CALIFORNIA AGRICULTURAL EXPERIMENT STATION CIRCULAR 394 OCTOBER, 1 949 DRY EDIBLE BEANS: SITUATION IN CALIFORNIA, 1949 Walter D. Fisher and Willard F. Williams 14 |^ 14 i*fr $12. so). l*f PRICES RECEIVED BY CALIFORNIA FARMERS F 12- 19 1A- in IU o < UI / N oi— ? ■ J IU Q QC < -J ^ Wf*A ■ y u -J o o A. w ^ PY A 4. f$k < EDIBLE BEANS A \§ m ^g ^oj - ■_ fcj - ■■* 1937 38 39 40 41 42 43 44 45 46 47 48 49 50 51 THE COLLEGE OF AGRICULTURE UNIVERSITY OF CALIFORNIA • BERKELEY PRICES OF CALIFORNIA DRY BEANS have taken the first big price drop in eight years. Early reports indicate that the average price of all varieties in 1948-49 will be at best 30 per cent lower than in the year before. In view of this price drop, bean growers are expected to take renewed interest in economic and marketing problems. Problems now facing growers are: where to find markets for available supplies of beans, what is a reason- able price to expect, how large a crop to plan for the future, what other crops to consider, and how will the government affect the growers' position. THIS CIRCULAR reviews in graphic form the factors which have brought about the present situation — production increases, consumer food habits, changes in market outlets, and government price supports. It is believed that this report will suggest to the bean grower ways of solving his problems of the future. Page 3 Production trends and areas 5 Prices and price supports 7 Consumer tastes and eating habits 1 Foreign trade in dry beans 1 3 Lima Varieties, production and use 16 White Varieties, production and use 1 9 Colored Varieties, production and use 24 Conclusions THE AUTHORS: Walter D. Fisher is Assistant Agricultural Economist on the Giannini Foundation. Willard F. Williams is a cooperative agent of the Giannini Foundation and the U. S. Bureau of Agricultural Economics. The authors wish to acknowledge the help of Ottar Nervik, former Research Assist- ant on the Giannini Foundation. DRY EDIBLE BEANS SITUATION IN CALIFORNIA, 1949 Walter D. Fisher and Willard F. Williams Dry edible beans are one of the most important field crops in California. All varieties together yielded California grow- ers a gross farm value of $50,500,000 dol- lars a year, on the average, during the years 1946-1948. Of the 16 field crops listed by the Crop Reporting Service dur- ing these years (truck crops excluded), only hay, cotton, and barley yielded higher gross farm value to California farmers. Beans amounted to about 8.4 per cent of a total farm value of $600 million a year for all California field crops. The prices of all California varieties of dr\ beans took a sharp drop shortly after the 1948 crop was in. From $14.80 a bag in the previous year, prices dropped to about $10.50 a bag in the 1948-49 season. This is the first big price drop in eight years. Although the price is still much higher than the $3.50 of the 1940-41 sea- son, the drop means that farmers will now consider especially carefully the future of dry edible bean production as compared with other crops which can readily be grown on the same land. Beans compete with other crops for land in California, and are often rotated with other crops. Most bean growers have at least one other crop that they could substitute for beans if the situation seemed to warrant such a change. Some of these alternatives are grains, sugar beets, tomatoes, lettuce and other vege- tables, and even citrus fruit, depending on the area where grown. Growers will compare the price situation for these other crops with the bean price situation before making their future plans. Many factors enter into the bean situ- ation. Among these are: extent of Cali- fornia's bean production and its place in the total production picture, the competi- tion met by this state's crop from the beans grown elsewhere in the United States, consumers' tastes and buying hab- its, government price supports and other financial aid. All these matters need con- sideration. PRODUCTION California's Part of Total Production In the years 1946-1948, production of dry beans in California was about one fourth of total United States production (table 1). The most important areas in Table 1 . WHERE OUR DRY EDIBLE BEANS ARE PRODUCED Region Per cent of total California 24.6 30.9 29.2 13.9 1.4 New York and Michigan . . . Idaho, Montana, Nebraska, and Wyoming Colorado and New Mexico All other states Source of data: See Statistical Supplement, table 2. the United States competing with Califor- nia are Michigan, New York, and certain Rocky Mountain states. The importance of the various competing areas differs with particular varieties. Generally speak- ing, the states of Idaho, Montana, Ne- braska, and Wyoming comprise the area producing the Great Northern variety; Michigan and New York specialize in pea [3 Table 2. CALIFORNIA'S PART IN THE TOTAL PRODUCTION OF DRY BEANS Variety Baby Lima. . . . Standard Lima Blackeye Small White... Pink Red Kidney . . Pinto Small Red Cranberry California United States average per year 1946-1948, thousand bags, field run 1,141 995 769 576 507 148 122 26 17 1,141 995 769 576 507 1,428 3,035 455 102 California's part of the total per cent 100 100 100 100 100 10 4 6 17 Source of data: See Statistical Supplement, tables 4 and 5. beans and in Red Kidneys; Colorado and New Mexico specialize in Pintos. (For more details, see discussions of separate varieties.) For many years California has been the only state producing certain varieties commercially. These are standard limas, baby limas, Blackeyes, Small Whites, and Pinks. On the other hand, California's part of production of other varieties (Red Kidney, Pinto, Small Reds, Cranberry) has been quite small (table 2) . In the last 