.m m.mm o.mm m.oo moH.o Home
Ham.m om.Hm mm.m ~.m 1am H.m H.Hm m.oo m.oo Hmo.o coma
mam.m mm.oe em.m m.m mom m.m o.am m.oo o.Hm mao.m mmma
-u - -..u- N.m mom o.oa o.em m.om m.mm omo.m mmma
-..n- m.m 11H m.m m.mm m.1m m.mm moa.m amma
ooo.aw .m .m woos mooe qmo.a moooa ooo.H
ous> a ” mecca " o 04 u eon 1‘“ u a “ msaem a
. mom « them a com a poem “ com “ monod « them “ oweoao4 A me A
Show » osoocH “ com. A macaw « hmmcm “ moped u oopcmam « smocked « a 962.32 « Meow mono
Hopes ” among a com A .>< ” “ .amm « Hole “ a u “
hagaua—u-mammmmwu:.mw « a“ c e u .m u o u m “ «gm-m-nnnm. “

%
f
i
t
z
i
*

 

‘1‘ ll l'lll'll'...

 

'l‘l'l'.u I'I..|| .l‘l II’I

\maolmmma .OHmo .moHBmHagHm ZOHHUDDomm swam Mdoom amaomqmm .N mqmds Nanzmmm<

187

.noppms cMHonom poo anon on moHon axoon no moooHo cH moanwon on

has Amos noV cos HmQOHpHUo<\m

 

 

 

 

 

mxosnp oe0H\mcop m
o8 to 3.3 "32 sooooo no n no N m .8 m .33 ode S .. dam ..
once nod oo.omw. "open sepmgo nopomnp nopmo>nmn
use» mH «oHoHH o.N H sOHQIm son H omosnem =
.mcHuHmz \m
oHHcs no>Hnr moon» no nova
Inomo novmosnem he moon on on noQQOp m .>oz
mosdmmm .momnmno once: sea oz on. = Inopmom mo>eoH who poem ImN .umom
.36
once nod om.:w on. = so: near Ions»
or. = me NH I opeprHdo mesh
. sons
23 pom 8.2 mm. .183 153-83 :2» Ban ..
0:. H = $3 NH I onwardvgo :
once
cowoan: Horace mom or. H = a mmonoIoon cowoanz Inez
cOHHew nod 499
is} a Bo 1585 aim
mcHepsoo evanescence mendm
.2322 e .odom N .. one
Harpoocm use «pa “mango .mocppe Apcownoso
I .pnom OHIomIm $000 I *\ nopocnu hence spa: Ionav hence econ .baa
004w @.ooom_snomocoz am.H on. H .BOHaIN HHHno Md one ouHHHpnom .pceHm IHHnd<
ochon_3onndm
ofimo fie. £8» 32% mom
Sofia. engages mm. H .. .m ..omoadu moflfiaménm Aroma
nopomnp .poo
mm. a sodium :31 :on ...ooom
u one no a u a a come A «
mxnmeom use mHeHnopeE » endow com A comm“ nosed “ nWHoaHmo « COHucnomo no pcosmfidvm a moped
wme .OHmo ammzmamcz 92¢ z¢0Hm0HE

mmzoq ZMMHmdm mo mHHom Qmm quH .mamum mdmsm mom mmu¢.mmm mBDAZH_nz¢ mchademo

.m mqmde xHszmm<

188

 

 

ua0H\.an ca gun: moHHa m mm. H maHHsmm mm .m:<
mH ...Eom
.pao mH “uHaHn m. m.H mm .OH oanSoo mm .wsH
mH .pmmm
3. H .. .m 8H2 .mev oEméonEH: mm .mé
nopoanp mH .poom
on. H ERIN mm $33 3. .33
H ...Eom
nopaH nHHENm o.H wchmogo 0H .m:«
OH ana
noan hHHSdh o.N wnHoon Pam H 23»
0H anu
om. H = m: HNIcOHua>HpHso H cash
NH 056
om. H = m: noooozéoflwzpdzo m 05.6
oH aqua
oHIONIm Hoom .umom .mnH mm on. H g m: pqum mm nag
AHn.H nopoanp
"mmzn ..m.ov deHn3ws hwnmm cm. H konIN m: mango pgoanSoIonm has
has
mm. H = .m gonna: a meu ..oonm HHom HHno<
nopounp ad:
om. H .30Hmam =HHIm :OHm HHnm<
mxnweom on.» meHnopmz mwmwm WWW nos nozom MWHMMHmMU mafianomo no pcoagwm $va

 

 

mo mAHom 9mm mg £56m maqum Nan Mom mmod mam EDmZH 924 mZOHHSHmmo

oomH .ono Hmmzmnmoz n24 ZHGHHUHE

.d as NHszmmd

.ommo mHsp cH ooHnm no: Bonn ooposooo pmoo .oHom HH hHao voHHoam on on UQSSmmw mH snoo nwm\w

