University of California College of Agriculture Agricultural Extension Service Berkeley, California CALIFORNIA UTILIZATION OF LINSEED OIL AND GENERAL ECONOMIC FACTS RELATING TO FLAXSEED by E. W. Braun September, 1933 Contribution from the Giannini Foundation of Agricultural Economics Mimeographed Report No . 29 Table of Contents Page Introduction 1 Volume of linseed oil utilized in California ... 1 World production of flaxseed ...... . . 1 United States production and net imports of flaxseed ..... 3 Flaxseed prices at principal markets and United States import duties ................. 5 Volume of linseed oil crushed in the United States 8 Relation of flaxseed prices to linseed oil prices and linseed meal prices ...... . 8 List of Tables and Charts Page Table 1. Volume of linseed oil utilized in California, 1928-1932 . 2 Table 2. World flaxseed production by principal countries, average 1928-1932 ... o o ... ..o ..... . 3 Table 3. Flaxseed supplies in the United States and domestic production as a percentage of total supplies, 1909-1932 4 Table 4. United States flax production by states, average 1928-1932 ...... .... 5 Table 5. Flaxseed prices at Minneapolis, ""■finnipeg, and Buenos Aires, 1909-1932, in dollars per bushel of 56 pounds . 7 Table 6. United States import duty rates on flaxseed and linseed oil, 1909-1930 8 Table 7. Flaxseed crushed in the United States and volume of linseed oil produced, 1919-1932 ............ 9 Table 8. Flaxseed prices at Minneapolis and linseed meal prices at Minneapolis and San Francisco . , , . . . , . , . . 11 Figure 1. United States flaxseed production and net imports, 1914-1932 6 Figure 2. Raw linseed oil prices at New York and flaxseed prices at Minneapolis, 1910-1932 ...... ... 10 ':•>■'■ ■■:;•!>■.; CALIFORNIA UTILIZATION OF LINSEED OIL AND GENERAL ECONOBOC FACTS REUTING TO FLAXSEED E. W. Braun s/ Introduction At the present time California has little commercial acreage of flaxseed. Grain grov/ers in certain sections of the state are, hov\rever, considering the planting of it . A brief presentation of the principal supply and demand aspects of the flaxseed industry is, therefore, timelyo California is now utilizing, in the form of linseed oil, the equivalent of 600,000 to 650,000 bushels of flax- seed. In the event that flaxseed becomes a commercial crop in California and market prices for flaxseed become established at San Francisco and Los Angeles, such prices may be expected to average somev\fhat above Minneapolis prices as long as California remains a deficit area for flaxseed. Flaxseed is produced commercially for the linseed oil and residue which it yields under a process of crushing. Linseed oil finds its principal use in the manufacture of paints and varnishes. Its next important use is found in the manufacture of linoleum and felt-base floor coverings. Oilcloth, patent and imitation leather, printers' ink, foundry oils, putty, and soft soaps offer minor market outlets for the oil.v^ Linseed meal and linseed meal cake, residue or by-products of the oil-crushing process, are widely used in this country as high protein concentrate feeds for livestock, principally dairy cov\;s . Volume of Linseed Oil Utilized in California A survey of the probable volume of linseed oil used in California during the past few years reveals, as shown in table 1, that linseed oil utilization in California probably reached a total of 7,500 tons in 1929 and has fluctuated