• TABLE OF CONTENTS
HIDE
 Copyright
 Front Cover
 Title Page
 Abstract
 Table of Contents
 List of Tables
 List of Figures
 List of appendix tables
 Acknowledgement
 Summary
 Introduction
 Soybean production and handlin...
 Processing plant feasibility
 Florida and U.S. international...
 Summary and conclusions
 Appendix A: Tables
 Appendix B: Recursive model used...
 Appendix C
 Appendix D: Rules and regulati...
 Appendix E: United States standards...
 Reference






Group Title: Florida Agricultural Market Research Center Industry report 81-1
Title: Feasibility of soybean processing in northwest Florida a report
CITATION PAGE IMAGE ZOOMABLE PAGE TEXT
Full Citation
STANDARD VIEW MARC VIEW
Permanent Link: http://ufdc.ufl.edu/UF00026915/00001
 Material Information
Title: Feasibility of soybean processing in northwest Florida a report
Series Title: Industry report Florida Agricultural Market Research Center
Physical Description: xiv, 145 p. : ill., forms, maps ; 28 cm.
Language: English
Creator: Mathis, Kary, 1936-
Publisher: Florida Agricultural Market Research Center, a part of the Food and Resource Economics Dept., Institute of Food and Agricultural Sciences, University of Florida
Place of Publication: Gainesville Fla.
Publication Date: 1981
 Subjects
Subject: Soybean -- Processing -- Florida   ( lcsh )
Genre: government publication (state, provincial, terriorial, dependent)   ( marcgt )
bibliography   ( marcgt )
non-fiction   ( marcgt )
 Notes
Bibliography: Bibliography: p. 144-145.
Statement of Responsibility: by Kary Mathis ... et al.
Funding: Florida Historical Agriculture and Rural Life
 Record Information
Bibliographic ID: UF00026915
Volume ID: VID00001
Source Institution: Marston Science Library, George A. Smathers Libraries, University of Florida
Holding Location: Florida Agricultural Experiment Station, Florida Cooperative Extension Service, Florida Department of Agriculture and Consumer Services, and the Engineering and Industrial Experiment Station; Institute for Food and Agricultural Services (IFAS), University of Florida
Rights Management: All rights reserved, Board of Trustees of the University of Florida
Resource Identifier: aleph - 000410264
oclc - 10809323
notis - ACF7029

Table of Contents
    Copyright
        Copyright
    Front Cover
        Front Cover
    Title Page
        Page i
        Page ii
    Abstract
        Page iii
    Table of Contents
        Page iv
        Page v
    List of Tables
        Page vi
        Page vii
        Page viii
    List of Figures
        Page ix
    List of appendix tables
        Page x
    Acknowledgement
        Page xi
    Summary
        Page xii
        Page xiii
        Page xiv
    Introduction
        Page 1
        Objectives
            Page 2
        Procedures
            Page 2
            Page 3
            Page 4
    Soybean production and handling
        Page 5
        Page 6
        Page 7
        Page 8
        Production in the study region
            Page 9
            Page 10
            Page 11
            Page 12
            Page 13
            Page 14
            Page 15
            Page 16
            Page 17
            Page 18
        Soybean handling in the region
            Page 19
            Page 20
            Country and terminal elevators
                Page 21
                Page 22
                Page 23
                Page 24
                Page 25
            The export elevator
                Page 26
                Page 27
                Page 28
                Page 29
            Soybean processing in the Southeast
                Page 30
        Transportation
            Page 31
            Page 32
            Page 33
            Page 34
            Farmer to elevator
                Page 35
                Page 36
            Elevators to processing plants or export terminals
                Page 37
            Alternative locations
                Page 38
                Page 39
                Page 40
        Soybean meal and oil marketing and distribution
            Page 41
            Meal use in Florida, Alabama and Georgia
                Page 42
                Page 43
                Page 44
        Objectives
            Page 45
        Procedures
            Page 45
            Page 46
            Page 47
            Page 48
            Page 49
            Page 50
            Page 51
            Page 52
            Page 53
            Page 54
            Soybean oil disposition
                Page 55
    Processing plant feasibility
        Page 56
        Investing and operating costs and requirements
            Page 56
            Page 57
            Page 58
            Spot crushing margins
                Page 59
                Page 60
        Processing returns and market trends
            Page 61
            Processing returns
                Page 61
                Page 62
            Market trends
                Page 63
                Page 64
    Florida and U.S. international trade in soybeans and products
        Page 65
        Florida's agricultural exports
            Page 65
            Page 66
            Page 67
            United States production and export trends
                Page 68
                Page 69
                Page 70
                Page 71
                Page 72
                Page 73
    Summary and conclusions
        Page 74
        Page 75
        Page 76
        Conclusions
            Page 77
            Page 78
            Page 79
    Appendix A: Tables
        Page 80
        Page 81
        Page 82
        Page 83
        Page 84
        Page 85
        Page 86
        Page 87
        Page 88
        Page 89
        Page 90
        Page 91
        Page 92
        Page 93
        Page 94
    Appendix B: Recursive model used for projecting soybean prices, scenario I and II
        Page 95
        Page 96
        Page 97
        Page 98
        Page 99
        Page 100
        Page 101
        Page 102
        Page 103
        Page 104
        Page 105
        Page 106
    Appendix C
        Page 107
        Page 108
        Page 109
        Page 110
        Page 111
        Page 112
        Page 113
        Page 114
        Page 115
        Page 116
        Page 117
        Page 118
        Page 119
        Page 120
        Page 121
        Page 122
        Page 123
        Page 124
        Page 125
        Page 126
        Page 127
        Page 128
        Page 129
    Appendix D: Rules and regulations
        Page 130
        Page 131
        Page 132
        Page 133
        Page 134
        Page 135
        Page 136
        Page 137
        Page 138
        Page 139
    Appendix E: United States standards for soybeans
        Page 140
        Page 141
        Page 142
        Page 143
    Reference
        Page 144
        Page 145
Full Text





HISTORIC NOTE


The publications in this collection do
not reflect current scientific knowledge
or recommendations. These texts
represent the historic publishing
record of the Institute for Food and
Agricultural Sciences and should be
used only to trace the historic work of
the Institute and its staff. Current IFAS
research may be found on the
Electronic Data Information Source
(EDIS)

site maintained by the Florida
Cooperative Extension Service.






Copyright 2005, Board of Trustees, University
of Florida







INDUSTRY REPORT


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FEASIBILITY OF SOYBEAN PROCESSING IN
NORTHWEST FLORIDA






a report by

Kary Mathis, Forrest E. Stegelin, J. Scott Shonkwiler,
and Emilio Pagoulatos



















February 1981


The Florida Agricultural Market Research Center
a part of
The Food and Resource Economics Department
Institute of Food and Agricultural Sciences
University of Florida, Gainesville 32611











The Florida Agricultural Market Research Center


A Service of
The Food and Resource Economics Department
of the
Institute of Food and Agricultural Sciences


The purpose of this Center is to provide timely, applied research

on current and emerging marketing problems affecting Florida's agri-

cultural and marine industries. The Center seeks to provide research

and information to production, marketing, and processing firms, groups

and organizations concerned with improving and expanding markets for

Florida agricultural and marine products.

The Center is staffed by a basic group of economists trained in

agriculture and marketing. In addition, cooperating personnel from

other IFAS units provide a wide range of expertise which can be applied

as determined by the requirements of individual projects.












Abstract


The study analyzed the economic feasibility of soybean processing

s3) in northwest Florida. Soybean production in the 90-county study region

grew from 14.5 million bushels in 1970 to 39.4 million bushels in 1979.

Handling and distribution facilities have also increased in number and

capacity. Approximately half of the soybeans produced in the region are

processed by two plants in the area, and half the soybean output is ex-

Sported, most through the port of Mobile. Investment and operating costs

for three sizes of soybean processing plants, 1,200, 2,000, and 3,000

tons of soybeans crushed per day, were estimated. A soybean processing

plant is not economically feasible for northwest Florida at the present

J time.



Additional key words: Soybean handling, soybean transportation, export
markets.
O0


R













TABLE OF CONTENTS

Page

LIST OF TABLES................................................. vi

LIST OF FIGURES.............................................. .. ix

LIST OF APPENDIX TABLES ...................................... x

APPENDIX FIGURE................................................ x

ACKNOWLEDGEMENTS ........................................... xi

SUMMARY.............. ......................................... xii

INTRODUCTION................................................. 1

Objectives .............................................. 2
Procedures ............................................. 2

SOYBEAN PRODUCTION AND HANDLING................................ 5

Production in the Study Region .......................... 9
Soybean Handling in the Region ........................... 19
Country and Terminal Elevators...................... 21
The Export Elevator................. ......... .... 26
Soybean Processing in the Southeast................. 30

Transportation............. ........................**** 31
Farmer to Elevator................................. 35
Elevators to Processing Plants or Export Terminals... 37
Alternative Locations............................... 38

Soybean Meal and Oil Marketing and Distribution........... 41
Meal Use in Florida, Alabama and Georgia............. 42
45
Objectives..................*********.................... 45
Procedures. .. .... ......................... ....******

Soybean Oil Disposition........................... 55

PROCESSING PLANT FEASIBILITY.......... ...................... 56

Investment and Operating Costs and Requirements........... 56
Spot Crushing Margins............................ *59











TABLE OF CONTENTS Continued

Page

Processing Returns and Market Trends........................ 61
Processing Returns .................................... 61
Market Trends......................................... 63

FLORIDA AND U.S. INTERNATIONAL TRADE IN SOYBEANS AND PRODUCTS.... 65

Florida's Agricultural Exports............................... 65
United States Production and Export Trends.................. 68

SUMMARY AND CONCLUSIONS........................................ 74

Conclusions ........................... ................... 77

APPENDIX A.................................................... 80

APPENDIX B................. ..................................... 95

APPENDIX C..................................................... 107

APPENDIX D...................................................... 130

REFERENCES ..................... .................................. 144











LIST OF TABLES


Table Page

1 U.S. soybeans: Supply and disposition....................... 7

2 Soybeans: Harvested acreage, yield and production, Florida,
Alabama, Georgia and U.S., 1970-1980........................ 10

3 Harvested acreage in soybeans, corn, peanuts and cotton,
Florida, Alabama and Georgia, 1960, 1965, 1970-1980......... 11

4 Soybean production, U.S. and study area, and U.S. farm price,
1970-1980, and forecast, 1981-1990 ......................... 16

5 Area, soybean production and soybean density, study region,
1978 ..................................................... 18

6 Soybean production and density in study region, 1985 and
1990 projections.......................................... .. 19

7 Soybean handling firms in the study region, 1980............ 21

8 Country and terminal elevators in study region and capacities,
1978 and 1980............................................ 22

9 Proportions of soybean receipts by country and terminal
elevators in study region, quarterly average, crop years
1977-78 through 1979-80................................... 23

10 Proportions of total grain receipts by country and terminal
elevators in study region, quarterly average of crop years
1977-78 through 1979-80.................................... 24

11 Country and terminal elevators: Proportion of soybean
receipts from farmers by distance, study region, average of
1977-78 through 1979-80 crop year........................... 25

12 Exports by commodity, public export grain elevator, Alabama
state docks, Mobile, 1968-69 through 1979-80................ 26

13 Monthly soybean exports from public export grain elevator,
Alabama State Docks, Mobile, fiscal years 1974-75 through
1979-80 .. ................................................. 29

14 Monthly exports of soybean meal and hulls from public export
grain elevator, Alabama State Docks, Mobile, 1974-75 through
1979-80 .................................................. 29

15 Soybean processing plants operating in three southeastern
state, 1980............................................... .. 32







LIST OF TABLES Continued


Table Page

16 Farm grain truck: Fixed and variable costs, 1980........... 36

17 Minimum cost assembly points for soybeans in the study region,
under different hauling costs and conditions................ 40

18 Oilseed meal: Estimated supply available for feed, U.S.
1975-1979 ................................... .............. 42

19 U.S. soybean cake and meal: Production, stocks and dis-
appearance ................................................ 43

20 U.S. soybean oil: Production, stocks and disappearance..... 44

21 Estimated oilseed meal and soybean meal consumption, Florida,
Alabama and Georgia, 1975-1980, and projected use, 1981-1990. 47

22 Livestock numbers, high protein animal units and oilseed
meal fed, Florida, Alabama and Georgia, 1979 .............. 48

23 Soybean oil refiners in the southeast....................... 55

24 Estimated total investment per plant and per bushel of soy-
beans crushed for three sizes of solvent soybean processing
plants, 1980 .......................................... 56

25 Estimated conversion costs per bushel for soybean crushing
plants, 1980 .......................................... 57

26 Estimated processing costs per bushel for soybean crushing
plants, 1980 .......................................... 58

27 Soybean price, market value of oil and meal and spot margin,
study region, quarterly, September 1979 August 1980....... 60

28 Soybeans: Annual value of products per bushel of soybeans
processed and spot price spread, 1965-79.................... 61

29 Quarterly soybean processing return, 1979-80................ 62

30 Soybeans processed and soybean meal and oil produced annually
by three sizes of soybean processing plants ............... 63

31 U.S. and Florida agricultural exports for fiscal 1970 and
1978......................................... ............. 66

32 Values of U.S. and Florida exports of soybean and soybean
products, 1970-79...................................... 68









LIST OF TABLES Continued

Table Page

33. Soybeans: U.S. exports, by principal markets, 1972-1978.... 70

34 Soybean oil: U.S. exports by principal markets, 1972-1978.. 71

35 Soybean cake and meal: U.S. exports by principal markets,
1972-1978 ................................................. 72


viii









LIST OF FIGURES


Figure Page
1 Study region, with crop reporting districts................. 3

2 Soybeans: Area harvested, 1979............................ 6

3 Harvested acreage in soybeans, cotton, corn and peanuts,
crop reporting districts in study region, 1970-1979......... 13

4 Percent of grain exports from Port of Mobile, 1968-69
through 1979-80.......................................... 28

5 Rail lines in study region................................. 33

6 Commercially navigable waterways in study region............ 34

7 Florida number of layers by county -- Major broiler produc-
ing counties of Florida .................................. 49

8 Hens and pullets of laying age............................. 50

9 Number hens and pullets of laying age by counties -- Number
of broilers sold by counties............................... 51

10 Cattle on farms by county .................................. 52

11 All cattle and calves -- All hogs and pigs................. 53

12 Cattle and calves on Georgia farms, January 1, 1979 -- Hogs
and pigs on farms, December 1, 1978........................ 54










LIST OF APPENDIX TABLES


Table Page

1 Soybeans: Acreage planted, harvested, and production,
1977-80..................................................... 81

2 Harvested acreage and production of soybeans, corn, cotton
and peanuts, crop reporting districts in study region by
state, 1970-1979. ......................................... 82

3 On farm and commercial grain storage capacity, selected
states and U.S., 1978...................................... 86

4 Comparison of approximate distances and savings in miles
with and without the Tennessee-Tombigbee Waterway between
two selected points using water transportation.............. 87

5 Estimated number of U.S. soybean oil mills and processing
capacity, 1965-80 ..................................... 88

6 Soybean processing plants, companies and production, U.S.,
1958, 1963, 1967, 1972 and 1979............................. 89

7 Oilseed meal and soybean meal, estimated supply available
for feed and high protein animal units, U.S., 1974-1980..... 90

8 Conversion factors for calculating high protein animal
units (HPAU's).......................................... 91

9 Soybean oil: U.S. utilization, by products, by crop year,
1964-78..... .............................................. 92

10 Soybean products: Factors relating to yields of selected
items ..................................................... 92

11 Soybean area, yield, and production, world and selected
countries, 1978-80 ..................................... 93



APPENDIX FIGURE

Figure Page

1 Approximate mileages between selected points on selected
river systems........... ................................ 94










ACKNOWLEDGEMENTS


Many people and organizations contributed to this study, and the
authors wish to express their appreciation to all of them. The busy

people in grain marketing firms, elevators, feed mills and processing

plants who were kind enough to provide so much help receive our parti-

cular thanks. Dr. James Hurst, Extension Economist at Auburn University

and Mr. Tom Sprouse, Extension Marketing Economist of the University of

Georgia at Tifton, were especially generous with information and advice.

