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The Soybean Industry

With Special Reference to the Competitive Position of the Minnesota Producer and Processor

Author:

Ray A. Goldberg

The Soybean Industry
The Soybean Industry

Ray Goldberg is the George M. Moffett Professor of Agriculture and Business Emeritus at the Harvard Business School. For a portion of the work published in this volume, he received a prize in the Uhlmann Awards Competition for research in grain marketing and agricultural economics.

The Soybean Industry

Table of Contents
i. INTRODUCTION 3
Purpose and Scope, 3. Source of Data, 6. Procedure, 7.
II. PRODUCTION 8
World Production, 9. National Production, 14: Acreage Changes in the
Corn Belt, 17. Minnesota Production, 22: Areas of Production, 22;
Suitable Varieties, 23; Acreage Changes in Minnesota, 26. Summary, 35.
III. UTILIZATION 37
World Utilization, 37. National Utilization, 41: Soybean Meal Utiliza-
tion, 42; Soybean Oil Utilization, 53: World and National Trade Move-
ments, 56, Price Relations, 57, Shortening, 59, Margarine, 60, Other
Edible Uses, 61, Industrial Uses, 61. Minnesota Utilization, 63. Sum-
mary, 65.
IV. THE PROCESSING INDUSTRY 66
Marketing Channels of the Crop, 66. Historical Evolution, 68: The
National Processing Industry, 68; The Minnesota Processing Industry,
74. Technical Development, 79. Processing Costs, 83: Minnesota
Processing Costs, 84. Summary, 88.
v. FACTORS AFFECTING THE COMPETITIVE POSITION
OF THE MINNESOTA SOYBEAN PROCESSOR 89
Transportation, 90: Minnesota Transportation, 93: Buffalo, New York,
93, Fargo, North Dakota, 94, St. Cloud, Minnesota, 95, Chicago Soy-
bean Prices, 96, Qualifications, 96, Foreign Market, 99; Summary, 100.
Storage, 101. Commodity Markets, 105. Price Formulation, 110: Gov-
ernment Action, 110; The Minnesota Processor, 116. Crushing Margins,
116: Specific Example, 117; Crushing-Margin Relationships over
Time, 121.
VI. SUMMARY AND CONCLUSIONS 126
The Producer, 126. The Processor, 128.
vii
viii THE SOYBEAN INDUSTRY
APPENDIX I. TABLES 133
APPENDIX II. INTERVIEWS 171
BIBLIOGRAPHY 175
INDEX 184
List of Tables
1. A Comparison of the Twelve Leading Soybean-Producing
States for 1920 and 1950 16
2. A Summary of Protein Content, Oil Content, and Iodine
Number of Soybeans, by Area, Three-Year Averages, 1945-
1947 19
3. The Results of Tests on Two Groups of Varieties of Soybeans 24
4. The Averages for Soybean Varieties for Date Mature and Oil
Content at Three Locations, Waseca, Blue Earth, and South-
western Minnesota 25
5. Percentage Changes in the Use of Land by Forty-two Minne-
sota Farmers, 1941 through 1945 (1940 = 100 per cent) 26
6. Changes in Crop Acreages between 1939 and 1949 27
7. Index Numbers (by Percentage) of Acreage on Fifty Southern
Minnesota Farms, 1941 through 1950 (1941 = 100 per cent ) 29
8. Percentage of Total Tillable Land in Specified Crops on Fifty
Southern Minnesota Farms, 1941 through 1950 29
9. Tillable Land and Specified Crops in Minnesota 30
10. Percentage of Total Tillable Land in Specified Crops in
Minnesota 30
11. The Dollar Value per Acre of Grain Crops in Southern
Minnesota 31
12. The Comparative Cost and Returns per Acre for Grain Crops
in Southern Minnesota, 1945-1949 32
13. The Indicated Frequency with Which Forty-seven Selected
Farms Produced Soybeans, 1941-1950 34
TABLE OF CONTENTS ix
14. The Number and Percentage of Fifty Southern Minnesota
Farms Producing Soybeans 34
15. Soybean Acreage and Soybean Farms in Minnesota 34
16. Canada: Soybeans Crushed, Soybean Oil, Cake and Meal Pro-
duction, 1950, with Comparisons 39
17. Canada: Imports of Soybeans, Edible and Inedible Soybean
Oil, 1950, with Comparisons 39
18. The Production and Distribution of Soybean Meal by States,
1945 44
19. The Deficit in Protein for All Livestock, Using Requirements
Given in Feeding Standards as the Quantity Needed, 1937
through 1949 46
20. Prices Paid by Farmers per 100 Pounds of Cottonseed Meal
and Soybean Meal, by Months, United States, 1950 51
21. The Production and Processing of Soybeans in Minnesota,
Iowa, and Illinois 63
22. Minnesota Monthly Production of Soybean Meal, October
1950 through September 1951, and Monthly Consumption of
Soybean Meal, October 1945 through September 1946 64
23. Marketing Channels for Soybeans, Illinois, 1947-1948 Crop
Years, as a Percentage of Total Sales off Farms 67
24. The Relative Costs of Acquiring Soybeans for Large and