near 6,000 tons since that time, which is equivalent to approximately 650,000 bushels of flaxseed. (See table 1.) The oil is brought into the state in a variety of ways. It arrives via rail from eastern crushing centers, and by boat from the Atlantic seaboard. Some oil is imported from foreign countries but a small amount is also exported. Within recent years an appreciable amount of linseed oil has been crushed in California from imported flaxseed. Information covering the movement of linseed meal into California is not available. ¥/orld Production of Flaxseed Flaxseed is one of the minor field crops but, like wheat and barley, is grown in many parts of the world. It enjoys a wide effective demand, has a high value relative to its bulk, and is readily transported. Roughly speaking, there are four centers of flaxseed production. They are (l) Argentina and 1/ Extension Specialist in Agricultural Economics and Associate on the Giannini Foundation of Agricultural Economics. y United States Tariff Cormmlssion. Report on Linseed Oil, 1929: 3. 1929. O Ch f i» c: o I— ' P 03 O CD c > SB H- d- W CD 0) O I— ' CL S» (D o CD 3 P3 P M 05 CD pa b -i X pL. m o CD so H+) CD Pb CD O O ^ CD o M O CD 0) o d- I— I o H-' &. 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The United States and India each supplied approximately one-tenth of the total. Only 2.1 and 2.4 per cent, respectively, are attributable to Canada and Uruguay. All other countries produced 5.6 per cent. TABLE 2 World Flaxseed Production by Principal Countries, Average, 1928-1932 1928-1932 Per cent Country average of total 1 2 thousands of bushels per cent Argentina 68,003 48.4 Russia 27,552* 19.6 United States 15,995 11.4 India 14,744 10.5 Canada 2,997 2.1 Uruguay 3,329 2.4 Other countries 7,853 5.6 Yforld total 140,473 1 100.0 j * Average for 4 years . Sources of data: U. S. Dept. Agr. Yearbook of Agriculture, 1933: 457. 1933. Supplemented by World Flaxseed Prospects FF-86: 5. July', 1933. United States Production and Net Imports of Flaxseed The United States, though one of the largest producing countries, imports almost as much as it produces. Table 3 gives, annually, the United States pro- duction and net imports of flaxseed since 1909. It also gives domestic produc- tion expressed as a per cent of total supply utilized. During a five-year period, 1909-1913, United States flaxseed production plus net imports amounted to an average of 27,160,000 bushels annually, of which 19,543,000 bushels or 72 per cent were produced domestically. (See table 3.) The period of highest total supply since 1909 occurred during the five years 1924-1928, the average annual TABLE 3 4. Flaxseed Supplies in the United States and Domestic Production as a Percentage of Total Supplies, 1909-1932 Crop year — United States production Net imports* September to August Total supplyt United States nr* 0 d u f» t i 0 n ft s r) p Y* p p T) "h of total 1 2 3 4 thousands thou sands unousanas of bushels of bushels of bushels per cent 1909-10 19 , 699 iT O O 5,922 o r~ o T 25, 621 76 .9 1910-11 12, 718 11,937 24,655 CI 51.6 1911-12 19 , o7U 7, /^22 27, 092 71.5 19 12-lo 28, 0 2,948 •2 1 PiO 1 ol, U21 90.0 iy 13-14 1 *7 O C "2 1 / , ooo 9 , boD 0^7 yi r\C\ 2 / , 409 65 . 1 1914-15 lo , 749 1 o 1 cr o 12 , 158 25,907 53 . 1 1910-16 14, OoU 1 / loo 14, 128 28, 158 49 . 8 19 lb- 1 / 14, ic9d in A "ZQ lU, <Loy O /I r7'2 c 24, /3b C (7 0 0 r . 