>'K Division of Agricultural Sciences UNIVERSITY OF CALIFORNIA llllll: HONEY MARKETING FREDERICK W. BAUER ■SPs to market CALIFORNIA AGRICULTURAL EXPERIMENT STATION BULLETIN 776 ERRATUM Page 25; paragraph 3 should read as fol- lows: Beekeeper Container Usage Since only 38 per cent of beekeepers own- ing more than 25 colonies restrict their sales entirely to bulk forms (i.e., tanks, drums, or 60-pound cans) , it follows that some por- tion of the output of the other 62 per cent is packed in containers suitable for retail trade. Fifty-four per cent of full-time bee- keepers restrict their sales entirely to bulk forms. Paragraph 6; delete last two lines of text. B776 CONTENTS Method and Procedure 3 Conclusions 4 I. Marketing Organization 6 II. Processing and Container Practices 19 III. Marketing Activities 32 IV. Federal Programs 61 Appendix 70 ACKNOWLEDGMENTS This study was produced, at the request of major organizations of the honey indus- try, under contract with the Agricultural Marketing Service, United States Depart- ment of Agriculture, under the provisions of the Research and Marketing Act of 1946. Acknowledgment is made to C. B. Gilliland, head of the Special Crops Section, Marketing Economics Research Division, AMS; and to Donald Jackson, agricultural economist, AMS, Berkeley, California, for their contribution in initiating the study and supervising the contract. Acknowledgment is made to the beekeepers, packing organizations, honey industry associations, and state and other federal government officials, for their contribution to this study. Frederick W. Bauer THE AUTHOR: The author, Frederick W. Bauer, produced this study while serving as Specialist in Agricultural Economics in the Dept. of Agricultural Economics and the California Experiment Station, University of California. For 10 years preceding this work Mr. Bauer was engaged in a variety of marketing research and sales management as- signments in the metal and printing industries, consulting, teaching and govern- ment service. He now is connected in a market development capacity with Kaiser Aluminum and Chemical Corp. DECEMBER, 1960 HONEY MARKETING Frederick W. Bauer A, his study, based on a sample of 2,000 beekeepers and packers, pro- vides an analytical description of current marketing organization and practices of the United States honey industry and offers suggestions for changed practices and further studies. From conferences held by Agricultural Marketing Service personnel and industry officials, and the author's subsequent interviews with pro- ducers and packers, this bulletin reports about the major marketing areas of concern to the industry : • Marketing Organization: Description of industry organization and the marketing functions performed at various levels within the organization. • Marketing Activities: Identification of seasonal patterns; volume handled by various channels of distribution; evaluation of sales promotion efforts; importance of exports and imports; growth of pollination as a major source of industry income. • Processing and Container Practices: Relationship to marketing effectiveness. • Federal Programs: Kinds of aid and the extent to which members of the industry avail themselves of assistance. METHOD AND PROCEDURE Data in this study were obtained through extensive correspondence, field interviews, secondary sources, and ques- tionnaires submitted to packers, beekeep- ers, and state apiary officials. SAMPLING METHOD Packer Information Questionnaires were mailed to all of the 180 packers found in food trade di- rectories and other lists maintained by the U. S. Department of Agriculture. Ap- proximately 28 per cent of these firms replied with usable data. Beekeeper Information Questionnaires were also mailed to ap- proximately 4,400 names provided by apiary officials of 14 states and the Amer- ican Beekeeping Federation. Usable re- turns numbered 1,418. The states selected for study were those considered to be most representative of the several honey districts. The practical control procedure used was to submit the same questions 3] to the American Beekeeping Federation members of the remaining states. Preliminary evaluation of samples sub- mitted by several state apiary inspectors led to the inclusion of the section on colony ownership. Analysis of beekeeper practices was based on the following number of re- turns: Full-time beekeepers (operating more than 400 colonies) .... 393 Part-time beekeepers (25 to 399 colonies) 665 Hobbyists (less than 25 colonies) . 360 Thus, approximately 32 per cent of all full-time producers, 6 per cent of all part-time beekeepers, and .2 per cent of the hobbyists are represented in the sample. In view of the small number of hobbyist returns represented in the study, the estimates of total honey production by this group is based on the residual after the calculated output of the other classes has been deducted from the total honey production announced by the Crop Reporting Service. Representation of hobbyists was mini- mized in order to devote the major re- sources of the study to the appraisal and analysis of those classes of beekeepers responsible for the bulk of honey pro- duction. Geographical distribution of the sam- ple plan, and of the actual returns, is given here: SAMPLE PLAN ACTUAL % OF TOTAL RETURNS DISTRICT MAILING % OF TOTAL Pacific Northwest 3 4 California-Arizona 15 15 Intermountain 12 14 Plains 12 13 Texas 4 7 White Clover Belt 34 39 Southern 20 8 100 100 The representation of the Southern District is less complete, even though a second mailing was designed to obtain more returns from that area. Apiary Inspector Information Inquiries were addressed to state api- ary inspectors and extension apiarists in all states. The data received in reply con- tributed helpful information to the sec- tions on industry trends, beekeeper pop- ulation, and colony ownership. CONCLUSIONS JVL arreting problems in the honey in- dustry arise from so wide and diverse a range of causes, that it is difficult for the industry to determine which step to take first toward solution. Although the occasional surpluses which occur would seem to present the most critical of mar- keting situations, actually other market- ing problems are of greater long-range significance. DISPERSION AND DIVERSITY OF INTEREST The approximately 200,000 producers are so widely dispersed that it is difficult for any agency or association to reach them with information, or for individual beekeepers to exchange ideas. Also, there is a diversity of interest among produc- ers, depending on the size and type of their operations and geographic loca- tion, which constitutes a serious obstacle to the building of well-organized indus- try associations and activities. As a re- sult, a marked lack of effectiveness is evident in those numerous areas of mar- keting and sales promotion which involve coordinated effort on a regional or na- tional basis. 4] USE OF MARKETING INFORMATION AND STANDARDS Current marketing information is be- ing used only to a limited degree, and this, coupled with the producers' inability to gain access to additional facts, ham- pers them in bargaining with middlemen, and in turn makes planning difficult at the packer-dealer level. Effective use of marketing data requires the kind of in- formed, professional analysis which it is impractical for most producers to try to provide for themselves. Both industry and government could materially assist beekeepers by undertaking this function and establishing efficient ways to dissemi- nate information. Lack of knowledge about, or indiffer- ence to standards of sampling, testing, and processing, reduces producers' mar- keting effectiveness and leads to inad- vertent destruction of quality. But the failure to apply established processing standards may largely be a reflection of the general unawareness among produc- ers of the integrated nature of modern production and marketing, and of the necessity for considering the ultimate ac- ceptability of the product during the course of production. A concise handbook outlining the techniques, standards, and costs involved would increase the accessibility of infor- mation, but only the recognition by bee- keepers that their returns are adversely affected by ignorance of the facts, will result in better use of standards. Organized efforts on the part of pro- ducer associations and packers to gather and spread honey facts, findings, and practices, could do much to achieve im- proved processing practices. MARKETING ACTIVITIES The suggestions made in this study are based on widely accepted techniques in modern marketing practice which have proved to be of significant help elsewhere in the food industry. If the honey industry is to improve its market- ing effectiveness, considerably greater attention than is currently being given, should be devoted to detailed analyses of: • Seasonal patterns of harvest and sales. • Channels of distribution, distribu- tion functions, and margins. • Consumer preferences, buying hab- its, and motivations. e Methods of sales promotion. Imaginative programs for selling more honey or improving margins to any sub- stantial degree require much more ex- tensive marketing research than now ex- ists in the industry, including a critical evaluation of existing sales promotion methods. While the interests of produc- ers and packers may naturally lead in different directions in many phases of marketing research effort, the expansion of promotion programs for their mutual benefit would be most effective if con- ducted on some joint basis. Although the development of pollina- tion services clearly offers opportunity for expansion within the industry, bee- keepers have done little, except in limited areas, to establish the marketing of pol- lination services on a commercialized basis. FEDERAL PROGRAMS The export and crop loan programs of the U. S. Department of Agriculture have been particularly effective. The crop loan program has served as a price insurance program every year since its inception, and has been a means of insulating the market in years of surplus. Further federal assistance, if contem- plated in the marketing field, would pro- vide the greatest long-range benefits by supplying estimates of crops from major floral sources, processing and marketing cost studies, demand analyses, and ana- lytical market situation reports. [5] I. MARKETING ORGANIZATION GENERAL X he HONEY industry is defined in this study as including beekeepers, processor- packers, dealers (who purchase for their own account but do not process), and exporters. In this study, any owner of at least one colony of bees was considered a bee- keeper. The producer level of the indus- try is composed of approximately 200,000 beekeepers who range from the hobbyist with a few colonies of bees, to commer- cial operators with thousands of colo- nies. 1 Commercial beekeepers 2 have been classified here according to their major activity: • Maximum production of honey. • Rental of bee colonies for crop pol- lination. • Production of package queens and bees for sale to other beekeepers. Concern has been expressed 3 about a possible high rate of exit from the in- dustry, but state apiary officials gener- ally do not report any substantial evi- dence of this. Movement both into and out of the industry is noted mainly among those who own a few colonies. Actually, there is a trend in 40 states toward larger colony holdings by commercial beekeep- ers, which parallels the increasing scale of operations in other areas of agricul- tural production. 4 PRODUCTION The peak year in colony strength was 1947 when, according to Crop Reporting Service estimates, there were 5.9 million colonies. In the succeeding decade, there was a gradual downward trend to 5.3 million in 1955 and 1956, a 10 per cent decline. In 1957 the Crop Reporting Service estimated that colony population increased over the previous year by 100,000 colonies, with a further slight increase occurring in 1958. The peak year for honey production was 1952, when 272 million pounds were produced. Although the average price per pound received by beekeepers doubled during World War II, honey out- put declined from its prewar levels until 1945. Thereafter, there was a rapid up- ward trend in production which culmi- nated in the 1952 output. Production varies widely between re- gions and from year to year depending on a complex combination of factors, such as rainfall, soil conditions, tempera- ture, various other environmental cir- cumstances, and management. Many of 1958 estimates made in cooperation with state apiary inspectors and extension apiarists of 47 states. 8 The colony ownership of a "commercial beekeeper" varies widely throughout the industry, ranging from a minimum of 30-40 colonies to the number of colonies required for a full-time job. Analysis of operating data in this study is based on colony ownership classes, rather than on "commercial" or "noncommercial" distinctions. 3 Hearings on H.R. 1768 and H.R. 2883, Committee on Agriculture, 81st Congress, April 27, 1949. 'Correspondence with apiary inspectors and extension apiarists of 47 states. [6 FIGURE 1 COMPARISON OF COLONY POPULATION Output Per Colony and Total Honey Production 1954-1958 o 50 O I*' |40- £35 30- 3275 H150 -6.0 Colony Population /\ Output Per Colony - - ^/ Note : The scale used on this chart is designed to compare dissimilar units. Source: U. S. Department of Agriculture ■5.0 sa 1944 1945 1946 1947 1948 1950 1951 1952 1953 1954 1955 1956 1957 1958 the industry's marketing problem evi- dently result from wide year-to-year fluc- tuations in natural conditions, which affect the quantity and quality of honey production throughout the United States. PRODUCTION AREAS Although honey is produced in all areas of the country, the preponderance of production is concentrated in twelve states, which account for about 65 to 70 per cent of the United States total. Cali- fornia production fluctuates between 9 per cent and 12 per cent of national out- put, followed by Minnesota with approx- imately 7 per cent, Florida with 5 per cent to 8 per cent, and Iowa and Wiscon- sin with 6 per cent each. These five states are the only ones which consistently pro- duce in excess of 10 million pounds an- nually, and they have accounted for 40 per cent of national production since 1952. Other significant states are New York, Michigan, Ohio, Indiana, Illinois, Texas, Montana, Arizona, and Idaho. Idaho has become increasingly promi- nent in the last few years. There are eight districts which may be so delineated on the basis of the floral sources of their honey production. Within each district, listed below, there is a relatively homogeneous range of bee- keeping practice, floral sources, and re- gional consumer preferences. [7] DISTRICTS 5 STATES INCLUDED White Clover Belt 6 Del., 111., Ind., Mich., Minn., New Eng., N. J., N. Y., Ohio, Pa., Wise. Southern District Ala., Ark., Fla., Ga., Ky., La., Md., Miss., N. C, S. C, Tenn., Va., W. Va. Plains District Iowa, Kans., Nebr., N. D., Okla., Mo., S. D. Texas District Texas Intermountain District Colo., Ida., Mont., Nev., N. Mex., Utah, Wyo. Pacific Northwest District. .Oregon, Washington California District California Arizona District Arizona Over the years, the far west has as- sumed greater importance in both colony population and production of honey. From the period 1928-1931, to the pe- riod 1954^1957, the annual average U. S. honey production increased 23 per cent. Production rose at less than the national rate in the White Clover Belt, the South- ern, Plains, Texas, and Pacific Northwest districts. Average production in the In- termountain District increased 51 per cent; in California 82 per cent; and in Arizona 93 per cent. In the area west of Texas and the Plains states, it rose from 42.9 million pounds, or 23 per cent of national production, to 67.7 million pounds, or 29 per cent of national pro- duction. This represents a 58 per cent increase in the total output of honey from this area in about 25 years. Table 1 de- picts these changes. The marked increase in western pro- U. S. Table 1 HONEY PRODUCTION AND SHARE OF PRODUCTION, HONEY DISTRICTS— ANNUAL AVERAGES 1928-1931*; 1954-1957t Honey production 25-year change in average honey production District 1928-1931 average 1954-1957 average Million lbs. Per cent Incr. or deer. Million lbs. Per cent U. S. Million lbs. Per cent U. S. White Clover Belt 68.2 40.6 28.1 8.7 18.3 5.9 15.8 2.9 36.3 21.5 14.9 4.6 9.7 3.0 8.4 1.6 77.5 47.8 28.7 9.4 27.7 5.6 28.8 5.6 33.5 20.7 12.4 4.1 12.0 2.4 12.5 2.4 + 9.3 + 7.2 + .6 + .7 + 9.4 - .3 + 13.0 + 2.7 13 6 Southern Plains 17.7 2 1 8 Intermountain Pacific Northwest 51.4 — 5 California 82 3 Arizona 93 1 188.5 100.0 231.1 100.0 +42.6 22.6 D. C * Voorhies, up. tit., p. 12. t Honey. 1957 Annual Survey, Crop Reporting Service, Agricultural Marketing Service, U.S.D.A., Washington 5 See Edwin C. Voorhies, Frank E. Todd, and J. K. Galbraith, Economic Aspects of the Bee Industry, University of California, College of Agriculture, Agricultural Experiment Station, Bulletin 555, Sept. 1933. 6 Some differences in yields, processing, and marketing practices exist between the eastern (Pennsylvania and east) and western (all states west of Pennsylvania) ends of this Belt. Sig- nificant differences are shown. [8] duction can be related to the following changes in agriculture in the last 25 years: • There has been increased cultivation in the west of copious-nectar crops under irrigation, such as alfalfa. • The trend toward mechanized agri- culture, permitting much larger-scale operation, has increased the de- mand for commercial pollination services, and seems also to have en- couraged more businesslike methods among beekeepers. Although the changes have not been confined to any one section of the United States, their impact has been greatest in the west. • There have been declines or static conditions in the production of cer- tain regional floral sources in the eastern districts. • There have been improvements in roads and motor vehicles, as well as in the science of beekeeping, which have made migratory beekeeping over wider areas economically fea- sible. SIZE OF OPERATIONS VOLUME OF PRODUCTION 7 Some of the marketing problems of the honey industry result from the wide range of sizes and styles of operations within the industry. As noted elsewhere in this study, the preponderance of bee- keepers are small operators who keep bees as a hobby, or for small-scale polli- nation of orchard and field crops. It is estimated that over 90 per cent of the nation's beekeepers own less than 25 col- onies, with an average ownership of about 10 colonies each. Table 2 depicts the estimated beekeeper population ac- cording to the ownership brackets used in this study. The Hobbyist Beekeeper Hobbyist beekeepers are recognized in the industry, but are not clearly defined. For the purposes of this study, mainly in consideration of the statistical prob- lems involved, a hobbyist is defined as a beekeeper who owns less than 25 colo- nies. It is estimated that average produc- tion of hobbyists in 1957 was about 250 pounds of honey for a total national out- put of 47 million pounds. The hobbyists represent an extremely wide variety of people, and are drawn from numerous occupations, including all of the professions, and many skilled trades. A vast majority of these pro- ducers who returned questionnaires ex- pressed no concern about marketing problems. 