IV. Conditions and Trends of Production
Influence of Agricultural Evolution
PRESENT-DAY economic relationships between vegetable and animal fats are best understood in the light of certain aspects of the development of world agriculture during the nineteenth century. Before that time sheep and cattle raising was the only form of agriculture possible in vast regions of grass lands because of scarcity in these lands of fuel, building materials, means of transportation, and water. In such regions carcass fats, together with hides, were the major marketable products of agriculture, for these are not very perishable. Meat, because superabundant and perishable, had little value. Cattle were slaughtered for their hides and tallow; sheep were sheared, or were killed for their pelts and tallow. It was not so long ago that this was the practice in the Southwest of the United States, in Argentina, and in Australia. It is still the marketing method in some remote regions, for example, in certain sections of South America. As late as the 1850's, probably even in the 1860's in Chicago, Cincinnati, and elsewhere in the Middle West, only the hams and shoulders of a large proportion of the hogs slaughtered were marketed as meat. The remainder of the carcass was steam rendered for lard. As late as the 1870's cattle were slaughtered for their hides and tallow in California. In other words, in certain stages of agriculture and in certain remote regions hides and carcass fat are the major products of animal husbandry; meat is either worthless or a mere by-product. The world over, the area of grass lands that was producing carcass fat as a major product was so vast during perhaps the first three-fourths of the nineteenth century as to exercise a great influence on animal husbandry everywhere, as well as on the world trade in fats and oils. The hides and wool were the first products, the fat the second product, the meat the last product.
Gradually, however, the grass lands were brought more and more under the plow. Three sets of inventions made the growing of crops possible in these areas. One was the railroad, which not merely made the transportation of crops to market practicable but also served to bring to the farmer fuel and building materials in exchange. Later came the modern steamship, port storage facilities, and still later the present-day refrigeration. The second invention was well-drilling machinery, which supplied water for domestic use and for irrigation. The third was agricultural machinery, which made extensive agriculture possible. (Cf. 0. E. Baker, The Potential Supply of Wheat, Economic Geography, March 1925, I, 15.) In these grass lands the rainfall is generally too scanty for high crop yields or the soil may be of too poor a quality, or both. On such land a farmer must work a considerable acreage to produce enough to support a family. If he must work the land with a spade or a primitive plow and a bullock he cannot cultivate a sufficient area. To exist he must practice extensive agriculture upon a considerable acreage, but this requires machinery operated by an abundance of draft animals or by engines of one sort or another. It is only within the last half-century that large sections of southern European Russia, of the United States, of Australia, and of Canada have become grain producers. Before that time they were cattle ranges and sheep pastures. At the present time this conversion of the ranges into crop land is approaching completion.
Animal Fats as By-products
There are now left few regions of the earth where hides and carcass fats remain major products of animal husbandry. In most regions, as a result of a gradual shift in relationships, meat has become the major product and fat a by-product in the sense that much the greater return is received from the meat and the lesser return from the fat and other products. The capacity for meat production has not yet reached its limits.
Why have fats become subordinate to meats in the carcasses of animals? To answer this question it is necessary to recognize first that it has two aspects. The more conspicuous involves the change that has occurred in the more remote regions and for this the explanation is obvious. Where once the meat was valueless because there was no market near enough to be reached, settlement of these remote regions has expanded the local market, and improved transportation facilities and refrigeration have opened up distant markets.
The other aspect of the question is more obscure, yet perhaps more important. Meat has probably always been the primary product of animal industry in regions close to centers of population. As improved transportation and refrigeration have brought to these centers of population the meat as well as the fats produced in remoter regions, it might be supposed that in the centers of population prices of meats should have fallen relative to prices of fats. But on the contrary it is the prices of fats that have declined. The reasons are many; the decline in prices of fats relative to prices of meats in the centers of population is the resultant of a number of factors, some involving supply, some demand. On the supply side, one factor has been the development of improved breeds of animals, particularly cattle, capable of laying on more fat. These heavier fat-producing breeds have been adopted chiefly because of the better quality of meat produced, but a consequence has been a larger production of fat per pound of meat.
The supply of animal fats is strongly influenced by the demand for meat, since it is the price of meat which is chiefly influential in determining the profits of animal husbandry. The direction and the amount of these changes over the last 50 years are by no means clear. It appears that in the United States the demand for meat per capita probably declined between 1907 and the beginning of the war and has since increased slightly. Even for the United States and for these recent years, the data do not justify positive conclusions, and for other regions and for other years there is too little evidence to justify even a guess as to the direction in which the supply of animal fats has been influenced by the demand for meats.
