on operating costs. Work is now underway to analyze the data collected and to prepare a publication of findings for widespread use in decisions on the further role of freezing in bakery products production and distribution.

2. Market potentials for Bulgur (Redi-wheat).—A market test of canned cooked wheat (Redi-wheat) developed by WU, ARS, was conducted in cooperation with the Kansas Wheat Commission and WU in Wichita, Kans. The data collected have been analyzed and a final report has been prepared.

During the market test, Redi-wheat outsold 57 established foods which might be used in similar ways. Six months later sales had leveled off not achieving as high a level as hoped for, but outselling 6 out of 10 of the 57 similar products. Redi-wheat is now being distributed commercially in the Kansas, Colorado, and Missouri area. Efforts are continuing by the Kansas Wheat Commission to encourage large national food distributors in adding Redi-wheat to their line of products and it is understood that this step is being seriously considered by a major food organization.

3. Rice distribution patterns in domestic and territorial markets.—In a continuing effort to improve distribution efficiency based on more complete knowl edge of markets, work has been initiated to develop fundamental information on the present characteristics of the domestic rice market for direct food use by determining (1) present rice distribution practices, including type of rice. kind of buyer, and package information; and (2) domestic rice distribution patterns, including the location and size of markets, variations between markets, and factors associated with distribution patterns. Data on the distribution of rice will be collected through the cooperation of rice millers as well as repackagers. The data collected from the industry will be on a nationwide and territorial basis for the crop years 1960-61 and 1961-62. All firms engaged in rice distribution (about 80 in number) will be contacted to furnish these data.

4. Market potentials for materials of agricultural origin in adhesives.-Research is nearing completion to appraise the technological and economic factors affecting use of adhesives, to relate these to present and potential markets for agricultural materials in adhesives manufacture, and to provide guides for further research based on more precise knowledge of end-use requirements. Adhesives have high value per unit and agricultural raw materials for adhesives from such sources as corn, wheat, soybeans, animal byproducts, and fats and oils need to keep pace with expanded use of synthetics in adhesives.

Three classes of agricultural materials are important in adhesive uses; starches and dextrose, vegetable proteins, animal proteins and bone glues have a 38.4 percent by weight and 17.4 percent by dollar value share of the $450 million adhesive market. This share is expected to decline in the future, unless new and improved adhesive performance is achieved for them. Several areas for research and development to assist in market improvement were obtained from the study.

5. Effects of use of urea in mixed feeds on market potentials for oilseed meals. Use of urea as a protein source has caused concern over its impact on oilseed meal markets. Projections through 1964 show increasing use of urea in ruminant feeds. Urea use will expand from an estimated 80,000 tons in 1959 to 125,000 tons in 1964.

Nutritional research continues on the use of urea in supplements. In this work more urea is used in relation to natural protein ingredients than is now practiced. Research projects using urea-molasses or urea-alcohol and forages to replace oilseed meals also have been continued. However, urea is not expected to replace a substantial portion of oilseed meal use in ruminant feeds over the next few years, as use will be equivalent to about 10 percent of oilseed meal in 1964.

6. Market potentials for cereal grain starch products in new industrial uses.Expansion of industrial uses for cereal grains, in large surplus, is essentially a problem of finding new uses or expanding existing uses for starch or for products in which starch or a starch derivative is a major component. Economic research is needed to identify new market possibilities and to evaluate techniceconomic factors affecting potential new uses for starch. As a first step in meeting these needs, a contract study has been initiated to carry out a patent search and a bibliography review of starch research for the period January 1. 1951, to June 30, 1962. The contractor will also make a critical evaluation of marketing ideas and products exposed in the literature and arising elsewhere for guides to new industrial use development for cereal grains.

Research will be directed to the most promising new uses suggested through this comprehensive review to evaluate potentials and to otherwise explore, from an economic viewpoint, possibilities for expanding use through new applications.

E. LIVESTOCK PRODUCTS

Market potentials for hides and skins.-Hides and leathers have been experiencing increased competition in the leather consuming industries. Synthetics have been substituted in a number of uses and a new threat exists in the shoe market in the form of a leather-like synthetic being tested by a chemical firm. Analyses are being made of information obtained from suppliers and manufacturers to determine potentials for retaining leather markets through improved physical characteristics and qualities to meet market needs. In addition, plans are being developed to appraise alternative markets to leather for raw materials from hides and skins, primarily collagen or gelatin.