7 Estimates and comments cited in this sec- tion are based on returns from beekeepers throughout the United States. Also, state apiary inspectors were queried in early 1959 concerning the colony ownership of beekeeper population in 47 of the states. Table 2 ESTIMATED POPULATION, COLONY OWNERSHIP, AND SHARE OF U.S. PRODUCTION BY OWNERSHIP CLASSES OF BEEKEEPERS, 1957 Number Colony ownership Percentage Ownership Class Total colonies Average ownership per beekeeper total U.S. honey production 187,200 11,600 1,200 1,872,000 1,682,000 1,440,000 10 145 1,200 19 Part-time (25-399 colonies) 37 44 Source: Questionnaire returns from beekeepers throughout the United States, checked against estimates of state apiarists. [9] Hobbyists are viewed with special in- terest in the industry. While beekeeping publications run columns designed to ed- ucate hobbyists on current practices, 8 and membership dues in beekeeping associa- tions are kept at a minimum for them, 9 a number of packers and producers, dur- ing interviews, expressed the opinion that the wide range of production and pricing practices, and the varying quality of hobbyists' honey, is injurious to those who are dependent on honey for a liveli- hood. This, of course, is a complaint often heard where the costs of entry into an industry are low. Actually, the effect of hobbyists on the industry is difficult to assess. A synthesis of the limited number of replies from this group indicates the following : Production practices: The range of honey house practices and standards is no greater than it is in other groups. Testing for color or moisture is infre- quent; straining or settling is usually undertaken to insure reasonable clarity; heating practices vary widely both as to time and temperatures. Marketing activities: A frequent comment was, "Have had no trouble sell- ing my honey." In general, members of this group indicate that no marketing problem exists for them, that they pro- duce only for family or neighborhood sales, or that they do not consider them- selves part of the honey industry. A carryover is rarely noted. In glass their prices are equal to, or higher than, retail store prices; in 60-pound cans they are higher than producer prices. Sales pro- motion efforts are confined mainly to personal selling at local stores and among neighbors and work associates. The sug- gestion hobbyists made most often for s See current issues of: American Bee Jour- nal, Hamilton, Illinois, and Gleanings In Bee Culture \. |. Root Co., Medina, Ohio. 9 Statements of officers, American Beekeep- ing Federation and California Beekeepers Asso- ciation, 1958. increasing sales and margins within the industry was for "more advertising." If any conclusion can be drawn from the limited data about hobbyists, it is that they create few, if any, marketing problems. Their standards appear to be similar to those of many beekeepers who devote considerably more effort to honey production. < The Part-time Beekeeper Part-time beekeepers are here arbitra- rily defined as owners of 25 to 399 col- onies. It should be stated at this point that a considerable number of beekeepers -, devote full time to less than 400 colonies, but many such operators are retired or elderly. Conversely, in certain sections of the country, beekeepers running substan- tially more than 400 colonies would be considered part-time operators. How- ever, 399 colonies represent an approxi- mate national upper limit for part-time operations. Average colony ownership and pro- duction volume of part-time beekeepers are shown in Table 3. It is estimated that about 11,600, or approximately 6 per cent of American beekeepers, own between 25 and 399 col- onies. At an average production of 7,600 pounds per beekeeper, the output of this class is calculated to have totalled 88 mil- lion pounds, or 37 per cent of the na- tional production in 1957. k The Full-time Beekeeper For purposes of this study, the full- time beekeeper is defined as one owning i 400 or more colonies. Although this lower limit has no meaningful applica- tion to the full-time commercial operators in many states, especially those in which large-scale migratory beekeeping is im- portant, it was set in order to include all beekeepers who are devoting full work- ing time to the job in all areas of the country. 10 In some sections of the coun- That is, full time of nonretired people. [10] Table 3 ESTIMATED AVEEAGE COLONY OWNERSHIP AND HONEY PRODUCTION : PART-TIME BEEKEEPERS— 1957 District Average ownership (colonies) Average production (pounds) Pacific Northwest California 80 135 220 180 117 127 118 156 145 4,400 5,700 11,000 Intermountain 8,600 9,300 6,600 White Clover 8,500 Southern 7,200 7,600 Source: Beekeeper questionnaire returns. Table 4 ESTIMATED AVERAGE COLONY OWNERSHIP AND HONEY PRODUCTION: FULL-TIME BEEKEEPERS— 1957 District Average ownership (colonies) Average production (pounds) 526 1,500 1,842 1,520 921 1,272 1,000 850 1,000 1,200 77,000 California Arizona 73,000 104,000 124,000 Plains 100,000 115,000 „„ . ™ [West* 85,000 White Clover < „ . [East 66,000 72,000 National average 88,000 Source: Beekeeper questionnaire returns. * West of Pennsylvania. try, beekeepers with 400 colonies fre- quently produce considerably more honey than do those with 600 or 700 in other sections. Hence, in evaluating the marketing impact of this small, but most important group, the definition used here produces no significant distortion. It is estimated that this group of bee- keepers numbers about 1,200 throughout the United States, a figure which repre- sents approximately .6 of 1 per cent of the estimated total beekeeper population. The group contains most of the industry leaders and in 1957 produced an esti- mated 106 million pounds of honey, rep- resenting 44 per cent of the total U. S. output. Although average colony owner- ship and production of full-time beekeep- ers vary widely by district, the national average colony ownership in 1957 was 1,200 colonies; average honey produc- tion was 88,000 pounds per beekeeper. This was more than 8 times as many col- onies owned and nearly 12 times as much honey produced as the average of the part-time operators in that year. Table 4 shows the average colony ownership and production of full-time beekeepers during 1957. HONEY PACKERS, DEALERS, AND BROKERS The packing and trading segment of the industry is composed of a relatively small group of middlemen, practically all [ii] of whom buy either bulk, or more com- monly, processed 11 honey, for their own account for resale. A precise breakdown of such buyers according to their special- ized functions is difficult. A compilation of all probable middlemen was made by searching the major food industry direc- tories and adding all others not listed therein from the files of the Agricultural Marketing Service and the Commodity Stabilization Service of the United States Department of Agriculture. The total thus obtained was approximately 180 firms, and questionnaires were subse- quently sent to all of them. About 10 per cent of the firms reported that they were no longer packing or han- dling honey. Many questionnaires were undeliverable. A number of firms an- swered by saying that they distribute only bottled honey packed by others, in connection with their general food whole- saling activities. Finally (as described in greater detail in the Export section), it was discovered that many import-export firms have not handled honey since the expiration of the export subsidy. It ap- pears reasonable, therefore, to conclude that: • Many firms market honey on an oc- casional basis as opportunity arises to turn a profit. • Many firms which list themselves in trade directories as honey handlers cannot properly be considered as members of this industry. In a large number of cases they are general food brokers or wholesalers, for whom honey is a minor item in a wide line of products. • Marketing units in the handler seg- ment of the industry have decreased appreciably within the past five years. Evidence at hand indicates that exits far exceed entries into the business. It is estimated that the number of firms 11 That is, filtered, pasteurized and packaged. active as packers, dealers, or brokers of honey in any significant volume, does not , exceed 100. 12 Furthermore, it is esti- mated from data received that approxi- mately 35 per cent of the 1957 total sales of American honey by packers, dealers, and brokers, was handled by the 24 mem- bers of the National Honey Packers and Dealers Association. Specialized Functions Functional classification of packers, dealers, and brokers is relatively simple: A honey packer processes honey by various means, such as blending, filtra- p tion, and pasteurization; prepares honey for marketing to commercial or house- hold users in a variety of containers suit- able to the needs of the market; pur- chases largely for his own account (ex- cept in the case of cooperatives, which must accept members' honey and market it for members' benefit) ; and sells mostly processed honey to industrial users or wholesale middlemen. A honey dealer is a middleman who buys honey for his own account and re- sells to industrial users and other middle- men. He ordinarily does no processing, but occasionally arranges for it if neces- sary to a sale. Over one-third of the pack- ers who responded to the questionnaire, signified that they engage in dealer ac- tivities. A honey broker is a middleman who i represents a buyer or seller of honey lots for a brokerage fee. The brokerage func- tion in the honey trade has declined al- most to insignificance, largely as a result of rather stable, continuing relationships between packers and producers, and the tendency of brokers to undertake dealer activities. Although it is common to refer to those engaged in the import-export 12 A significant number of firms listed in the packer group handled less than 100,000 pounds of honey in 1957, an amount not much in excess of the average output of a full-time beekeeper in that year. [12] trade as brokers, such firms actually op- erate largely as dealers — buying almost entirely for their own account for resale, as specific opportunities arise. It is not uncommon for units within the industry to engage in a variety of activities as op- portunities to do so profitably arise. A substantial number of packers, 25 per cent of the respondents, undertake truck distribution to wholesalers' ware- houses and retail stores, particularly if they also carry food lines. 13 Packers who are also beekeepers (re- ferred to in the industry as producer - , packers) are difficult to categorize; both their marketing and packing practices tend to be analogous to those of packing organizations. Thirty-eight such firms are listed by the American Beekeeping Federation as members of that organiza- tion, but a number of other known and substantial operators of this type are not listed by the association. A producer- packer can be characterized as: • Producing a substantial share of his pack. • Purchasing from other beekeepers. • Engaging in packing and marketing functions. Excluding several very large firms which are listed as producer-packers in the American Beekeeping Federation membership list, but which could more accurately be categorized as packers, one finds that the average 1957 honey sales of producer-packer firms was 135,000 pounds. Their purchases from other bee- keepers averaged 36,000 pounds. In considering marketing practices, a number of producer-packers were re- garded as packers on the merit of the relative importance of their packing function. In many cases their operations were transitional between that of pro- ducer and that of packer. This dual type of operation is particularly effective near consuming centers, and is often found in the White Clover Belt. Concentration of Markets The fact that there is a relatively small group of packing and marketing firms has not gone unnoticed by producers, many of whom blame the frequent low price levels on this concentration of buy- ers, 14 a condition which they feel has also led packers and dealers often to act to- gether in setting the price at which they will buy. It is impractical in a study of this type to attempt to assess the validity of such charges, but the facts indicate that "going" offering prices for producer lots of honey can be arrived at without resort to collusion. One of the characteristics of the indus- try which makes informed marketing at the producer level difficult is the rather isolated nature of beekeeper operations. Packers and dealers are in a much better position to know about general supply- levels over a wide area than is the indi- vidual producer, or even an entire group of producers in a given area. In some areas private packers try to stay "in line" cost- wise with Sioux Honey Association Cooperative. This means that private packers frequently work back from a competitive wholesale price level to a producer price level at which they hope to purchase honey and maintain a suitable profit. Thereafter bargaining with producers quickly narrows prices to a "going" level. It must be assumed that where pro- ducers freely discuss prices, a market price based on packers' inventories and shipping costs will be quickly established. In the case of the isolated Intermoun- tain District, however, from which sur- plus honey must move eastward or to urban Pacific Coast sections, price levels are largely governed by the prices, less 5 Among other lines noted were peanut butter, mayonnaise, pickles, syrups. Comments of beekeepers on questionnaires and during interviews. r 13 1 freight, which obtain in the areas of des- tination. Interviews within the industry revealed that the various state packer and dealer groups and the National Honey Packers and Dealers Association are not cohesive trade organizations out of which unified action could be expected on supply prices. The trading tactics of individual packers are sometimes less than ethical, quite aside from the economics of the market. A common questionnaire observation by beekeepers was: "There ought to be more competition among packers for honey." However, although more ener- getic bidding for available honey sup- plies might result if there were an in- crease in the number of packers, inquiry reveals that in spite of the modest capital requirements connected with honey pack- ing, at least four of the nation's largest food processors have avoided honey as a national branded item, 15 because of the problems inherent in the grading, inspec- tion, and blending of honey, its nonuni- form supply, variable shelf life, low stock turnover, and the wide range of regional preferences. As mentioned elsewhere, the entry of additional packers via the producer- packer route is a constant element to be reckoned with by honey-packing firms. As producer?packer firms grow, however, they necessarily become more oriented to packer interests and less to those of bee- keepers. Finally, it is apparent from evidence gathered in this study that current mar- ket and profit conditions in the industry not only fail to present a picture of wide- spread opportunity with which to attract new entrants, but have actually brought about a substantial exit of packer-dealer firms. In order to improve his marketing po- '" Based on correspondence with four proc- essors of national brands. All had considered honey and one had actually sold bottled honey, but dropped it. sition, a producer must be aware of sup- ply conditions not only in his own area, but in other areas within economical shipping distances of packing centers. 10 Successful marketing requires knowl- edge, ingenuity, and energy. A producer cannot concern himself solely with pro- duction until after harvest and expect to maximize his income. Marketing is a year-round job. A route by which beekeepers may at- tempt, and sometimes have attempted, to improve their marketing operations, is through cooperative organization. COOPERATIVE ORGANIZATIONS There are six important cooperatives in the honey industry: • Sioux Honey Association, Cooper- ative, Sioux City, Iowa. • Finger Lakes Honey Producers Co- operative, Groton, New York. ° Ohio Honey Association, Columbus, Ohio. • Florida Honey Cooperative, Uma- tilla, Florida. • Imperial Valley Honey Marketing Association, San Bernardino, Cali- fornia. • Valley Honey Cooperative, Car- michael, California. The combined volume of honey han- dled by these six organizations in 1957 was about 35 million pounds, or 14 per cent of national production. Combined membership is approximately 800 pro- ducers. All of these cooperatives are organized primarily as marketing associations, al- 16 Since producers and middlemen deal in various floral sources, not just honey, it would be of great benefit to the industry if a method of crop estimation could be developed for major floral sources. To be of maximum benefit, it would be necessary to release estimates promptly after the harvest of a number of important regional crops like tupelo, sage and fireweed. [14 though Sioux Honey Association and Finger Lakes Producers Cooperative also engage in the full range of processing with their own facilities. Sioux Honey Association, with its six plants located in the major producing areas of the coun- try, is the largest processor and marketer of honey in the United States. The other cooperatives are essentially regional in character, as for example Finger Lakes Cooperative, which restricts its market- ing activities largely to the New York metropolitan area. Although records show that this type of organization has existed in the honey industry for over fifty years, only the six listed here are known to exist today, and several of these are of fairly recent origin. 17 Cooperatives offer advantages 18 to bee- keepers which they cannot achieve as in- dividuals, but the potential gains are de- pendent to a great extent on the follow- ing factors : • Floral source of production and quality of output. • Degree of control which manage- ment has over storage, segregation, and quality standards. • Range of processing and marketing activities. • Financial strength of members. • Management skills of hired per- sonnel. In general, the producers' bargaining position is enhanced if the cooperative controls a sizable portion of a crop, but since a small percentage of producers are members of the cooperatives, and only 14 per cent of the total production, widely dispersed throughout the country, is con- trolled by these organizations, the bar- gaining advantage to be gained through 17 Another cooperative was in the process of formation in California at the time this manu- script was being completed. 18 There is an extensive body of work on the theory and operations of cooperatives. The com- ments offered here apply only to factors of specific concern to honey producers. belonging to a cooperative is of consider- ably less importance in this industry than in many others. 11 ' Although cooperatives have sometimes successfully raised or maintained producer prices by bidding for supplies of particular floral sources in various localities throughout the coun- try, their major contribution to this in- dustry has been in the area of providing better marketing management for crops than beekeepers have been able to pro- vide for themselves. The following comments are based on observed problems of beekeeper cooper- atives in connection with the five factors mentioned above. Floral Sources and Quality Because of the local nature of most honey cooperative operations, it is al- ways most likely that their product mix will adhere closely to that of the region in which they are located. While this is an advantage in years when conditions yield a good crop of choice regional types, there are also years when the co- operatives find themselves with just an average product mix of the particular area in which members are concentrated. If, for instance, a small regional cooper- ative has mainly a large crop of light amber alfalfa honey which must be mar- keted, either as bakery or export honey, there is a strong probability that there is also a plentiful supply of the same type of honey in the hands of beekeepers out- side the cooperative. There would then be no compelling reason for packers or exporters to deal with the cooperative, unless the organization could offer both the producer and potential buyers the benefits which accrue from good man- agement. The concentration of cooperative mem- bership in a limited area, especially if members are not migratory operators, also frequently presents the problem of 19 In some areas, of course, cooperatives con- trol a much higher proportion of the crop; in others, practically none. [15] limiting the types and grades of honey a cooperative can offer customers. The only solution to this problem lies in the organization's willingness to add to the range of its stock by purchasing honey from other areas. Degree of Management Control Over the Product Packer interview responses indicate that purchases from cooperatives which do not have central storage and grading are frequently unsatisfactory because the shipments received from members do not coincide with representations made by the manager as the basis of the sale. In some honey cooperatives managers have little or no control over sampling, testing, storage, or segregation of the crop, since the "pools" are simply the totals of re- ported floral sources and grades held by the individual members. In such cases the manager is essentially a sales agent, and marketing standards are therefore applied to crops which have actually been variously processed, because of the wide range of members' practices. Thus, central sampling, testing, grad- ing, and storage in various pools — all insurance of quality service — are vital marketing management functions which cooperatives can perform as inducement for packers, dealers, and industrial users to buy from them. It is difficult to en- vision how a manager can do an effective job without having such control over the members' output. Range of Processing and Marketing Activities Since a number of honey cooperatives do not process in any way, they add noth- ing to their product which differentiates it from that of the competing nonmem- ber producers. While there may not be any necessary correlation between suc- cess and full processing and marketing, the most successful cooperatives do en- gage in the full range of processing, pack- ing and merchandising. One advantage in this is that honey does not then have to be sold to others as separate lots of various floral sources and grades, but can be blended into suitable varieties of pack depending on the demands of the end-use market. In order to be in a position to do this, however, a cooperative must be able to draw on a sufficiently wide range of floral sources to provide an adequate product mix. Financial Resources The financial strength of cooperative members is important to the organiza- tion's success, inasmuch as producers do not receive full payment for their crop at the time it is turned over to the cooper- ative. 