Publisher Summary

This chapter highlights the economic features of the starch industry in the United States, emphasizing the demand prospects and industry organization. The starch industry refers to the producers of commercial starch. Commercial starch is an important ingredient in manufacturing a wide range of industrial products, such as paper, textiles, and building materials. Commercial starch in the United States is made primarily from corn by the wet-milling industry. The industrial organization and behavior of the corn wet-milling industry seems unlikely to change drastically in the near future. Further product diversification may occur as the firms succeed in developing new products for a growing and changing consumer market. The production of starch derivatives will probably occur largely in other types of plants or in starch consuming industries, such as the paper industry. Plant automation is expected to increase, and new semi-wet-milling technologies may lead to increased efficiency in pearl starch production.

I Introduction

II Statistical Estimation of the Demand for Starch

III Projected Future Volumes of Corn Likely to Be Used by the Wet-Milling Industry

IV Organization of the Corn Wet-Milling Industry

V References

I INTRODUCTION

This chapter highlights the economic features of the starch industry in the United States, giving particular emphasis to demand prospects and industry organization. The starch industry, as defined here, refers to producers of commercial starch. Man consumes starch both from foods to which commercial starch, or products made from commercial starch, have been added, as well as from search-bearing plants. Commercial starch also is an important ingredient in manufacturing a wide range of industrial products, such as paper, textiles, and building materials.

Commercial starch in the United States is made primarily from corn by the wet-milling industry. The term “wet-milling” is used because the corn is wet when it is ground and water is used as the suspension medium during most of the other operations.

Corn and relatively small quantities of sorghum (milo) grains are the basic materials used by the corn wet-milling industry. Annual utilization of corn by this industry fluctuated between 55 and 83 million bushels during the 1930s. Utilization increased rapidly during the 1940s and has continued to rise steadily through the 1970s (Table I).

Of the corn produced for grain in the United States, the percentage used by the corn wet-milling industry has shown a slightly rising trend, from around 3.5% in the 1930s to over 5.5% in the 1970s. However, because much corn is used on the farms where it is produced, the proportion sold from farms that has been taken by the wet-milling industry has been around 9% in the last decade. The proportion was about 20% in the 1940s. The proportion fluctuated greatly during the 1930s, dropping as low as 12% and rising to over 30% in the major drought years of 1934 and 1936.

A typical bushel of corn weighing 56 pounds yields about 34 pounds of starch, 2 pounds of oil, 11 pounds of animal feed (gluten and hull), and nine pounds of water (3). Some of the starch is converted to other products, such as sweeteners, by corn refiners. During the 1970s, about 15 pounds of starch per bushel of wet-process corn grindings were shipped as starch, and the remainder was used by corn refining companies to manufacture other products. Starch shipments, as a percent of the total value of products shipped by the industry, declined from around one-third in 1963 to about one-fifth in 1977 (Table II).

II STATISTICAL ESTIMATION OF THE DEMAND FOR STARCH

Because starch use permeates the entire economy, the demand for starch in any particular year depends rather directly on the level of national income and output. The growth of the starch industry relative to the growth of the general economy depends on a number of factors, including changes in the composition of national income and output, changes in the technology of industrial processes, the development of new products, and changes in the availability and prices of substitutes for starch.

The most important general indicator of change in the demand for starch is the gross national product (GNP) of the United States (Table III). From the early 1930s to the mid-1960s, the quantity of corn processed by the corn wet-milling industry rose at about two-thirds the rate of increase in GNP. Growth in utilization of corn by the wet-milling industry began to accelerate in the mid-1960s, reflecting the development and improvement of high-fructose corn syrup and...