Small Processing Plants, Illinois, Crop Year 1948 67
25. Soybean-Processing Plants in the United States, 1950 70
26. The Estimated Soybean-Processing Capacities of the Nine
Largest Operators, May 1945 and January 1951 72
27. The Number of Soybean Plants in the United States on July
1, 1944, by Size 73
28. The Number of Soybean Plants in the United States on
January 1, 1951, by Size 73
29. Soybean Mills in Operation in Minnesota, October 1, 1945 76
30. Soybean Production in Minnesota, Actual and Potential,
December 1951 76
x THE SOYBEAN INDUSTRY
31. A Summary of Soybean-Processing Facilities and Operation
Status, Excluding Mills Crushing Soybeans Temporarily or
Less Than Half Their Operating Time, United States, May
1945 and January 1951 80
32. Soybean Processing Margin by Size and Type of Plant,
1943-1944 84
33. The Processing Costs of Six Minnesota Soybean Plants, Per-
centage Breakdown and Actual Cents-per-Bushel Range, 1951 5
34. The Capacity of Soybean Mills in Specified Areas, Excluding
Mills Crushing Soybeans Temporarily or Less Than Half
Their Operating Time, May 1945 and 1950 92
35. The Over-all Freight Advantages per Ton of Meal Shipped,
as Used by Commercial Men for Territories Rather Than
Specific Locations 97
36. Available Storage Space and Estimated Requirement for
United States Soybean Mills, 1951-1952 Crush 102
37. Monthly Sales of Soybeans by Farmers, as Percentage of
Total Sales, in Ten Soybean-Producing States, Marketing
Year, 1947-1948 103
38. Soybean Stocks on Minnesota Farms, Quarterly, 1943-1952,
by Thousand Bushels 103
39. Range of Contract Cash Prices of Soybeans at Chicago,
Monthly 105
40. Range of Contract Cash Prices of Soybeans at Chicago,
Yearly 106
41. Receipts of Soybeans at Chicago and Minneapolis Grain
Centers for the Last Five Years 108
42. Price Supports, Price Ceilings, and Average Prices Received
by Farmers for Soybeans, Crop Years 1940-1951 1ll
43. Country Elevator Base Ceiling Prices for No. 1 and No. 2
Yellow and Green Soybeans 115
44. Ceiling Prices for Crude Soybean Oil, in Tank Cars, in Cents
per Pound 115
45. Estimated Differences in Crushing Margins among Illinois,
Iowa, and Minnesota Processing Plants 118
TABLE OF CONTENTS xi
APPENDIX TABLES
1. Soybeans: Acreage, Yield per Acre, and Production in Speci-
fied Countries, Average 1935-1939, Annual 1948-1950 34
2. Soybeans: Exports from Specified Countries, Average 1935-
1939, Annual 1947-1950 136
3. Soybean Oil: Exports from Specified Countries, Average
1935-1939, Annual 1947-1950 136
4. Suez Canal: Northbound Movement of Manchurian Soybeans,
December 1950-June 1951 137
5. Soybeans: Acreage, Yield, and Production in the United
States, 1924-1950 138
6. Acreage of Soybeans Harvested for Beans, United States and
Selected Groups of States, Averages 1925-1929, 1930-1934,
and 1935-1939, and Annually 1940-1950 139
7. Soybeans: Supply and Utilization in the United States, 1924-
1950, by Number of Thousand Bushels 140
8. Acreage Changes in the Six Leading Soybean States 142
9. Soybeans Harvested for Beans: Acreage, Yield, and Produc-
tion for the Ten Leading States, 1945-1950 143
10. Soybeans: Yield per Acre, Oil Content, and Oil Yield per Acre
in the Principal Soybean-Producing States, by States, 1944
and 1945 144
11. Soybean Oil Content, Temperature, and Length of Day in
the Principal Soybean-Producing States, May-October Aver-
ages, 1944 and 1945 145
12. Soybean Oil Meal and Cake: Supply and Utilization in the
United States, 1924 through 1949, by Number of Thousand
Tons 146
13. State-to-State Movements of Soybean Meal in the Six Main
Meal-Producing States, 1948, 1949, and 1950 147
14. Protein Concentrates: Estimated Use for Feed in the United
States, Prewar Average and Years 1944 through 1950, Year
Beginning October 1, by Number of Thousand Tons 151
15. Relationships between the Prices of Soybean Meal and Prices
of Other High-Protein Feeds 152
xii THE SOYBEAN INDUSTRY
16. Soybean Oil, Crude Basis: Production, Trade, Stocks Decem-
ber 31, and Apparent Disappearance, 1910-September 1950,
by Number of Thousand Pounds 153
17. State-to-State Movement of Soybean Oil, 1950 155
18. Vegetable Oils: Wholesale Prices, in Cents per Pound, at
Specified Markets, Annual Averages, 1930 through 1950 156
19. Wholesale Prices, in Cents per Pound, of Leading Fats and
Oils, United States, for Specified Periods 157
20. State-to-state Movements of Soybeans 158