20 It is therefore necessary for mem- bers to have sufficient working capital with which to continue in operation until the crop has been sold. One way in which a properly managed cooperative with a suitable central warehouse can improve this situation is through the use of com- mercial loans on warehouse receipts, which may be used to finance members' operations as the crop is sold. The co- operative is, of course, entitled to the same government crop loans and pur- chase agreements as are individuals. It is assumed that the organization's own reserves might ultimately be used for these purposes. Also, the Banks for Co- operatives are a source of loans for co- operatives in sound financial condition. It should be kept in mind that a sound working capital position is just as impor- tant to a cooperative as it is to any other business enterprise. A cooperative member's financial re- sources are also a crucial consideration in relation to the period of time over which his crop may be held prior to sale. The manager of a purely local cooper- ative, having difficulty moving a heavy crop (especially if it is of low grade or limited floral source) may put most of the crop under CCC loan and then hold 20 Usually not more than 50 per cent on deliv- ery. [16] it up to the time limit prior to delivery to CCC, as he attempts to move it. Con- versely, it may occasionally be desirable to carry over choice stocks into the next crop year, but again, the putting into effect of such a plan would depend on the members' ability to finance them- selves until the eventual sale is made. In the former case, members are probably no better off than other beekeepers with like yields unless other benefits accrue through membership; in the latter case the cooperative might present advantages through continuing marketing manage- ment. Generally speaking, cooperatives in this industry try to avoid carrying over anything but choice specialty types on which crops are limited or infrequent. Another obstacle to the building of financially strong honey cooperatives arises from the tendency of members to take a short-term view of the advantages of cooperation, and in years of scarce supply independently enhancing their individual incomes over what they would garner from pool averages, less expenses. It is clear that in order to be effective, cooperation must be sold to beekeepers on the basis of the long-term over-all advantages it can offer, in addition to full-time marketing management services. Management Skills of Hired Personnel Although management skill is an in- dispensable ingredient for success in any enterprise, cooperative management per- sonnel must have pronounced leadership qualities. This is particularly true in co- operatives handicapped by lack of facili- ties, working capital, limited manager control of the crop, or minimum process- ing activities. Although it is usually difficult for small honey cooperatives to hire full-time skilled managers at the salaries they can afford to pay, part-time beekeeping by the manager to supplement his income is likely to defeat the cooperatives' pur- poses in employing him. It is a widely [ accepted fact in business management that when a manager's total income de- pends on several activities which yield various returns, he devotes more atten- tion to those ventures over which he has the more direct personal control. And in the case of the part-time beekeeper-man- ager, it is likely that he would put less effort into his managerial duties than he does into his beekeeping. In order for producers to reap the maximum benefits from cooperation, honey cooperatives will have to concern themselves more and more with activities which will put them on a sound competi- tive basis with private business organi- zations in the industry. This means among other things, that they will need: managers who understand the techniques of standardization, processing, cost con- trol, and merchandising; access to legal and accounting skills; and information about the advantages of working with other types of cooperative organiza- tions. 21 The conclusions to be drawn from these observations are: • Cooperatives can enhance bargain- ing power and marketing efficiency of beekeepers, although some honey cooperatives are not fully exploiting their opportunity to accomplish these ends. • Honey cooperatives should seek to draw membership, or exploit nectar sources, from over an area wide enough to insure an extensive prod- uct mix both as to floral source and grade. The federation of several local cooperatives might achieve such an end. • The crop should be delivered to the cooperative warehouse for testing, grading, and segregation into pools under the control of the manage- ment. 21 One advantage cooperatives gain in this respect is a full-time staff in the Farmers Coop- erative Service, U.S.D.A., on whom they can call for advice. 17 The entry of more local or regional cooperatives into processing, con- sumer packaging, and merchandis- ing, would increase the opportuni- ties for improving returns of pro- ducers already using the cooperative as a. bargaining association for the sale of bulk, unprocessed honey. 22 Since new members are reportedly not currently being accepted by the only nationwide cooperative which carries on such activities, producers can venture into more extensive co- operative marketing only by build- ing their own processing plants, or buying out existing private pack- ers. The cooperative should adopt stand- ards and practices which would im- prove its ability to borrow working capital for its own and members' operating needs. Honey cooperatives should handle a sufficient volume to support a full- time manager who would be respon- sible for application of standards, processing, marketing, and other business management. It is likely that it will eventually be recognized that more formal training in busi- ness management, as well as experi- ence in food marketing, should be considered in the hiring of honey cooperative managers. 22 This has been common among cooperatives in a number of crops since World War II. See Farmer Cooperatives in the United States, F.C.S. Bulletin 1, Farmer Cooperative Service, U.S.D.A., December 1955, p. 23. 23 Another possible method of diversification would be for the cooperative to extract members' honey in order to free beekeepers to concentrate on production. This discussion has avoided the implications of what might happen to competitive conditions within the industry if additional processing and marketing units were to become active. In general, all packers, including cooperatives, appear to view the demand for honey as inelastic, with compe- tition aimed at a larger share of existing demand rather than the same or a slightly smaller share of a considerably increased demand. Sioux Honey Association's policy of not accepting new mem- bers until demand can be expanded for the additional volume (presumably at existing margins), is apparently a manifestation of this attitude. Thus, the entry of new packing organizations would undoubtedly produce short run effects of reducing margins of existing regional units and un- settling regional competitive relationships unless, for instance, a cooperative were to buy the facilities and good will of an existing packer. Over the long run, it is entirely possible that addi- tional competitive pressure would produce greater total profit for efficient units through the crea- tion of a new demand curve for the industry. A theoretical appraisal of the various facets involved does not fall within the purview of this study, but might present some interesting opportunities for investigation in connection with the organization of additional regional packing cooperatives. [18] II. PROCESSING AND -I CONTAINER PRACTICES PROCESSING PRACTICES 1 Beekeepers JYIethods of sampling, and the care taken in preparing honey lots, are the processes by which producers largely establish their reputation. Honey house practices may affect the color, shelf-life, cleanliness, flavor, and general salability of honey. Of all the complaints voiced by packers, those involving lack of ade- quate care on the part of the producer are among the most frequent. Processing practices which most affect marketing are: • Settling, straining or filtering. • Heating. • Testing for color and moisture. • Sample taking. Settling-, straining and filtering. The clarification of honey is so impor- tant that it should command the serious attention of the beekeeper. A product which contains a large number of insect parts, larvae, and other foreign materials, naturally casts serious doubt on the qual- ity of the honey and the craftsmanship of the producer. Even though the num- ber of producers who do not clarify is small, the total volume of honey involved may be considerable. Part-time producers are more likely to avoid processing than full-time operators. In general, settling and straining tend to 1 Data in this section were derived from ques- tionnaires filled out and returned by beekeepers and packers. be used in combination to a greater ex- tent than either one separately. Filtering is less often used, except among full-time beekeepers of the eastern White Clover Belt. Table 5 shows the practices of the various honey districts, and indicates certain tendencies with regard to clarifi- cation. A conservative estimate of the volume of honey not clarified by the producer in any way would be at least 10 per cent of the total. In cases where the beekeeper decides between settling and straining, the full-time operator tends to select the settling method, the part-time producer the straining method — possibly because settling equipment is the more expensive. From the standpoint of marketing quality, it is suggested that beekeeper or- ganizations strive to encourage all pro- ducers to perform at least a straining operation on honey during extraction. Heating. As can be gathered from the amount of discussion and feeling which has been engendered by the question of overheated honey in the export trade, heating assumes great importance in the marketing of honey. The evidence gath- ered in this survey indicates that there is no other subject related to honey about which there is less agreement — either as to facts or practices — and this applies to all classes of producers. Two elements are involved in the ap- plication of heat: time and temperature. Whereas laboratory tests demonstrate that flash heating to 160° F is not injuri- ous to honey, honey held even at room temperature or slightly heated over an extended time, may darken, change in 19 Table 5 CLARIFICATION PRACTICES OF BEEKEEPERS PERCENTAGE OF PRODUCERS ENGAGING IN VARIOUS TECHNIQUES Part-time producers Full-time producers District Do not process Settle or strain only Settle and strain Filter Do not process Settle or strain only Settle and strain Filter % 14 7 14 6 5 10 4 2 10 % 36 Strn. 14 Strn. 57 Stl. 18 Strn. 35 Strn. 57 Strn. 46 Strn. 38 Strn. 45 Strn. % 50 77 29 70 58 29 48 58 45 % 2 6 2 4 2 2 % 7 3 7 3 4 7 7 % 8 Stl. 36 Stl. 64 Stl. 8 Stl. 26 Stl. 41 Stl. 7 Strn. 21 Strn. 29 Strn. % 77 61 27 77 69 45 76 50 57 % 8 9 8 3 Texas 10 /West 10 White Clover < „ ~. (East 28 7 Source: Beekeeper questionnaire returns. Table 6 HEATING OF HONEY^ As applied by part-time producers As applied by full-time producers District Time range f Temp, range Average temp. I Time ranget Temp, range Average temp.J hr.-min. 4 h 30»- gh 60«> 30™-15 h 15™-24 h 30m_6()m 10m_ 2h 15 m -30 h deg. F. 120-168 110-160 110-160 100-160 80-160 100-170 110-175 130-160 deg. F. 140 130 180§ 140 140 150 140 150 150 hr.-min. 3 m -30 m 24 h 10™-12 h 10 m_24b 3m_ gh 60 m -24 h 30™-24h 45 m -60 m deg. F. 105-160 100-160 85-160 80-165 110-160 110-160 100-170 110-160 deg. F. 130 California Arizona Intermountain Plains 115 155§ 130 140 140 White Clover {f™\ (West Southern 140 140 140 Source: Beekeeper questionnaire returns. * The presentation of time — temperature data should be based on the combined results of the individual times and their related temperatures. The figures shown in this table are intended merely to show the extent to which honey is heated. t Flash heating not included in the time range, although flash temperature is in temperature range. t Median value : half of observations are higher and half are lower. § Only one observation in each case. I! Insufficient time data. High proportion evidently use flash-heating. flavor, or both. Table 6 shows the ranges of time and temperature reported in the various honey districts by producers. Although it would seem clear that the higher heats would best be applied for shorter times, study of individual reports shows that in fact high heat is frequently associated with long heating periods. In- dications are that producers who are overheating and not properly cooling, are unwittingly burning up their profits by increasing their processing costs and causing color and grade deterioration of their product. Analysis of Table 6 will show that full- time beekeepers tend to use a lower aver- age heat than do other producers, which undoubtedly can be attributed in con- siderable part to their better understand- ing of the process. However, a partial [20] Table 7 TESTING PEACTICES OF BEEKEEPERS: PERCENTAGE OF REPORTING BEEKEEPERS WHO TEST FOR COLOR AND MOISTURE Part-time Full-time District Test for color Test for moisture Test for color Test for moisture Pacific Northwest % 6 9 1 3 6 4 4 % 5 3 12 3 3 6 1 4 % 26 34 20 41 10 12 15 7 10 % 6 17 Arizona 27 14 Plains 10 Texas 17 White Clover (!f est (East 18 7 Southern 26 Source: Beekeeper questionnaire returns. explanation of differences in time and heat applications from district to district can be made on the basis of disparate honey characteristics, honey harvest practices, and packing methods. Many producers feel strongly that no heat should be applied to honey, or that it should not be heated above room tem- perature, on the assumption that its essen- tial nature is changed by heating. This view is widely ascribed to in the health food trade where honey labeled as "un- cooked" is featured. Somewhat the same claims have been made about other foods, such as milk. It would, however, be diffi- cult to establish that heats used in careful processing and packing of honey by either producers or packers could "cook" honey. Such honey might more accu- rately be referred to as "minimum," or "moderately-processed." It is difficult to conclude whether the marked range of heating practices results from unconcern about the product, lack of knowledge about processing recom- 2 Moisture levels of fully-ripened honey are rarely so high as to endanger its quality. When ripe, honey has sufficiently high sugar content to prevent fermentation. For this reason the moisture test is less pressing than that for color. 3 At f!20-$30, the comparator is considered a bargain by experts. For the thousands of bee- keepers who sell their honey directly to end-users, the question of color never arises. For others, who may view the instrument as a luxury, their saving may actually net them an ultimate loss far greater than the initial outlay for the equipment, as a result of bargaining with incomplete knowl- edge, or failing to detect gradual color change in stocks. mendations (which have been widely available for some years) , or the expense involved in acquiring proper equipment. Testing. Considering the fact that producers' income depends mainly on color, and partly on moisture, 2 it is sur- prising that so few beekeepers test for either. Many people in this industry enter the marketplace without complete infor- mation about their product, and depend on others (often the other party to the sale) to enlighten them. Table 7 shows that the percentage of beekeepers who do no testing for color probably exceeds 75 per cent. This inattention to product specifications is one of the many unbusi- nesslike practices which abound in the industry. A number of producers who do con- duct tests use the Pfund grader for color, and a refractometer for moisture. The relatively high cost of even such devices as the simple comparator may be one reason for the low percentage of oper- ators who test at all. 3 [21] Sampling. One of the techniques which has a bearing on the beekeeper's ability to bargain effectively, is the sampling of his honey lots. Not only does accurate sampling improve the pro- ducer's knowledge of what he really has to sell, but it increases his reputation with packers, who often complained that producers' samples did not accurately represent their honey. Questionnaire re- turns show a great variation of sampling techniques, indicating a general lack of knowledge of how samples should be taken in order to represent given lots. Thus, the reputations of many producers with their packer customers may well rest on chance, since the samples taken by methods described in many question- naires may not necessarily be representa- tive of a honey lot. 4 Accurate sampling was considered suf- ficiently important for the California Beekeeper Association to appoint a com- mittee in 1958 to develop a reliable sampling method. National and state as- sociations could take the lead in dissemi- nating data on processing and sampling, and the use of the beekeepers' own asso- ciations for spreading information and introducing uniform techniques, could be an effective device for building up channels of communication among bee- keepers and strengthening the self-help aspects of producer associations. That sound sampling techniques are crucial can be further attested to by the fact that 73 per cent of the packers and dealers base their decisions to purchase on a seller's advance sample. Packers and dealers generally check honey upon re- ceipt of shipment, and it is at this time that a beekeeper's reputation (and in- come) may suffer if he has taken a grossly unrepresentative sample. Occa- sionally, colors are determined after re- ceipt at the packer's plant, but this occurs 1 1t should be emphasized that even with sampling on any acceptable basis, the chance of occasionally drawing a clearly unrepresenta- tive sample will remain. largely in the cooperative organizations, and among packers who have had long- standing working arrangements with pro- ducers. Since samples submitted for an offer are nonuniform in container and weight, and many producers submit samples weighing as much as 2% to 5 pounds, the cost of merely submitting samples can be substantial. Even a two-ounce sample, sufficient for normal packer test- ing purposes, costs approximately 30 cents, complete with jar, container and postage.' Table 8 shows the most fre- quently cited sample sizes throughout the United States, the eight-ounce sample weight being the one most commonly used. It seems unlikely that a standard sample size or method of packing will be established except at packers' insistence, even though lower costs and more effi- cient handling could be achieved thereby. There are evidently many aspects of processing, sampling, and testing about which producers are not clear; many bee- keepers admit that they have difficulty in determining just what the specifications of their product really are. A concise handbook describing recommended proc- essing techniques, mechanical and sta- tistical methods for reasonably accurate sampling, and methods of grading, would be of material assistance in helping pro- ducers to carry on more informed mar- keting. Packers and dealers could also improve the general level of information throughout the industry by sponsoring joint seminars during state and national conventions. Packers and Dealers Although packing practices do not vary as widely among packers as they do among producers, packers also engage in a considerable variety of methods and techniques in preparing honey for mar- ket. B Dealers frequently require larger samples in order to have sufficient honey to offer sub- samples to a number of prospective buyers. [22 Table 8 MODAL SIZE* OF HONEY SAMPLES SUBMITTED BY PRODUCERS District Part-time producers Full-time producers Pacific Northwest ounces per sample 16 2 Variable t Variable! 