Ms. Sally Ramsey, project coordinator in the Florida Department of

Commerce, was extremely effective in helping initiate this study and in

coordinating with governmental agencies and institutions. The support

and cooperation of the Coastal Plains Regional Commission, particularly

its Agriculture and Forestry committee and staff, is gratefully acknow-

ledged. The extensive and frequently onerous statistical, clerical and

typing chores required were admirably and efficiently completed by Ms.

Patricia Beville and Mrs. Cyndy Cooper.












Summary


Agricultural processing is a potential economic opportunity for
northwest Florida. This study evaluated the economic feasibility of a
soybean processing plant for northwest Florida.

A study region was defined that included 26 counties in north and
northwest Florida, 26 counties in south Alabama, and 38 counties in
southwest Georgia. Soybean production in this region, in the entire area
of all three states, and in the United States has increased substantially
in the past ten years.

Acreage planted to soybeans in Florida, Alabama and Georgia to-
gether increased over 280 percent form 1970 to 1979, while U.S. acreage
grew 67 percent. Acreage in other major field crops in the study region,
cotton, corn and peanuts, has declined or remained about the same, while
soybean acreage grew.

Soybean production in the study region increased from 14.5 million
bushels in 1970 to 39.4 million bushels in 1979, and is projected to reach
from 54.7 to 69.5 million bushels by 1990.

Soybean density, or production in a given geogaphic area, was
773 bushels per square mile, considerably lower than average density of
4,391 bushels per square mile in the Arkansas Delta, a major soybean
producing area.

Approximately half of the soybeans produced in the study region are
exported, nearly all through the Port of Mobile, and half are processed
in the region.

There are 168 firms handling soybeans and soybean products in the
study region, at the best estimate, made up of one export elevator, seven
terminal elevators, 100 country elevators and 60 feed mills.

Total grain storage capacity in country and terminal elevators in
the region increased by 55 percent form 1978 to 1980, from 15.6 million
bushels to 24.1 million bushels.

Over 81 percent of soybeans handled by elevators in the region are
received during September, October and November.

The export elevator at the Port of Mobile, owned and operated by
the state of Alabama, handled an average of nearly 43 million bushels of
soybeans and 17 million bushels of corn, wheat and other grain during
the three-year period, 1977-78 through 1979-80.






Soybean exports from Mobile are heaviest from October through
January, during and immediately following harvest.

Exports of soybean meal and hulls through the public elevator
averaged almost 130,000 tons annually over the six-year period from
1974-75 through 1979-80. Heaviest movement of these products was
November through March.

Ten plants process soybeans in or near the study region: three
plants each in Alabama and Georgia and four in South Carolina. These
plants have a combined capacity of 12,400 tons per day for processing
and 3.5 million bushels for storage.

Transportation of soybeans and soybean products is a vital link
in marketing and distribution. Harvested soybeans move from farms to
elevators by truck, and many are shipped by truck from country elevators
to export or processing. River terminal elevators ship most soybeans to
Mobile or other export facilities by barge. Processing plants receive
soybeans by rail, also, and ship products by rail.

Costs for transporting soybeans from farms in the region to elevators
and to processing plants were calculated, and used in determining least-
cost assembly points. These points, possible locations for processing
plants, were identified subjected to different geographical limitations
and differing transportation cost conditions.

Soybean meal from processing plants is used primarily in livestock
and poultry feed, while soybean oil goes to refineries and then for use
in foods.

An estimated 1.8 million tons of all oilseed meal was fed to live-
stock and poultry in the three states of Florida, Alabama and Georgia,
with about 85 percent being soybean meal.

Total oilseed meal use in the three states is projected to increase
to 2.1 million tons by 1990 with from 85 to 90 percent being soybean meal.

Capital investment and total processing costs were calculated for
three sizes of soybean processing plants, expressed in tons of soybeans
crushed per day: 1,200 tons, 2,000 tons and 3,000 tons.

Estimated total investment for each size plant was $17.1 million,
$26.1 million and $37.9 million and each plant would crush 11.9 million
bushels, 19.8 million bushels and 29.7 million bushels per year, re-
spectively.

Conversion costs, those involved in the mill process of crushing soybeans
and producing and handling products, were estimated at $0.695, $0.628 and
$0.605 per bushel, respectively. Aquisition costs per bushel for assembl-
ing soybeans were $0.130, $0.135 and $0.148 for the 1,200, 2,000 and 3,000
ton plants, respectively.


xiii








Total processing costs per bushel conversion plus acquisition
costs were $0.825, $0.763, and $0.753. Spot crushing margins for the
1979-80 year were calculated, using both export and country elevator
prices for soybeans. Prices paid for soybeans destined for export
normally are higher than country elevator prices. This difference
averaged $0.39 per bushel during the 1979-80 year.

Spot margin for plant crushing 2,000 tons of soybeans daily during
1979-80 would have been $0.51 per bushel if export prices had been paid
for all soybeans and $0.91 per bushel at country elevator prices. With
processing cost of $0.76 per bushel, this would have generated a return
of $0.15 per bushel at country elevator prices or a loss of $0.25 at
export prices.

The most favorable return, $0.15 per bushel, would have provided a
total annual return of $2,970,000 or 11 percent on original investment.
The least favorable situation represented a loss of $4,950,000 or 19
percent loss on original investment.

International trade in soybeans and products has grown greatly
during the past ten years, with the United States the major exporter.
Soybeans ranked first in value of U.S. agricultural exports, and third
in value of agricultural exports from Florida.

Export markets for soybeans will continue to grow though probably
not at as high a rate as during the past decade. Foreign demand for raw
soybeans will likely increase, though demand for soybean oil may not
rise.

The overall conclusion of this study is that a soybean processing
plant is not feasible at the present time. Soybean production in the
region is not large enough nor are markets for soybean meal great enough
to support a plant of any of the sizes analyzed.

Existing processing capacity in the region, and competition of the
export market for soybeans result in soybean and product price margins
unfavorable for plant profitability. Moreover, investment and operating
costs for a plant built today are not favorable to plant establishment.












FEASIBILITY OF SOYBEAN PROCESSING IN
NORTHWEST FLORIDA


Kary Mathis, Forrest E. Stegelin, J. Scott Shonkwiler,
and Emilio Pagoulatos


INTRODUCTION

Soybean production in the Southeast increased substantially during

the decade of the 1970's. Much of this production was exported, but a

sizeable proportion was processed in the producing states. Nearly all

soybean production in Florida is in the northwestern part of the state,

but there are no soybean processing plants in Florida. Florida-grown

soybeans are exported or shipped to Alabama or Georgia for processing.

The Florida Department of Commerce (FDOC), as a part of its responsi-

bility in helping to develop the economy of the state, has focused on

agricultural processing as a possible growth sector. The Department of

Commerce contracted with the Florida Agricultural Market Research Center

(FAMRC) to study the economic feasibility of soybean processing in

northwest Florida. Funds for direct costs of the study were provided to

the FDOC by the Coastal Plains Regional Development Commission. The

FDOC Agreement with this Commission states the overall objective of the

study: "To provide an improved basis for private agribusiness development


Kary Mathis is professor, Forrest E. Stegelin and J. Scott Shonkwiler
are assistant professors, and Emilio Pagoulatos is associate professor of
food and resource economics at the University of Florida. The authors also
acknowledge with thanks the assistance of Robert L. Degner, Timothy D.
Hewitt and David Mulkey, assistant professors of food and resource economics.





2


in the area specifically relating to the apparent soybean processing

opportunity that exists or is emerging."


Objectives


Specific objectives for the study were:

1) Analyze soybean production and production trends in a designated

study area of northwest Florida, south Alabama and south Georgia (Figure

1);

2) Determine a range of sizes for soybean crushing plants, estimate

resource requirements and costs for each size plant, and estimate profit

potential, expected revenues and anticipated markets for products;

3) Determine potential locations for plants based on transportation

facilities and costs.

Other objectives tentatively included in the initial project proposal

were found not relevant to the study. Production trends in other oilseed

crops and possible effects of these supplies on soybean crushing did not

need to be considered, since large soybean plants do not crush other

oilseeds because of different equipment and processes required and costs

of shifting between oilseeds. Impacts of soybean processing activity in

the region were not evaluated because of the findings on plant feasibility.


Procedures

Published data and previous studies on soybean and soybean product

output, handling, processing, distribution and marketing were assembled

(see list of references). This information was used in describing the

soybean production marketing system and in making production and use

projections.





2


in the area specifically relating to the apparent soybean processing

opportunity that exists or is emerging."


Objectives


Specific objectives for the study were:

1) Analyze soybean production and production trends in a designated

study area of northwest Florida, south Alabama and south Georgia (Figure

1);

2) Determine a range of sizes for soybean crushing plants, estimate

resource requirements and costs for each size plant, and estimate profit

potential, expected revenues and anticipated markets for products;

3) Determine potential locations for plants based on transportation

facilities and costs.

Other objectives tentatively included in the initial project proposal

were found not relevant to the study. Production trends in other oilseed

crops and possible effects of these supplies on soybean crushing did not

need to be considered, since large soybean plants do not crush other

oilseeds because of different equipment and processes required and costs

of shifting between oilseeds. Impacts of soybean processing activity in

the region were not evaluated because of the findings on plant feasibility.


Procedures

Published data and previous studies on soybean and soybean product

output, handling, processing, distribution and marketing were assembled

(see list of references). This information was used in describing the

soybean production marketing system and in making production and use

projections.







Figure 1.--Study region, with crop reporting districts.








Firms handling and processing soybeans and soybean products in the

region were identified. Structured interviews were conducted with

management personnel in many of these firms (see Appendix for question-

naires used). Information from these interviews, and from published

sources and industry specialists, was summarized and used in later

analyses. Soybean and product transportation patterns were analyzed,

crushing plant investment and operating costs were estimated and world

trade in soybeans and their products was examined.

The study region was originally defined by the FDOC as a 56-county

area, made up of the 16 Florida counties west of the Suwannee river, 20

counties in south Alabama and 20 counties in southwest Georgia.1 After

preliminary investigation, the FAMRC study team broadened the relevant

region to the 90-county area shown in Figure 1. Included were Crop

Reporting Districts 1 and 3 in Florida (16 and 10 counties, respectively);

50, 70, 80 and 90 in Alabama (26 counties total) and 7 and 8 in Georgia

(38 counties).

The larger area was defined to insure that relevant marketing and

transportation patterns were identified and included. Crop Reporting

Districts are used by the state-federal crop reporting services as

relevant regions for data collection and publication. Firms and trade

associations also use these regions as convenient subdivisions for their

own organizations.






ties in Alabama and Georgia ere not specified by the FOC.
Counties in Alabama and Georgia were not specified by the FDOC.




5







SOYBEAN PRODUCTION AND HANDLING


Soybean production in the U.S. is concentrated in the midwest and

Mississippi Delta. Acreage in soybeans in the southeast has increased

substantially in recent years, but total acreage in Florida, Alabama and

Georgia together is about the same as in Indiana alone (Figure 2). The

Corn Belt states still account for nearly 60 percent of U.S. soybean

acreage, however (Appendix Table 1). Total U.S. production increased

sharply over the past 10 years (Table 1).

Harvesting of the U.S. soybean crop usually begins about mid-

September and continues until early December. October and November are

the months of heaviest merchandising, with growers normally selling well

over half their crops, and processors and foreign buyers booking a large

part of their annual needs. In recent years, about 62 to 65 percent of

the crop moved off farms and into commercial trade channels by January

1.

Soybean marketing and distribution begins at the farm and involves

assembly of the raw commodity, its transportation, preparation for use,

storage, and the shifting and sharing of risks. At the heart of the

soybean distribution system is a network of country elevators and clusters

of huge terminal elevators owned and operated by dealers, exporters, and

processors. Transportation, a critical cost factor in the operation of

the middleman, is conducted by means of truck, railroad and river barge,

with soybeans ultimately destined for processing plants or export location.










*~-- ..... .
----------- --
k \ i L._. 0 f k 0 0 9 0 9i 0 **



: i0 ** i 1 .
," ; -*: -. ," .:


( r'V -.-.-C.-Y
I *
j I ii i **, ** .
-....* i ." *-- ".
.... ... *-*- *-." /-* '^
V.
Si. -

U.S. total 70,530,000 acr-. .
\o, '^ 'i





U S t 7 0 0 00i ac'


Figure 2.--Soybeans: Area harvested, 1979.


C`













1.__.___


SII
SI!

'~iI

*1


--I-,








Table I.--U.S. soybeans: Supply and disposition.



Beoinnin2 Total domestic Acreage Price received
Year Production stocks Exports Crushings disposition planted by farmers


------------------------- Million bushels ------------------- Million acres Dollars per bu.

1970 1,127.1 229.8 433.8 760.1 824.3 43.1 2.85

1971 1,176.1 98.8 416.8 720.5 786.1 43.5 3.03

1972 1,270.6 72.0 479.4 721.8 803.6 46.9 4.37

1973 1,547.5 59.6 539.1 821.3 897.2 56.6 5.68

1974 1,216.3 170.8 420.7 701.3 778.2 52.5 6.64

1975 1,547.4 188.2 555.1 865.1 935.6 54.6 4.92

1976 1,287.6 244.9 564.1 790.2 865.5 50.2 6.81

1977 1,761.8 102.9 700.5 926.7 1,003.1 58.8 5.88

1978 1,870.2 161.0 753.0 1,017.8 1,103.8 64.4 6.66

1979 2,267.6 174.0 850.0 1,100.0 1,227.0 71.6 6.12


a
Year and stocks beginning September 1.

Source: USDA, ESCS; Fats and Oils Situation.









Channels of distribution for soybeans are relatively simple due

primarily to a concentration of processing facilities in the areas of

heavy production. Farmers usually sell to a country elevator depending

upon which is the highest bidder within the area they can deliver by

truck. Some farmers may sell to terminal elevators, but most soybeans

in terminal elevators come from country elevators.

Processors usually buy from the country elevators, also. The

processor obviously is interested first in keeping his mill supplied

with soybeans in order to maintain continuous operations. However, he

does have some flexibility in his purchasing policy. His options include

purchasing and accepting delivery of soybeans only as needed for process-

ing; purchasing ahead but taking delivery only as needed; or forward

buying with storage at the mill. Size of mill, mill storage capacity

and availability of nearby supplies will largely determine which method

is preferable at any given time.

A relatively small number of export firms, some of which own or

operate terminal and/or country elevators, and processing mills, handle

the bulk of export business in soybeans. Seasonally, the export move-

ment tends to be heaviest in the final quarter of the year, a time when

new crop beans become available in volume. Export sales, however, may

have been booked many months in advance. The increased importance of

exports has widened the territory in which the exporter can be competi-

tive with the domestic processor for soybeans.