0 Q 1 C/l y , Xb'l lo , O f 0 no 17 "Z Q c:2, f 09 /I r\ 'z 4vJ .0 jiy 1 o— ±y xo , oby Q 7/1 Q O, / '±0 00 1 1 ^ n /I bU .4 ly ly — (i u C lid <cb , Ulb <Z'Z 1 Q /I 00 , 194 2U .4 xy c u— (C X xu, yuu 1 Q c: c; 10 , 900 CO , lU f /I A D 4vJ . 0 xy iS X— o , xu f o "2 o /I n CO , ^;4U '2 1 0 n ol, 269 0 c n 2b .9 1922-23 10,520 28,848 39,223 26.8 1923-24 16,563 19,412 36,472 45 .4 1924-25 31,237 12,725 44,272 70.6 1925-26 22,337 20,710 43,134 51.8 1926-27 18,537 24,043 43,378 42.7 1927-28 25,183 18,057 43,904 57.4 1928-29 19, 140 23,505 43,433 44.1 1929-30 15,910 18,428 34,338 46.3 1930-31 21,287 . 9,869 31, 109 68.4 1931-32 11,798 10,903 21,921 53.8 1932-33 11,841 7,400t 19,24lf 61.5 * Including linseed oil in terms of seed based on 2.5 gallons of oil to equal 56 pounds or one bushel of flaxseed. T No allowance made for carryin and carryover. Preliminary. Sources of data: U. S. Dept. Agr. Yearbook of Agriculture, 1933: 456. 1933, except for 1932-33 imports. 1932-33 imports from U. S. Dept. Connnerce, Bur. For. and Dom. Commerce. Monthly Summary of Foreign Commerce of the United States. 5. supply being 43,624,000 bushels, of which 53.4 per cent was domestic production. Since 1928 the United States flaxseed supply has decreased markedly. For the two seasons of 1931 and 1932, total supply amounted to an average of only 20,581,000 bushels or a little less than one-half of the 1924-1928 average. The proportionate decrease was practically the same in both production and net imports. Production and net import trends since 1914 may be readily observed in figure 1. (See figure 1.) Commercial production of flaxseed in the United States is localized in the spring wheat section of the United States. The principal states are in order of their importance North Dakota, Minnesota, South Dakota, and Montana. Table 4, based on a five-year average 1928-1932 production, shows that approxi- mately 96 per cent of a United States total of 16,143,000 bushels is produced in these four states. TABLE 4 United States Flax Production by States Average, 1928-193 2 1928-1932 Per cent State average of total 1 2 thousands of bushels per cent North Dakota 6,071 37.6 Minnesota 5,913 36.6 South Dakota 2,295 14.2 Montana 1,198 7.4 Other states 666 4.2 Total United States 16,143 100.0 Source of data: Compiled from U. S. Dept. Agr. Yearbook of Agriculture, 1932 and 1933. Flaxseed Prices at Principal Markets and United States Import Duties Practically all of the flaxseed imported into the United States origi- nates in Argentina and in Canada, and the bulk of the domestic production is tributary to Minneapolis. Flaxseed prices at Minneapolis, Buenos Aires, and Winnipeg are, therefore, of vital importance to the flax industry of the United States. Crop-year annual prices at these three markets are given in table 5. (See table 5.) The data for two markets, namely, Minneapolis and Winnipeg, extend back to 1909, but for Buenos Aires extend only to 1920. Changes in the price spread between Minneapolis and IVinnipeg reflect changes in the import duty on flaxseed brought into the United States. Flaxseed producers in the United States have been benefited by approximately the amount of the tariff, and con- 6, Figure 1 United States Flaxseed Production and Net Imports 1914-1952 50 — Net imports ^ U. S, production 40- 0) 50- m •H IC- 00 1?^ .V.V.' r+t+1 .;.v.