25 years, production of beans in the United States has been in- creasing steadily, with the result that in 1946-1948 more than twice as many were grown per year as in the period 1921- 1925. California's production increased as fast or faster than that of the United States as a whole up to the late 1930's; but since then has shown a tendency to level off. Producing Areas in California The most important producing area of dry beans in California is in the southern part of the state (figure 1). In this area, beans are grown in a narrow belt along the coast, and standard limas are re- stricted to a still narrower belt. Produc- tion of all beans in southern California has fallen off in the last few years, how- ever. The next most important area is the northern San Joaquin Valley. There has been also a steady increase in production in the Sacramento Valley since the late 1930's. New heat-resistant varieties partly explain the recent shift into the hot cen- tral valleys. There has been a correspond- ing decline in production in the Salinas Valley and other areas of the coast north of Santa Barbara County. In the Salinas Valley beans compete for land with sugar beets, lettuce, and other vegetables. In the northern San Joa- quin Valley the most important compet- ing crops are grains, tomatoes, and sugar beets. In the Sacramento Valley they are rice and other grains. These crops often are rotated with beans. It can be seen that the production alternatives available to a grower depend on the region of the state in which he is located, as well as on other things. [4 PRICES AND PRICE SUPPORTS Price Behavior The average price of all California beans has fluctuated greatly over the years. Price depends partly on general economic conditions in the United States. Since 1924 the lowest prices occurred during the years of deep depression in 1931-33. Since 1940 the high national income caused by rearmament and World War II brought about a continual rise of prices until the sharp break in 1948. Each individual variety has its own price behavior. But there are some sim- ilarities. With all varieties the price tends to be low when available supply is large, and to be high when available supply is small. Prices of standard limas and of baby limas vary closely together. Studies made suggest that these two varieties com- pete more closely with each other than does either one with other varieties. The same thing can be said about Small Whites and the other varieties of white beans. Prices will be further discussed in the later parts of this circular. For convenience, varieties are classified in three groups: limas, whites, and colored. Government Supports — Past Since 1941, the federal government has, in most years, been the most impor- tant single influence on price and supply of beans. The government will probably continue to be important in the years to come. In the years 1936 to 1940, the govern- ment purchased some beans for relief dis- tribution, and some purchases were made with blue stamps under the Food Stamp Plan. The quantities were so small, how- ever, that the influence on the whole United States market was not important. In 1941 some varieties of dry edible beans were included as Steagall commod- ities, whose production was encouraged for the war effort. In order to increase production, bonuses were paid to growers for more acreage, and market prices were supported by government loans and pur- chases. From 1942 to 1946, dealers' sell- ing prices and retail prices were con- trolled by the OPA. In 1945 a subsidy program was in operation under which dealers were paid a subsidy to compen- sate them for losses incurred by paying Figure 1. CALIFORNIA'S DRY-BEAN-PRODUCING AREAS 2.5 S 2 ° CD Z g _i I 5 or a. 1.0 z o O a a. 1936" 1941- 1946- 1940 1945 1948 1936- 1941- 1946- 1940 1945 1948 1936- 1941- 1946- 1940 1946 1948 1936- 1941- 1946- 1940 1945 1948 [5] grower-support prices and selling at OPA- controlled selling prices. The OPA con- trols on all bean prices were ended in October, 1946. These government programs were suc- cessful in causing quite an increase in production through 1943. Production fell sharply, however, in 1944 and 1945. There is some evidence that the small production in these latter two years was caused by the relatively low ceiling and support prices for beans in relation to prices for other crops competing for the same land. In 1946 and 1947, with controls off, the demand situation caused a spectacular rise in prices. Price-support programs were inactive because market prices greatly exceeded support prices. Some government purchases were made for for- eign relief and for the Puerto Rico School Lunch Program. In 1948-49 prices fell, and many grow- ers took advantage of the price-support program. All California varieties were affected by the program except standard limas (which at present writing are still higher than support level) and Blackeyes, which are not covered by price supports. Nonrecourse loans and purchase agree- ments were both used in the program; most California growers participating chose purchase agreements. Through De- cember 31, 1948, purchase agreements were made on more than 577 thousand bags of California beans— more than 22 per cent of the crops from which pur- chases were made. This high percentage shows the impor- tance of the price-support program. There is no doubt that the program was effective in 1948-49 and that market prices for most varieties would have fallen much farther if the program had not been in operation. How the government will dis- pose of the purchased beans, however, and what would be the effects of such a program continuing over a period of years are still unsolved