The growing importance of the export market has changed historical

market price relationships. For example, increased movement of soybeans

for export from Duluth-Superior and Toledo has tended to increase relative

market prices in both Minnesota and Ohio and has forced upward revisions







in some county loan rates in the Federal soybean program.2 Country

elevator prices in the study region in Florida, Alabama and Georgia

reflect the influence of soybean exports through Mobile. This point

will be discussed in more detail later.


Production in the Study Region


Area planted to soybeans in the three states, Florida, Alabama and

Georgia, together has increased over 280 percent, while U.S. acreage

grew 67 percent from 1970 to 1979 (Table 2). Total soybean production

in the three states more than quadrupled from 1970 to 1979. With 1979

acreage and yields at all-time highs, U.S. production exceeded two

billion bushels for the first time ever. Average U.S. yield was con-

siderably higher than in the three southern states (Table 2).

Soybean acreage in Florida, Alabama and Georgia has increased

greatly over the past 20 years, while acreage in other major field

crops, corn, peanuts and cotton, remained stable or declined substan-

tially (Table 3). This pattern is generally found in the 90-county

study region. Soybean acreage increased substantially from 1970 to the

present, while corn acreage fluctuated from year to year (Figure 3 and

Appendix Table 2). Cotton acreage generally declined and area in peanuts

remained relatively stable. Much of the land formerly in cotton was

planted to soybeans during this period. Cropland was also added, as

pasture and timberland was converted to soybeans and other crops.


2
Much of the information in this section was adapted from material
provided by the American Soybean Association.








Table 2.--Soybeans: Harvested acreage, yield and production, Florida,
Alabama, Georgia and U.S., 1970-1980.



Year Florida Alabama Georgia U.S.


Harvested acreage

1,000 acres


1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980a


184
207
232
254
266
281
253
327
410
453
465


600
655
800
970
920
1,260
1,170
1,600
1,950
2,250
2,050


475
600
670
950
1,010
1,160
870
1,090
1,680
2,100
1,950


42,249
42,075
45,683
55,667
51,341
53,579
49,358
57,612
63,343
70,524
67,307


Yield and production


Yield Prod.


Yield Prod.


Yield Prod.


Yield Prod.


Bu. 1,00Obu. Bu. ,000bu.


28.0
28.0
21.0
24.0
26.0
24.0
26.0
25.0
25.0
29.0
24.0


5,152
5,796
4,872
6,096
6,916
6,744
6,578
8,175
10,250
13,137
11 ,160


23.0
26.0
20.0
21.0
23.0
24.5
24.0
21.0
21.0
25.0
18.0


13,800
17,030
16,000
20,370
21,160
30,870
28,080
33,600
40,950
56,250
36,900


Bu. 1,000bu. Bu. Million bu.


23.0
25.5
15.0
21 .0
24.5
25.5
23.5
20.0
17.5
28.0
13.0


10,925
15,300
10,050
18,900
22,875
29,580
20,445
21,800
29,400
58,800
25,350


26.7
27.5
27.8
27.7
23.2
28.9
26.1
30.6
29.5
32.2
26.1


1,127.1
1,176.0
1,270.6
1,547.2
1,214.8
1,547.4
1,287.6
1,761.8
1,870.2
2,267.6
1,757.3


Preliminary


Source: USDA, ESCS, Crop Production.


1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980a


~_








Table 3.--Harvested acreage in soybeans, corn, peanuts and cotton, Florida,
Alabama and Georgia, 1960, 1965, 1970-1980.



Year
and state Soybeans Corn Peanuts Cotton


-------------------- 1,000 acres -------------


Florida
1960


1965

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980a


184
207
232
254
266
281
253
327
410
453
465


24.5

22.0

8.2
9.3
11.3
11.5
12.1
3.7
7.1
6.1
3.6
3.4
5.7


Alabama


1960

1965

1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980a


228


600
655
800
970
920
1,260
1,170
1,600
1,950
2,250
2,050


1,705

945

555
626
545
610
630
660
800
375
544
502
420


187


190
194
197
200
201
206
214
215
214
213
200


538
558
580
510
585
370
420
395
315
310
314


653


Georgia


2,043


1960

1965


485 577


168 1,585









Table 3.--Harvested acreage in soybeans, corn, peanuts and cotton, Florida,
Alabama and Georgia, 1960, 1965, 1970-1980.--Continued.



Year
and State Soybeans Corn Peanuts Cotton

------------------ 1,000 acres ------------------

Georgia

1970 475 1,563 507 375
1971 600 1,672 510 385
1972 670 1,490 512 430
1973 950 1,670 512 375
1974 1,010 1,880 516 410
1975 1,160 1,880 524 160
1976 870 2,160 526 240
1977 1,090 1,000 526 170
1978 1,680 1,500 526 115
1979 2,100 1,550 527 150
1980a 1,950 1,200 480 155


a
Preliminary.

Source: Alabama Crop and Livestock Reporting Service, Alabama Agri-
cultural Statistics; Florida Crop and Livestock Reporting Service, Field
Crops Summary, Florida Agricultural Statistics; Georgia Department of
Agriculture, Georgia Agricultural Facts.















1300 -

1200 .

1100 -

1000 -

900

800

700 .

600

500 -

400 -

300

200

100-


I I 1 I 1 I I i I 1
70 71 72 73 74 75 76 77 78 79
FLORIDA 3


I I l I i S I I -
70 71 72 73 74 75 76 77 78 79

FLORIDA 1


Soybeans


70 71 72 73 74 75 76 77 78 79
GEORGIA 7


i I a I i I I I r
70 71 72 73 74 75 76 77 78 79

GEORGIA 8


Figure 3.--Harvested acreage in soybeans, cotton, corn and peanuts, crop
reporting districts in study region, 1970-1979.







14





400.
400"

350
350.

300.
300

250
250-


200 Soybeans Soybeans
200.


I SO ISO- Cotton

Peanuts









70 71 72 73 74 75 76 77 78 79 70 71 72 73 74 75 76 77 78 79
ALABAMA 80
ALABAMA 50 650.



400. 500.


350. 450-


300 Cotton
400-

250
350


Soybeans 300. Peanuts


150
250-


100 Corn -
200
Cotton Peanuts
50 5Peanuts 0



i- 1- ,100
70 71 72 73 74 75 76 77 78 79

ALABAMA 70 ,
70 71 72 73 74 76 76 77 78 79
ALABAMA 90


Figure 3.--Continued.







Soybean production in the study region increased from about 14.5

million bushels in 1970 to a high of 39.8 million bushels in 1978 (Table

4). Production is expected to increase over the next decade, subject to

weather effects in any given year.

The forecasts presented in Table 4 were obtained from estimated

regional supply equations which were fitted to data available through

1979. These regional supply equations included both price and trend

effects. The prices used were U.S. average prices which are represent-

ative of prices received in the region. Of course, during the forecast

period this price series was unknown and had to be forecast as well.

These forecasts were made using two different models.3

One model was a U.S. recursive supply-demand model which was fit to

annual data. In this model supply was determined from lagged price and

current price was related to current production. Simulation of the

model through the forecast period then provided projected prices for use

in the regional supply equations, Scenario I in Table 4.

The other model used was a large scale econometric model which

accounted for more diverse effects as they might influence the soybean

market. In addition, this model explicitly allowed the effects of

inflation to enter systematically in the generation of the forecasts.

For this reason the more distant price projections are at higher levels

than those from the recursive model (Scenario II, Table 4).

In Table 4, forecast prices in Scenario I reached $10 per bushel by

1990, and regional production increased to 54.7 million bushels. With


3
See Appendix for detailed model description.







Table 4.--Soybean production, U.S. and study area, and U.S. farm price,
1970-1980, and forecast, 1981-1990.



U.S.
Year Production Farm price Study area production


Million bu.

1,127
1,176
1,271
1,548
1,216
1,547
1,289
1,762
1,867
2,268
1,757


------- $per bu. ---

2.85
3.03
4.37
5.68
6.64
4.92
6.81
5.79
6.75
6.25
8.00


----- 1,000 bu --------

14,496
18,075
14,691
21,313
24,698
21,225
25,725
29,977
39,777
29,430
30,000


-------------------- Forecast -----------------


1,933
1,979
2,040
2,110
2,181
2,251
2,320
2,388
2,457
2,525


Scenario
I

7.17
7.55
7.91
8.24
8.55
8.85
9.15
9.46
9.76
10.06


Scenario
II

7.85
7.81
8.58
8.69
9.07
9.82
10.83
11.94
13.07
14.23


Scenario
I

39,215
40,333
41,985
43,847
45,734
47,577
49,373
51,138
52,919
54,680


a
Crop reporting districts 1, 3 ,Florida; 50, 70, 80, 90
7, 8 Georgia,


Scenario
II

38,240
41,724
43,468
46,547
48,345
50,342
53,483
58,056
63,425
69,500


Alabama;


From two-equation recursive model.


From large-scale econometric model.


1970
1971
1972
1973
1974
1975
1976
1977
1978
1979
1980


1981
1972
1983
1984
1985
1986
1987
1988
1989
1990







the effects of inflation, at an annual compound rate of 8 percent,

included in Scenario II, prices are forecast to exceed $10 by 1987 and

$14 by 1990. Production in this scenario is forecast to reach 69.5

million bushels by 1990 (Table 4).

Soybean production in the study region is projected to increase

about 87 percent from 1980 to 1990. While substantial, this is about

half the percentage increase from 1970 to 1979. Under current con-

ditions, it did not seem reasonable to project the same rate of increase
over the coming decade as occurred during the 1970's.

Location or density of soybean production in the region is another

important factor in evaluating the feasibility of a processing plant.

Soybean production in 1978, the highest year on record, was used in

calculating density, since acreage and production is expected to in-

crease. Crop reporting districts (CRD) were the geographic unit used.

The Florida Panhandle (CRD 1) with 1,033 bushels per square mile, had

much greater soybean density than the 79 bushels in Florida CRD 3, and

was higher than all the Georgia districts and three of the four Alabama

districts (Table 5). Densities in Alabama ranged from 812 to 1,154

bushels per square mile and from 571 to 784 bushels per square mile in

Georgia.

Average density for the entire study region was 773 bushels per

square mile for 1978 production. This is considerably lower than the

density in another region reported in a 1978 Arkansas study of pro-

cessing plant feasibility (Mixon and Morrison). Average soybean density

in the Arkansas Delta was 4,391 bushels per square mile for a 26-county

area of about 11,300 square miles.









Table 5.--Area, soybean production and soybean density, study region, 1978.



State and CRD Area Soybean production Density


Sq. mi.


1,000 bu.


Bu./sq.mi.


Florida


7,830

6,979

14,809


8,085

550

8,635


1,033

79


Alabama


5,337

6,027

5,212

5,121

21,697


1,154


6,160

5,960

4,900

4,160

21,180


Georgia


6,728

8,198

14,926

51,432


Total


Total region


5,277

4,685

9,962

39,777


Source: Alabama Crop and Livestock Reporting Serive, Alabama Agricultural
Statistics; Florida Crop and Livestock Reporting Service, Field Crops Summary,
Florida Agricultural Statistics. Georgia Department of Agriculture, Georgia
Agricultural Facts, U.S. Department of Commerce, County and City Data Book.


Total


Total








Table 6.--Soybean production and density in study region, 1985 and 1990
projections.


Scenario I Scenario II
Year Production Density Production Density

1,000 bu. Bu./sq. mi. 1,000 bu. Bu./sq. mi.

1985 45,734 889 48,345 940

1990 54,680 1,063 69,500 1,351

a
See notes to Table 3.

If regional production projections were realized, density would

increase to 889 bushels (Scenario I) to 940 bushels (Scenario II) per

square mile by 1985, and 1,063 (I) to 1,351 (II) bushels per square mile

by 1990 (Table 6). Greater density -- more soybeans produced in the

same geographic region -- would improve the potential profitability of a

processing plant. These topics will be addressed in more detail in

later sections.

Soybean Handling in the Region


As stated earlier, soybean harvest in the study region normally

begins in mid to late September and continues to mid December, with the

bulk of movement in October and November. Farmers truck the harvested

soybeans to country or river terminal elevators. Elevators move soybeans

by truck or barge to the Port of Mobile, by rail to Pascagoula or by

barge to Mississippi River ports for export, and by truck and rail to

processing plants. Some soybeans from the region are occasionally

exported through Savannah and Charleston.







About half of the soybeans from the study region are exported, and

about half are processed in the region. Some soybeans are occasionally

shipped to processing plants outside the region in Mississippi, Alabama

or Georgia.

Interviews with management personnel in soybean handling firms

provided considerable information on storage capacity, soybean and grain

volume and movement, and marketing methods in the region. Table 7

summarizes findings regarding firm numbers and grain storage capacities.

The bulk of grain storage capacity in the region is in the country

elevators, which have about two-thirds of the region's capacity. Though

there are only seven terminal elevators and one export elevator, their

larger individual capacities together account for 15 percent of storage

space in the study region. Feed mills normally do not store or handle

raw soybeans but use their storage for corn and other feed grains and

for ingredients, such as soybean meal.

Most of the country elevators and feed mills are owned by individuals

or cooperatives. Some operators own from two to six elevators and/or

feed mills in a several-county area. Two large firms own or lease most

of the larger country and terminal elevators, which together account for

about half of the storage capacity in the region. The export elevator

at the Port of Mobile is owned and operated by the state of Alabama.

One of the large firms operating country and terminal elevators

sells the soybeans and other grains it purchases from farmers in export

markets. The other large firm assembles soybean through its elevators

for movement to its processing plants in Alabama and Georgia.






Table 7.--Soybean handling firms in the study region, 1980.


a
Type of firm State Number in region Storage capacity

1,000 bu.

Country elevator Florida 10 1,890
Alabama 26 5,541
Georgia 65 12,382
Total 100 19,813

Terminal elevator Florida 3 2,160
Alabama 4 2,170
Total 7 4,330

Export elevator Alabama 1 2,200

Feed millb Florida 18 1,358
Alabama 44 1,900
Georgia 3 160
Total 60 3,418

Total all firms 168 29,751

a
Total capacity for all grains handled.
b
Firms that operate only as feed mills. Most country elevators in
Georgia and many in Alabama are also feed mills. These are included with
country elevators.


Country and Terminal Elevators


Country and terminal elevator capacity in the region increased sub-

stantially in the two years from 1978 to 1980. A number of elevators

expanded, some new large elevators were built and some smaller, older

facilities closed. Total capacity in the study region increased by 55

percent, from 15.6 million bushels to 24.1 million bushels (Table 8).

Grain and soybean receipts at country and terminal elevators are

heaviest during harvest season, as would be expected. Over 81 percent







Table 8.--Country and terminal elevators in study region and capacities,
1978 and 1980.


1978 1980
State a Number Capacityb Number Capacity b


1,000 bu. 1,000 bu.

Florida 11 2,653 13 4,050
Alabama 31 6,740 30 7,711
Georgia 66 6,175 65 12,382

Total 108 15,568 107 24,143


a
Includes elevators in those CRD's in the study region in each state.
b
Total grain storage capacity.


of soybeans handled by elevators in the region were received during

September, October and November (Table 9). The proportion of receipts

in that fall harvest quarter varied in crop reporting districts in the

region from about 64 percent in Georgia CRD 7 to 89 percent in Alabama

CRD 50. Factors affecting these percentages are weather and progress of

soybean harvest during the season, amount of farm storage in a district,

and actual and expected soybean prices.