\v 'A w m Si i 1 i HP +1+ §. ••.V.VJ ivKv.'; m m. M LO CO 00 a> o> OS 01 as OS O OJ CV3 03 W CO 'sl^ CVJ CO CM 0> OJ Oi rH fH cH LQ CO o> 01 rH iH CO 03 O to 03 iH CN2 CO CO 03 03 iH rH TABLE 5 7. Flaxseed Prices at Minneapolis, Winnipeg, and Buenos Aires, 1909-1932 (in dollars per bushel of 56 pounds) Minneapolis* Winnipeg Buenos Aires Minneapolis Minneapolis Crop year No. 1 No. 1 (Argentina) above above Sept .-Aug. Northern Northwestern Winnipeg Buenos Aires 1 2 3 4 5 dollars dollars dollars dollars dollars 1909-10 1.97 1 .76 •m M 0.21 1910-11 2 .50 2 .23 0.27 1911-12 2.18 1 .97 T 0,21 1912-13 1 .42 1 . 22 0.20 1913-14 1 .50 1.31 0,19 — 1914-15 1 .70 1 .49 0,21 1915-16 2 .00 1 *80 0.20 1916-17 2 .80 2 .60 0.20 1917-lo 6 . /O o .bo 0 , 17 19 18-19 4.0/ 3.95 0.12 19 19-20 '±*d 1 0 .46 iy (cU-iii 1 '7 Q It lO 1.0/ 0,42 r\ nit 0 ,63 19 2 1-2^2 d * lb 1.69 0 . 14 0.47 1 Q 1 0.35 0.78 19£io-24 O 11 1 . f 4 r\ '2 'z 0 .33 0 . 70 c .bo O /II O T Q . io r\ o o 0 .45 19 25-26 2 . DO 2 .11 1,78 0,42 0.75 1926-27 2.25 1.94 1.67 0.31 0.58 1927-28 2.21 1.88 1.68 0,33 0.53 1928-29 2.29 2.09 1.72 0.20 0.57 1929-30 3.11 2.39 2.01 0.72 1.10 1930-31 1.76 1.09 0.97 0.67 0.79 1931-32 1.36 0.81 0.62 0.55 0,74 1932-33 1.20t 0.74l= 0.70t 0.46 0,50 * Crop year begins August 1. ■f Average for 11 months. ^ Average for 10 months. Sources of data: Minneapolis 1909-1931: U. S. Dept. Agr 1932-1933: U. S. Dept. Agr Buenos Aires Sept. 1920-Dec. 1925: Yearbook of Agriculture, 1933: 456. Bur. Agr. Econ, Crops and Markets- 1933. Yearbook of Agriculture, 1925: Jan, 1926-Dec, 1927: Jan. 1928-Aug. 1929: Sept. 1929-July 1933: Winnipeg Sept U. S, Dept. Agr 841. 1926. U. S. Tariff Commission. Report on Flaxseed, 11: 1929 . U. So Dept. Agr. Foreign Nev/s on Flax and Flaxseed, F.S. FF-46. Dec. 30, 1929. U. S. Dept. Agr., Bur. Agr. Econ. "lATorld Flaxseed Prospects, FP Nos. 59, 71, 82, and 86. 1909-Dec. 1913: U. S. Tariff Commission. Agricultural Staples and the Tariff, Information Series 20: 145. 1920. Jan, 1914-Dec, 1925: U. S. Dept. Agr. Yearbook of Agriculture 1925: 842. 1926 Jan. 1926-July 1933: Siime as for Buenos Aires. 8. sumers of flaxseed products in the United States have had to pay a higher price for flaxseed products by an amount approximately equal to the import duty. The rates of duty which have prevailed since 1909 are given in table 6. TABLE 6 United States Import Duty Rates on Flaxseed and Linseed Oil, 1909-1930 Year of Tariff Act Flaxseed per bushel* Linseed oil per gallont 1 2 cents cents 1909 25 15.00 1913 20 10.00 1921 30 10.00 1922 40 24.75 1930 65 33 c 75 * Bushels of 56 pounds, t Gallons of 7,5 pounds. Sources of data: 1909-1922: U. S. Tariff Commission. Report on Linseed Oil, 1929: 2. 1929. 1930: U. S. Dept. Commerce. Statistical Classification of Imports into the United States with Rates of Duty, Schedule A: 26. 1930. Volume of Linseed Oil Crushed in the United States Approximately 90 per cent of the flaxseed produced and imported into the United States is crushed for oil. The amount crushed and the volume of oil produced annually, 1919-1932, are given in table 7. (See table 7.) Exports and imports of linseed oil in the form of oil have been very small in recent years, exports amounting to only slightly over 1,000,000 pounds and imports less than that. Since 1922 annual imports of oil have decreased from 72,000 tons to less than 100 tons . Relation of Flaxseed Prices to Linseed Oil Prices and Linseed Meal Prices Because linseed oil is the principal flaxseed product, the price of linseed oil and the price of flaxseed are very closely related. A determination of the exact cause and effect relationships between the two is, however, beyond the scope of the present study. New York prices of raw linseed oil and Minneapolis prices of flaxseed are shown in figure 2. (See figure 2.) 