problems which are likely to persist for some time. [6 Government Supports — Future By means of the Agricultural Act of 1948 (Hope-Aiken Bill), Congress ex- tended price supports into the future. This Act provides separately for the calendar year 1949 and for the years 1950 and beyond. In each case the Secretary of Agriculture may require compliance with acreage and production goals in order for a grower to be eligible for the benefits. The 1949 support price for dry edible beans is discretionary with the Secretary of Agriculture within the limits 60 per cent of parity up to the 1948 support price. For 1950 and after, the support price is discretionary at any level up to a maximum of 90 per cent of parity. The Act provides that in special cases, the Secretary may set a support level higher than 90 per cent of parity if, after a public hearing, he finds that increased production of a commodity is necessary in interests of national security. The Act also revises the formula for computing the parity price of an agricul- tural commodity. The revision keeps the base period 1910-1914 for all agricul- tural commodities combined in relation to prices paid by farmers, but for indi- vidual commodities it also takes into ac- count the price for the ten-year period preceding the date of computation. Calculations made by the U. S. Bureau of Agricultural Economics indicate that for dry edible beans, the revision of the parity formula will decrease the parity price less than 5 per cent for the next year or two. Under present demand conditions it seems that the support prices fixed by the Secretary of Agriculture will be very important to California bean growers, as well as to the consumers who buy the beans. Too high a support price will have its future effect. If the support price is set rather high— high enough to be attrac- tive—it seems reasonable that a rather large quantity of beans will be offered to the government at the support price (un- less some type of production control is imposed) . If production is increased, the problem is not solved— only postponed and made worse. Growers and their associations will be interested in finding a more fundamental solution to the problem. One such solution may be to find another crop to produce. But the question naturally arises whether the market for dry beans cannot be ex- panded rather than production curtailed or shifted. // the industry can on its own initiative expand the market, then it will have to rely less on the government for support. MARKET OUTLETS Distribution In the decade of the 1930's, 75 per cent of the total supply of dry beans passed through domestic trade channels and was bought by consumers within the United States. About 9 per cent was used as seed. Exports including shipments to Puerto Rico accounted for 4 per cent, and carry- over was 13 per cent (see figure 2) . During World War II exports in- creased, and an increased supply was built up in stocks. These stocks were heav- ily drawn on in the 1945-46 marketing year. Beans are sold to United States con- sumers both in dry and in canned form. It is estimated that in the period 1936- 1940 approximately 22 per cent of the United States disposition of beans of all varieties (including net exports and use for seed) went to canners, and the remain- ing 78 per cent was sold dry to whole- salers. More recent data are not available. White varieties are the most important in canning. Colored varieties and limas are of much less importance. If dry beans fol- low the trend established by other foods, the canning outlet will become of in- creased importance in the future. Figure 2. UNITED STATES SUPPLY AND ITS DISPOSITION 1930 1935 1940 1945 [7] Figure 3. REGIONAL CONSUMPTION OF DRY BEANS o WEST- NORTH CENTRAL- MOUNTAIN 13% QTp NORTHEAST 39% OTj=> SOUTH 41% c — f Pounds of Beans Eaten Per Person Per Year THE FOLLOWING STATES comprise the regions in figure 3, and in figures 14 and 16 which appear later: NORTHEAST: Maine, New Hampshire, Vermont, Mas- sachusetts, Connecticut, Rhode Island, New York Pennsylvania, New Jersey, Delaware, Ohio, Indiana, Michigan, Illinois, Wisconsin; SOUTH: Maryland, District of Columbia, Virginia, West Virginia, Kentucky, Tennessee, North Carolina, South Carolina, Georgia, Florida, Alabama, Mississippi, Arkansas, Louisiana, Oklahoma, Texas; WEST-NORTH CENTRAL-MOUNTAIN: Minnesota, Iowa, Missouri, North Dakota, South Dakota, Nebraska, Kansas, Montana, Wyoming, Colorado, New Mexico, Idaho, Utah, Nevada, Arizona; PACIFIC: California, Oregon, Washington. Domestic Use Most of the dry beans sold within con- tinental United States are consumed in eastern and southern markets. The densely populated Northeast region and the South together account for approximately 80 per cent of the United States market, com- bining both canned and dry (figure 3). These figures are based on data collected in 1940, and it is probable that recent shifts in population to the Pacific Coast have changed these percentages slightly. Although fewer people live in the South than in the Northeast, average consump- tion per capita is much higher in the South than in any other region of the country (estimated at 11.4 pounds per [8] year in the period 1936-1940). The rea- sons for this difference are probably the different food habits in the South result- ing either from low income or from dif- ferent culture of the population. Dry beans are chiefly a poor man's food. The 25 per cent of the population having the lowest incomes consume the largest amount of dry beans (not canned ) per capita, and the 25 per cent having highest incomes consume the least ( figure 4) . It is estimated that the lowest income group consumed 42 per cent of the