Total grain receipts are also heaviest in the September-November

quarter but proportions vary considerably from the soybean pattern among

districts in the region. Corn, the other major commodity handled by

elevators, accounts for most of the volume in the June-August quarter

(Table 10). Corn is also significant in some districts in the September-

November period. Wheat is the primary grain in some districts, such as

Florida CRD 1, Alabama CRD 70, and Georgia CRD 8, in March, April and




23


May (Table 10). Elevators in the region handle yellow and white corn,

soybeans and wheat, with some elevators handling one or more of the

following: oats, rye, milo, peanuts and sunflower seed.


Table 9.--Proportions of soybean receipts by country and terminal elevators in
study region, quarterly average, crop years 1977-78 through 1979-80.


Quarter
State and CRDa Sept.-Nov. Dec.-Feb Mar-May June-Aug.

------------------------- Percent---------------------

Florida

1 87.7 8.7 2.0 1.6

Alabama

50 89.2 6.4 2.6 1.8
70 73.6 15.5 9.6 1.3
80 87.4 10.0 1.3 1.3

Georgia

7 64.6 22.5 6.1 6.8

Total region 81.4 11.6 5.2 1.8


a
Elevator operators in Florida CRD 3, Alabama CRD 90, and Georgia CRD 8
could not provide detailed data to calculate quarterly receipts in those
districts.

Farmers in the study region generally truck their soybeans to a

nearby elevator. Nearly 60 percent of soybean receipts by country and

terminal elevators came from farms within 25 miles of the elevator

(Table 11). An additional 25 percent of receipts came from farms 26 to

50 miles from elevators. Some crop reporting districts showed different

patterns, with Alabama CRD 70 having the widest dispersion of receipts,

and Alabama CRD 90 and Georgia CRD 8 the most concentrated (Table 11).







Soybeans received by country and terminal elevators are moved out

to processing plants or to port elevators for export. Nearly all country

elevators are on rail lines, and ship a large proportion of soybean and

grain receipts to processing plants or terminal elevators by rail,

depending on availability and costs for rail cars. Most country elevator

shipments to Mobile are by truck, however, since the relatively short

distances make truck transport more rapid than rail. Since the soybean

harvest in the study region comes during the same months as midwestern

harvest, rail cars are usually in tight supply and turnarounds at ports

or processing plants are slower than in off-season. Some elevators do


Table 10.--Proportions of total grain receipts by country and terminal
elevators in study region, quarterly average of crop years
1977-78 through 1979-80.


Quarter
State and CRDa Sept.-Nov. Dec.-Feb. Mar.-May June-Aug.

------------------------- Percent -------------------

Florida

1 65.2 6.5 8.4 19.9

Alabama

50 80.4 8.5 4.1 7.0
70 51.9 10.6 9.6 27.9
80 68.7 6.8 4.3 21.2

Georgia

7 32.5 16.2 15.7 35.6

Total region 60.1 9.5 8.2 22.2


a
Elevator operators in Florida CRD 3, Alabama CRD
could not provide detailed data to calculate quarterly
districts.


70 and Georgia CRD 8/
receipts in those,








ship soybeans by rail to Pascagoula or Savannah but volumes are not

large relative to total movement in the region.

River terminal elevators ship most of their soybean and grain

receipts to ports by barge. Six of the seven terminal elevators in the

study region (Table 7) ship soybeans and other grains to Mobile by

barge. The other terminal elevator is owned by a large international

grain firm which barges soybeans to a company facility on the Mississippi

River in Louisiana.


Table 11.--Country and terminal elevators: Proportion of soybean receipts
from farmers by distance, study region, average of 1977-78
through 1979-80 crop years.


Miles from elevator
State and CRD 0-25 26-50 51-75 76-100 Over 100 Total

------------------- Percent ----------------

Florida a

1 48 43 9 100

Alabama

50 60 30 10 100
70 20 30 30 15 5 100
80 60 30 10 100
90 100 100

Georgia

7 82 14 3 1 100
8 100 100


Total 59 25 12 3 5 100


a
Operators in Florida CRD 3 could not provide information.






The Export Elevator


The public grain elevator owned and operated by the state of Alabama

at the Port of Mobile is the only grain export facility in the study

region. About half of the soybeans produced in the region are exported

through this elevator. This facility has handled from 8.8 million

bushels to as much as 46.8 million bushels of soybeans annually since the

1968-69 season (Table 12).


Table 12.--Exports by commodity, public export grain elevator, Alabama
state docks, Mobile, 1968-69 through 1979-80.



Wheat and
Yeara Soybeans Corn other grain Total

---------------------- 1,000 bushels -----------------

1968-69 9,744 6,680 6,222 22,646
1969-70 9,129 3,251 3,031 12,408
1970-71 8,776 3,223 5,550 17,549
1971-72 9,848 3,449 4,333 17,630
1972-73 17,979 15,138 12,581 45,068
1973-74 15,741 17,328 6,143 39,212
1974-75 16,291 24,104 9,418 49,813
1975-76 29,047 43,332 10,440 82,818
1976-77 19,081 33,284 6,055 58,420
1977-78 46,763 12,488 2,384 61,635
1978-79 32,693 5,939 1,386 40,017
1979-80 49,489 22,374 6,409 78,271


a
October 1


- September 30.


Other grain mostly grain sorghum.


Source: Annual Volume Reports, Alabama State Docks, 1969-80.







Soybean exports have grown substantially, both in absolute terms

and as a share of total grain shipments. Soybeans accounted for about

one-third of Mobile exports in the mid-1970's, then jumped to three-

fourths or more from 1977-78 on (Figure 4). Corn shipments increased

sharply then dropped even more sharply during the twelve-year period

shown in Table 12 and Figure 4.

Shipments of soybeans from Mobile in recent years have been heaviest

during and immediately following harvest. Movement was greatest during

the October-January period, when over half of soybean exports were

handled (Table 13). Soybean shipments remained substantial but dropped

during February, March and April, and were sporadic and relatively small

through the summer, in most of the past six years (Table 13).

Soybean meal exports have fluctuated widely since 1974-75, ranging

from 47,000 tons to 215,000 tons (Table 14). Exports of soybean meal

and hulls through the public elevator have declined substantially since

the late 1970's (Auburn University). The meal and hulls exported may

have been produced in the study region but they could also have come

from plants in other southern or midwestern states. There are no data

for origin of soybean meal and hulls exported.

The public grain elevator at the Port of Mobile has total grain

storage capacity of three million bushels, with an additional million-

bushel storage capacity planned to be available in 1984 when the Tennessee-

Tombigbee Waterway opens (see Appendix for additional detail on trans-

portation impact of this waterway). The elevator can load ships at

38,000 bushels per hour and will be able to load at 80,000 bushels

hourly when a ship loading dock now under construction is completed.










100
Wheat and other grains
90


80


70 Corn


60














10 -



1960-1970 1974-1975 1979-1980
c-
50










Figure 4.--Percent of grain exports from Port of Mobile, 1968-69 through

1979-80.
20


10



1960-1970 1974-1975 1979-1980

Figure 4.--Percent of grain exports from Port of Mobile, 1968-69 through
1979-80.




29
Table 13.--Monthly soybean exports from public export grain elevator,
Alabama State Docks, Mobile, fiscal years 1974-75 through
1979-80.



Year
Month 1974-75 1975-76 1976-77 1977-78 1978-79 1979-80 Average


---------------------- 1,000 bushels --------------


2,103
4,418
2,873
3,054
2,110
1,507
2,029
384


4,749
4,411
2,663
6,797
4,266
5,280
6,125
7,448
2,984


602
1,013
1,027
19,081 46,763


6,313 8,855
3,946 9,008
3,840 7,914
2,492 5,506
3,924 6,988
4,164 1,980
2,383 2,260
2,738
3,670 1,508
1,495 681
466 987
1,065
32,693 49,489


Source: Annual Volume Reports, Alabama State Docks, 1975-1980.

Table 14.--Monthly exports of soybean meal and hulls from public export grain
elevator, Alabama State Docks, Mobile, 1974-75 through 1979-80.


Year
Month 1974-75 1975-76 1976-77 1977-78 1 978-79 1979-80 Average

--------------------------- Tons -------------------

October 10,673 2,400 1,115 5,229 13,451 5,478
November 9,464 9,594 46,618 41,667 17,890
December 13,385 6,958 1,404 30,423 22,157 12,388
January 4,276 4,346 27,806 28,528 43,904 18,143
February 11,194 15,604 13,889 26,031 28,811 15,922
March 1,190 16,291 13,788 13,889 42,124 28,350 19,272
April 14,942 27,778 14,573 7,023 10,719
May 17,076 30,712 2,606 8,399
June 7,365 49,862 14,707 11,989
July 3,658 1,554 1,723 1,156
August 7,988 14,913 9,393 2,822 2,311 6,238
September 6,358 3,383 2,067 1,968
Total 107,569 52,102 47,526 169,940 214,873 185,363 129,562


Source: Annual Volume Reports, Alabama State Docks, 1975-1980.


October
November
December
January
February
March
April
May
June
July
August
September
Total


2,303
4,518
1,948
3,051
1,212
1,061
510


531
186
971
16,291


3,928
4,621
5,716
4,752
3,554
1,732
1,888
661
412
1,282
116
386
29,047


4,709
5,154
4,159
4,275
3,676
2,621
2,532
1,872
1 ,429
765
461
575
32,227





Unloading facilities can handle two trucks, two rail hopper cars,

and two barges. Unloading space and equipment for two more hopper cars

is being added. The elevator can also dry a million bushels of grain

per hour, if necessary. Total unloading capacity at the elevator for a

24 hour period is 180 trucks, 100 rail cars, and five barges. The

Alabama State Docks System has its own rail yard, cars and switch engines.

The Louisville and Nashville (L&N) and Illinois Central Gulf (ICG)

railroads serve the docks, and Southern and Frisco also serve the Mobile

rail yard.


Soybean Processing in the Southeast

A total of 10 plants process soybeans in the three states that are

part of or nearest to the study region. There are three plants each in

Alabama and Georgia and four in South Carolina (Table 15). Plant size

is rated by daily processing capacity in tons of soybeans. Storage

capacity, in bushels of soybeans, is a major cost in plant construction.

Two of the 10 plants listed in Table 15 are in the study region,

one at Enterprise, Alabama, in CRD 90, and the other in Georgia CRD 8 at

Valdosta. These two plants have a total processing capacity of 2,400

tons per day and storage capacity of 6.2 million bushels of soybeans.

As noted earlier, approximately half of the soybeans produced in

the 90-county study region (Figure 1) go to processing plants, primarily

to the two plants in the region. The plant in Georgia will handle some

soybeans from Georgia counties outside the study region, and some region

production will be processed in plants in north Georgia or north Alabama

(Table 5). Generally, though, current transportation costs and rates are

most conducive to regional production being processed in the region.







Transportation

Transportation is a vital link in three separate segments of the

soybean marketing distribution system: Movement of harvested soybeans

from farmers to elevators; transportation from elevators to processing

plants or ports; and movement of soybean products from plants to users.

Earlier sections on production, handling and processing have indicated

the transportation modes used in each of these segments.

Soybean assembly at country and terminal elevators is performed by farm

trucks or tractor-trailers owned by commercial harvesters. Elevators

receive, weigh and grade soybeans, and then move them to terminal elevators,

ports or processing plants. Both rail and over-the-road trucks are

used, depending on elevator facilities, soybean destination and equipment

availability and costs. River terminal elevators ship soybeans by barge

to export elevators where the soybeans are loaded aboard freighters for

shipment abroad. Processing plants receive soybeans by rail and truck,

mainly from country and terminal elevators, and also ship products by

rail and truck.

The study region has an extensive network of roads and highways and

considerable rail line mileage. The Southern Railways and the Family

Lines system (Seaboard Coastline and L&N) are the primary rail carriers

in the region. Some privately-owned specialized rail lines also haul

soybeans or products (Figure 5).

Several navigable waterways in the region are used by barges to

move soybeans. The Blackwarrior-Tombigbee-Alabama River systems in Alabama,

the Chattachoochee River, and the Intracoastal Waterway are major water

links (Figure 6). The completion of the Tennessee-Tombigbee system will






Table 15.--Soybean processing plants operating in three southeastern states,
1980.



Capacity in state
State Location Company Processing Storage


Tons/day 1,000 bu.


Decatur
Guntersville
Enterprise


Gold Kist
Continental Grain
Sessions


Total

Georgia


Total

South Carolina


Valdosta
Augusta
Gainesville



Cameron
Estill
Hartsville
Kershaw


Gold Kista
Archer Daniels Midland
Cargill



Continental Grain
Southern Soya
Hartsville Oil Mill
Archer Daniels Midland


Total

Total three states


3,500

12,400


8,000

30,500


a
Located in study region.

Source: American Soybean Association Blue Book 1979, and interviews with
plant managers.


reduce river mileage significantly from the midwest and midsouth to Gulf

ports, compared with the Ohio-Mississippi River system (Appendix Table

4).

Two distribution segments were considered in evaluating possible

locations for soybean processing plants in the study region:

a. Farm or production sites to country or terminal elevators, and

b. Inland elevators to export or processing facilities.


Alabama


3,800


8,500


14,000


5,100










Figure 5.--Rail lines in study region.


t' *








Figure 6.--Commercially navigable waterways in study region.








As stated earlier, soybeans are moved from farms primarily by farmer-

owned and operated trucks. Commercial grain truck or railroads move

soybeans from inland elevators to export or processing points.

Farmer to Elevator

Soybean transportation costs from farms to elevators were calcu-

lated for each county in the study region. The county seat was used as

the central production point in each county, and mileage from that point

to the nearest country or terminal elevator was taken from official 1980

state road maps for Florida, Alabama and Georgia.

The per mile cost of hauling grain from farm to elevator by farm

truck was calculated for three different amounts hauled: 40,000, 80,000

and 120,000 bushels (Table 16). Total fixed costs ranged from $4,171 if

a total of 40,000 bushels were hauled by the truck, to $4,838 if 120,000

bushels were hauled. Fixed cost per bushel declines as amount hauled

increases. Total variable costs per mile per bushel for a truckload

(450 bushels) are $0.0018 (Table 16).
Total cost for transporting all soybeans produced in a particular

county was then calculated by multiplying county production times the

fixed cost per bushel. Mileage in the county (from county seat to

nearest elevator as explained earlier) was multiplied times total

variable cost per mile per bushel and added to the total fixed cost.
Some producers haul soybeans directly to processing plants or the

export elevator. In those instances where country or inland terminals

were not available in the county and excess storage was not available in

adjoining counties, the soybeans were assumed to be transported by farm

grain trucks to the export terminal or production plant, whichever was







Table 16.--Farm grain truck: Fixed and variable costs, 1980.



Dollars

Dual wheel tandem axle,
450 bushel grain box

Purchase price (PP) 22,120.00
Salvage value (SV) 7,720.00

Fixed costs

Interest @ 12 percent (PP-SV).12
2 864.00

Depreciation 10 years PP-SV
Life 1,440.00

License 190.00
Insurance 680.00
Maintenance @ 3 percent PP 663.60
Unloading costs ($5/hr., 45 min. avg. per load)

Total amount hauled:

40,000 bushels 333.75
120,000 bushels 1,001.25

Total fixed costs

Total amount hauled:

40,000 bushels 4,171.35
80,000 bushels 4,505.10
120,000 bushels 4,838.85

Fixed cost/bushel

Total amount hauled:

40,000 bushels .104
80,000 bushels .056
120,000 bushels .040

Variable costs

Fuel @ $1.00/gal./loaded mile @ 5 mpg .40
Oil @ $10.00/4,000 miles .01
Tires/mile [$ (tires/expected mileage)] .07
Wages [32 mph @ $5.00/hr.] .31
Total variable cost/mile .79
Total variable cost/mile/bushel for 450 bushel load $.0018








closer to the production site. The transportation cost was calculated

as described above.