8 2 8 4or8t 8 ounces per sample 4or8t 2 Arizona 8 8 Plains 16 8 White Clover (j?.* 8 * [West Southern 2 8 8 Source: Beekeeper questionnaire returns. * Modal size: that is, most commonly reported size among all sizes used. t An equal number reported using 4 and 8 ounce samples. % Insufficient data to establish a modal size. A dealer in the honey trade is a middle- man who buys for his own account and resells the honey in the same form as he bought it ; he does not process. Although dealers are concentrated in the import- export trade, there are a number of small-scale dealers in domestic trading activities who purchase in bulk. Testing. There are wide variations among packers in both testing standards and testing techniques. The larger or- ganizations, which market over more than local territories, are customarily equipped with a suitable range of instru- ments for testing color, moisture, and other components (such as ash, acid-base reaction). But whereas nearly every packer and dealer checks the color of the honey he buys, only 60 per cent of the reporting packers and dealers noted that they test for moisture. In fact, some packers who reported that they blend and pack to U.S.D.A. grades, 6 do not test for moisture. This may be a hazardous practice if the label bears a U.S.D.A. grade, since those grades specify certain minimum soluble solids — the remainder of the product being moisture. 6 Color is not a part of grade. The reference to color above is a comparative comment only. See Appendix for U.S.D.A. grade description. Discord in the industry often arises when colors which have been determined at the producer level on a comparator are later checked on a Pfund grader, and rejected as being unsatisfactory. The problem is common in the export trade and is complicated for exporters by the fact that the U.S.D.A. grades are of- ficially based on the standards of the comparator. In January, 1959, the National Honey Packers and Dealers Association re- quested the U.S.D.A. to make the Pfund scale ranges the official color standards, at least in the export trade. The Pfund grader is often thought to be more accu- rate because it has an imposing design and can be read on a millimeter scale, whereas differences near the borderlines of the comparator color blanks are some- times difficult to detect. The Pfund grader is subject to wide variations in accuracy, however, and must be recalibrated at fre- quent intervals (6 months suggested), with no assurance that readings on two different graders will coincide. 7 It is clear that the factor of human judgment can- 7 In a 1950 study by U.S.D.A., it was shown that wide discrepancies were found among Pfund graders. However, in spite of the me- chanical requirement of recalibration, the Pfund is a very useful instrument in blending practices. [23 not be entirely eliminated from grading, and adoption of the policy proposed by the packers and dealers would deprive most beekeepers of the inexpensive offi- cial color grading standard, without sub- stantially improving the basis of grading. Clarification. Fifty-three per cent of reporting packers filter honey. This is in contrast to the 13 per cent who settle and strain, 27 per cent who strain only, and 7 per cent who settle only. A very high percentage of bulk honey (sold in tanks, drums, or 60's) is strained only; filtra- tion is performed on an estimated mini- mum of 75 per cent of the retail pack. Blending. Blending is performed by 60 per cent of the reporting packers, and it is estimated that in excess of 80 per cent of the retail pack released by pack- ers is blended to various color grades. The following objectives may be achieved by blending: • A standardized product can be pro- moted as to flavor and color. • Fluctuating supplies of colors within floral sources can be balanced out. • Cheaper types of honey can be mixed with more expensive ones, thereby stabilizing costs or increas- ing profits. • Fermentation can be halted and car- amelized flavor hidden. Many packers seek the first two objec- tives. A number of proprietary blends of several floral sources are energetically promoted around the country. In some areas the native clover honey is blended with that of another region to produce a more pleasing flavor. Packers state in their questionnaires that marketing prob- lems which arise from variations in honey are largely caused by the change in quality of the various floral sources. Uniform year-to-year honey color is rec- ognized as being of utmost importance in fostering both consumer loyalty and good store relationships. The third objective was not mentioned by packers, but is common practice with agricultural commodities which lend themselves to uniform mixture. The fourth objective was mentioned in interviews and correspondence. It is important to keep in mind that honey may be graded and labeled either to U.S.D.A. or state specifications. The U.S.D.A. specifications are "A" (Fancy) , "B" (Choice) or "C" (Standard) ; color class is sometimes included on the label. About 30 per cent of the reporting pack- ers blend to U.S.D.A. Grade A of various colors; the actual physical volume of honey involved exceeds 50 per cent of the total reported by packers. The other 70 per cent merely attempt to achieve uniform color standards within the limits of local requirements. Blending and labeling practices tend to parallel each other, although the data which packers put on their labels need not cover the entire range of the product specifications. Field study has shown, however, that floral source, grade, and color information is not usually found on labels east of the Intermountain Dis- trict, even where the packer has adhered to the highest U.S.D.A. grade standard. Questionnaire answers on labeling prac- tices concur with this finding. Table 9 shows the range of label data found west of the Plains States and Texas com- pared with that found east of that line: The fact that there are many more private label packs in eastern stores, coupled with the minimum label infor- mation given regarding floral source and color, might lead one to conclude that eastern consumers depend more on skill- ful blending and distributor reputation than is likely to be the case in the west. On the other hand, little is known about what consumers look for when they buy honey. Label information merely presents opportunity to buy more intelligently, or to develop identifiable preferences; it does not necessarily educate the buyer. [24] Table 9 COMPAEISON OF EASTERN AND WESTERN LABELING PRACTICES Area Trade name floral source and color Trade name floral source Trade name color Trade name only Plains states, Texas and east % of replies 33 53 % of replies 39 41 % of replies 11 % of replies 17 Intermountain and west 6 Source: Packer questionnaire returns. Heating. The desirability of heating honey beyond the point necessary to liq- uefy it for easy handling is questioned by some packers, just as it is among pro- ducers. The packer's attitude toward honey heating is primarily colored by his responsibility for bottling honey which has a suitable shelf life and is free from the likelihood of granulation and fermentation. Generally speaking, nearly all large-volume packers flash heat to 160° in order to pasteurize the yeasts which may cause fermentation, and also filter. In a few plants east of the Inter- mountain District, evaporation columns are used as an alternative method for suppressing fermentation and maintain- ing uniform moisture content in the bottled honey. ANALYSIS OF CONTAINER USAGE Container usage has vital economic and merchandising implications because it figures in the marketing picture all the way from the honey house to the con- sumer's kitchen. This section assesses sev- eral aspects of container usage, based on information garnered from questionnaire returns and field interviews. Beekeeper Container Usage Since only 38 per cent of beekeepers owning more than 25 colonies restrict their sales entirely to bulk forms (i.e., tanks, drums, or 60-pound cans), it fol- tainers suitable for retail trade. Fifty- four per cent of full-time beekeepers re- strict their sales entirely to bulk forms. Table 10 is a district-by-district rec- ord of bulk container usage. The per- centage of full-time and part-time bee- keepers in each district who sell honey in retail trade containers can be ascer- tained by deducting the figures in the "Bulk Containers Only" column from 100 per cent. Drums. The 55 gallon drum is likely to become more popular because its use constitutes a potential cost saving. For this reason data on drums was solicited from both producers and packers. Use of drums is, of course, still far behind 5 gallon cans in small scale operations. But as Table 10 indicates, a sizable per- centage of full-time producers use drums for a portion of their output in the White Clover, Southern, and Texas districts. Nationally, about 20 per cent of full-time beekeepers use drums for all or part of their shipments. 8 As Table 11 shows, data on beekeeper costs 9 for drums are fragmentary. Their cost varies according to quantity pur- chased, gauge, construction, painting lows that some portion of the output of the other 62 per cent is packed in con- 8 It is estimated that about 3 per cent of the honey sold to packers and dealers is delivered in drums. 9 The reader should not interpret the averages shown in this chapter as representing more than regional and quantity cost differences. Obvi- ously, the cost which means most to a producer is his own cost. [25] Table 10 PEECENTAGE OF BEEKEEPEES SELLING IN BULK ONLY, THOSE EESTEICTING CAN USAGE TO NEW CANS, AND THOSE WHO SELL PAETLY IN DEUMS BY DISTEICTS IN THE U.S., 1957 Percentage of part-time beekeepers Percentage of full-time beekeepers District Who sell in bulk containers only* Whose can usage is restricted to new canst Who sell some output in drums Who sell in bulk containers only* Whose can usage is restricted to new canst Who sell some output in drums 30 44 86 25 30 20 19 28 4 12 79 50 43 29 63 52 52 63 15 1 2 9 13 2 19 2 52 91 100 49 45 68 34 32 43 81 91 41 27 6 49 41 71 11 5 10 15 29 fWpst White Clover Belt < ^ " ' ' 31 32 611 Source: Beekeeper questionnaire returns. * "Bulk containers" means tanks, 55-gal. drums, or 60-lb. cans. t This does not mean that their entire sales are in 60-lb. cans. I Dominated by data from Florida. Table 11 COMPAEISON OF PEICES PAID BY BEEKEEPEES FOE NEW AND USED BULK CONTAINERS* BY DISTEICTS IN THE UNITED STATES Paid by part-time beekeepers Paid by full-time beekeepers District Cans Drums Cans Drums New Used New Used New Used New Used c/can 75 62 65 72 71 73 66 68 76 c/can 32 32 36 35 28 37 30 31 31 %/drum no obs %/drum ervations 1.50(r)f c/can 65 56 60 63 65 61 60 61 65 c/can 30 30 30 34 30 30 30 30 30 %/drum no obs. no obs. 8.35 7.50 7.50 7.50 no obs. 7.50 %/drum 1.50(r) 6 00 1.50(r) Intermountain 7 00 Plains 6.50 7.50 7.50 6.00 no obs. 1.50(r) 1.50(r) 1.50(r) 1.50(r) 1.50(r) 1.50(r) 1.50(r) Texas White Clover |^ eSt (East no obs. 1.50(r) l.S0(r) Southern Source: Beekeeper questionnaire returns. * Average of prices paid per container in all quantities. t (r) — Rental specifications, and geographical location. And there are almost daily price fluctua- tions in used drums as conditions of demand and supply change in each area. The one drum cost which appears to be static and uniform, however, is the rental rate of $1.50 per drum, at which rate more and more packers are providing drums to their suppliers. Rentals bring the beekeeper's container costs to about x /4 cent per pound, and a beekeeper sell- ing 80,000 pounds would save at least $600 per year over the cost of new 60- pound cans. The illustration points up 26] not only the direct saving but the oppor- tunity to reduce working capital as rep- resented by a can supply. Producers tend to regard the necessity for installing a filling pit and hoisting equipment as an obstacle to the use of drums. Although direct labor costs would probably not be affected 10 (except in the case of the very large beekeeper) , the use of drums would eliminate much heavy lifting and otherwise make for more effi- cient use of labor. The greatest impetus to the introduc- tion of drums has come from packers, a number of whom have equipped their plants to handle them. Their claim is, however, that although individual bee- keepers who have converted to drums are enthusiastic, there is a generalized reluc- tance on the part of producers through- out the industry to adopt this method of bulk packing. Five gallon cans (60-pound contain- ers). Table 11 shows the average cost of new and used 60-pound containers in 1957. Since these cans are used more ex- tensively than drums, the data are more reliable indicators of price differences from district to district. In general, part- time producers pay a higher price for new cans than do full-time operators, probably because their average purchases are not large enough to rate discounts awarded bigger accounts. The differential is much smaller or nonexistent on used cans, but in most districts a higher pro- portion of part-time operators pack their honey in new cans. 11 (Table 10.) 10 In order for direct labor costs to be re- duced, the introduction of such devices would have to result in displacement of full- or part- time labor. In family-type operations this would not occur, nor would it be likely to occur in any except those large enough to have nearly full-time labor handling cans from filling to storage and/or loading. 11 Note that this does not mean that a higher physical volume of honey is sold in new cans. It signifies only that more part-time operators prefer to pack in all new cans than is the case with full-time beekeepers. In some areas of the country there are two grades of used cans: • Grade 1 : Used only once and free from dents and rust. Usu- ally sells for about 10 cents more than Grade 2. • Grade 2 : Used more than once. May be dented and/or rusted. Prices vary, running up to about 30 cents each. A very substantial percentage of bee- keepers in both classes prefer to use new cans entirely (Table 11), and during interviews, there were strongly held opinions on both sides of the question of whether residue in used cans could adversely affect subsequent honey con- tents. It is most likely that chance plays a considerable part in what happens to subsequent fillings. If a producer fills cans which contained dark, strong honey with a light, mild honey, an adverse change may take place. 12 The odds on this are reduced where packers purchase from a few producers who restrict opera- tions to the same limited geographical areas and floral sources year after year. In this way there is a "float" of cans among a relatively few producers whose product and honey-house practices are known to the packer. Considering the variations in quality within the same floral source from year to year, however, even this practice may be hazardous. Since many packers pay a premium of y>2 per cent per pound for honey in new cans, which in effect covers the cost of the can, the lower price producers pay for used cans may ultimately represent an illusory saving. In the case of the full- time beekeeper who markets 80,000 pounds of honey, he would net about $425 in additional profit by selling in used cans if he sold to packers who pay no premium for new-can pack. If he sells to a packer who pays the premium, his 12 Some laboratory tests to determine effects of various residues might be helpful in settling the arguments. [27 profit would be reduced only by the in- terest on the additional working capital required for new cans, probably not more than $5 to $7, since producers tend to market their crop within a calendar quarter after harvest. This is actually little to pay for insurance against the changes in honey flavor and color that might take place as a result of the residue found in used cans. The five-gallon can drains slowly, re- quires a good deal of handling per unit of honey, and according to an official long connected with the industry, is gen- erally felt to be inadequate. Can filling: Short weights in 60-pound cans evidently come up often enough to constitute a continuing threat of ill will between packers and producers. Because of the difficulty of handling the cans, most packers find it impractical to weigh entire loads of honey, or even a sub- stantial part, and do so only when they feel they have reason to question a ship- ment. 13 Those large packers who rou- tinely make periodic weight checks gen- erally prefer to overlook modest short- ages on the theory that these will be off- set by overages. If a producer's weighing equipment is inaccurate, he may inadvertently alienate packers through short weights, or give away honey through long weights. Clearly, good scales, frequently checked, have a bearing both on reputation and profits. Retail containers. Since about one- third of our honey crop is sold "direct," it is relevant to the general marketing picture to know how that third is pack- aged. Table 12 shows how the various retail containers compare in popularity with producers. Producer preferences tend to be con- " Truck scales were not observed at most plants visited. Apparently the use of public team scales is more inconvenient than living with the problem. centrated among the larger sizes, mainly 5- and 10-pound glass jars or cans. Four- pound containers were significant only in the White Clover Belt and 2%-lb. jars were significant only in the Southern Dis- trict. Preference for smaller sizes (1 lb. or less) is highest in the Plains, White Clover, and Southern districts, where approximately one-third of all producers use 1-lb. and 8-ounce containers. The reason for the popularity of the larger containers with producers cannot be inferred from these data with any confidence, but only speculated about. Producers may deliberately turn to a container size not notably used by pack- ers, or they may simply think in terms of reducing bottling labor and costs. Packer Container Usage Drums. The adoption of drums can be brought about only by a combination of changed thinking on the part of pro- ducers, and willingness to modify meth- ods and invest funds on the part of the packers. Since much of the pressure for the use of drums comes from packers, they are more likely to be amenable to adjustments, although the question of drums is a good illustration of how major processing innovations are dependent upon changes at all industry levels, since producers must also make the necessary honey house changes. There are also, however, many packers whose reluctance to convert to drums is losing them the benefits of mechanized handling. A number of large honey plants have installed additional capital equipment and developed a fresh ap- proach to plant engineering, by using drums entirely. They are managing their entire bulk storage, processing in-feed, and packed stock, with a single ware- houseman. An observer must conclude, in passing, that many packing plants in the honey industry are extremely ineffi- cient by modern industrial engineering standards. [28] Table 12 EETAIL CONTAINER SIZES USED BY PRODUCERS, 1957 PERCENTAGE OF BEEKEEPERS USING EACH SIZE, BY DISTRICT District 5 or 10 lb. can* Glass jar 51b. 4 1b. 3 1b. 2Hlb. 2 1b. 1 lb. 8oz. % 14 13 39 18 18 11 14 % 44 31 30 34 26 39 25 % -t 4 % 8 13 1 11 3 5 % 6 % 14 18 6 16 19 10 17 % 18 25 20 28 23 31 31 % 2 _ 4 Plains 3 3 White Clover 2 Southern 2 Source: Beekeeper questionnaire returns. * Mostly 10 pound. t Insufficient information shown by " — ". The introduction of bulk handling in drums, related as it is to beekeeper rela- tionships, plant storage, and processing input, might be an ideal point at which to start on programs of plant efficiency. A distinct disadvantage in the use of drums is the space they take up in the warehouse and on trucks. Because cans are square, they can be