 

189

 

 

nopownp
on. sonIN onopm and stm =
oHno ..sn OHH nopomnp H .ooa
cdenon ..dn 00H "vHoHM mm.H H .30HmIm mH \mficnoo nwov pmo>nwm OH .900
Mm
oHso .mnop n.mH nopoonu no3oHn .mcommz N
c8232 .88. mH .329 om.m H 338m om.HHm 28.. vs. 9% _.
hJHowmwo
ndon\BNH .vaon mono.30n\= nopomnu nommono
pmo>nwg omanom HHoam_3on H om.H H 3onIm .nn\e NH owonom I AommHHmv pwo>nmm .pmmm
mm coda
om. H __ ms Hm I 33330 0H 3.
mcst QI¢.N mm. 0:. H = .wH hdnmm OMIH ocdu
mH
opwanc Edflzossw $OOH 0%. H = m& sz moono oon IH 0:55
nopownp MN Adm
GHANA “H83 88 .3 m. 3. H 33?... m: wcfiqum H .82
, E..
on. H .. .m MN .623 H. x5. .88 HHom H23
nopoanv Adm
om. H 339$ EHA :on Hg:
“ u u u h, u u
g... a... . .. . . .... a. . .WHMM. . ...... - a... . .2.

 

 

wmmH .OHmo Hmmzmemoz QZd ZdUHmoHE zmmamdm
mo mAHom 0mm Mada .Aszmm mo mo4HHm momv zmoo mom mmo<.mmm mHDQZH 924 mZOHadmmmo .m mqde Nanzmmmd

190

 

nonconp

 

m3. H BonIN comm: Hdmm ..
oHno :H .52 no oanaoo wH
fimEoE 5“ .3 mm “33» m3. H I mm .OH 3.2.x -m 32.
A.p:doooa
«.3.de 3 8320 8.3 30.8.3 $33. 98.8 o... HEM...
om: © doom .3 z 5.3 .mom 3. H sonIN HHHnHv .m cmmoanq mmonoImoe IH .nmz
oHIomIOH Macon nopodnu. mm
H..... 33 3. H 33.3 HHHnHV .m 333.8“ .m £25 ..mH show
.ooanvon quonm nopownu om .pmom
on "unwop novmo on on UoEdmm< on. H 3onIm .m xN I_Bonnw: w men ImH .Mdd
« ono< nom ” u “ mmwwmmmo " «
oanaom and deHnooaz ” mndom » no: “ nozom “ no oNHm u noprnomo no pcosdevm « mopan

 

 

agenda .mo aHom. Qmm as .949; EZHZ Mom 954 mam manna/NH 94¢ mzofimdmmmo

mmmH .OHmo Haamoz azd 73mg”?

.0 as NHQEmmd

 

191

 

 

 

 

nopoonp 0H .m54
3. H onoIm meow... Hag om 33.
020 :3 on 0H .o3.
caoflofi :3 oo .33» 3. H II mm .OH 325% cm 62.
nopoonp
.3) 6:3. QJIN on. H 33.7... .NH bran 82.
doom awn nepoonp
3.84: .38. 3. H :OHQIN .o ..HHflnon on. 2.: H29...
novoonp sonnon
R. H .SHoIm .33 .m H... I ooflHHn H203
nopoonp
om. H .SHoIm 3H x m .58 H23.
u onod nom “ » nuHooooo “ «
oxnosom woo oHoHnopoz u onsom com.” 2oz ” nozom no ouHm u noHponomo no psoamHsvm» oopon
. oooH .38 93.5952

024 z<onoHE 2mmBm4m mo mAHom mam QM§H .mado mom mmo4 mam maDmZH 92¢ mZOHBmemo .m mnm¢H NHszmm<

192

 

ocou. mm. “UHoHH oo.H onsm go Hoom

 

 

 

 

 

 

 

oqfifi mH.H oHon Homo oxon .308 poomom .pmom
ocop oo.H " Hoax om.H onopo Hugo Hoom
3H3... om.H oHop Hugo oxon .308 I o>oo.o poomom add.
moon mm.H “oHoHH om.H N .. onopo coo Hdom ..
c3 So .3 353 mm. H .. onm ..
3. H = .w 33m ..
mm. H .. K. :02 33.
own H.230... 1.8m nBoofi
momm Hospoo wow 3. H onmIN .m oNHHHpnoh .3an
onHonmmfiMWo©omomHmnome .ooHnmn3co :fionw HHoEo 3 oomnono €on HHnEH.
ocoowmoowwwpoz Mama“ . 2oz . noenonH mwflwlmwd aofionomo no psoagwm oopon
mme .030 E35352 924 z¢on0Hz
559$ mo mHHom Qmm m3 .MSH H3443 mafia Mom 984 mam EEZH 924. mzoflgmo .m mama finzmmmd.

 

 

 

 

 

 

   

"I1mm@mgwmrujanwzfimifl‘n“