Elevators to Processing Plants or Export Terminals

Several sources provided representative long-haul grain trucking

rates, including published tariffs, truck brokers, independent grain

haulers, and truck leasing firms. Regression equations were developed

to calculate grain hauling rates from country elevators and inland

terminals to rive terminals processing plants.

Grain haulers using the Interstate Highway System, truck brokers

and contract haulers provided manifested trucking rates and grain haul

distances. A total of 38 observations were used for the regression

equations for soybean transportation cost from country elevators to

river or export elevators. Costs for country elevators to processing

plants used 57 observations. The equations are:

Country elevators to river and export terminals:
Cost (/bu.) = 6.4353 + .0794 (miles) -.00002248 (miles)2
(3.111) (5.4916) -(4.1871)
R2 = .970 S.D. = .0147


Country elevators to soybean processing plants:
Cost (/bu.) = 3.1487 + .1038 (miles) -.00008134 (miles)2
(2.7922) (3.5334) (-2.6137)

R2 = .983 S.D. = .0270


The values in parentheses under the coefficients are the respective

t-values. The R-squared values and the standard deviations of the

equations are also noted.








These costs in cents per bushel were multiplied by the total

bushels transported to determine total transportation cost for soybean

shipped from country elevators. Handling (receiving and loadout) costs

and storage costs incurred at the country and terminal elevators were

not assessed as the focus of this section is on soybean transportation

costs. Shipping costs for soybean products from processing plants to later

users were not considered either.


Alternative Locations


Alternative soybean collection points were evaluated with both a

linear programming model and a network algorithm. The evaluations deter-

mined locations in the region where soybean transportation costs were

minimized, under several different conditions.

These conditions were:

1. Restricting the assembly point to the Florida Panhandle (CRD 1);

2. Restricting the assembly point to Florida CRD 1 and 3;

3. Allowing the central point to fall anywhere in the entire

study region;

4. Restricting the region for the assembly point to the 56-county

area originally specified in the DOC request;4

5. Using farm truck hauling costs for all locations;

6. Using export and bulk rail freight rates for assembly from

the entire study region.



4
Sixteen counties in Florida CRD 1, 20 counties in south Alabama
and 20 counties in southwest Georgia.








All evaluations used current soybean production in the region, existing

storage capacity, current exports from Mobile and current volume pro-

cessed in the region. The objective under each set of conditions was to

identify a location that minimized soybean assembly cost for the par-

ticular geographic area.

The alternative locations considered as feasible for inclusion in

the computerized site selection program met basic transportation services

criteria. First, a community was at a crossroads of paved or improved

highways, generally state maintained. Truck transport (producer-owned

and custom hauling) was the primary mode for soybean shipments from the

field to the elevator. Long-haul grain trucks were the principal trans-

portation mode used from country elevators to export or processing facil-

ities.

The second criterion was railroad service to the community. Main-

line service was not necessary, but the section must not be destined for

abandonment. Rail rates on grains are considerably lower for southbound

shipments, which helps reduce rail traffic in grains moving north. Some

soybean products could be shipped via rail to first users, however.

A third criterion in the location selection was existing or potential

river barge service. Those communities that satisfied, at least marginally,

the first two criteria and had or could have barge service were included

on the list of possible sites for a soybean processing facility.

Towns considered possible sites for a soybean collection point,

based only on minimizing costs of assembling soybeans, are shown in

Table 17. Results from both the linear programming and network models

were similar. Constraining the region to Florida CRD 1 or to Florida











Table 17.--Minimum cost assembly points for soybeans in the study region, under different hauling costs and
conditions.


Minimum cost assembly point usinga
Export and bulk
Transportation Farm truck cost freight rates
mode availability 90-County 56-County 90-County 56-County
Site Barge Rail Highway FL CRD 1 FL CRD 1, 3 region region region region


Florida

Apalachicola X X X X
Blountstown-
McNeal X X X X X X
Chattahoochee X X X X X
Crestview X X
DeFuniak Springs X X
Jacksonville X X X X
Lake City X X
Live Oak X X
Marianna X X X
Panama City X X X
Pensacola X X X
Port St. Joe X X X
Tallahassee X X

Alabama

Andalusia X X
Columbia X X X
Dothan X X X X
Eufaula X X X X
Mobile X X X X

Georgia

Albany X X
Bainbridge X X X X
Columbus X X X
Donalsonville X X X
Thomasville X X

a
See explanation of conditions on page 38.








CRD 1 and 3 together, with farm truck hauling costs for soybeans,

resulted in the least cost assembly point on the Apalachicola River in

the Florida Panhandle.

Using the entire 90-county study region, again with farm truck

hauling, resulted in an assembly point at approximately the intersection

of the Florida, Georgia and Alabama state lines. Restricting the relevant

region to the 56-county area noted in condition (4) above resulted in

the least cost location on the Chattahoochee River north of the Florida

state line.

Changing to export and bulk rail freight rates for assembly within

the entire 90-county region resulted in the least cost assembly point at

Jacksonville. This drastic shift emphasizes the importance of trans-

portation costs and freight rates in assembly of raw agricultural products

for eighter processing or export.

Soybean Meal and Oil Marketing and Distribution


One bushel of soybeans (60 pounds) yields, on the average, 72

percent meal, 17 percent oil and 8 percent hulls. The remaining 3

percent is processing loss. The meal is 48 percent protein, and the

hulls are blended back to produce 44 percent protein meal that is sold

for livestock and poultry feed. The oil is sold to oil refineries.

Soybean meal goes to feed manufacturers, often to feed mills owned

by processing firms. Soybean meal has represented most of the oilseed

meal available for feeding in the U.S. in recent years (Table 18).

Soybean meal production and use in the U.S. has increased substantially

in the past decade, even as prices increased (Table 19). Soybean oil

production and disappearance have also increased (Table 20).








Table 18.--Oilseed meal: Estimated supply available for feed, U.S.,
1975-1979.


Year beginning October_
1975 1976 1977 1978 1979

---------------- 1,000 metric tons ----------

Oilseed meal

Soybean 14,164 12,751 14,766 16,075 17,237

Cottonseed 1,148 1,412 1,780 1,450 1,724

Linseed 79 117 79 75 68

Peanut 284 184 92 125 123

Sunflower ----- ---- ------ ----- 318

Total 15,675 14,464 16,717 17,725 19,470


a
Preliminary.

b
Forecast

Source: USDA, ESCS, Feed Situation, May 1980.


Meal Use in Florida, Alabama and Georgia

Soybean meal consumption by livestock and poultry is discussed for

the entire state for each of the three involved in this study. Soybean

meal, as are other oilseed meals used for feed, is often shipped long

distances from processing plants. Meal from Iowa and Illinois processors

may be used in the study region or even farther south in Florida, de-

pending on national and regional supplies and market conditions. There-

fore, confining meal use to the study region was not appropriate.








Table 19.--U.S. soybean cake and meal: Production, stocks and disappearance.


Yeara Production Beginning stocksa Exports Domestic disappearance Price per ton

---------------------------------- 1,000 tons ------------------------------ -- Dollars --

1970 18,035 137 4,559 13,406 78.50

1971 17,024 146 3,805 13,110 90.20

1972 16,708 192 4,745 11,920 229.00

1973 19,674 183 5,548 13,766 146.35

1974 16,702 507 4,299 12,502 130.85

1975 20,754 358 5,145 15,552 147.75

1976 18,488 355 4,559 14,001 199.80

1977 22,371 228 6,080 16,209 164.20

1978 24,354 243 6,610 17,645 190.10

1979 26,293 267 7,200 18,915 170.00


a
Year and stocks beginning October

Source: USDA, ESCS, Fats and Oils


1.

Situation.








Table 20.--U.S. soybean oil: Production, stocks and disappearance.


Beginning Domestic Price per pound
Yeara Production stocks Exports disappearance Crude, Decatur Refined, N.Y.

----------------------- Million pounds ------------------- -------------- Cents -----------

1970 8,265 543 1,742 6,253 12.8 14.6

1971 7,892 773 1,398 6,439 11.3 12.7

1972 7,501 785 1,066 6,685 16.5 17.7

1973 8,995 516 1,435, 7,255 31.5 33.0

1974 7,375 794 1,028 6,518 30.7 33.0

1975 9,630 561 976 7,906 18.3 23.5

1976 8,578 1,251 1,547 7,455 23.9 29.2

1977 10,288 771 2,057 8,193 24.6 29.6

1978 11,323 729 2,334 8,867 27.4 32.7

1979 11,769 776 2,350 9,120 23.0 n.a.


a
Year and stocks beginning October 1.

Source: USDA, ESCS,.Fats and Oils Situation








in the area specifically relating to the apparent soybean processing

opportunity that-exists or is emerging."

Objectives


Specific objectives for the study were:

1) Analyze soybean production and production trends in a designated

study area of northwest Florida, south Alabama and south Georgia (Figure

1);

2) Determine a range of sizes for soybean crushing plants, estimate

resource requirements and costs for each size plant, and estimate profit

potential,expected revenues and anticipated markets for products;

3) Determine potential locations for plants based on transportation

facilities and costs.

Other objectives tentatively included in the initial project proposal

were found not relevant to the study. Production trends in other oilseed

crops and possible effects of these supplies on soybean crushing did not

need to be considered, since large soybean plants do not crush other oilseeds

because of different equipment and processes required and costs of

shifting between oilseeds. Impacts of soybean processing activity in

the region were not evaluated because of the findings on plant feasibility.
Procedures

Published data and previous studies on soybean and soybean product

output, handling, processing, distribution and marketing were assembled

(see list of references). This information was used in describing the

soybean production marketing system and in making production and use

projections.








in the area specifically relating to the apparent soybean processing

opportunity that-exists or is emerging."

Objectives


Specific objectives for the study were:

1) Analyze soybean production and production trends in a designated

study area of northwest Florida, south Alabama and south Georgia (Figure

1);

2) Determine a range of sizes for soybean crushing plants, estimate

resource requirements and costs for each size plant, and estimate profit

potential,expected revenues and anticipated markets for products;

3) Determine potential locations for plants based on transportation

facilities and costs.

Other objectives tentatively included in the initial project proposal

were found not relevant to the study. Production trends in other oilseed

crops and possible effects of these supplies on soybean crushing did not

need to be considered, since large soybean plants do not crush other oilseeds

because of different equipment and processes required and costs of

shifting between oilseeds. Impacts of soybean processing activity in

the region were not evaluated because of the findings on plant feasibility.
Procedures

Published data and previous studies on soybean and soybean product

output, handling, processing, distribution and marketing were assembled

(see list of references). This information was used in describing the

soybean production marketing system and in making production and use

projections.







An estimated 1.8 million tons of oilseed meal were fed to livestock

and poultry in the states of Florida, Alabama and Georgia in 1979.

Florida soybean meal use was 260,000 tons, while feeding in Alabama was

659,000 tons and in Georgia, 785,000 tons (Table 21). About 172,000

tons, or 57 percent of Florida use, went to poultry, while 88 percent

and 83 percent, respectively, of Alabama and Georgia use was for poultry

(Table 22).

Florida broiler production is virtually all in the study region, as

well as a significant share of egg production. However, the largest egg

producing counties lie outside the region (Figure 7). Egg production is

substantial in the Alabama portion of the study region, but the major

counties are in north Alabama (Figure 8). Both broiler and egg production

is concentrated in north Georgia (Figure 9).

Dairy and beef cattle, which together account for an additional 38

percent of the soybean meal fed in Florida, are dispersed throughout the

state. However, the greatest concentrations are in central and south

Florida, outside the study area (Figure 10). Beef and dairy cattle are

raised throughout Alabama, and Georgia with several counties having

large populations in each state (Figures 11 and 12). Hog numbers are

most concentrated in southeast Alabama (Figure 11) and in a belt from

southwest to southeast Georgia (Figure 12).

Oilseed meal use in the three states of Florida, Alabama and Georgia

is projected to increase as livestock and poultry numbers increase.

Historical trends in livestock and poultry numbers and oilseed meal use

in each state were projected to 1990. Total oilseed meal use in the

three states is projected to increase from 1.8 million tons in 1980 to

2.1 million tons in 1990 (Table 21).








Table 21.--Estimated oilseed meal and soybean meal consumption, Florida, Alabama and Georgia, 1975-
1980, and projected use, 1981-1990.



Oilseed meal consumption Estimated soybean
Year Florida Alabama Georgia Total meal consumption


------------------------------------- 1,000 tons------------------------------


1975
1976
1977
1978
1979
1980


264
281
283
270
301
310


595
635
623
633
655
666


707
760
804
849
826
833


1,566
1,676
1,710
1,752
1,782
1,809


1,290
1,441
1,436
1,507
1,550
1,538


Projected


1981
1982
1983
1984
1985
1986
1987
1988
1989
1990


677
687
698
709
720
731
742
752
763
774


1,837
1,863
1,891
1,918
1,946
1,974
2,002
2,028
2,056
2,083


1,543
1,584
1,607
1,630
1,674
1,698
1,722
1,744
1,789
1,812





48

Table 22.--Livestock numbers, high protein animal units and oilseed meal
fed, Florida, Alabama and Georgia, 1979.


Florida
Number HPAUd OSM-
useb


Alabama
Number HPAUd OSM
useb


Georgia
Number HPAUa OSM
useb


Dairy cattle

Beef cattle

Hogs

Poultry

Totalc


-------------- 1,000 tons

268 330 62 136 76

1,977 291 53 1,717 210

360 78 14 700 147

95,881 930 172 518,020 3,119

1,632 301 ------ 3,552


----------------------------

14 226 131 23

39 1,504 250 46

27 1,800 394 73

574 598,874 3,704 684

655 ------- 4,479 826


a
High-protein animal units a measure of high protein feed consumed for
each type of livestock, based on a mature dairy cow as the base unit. See
Appendix Table 8forfactors used in calculating HPAU's for each state.

b
Based on 369 pounds of oilseed meal per HPAU. See Appendix Table 8.

c
Other kinds of livestock such as horses, mules and sheep consume small
amounts of oilseed meal but are not included in calculations because no esti-
mates of numbers of those species are published for these three states.

Consumption in Florida is estimated to increase from 310,000 to

405,000 tons, a growth of 31 percent in the 10-year period. Projections

for Alabama show a larger total use, from 666,000 to 774,000 tons,

an increase of 16 percent. Georgia consumption is projected to grow

from 833,000 to 904,000 tons, a 9 percent increase (Table 21).

It is estimated that between 85 and 90 percent of oilseed meal

consumption in Florida, Alabama and Georgia is soybean meal. For 1980,

total soybean meal consumption for all three states is estimated at

1,538,000 tons. Projections to 1990 assume that soybean meal will make

up about the same share of oilseed meal consumption as in 1980.


Livestock








rtoKOIAS 'iw U tl s of .LvEi Y (.i OlT


1978


NU-3ER OF LAYERS
BY COUNTY

(THOUSANOS)


LESS TrHN 25 C
25 99
100 499
500 999
1o00 AND OVFR


* -


MAJCR BnOlLEn P;:;'UCl;N
COu'"IlS or !I1.siUo 1/


BROILERS SOLO

LESS THAN 100.000
100,000 999,999
1,000t000 4.99,999
5,000,000 OR MORE -


1/ 1974 CENSUS OF AGRICULTURE


K


Figure 7.
