dry beans in 1941, and the highest group con- sumed only 10 per cent. Canned dry beans are somewhat more of a luxury. The highest per capita con- sumption is found in the next to highest group. It seems that the advantage to the housewife of having the beans processed in the can is a service, which higher in- come groups can more readily afford and for which they are willing to pay. Dry bean consumption shows striking differences according to race and nation- ality. While the average person in the United States consumes only nine pounds per year, Negroes eat 13 pounds and per- sons of Mexican stock 50 pounds per capita. Table 3. REGIONAL CONSUMPTION OF BEAN VARIETIES Per cent of total U. S. consumption Standard Limas Baby Limas Small Whites Blackeyes Pinks Northeast South West-North Central- Mountain 49 33 13 5 21 65 9 5 24 29 7 40 14 80 3 3 1 9 7 83 100 Pacific United States 100 100 100 100 For definition of regions see figure 3. Source of data: See Statistical Supplement, table 28. Figure 4. EFFECT OF INCOME LEVEL ON CONSUMPTION OF DRY BEANS 2.0 LOWEST 2ND 3RD HIGHEST LOWEST 2ND 3RD HIGHEST INCOME GROUPS EACH 25% OF TOTAL POPULATION [9 Foreign Trade Foreign markets for United States beans, and competition at home from for- eign beans have always been matters of interest to United States growers and mar- keting associations. Foreign trade has not been so important a factor for California as for other areas of the United States. Blackeyes are neither imported nor ex- ported. Neither are lima varieties, except for some recent exports of baby limas for relief. Probably the most important off- shore movement involving California is the shipment of red colored varieties to Puerto Rico. Imports. Imports were a significant fac- tor in the United States bean market before 1930, but now they are so small as to be negligible (table 4) . It is possible, however, that if the United States should change its tariff policy, imports would become more important in the future. In the years before 1930 most of the imports came from Japan, eastern Eu- rope, and Mexico (most of the imports Table 4. IMPORTS OF DRY EDIBLE BEANS AND GARBANZOS INTO THE UNITED STATES Calendar years Average per year Per cent of United States beans 1926-1930 thousand bags 1,511 13.4 1931-1935 395 3.0 1936-1940 286 2.2 1941-1945 570 3.8 1946-1948 278 1.7 (3-year period) Source of data: See Statistical Supplement, tables 10 and 15. from Mexico were garbanzos). The ma- jority of beans imported were of white varieties. But at the present time the United States is exporting dry beans both to Japan and to Europe. In 1930 the tariff on dry beans was raised by the Smoot-Hawley Act to $3.00 Figure 5. UNITED STATES EXPORTS OF DRY BEANS 2.0 EUROPE I 5 I 1.0 CENTRAL a SOUTH AMERICA AND PUERTO RICO wm 931- 1936- 1941- 1946 1936- 1941- 1935 1940 1945 1940 1945 1947 1946 1947 [10 per hundredweight. It had previously been $1.75. The 1930 tariff rate remained in effect until 1947, when at the Geneva Con- vention the United States granted reduced rates of $2.00 on Red Kidney beans and $1.50 on other varieties during the months May through August only. This conces- sion was made to Chile during the confer- ence in exchange for concessions by Chile on certain United States exports. It is too early to appraise the effect of this conces- sion, but no increase of imports from Chile has occurred during 1948, accord- ing to preliminary data. Exports. Normally, United States ex- ports of dry beans have not been large (less than 5 per cent of total production) , and have gone chiefly to Central and South America (figure 5) . During World War II and afterward, we have exported large quantities to Europe to help feed allied armies and populations— first to the United Kingdom and the U.S.S.R. and later to western and central Europe. In the postwar years we have even shipped dry beans to Japan, our former compet- itor in production. The beans to Japan were shipped by the United States Army. Generally speaking, exports to Central and South America (including shipments to Puerto Rico) have been colored vari- eties, and exports to Europe have been white varieties. As mentioned above, some baby limas have recently been exported under foreign relief programs. The amounts sent to Europe recently have been much larger than normal ex- ports from the United States, but the boom is already beginning to fall off. The United Kingdom bought virtually none in the fiscal year 1947-48, and other countries are short of dollar exchange. These countries may be expected to seek the cheapest source of supplies possible and to economize in using their dollars. They may well find cheaper sources on the European continent itself than in the United States in the long run. Judging by the period 1929-1933, which includes two years before the United States raised its tariff rate, the main areas of the world having net ex- ports of dry beans in peacetime are east- ern Europe (including the U.S.S.R. and the countries now controlled by it) and Asia. The two main areas importing beans normally would be western Europe (plus Greece) and the Western Hemisphere. There was, prior to World War II, a nat- ural trading relationship where western Europe bought its beans from eastern Europe, and Asia had a normal surplus after filling the needs of densely populated Japan. The situation at the present time is not that of 1929-1933, but it probably resem- bles it more nearly than it does the ab- normal war situation. Western Europe may be expected to try to buy again from eastern Europe, despite political barriers If political barriers should prove an effec tive hindrance to trade with eastern Eu rope, western Europe may be able