21. The Cost of the Component Parts of a 300-Ton Capacity,
Solvent Extraction-Plant 160
22. The Price per Ton of Shipping Soybean Meal from Decatur,
Illinois, December 1951 163
23. The Average Per-Ton Railroad Freight Revenue for Soybeans,
Soybean Meal, Cottonseed, Cottonseed Meal, Linseed Meal,
and Flax, United States, 1947 through 1950 164
24. The Total Freight Traffic, by Number of Cars, for 1947
(Including Duplications) 165
25. The Total Freight Traffic, by Number of Cars, for 1950
(Including Duplications) 165
26. Soybeans: Stocks in Various Positions, United States, Quar-
terly Dates, 1942-1951, by Number of Thousand Bushels 166
27. The Typical Cost to Farmers, in Cents per Bushel, for Soy-
bean Storage on Farms and at Country Elevators, for Three-
Month and Six-Month Storage Periods, Midwestern Soybean-
Producing States 168
28. Official United States Grades and Grade Requirements for
All Classes of Soybeans 169
List of Figures
1. Soybean Acreage Harvested for Beans, Minnesota, 1934-1950 4
2. Soybean Production, Minnesota, 1934-1950 4
3. Value of Minnesota Soybean Production, 1935-1950 5
TABLE OF CONTENTS xiii
4. International Trade in Soybeans, Average for 1935-1939 12
5. International Trade in Soybeans, Average for 1948-1949 13
6. Acreage of Soybeans for Beans and Other Specified Crops
Harvested in Indiana, Illinois, and Iowa, 1924-1950 18
7. Map of the Ten Soybean-Producing Areas 18
8. Prices Received by Farmers for Soybeans, Corn, and Oats,
United States, Season Average, 1924-1950 20
9. Concentration of Soybean Production in the Various Types
of Farming Areas in Minnesota, 1949-1950 21
10. Types of Soils in Minnesota 22
11. Cash Receipts by Commodities, Minnesota, 1949-1950 33
12. Destination of Exports of Soybeans and Soybean Oil from the
United States under the Economic Cooperation Administra-
tion: April 3, 1948-June 30, 1951 38
13. United States Exports of Soybeans 38
14. The Soybean: Uses — Derivatives — Applications 42
15. Distribution of Soybean Meal in 1945 and Production of
Soybean Meal in 1950, by States 43
16. Production of Specified Protein Concentrates, United States,
1937-1949 45
17. Utilization of Soybean Oil Meal among Classes of Livestock:
Percentage Distribution, United States, 1950 47
18. Prices of Soybean, Cottonseed, and Linseed Oil Meals, 1940-
1950 50
19. Utilization of Soybean Oil in Food and Non-Food Products,
Percentage Distribution, United States, 1940-1950 54
20. Supply of Cottonseed, Soybean, Coconut, and Other Oils and
Food Fats, Not Including Butter and Lard: Percentage Dis-
tribution, United States, 1920-1949 55
21. Supply of Food Fats and Oils, United States, 1920-1949 55
22. Location of Principal Producers of Shortening, Margarine,
Salad and Cooking Oils, United States, June 1945 57
xiv THE SOYBEAN INDUSTRY
23. Supply of Butter, Lard, and Other Major Food Fats and Oils:
Percentage Distribution, United States, 1920-1950 58
24. Wholesale Prices of Cottonseed Oil and Soybean Oil, United
States, 1935-1949 58
25. Utilization of Fats and Oils in Shortening: Percentage Dis-
tribution, United States, 1920-1950 59
26. Location of Minnesota Soybean-Processing Plants, 1951 77
27. Proportion of Soybeans Processed by Specified Methods,
United States, 1937-1950 80
28. Soybean Oil Meal Processing, Hydraulic Method 81
29. Soybean Oil Meal Processing, Expeller Method 81
30. Soybean Oil Meal Processing, Extraction Method 82
31. Price of Shipping Soybean Meal per Ton from Decatur, Illi-
nois, December 1951 91
32. Prices of Soybeans: Cash Prices of Number 2 Yellow at Min-
neapolis, on Track Bids at Minnesota Country Points; and
Futures Prices at Chicago, 1950 107
33. Cash Prices of Number 2 Yellow Soybeans at Minneapolis
and Chicago 109
34. Soybeans under Price Support Programs, United States,
1941-1950 112
35. Prices of Soybeans: On Track Bids at Minnesota and Illinois
Country Points 113
36. Prices of Soybeans: On Track Bids at Minnesota and Iowa
Country Points 113
37. Solvent Crushing Margins Compared to Weighted Processing
Cost, Seven Minnesota Firms 120
38. Soybean Crushing Margins for Solvent and Expeller Plants
in Minnesota 122
39. Soybean Crushing Margins for Solvent Plants in Minnesota
and Illinois 122
TABLE OF CONTENTS xv
40. Soybean Crushing Margins for Solvent Plants in Minnesota
and Iowa 122
41. Soybean Crushing Margins for Expeller Plants in Minnesota
and Illinois 123
42. Soybean Crushing Margins for Expeller Plants in Minnesota
and Iowa 123