HENS AND

PULLETS OF

LAYING AGE


December 1, 1978





LEADING FIVE COUNTIES
Cullman...........2,144,000
DeKalb............1,551,000
Bloumt............1,313,000
Marshall............859,000
Lawrence............796,000






StLess than 20,C00
^'S 20,000 49,999
S50,000 149,999
[~rL 150,000 499,999
S 500,000 and over


Figure 8.







'lrie'r iH,' aod Pjalets 0f ayin'i Ale
y Countle. r,ilr. with 1.110s '.V.1.
.. .a.... OI 0 r 1974 C? sus of Aricultur
,. 1 dot 5 ,000 tHens & Pullets
S Top i1 Ccunr ties with Niomber of liens Fullets
1. Coffee 1,90..915
2. Hall 1,543,663
3. Telfair 1,073,043
*. -.. .. 4. Forsyth 767,500
5. Candler 779,413
Jackson 694,437
7. Brantley 622,511
8. Cherokee 561.946
S... 9. Pierce 547,302
10. Lunpkin 5;2 ,600









--- % ., ..... \ V

















1974 C us of Ariculture
5...nt .






















'i .-~ -~.' SI, 1 dot = 500,000 Broilers
S. ." Top 10 Counties with Broiler Nubers listed
i .' cw: 1. Hall 27, ,436
.: 2. Jackson 22,877 ,01

S.. 3. Forsyth 21,95 ,C2
4. Cherokee 19,597.037
." '... ...'.:^ :.:,:.' '. :'. -.5. Gordon 14,234,629
6. H ecrsh m 13,_W7,393
S7. Madison 12,461 ,214
S8. White 11,525,267
S? .-... Franklin 0,78,6
\- J -- ". .. .. .. : .,. 410. Oglethorpe 9,59,557


figure 9.











































* 1,000 HEAD


Figure 10.--Cattle on farms by county.

















ALL CATTLE

AND CALVES

January 1, 1979





LEADING FIVE COUNTIES

Montgo-ry...........68,000
Cullman...............58,000
Londe................57,000
Dallas...............48,000
Marengo...............45,000


E l


Under 20,000

20,000 29,999

30,000 39,999

40,000 49,999

50,000 and over


ALL HOGS


AND PIGS

Decereber 1, 1978




LEADING FIVE COUNTIES

Houston............ 38500
Henry............38,000
Coffee............31,500
utauga ...........31,400
DeKalb.............31,000









i Under 5,000

5,000 9,999

10,000 19,999

20,000 29.999

30,000 and over


Figure 11.


.- ---,
tr----i-.



r
'''' ~


rlji~
i::
-' ,'
:1
:
'' ~' -
..:::
.. -: ::1

:,.(::.::~:~i':''''';
''"'~
._~.~
$rl~r~TF~:::::I'

~---i-- 1
ci




~
'4 -;~ ..
I

~
~-;
i
4~;~~ 1 Y u








-t
~dj-~










Cattle and Calves on Georgia Farms
January 1, 197'
CGeorgia Crop Reprntr g Service
I dot 2,CD Cattle anJ CalIve
1. Sumtnrrr 39,0.
L., *".'.,C..\. 3 ,0 3. pFro k 31.10








































Hogs and Pigs on Farm,, D br 197
a ;. .I dot 20-o .. F. -,



















op 10 Countiest ith Nunbers Listd beio.c
I>s( I
.2. Cluitt 7 .000
3. Pulloch 7 ,, k ,
4. Grad, 75,1'0
.5. Brnoo 57,(' '




















9. Decat,- . "700
.. ... _.- % _









,; ra yt .
-- " "5 B oo s 5
t" "'-'-' '"'-;" ".41T, ,) ,' b" .au e s 5 U
~ .. ,": _,.-, S re e ''























Figure 12.







Soybean Oil Disposition


Over 90 percent of U.S. soybean oil use is for foods,primarily

shortening, margarine, and cooking and salad oils. Nonfood or industrial

uses include soap, paint and varnish, and resins. About 20 percent of

U.S. soybean oil production was exported in 1979 (Table 20).

Most soybean processing plants sell crude soybean oil. Many plants

do have equipment for degumming the oil, which is also the first step in

the refining process.5 However, most soybean oil goes in crude form to

edible oil refiners. Market conditions, freight rates and contract

arrangements determine where a particular plant ships the oil it produces

for refining. There are several refiners in the southeast (Table 23) as

well as in other parts of the U.S.

Table 23.--Soybean oil refiners in the southeast.


State Location Company


Georgia Gainesville Cargill, Inc.
Macon Proctor & Gamble Mfg. Co.
Savannah Hunt-Wesson Foods, Inc.
North Carolina Fayetteville Cargill, Inc.
South Carolina Hartsville Hartsville Oil Mill
Tennessee Chattanooga Central Soya
Swift Edible Oil Co., Inc.
Memphis Humko Products, Kraft, Inc.,
Hunt-Wesson Foods, Inc.

Source: American Soybean Association Blue Book 1979.


5
"Sometimes referred to as crude degummed soy oil; the product
resulting from washing crude soy oil with water and/or steam or another
degumming agent for a specified period of time and then separating the
oil-and-water mixture, usually by centrifugation, to remove the phosphatides;
it shall not contain more than 0.02 percent of phosphorus without a
discount penalty." American Soybean Association Bluebook 79.









PROCESSING PLANT FEASIBILITY

Investment and Operating Costs and Requirements


The 1978 Arkansas study by Mixon and Morrison was used as the basis

for estimating processing plant investment and costs. Costs for a

modern plant from this study were updated for 1980 conditions.

Three plant sizes were used, expressed in tons of soybeans crushed

per day: 1,200 tons, 2,000 tons, and 3,000 tons. Capital investment

was estimated for each plant size by increasing the investment figures

in Mixon and Morrison by 30 percent, the increase in the wholesale price

index from June 1978 (Mixon and Morrison, p. 4) to June 1980.

The smallest mill size considered, 1,200 tons daily, would process

11,880,000 bushels of soybeans per year, and the largest 29,700,000

bushels annually (Table 24). Storage capacity was based on 90 days

Table 24.--Estimated total investment per plant and, per bushel of soybeans
crushed for three sizes of solvent soybean processing plants, 1980.


Plant size in tons crushed per day
Item Unit 1,200 tons 2,000 tons 3,000 tons

Soybeans processed
per year 1,000 bu. 11,880 19,800 29,700

Storage capacity 1,000 bu. 3,240 5,400 8,100

Capital investment
per plant $1,000 17,094 26,051 37,939

Per bushel
processed Dollars 1.44 1.32 1.28


Source: Adapted from B. J. Mixon and W. R. Morrison, Economies of Size
in Soybean Processing Plant, 1978, Arkansas Agricultural Experiment Station
Bulletin 840, October 1979.









PROCESSING PLANT FEASIBILITY

Investment and Operating Costs and Requirements


The 1978 Arkansas study by Mixon and Morrison was used as the basis

for estimating processing plant investment and costs. Costs for a

modern plant from this study were updated for 1980 conditions.

Three plant sizes were used, expressed in tons of soybeans crushed

per day: 1,200 tons, 2,000 tons, and 3,000 tons. Capital investment

was estimated for each plant size by increasing the investment figures

in Mixon and Morrison by 30 percent, the increase in the wholesale price

index from June 1978 (Mixon and Morrison, p. 4) to June 1980.

The smallest mill size considered, 1,200 tons daily, would process

11,880,000 bushels of soybeans per year, and the largest 29,700,000

bushels annually (Table 24). Storage capacity was based on 90 days

Table 24.--Estimated total investment per plant and, per bushel of soybeans
crushed for three sizes of solvent soybean processing plants, 1980.


Plant size in tons crushed per day
Item Unit 1,200 tons 2,000 tons 3,000 tons

Soybeans processed
per year 1,000 bu. 11,880 19,800 29,700

Storage capacity 1,000 bu. 3,240 5,400 8,100

Capital investment
per plant $1,000 17,094 26,051 37,939

Per bushel
processed Dollars 1.44 1.32 1.28


Source: Adapted from B. J. Mixon and W. R. Morrison, Economies of Size
in Soybean Processing Plant, 1978, Arkansas Agricultural Experiment Station
Bulletin 840, October 1979.








production. For the smallest plant, this was 3,240,000 bushels, and for

the largest, 8,100,000 bushels. Total investment for the smallest plant

was estimated at $17,094,000 in 1980 dollars while capital investment

for the largest was $37,939,000. Capital investment per bushel was

$1.44 for the smallest plant, dropping to $1.32 for the 2,000 ton plant

and to $1.28 for the 3,000 ton mill (Table 24).

Estimated operating costs per bushel also drop as plant size in-

creased. Conversion costs, the cost involved in the mill process of

crushing soybeans and producing and handling products, were based on a

continuous 24-hour, 330 day processing season, with the plant operating

at 90 percent of capacity. Conversion costs were divided into variable

and fixed portions, and were increased by 30 percent from those used by

Mixon and Morrison. Conversion costs per bushel decreased from $0.695

for the 1,200 ton plant to $0.605 for the largest size (Table 25).


Table 25.--Estimated conversion costs per bushel for soybean crushing plants,
1980.


Plant size in tons crushed per day
1,200 tons 2,000 tons 3,000 tons
Costs Per bushel Total Per bushel Total Per bushel Total

------------------------- Dollars----------------------------

Variable .491 5,834,750 .447 8,846,260 .435 12,918,325

Fixed .204 2,422,090 .181 3,591,885 .170 5,052,600

Total .695 8,256,840 .628 12,438,145 .605 17,970,925

Source: Adapted from Mixon and Morrison.







Processing costs include costs of conversion and of acquisition of

soybeans. Estimated acquisition costs per bushel rose as plant size in-

creased, since larger amounts of soybeans must be transported from

greater distances. Acquisition costs for a given size plant also depend

on the amount of soybean production within a given radius from the

plant. Mixon and Morrison expressed this factor as density of production,

measured in bushels per square mile. Average soybean density in the

Arkansas Delta region considered by Mixon and Morrison was 4,391 bushels

per square mile. Average density in the study region, using 1978 production,

was 773 bushels per square mile (Table 5), less than one-fifth the

Arkansas figure. Obviously, the lower the density in a region, the

greater the distance required to assemble a given quantity of soybeans

and the greater the acquisition cost per bushel.

Acquisition costs used by Mixon and Morrison were increased by 30

percent to reflect price changes since 1978, and extrapolated to a lower

density of 700 bushels per acre, the approximate average density for the

study region over recent years. These costs per bushel were $0.130 for

the 1,200 ton plant, $0.135 for the 2,000 ton plant, and $0.148 for the

largest mill (Table 26). Total processing costs ranged from $0.825 to

$0.753 per bushel.

Table 26.--Estimated processing costs per bushel for soybean crushing plants,
1980.


Plant size in tons crushed per day
Costs 1,200 tons 2,000 tons 3,000 tons

----------------------- Dollars---------------------

Conversion .695 .628 .605
Acquisition .130 .135 .148
Total processing .825 .763 .753


Source: Adapted from Mixon and Morrison.







Thus, the 2,000 ton per day plant would require 76 cents per bushel

to cover processing costs. If soybeans cost the plant $7.00 per bushel,

product sales from that bushel should total $7.76 to cover costs.

Spot Crushing Margins


Table 27 illustrates the value of oil and meal from a bushel of

soybeans at prevailing prices, compared with soybean price, and shows a

margin.6 Actual prices for each quarter of the crop year just ended,

September 1979 -- August 1980, are used.

A major factor affecting the size of the spot margin for the study

region is the price paid for soybeans. If all needed supplies could be

purchased at prices paid at country elevators, the margin would be

substantially wider than if export-level prices had to be paid. In the

1979-80 year, the difference between country and export elevator price

ranged from 31 cents to 47 cents per bushel (Table 27). These variations

resulted in spot margins of $1.34 per bushel in the most favorable case

(Quarter II) to -$0.13 in the least favorable quarter (IV). Average

margin for the year was $0.91 per bushel for country elevator prices or

$0.51 per bushel for export prices.

Average spot margins in the U.S. have varied widely since 1950

(Table 28). Since 1970, margins have ranged from $0.30 per bushel to

$0.71, except for the two unusual years of 1972-73 and 1973-74.






6
This is generally called a "spot margin". It is calculated on
current cash or "spot" prices. This may not reflect the actual cost of
soybeans to the plant or product sales values.







Table 27.--Soybean price, market value of oil and meal and spot margin, study region,quarterly, September
1979 August 1980.



I II III IV
Item Unit Sept. Nov. 79 Dec. 79 Feb. 80 Mar. May 80 June Aug. 80 Year


Soybean oil C/lb. 28.44 24.87 21.06 24.08 24.61
Oil yield
per bu. Ibs. 10.79 10.55 10.77 10.95 10.76
Value from bu. $ 3.07 2.62 2.27 2.64 2.65

Soybean meal $/ton 184.10 201.80 184.10 178.30 187.07
Meal yield
per bu. Ibs. 47.91 47.98 47,95 48.50 48.08
Value from bu. $ 4.41 4.84 4.41 4.32 4.49

Value oil & meal
from bu.
soybeans $ 7.48 7.46 6.68 6.96 7.14

Soybeans $/bu.
Country price 6.42 6.12 5.72 6.70 6.24
Export price 6.82 6.59 6.03 7.09 6.63

Spot margin $
Country price 1.06 1.34 0.96 0.26 0.91
Export price 0.66 0.87 0.65 -0.13 0.51


Explanation and sources:
Soybean oil prices: Futures prices, Chicago Board of Trade, plus Southeastern basis, F.O.B. processing plant.
Soybean meal prices: 44% protein, bulk, Atlanta, Feedstuffs and Fats and Oils Situation.
Soybean prices: No. 1 yellow, south Alabama and southwest Georgia, unpublisheddata from Auburn University
and University of Georgia.
Oil and meal yields: National average yields, Grain Market News.