to mee its needs either by increasing its own pro duction or buying from South America Japan in the long run probably will use sources in Asia rather than purchase from the United States. Exports from the United States can be expanded little if any in the long run, unless a dumping policy is deliberately adopted. In the near future, exports will probably fall rather than rise. Marketing Costs Only 30 per cent of the consumer's dollar spent on dry beans goes into cost of farm production (including farmers' profits) ; the remaining 70 per cent goes into getting the beans from farm to con- sumer (figure 6). Over one quarter of the consumer's dollar goes into the cost of retailing. On canned beans alone the retail price is higher than on an equivalent amount of beans sold dry, because costs of proc- essing must be added to other costs. Farm production cost is a still-smaller percent- age of the consumer's dollar spent on canned beans alone. [ii] Figure 6. WHAT HAPPENS TO THE CONSUMER'S DOLLAR SPENT FOR DRY BEANS ^TRANSPORTATION If marketing spreads are high, it is not necessarily because the marketing system is inefficient. Apparently consumers want and are willing to pay for a large number of marketing services. For example, can- ning beans may be regarded as a service to the housewife, since it saves her the labor of preparing the beans in the kitchen. The household may be willing to pay the increased cost of supplying this service. If processing firms are operating efficiently, it may not be possible to re- duce this cost. On the other hand, it may be possible to reduce marketing spreads by increas- ing the efficiency of present systems of marketing, or by inventing new tech- niques. The writers do not have the infor- mation to determine whether the existing system is inefficient or not, or what new techniques could be devised, if any. But the existing marketing spread is a chal- lenge to the industry. Growers could bene- fit by a reduction in the spread, if such is possible; the benefits could be higher prices received or larger volumes mar- keted, or both. Figure 7. TREND OF PRODUCTION OF LIMA VARIETIES -HO j STANDARD LIMA BABY LIMA m 1921-25 1926-30 1931-35 1936-40 1941-45 1946-48 [12] Figure 8. CALIFORNIA'S LIMA-PRODUCING AREAS 1.5 STANDARD LIMA BABY LIMA ^^ SAN JOAQUIN ^^ VALLEY— j SOUTHERN CALIFORNIA SACRAMENTO VALLEY SAN JOAQUIN VALLEY SOUTHERN ' CALIFORNIA 1936-40 1941-45 1946-48 1936-40 1941-45 1946-48 LIMA VARIETIES Growth of Lima Industry California grows all of the dried lima beans that are produced commercially in the United States. Over the last 25 years the trend of production and consumption of lima varieties has been steadily up- ward. Slightly smaller quantities, how- ever, were produced in the three seasons 1946 to 1948 inclusive, than in the previ- ous decade (figure 7). Production of baby limas has increased more than that of standard or Large limas. The increase of baby limas has been especially great since around 1930. In the years since 1941, more than twice as many baby limas were being produced as in the 1920's. Production of standard limas has been more stable. At present (1946-1948) the two varieties are of ap- proximately equal importance in quan- tity of production. Standard limas are grown almost ex- clusively in a narrow belt along the coast in southern California, where the climatic conditions are just suitable for the needs of the plant. It had not been possible to grow this variety in any other area of the state until in 1948, for the first time, a few were grown successfully in the San Joaquin Valley on an experimental basis. It will not be known whether this innova- tion will be successful until after several more years of breeding experimentation. The most rapidly expanding area of baby lima production in California is the Sacramento Valley (figure 8). The San Joaquin Valley is still the area of greatest importance in commercial production of baby limas, however. Over the last twenty years or so, the development of new vari- eties of baby limas has made possible the expansion of acreage in the hot interior valleys of the state. At the same time, acre- age in southern California has slightly declined. Prices Prices for individual varieties of beans follow to some extent the same general pattern. Each variety, however, has its 13 Figure 9. RELATIONSHIP OF SUPPLY AND PRICE, STANDARD LIMAS 1800 1500 1200 900 600 1925-26 1935-36 Figure 10. RELATIONSHIP OF SUPPLY AND PRICE, BABY LIMAS 25 < CD £20 O 0L o o 15 >-sr l20 ° 900 2 10 _i 5 < A> SUPPLY ~ 1 A 1 "\ A / I # # # 7 1 V \ V PRICE -£/ — "~" 1 1 i 1 i i i i i i i i 111! L. 1 1500 600 300 1925-26 1930-31 [14 own individual circumstances that make for price differences. Standard limas enjoy a price premium over baby limas that has varied from $1.00 to over $13.00 per hundredweight (table 5) . The differential between stand- Table 5. FLUCTUATION OF DEALERS' PRICES FOR LIMAS Marketing year beginning September Dealers' F.O.B. prices* Standard Lima Baby Lima 1926-27 dollars per bag of 100 lbs. 6.00 12.14 4.17 7.12 23.91 17.92 5.06 10.70 2.76 5.32 10.12 8.57 1928-29 1931-32 1936-37 1947-48 1948-49 (6 months only) * Simple average of weekly quotations on U.S. No. 1 grade in carlots, excluding brokerage. Source of data: See Statistical Supplement, table 36. ard and baby varieties has been greater when price levels were high. The prices in table 5 are dealers' quotations to the trade F.O.B. country loading points. Farm prices are from 40 to 60 cents lower, and closely follow dealers' prices. The price of standard limas has fluctu- ated widely in the last twenty-five years, and tends to vary inversely with the sup- ply (figure 9). By the supply