On the demand side, there has been an important increase for fats in general, arising from the greatly increased consumption of soap. The most powerful influence on the supply side, however, has been the development of new sources of vegetable fats. In consequence, vegetable fats have been substituted for animal fats on a large scale and in many uses. The production of cottonseed, coconut, and palm kernel oil has been greatly expanded. As the demand for cotton has increased, production of cottonseed has of necessity increased likewise. New areas opened up in the tropics have provided abundant supplies of coconut and palm kernel oil at low prices. With the increase in supplies of vegetable oils came also the development of the process of hydrogenation, whereby the vegetable oils could be transformed into solid fats and brought into direct competition with the animal fats.
The relation of meat (in the stricter sense) to fat can be shown both by comparisons between animals of different ages and by comparisons of the prices of different parts of the carcass. Let one compare the bacon type of hog with the lard type of hog. The bacon type of hog is finished at an earlier age, commands a premium in the livestock market, and when the disposition of the entire carcass is computed, it is observed that the lard and salt pork fractions are relatively low. In the case of the lard hog, the animal is finished later and reaches a larger weight; the heavier the animal, the lower the price per pound as a rule; and when the disposition of the carcass is computed, it will be found that the lard and salt pork fractions are relatively high. Let the commercial prices for loins, hams, shoulders, bacon, lard, ribs, and mess pork be compared, as in Table 3. The loin, bacon, and ham carry high prices and the lard and salt pork a low price.
Table 3. Prices of Hogs and Hog Products in Chicago, 1913-14 and 1921-26*
(Cents per pound)
Year Live hogs Smoked hams Bacon: short clear sides Fresh pork loins Pure lard Short ribs Mess pork 1913 8.35 16.6 (199) 12.7 (152) 14.9 (178) 10.8 (129) 11.37 (136) 10.81 (129) 1914 8.30 16.7 (201) 13.2 (159) 15.4 (186) 10.2 (123) 11.09 (134) 10.44 (126) 1921 8.51 26.8 (315) 13.5 (159) 22.5 (264) 13.2 (155) 9.52 (112) 10.75 (126) 1922 9.22 26.5 (287) 14.1 (153) 21.7 (235) 13.1 (142) 11.21 (122) 12.37 (134) 1923 7.55 21.2 (281) 12.0 (159) 18.0 (238) 13.9 (184) 9.81 (130) 11.95 (158) 1924 8.11 20.2 (249) 14.4 (178) 19.1 (236) 14.7 (181) 11.28 (139) 13.14 (162) 1925 11.81 27.1 (229) 22.3 (189) 25.0 (212) 17.9 (152) 16.97 (144) 18.79 (159) 1926 12.34 30.8 (250) 20.1 (163) 27.8 (225) 16.9 (137) 15.48 (125) 18.30 (148)
Agriculture Yearbook, 1926, pp. 1105 and 1110; also G. C. Haas and Mordecai Ezekiel, Factors Affecting the Price of Hogs (U.S. Department of Agriculture Bulletin 1440); 1926 prices of short ribs from Price Current-Grain Reporter, November 9, 1927; 1926 price of mess pork computed from weekly data in National Provisioner. Figures in parentheses indicate percentage of each price to the live-hog price for that year
The disparity in prices is so pronounced as almost to justify calling the lard a by-product. The high price of the lean cuts must carry the low price of the salt pork and lard; and since the load is heavier in the case of lard hogs than of bacon hogs, this represents an advantage for the latter, considered from this viewpoint alone.
This conclusion is confirmed by inspection of the practices current in the retail sale of fresh pork. The loins, chops, and steaks -- the cuts that are prepared by broiling rather than by roasting -- carry the highest prices. Next come the relatively lean cuts that may be either broiled or roasted, such as the rump. Then come the fatter cuts that can be neither broiled nor roasted, but must be boiled, stewed, or sautéd. As meats are sold at retail, the excessive fat is cut off and thrown away, to be rendered or sold to renderers for what it will fetch. In the household a further trimming off of fat occurs, representing largely a waste. Owing partly to preference for the quality of meat in the parts of the animal sold as steaks and roasts, but largely also to the co-existence of the fat, the lean cuts carry a higher price and the fat cuts carry a lower price.