packed to utilize space more efficiently, permitting stor- age or transport of a greater amount of honey in a given warehouse area or truck bed. 14 This is a serious considera- tion which has to be weighed against the handling savings afforded by drums. The packer practice of renting drums at $1.50 each, thus minimizing beekeeper container costs, may foster a closer work- ing relationship between packer and pro- ducer. Also, by steam-cleaning his own drums, the packer has some additional control over quality, which he otherwise could gain only by using new 60-pound cans. Most packers who use drums favor open tops; a few, limited by the process- ing capacity of their equipment, use drums with closed tops and bung open- ings which release honey at a slower rate. A drawback to the use of drums 14 Approximately 25 per cent more space than drums. with open tops is that variations in their circumferences present the problem of matching tops to them after cleaning. The discard rate of drums cannot be accurately assessed because of insuffi- cient data. In the barrel trade, the aver- age life of a steel drum is considered to be about 6 "trips," which would be about 6 years in the honey industry (a discard rate of 17 per cent per year), although careful handling may appreciably im- prove this figure. The discarded drums are either exchanged or sold to beekeep- ers and customers. Five-gallon cans. Data supplied about this receptacle under Beekeeper Con- tainer Usage, generally apply also to packers. Packers and dealers dispose of cans, in which about 70 per cent of their honey is received, in numerous ways. Calcula- tions based on packer questionnaire re- turns show that approximately 60 per cent of these cans are sold or exchanged to beekeepers and customers, 12 per cent are re-used in the plant, and 28 per cent are disposed of as salvage or discarded. This last figure would indicate an av- erage can life of about four years, al- though most packers interviewed on this subject estimated it as nearer three vears. [29] Approximately 13 per cent of packers' total domestic sales volume is shipped in 5-gallon cans. Retail containers. About 75 per cent of the domestic sales volume of packers is in containers suitable for retail trade. This includes cans, glass, paper cartons, polyethylene squeeze bottles, and spe- cialty packs of various kinds. Squeeze bottles and specialty packs accounted for about 1 per cent of the total retail pack in 1957. At that time polyethylene con- tainers had only recently been intro- duced, mainly in the far west. The use of plastic squeeze bottles will probably in- crease because they "cut off" as soon as pressure is released, making the table serving of honey both neater and easier. Children enjoy serving themselves honey by this method. Glass containers comprised an esti- mated 80 per cent of the retail volume; cans, 12 per cent; paper cartons, 7 per cent; squeeze bottles and all others, 1 per cent. From fragmentary data, it can be sur- mised that possibly half of the total re- tail pack of honey is packaged in 1- pound containers. Glass containers. Glass containers are found in many sizes, even within narrow geographical limits. It is not uncommon in the midwest and northeast to find 1- pound and 2-pound containers in one store and 1-pound and 2 1 /2-p°und con- tainers in another within the same city block — all of the same brand. Although 14 different glass jar sizes for extracted honey can be found throughout the east and midwest, most of it is bottled in 1 pound, 8-ounce, 2-pound, and 5-pound containers. (In the far west, cans are commonly used for 5-pound weights rather than jars.) Competition and merchandising strat- egy dictate the addition or discontinua- tion of various container sizes. One packer recently discontinued one less- than-1-pound size and substituted an- other which did not look substantially smaller than a 1-pound jar (although it was clearly labeled as to weight), in order to minimize a price differential be- tween his label and the chains' private labels. Criticism of the multiplication of jar sizes by marketing authorities is well known. Assortments of five-ounce, 12V<>- ounce, 13-ounce, 20-ounce, and 22-ounce jars are not only misleading to the con- sumer, but render the concept of market- ing flexibility ridiculous. As a result, in some areas, legislative action has pro- hibited other than prescribed standard sizes. In the interests of increased honey sales, it is suggested that packer organi- zations work jointly toward elimination of extremely small jars. It might be noted that motivation and industrial engineering research have rad- ically changed jar shapes and labels in other industries without changing stand- ard weights. Packer complaints of lim- ited jar selections evade the fact that most large jar molders provide design services to their customers. Considering the importance of self-service in food retailing today, the need for attractive container and label design for maximum display and merchandising purposes cannot be overemphasized. Paper containers. Paper containers are restricted to creamed honey. In another study 10 it was found that creamed honey was packaged in waxed paper containers about 78 per cent of the times it was found on store shelves in cities east of the Rocky Mountains. Cans. Honey in cans is not found widely throughout the United States. Al- though the five-pound can is a popular item in the far west, it is rarely seen in the eastern areas except as packed for institutional trade. Producers fear the practice of packing 15 Ellsworth, H. M., Expanding the Consump- tion of California Honey, Bureau of Markets, California Dept. of Agriculture, Sacramento, 1953. See this study for additional details on container sizes. 30 lower grade 16 honey in 5-pound cans may result in long-range injury to the indus- try. It is not uncommon to find impres- sive lithographs on these cans of lower grades of honey, and during the course of this study several housewives main- tained that cans they had purchased had been ambiguously labeled. On two occa- sions the author sampled canned honey which was actually better suited for bak- ing than the table. In an attempt to protect consumers, some states require in their agricultural codes 17 the "plain and conspicuous" marking of opaque containers with the color of the honey, although in his study Ellsworth 18 observes that adherence to this statute is somewhat less than strict, a finding confirmed by the author. It is suggested that where there are labeling statutes which apply to honey, 16 Note that the reference is to "lower grade" rather than "lower quality." While the latter term conceivably applies to some of this type of pack, there are definite regional preferences for darker, stronger-flavored grades. Also such dark honeys may be equal in basic qualities to lighter, milder grades. 17 See Chapter 2a, Honey Standards, Par. 843.2, California Agricultural Code, 1949. 18 Ellsworth, H. M., Expanding the Consump- tion of California Honey, Bureau of Markets, California Dept. of Agriculture, Sacramento, 1953, p. 19. opaque containers be required to bear on the top center or bottom center of the label, the color and possibly the floral source of the honey, in letters %" high, in an area not less than 2" long and free from other printing. Packer container costs. Although there is little detailed cost information, some facts can be inferred from ques- tionnaire returns at hand. Packers reported their container costs from 3 to 8 cents per pound of honey, with the average at about 5 cents per pound — a substantial percentage of the price at which the packer sells his prod- uct. In view of this, it is clearly to the packers' advantage to keep himself in- formed about container features which would return a maximum of merchandis- ing benefits. Experiments are currently being made with pliofilm sacks within a fiber carton, which would reduce producer container cost to about 18 cents per 60 pounds of product. The major drawback to the use of this material is the excessive adherence of honey to the pliofilm when the con- tainer is drained. An industry program or federal assist- ance might speed the development of an inexpensive, efficient container. [31] III. MARKETING ACTIVITIES SEASONAL PATTERNS OF HARVEST AND SALES Beekeepers XXlthough 99 per cent of the har- vesting and extracting throughout the United States is done in three quarters of the year, Tables 13 and 14 show that marketing pressure on the producer rises sharply in the third calendar quarter, during which period about three-quarters of the nation's honey crop is harvested. The patterns of harvest and sales by quarters do not vary significantly from year to year, if a generalization can be drawn from what producers reported about the harvest and sales patterns of 1955 and 1957. Marketing pressures at harvest differ for part-time producers and full-time op- erators. In most districts the part-time operators generally start extracting ear- lier, and in almost every district have a higher proportion of their harvests in the second quarter. 1 Nationally, part-time producers sell about 50 per cent more of their crop in the second quarter than do full-time operators, although this varies from district to district. This early har- vest pattern evidently constitutes a mar- ket advantage in earlier sales in the Pa- cific Northwest, Intermountain, Texas, White Clover and Southern districts, 2 but a slight market disadvantage in the other three districts. Part-time operators have a significantly smaller carryover than do other producers. 1 Compare 2d quarter harvest, Tables 13, 14. 2 Compare 2d and 3d quarter sales, Tables 13, 14. Although the data for all producers were too scant to allow for authoritative calculation of total industry carryover, it was found in this study that, excluding the hobbyists' extremely small carry- over, the combined carryover for all other producers was 15 per cent of their 1957 crop. However, the yearly U.S.D.A. estimate of honey on hand for sale as of December 15, 1957, arrived at this carry- over figure as 27% of the year's crop. It is the author's judgment that the dis- parity between these percentages cannot wholly be explained by the absence of precise data on hobbyists and the fact that the cut-off dates used in the two appraisals were sixteen days apart. Inas- much as marketing and purchasing de- cisions are necessarily closely postulated on carryover estimates, it is suggested that detailed study be made of this criti- cal factor. Calculations based on questionnaire replies show that approximately 7 per cent of the 1957 crop was sold by pro- ducers in the second quarter (combined data of Tables 13 and 14). Yet packers and dealers show 21 per cent of total pur- chases in that quarter (Table 15). The lack of agreement between the reported producer sales and packer purchases can be attributed to a difference in concept as to what constitutes a "sale" at the pro- ducer level and a "purchase" at a packer level. Since most producers are on a cash basis, and packers are on an accrual basis, an accounting difference tends to arise. 8 Also, there are many informal ar- 3 For tax and other accounting purposes, bee- keepers record a sale upon payment; packers [32] Table 13 HARVEST AND SALES PATTERNS FOR HONEY: PART-TIME BEEKEEPERS, 1957 Percentage of total harvested and sold each calendar quarter District Per cent harvested — quarters Per cent sold — quarters 1st 2nd 3rd 4th 1st 2nd 3rd 4th Carry- over Pacific Northwest. . California 2 17 3 1 20 28 46 6 28 12 53 15 74 59 47 99 76 47 76 40 72 6 11 7 1 18 8 12 4 12 2 9 11 3 1 7 10 6 7 1 24 8 36 9 50 22 22 19 40 27 27 37 28 36 59 63 57 52 25 53 23 50 7 7 9 Intermountain Plains 8 7 13 White Clover Southern 12 1 NATIONAL TOTAL 12 Source: Questionnaire returns of beekeepers. Table 14 HARVEST AND SALES PATTERNS FOR HONEY FULL-TIME BEEKEEPERS, 1957 Percentage of total harvested and sold each calendar quarter District Per cent harvested — quarters Per cent sold — quarters 1st 2nd 3rd 4th 1st 2nd 3rd 4th Carry- over Pacific Northwest . . 1 3 14 1 1 15 18 39 3 5 22 10 52 13 12 85 73 57 94 80 72 85 28 80 80 8 4 3 15 3 5 6 6 7 1 3 14 1 3 4 11 8 4 4 8 5 20 6 6 17 35 53 19 23 43 23 31 27 31 69 38 31 52 61 42 56 21 49 51 10 15 8 Intermountain Plains 25 12 4 White Clover 16 14 NATIONAL TOTAL, 1957.... NATIONAL TOTAL, 1955.... 16 9 Source: Questionnaire returns of beekeepers. rangements between producers and pack- ers involving physical transfer of honey, without either title or money changing hands for some time. Packers Table 15 shows the approximate sea- sonality of purchases and sales of honey record a sale when a commitment is made to the beekeeper, or when they take possession of the honey. by U. S. packers and dealers, based on 1957. Note that the distribution of packer and dealer purchases is based on actual poundage purchased by packers and dealers, and estimated acquisitions by cooperatives from their members. Since cooperatives must accept honey from members, "purchases" must take place close to harvest and not under influence of predicted sales needs. Private pack- [33 Table 15 QUARTERLY PURCHASES AND SALES OF HONEY: PACKERS AND DEALERS, 1957 Calendar quarters 1st quarter % of total 2nd quarter % of total 3rd quarter % of total 4th quarter % of total Carry-over % of total 15 25 21 18 42 29 22 28 20 Source: Questionnaire returns of packers and dealers. Notes: Percentages sold by quarters and carry-over for 1955 and 1957 varied from each other by not more than 1 per cent. Indicated percentages purchased by quarters in 1955 were slightly lower in the second quarter and slightly higher in the 3rd and 4th than is indicated for 1957. "Purchases" shown above are based on poundage reported bought by private firms plus the estimated receipts of cooperatives by quarters. Quarterly receipts by the latter organizations were unavailable, although total poundage is known. In general, private firms' purchases seem to show some tendency to lead sales by about one quarter. (Several packers also stated that they try to adhere to about one quarter's lead time.) Table 16 ANALYSIS OF PACKERS' QUARTERLY PURCHASES, SALES AND CARRY-OVER AS A PERCENTAGE OF ANNUAE SALES (Calendar Quarters) 1st quarter 2nd quarter 3rd quarter 4th quarter Carry-over from previous quarter (per cent of annual sales) 20 18 20 18 18 24 17 25 25 33 36 22 22 25 27 Carry-over into next quarter (per cent of annual sales) . . . 20 ers' purchases tend to be somewhat more sales-oriented, but are still strongly har- vest-oriented, as is demonstrated by the fact purchase activity is heaviest in the third quarter (Table 16). 4 Seasonal behavior cannot be appraised without taking into account the quarter- to-quarter carryover. As shown in Table 16, the largest carryover is from the second into the third quarter, when heav- iest purchases are made. This may be explained by the fact that new crop honey begins to flow into packer hands during the second quarter, when packer sales volume is at its lowest level of the year. Note from Table 15 that there is a 28 per cent drop in honey sales from the first to second quarter — from 25 per cent of annual sales to 18 per cent. This is statistical confirmation of the frequent 4 Private packers and dealers only. As re- ported for 1957 in questionnaire returns. packer interview response that there is generally a drastic decline in honey de- mand in the second quarter. The Table 16 analysis suggests that individual pack- ers might effectively minimize inventory costs by applying mathematical program- ming methods to purchases. The storage function might then revert to the pro- ducer, but he could perhaps capitalize on this by controlling the movement of his crop into dealers' hands and fore- stalling the wide price fluctuations throughout the year. Packers evidently accept the historical summer seasonal drop in honey sales as an immutable fact of honey industry life, rather than a real promotional chal- lenge. Whereas selling campaigns are re- portedly heavy around the period of the opening of schools in September, packers seem to be overlooking the fact that, because of high energy needs during [34] * i the summer, there is a heavy home use of sugar in beverages and dairy prod- ucts. Investigation might indicate how honey could be brought into this home consumption picture. Many industries launch advertising programs to offset seasonal declines; coordinated effort in this direction by the entire honey indus- try could conceivably result in interest- ing consumers in honey as a summer food. The efforts of the few isolated packers who have tried to influence local habits of honey usage have been unsuc- cessful. Seasonality assumes importance for the full-time producer at the point that his preoccupation with the various ac- tivities of production, harvesting, and processing may delay the entry of his new-crop honey onto the market. Again — local cooperatives could perform real service by conceivably undertaking re- sponsibility for the extraction process. In the constant reappraisal of these seasonal patterns, the honey industry may well find real opportunities for in- creased volume and profits. CHANNELS OF DISTRIBUTION Beekeepers An important aspect of any marketing analysis is a study of the channels of dis- tribution. About one-third of the honey sold by producers in the United States by-passes the producer to packer (or dealer) to food wholesaler to retailer to consumer sequence. 5 "Direct" marketing by hobbyists involves approximately 19 per cent of the total U. S. crop. 6 Only 5 per cent of hobbyist respondents men- tioned sales to dealers or packers. Honey volume of producers with less than 25 5 This sequence is considered the "normal" channel for purposes of this study. 6 Any assumption of packer (dealer) , whole- saler or retailer functions, categorizes the trans- action as a "direct" sale. colonies (disposed of through home use, to friends, on-farm sales, or to local re- tailers), is larger than the "direct" sales of part-time and full-time beekeepers in the Plains, White Clover, and Texas dis- tricts. Packers and dealers, however, also indicate that about 19 per cent of their domestic sales are "direct" (See below). Although packer interviewees complained that this "direct" marketing creates addi- tional competitive pressure throughout the industry, the total effect of this pres- sure is difficult to assess since the packers and dealers themselves are presumably reaping some gains from this technique. An important operator is the producer- packer, a large-scale beekeeper who packs his own output and frequently pur- chases honey from other beekeepers for packing. Producer-packers market a sig- nificant percentage of the crop in the Pacific Northwest, Intermountain, White Clover, and Southern districts. In this study, producer-packers are most often classed as packers. Their marketing prac- tices tend to be analogous to those of other packers. Tables 17 and 18 show the distribution of output of part-time and full-time bee- keepers by honey district through var- ious marketing avenues. Whereas 62 per cent of part-time operators' honey' and 87 per cent of that produced by full-time beekeepers 8 moves through packers and dealers, there are wide variations in the different honey districts. It can be gen- eralized from the data that a higher per- centage of honey moves through "nor- mal" commercial channels from those districts which are surplus producers, have large numbers of full-time or near full-time operators, and are separated by distance from large consuming areas of the country. 7 Percentages for part-time operators refer to an estimated 37 per cent of the U. S. honey crop — about 90 million pounds in 1957. s Percentages for full-time operators refer to an estimated 44 per cent of the U. S. honey cr0 p — about 106 million pounds in 1957. [35] m 1 0) ,3 ,-< . • • ^H • t(( H ^ M N CO © p« o 5 s o oo » ■ m r-* -co • co >> ■+3 O > s 0) C c o o "8 £ 0> 01 ej OOtONNOOtOOOXJNM a ft l-H CM rH ^H _l -t-~»-IO>«©t^OOCOCO 03 0> ^ NtClOtDtOOOOOO^O o ^woiiosraraNMtio c3 Ph p s ■*^ < ^ J s H f 5 c "5 s3 O H •J c V c ee "5 p. 0* e | 5 c e N o E s JE C C 8 2 Pm b€ „ OH 2 SR * GO* t~ m <& PM W OS pq rH P Q o £ £ o Pg 2 QQ w 0) ,d O ,_, . rt ■ 1-1 • > '55 '33 ft * u. 4) -^ O "-< a s 03 V o cS "** 03 03 CD s ■^i .