is meant the carry-over on September 1 plus pro- duction during the crop year. Figure 9 shows that there is a tendency for prices to be low in years when supply is large and vice versa. Further analysis of prices shows that in any one year the price will be affected directly by the level of consumer income in the United States, but inversely by the supply of standard limas, and, to a lesser extent, inversely by the supply of baby limas. The price of baby limas has followed a similar pattern to that of standard limas, only at a lower level (figure 10). There is a similar tendency for the price of baby limas to be related to supplies put on the market. Further analysis of prices of baby limas shows that in any one year the price will be affected by the level of consumer income in the United States, the supply of baby limas, and to a lesser extent, the supply of standard limas. Standard and baby lima beans compete with each other more closely than either does with other varieties of beans. How- ever, each has its own market areas of preference, which will be discussed below. Outlets Within the domestic market, canning of dried Large limas is a recent develop- ment, but promises to be of some impor- tance. The largest cooperative association in California handling dry beans is now putting out a canned product under its own trade name. Quantities of the stand- ard lima crop that go into the can are still small, however. It is estimated that from 4 to 6 per cent were canned in the period 1936-1940; from 1 to 3 per cent in 1941-1945; from 4 to 6 per cent in 1946; and from 5 to 7 per cent in 1947. Slightly higher percentages of dried baby limas go into the can. It is estimated that in the period 1936-1947 from 5 to 10 per cent of baby limas were canned. In 1946 a somewhat larger percentage was sold to canners, but not all of the beans sold were actually canned. Unfortunately, statistical data are not available to appraise with any confidence the economic position of the frozen lima industry, and its relationship to the re- mainder of the industry. The freezing of limas promises to be an important devel- opment, however. With the exception of some exports of baby limas in 1947 for foreign relief, lima beans do not normally enter into the for- eign trade of the United States, either in imports or exports. 15 Domestic Markets Most dried lima beans are consumed in the eastern markets of the United States. The densely populated Northeast region and the South together accounted for ap- proximately 82 per cent of the market in 1936-1940. Although fewer people live in the South than in the Northeast, per capita con- sumption (1.9 pounds per year) is so much higher there that more limas are sold than in any other region of the coun- try. (These figures are subject to some revision due to the population shift to the West Coast since 1940.) The market for standard limas is con- centrated in the Northeast region of the United States; the market for baby limas is concentrated in the South. Almost one half of the standard limas sold dry at wholesale are sold in the Northeast, ac- cording to a 1940 survey, and almost two thirds of the baby limas are sold in the South (table 3). The reason for this dif- ference is partly the fact that consumer incomes are lower in the South, and peo- ple can more easily afford the lower- priced baby lima. Probably a preference for the smaller bean has developed through habit, also. WHITE VARIETIES Competition Met by Small Whites At the present time the only commercial variety of white bean grown in California is the Small White. This variety is pro- duced only in California, but meets com- petition from other varieties of white bean grown elsewhere in the United States— Great Northern, Pea and Medium White, White Marrow and White Kidney. California Small Whites comprise only a small part of the total production of white varieties— from 5 to 10 per cent ( figure 11). Another white variety, the Large White, was a significant factor in the California picture in former years, but is no longer produced commercially in the state. The most important production of white beans outside of California is in the states of Michigan and New York- growing chiefly Pea and Medium White varieties amounting to 45 per cent of the country's total ( table 6) ; and in the states of Idaho, Wyoming, Nebraska, and Mon- tana—growing chiefly the Great Northern Figure 1 1. CALIFORNIA'S PART IN TOTAL PRODUCTION OF WHITE BEANS 12 or >■ 5 3 O o o cr Q- y\ / TOTAL U.S.— K fO~\ r *y 1 / CALIFORNIA-^ i .1.1 1 1 1 1 i 1 i i 1925 1935 1945 [16 Table 6. PRODUCTION OF WHITE VARIETIES BY STATES Variety and state Production (Average per year 1946-1948) Per cent of all white varieties Great Northern Idaho Wyoming Nebraska Montana Pea and Medium White Michigan New York California Small White . . Other varieties and states Total all white varieties . . thousand bags field run 1,375 1,160 1,158 336 3,618 307 576 195 8,722 15.8 13.3 13.3 3.8 41.5 3.5 6.6 2.2 100.0 Source of data: See Statistical Supplement, tables 4 and 6. variety (about 46% of the total). In the years 1946-1948 production of Great Northerns in the latter four states and of Pea and Medium Whites in Michigan and New York all together accounted for over 91 per cent of production of white beans in the United States. In the last ten years or so, production of California Small Whites has remained fairly constant, but other whites have greatly increased in quantity (figure 11) . This increase has been due chiefly to Great Northerns. Production of Pea and Medium Whites has remained relatively constant. Recently, the largest increases in acreage of Great Northerns have oc- curred in Nebraska