61



Table 28.--Soybeans: Annual value of products per bushel of soybeans
processed and spot price spread, 1965-79,



VALUE 3F PRODUCTS PCR UVHNL : SOYTBEa '4ICE : S~eAD YfENt 4ILU
..------.---------------------- ------ ------- ---........ ....--.- -- *-e-s -3
YEAR : SOY9[A OIL t40 EAL i : RECEIVED 4: 1 : SoItA 41.1Et
IINNI:....----....---.....----------. ------- ---- ..... ...-------* .---- TOTL I 1Y YELLOdJ :------*------------'--
E'iTE46S: : IL3 iARICE C VALUE : IELD : PRICE I: .J I #ALt : 424Et!S ILLINOI : S !tC1 D :0.1 ftLLOJ
S : : 2 : : 2/ : 2 : : 3 : POITS 4/: Y : ILLINOIS
S: '4AWRS : POatTS
C--C----------P-----------A PO---UNS CN----------------------------------DOLAS
*3JYVS CENTS 30LLARS POUNDS CENTS - *- - DOLLARS - - -
1)65 : 1.6i 11.: 1.26 47.53 4.02 1.31 3.17 2.54 2.91 .63 26
165 10.71 1Q.* 1.11 47.66 3.98 1.)0 3. 1 2.5 2.85 *2S .15
1)67 10.57 9. .91 47.71 3.82 1 .2 2.73 2.49 2.61 *24 .12
1)68 10.61 8.2 .87 47.43 3.T6 1.71 2.66 2.43 2.54 .23 .12
1369 10.66 11.0 1.17 47.36 3.99 1. 4 3.31 2.35 2.53 .66 .49
1)70 13.23 12.8 1.38 47.39 3.96 1 S S. 2.S9 3.11 41 .26
1371 : 1) 11.5 1 26 47.43 4.36 2. 7 333 33 3 3.24 0 .09
1372 10 59 15 2 1.62 47.04 11.3 5.19 6.81 4.37 6.22 2.44 .59
1173 10.76 30.2 3.23 47.18 7.61 3.59 6.84 5. 6 6.12 1.16 *72
1174 10.51 32.1 3.37 47.48 6.56 5.12 6.49 6.64 6.32 .34 .17
1975 10.94 18.5 2.02 47.27 7.20 3.40 5.42 4.92 5.26 .50 16
1976 11.09 24.1 2.67 47.81 10.14 4.85 7.52 6.81 7.33 .71 .19
1977 10.89 23.8 2.59 47.34 8.09 3.83 6.42 5.88 6.14 .54 .28
1978 I/ 11.07 27.0 2.99 47.63 9.40 4.48 7.47 6.66 7.11 .81 36
----------------------------------------------------2--.-------------6-65 651, 7 .
11 ACTUAL OUTTURN OF DIL AND 'EAL AS CALCULATED FRoM BUREAU OF CENSUS RtPORTS. 2/ SIMPLE AVERAGE OF 3TH43LT :4S PRICES Jp
'DUNO USINS T74E FOLLOmING 2l33TA713S: SDYBlE OIL* CRUDE TANK CARS. F*.3IeI OECATUe OLLtIOIS': 0S84 46Mt. 8JLK. t4 PERCTI
'OT1tN, CECATUR. ILLINOIS. 3/ SEASDN AVERAGE PRICE RtCCIVE Y FARMERS WtISHTE BY 741 ESTIMATED PERCENT OF THE CROP SL.0 E:i
3NTI4. 4/ S 4PL IVERAIEF OF MONTHLY PRICES. 5/ PNELNIIN*AY.





Source: USDA, ESS, Fats and Oils Situation, October 1980.












Processing Returns and Market Trends



Processing Returns



Comparing estimated processing cost for the middle-sized plant


($0.76 per bushel) with prevailing product prices during 1979-80 provides


an idea of plant return. Quarterly returns ranged from $2,871,000 to


-$2,475,000 at country prices for soybeans, and $544,000 to -$4,405,000


for export prices (Table 29). Total plant return for the year was


$2,970,000 and -$4,950,000 at country and export prices, respectively.





61



Table 28.--Soybeans: Annual value of products per bushel of soybeans
processed and spot price spread, 1965-79,



VALUE 3F PRODUCTS PCR UVHNL : SOYTBEa '4ICE : S~eAD YfENt 4ILU
..------.---------------------- ------ ------- ---........ ....--.- -- *-e-s -3
YEAR : SOY9[A OIL t40 EAL i : RECEIVED 4: 1 : SoItA 41.1Et
IINNI:....----....---.....----------. ------- ---- ..... ...-------* .---- TOTL I 1Y YELLOdJ :------*------------'--
E'iTE46S: : IL3 iARICE C VALUE : IELD : PRICE I: .J I #ALt : 424Et!S ILLINOI : S !tC1 D :0.1 ftLLOJ
S : : 2 : : 2/ : 2 : : 3 : POITS 4/: Y : ILLINOIS
S: '4AWRS : POatTS
C--C----------P-----------A PO---UNS CN----------------------------------DOLAS
*3JYVS CENTS 30LLARS POUNDS CENTS - *- - DOLLARS - - -
1)65 : 1.6i 11.: 1.26 47.53 4.02 1.31 3.17 2.54 2.91 .63 26
165 10.71 1Q.* 1.11 47.66 3.98 1.)0 3. 1 2.5 2.85 *2S .15
1)67 10.57 9. .91 47.71 3.82 1 .2 2.73 2.49 2.61 *24 .12
1)68 10.61 8.2 .87 47.43 3.T6 1.71 2.66 2.43 2.54 .23 .12
1369 10.66 11.0 1.17 47.36 3.99 1. 4 3.31 2.35 2.53 .66 .49
1)70 13.23 12.8 1.38 47.39 3.96 1 S S. 2.S9 3.11 41 .26
1371 : 1) 11.5 1 26 47.43 4.36 2. 7 333 33 3 3.24 0 .09
1372 10 59 15 2 1.62 47.04 11.3 5.19 6.81 4.37 6.22 2.44 .59
1173 10.76 30.2 3.23 47.18 7.61 3.59 6.84 5. 6 6.12 1.16 *72
1174 10.51 32.1 3.37 47.48 6.56 5.12 6.49 6.64 6.32 .34 .17
1975 10.94 18.5 2.02 47.27 7.20 3.40 5.42 4.92 5.26 .50 16
1976 11.09 24.1 2.67 47.81 10.14 4.85 7.52 6.81 7.33 .71 .19
1977 10.89 23.8 2.59 47.34 8.09 3.83 6.42 5.88 6.14 .54 .28
1978 I/ 11.07 27.0 2.99 47.63 9.40 4.48 7.47 6.66 7.11 .81 36
----------------------------------------------------2--.-------------6-65 651, 7 .
11 ACTUAL OUTTURN OF DIL AND 'EAL AS CALCULATED FRoM BUREAU OF CENSUS RtPORTS. 2/ SIMPLE AVERAGE OF 3TH43LT :4S PRICES Jp
'DUNO USINS T74E FOLLOmING 2l33TA713S: SDYBlE OIL* CRUDE TANK CARS. F*.3IeI OECATUe OLLtIOIS': 0S84 46Mt. 8JLK. t4 PERCTI
'OT1tN, CECATUR. ILLINOIS. 3/ SEASDN AVERAGE PRICE RtCCIVE Y FARMERS WtISHTE BY 741 ESTIMATED PERCENT OF THE CROP SL.0 E:i
3NTI4. 4/ S 4PL IVERAIEF OF MONTHLY PRICES. 5/ PNELNIIN*AY.





Source: USDA, ESS, Fats and Oils Situation, October 1980.












Processing Returns and Market Trends



Processing Returns



Comparing estimated processing cost for the middle-sized plant


($0.76 per bushel) with prevailing product prices during 1979-80 provides


an idea of plant return. Quarterly returns ranged from $2,871,000 to


-$2,475,000 at country prices for soybeans, and $544,000 to -$4,405,000


for export prices (Table 29). Total plant return for the year was


$2,970,000 and -$4,950,000 at country and export prices, respectively.








Table 29.--Quarterly soybean processing return, 1979-80.



Quarter
Item Unit I II III IV Yeara


Quantity
processed 1,000 bu. 4,950 4,950 4,950 4,950 19,800

Processing cost b $ bu. 0.76 0.76 0.76 0.76 0.76

Spot margin
Country price $ bu. 1.06 1.34 0.96 0.26 0.91

Export price $ bu. 0.66 0.87 0.65 -0.13 0.51

Difference
Country price $ bu. 0.30 0.58 0.20 -0.50 0.15

Export price $ bu. -0.10 0.11 -0.11 -0.89 -0.25

Country price $1,000 1,485 2,871 990 -2,475 2,970

Export price $1,000 -495 544 -544 -4,405 -4,950


a
Totals may not add due to rounding.

b
Quantity and cost for plant processing 2,000 tons per day.


The most favorable figure of $2,970,000 provides an annual return

on original investment ($26,041,000, Table 24) of 11 percent. The least

favorable situation represents an annual loss of -19 percent on original

investment. Two primary factors contribute to this relatively unattractive

range of returns -- the competition of the export market for soybeans,

and the high processing cost for a plant built today.








Market Trends


If it is assumed that soybean processing plants in Alabama and

Georgia presently supply current soybean meal use in Florida, Alabama,

and Georgia, and that there would be no expansion of these plants over

the next 10 years, it is possible to calculate the point at which a new

plant might enter the market. Adding 1,600,000 tons (1980 consumption)

to the amounts produced by each size plant (282,000, 470,000 and 705,000

tons, respectively, Table 30) gives total supply of 1,882,000 tons,

2,070,000 tons, 2,305,000 tons, respectively. From Table 21, it can be

seen that projected consumption does not reach any of these levels by

1990. If the trends projected continued beyond 1990 the smallest plant

would enter the three-state market soon after 1990 (1,882,000 tons total

supply compared with estimated 1990 consumption of 1,875,000 tons).

Soybean oil produced by a plant in the study region would also have

to be marketed profitably and competitively. Existing plants in the

Southeast currently sell oil to refiners in that region or throughout

the eastern U.S. It is assumed that a plant in the study region would

have to be competitive for soybean oil markets.


Table 30.--Soybeans processed and soybean meal and oil produced annually
by three sizes of soybean processing plants.


Processing or production Plant size in tons crushed per day
per year Units 1,200 tons 2,000 tons 3,000 tons

Soybeans processed 1,000 bu. 11,880 19,800 29,700

Soybean meal processed 1,000 tons 282 470 705

Soybean oil produced 1,000 tons 64 106 159








Regional soybean production projected in Table 4 would provide

enough soybeans in excess of 1979 supplies (39.4 + 11.9 = 51.3 million

bushels) to support the smallest plant by 1988 under Scenario I, or by

1987 in Scenario II (Table 4). Projected production in the region would

support the middle-sized plant (59.2 million bushels) by 1989, and the

largest plant by 1990 (69.1 million bushels) under Scenario II only.

Projections made with the assumptions used for Scenario I do not show

regional production large enough to support either the middle-or large-

size plant by 1990 (Table 4).

Further assumptions required for applying these projections are

that processing plants already in the region do not expand, and that

export markets do not take more soybeans than at present. It is, of

course, an underlying assumption that no major disruptions occur, such

as wars, disastrous weather or massive disruptions in world trade.

Another assumption must also be made -- that a new plant can sell its

products at prices that will yield profits.










FLORIDA AND U.S. INTERNATIONAL TRADE IN SOYBEANS AND PRODUCTS

This section documents the increasing importance of agricultural

exports, particularly soybeans, to the state of Florida. It also pre-

sents an overview of U.S. international trade in soybeans and products

in the 1970's, and assesses the future of foreign markets for U.S.

soybeans and products.

Florida's Agricultural Exports

Exports of agricultural products from Florida have grown substantially

since 1970. The total value of the state's agricultural exports (including

forest and fishery products) grew from $118.4 million in 1970 to $402.8

million in 1978 (Table 31). Furthermore, exports accounted for about 9

percent of the total cash receipts from farm marketing in 1970 but

reached about 15 percent of sales by 1978. This impressive record of

growth has made farm exports basic not only to the economic prosperity
of Florida's farm sector, but to the whole state economy as well.

A number of agricultural products in the state are heavily dependent

on world markets. The 1978 export market provided an outlet for four-

fifths of Florida's wheat production; two-thirds of the state's soybeans;
more than three-fifths of the tobacco produced; half of the cottonseed

oil produced; two-fifths of the cotton grown; and more than one-third of

the peanuts grown.

The most important commodity group exported from Florida was fruits

and preparations (mainly fresh and processed citrus), which accounted

for $200 million in sales or half of the state's agricultural exports in










FLORIDA AND U.S. INTERNATIONAL TRADE IN SOYBEANS AND PRODUCTS

This section documents the increasing importance of agricultural

exports, particularly soybeans, to the state of Florida. It also pre-

sents an overview of U.S. international trade in soybeans and products

in the 1970's, and assesses the future of foreign markets for U.S.

soybeans and products.

Florida's Agricultural Exports

Exports of agricultural products from Florida have grown substantially

since 1970. The total value of the state's agricultural exports (including

forest and fishery products) grew from $118.4 million in 1970 to $402.8

million in 1978 (Table 31). Furthermore, exports accounted for about 9

percent of the total cash receipts from farm marketing in 1970 but

reached about 15 percent of sales by 1978. This impressive record of

growth has made farm exports basic not only to the economic prosperity
of Florida's farm sector, but to the whole state economy as well.

A number of agricultural products in the state are heavily dependent

on world markets. The 1978 export market provided an outlet for four-

fifths of Florida's wheat production; two-thirds of the state's soybeans;
more than three-fifths of the tobacco produced; half of the cottonseed

oil produced; two-fifths of the cotton grown; and more than one-third of

the peanuts grown.

The most important commodity group exported from Florida was fruits

and preparations (mainly fresh and processed citrus), which accounted

for $200 million in sales or half of the state's agricultural exports in












Table 31.--U.S. and Florida agricultural exports for fiscal 1970 and 1978.



1970 1978
Florida Florida
Florida as % of Florida as % of
as % of state as % of state
Commodity group U.S. Florida U.S. production U.$. Florida U.S. production


Million dollars


---- Percent ----


Million dollars


Livestock products

Meat animals
Dairy products
Poultry and eggs
Hides and skins
Lard and tallow

Crops
Wheat
Feedgrains
Cotton
Cottonseed oil
Tobacco
Soybeans and products
Peanuts and oil
Protein meal
Vegetables and
preparations
Frutis and preparations
Nuts and preaprations

Other agricultural and
fisheries

Forest, greenhouse and
nursery
Fishery products
Other
Total agricultural and
fisheries


152.8
109.1
76.0
158.4
208.1


.79
.37
2.11
1.07
.96



.07
.25
.09
.18
1.67
.41
4.29
.40

5.95
20.13
.33


941.6
987.3
352.4
54.3
561.9
1,207.7
32.6
322.6

196.8
343.2
60.1


71.1
117.5
911.5


6,865.0 118.4


.71
.31
1.72
n.a.
n.a.



59.80
43.55
25.00
58.82
30.52
33.56
10.77
n.a.

4.58
16.83
2.06


687.3
146.1
332.7
823.6
563.3


4,138.7
5,983.1
1,706.9
205.6
1,131.8
6,410.9
290.4
955.3

658.1
976.5
287.7


.93
.68
2.83
.98
1.30


.8
6.7
.6
.1
19.9
29.7
13.3
5.1

57.5
200.0
1.1


.67 145.6
3.67 520.5
n.a. 1,920.9


8.88 27,885.0 402.8


.02
.11
.04
.05
1.76
.46
4.58
.53

8.74
20.48
.38


80.00
21.68
40.00
50.00
65.03
69.23
37.78
n.a.

10.27
26.90
5.50


Source: USDA, Foreign Aqricultural Trade of the U.S., (ESCS), 1971 and 1979; USDA/USCS, State Farm
Income Statistics, severalissues; Tylerand C. A. Wheeler, Florida's International Trade and Is pact
on the State EconMy, University of Florida, 1978.


---- Percent ----


3.16 1.44
2.69 12.73
.90 n.a.


1.44 14.93







1978 (Table 31). Vegetables made up the second most significant export

crop, generating $57.5 million in revenues during 1978. Soybeans,
accounting for $29.7 million in export sales in 1978, was the third most

important export product. Other important export commodities were
tobacco, fish, peanuts, poultry and eggs.

Florida's farm export performance is all the more remarkable con-

sidering the limited presence of wheat, feed grain and cotton, exports

which dominate U.S. agricultural trade. Indeed, the state contributed
an increased share of U.S. exports during the 1970 to 1978 period in

virtually all product areas, with the exception of hides and skins,

wheat, feed grains, cotton and cottonseed oil.

Soybean exports from Florida increased substantially over the 1970-

79 period (Table 32). Florida's exports have grown faster than total
U.S. soybean and products exports, increasing eightfold during the 1970-

79 period, as compared to a sixfold increase for U.S. soybean exports.