^h»C^-i ■ rt M -h fq M '3 CO >> d d O ,4 CO cd 0) 60 r-l »-l ■0CWN»"OO>O!D 03 "S CD O ft G 0) £h I c8 -G • rt< • cm 1— 1 m co eo • "- 1 "-< O 2 ^ . iH • H N • OO 1C Tf (N (N 03 CQ co -2 "3 CD -*©00 44 eOOrtrtOlMOOOWN'l' t^COCOOOOOOlOCOlOt^t^ 03 Ph CI a -£ 03 ft T3 J 5» r ►h S s 5 CO CD ^ 03 Si f -G 4a d '3 CD h 2 J 3 ific Nor ifornia . zona G d Is CO •£ a 1 I o3l3'C-S^S^ %<0 P. c > .. £ c « ^«~ G 58| CZ2* 4- Table 19 ESTIMATED PERCENTAGE OF HONEY CROP SOLD "DIRECT" BY PRODUCERS, 1957 Pacific Northwest. California Arizona Intermountain — Plains Texas White Clover Southern U. S. TOTAL.. District Percentage of total produced Source: Questionnaire returns of beekeepers, state apiary inspectors, and ex- tension apiarists. Table 19 shows the estimated percent- age which is sold by all beekeepers "di- rect" (that is, by by-passing one or all of the functional stages between pro- ducer and consumer) in the several honey districts. The movement of such a large portion of the industry's output through "direct" channels, results in the extremely wide range of standards as to quality, packaging, labeling, and pric- ing; it is extremely unwieldy to attempt to standardize such a large portion of the industry's output over which it is so difficult to gain any control. The packer must, in the long run, choose between offering producers the most desirable market, and facing the distinct likelihood of a growing number of producer-packers and cooperatives. The fact that producers may undertake packing functions without recognizing the costs and risks involved, is more than a minor consideration, since inexperi- enced and uninformed marketers can be even more damaging to an established marketing structure than informed ones who simply act to improve their own po- sition in some particular marketing sit- uation." !l It should be noted here that in most eases it was observed that producers sell table honey at about the same price as local retail rates or higher. A few examples of large-scale producers selling lower than dealers were cited. Packers and Dealers The honey sold domestically by pack- ers and dealers finds its way to consumer outlets mainly through food brokers and wholesalers. Out of the estimated 167 million pounds handled by packers and dealers in 1957, about 20 million, or 12 per cent, was exported. Of the remain- ing, or domestic sales, it is estimated that 68 per cent was sold through food brokers and wholesalers. Direct sales to retailers constituted 19 per cent of do- mestic sales, those to bakers and other users 13 per cent (See Table 20). The importance of food brokers 10 is further indicated by the fact that even excluding those used by the largest pack- ing organizations, the average number of brokers mentioned by reporting packers was 16. Few packers have what might be called a "sales organization"; even in the largest firms, salesmen work primar- ily in assisting the broker or wholesaler. Those packers who report having more than a few salesmen tend to carry other products. 10 The breakdown shown in this analysis is concerned with the manner in which primary sales of packers and dealers are made. Func- tions and activities are changing so rapidly in the food industry that the definitions of the various middlemen are tending to become less precise, even to people in the industry. [38] Table 20 DOMESTIC HONEY SALES OF PACKERS AND DEALERS, 1957 PERCENTAGE OF SALES BY TYPE OF BUYER Type of buyer Percentage of domestic sales Brokers Food wholesalers .... Chains Independent retailers Bakers and other. TOTAL 100 Source: Questionnaire returns of producers, honey packers, and dealers. Over half of the privately-owned pack- ing firms state that they time their pur- chases to replenish working inventory. 11 There is also, apparently, some trend on the retail level toward greater ware- housing of some items and more shelf- servicing of others. Some packers, in- creasingly faced with problems attendant on limited stocking by stores and chains, may feel required to carry more stock themselves, or to return part of the stock maintenance function to the beekeeper, which in turn could result in many pro- ducers having to hold an increasing share of their output in on-farm storage. This illustrates how changes on one end of the distribution channel can (and usually do) result in important changes in meth- ods, facilities, and costs all the way to the other end. Concerning the packer's shipping problem under these changes in distribu- tion, the questionnaires show that mini- mum quantity shipments are becoming common, either on a case or net weight basis. About one-third of the packers who replied to the questionnaire now make minimum drop shipments, the common- est being 10 cases, or approximately 250 pounds; only 12 per cent, however, re- port making an additional charge for them. 11 This statement is slightly at variance with the analysis of Tables 15 and 16, where the data showed a somewhat more strongly harvest- oriented pattern. Packers' sales to independent retailers are minimal compared with their direct sales to chains (Table 20) ; because of the numerous marketing functions which chains perform, increasing numbers of food manufacturers are dealing with them directly as they would with brokers or wholesalers. The growth of direct selling also stems from the fact that 20 to 25 per cent of the honey packed for the retail market is pri- vate label stock, 12 the merchandising of which calls for the setting of specifica- tions and bidding. In order to increase sales and spread overhead, forty-four per cent of the honey packer and dealer respondents handle other products (exclusive of bee industry products like wax and bee sup- plies), which account for a minimum of 50 per cent of their total sales. They often deal in companion products to honey, such as syrups, jams, jellies. In concluding this section, it seems de- sirable to re-emphasize that the changes taking place in the distribution of food products today are certain to have an im- pact on honey marketing. In the last few years, there has been a high degree of concentration within the retail sector of 12 Data at hand are insufficient to pin this figure down more precisely. Some respondents did not give complete information, and the volume of a number of packers whose output is known to be largely private brand pack had to be estimated. [39] the food industry; the number of stores and organizations has drastically de- clined, although sales volume has greatly increased. However, although packers now have the opportunity to move a greater volume per outlet, they also have problems related to the competition for the patronage of fewer retail buyers. 13 The growing number of high-volume self-service supermarkets requires better control of product standards and im- proved container displays in order for honey to command shelf space. Modified warehouse practices at the wholesale and retail levels may also mean that ware- housing functions will be shifted back to the producer. All of these changes, touched on here very lightly, call for up- dated information, analysis, and under- standing if sound planning and invest- ment are to be carried on either by the industry as a whole, or by individual producers or packers. SALES PROMOTION AND ADVERTISING 14 Generally speaking, beekeeper expen- ditures for advertising and sales promo- tion are apt to be minimal in the absence of any state marketing order. 15 Of the total number of operators who returned questionnaires, less than 5 per cent spent over $100 for promotional purposes. Ex- penditures among packers are also rather 13 The A. C. Nielsen Company estimates that mergers and acquisitions have reduced the num- ber of retail chains from 273 to 77 between 1953 and 1958. See: The Nielsen Researcher, A. C. Nielsen Company, New York, April 1959. Other authorities reach varying estimates of the pres- ent number of chains, but the central fact is that reductions have been substantial. 14 This section is concerned with the general nature of promotion efforts in the industry, not with specifically detailed techniques. 15 California assesses 7 cents per 60-pound can on both producers and handlers for this purpose; Idaho assesses 5 cents per colony. Although other states have had marketing or- ders, these are the only state promotion plans currently in effect. modest, but tend to be related to sales volume. One of the major obstacles to more effective sales promotion is the lack of unanimity about the form which it should take. This section, therefore, is concerned not only with existing practices, but with some which might be considered in fu- ture programs. Beekeeper Sales Promotion Practices It is clear that when it comes to adver- tising and promotion, the beekeeper is primarily prepared to spend his time. Personal sales are frequently mentioned in the questionnaire responses as being of prime importance in the sales promo- tion activities of all categories of bee- keeper operation, and the hobbyist bee- keeper's sales promotion is almost en- tirely based on personal selling. One may suggest, however, that producers are often unaware of the cost to them of their own selling time. A breakdown of replies from part-time and full-time beekeepers with regard to advertising and promotion expenditures appears in Table 21. Producers clearly place major emphasis on the promotional activities of the state and national asso- ciations, boards, and combined institu- tional organizations. Although a signifi- cant difference exists between classes in most districts, the most significant one lies in the percentage of participation in the various types of organized industry promotional efforts. The table shows that few beekeepers carry on advertising activity of their own; a few reported 1957 expenditures of approximately $1,000. Most of the money spent went into newspaper advertising. Despite the evidence to the contrary, beekeepers are not uninterested in ad- vertising. Many questionnaire comments concern the need for "more advertising," and "better promotion," and suggestions are frequently made for advertising honey's "natural goodness," "healthful properties," "quick energy." Such sug- [40] S3 'fl c .3 a •^3 (B O «K 'o? «!£ : is c o <» § 5 o » js > l?FrS .2 *U O « 4) a"2^ o o a c-° 0:3 a •^ a 3 m^i^> c S « o»« SS >, |TJ| o c O O rt si§ o^+e s+;S »"3§2 g § ° a £ >>3*o aire iust bers Boa eeper questionr mbership in in : Includes mem oney Advisory V G C aj «8PP Oh O 03-3 CG* -♦— ►+ gestions are often offered, however, by producers who give no indication that they carry on any advertising themselves, or make any contributions or pay any assessments to a promotional organiza- tion. Many beekeepers state that the respon- sibility for advertising rests with the packers; others are apparently content with the status quo on promotion, are preoccupied with other phases of bee- keeping, or have concluded that nothing more can be done. It is doubtful if the current total expenditure for all adver- tising and sales promotion by American beekeepers (excluding the value of per- sonal time and travel) exceeds $200,000 per year. Although beekeepers are relatively un- informed about advertising costs, tech- niques, and the problems connected with promotional activity, 16 the absence of a strong producer organization to support promotion is a major obstacle to more effective efforts. This weakness is not only due to incohesiveness, but also to the lack of any widespread feeling of need. Packers The stated policy of many packers is to spend approximately 5 per cent of sales on advertising and sales promotion. The survey returns indicate, however, that except for the largest firms, 2 to 3 per cent is more nearly representative of their normal expenditures. Packers make use of the entire range of sales promotion techniques, and spend most of their budget on cooperative promotional and other allowances, newspapers, and in- store activities, in that order. Since what the majority of packers spend results in very little promotion, consumers are little J,i It should be emphasized that beekeepers are probably much like other producers and many thousands of businessmen. The subject of advertising seems to lend itself to "expertiz- ing" without the feeling that experience or knowledge is necessary. touched by it. Where the advertising ex- pense is shown to be considerably in ex- cess of the industry level, the results appear to justify it. Sales promotion efforts of salesmen are oriented toward presenting ideas to food brokers and wholesalers, and assist- ing brokers' men in store activities. Actually, the major advertising and promotion decisions with regard to honey rest finally with retail store man- agement, which decides between honey packers' suggestions and promotion of- fers and those made by packers of other food products, or of competing honey. Some food packers have attempted to minimize expensive allowances to retail- ers by advertising more heavily directly to consumers. When interest in a product has been created, and consumer requests stimulated, retailers are generally found to be amenable to displaying the adver- tised products. Promotional Organizations In addition to the modest promotional activities of the American Beekeeping Federation and the various state associ- ations, there are three prominent promo- tion groups in the industry. These are: • American Honey Institute; Madi- son, Wisconsin • Honey Industry Council of Amer- ica; Shelbyville, Tennessee • California Honey Advisory Board; San Marino, California American Honey Institute. The American Honey Institute is the major national honey promotion organization. It draws its income from producer con- tributions, producer organizations, pack- ers, dealers, and occasionally state-spon- sored promotion agencies; in 1958 this amounted to approximately $25,000. The Institute's promotion efforts have centered on what is characterized as the "home economics approach." Through its director, it prepares releases, recipes, [42] and articles for inclusion in newspapers and periodicals. Recipes, streamers, and other point-of-purchase materials are sent to packers and producers for further distribution. Campaigns directed at food editors are conducted, and plans with * national food advertisers developed to feature honey in conjunction with their own products. Considering the low budget, this is an impressive output. Honey Industry Council of Amer- > ica. The Honey Industry Council of America 17 was founded in 1955 in order to collect money from packers, dealers, producers, and bee supply manufacturers, for purposes of honey research and pro- motion. It organizes the collection of funds, and works toward achieving a uni- fied program for its disposition. Collection of funds is by means of a "check-off plan," whereby packers re- quest producers to contribute 1 cent per 60-pound can to the Council fund at the time of sale, the packer then matching such contributions by an equal amount. The total contribution is receipted to the producer in the form of stamps for which the packer has paid in advance. The Council makes no attempt to col- lect from packers or producers who al- ready pay an assessment under a market- ing order. b During 1958, the Council collected $1,443 and made disbursements of $2,500 to the American Honey Institute for promotion purposes. In 1959, an- other $2,500 was allocated to the Ameri- can Honey Institute, and $1,200 to Kan- sas State University, for the preparation of a monograph to be directed at bakers s.\ and home economists. California Honey Advisory Board. The California Honey Advisory Board 17 Representing the combined interests of the National Honey Packers and Dealers Associa- tion, American Beekeeping Federation, Ameri- can Bee Breeders Association, and the Bee Industries Association. was established under a marketing order in 1952. The Board is composed of 5 packer members (one of whom must always be a representative of a coopera- tive), and 5 producer members. The Board is empowered to make assessments and sponsor promotional activities and research on honey produced in Califor- nia. (It also may require price posting by packers under the California Unfair Trade Practices Act.) The California Honey Advisory Board has the largest income and budget of any of the promotion organizations in the industry. By assessing 7 cents per 60- pound can on producers, and 7 cents on packers and dealers for every 60-pound can handled for sale within the state, the Board collects approximately $45,000 per year. Major expenditures are for promo- tion, 18 essentially of the type carried on by the American Honey Institute, but much more intensive, since a larger budget is concentrated mainly in Cali- fornia. (The Board's promotion activi- ties have some influence beyond Cali- fornia insofar as national advertisements of other California products feature honey as part of the illustration and copy. Recipe books have also been widely distributed by the Board.) Where there are weaknesses in these institutional promotion programs, it is evident that they arise primarily from the industry's dispersion and incohesiveness. There is no strong, central promotional organization, backed by funds adequate for launching campaigns which would have impact in the areas where honey consumption is low. (The author here assumes that the best areas in which to promote honey are those in which con- sumption is presently low. This assump- tion may be incorrect, and a given adver- tising effort might produce greater results in areas where money consumption is already high. However, the only way this ls Several research and marketing studies have been financed by the California Honey Advisory Board. [43 industry's promotion efforts, and might, in fact, only further disorganize the in- dustry into a group of competing agen- cies, confusing consumers and dissipat- ing the funds collected from beekeepers and packers, unless the agencies sub- merge local interest and allocate a large share of their funds to an effective na- tional promotional organization. 20 Further Comments About Sales Promotion Adapting" subject matter to con- sumer needs. A recent study 21 examined the bases on which homemakers, classi- fied by age, education, race, and income class, make marketing decisions. Con- clusions drawn from that study suggest certain approaches which might be made to the honey industry's institutional pro- motion efforts. Marketing information to which there was most response was that which dem- onstrated how to compare prices and quality of various forms of the same product, and how to identify quality. Hoobler's study also indicated that re- cipes, menus, and pictures were of less interest than helpful facts about meal planning and grocery shopping. Thus, articles and other informational mate- rials about the properties, varieties, qual- ities, and price of honey, might well stim- ulate a new market of homemakers to use it. Considering that honey is generally little used in low income households 22 (a marketing group unfamiliar with many 19 For several years the California Honey Advisory Board contributed generously to the American Honey Institute for national promotion. The Board then decided to confine its funds to California. 20 One way in which the state marketing order approach might work to collect funds without duplicating overhead would be for advisory boards to grant most of their promotion funds to a single promotion agency managed by a board of directors composed of the chairmen of the various state honey advisory boards. One of the major problems of the marketing order approach for honey is its widespread production. Successful marketing board activity of many specialty crops is in part dependent on production in a limited geographical area. 21 Hoobler, S. G., Homemaker Values, Motivations and Knowledge of Food Buying, Federal Extension Service, U.S.D.A., Washington, 1959. 