and Wyoming. California Producing Areas Most California Small Whites are pro- duced in the Salinas Valley, and a small quantity is also produced in southern California (figure 12). There was an in- crease in the production from southern California in the war years, and a slight decline from both areas in the postwar years. Figure 12. AREAS PRODUCING WHITE BEANS 800 IT uj 400 200 SALINAS VALLEY SOUTHERN CALIFORNIA 1936-40 1946-48 [17] Prices Prices paid growers for Small Whites vary approximately in the same manner as dealers' prices. Complete data on grow- ers' prices are not available, but over the years, dealers' prices (averaged for the season) have varied from $2.62 to $15.25 (table 7; years are selected for peaks and troughs). Table 7. FLUCTUATION OF DEALERS' PRICES FOR SMALL WHITES Year beginning September 1 Dealers' F.O.B. prices* 1926-27 dollars per bag 6.60 9.07 2.62 6.34 15.25 9.07 1928-29 1931-32 1936-37 1947-48 1948-49 (6 months only) * Simple average of weekly quotations on U.S. No. 1 grade in carlots excluding brokerage. Source of data: See Statistical Supplement, table 36. Over a period of years, dealers' prices tend to vary inversely with the available supply of Small Whites (figure 13) . They also vary directly with the level of con- sumer income in the United States. Fur- ther analysis is needed before one can say what the effect is of supplies of other white beans on the price of Small Whites. As in the case of other varieties, prices of Small Whites have been greatly influ- enced by the government support pro- grams since 1941. Outlets White varieties of dry edible beans have three important outlets at the present time: the domestic wholesale trade (for dry marketing), domestic canners, and foreign trade. It is not known just how important Small Whites are in foreign trade, since statistics on foreign trade by variety are not available. It was pointed out earlier, however, that foreign trade has always accounted for only a small part of the total use of dry beans, and that it is likely that the present level of exports to Europe cannot be maintained. If Small White are exported at all, they would be in extremely small quantities. < Figure 13. RELATIONSHIP OF SUPPLY AND PRICE, CALIFORNIA SMALL WHITES 20 15 10 £ 5 A i \ ; \ SUPPLY- -J V / 1 v \ % % \ / \ * 1 V / A / / * / / j \ - V A 3 / / PF \ ™X-\ 1 .*' i i i i i i i i 1 1 1 1 i i 1200 3 O 900 o 600 300 1925-26 1930-31 1945-46 [18 It seems that domestic outlets will take the major attention of the industry in the near future. White varieties are the most important in canning, and the canning outlet is espe- cially important for Small Whites. Baked beans and pork-and-beans have long been familiar household items, and Small Whites are well suited for processing. A representative group of California dealers have estimated that in the years 1936- 1940, from 40 to 50 per cent of Small Whites went into the can; in 1941-1945, from 50 to 60 per cent; in 1946, 65 to 70 per cent; and in 1947, 70 to 80 per cent. Of the total United States usage of white beans in 1936-1940, about one third went to canners. Domestic Markets In the late 1930's, over one half of the white beans sold in the United States (both canned and dry) went to consumers living east of the Mississippi River and north of the Ohio River and Mason-Dixon Line (figure 14) . This northeastern mar- ket is more important for white beans than for colored beans. The West Coast is a natural market for Small Whites, because competing vari- eties are more accessible to the eastern markets. A fairly large portion of this variety marketed dry is sold in the West— an estimated 40 per cent in 1940 (table 3). If population continues to shift into California and the other Pacific Coast states, as is probable, the position of Small Whites will improve, but this shift will be gradual. People having very low incomes eat many dry white beans, and people having higher incomes eat fewer. Canned beans do not depend so greatly on income level as do dry beans, and the highest per cap- ita consumption occurs at a higher in- come level. As suggested above, higher income groups can better afford the cost and the convenience of having the canned product. Many canned beans are con- sumed in the New England states. Figure 14. REGIONAL CONSUMPTION OF WHITE BEANS ~-1 SOUTH 58% <— ? Pounds of Beans Eaten Per Person Per Year Blackeyes In 1948 production of Blackeyes is esti- mated at 1,177 thousand bags, field run basis, which makes this variety second only to standard limas in California. The most important producing areas are the San Joaquin Valley and southern Cali- fornia (figure 17). There is also a small but increasing amount coming from the Sacramento Valley. Although California is the only state producing Blackeyes commercially, they are produced for home consumption in many parts of the South. The south is by far the most important market for California Blackeyes. Accord- ing to a sample survey made in 1940, 80 per cent of the total quantity marketed in that year went to the south (table 3) . Figure 1 7. AREAS PRODUCING COLORED BEANS IN CALIFORNIA 1000 o 2 800 Q 3 O * 600 400 §200 CL BLACKEYE PINK P,NT0 AND RED KIDNEY SAN JOAQUIN VALLEY SOUTH SACRAMENTO VALLEY COAST** ' ^SACRAMENTO V. SAN JOAQUIN VALLEY SACRAMENTO V. OTHER 1936- 1941- 1946- 1936- 1941- 1946- 1936- 1941- 1946- 1940 1945 1948 1940 1945 1948 1940 1945 1948 [21] Figure 18. RELATIONSHIP OF SUPPLY AND PRICE, BLACKEYES 25 < CD o20 z ZD o 0. 6 g cr W IE a. 5 Ui ° \0[ ce o j» 1 SUPPLY—^ | % \ \ \ \ # # # # \ \ \ / / 1 t I 1 1 1 1 | / A f M / M / * i l * \ V A / l # ■■ /v 7 \ V PRICE I 1 i i i i i i i i ! 1 1 1 1 1 1 1 1 ! 