9. TABLE 7 Flaxseed Crushed in the United States and Volume of Linseed Oil Produced, 1919-1932 United States* r " ■ Flaxseed Per cent of Linseed oil Crop year I Q ^ -rs-l- -1- r\ \ oepTy . GO Auc. ) flaxseed supply crushed , supply crushed produced i. 0 c thousands thousands millions of bushels of bushels per cent of pounds 1919-20 33, 194 26,969 81.2 505 1920-21 26,707 24,828 93.0 466 1921-22 31,269 23,276 74,4 435 1922-23 39,223 33,806 86.2 647 1923-24 36,472 35,529 97.4 659 1924-25 44,272 40,996 92.6 758 1925-26 43,134 39,716 92.1 732 1926-27 43,378 40,136 92.5 745 1927-28 43,904 41,795 95.2 783 1928-29 43,433 42,313 97.4 788 1929-30 34,338 31,070 90.5 567 • 1930-31 31,109 28,777 92.5 522 1931-32 21,921 19,751 90.1 365 1932-33i" 19,241 17,631 91.6 325 * No allowance made for carryin and carryover for any given crop year, t Preliminary . " . Sources of data: Col. 1: U. S. Dept. Agr . Yearbook of Agriculture, 1933: 456. 1933. Cols. 2 and 4: 1919-1930: Same as col. 1 but taken from page 462. 1931-1932: Courtesy of 0. C. Stine, in charge. Division of Statistical and Historical Research, U. S. Dept. Agr. Col. 3: Col. 2 divided by col. 1. 10. Figure 2 Raw Linseed Oil Prices at Ne\v York and Flaxseed Prices 4.50 4.00 rH 3.50 B 3.00 f^2.50 w CO I— 1 o 2.00 1.50 1.00 .50 .00 at Minneapolis, 1910-1932 A ^Flaxseed - ) Minneapolis - Ik ' ^ / y ' Linseed oil New York i ■ — J,... 1 — J.. _i .J I ,.l t .1... M. <■ ..— .-t .-n 1.80 1.60 1.40 o 1.20 to u 1.00 ^ w .80 .60 .40 .20 .00 1910 1915 1920 1925 1930 11. It will be noted from table 8 that the relationship between flaxseed prices and prices of linseed meal is also close. The relationship is, however, not as close as is true in the case of flaxseed and linseed oil. This is to be expected because linseed meal is in the nature of a by-product, consequently there is little relationship between the amount placed on the market and pre- vailing prices. TABLE 8 Flaxseed Prices at Minneapolis and Linseed Meal Prices at Minneapolis and San Francisco Price of Price of Price of flaxseed at linseed meal at linseed meal at Crop year* Minneapolis Minneapolis San Francisco 1 2 3 dollars dollars dollars per bushel per ton per ton 1921-22 2.19 48.19 1922-23 2.58 49.35 1923-24 2.44 47.66 53.12 1924-25 2.63 48.18 52.54 1925-26 2.53 50.09 53.70 1926-27 2.25 48.59 51.68 1927-28 2.21 51.58 52.24 1928-29 2.29 58.20 53 .50 1929-30 3.11 52.24 52.94 1930-31 1.76 33.08 35.87 1931-32 1.36 26.38 28.78 1932-33 1.27 23.05t 25.55t * Flaxseed crop year, August to July, Linseed meal crop year, September to August . ■f Average for 11 months. Sources of data: Flaxseed at Minneapolis 1909-1922: U. S. Dept. Agr . Yearbook of Agriculture, 1932: 646. 1932. 1923-1931: U. S. Dept. Agr. Yearbook of Agriculture, 1933: 462. 1933. 1932: U, S. Dept. Agr. Crops and Markets, monthly issues. Linseed meal at Minneapolis 1921-1929: U. S. Dept. Agr. Yearbook of Agriculture, 1930: 667. 1930. 1930- 1933: U. S. Dept. Agr., Bur. Agr. Econ. Crops and Markets. Linseed meal at San Francisco 1923-1925: From the San Francisco Chronicle . 1926-1930: Compiled from the San Francisco Examiner. 1931- 1933: Compiled from the YiTeekly Feed Market Review, San Francisco.