22 See Table 22. Note that on a nationwide basis, usage in households is considerably higher in the upper income brackets. On the other hand, one notes that in the west, the second highest per- centage of households using honey occurs in the very lowest income groups. The data in Table 22 can be determined is by actual advertis- ing and market testing — which brings one back to the need for a means of di- recting efforts over wide areas of the country.) Packers complain that institutional ad- vertising depends too much on the "home economics approach." On the other hand, limited funds preclude the purchase of space for more extensive programs; hence, the American Honey Institute and the California Honey Advisory Board have gotten "free" space by inducing newspapers and magazines to run articles about the use of honey. Formation of additional promotion agencies would reduce the influence of existing ones, dissipate funds in addi- tional overhead costs, and also possibly introduce sectional influences, which would negate the purpose of increasing consumption on a nationwide basis. About half of the total incomes of the American Honey Institute and the Cali- fornia Honey Advisory Board are ex- pended in overhead costs — manager and staff salaries, travel expenses, rent, and utilities. The funds collected by state promotional agencies tend to be spent largely for promotion within states where they are collected, 19 authough long-run benefits might accrue if they were spent in deficit production areas. Thus, the creation of additional pro- motional agencies and the reactivation or passage of additional state marketing orders might not appreciably improve the [44] foods and food facts), widely dissemi- nated information could also result in broadening the use of the less expensive types of honey. The relationship of price to quality was a matter of general concern. Al- though Hoobler's study made no attempt to determine the bases on which his re- spondents judged "quality," it shows that lack of information about the quality of a particular product does act as a buying barrier. Applied to the honey industry, these findings might suggest that limited knowledge about grades, floral sources, and colors of honey, is a real obstacle to its greater acceptance; that it would be worth modifying the current heavy em- phasis on menus, recipes, and certain types of cooperative advertising in the direction of straightforward marketing information; and that since newspapers and pamphlets are the most effective dis- semination media, their use would yield more profitable response than point-of- sale streamers and similar devices. Motivation research. The kind of advertising and promotion discussed above deals with the expressed prefer- ences of homemakers. The unconscious factors which figure in consumer buying are often uncovered by motivational re- search studies, which largely use psycho- logical techniques. Many marketing and promotion experts urge motivation re- search as a means to most effective mar- keting in general and advertising in par- ticular. 23 Certainly advertising and moti- vation specialists should be consulted in the development of any extensive honey promotion aimed at the household con- sumer. 24 EXPORTS Before World War II, the United States was in some years a net importer, in others a net exporter of honey. During the war, because of the demand for sug- ars of all kinds, imports vastly exceeded exports. But one result of our various postwar foreign programs, the return of foreign prosperity, rising American honey production, and an export subsidy, has been to raise the honey export trade to a level never before achieved. From less than 1 per cent of the national out- put in 1947, exports rose to a peak of nearly 15 per cent, or 32.9 million pounds, in 1953 (See Table 24) . The ex- port subsidy program was probably the greatest influence on our honey export trade, and upon its expiration in 1954, our total export volume declined to its present level of about 20 million pounds per year, some 8 to 9 per cent of our total production. Exports in Relation to Production Areas Table 23 shows approximate percent- ages of U. S. exports from customs dis- tricts adjacent to various producing areas. Approximately two thirds of the United States honey exports pass through Los Angeles and San Francisco Customs do not show the absolute usage of honey in each income class since that is a function of the two elements of data shown, plus the number of households in each class. The information suggests, however, that special efforts should be made, geographically in the Northeast and North Central states, and economically, in the household income area between $3,000 and $8,000 per year. 23 As an example of a motivation research study applied to a specialty fruit, see Psychological Research Study on the Sales and Advertising Problems of the California Prune Advisory Board, Institute for Research in Mass Motivations, N. Y. 1952. A recent article for laymen on psycholog- ical techniques is How to Win or Lose Sales at the Point of Purchase, R. N. McMurry, Journal of Marketing, July, 1959. 24 Names of consultants in motivation research whose practice is oriented to marketing can be obtained from the American Marketing Association, 27 East Monroe Street, Chicago 3, Illinois. [45 w # En w < <1 ft H ft P o w £ H i— i M P Eh Eh M PH Eh O o s CO lO CO CO O "0 O CO u3 n io oo m O CO o >o o i(3 e 0*0»OCOOCOCOCOO CO CM ■* CO CO iO«MUW(DU5 OS Oi -i eq co «tf »o t- 03 G > o 3 O 3 O 1 o § o o o o o o o o o o o lO CO 00 o 3 «* J3 "«-i +3 •s-c 3 -« a *««! 05 .2 II OJ o" a £ V OA H Vg -^ 03 R. bC S C s C oo 3 S^ «4 0^3 Table 23 PERCENTAGE OF TOTAL U.S. HONEY EXPORTS FROM REGIONAL CUSTOMS DISTRICTS 1952-1957* (For comparative purposes only. Small quantities and offshore districts omitted.) 1952 1953 1954 1955 1956 1957 Far West totals % 79 14 7 % 78 14 3 5 % 78 11 1 10 % 76 5 2 17 % 79 5 1 15 % 73 Gulf Coast totalsf 10 East Coast totals Interior white clover ports! 17 * Source: U.S. Dept. of Commerce, Bureau of Census. t Includes Florida. t Includes St. Lawrence and Great Lakes Districts. Districts 25 and almost all of this origi- nates in California and Arizona, which exported about 45 per cent of its total production from 1952 to 1957. Since the expiration of the export subsidy, this percentage has been about 40 per cent. Shipments from other states, notably Florida, Texas, and New York also de- creased after the export subsidy program expired. On the other hand, the midwest and Pacific northwest exports rose over what they had been during the subsidy program, largely by reason of growing Canadian imports. U. S. honey exports to Canada had been less than 400 thou- sand pounds per year until 1954, when this increased to nearly four million pounds. The average Canadian honey ex- port for 1954-1957 was 4.1 million pounds. Since such a high proportion of the honey produced in California and Ari- zona is exported, these states are particu- larly concerned with export demand. Certain of the dark honeys which they produce are not always easily sold on the domestic market, but are acceptable 2o Washington exports move mainly to Can- ada, probably taking as much as 15 per cent of that state's crop. Other exporting states are estimated at: New York, 5 per cent; Florida, 6 per cent; Texas, Idaho and Oregon, 3 per cent. Most of U. S. exports to Canada pass through Detroit Customs District, but the honey origi- nates in Michigan, Minnesota, Wisconsin and Iowa in varying quantities from year to year. abroad, and some western beekeepers feel that a major contribution of the ex- port subsidy program was the encourage- ment of the shipment of dark honeys abroad with some satisfactory return to beekeepers. This also resulted in the re- lated benefit of reducing the amount of dark, lower-priced honey which would go both into industrial trade and into 3- and 5-pound cans for household consumers, possibly severely depressing prices of all honey. 26 The Foreign Market Ninety -three percent of our total honey exports went to West Germany, Canada and the Benelux Countries (Belgium, Holland, Luxemburg), in the period from 1955 to 1957. Switzerland has also been a consistently good customer for American honey, and although it buys less in volume, its per capita imports are nearly on a par with the bigger buyers. The major consumer countries (Table 24), whose U. S. honey imports cur- rently run about .2 pound per capita per year, are all hard-currency countries, highly industrialized, and with active, less-restricted foreign trade with the United States; except for Canada, they are food deficit countries. 2(5 The only other alternative to these uses at present seems to be in various Section 32 pro- grams through C.C.C. [47 Regional origins and destinations of the greatest percentage of U. S. honey ex- ports : COUNTRY OF DESTINATION STATES OF ORIGIN West Germany California, Arizona, Florida, Oregon, Idaho, Texas Benelux California, Arizona, Florida, Oregon, Idaho, Texas Switzerland California, Arizona, Florida, Oregon, Idaho, Texas Canada Mainly Michigan, Iowa, Wisconsin, Minnesota, and Washington. Small amounts from other bor- der states, California, and Florida. Although the United Kingdom once honey in 1949, 1950, and 1951. There- bought most of its honey from the United after, the 1950 honey export subsidy pro- States, exchange restrictions have se- gram was partially responsible for the verely limited American honey exports to great increase over pre-1952 levels; when those countries since World War II. The it expired in 1954, average annual im- entire import allowances for the year ports of American honey declined by 6 July 1958 to June 1959 from all dollar million pounds, or 40 per cent. How- countries was established at $224,000, ever, the United States provided about which actually represented a modest in- 15 per cent of the 71 million pounds crease over 1957-1958. 27 It is difficult to Germany imported in 1957. assess the probable effects of 1959 lib- In 1955, American honey accounted eralization on demand for American for 24 per cent of Germany's total honey honey. imports; in 1956, 13 per cent. This fluc- tuation results partly from the fact that The German Trade German importers buy honey in a corn- Since exports to Germany approxi- petitive market comprised of a number mate 50 per cent of our total honey ex- of countries, and partly from the fact ports, the factors affecting this trade de- that, until January, 1960, there was dis- serve special comment. tribution control by import tenders. This Although pre-depression Germany had practice of control originated in August, been an important market for American 1957, in order to liberalize trade in honey, a series of tariff increases which honey. 29 Before then, American honey raised the duty by two and one-half times was purchased with dollars which had to its pre-depression level 28 put nearly all be acquired at a premium of about 16 but the cheapest foreign honey beyond per cent by German importers. The the reach of the German consumer. The tender system apparently worked to the consumption of American honey was re- benefit of American exporters, sumed in 1948, when about 10.5 million Since much American honey is used pounds was provided by the U. S. Army's for blending with stronger-flavored prod- Civilian Supply Program. Currency re- ucts of lower cost, it can be sold at a form, reconstruction, and the re-entry of slightly higher price over competing Germany into world commerce brought honeys, about modest purchases of American Grades accepted in the German trade 27 Foreign Commerce Weekly, July 28, 1958, p. 9. 28 Jrom 4%*/lb. in 1930 to 10.8^/lb. in 1933. As of 1959, there is no German import duty, but an "equalization tax" of 4%, ad valorem. J The system essentially provided for the apportionment of the periodic quotas on "nonliberal- ized" commodities. Importers' requests were matched against announced quotas, and scaled down proportionately whenever the total of requests for a specific commodity exceeded the quota for it. As of January, 1960, honey was placed on the "liberalized" list, and no quantitative restrictions now apply. [48] « EH p O Q o I— I p o P3 § 3 H a* r: ^ i> >H fc o W En S O Ph x H P "o3 6? CO l^ «5 CO 1- •**! 00 o CO "»< IN t- CM £ © CM "3 65 CO rt lO ti ■«* O "o lO CM >-i O t^ H US OS S 5 o <— oo -r co a> -h O 1« N f 0O OS M cs Ol (N Ol N 00 t-- O0 £ o O •* N Oi o 03 "o 65 CO 00 f "5 O O t* H IN i"H 1 CO H «5 03 g -© IN O ©> OS O O "S O 00 lO t-- CN ■*F . M © I— CM Tf a> 00 IN CO <=> t^. co -f 1- 00 £ © "3 "o &s O "5 N * t lO IN >H >o Eh "5 OS -g lO lO ■* O <- «o i-H O0 CO CM C 00 . M o — i o »o oo a ■* 00 0) o O "5 Co" 0" © CM _ -2 &S to id a) n c O o lO rt ,-H O H «3 OS 5 -c O Oi OS t~- w O CM OO O t-i -H IT 00 bC °53 © © CO 03 »C t~- -* co" co" TP l- CM «-l IN 3 o 6? M H OO N « co cm 8 CO Eh *a Oi ■g "O >t © ^ to c t^ CD >0 rt rn C 10 © CO CO CM CO C CO ■* 'S3 O Ol" CS CM £ CO c3 65 co ■ co co «■ O O 10 • CM «- O IN H »o> Oi JS iS -h co co >n c\ t^ «3 —c O — 00 — t-- '53 © co O > ft " C3 c 3 D 3 a £ T H a 1 C >£ < i .3 os 2 c -a O Pos ,3 C ** o a- II S a P 5 a a as m 5. . ovs S o o x.5 c H c -£ c a « o.sg » g^ ft.2 6 ao-o * > £<< °h-> <^ « C SR Table 33 DISTRIBUTION OF TOTAL POUNDS UNDER SUPPORT BY HONEY DISTRICTS OF THE UNITED STATES: 1950-1958 District 1950 1951 1952 1953 1954 1955 1956 1957 1958 % % % % % % % % % California-Arizona 50 13 22 6 6 3 100 56 25 8 7 3 1 100 33 4 28 5 17 7 6 100 9 6 28 11 26 14 6 100 16 4 10 6 11 9 44 100 34 8 9 28 13 8 100 54 8 22 2 14 100 43 6 16 18 7 10 100 46 3 Intermountain Texas Plains 8 1 21 White Clover* 15 Southern 6 100 Source: Annual releases of honey price support data: Fruit & Vegetable Branch, A. M.S., U.S. Dept. of Agricul- ture. * Practically all support was in states west of Pennsylvania. rectly involved, and deliveries to C.C.C. were insignificant or nonexistent. The largest proportion of any crop to come under support was in 1958, when about 6.6 per cent was put into the program. Deliveries to C.C.C. amounted to .8 per cent of the total 1958 crop. Table 33 shows how the program was utilized in the various honey districts on the basis of distribution of the total phys- ical volume purchased, or under loan or purchase agreement. The percentage distribution of support among the various districts fluctuates from season to season (Table 33) . There is no relationship between use of the program for loans and the volume de- livered to C.C.C; percentages of totals delivered in various districts do not co- incide with percentages of total under support. In 1952, for example, 28 per cent of the support went to the Inter- mountain District, but 46 per cent of the deliveries were made there. And 46 per cent of the support went to California- Arizona in 1958, but 77 per cent of the deliveries were made there. Except for the crop years 1950, 1951, 1952, and 1958, there was little direct cost to the taxpayer. 3 All crop loans and purchase { Costs to taxpayers include, in most years, only amounts paid to C.C.C. by other agencies agreements were retired by producers in the years 1954 to 1956. Acquired stocks cost approximately $91,000 in 1953, less than $7,500 in 1957. The program has been most consist- ently used in the far west (Table 33). Since the loan and purchase agreement program was inaugurated, about 58 per cent of the total support has gone to the Pacific coast and Intermountain states. Analysis of the data will show, however, that support shifts from year to year with changes in marketing, crop yields, and quality. During the 1952-1957 crop years, 666 crop loans and 171 purchase agreements were made at an average of 30,000 pounds per loan and 50,000 pounds per purchase agreement. Loans have been made, however, on less than 3,000 pounds. 4 Study of loans by year in the for the honey which they take from C.C.C. de- livered stocks. The total of such costs includes the total amounts of the loans on delivered honey, plus costs of transportation and packag- ing. i Numerous loans have been made on quanti- ties less than this, according to Sugar Division, Commodity Stabilization Service. They estimate that 6,000 lbs. would be the most economical lower limit for a loan or purchase agreement, but other conditions than service costs may make it worthwhile to handle smaller quanti- ties. [63] various districts shows that the number of loans and their average size fluctuate widely with honey crop conditions, so that it is difficult to arrive at any mean- ingful average loan amount. The smallest average loan size, about 20,000 lb. /loan is found in the Southern and Texas Dis- tricts with the Arizona, Pacific North- west, Plains, and Intermountain loans progressively higher in average size. There is also a wide range of loans made by states within districts, a reflection of the beekeeping operations of individual states. California, Minnesota, and Iowa, have most consistently used larger crop loans, in most years averaging in excess of 60,000 pounds per loan; Arizona has taken out the greatest number of loans. Purchase agreements were relatively un- important until 1958, in which year they were larger than crop loans. Industry Attitudes Toward Crop Loans Some industry officials believe that many beekeepers do not understand that the program is intended to help in the more orderly marketing of honey, and are not using the program as extensively as they should. 5 The evidence at hand seems to indicate that producers regard the program as insurance. It is, however, difficult to separate the insurance feature from "orderly marketing," because if prices are high enough to obviate the need for loans, the market is apparently functioning in an orderly fashion. If prices are not high enough, the program tends to insulate the market from sur- pluses and thus imparts a certain order. Producers and packers often held, in interviews, that beekeepers tend to use crop loans as a last resort, in most cases taking a somewhat lower price in pref- erence to engaging in the effort and 5 Other reasons for nonuse of the program: lack of acceptable on-farm storage, unaccept- able quality of honey, insufficient quantity to make the inconvenience of application and pay- ment of inspection fees worth while. paperwork involved in obtaining a crop loan. This attitude may be the result of beekeepers' lack of experience or knowl- edge of the fact that there is little, if any, more red tape connected with get- ting a support loan than a commercial loan. Commercial bank credit was the major source of outside working capital men- tioned by a very high proportion of those beekeepers who returned questionnaires. 6 Field interviews reveal that of late years, producers have been accepted by their local bankers as good risks. Where bee- keepers have good local credit standing, commercial credit is a more flexible and immediate source of funds than a crop loan, although at a much higher interest rate. Honey prices have been rising since the loan program was initiated, while support prices have been declining. The national season-average price of honey in 60-pound cans was 18 per cent higher in 1957 than in 1952, whereas the sup- port price was 15 per cent lower. Analy- sis of loan data from 1955-1958, 7 shows that the majority of loans, both in num- ber and physical volume, has been on extra light amber honey in Arizona, Cali- fornia, Southern, and Texas districts. In all other districts, loans have been almost entirely on white or lighter grades, but they approximated only 20 per cent of the national loan total from April, 1955 to October, 1958. Although there is evidence that gov- ernment loans are occasionally resorted to for working capital, there are strong indications that their price insurance fea- ture has had more significance for the honey industry to date. 6 It is not possible to determine how many of those who indicated "bank credit" actually used an A.S.C. instrument as the basis for a C.C.C.- guaranteed bank loan, since, for instance, a purchase agreement may be used to establish price insurance for a commercial loan. 7 Arrived at by determining average support prices of the total honey under support in each state as released in the Honey Market News. [64] Costs of the Price Support Program The $9.1 million cost of the honey price support program between 1950 and 1957 is not recorded as a loss to the Commodity Credit Corporation, but as costs related to the various disposal op- erations, like school lunches, diversion, and export subsidy. (The cost of each of these operations is included below in its description.) East-West Support Differential An additional question frequently arises in the far west regarding the east- west support differential. In all states west of the Plains States and Texas, the support rates are .9 cents per pound less than those of the eastern area. The dif- ferential represents the average freight cost of moving honey from a surplus production into a deficit area. In the case of the far west, however, the differential is less than actual freight would dictate, since it is rarely possible to negotiate a freight rate as low as the differential from that area to consuming centers of the midwest or northeast. 