1500 900° CO (3 < CD a o S 1930-31 1935-36 1940-41 Figure 19. RELATIONSHIP OF SUPPLY AND PRICE, PINKS 1200 1930-31 1935-36 1940-41 22 The negro population has a strong pref- erence for Blackeyes. Surveys made in the years 1934-1936 showed that negroes consumed more than ten times as many Blackeyes as did whites on a per capita basis and took 69 per cent of the total quantity. Most of the whites who eat Blackeyes live in the south. The price of Blackeyes fell more sharply in late 1948 than did the price of any other variety of beans in Califor- nia. In general, the price has fluctuated more widely than other bean prices. This may be due to the fact that there are many small-scale producers of this variety, who move in and out of production on a tem- porary basis. Like other varieties, the price is related inversely to supply, and the supply has also fluctuated violently over the years (figure 18). Blackeyes were not included with other varieties of beans in the government price-support program. Pinks Of the varieties of red colored beans produced in California, Pinks are the most important and are the only variety produced exclusively in California. The Sacramento Valley, especially Sutter County, is the most important producing area of the state (figure 17). In former years the King City area of the Salinas Valley was equally important, but produc- tion in this area has declined markedly. The major reason for the increase of Pinks in the Sacramento Valley is the introduction of the "Sutter Pink" variety in the early 1940's. The decline in the Salinas Valley is due to inroads made by bean mosaic, to which the Pink variety is susceptible. The principal outlets for Pinks are the Puerto Rican-Latin-American trade, and the wholesale trade on the Pacific Coast. In 1940 approximately 83 per cent of pinks marketed dry in the United States were sold in the three Pacific Coast states of California, Oregon, and Washington (table 3). This high percentage in the West is probably caused by competition in eastern markets from Pintos and Red Kidneys, which have a location advan- tage. Relatively few Pinks are canned— probably less than 5 per cent. The price of Pinks has varied over the years, but the variation has been less than the price of Blackeyes. In years of low prices, Pinks have not fallen so far as Blackeyes, and in years of high prices they have not been so high (table 9) . There is the same tendency for price to vary inversely with available supply, as has been noted with other varieties, and Table 9. FLUCTUATION OF DEALERS 1 PRICES FOR COLORED VARIETIES Year beginning September 1 Blackeye Pink Red Kidney 1926-27 Dealers' F.O.B. prices* — dollars per bag 3.79 9.37 2.42 4.90 17.73 7.19 5.00 6.54 2.91 4.81 14.16 8.95 3.16 8.25 14.40 11.18 1928-29 1931-32 1936-37 1947-48 1948-49 (6 months only) * Simple average of weekly quotations on U.S. No. 1 grade in carlots, excluding brokerage. Source of data: See Statistical Supplement, table 36. 23 also to vary directly with the level of con- sumer income in the United States. The variation in available supply from year to year has not been so great in the case of Pinks as in the case of Blackeyes, for example (figures 18 and 19) . In 1948-49 Pinks were protected by price supports. Presumably, Pinks meet competition from other red colored beans to a certain extent, but further analysis is needed in order to arrive at definite conclusions on this point. Red Kidneys Recent development of the Red Kidney industry in California has been chiefly as a source of seed for New York growers. This development has been aided by a seed-certification program. Cooperative marketing organization has also been a factor of importance. Production of Red Kidneys and Pintos is at present confined to the Sacramento and San Joaquin val- leys. CONCLUSIONS A healthy state of affairs in the Cali- fornia bean industry requires that avail- able supplies find outlets at reasonable prices without long-run government sub- sidy. The price decline in 1948-49 is evi- dence that available supplies are in excess of existing outlets. The alternatives are to reduce bean production in favor of some alternative crop, or to find more outlets for beans. The domestic market appears to be the most fertile ground for finding new out- lets. Persons with low incomes consume many beans now. If their incomes rise, they may consume more beans, or shift to other items of food. Possibly, selling effort among low-income groups to en- courage them to keep buying beans would be productive. Canned beans are more costly and are preferred by people with higher incomes than those who buy beans dry. The indus- try has, in fact, two products that are made from the same raw material. Fur- ther attention to the possibilities of proc- essing, and further research into the mar- keting potentials of the canned product may bring returns. If it is possible to cut the costs of processing and marketing canned beans, and to lower the retail price to consumers, the lower price would en- courage more bean consumption among medium and medium-low income groups. Food habits of the South and of racial groups using many beans per capita should be considered in any plan to in- crease the market. The possibility of utilizing dry beans in industry and in new products is a field in which research is just being started. This research may aid the industry in disposing of its supplies. The tables and figures appearing in this circular are summaries of more detailed tables, which are published in a separate Statistical Supplement in mimeographed form and which give sources in detail. This supplement may be obtained by writing to the Giannini Foundation of Agricultural Economics. 10m-10,'49(B5806) [24]