In the case of beeves, it is a fair statement of retail practice to say that the hind quarters must carry the front quarters, and that in the case of each of these a relatively small fraction of the leaner, more highly esteemed cuts (steaks and roasts), carries the balance of the quarter. Lamb is preferred to mutton because it is leaner and younger. The premium for young, lean poultry over old, fat poultry expresses the same fact. Right through animal husbandry (outside of dairying), therefore, we find the fat to be at best a subordinate product, if not indeed a by-product; the lean is the principal product.
Vegetable Oils Major Products
If now the vegetable fats and oils be compared with carcass fats in regard to manner of production, it appears at once that the former are not in many cases joint products. They are usually major products, sometimes with and sometimes without by-products of value. It is instructive to review the different forms. In the case of palm oil, this is practically the sole product, since the carbohydrate and protein in the residues left after the extraction of the oil find very little use in the country of origin. (Carbohydrate is the term applied by chemists to a group of substances which includes the sugars and substances which when decomposed by hydrolysis (see II. Properties of Fats and Oils -- Chemical composition) yield sugars. The most important representatives are grape sugar or glucose, fruit sugar, milk sugar, malt sugar, cane or beet sugar, starch, cellulose -- which last is the most important constituent of wood, cotton, and many other fibrous plant products. Proteins, also known as albumins or albuminous substances, are a class of complex chemical substances present in all living things. They are familiar to everyone for, with water, they are the chief ingredient of the white of eggs, of flesh (muscle tissue), and of blood clots. They are present in milk in roughly about the same proportion as fat (cream) and milk sugar. They always contain carbon, hydrogen, oxygen, nitrogen, usually sulphur, also sometimes phosphorus and iron. Very few of them are soluble in anything but aqueous media. Most of them are coagulated by heating (for example the albumen in white of egg), that is, heat makes them insoluble.) In the case of the palm kernel and coconut, these may be crushed in the countries of origin or in countries of destination. When crushed in countries of origin, the residual cake finds little use, except as it may be shipped to other countries for feeding purposes. When crushed in the countries of destination, the cake and meal are used as high-protein feeding stuffs and sell in competition with other high-protein feeding stuffs. In some importing countries, the protein of the oilseeds is so highly prized as a feeding stuff that the oil cake has very considerable value. But if crops be viewed as a whole, the oil of the palm and the fat of the coconut are the principal products, and the carbohydrate and protein of the residues are the by-products. In the case of the soy bean in Asia, on account of the importance of the whole bean in the diet of the common people, it is reasonable to term the fat, the protein, and the carbohydrate co-equal products; when soy beans are crushed in countries of import, however, the fat is the principal product and the cake is the by-product. The same thing holds for the seeds of the peanut, cotton, sunflower, and for the olive -- the fats are the prime product and the residues the by-product, although cottonseed oil is merely a by-product in the production of cotton and corn oil a by-product in the manufacture of meal and starch.
Quite generally with oil seeds, therefore (cottonseed oil and corn oil being the exceptions), the fats are the chief products and the carbohydrate and protein the by-products, varying under different circumstances from a relatively high value to insignificance. (There is, however, a trend of increase in demand for cake.) When animal and vegetable fats come into competition (for example, tallow and lard versus the several vegetable oils), the animal fats and oils, in themselves secondary products, are competing with vegetable fats and oils, in themselves primary products (except cottonseed and corn oils). Furthermore, in the case of animals, the meat (chief product) is made to carry the load, whereas in the case of oil seeds, the fats and oils (chief products) must carry the load of the commercial operation.
The Question of Relative Costs
Comparison of costs of production of animal and vegetable fats involves numerous complicated problems and cannot profitably be carried beyond a certain point. Certain of the facts bearing on costs are, however, pertinent to the discussion of conditions and trends of production. Fats arise in animals either through the storage of fat ingested with the feed or through the transformation of other feed constituents, of which starch is the most important. These processes are accomplished with losses both of material and of energy, the absolute magnitude of which varies with circumstances. As a matter of fact the losses are very considerable and only a portion, sometimes only a small portion, of the intrinsic caloric values of the feed is recovered as fat and meat in the carcass. From the agricultural or commercial point of view, the losses incurred when feeding stuffs are converted into carcass fat may or may not represent waste and inefficiency. This depends upon the value of the feeding stuffs and the conditions under which these were produced. If the feed is fit for human food and might have been used for this purpose (as, for example, barley, oats, corn, wheat), or if it was produced upon land that might have been devoted to producing food crops, then the production of carcass fat in this manner might be regarded from one point of view as inefficient, even though it may have been commercially profitable, because the carcass fat and the meat will feed fewer persons than might have been maintained upon the grains used as feed to produce them. (Cf. C. L. Alsberg, The Effect of Scientific Food Consumption in Increasing Wealth, Annals of the American Academy of Political and Social Science, September 1924, CXV, 1-8.) If, however, the feed could not have been used as food (for example, straw), or if it was the product of rough land suitable only for pasture, the production of carcass fat may be regarded as a very efficient process, since it converts into food products materials not otherwise of use.