8 The uniform differential for the entire west, therefore, may result in more honey being delivered to the Commodity Credit Corporation in some years than might be the case if the differential were more in line with actual freight rates. Study should be devoted to the possi- bility of widening the support differen- tial to more nearly reflect the freight rate structure in effect between surplus and deficit production areas. Forfeited Honey- It became clear during field interviews that there is widespread misunderstand- ing of the policies of the Commodity Credit Corporation regarding disposal in 8 Packers said in interviews that freight rates vary from 1.5 to 2.7 cents per pound from far western points to the midwest and northeast, depending on point of origin, destination and method of transportation. the open market of honey which has been delivered to it. Many beekeepers are under the impression that after March 31st, packers may bid on this honey at prices lower than support rates. The C.C.C. is, however, precluded from selling its honey at less than sup- port prices, except under certain circum- stances. The disposition of stocks of honey to various available outlets must be determined on the basis of conditions which obtain at the time. Since 1950, small quantities have been exported and marketed in regular commercial chan- nels, although the major portion of the stocks acquired under the price support program, has been utilized under school lunch programs, "Section 32." SECTION 32 PROGRAM "Section 32" programs are set up under Sec. 32 of the Act of August 24, 1935 (P.L. 320, 74th Congress) for three purposes: 1. To encourage exportation of agri- cultural commodities. 2. To encourage domestic consumption by diverting commodities from normal channels of trade. 3. To re-establish farmers' purchasing power at a fair relationship with that of persons not living on farms. (This clause was added to the Section by an amendment on February 29, 1936, but has not been resorted to in recent years, because it would essentially duplicate the service the parity mechanism is supposed to perform.) The description of the export subsidy program in the section on Exports, cov- ered the first of these purposes. We are here concerned with the second purpose. Clause 2 of Section 32 specifically men- tions donations to low-income groups in our population. The donation of agri- cultural surpluses for relief activities, or enrichment of the nutritional patterns of low-income groups, does widen the market for agricultural commodities, but [65 Table 34 SECTION 32 DONATIONS TO SCHOOL LUNCH PROGRAM POUNDAGE AND COST OF DONATIONS 1950-1953 Crop year Pounds Donated Cost 1950 1951 1952 1953 000 6,787 17,754 6,272 527 $000 ' >Outright purchase 2,884 1 (est.) 1,125 \_. .. . . , > Delivered stocks Source: Commodity Stabilization Service and Agricultural Marketing Service. _ Note: The average cost of these stocks exceeds the support price. The difference is represented by processing and other costs. to an extent which is difficult to measure. This clause is also concerned with the development of new uses for commod- ities, and offers temporary financial sup- port to subsidize the higher costs of in- troducing the commodities into those uses. Funds for Section 32 programs origi- nally were provided by transfer from the Treasury of 30 per cent of the duties collected on imported merchandise. 9 It was felt by Congress that this would help equalize the aggregate incomes of farm- ers who purchased industrial commod- ities protected by tariffs, but sold much of their output in an unprotected market. Donations under Clause 2 may be made to nonprofit schools, 10 public or private welfare agencies, charitable in- stitutions, summer camp and child care centers, and emergency and disaster re- lief organizations. Donations are made by the various states, which determine the eligibility of distributing agencies, store, deliver, and cooperate with recip- ient groups in establishing proper stor- age and use of donated commodities. The only donations of surplus honey under Section 32 have been to the School Lunch Program. "In recent years direct appropriations by Congress have been used to augment Section 32 funds. 10 The Secretary of Agriculture's activities in the school lunch area under Section 32 were clarified and encouraged in the National School Lunch Act of 1946 (60 Stat. 230). School Lunch Program Donations It will be recalled that honey prices were supported in 1950 and 1951 through purchases by C.C.C. directly from packers who were required to pay beekeepers support prices. After 1951, stocks acquired by C.C.C. were those de- livered by producers to retire loans or fulfill purchase agreements. Section 32 funds assigned to the School Lunch Pro- gram were applied to most of these stocks by the Department of Agriculture. Technically speaking, the C.C.C. is re- imbursed by other programs for the loan value of its stocks. The School Lunch Program has been the recipient of about 98 per cent of all honey to which the Federal government took title in price support operations. The poundage and value of this phase of Section 32 opera- tion is shown in Table 34. The use of the School Lunch Program to absorb excess honey supplies not only ideally fulfills one of the purposes of Section 32, but also one of the industry's major goals — the introduction of honey to potential consumers at an early age. Industry leaders have long been con- cerned about the decline in per capita consumption, and have felt that since modern children are so little exposed to honey at home, their interest in it will naturally be minimal when they grow into housewife shoppers and adult con- sumers. School lunches do give children the opportunity to familiarize themselves [66] Table .35 HONEY DIVERSION PROGRAM: VOLUME, INCENTIVE, AND COSTS 1950-1954 ( Top year Amount of subsidy cents per lb. Poundage diverted Total cost 1950 1952 1953 1954 2% 4 3M 53,410 50,679 139,990 65,755 $ 2,000 2,281 5,599 2,473 Totals 309,834 S 12, 353 with honey, and if (as studies mentioned elsewhere purport to show) it is also a highly nutritious food, then the donation of honey to this program can certainly be considered altogether advantageous in these areas. On the whole, however, excess stocks do not appear with the kind of regularity which justifies any conclusion that long- run benefits will accrue to the honey in- dustry from the School Lunch Program. This fact notwithstanding, the industry's interest in the quality of School Lunch honey is pertinent; if children are fed honey in school, it should be the kind of honey they will enjoy. In actual practice, the Department of Agriculture is careful about the selection of disposal outlets. When stocks are de- livered to C.C.G., they are concentrated within an area, and inspected for quality and flavor. When a full appraisal is made of all stocks, the U.S.D.A. deter- mines how best to blend them, and for which programs the processed output is best suited. Generally, it is desirable to dispose of honey within the area where it is delivered to C.C.C., because freight costs are thus minimized and regional types are likely to be most acceptable to consumers in the area where they are produced. The position some industry members take, that stronger-flavored honey should be kept out of this pro- gram, may be short-sighted. Surpluses are usually preponderantly darker hon- eys, and the more widespread cultivation of taste for darker flavors (an already established preference in some places), would be a step toward solving some of the marketing problems with which the industry is faced. Diversion Programs During the crop years of 1950, 1952, 1953, and 1954, payments were made to packers to encourage the introduction of honey into new uses. It seems clear that substantial bene- fits can come only from the creation of those new uses for honey able to with- stand the competition of other products. Practically, however, the industry's ef- fort was such that no lasting new prod- ucts resulted. All types of honey were acceptable under the diversion program, but in actual practice mostly table honeys darker than white were utilized in new developments. Also, the fact that so little honey went into the program attests to the industry's primary interest in devot- ing its efforts to traditional forms and outlets. A few ingenious uses of the diver- sion funds were made to support the mar- ket development for new products, but then the products themselves were ap- parently abandoned upon termination of the program. Introduction of new products or uses which will stand on their own merits eco- nomically, requires study by packers of market possibilities, particularly of the potential needs of large-scale users, and requires also the risk of their own funds in production and market development. [67] HONEY RESEARCH Since it is commonly recognized today that laboratory findings frequently make vital contributions to marketing proced- ures, a honey investigations unit has been maintained at the Eastern Regional Laboratory (now known as the Eastern Utilization Research and Development Division), in the U. S. Department of Agriculture in Philadelphia. Under the direction of Dr. Jonathan W. White, Jr., a section in the Labora- tory has been conducting a wide variety of investigations designed to determine the chemical properties of honey and its possible uses — both in foods and in other ways. The development of new products using honey in various forms is a major objective of the honey investigations unit, which is supervising an extensive study at Kansas State University in the use of honey in baked goods, under the sponsorship of the U. S. Department of Agriculture. The projects of all the lab- oratories working in honey research are concerned with the following: • Experiments to determine basic chemical and physical components of honey. • Experiments on the biological prop- erties of honey, to determine its ef- fects both on human and bee con- sumption. • Experiments designed to develop new uses for honey and to make possible the better use of low quality honey. Chemical and Physical Experiments Honey is in many ways a complex substance. Its components vary widely depending on its floral sources, and such properties as color, cloudiness, and mois- ture content vary from lot to lot among the same floral sources. Over the years, methods of testing have been inexact, as have the standards against which tests have been applied. Thus, there has long been a need to develop basic data about the chemical and physical properties of honey so that dependable testing pro- t cedures could be established and further research on its possible uses engaged in. The research to date has resulted in : • Simple methods for detecting incip- ient granulation. • Increased knowledge about the com- 4 position of honey, especially its minor sugars, acids, and enzymes. Research of this type relates to po- tential new uses and also can play a critical role in our export trade by helping to solve problems created by foreign food regulations. • Production of an inexpensive kit for grading color. • Improved laboratory testing meth- ods for various honey constituents. Over the years, the Eastern Labora- tory has done numerous basic-data expe- riments on honey. As with many basic studies, their practical applications may not be immediately apparent, but the re- sults of such research are necessary to better methods of testing, standardiza- tion and utilization. The Laboratory is currently undertaking an extensive com- positional analysis of domestic honey from 47 states, which represent all the commercially important floral types and blends. The elimination of granulation 11 would confer great benefits on the industry by * increasing the shelf life of its product and obviating the need to teach con- sumers that granulated honey is not spoiled. It is hereby suggested that re- search designed with this end in view be undertaken. 11 The experiments of Dr. S. A. Kaloyereas of Louisiana State University, using fatty acids of low molecular weight or high frequency sound waves for this purpose, have not yet been successfully duplicated by other laboratories. [68] Utilization Experiments The Eastern Laboratory and other re- search laboratories have conducted a considerable number of studies on the possibilities for widening the market for honey. The work done at Kansas State University on the use of honey in baked goods has been extensive with regard both to the qualitative and quantitative properties of the end product, and .the results have been widely published in the baking trade journals. In interviews, however, bakers have raised one impor- tant point: even given the advantages claimed in the research (improved mois- ture retention, color, flavor, and consist- ency), they are evidently not great enough to offset the added costs entailed in the substitution of honey for sucrose or commercial invert sugar. Nonetheless, the studies have substantially added to our knowledge of what results can be obtained with various grades and types of honey when its use as an ingredient is desirable. The development of honey-fruit spreads and honey-milk combinations has not, as yet, resulted in any permanent com- mercial product, although the former was briefly produced commercially sev- eral years ago. Methods for dehydrating honey with- out loss of color or flavor have been developed. A study sponsored by the Laboratory to evaluate the properties of honey in pharmaceutical compounds was recently completed. Additional research on the role of honey in confections is being considered. With regard to new products, one gathers from interviews that the industry is reluctant to expend either funds or effort to push their commercial accept- ance. But utilization research cannot yield maximum benefits unless the in- dustry is prepared to exploit research results to the fullest. Other Comments Although the Eastern Regional Lab- oratory is the major center of honey research, packers are evidently more eager to invest money in new products developed as the result of their own mar- keting and laboratory investigations. Sioux Honey Association has taken some steps in this direction, and has produced a honey syrup which makes use of darker honeys. Also, additional attempts are being made to pack commercial honey with uniform chemical properties. In 1959, the California Honey Advisory Board had several products with poten- tial merit under test. Other independent studies in past years have established the value of honey in infant feeding for promoting calcium retention, 12 as well as the benefits to be derived by children from the invert sugars of honey. 13 The industry is over- looking two extremely potent advertis- ing appeals by ignoring these findings. When they were published, the country was not as food conscious as it is today, nor did such a bumper crop of children figure in its population. Both studies could well be repeated with profit, using up-dated knowledge and techniques, and possibly widening their scope to include application of their results to other age groups. MARKETING PUBLICATIONS Another service performed for the in- dustry by the U. S. Department of Agri- culture is the issuance of the Honey Mar- ket News, a bi-monthly market release which covers weather and colony condi- tions, price quotations at various market levels, import-export statistics, and other '-Drs. Schlutz, Knott and Shukers, Effect of Honey on Calcium Retention of Infants, Jour- nal of the American Medical Assn.. October 1941. 13 Use of Honey as a Carbohydrate in Infant Feeding, ibid., Oct.-Nov. 1938. [69] pertinent information. Twenty-two hun- dred names, many of whom are packers, dealers, university research personnel, and government offices are on the mail- ing lists for this publication. Some states excerpt pertinent data for inclusion in their official news letters for beekeepers, but these publications also have limited circulation. In California, for instance, there are only 278 names on the mailing list for the Federal-State Market News report on honey, although there are some 3,800 beekeepers in the state. The fact that there are so few recipients of mar- keting news is further evidence of the low level of marketing interest among beekeepers, and the limited degree to which marketing information is circu- lated. This report has held that more re- search on physical properties, chemistry, and new or modified uses of honey, is needed. This is also true of marketing research. The information issued in mar- ket news letters concerning both state and Federal government activities, can be put to valuable use, but needs analysis for an adequate understanding of the market. For example, a critical examina- tion of supply estimates for various floral sources would be of great help to both producers and packers. Coordinated and summarized data on wholesaler "deals" would help all levels of the industry to assess effective wholesale prices in var- ious markets. APPENDIX U. S. GRADES OF Grades of Honey EXTRACTED HONEY " u - s - GRADE A " or ." u - s - FANCY" Tl is a honey which contains not less than HE united states standards foi 81 4 per cent goluble solidg . possesses a grades of extracted honey are established good flayor for the predominant flora l by the U. S. Department of Agriculture.' source or> when blended; a good flavor The description of these standards runs for , he Wend o{ floral sources; is free to 12 pages, and only a brief excerpt is from defects; and is of such quality with included here ,n order to acquaint the re tQ ^ ag to gcore not lesg than reader with some of the details of the q^ Domts U.S.D.A. grades referred to herein. U. S. grades are based on four factors: "jj g GRADE B" or "U. S. CHOICE" soluble solids (or moisture content), i s a honey which contains not less than flavor, absence of defects, and clarity. 8L4 per cent soluble solids; possesses a After determination of soluble solids, the reasonably good flavor for the predom- specific grade is determined by means inant floral source ^ when blended, a of a scoring system. This system is not reasonably good flavor for the blend of described here, but the characteristics floral sourC es; is reasonably free from are weighted as follows: defects; is reasonably clear; and scores factors possible points not less than 80 points. Flavor 50 Absence of Defects 40 "U. S. GRADE C" or "U. S. SI AND- Clarity j 10 ARD" is honey for reprocessing which Total Possible Score 100 contains not less than 80 per cent soluble solids; possesses a fairly good flavor for 1 For detailed description of the U.S.D.A. a, j • t a i i „ , , f .. , * • i the predominant floral source or, when jiiades and testing procedures, contact Agricul- .. r - , f . , 1 _ ' tural Marketing Service, U.S.D.A., Washington blended, a fairly good flavor for the 25, D.C. blend of floral sources; is fairly free from [70] defects; and is of such quality with re- spect to clarity as to score not less than 70 points. "U. S. GRADE D" or "SUBSTAND- ARD" is a honey which fails to meet the requirements of "U. S. GRADE C" or "U. S. STANDARD." DEFINITIONS OF HONEY CLASSES FOR PRICE SUPPORT PURPOSES Price supports for honey are not based on grades, but on color classes of "table honey" and "non-table honey." As of 1959 these classes and definitions were as follows: Classes White and lighter table honey. Extra light amber table honey. Light amber table honey. Non-table and other table honey. Definitions Loans are made at the applicable sup- port rate established for the state in which the honey is stored. "Table honey" refers to honey with the predominant flavor of not more than two sources, and preferably one, which can be readily marketed for table use in all parts of the country. Such honey in- cludes those with the predominant fla- vors of Alfalfa, Bird's-foot Trefoil, Blackberry, Brazil Brush, Catsclaw, Clover, Cotton, Fireweed, Gallberry, Huajillo, Lima Bean, Mesquite, Orange, Raspberry, Sage, Saw Palmetto, Sour- wood, Star Thistle, Sweet Clover, Tupelo, Vetch, Western Wild Buckwheat, Wild Alfalfa, and similar predominantly mild- flavored honeys, or predominantly mild- flavored blends of honey, as determined by the Director, Sugar Division, CSS. "Non-table honey" refers to honey with a predominant flavor which limits its acceptability for table use on a nation- wide basis, but is considered suitable for table use in most areas in which it is pro- duced. Such honeys include those with the predominant flavors of Aster, Avo- cado, Buckwheat (except Western Wild Buckwheat), Cabbage Palmetto, Dande- lion, Eucalyptus, Goldenrod, Heartsease (Smartweed), Horsemint, Mangrove, Manzanita, Mint, Partridge Pea, Rattan Vine, Safflower, Salt Cedar (Tamarix Gallica), Spanish Needle, Spikeweed, Titi, Toy on (Christmas Berry), Tulip- Poplar, Wild Cherry, and similarly fla- vored honeys, or blends of such honeys, as determined by the Director, Sugar Division, CSS. I0m-12,'60(B4587)H.R. [71 J