This impressive growth in Florida exports, however, has slowed since
1976, following the national rate of increase.
The fastest growing agricultural export products from Florida in

the last 10 years, in order of importance, have been peanuts and oil;

fishery products; forest, greenhouse and nursery products; soybeans;

poultry and eggs; nuts and preparations; and meat animals. It is inter-
esting to note the broad range of products that play a part in Florida's

prospering agricultural export business. While in the past, Florida's

exports were limited mainly to citrus and vegetable products, the state's

farm export sector is becoming considerably more diversified.








Table 32.--Values of U.S. and Florida exports of soybean and soybean
products, 1970-79.


Value of exports Florida share
Year U.S. Florida of U.S.

-------- Million dollars ----- --- Percent --

1970 1,207.7 4.9 .41
1971 1,514.9 6.9 .46
1972 1,615.6 8.0 .50
1973 2,431.4 9.2 .38
1974 3,567.4 13.8 .39
1975 3,376.0 21.0 .62
1976 3,245.9 14.9 .46
1977 5,637.5 28.8 .51
1978 6,410.9 29.7 .46
1979 7,515.0 39.2 .52

Source: USDA, ESCS, Foreign Agricultural Trade of the U.S.


United States Production and Export Trends


Soybeans are the most important cash crop for U.S. farmers and the

leading U.S. agricultural export commodity. Soybeans constitute about

24 percent of total cash receipts from crop marketing. The U.S. is the

world's leading producer and exporter of soybean products. In 1979 the

U.S. produced two-thirds of the world soybean output, and over two-

fifths of world soybean oil and soybean meal production.

Export markets are of paramount importance to the U.S. soybean

industry. For soybeans, the export share of domestic production has

been close to 40 percent in 1978 and 1979. During the same years,

foreign buyers purchased about 20 percent of soybean oil and 27 percent

of soybean meal produced in the U.S.

The leading foreign markets for U.S. soybeans are the European

Community (EC), especially the Netherlands and West Germany, and Japan







and Spain. The entire EC imported about 45 percent of U.S. exports

during the 1970's. In recent years, Mexico has rapidly expanded its

purchases of soybeans from the U.S. while the volume of soybean exports

from the U.S. almost doubled since 1970, the country distribution of

these exports has remained virtually unchanged (Table 33).

Soybean oil importing nations are mainly developing countries with

low per capital incomes and low per capital consumption of edible fats and

oils (generally one-third the consumption in developed countries). The

major importing nations in the 1970's were India, Pakistan, Peru, and

Iran (Table 34). In addition to commercial sales, many of these countries

received considerable concessional sales of U.S. soybean oil under P.L.

480 programs. In recent years, however, P.L. 480 shipments of oil have

diminished substantially.

Finally, the leading market for U.S. soybean meal has been the EC,

importing over 50 percent of total exports in the 1970's. In terms of

individual countries, the chief importers of soybean meal are West

Germany, Italy, the Netherlands, Canada, Poland, and Japan (Table 35).

As we enter the decade of the 1980's, the U.S. soybean industry,

because of its large reliance on foreign markets, will find its future

increasingly more dependent on economic conditions in importing nations,

especially in the European Community. Conditions prevailing in the

livestock sectors of developed counties, as well as in the oilseed and
fish meal industries abroad, will have a significant impact on both

production and exports in the U.S.

Three foreign developments will be of particular importance in the

near future. First is the emergence of Brazil, the People's Republic of

China, and Argentina as major producers and/or exporters of soybeans and








U.S. exports, by principal markets, 1972-1978.


Market 1972 1973 1974 1975 1976 1977 1978


Canada
Mexico


European Community


Denmark
U.K.
Netherlands
Belgium
France
West Germany
Italy


Norway
Spain
Israel
Taiwan
Japan
U.S.S.R.


Eastern Europe


---------------- 1,000 metric tons-----------

608 290 394 428 390 347 281
18 81 337 21 230 413 580

5,265 6,028 6,403 5.747 7,197 7,506 8,931


446
246
2,060
138
311
1,507
558

177
1,258
317
637
2,977
392


456
273
2,222
299
344
1,666
786

221
862
384
601
3,193
483


240
229
2,515
263
392
1,943
821

266
1,295
351
492
2,759
0


283
279
2,706
279
239
1,170
791

170
1,177
390
921
2,767
0


284
374
3,434
505
322
1,383
895

197
1,221
386
695
3,069
571


421
493
3,390
401
499
1,506
796

239
1,206
407
671
3,410
565


409
741
4,283
500
602
1,514
882

270
1,564
418
927
3,798
744


82 175 127 137 276 234 528


0 198 570


120 55 0 151
15 220 137 191

0 0 47 57


' -


'1 -


265 705 820 738 1,110 1,150 1,588



11,996 13,221 13,940 12,496 15,332 16,195 19,686


Poland
Romania


China

Other


Total


Source: USDA, FAS, Foreign Agricultural Circular: Oilseeds and
Products.


Table 33.--Soybeans:








Table 34.--Soybean oil: U.S. exports by principal markets, 1972-1978.



Market 1972 1973 1974 1975 1976 1977 1978

------------------ 1,000 metric tons --------------

Canada 17 19 34 22 29 27 28

Mexico 0 20 87 24 2 15 30

Peru 30 50 56 18 29 58 69

European Community 1 6 6 0 1 22 27

Eastern Europe 103 32 40 49 5 0 1

Africa 100 42 65 20 16 24 30

India 49 23 22 3 53 230 248

Iran 29 39 155 68 47 50 54

Pakistan 54 60 89 10 168 98 96

Australia 3 5 9 16 13 30 25

Other 209 143 199 126 147 220 326

Total 595 439 762 356 510 774 934


Source: USDA, FAS, Foreign Agriculture Circular: Oilseeds and Products
(several issues),







Table 35.--Soybean cake and meal: U.S. exports by principal markets,
1972-1978.


Market 1972 1973 1974 1975 1976 1977 1978


---------------- -1,000 metric tons --------------


Canada
Mexico
Venezuela
Japan

European Community
Belgium
Denmark
France
West Germany
Ireland
Italy
Netherlands
U.K.

Portugal
Spain
Switzerland

Eastern Europe
East Germany
Hungary
Poland
Yugoslavia
Romania
Czechoslovakia

Other


190
49
23
50

2,434
226
87
613
721
68
295
377
47


163
29
6
264

2,539
170
93
606
885
73
428
232
53


260
24
101
87

3,133
108
36
814
1,044
34
587
363
57


94
41
35

790
0
118
250
222
104
80

345


232
22
62
1

2,571
250
17
745
863
48
328
245
77


273
5
76
120

2,817
192
47
590
1,074
48
477
326
62


272
191
138
270

2,198
64
36
113
967
47
472
443
48


6 7 10
128 322 156
33 77 25


564
0
196
201
13
13
117


921
0
70
392
171
98
179


507
24
47
178
108
47
102


163 244 366


3,615 4,415 4,910 3,783 4,862 4,134 5,516


Source: USDA,
Products, (several


FAS, Foreign Agricultural
issues).


Circular, Oilseeds and


339
95
114.
271

2,796
37
26
147
1,040
84
742
655
65


82
237
83

927
105
120
493
113
32
64

572


Total







soybean meal, especially during the late 1970's. Competition from these

countries in world markets will intensify in the near future. Second is

the increased competition in both the U.S. and world markets from foreign

vegetable oils such as palm oil, coconut oil, and palm-kernel oil.

These imported vegetable oils compete directly with domestically-grown

vegetable oils, particularly with soybean oil, accounting for about 14

percent of domestic fats and oils consumption. The third factor is

increasing processing capacity in industrialized nations such as Japan,

several EC countries, Spain and Portugal. These countries may begin to

take less soybean meal and oil but an equivalent increase in soybeans,

to use their domestic crushing plants.

Soybean and soybean product exports will continue to be an important

source of U.S. farm income. The decade of the 1980's will see a con-

tinuation of the upward trend in production and exports of U.S. soybean

products. However, the increased competition from the newly emerging

soybean producers and the import competition from vegetable oils, are

bound to mitigate somewhat this upward trend, unless new markets can be

developed for both U.S. and foreign exporters of soybean products.

Even though export markets in the 1980's may not grow at the past

decade's average rate of 10 percent per year, foreign demand is likely

to continue increasing. Only drastic disruptions in the world economy

and world trade would reverse this trend. The export market would,

thus, be a continuing competitor for soybeans grown in the study region.










SUMMARY AND CONCLUSIONS

This study analyzed the feasibility of soybean processing in north-

west Florida. Soybean production and handling in the study region were

described in detail, along with production and handling for the U.S

soybean industry as it related to the study region. Soybean production

in both the U.S. and the study region has grown substantially in the

past 10 to 15 years.

Soybean production and prices for the region and the U.S. were

forecast for the 1981-1990 period, also. Production in the study area

was forecast to increase 87 percent from 1980 to 1990, compared with an

increase of 31 percent for the U.S. as a whole. The study region would

still account for less than 3 percent of U.S. production by 1990, how-

ever.

Density of soybean production within the region is another important

factor in evaluating processing plant feasibility. Soybean density in

the study region with 1978 production, a record, was 773 bushels per

square mile. The projected production density could reach from 1,063 to

1,351 bushels per square mile by 1990. This is still well below production

densities in other major growing areas. For example, average density

in the Arkansas Delta in 1978 was 4,391 bushels per square mile.

Soybeans produced in the study area are handled by country and

terminal elevators, and moved on to export elevators or to processing

plants. Management personnel in all these kinds of firms in the region

were interviewed, and provided considerable information. There are 168

elevators and feed mills in the study area, with total grain storage








capacity of nearly 30 million bushels. Most of this capacity is in

country and terminals, which have over 24 million bushel capacity, up
from 15.6 million bushels in 1978.

Country and terminal elevators in the study area receive most

soybeans they handle during the harvest period of September, October and

November. Over 81 percent of soybeans handled came in during this

quarter with another 12 percent in the December-February quarter. These
elevators also receive 60 percent of total grain receipts during the

September November quarter. About 84 percent of soybean receipts by

elevators in the study region come from farms within 50 miles of the
elevator.

The public elevator at the Alabama State Docks in Mobile is the

only export elevator in the study region. This facility has handled

from 19 million to 47 million bushels of soybeans annually since 1975,

as well as some soybean meal and hulls. The export market takes about

half of the soybeans produced in the study region and nearly all these
exports go through Mobile.

There are only two plants in the studyarea processing soybeans, a

large mill handling only soybeans at Valdosta and a peanut processor at
Enterprise who crushes some soybeans after peanut season. There are two
other plants in north Alabama, two more in north Georgia and four soybean

processors in South Carolina.

Transportation in the study region has a major impact on soybean
movement. Road, rail and barge networks were described briefly. Hauling
costs from farms to assembly points were calculated for both farm trucks

and export and bulk rail shipping. Alternative collection points were

analyzed under each of these cost conditions, for four geographic area








restrictions. Certain locations were identified as least-cost assembly

points under different restrictions.

Soybean meal consumption by livestock and poultry in Florida,

Alabama and Georgia was analyzed and projected to 1990. Soybean meal

use is projected to grow by 18 percent from 1980 to 1990, as livestock
numbers and feeding increase in these three states.

Investment and operating costs for a soybean processing plant were

calculated, using a 1978 Arkansas study. Three plant sizes, expressed

in tons of soybean crushed per day were evaluated. Plants that crush

1,200 tons, 2,000 tons and 3,000 tons daily were evaluated. Capital

investment and operating costs, in total and per bushel processed, were

calculated. Total investment increased from $17.1 million for the 1,200

ton-per-day plant to $37.9 for the 3,000 ton plant. Capital investment

per bushel processed declined as plant size increased, from $1.44 for

the smallest plant to $1.28 for the largest size.

Conversion costs, the costs for crushing soybeans and handling

products, declined on a per bushel basis from $0.695 to $0.605. Acquisi-

tion cost, for assembling soybeans at the plant, increased as volume
rose, from $0.130 per bushel to $0.148 for the 3,000 ton plant. Total

processing costs per bushel, adding conversion and acquisition costs,

declined from $0.825 for the 1,200 ton plant to $0.763 for the 2,000 ton

size and $0.753 for the largest plant.

Spot crushing margins for the 1979-80 crop year were calculated,

using both country elevator and export elevator prices for soybeans.

Market trends for soybean meal, and future years when a new plant might

enter the study area market, were projected.







Conclusions


A soybean processing plant is not economically feasible for north-

west Florida at the present time. With present export markets and

current processing capacity in the region, soybean supplies within

economical transportation range are not large enough for a new plant to

enter. Further, markets for soybean meal are not large enough to accept

new meal supplies. Projections of both soybean production and protein

meal demand show that 1987 is the earliest that soybean supplies would

be large enough for the smallest size plant estimated, and 1990 the

soonest that meal markets would absorb meal output from that size plant.

Current processing costs compared with spot margins are not favorable

to plant establishment, either. Expected increases in processing costs,

due to likely increases in energy costs and inflation rates, would keep

a plant from realizing profitable crush margins.

It is, of course, possible that major changes in economic conditions

and world soybean markets could alter the supply-demand-price arrangements

discussed in this report. Projections of regional and U.S. soybean pro-

duction and of demand for soybean products are based on relationships

prevailing in the recent past and on assumptions that major disruptions

would not occur.

While a soybean processing plant is not economically feasible at

the present time, other improvements in soybean marketing and handling

in the study region deserve attention. Transportation, export facilities,

and grain storage facilities are three important areas where private and

government efforts could improve the handling system.

Rising energy costs, inflation and high interest rates and risks in

capital investment have restricted rail and highway improvements and







constrained service and equipment available to southeastern agricultural
shippers. Rail car availability and rail service in the study region

have improved over the past three years, according to soybean and grain

handlers in the study area. However, most soybeans still move by

truck, particularly during harvest. Both government and industry group

efforts to work with rail and motor carriers are highly desirable.
Recent deregulation of rail rates for grains and soybeans means

that shippers such as elevators can negotiate rates with carriers on a

continuing basis, with charges varying with market conditions. Effects

of this change from the previous system of posted rates regulated by
Federal or state agencies are not yet clear. Those involved in the

grain trade must take there varying rates and changes in availability of

service into account.

Export facilities are another key factor in regional soybean marketing.

Handling capacity at the public elevator in Mobile has not kept pace

with grain exports. Expansion underway will improve handling efficiency

considerably, as stated earlier. However, increasing production and

export shipments may well outgrow the capacity of the Mobile facilities.

A private effort to develop an export elevator at Port St. Joe, Florida,
was halted by rapidly-rising interest rates, the Federal embargo on

grain shipments to the U.S.S.R. and other economic factors. This effort

may be revived in the future, and other groups may consider developing

grain export facilities at the Port of Jacksonville.
Commercial and on farm storage for soybeans and other grains pro-

duced in the study region is limited, compared with major grain producing

states. Data on grain storage capacity in Appendix Table 3 point out

that Florida, Alabama and Georgia together had total grain storage







capacity of 278 million bushels in 1978, compared with 2,127 million
bushel capacity in Iowa, the leading state in the U.S. Earlier sections

of this report documented the increase in commercial elevator capacity

in the study region since 1978. Also, farm storage increased substantially
during 1977 and 1978, due to large grain crops and a farm storage

facility loan program operated by the Agricultural Stabilization and
Conservation Service, USDA.

However, farm and commercial storage in the study region will need
to increase in the future as production grows. Substantial storage

capacity in a region is an important factor in soybean processing plant
feasibility as mentioned earlier. Storage facility costs represent a

large share of plant investment, so that the larger the capacity exist-
ing in a region, the less the investment required for a plant.




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