It will be advantageous to illustrate the limited recovery of the calories of nutrients in the flesh of animals raised on them and to indicate the relative preponderance of fat over protein with increasing age of the animals. With good practice in the corn belt in this country, 8 or 9 bushels of corn are required to produce a hundredweight of live hogs, corresponding to a recovery of about a third of the calories of the corn in the form of edible pork. In the feeding of adult steers, the recovery of the calories of corn in the form of beef is often as low as 15 per cent. Possibly 45 per cent in the case of hogs and 30 per cent in the case of cattle represent the maximum limits of practicable recovery of nutrients in the form of edible meat products. To illustrate the preponderance of fat over lean with increasing ages and weights, information may be drawn from analyses of whole carcasses. Hogs weighing in the neighborhood of 200 pounds will contain something like 24 pounds of protein and 85 pounds of fat, while hogs weighing in the neighborhood of 300 pounds will contain some 30 pounds of protein and 160 pounds of fat. From these data obvious inferences as to what might be termed physiological costs of production may be deduced; but whether physiological costs of production correspond to economic costs of production depends on other circumstances.
Animal fats, then, are not primary products of the soil, they are secondary products. They are produced by feeding primary products of agriculture. The conversion of these primary products, the feeding stuffs, into animal fats is accompanied by heavy losses in nutrients. It is quite otherwise with vegetable fats; these are primary products of the soil, and no such conversion losses are involved. If animal fats were produced only from vegetable fats of the feed one might be justified in concluding offhand that animal fats are always produced at higher cost than vegetable fats. As a matter of fact they are produced in this manner to a slight extent only. They are produced for the most part by conversion of non-fat material in fodders like alfalfa, hay, straw, stover, bran, and especially from the starch of feed grains. There are still regions where bulky products like fodder and grain have little value because of transportation difficulties, where oilseed crops cannot be made to flourish. In countries like the United States, however, except for range cattle and sheep, animal fat is largely produced from the grains, particularly corn.
Despite the losses involved in converting plant nutrients into animal fats, it is more economical in temperate regions to obtain fats chiefly by this indirect process than directly from plants. This is the case for two reasons. Because meats cannot be produced without the simultaneous production of fat, a large amount of animal fat is unavoidably produced in the process of obtaining the supplies of meat for which we are willing to pay. A large proportion of this fat would be produced even though it had no more remunerative use than to supply heat for the power plants of the packing houses. Because the fat does have a considerable value, however, it is profitable to produce more than the theoretical minimum per pound of meat. The longer an animal is fed, the larger the proportion of nutrients converted into fat and the smaller the proportion converted into lean meat. With the decrease in. value of fat relative to meat in the last generation, it has become necessary to shorten the feeding period and thus reduce the ratio of fat to lean meat in the carcass, but this ratio is still far above the minimum.
The second reason for the relative economy of indirect production of fat, through conversion of plant nutrients into animal fats, in temperate regions, lies in the fact that the plants which thrive in these regions store only small proportions of the nutrients which they elaborate in the forms of fats or oils. They are chiefly fiber- and starch-producing plants. No highly efficient fat-producing plants are adapted to cultivation in most temperate regions. In consequence, vegetable fats can be produced economically in temperate regions only in connection with other joint products capable of carrying the major burden of the costs of production. The necessary conditions are those which account for the existing production of cottonseed and corn oil and to some extent of peanut oil.
With certain tropical plants, however, the situation is otherwise. The coconut and the palm store large quantities of nutrients in the form of fats. They are therefore fairly efficient direct fat producers. With this efficiency, coupled with the fact that they grow in regions where there are no other highly profitable uses for the land, the coconut and the palm are able to compete in fat production with the animals and plants of temperate regions where the major portion of the costs of production are borne by other joint products.
Next: IV. Conditions and Trends of Production -- The position of dairying
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