F. POULTRY AND EGGS

Market potentials for improved egg products in remanufacturing uses.—Most of the work on this study to determine the market expansion possibilities for egg products of improved quality in remanufacturing uses has been completed. The data collected have been analyzed and the manuscript of the report of the findings is being prepared. Based on the findings from this study it would appear that the use of dried egg products and egg containing prepared dry mixes will increase substantially in the years immediately ahead. Increases in the use of dried eggs will be largely at the expense of frozen eggs. The convenience aspect of dried eggs and premixes appeals strongly to industrial users. Resistance to the use of dried eggs and premixes is fast disappearing, and apparently, is no longer a strong deterrent to expanded utilization, with the possible exception of the small retail baker.

Oilseeds

OTHER FARM PRODUCTS

1. Market potentials for modified edible fats and oils.—Although little change has occurred in the per capita consumption of fats and oils in the United States during the past decade, major shifts have occurred both among food fat products groups and within groups, as well as important shifts in fats and oils used in end products. These trends have been accelerated by changes in food technology, consumer tastes and regulatory requirements which have led to demands for new and improved fats and oil products for the older markets, as well as intensification of the search for new markets. Utilization research development of new and improved fat and oil products with special properties making them suitable for use in confections, bakery products, food and container coatings, edible lubricants, emulsifiers, coating oils and fats, and other special uses offer an opportunity for opening up entirely new markets for edible fats and oils. A variety of modified fats including a cocoa butter-like fat, dibasic-acid containing fats, and edible polymers and polyester-type derivatives of cottonseed oil are now and will be available to food processors for specialized end uses.

Research has been initiated under contract to appraise the market potentials for edible modified fat products of agricultural origin; to evaluate the competitive situation in relation to price and properties among various modified fats now available and between products of nonagricultural origin in food and container coatings, waxes, and polishes; and to determine the need for improved specialized fat and oil products which would serve as guides for future research and development.

2. Market potentials for fats in feeds.-Research on potentials for fats in feeds has been completed. Within the span of a few years feed, use has developed into the largest single new market for fats and oils. It is predicted that this market will continue to grow in the next 10 years. Increasing numbers of feed manufacturers are adding fats to feeds and feed ingredients. As manufacturers gain experience in adding fats they are using fats in a wider range of products as well as increasing the level of fat added. An important factor in expanded production and increased efficiency in poultry has been the use of high energy rations using added fats in feeds. These and the many other advantages of adding fats to feeds has enabled this to develop into a major market outlet that has stabilized tallow and grease prices, particularly important in view of the displacement on other markets such as soap by synthetic materials. A wide

range in kind and grade of fats and oils materials were found to be used with good results. Supply availability most frequently determines kind and grade of fat used.

3. Market potentials for fats and oils and fatty acids in selected industrial use markets. Technological developments have enabled nonagricultural raw materials to displace agricultural fats and oils and their fatty acid derivatives in some traditional market outlets, and have reduced their use per unit in other applications. New fats and oils products have been developed, and research is under way to determine their potential for improving the competitive position of agricultural fats and oils. Research is also being conducted to determine requirements for a number of end uses as guides for further physical research to development of properties that will permit fats and oils and their derivatives to meet competition from synthetic materials. Fieldwork was completed during the year. The contractor has prepared drafts of reports in each of six market Users of fats and oils surveyed often cited pricing and quality of these materials to be paramount problems. Fluctuation of commodity prices discourages long-term investments in plants and processes to utilize these materials, and the inability to make long-term contracts to supply users of derived materials from these fats and oils puts a strong damper on private research toward new product and process developments.

areas.

On quality, the inability to obtain stocks of material on a standardized quality basis at all times in the open market, and variations in quality of material with a single description and price created problems for firms seeking or using these materials.

4. Market potentials of unextracted soybean meal in poultry feeds.-A research has been directed at some of the economic questions relative to whole soybean meal. Findings based on a study of the Arkansas poultry area indicate unextracted soybean meal would offer an alternate outlet for soybeans and at the same time afford feed manufacturers and livestock feeders who mix their own feeds an opportunity to have larger amounts of fat in their feeds, without requirement of special fat-handling equipment. Inedible tallow and grease are the primary fats being added to formula feeds. The price spread between tallow and grease and soybean oil has been narrowing in recent years, making the processing of cooked, unextracted soybean meal more attractive. In some areas of the United States, production of soybeans and consumption of soybean meal are high, but processing facilities are not locally available. Soybeans are shipped out of these areas and meal is shipped back in. Lowered freight costs on this feed ingredient would amount to a substantial saving. For these reasons cooked, unextracted soybeans may find its most attractive economic position in areas away from the main soybean production and proc essing areas.

5. Market potentials for fats and oils in plasticizers.-A special tabulation of fat-derived materials used in plasticizers in 1958 and 1959 was made by the U.S. Tariff Commission to meet industry requests for current data. Consumption of fats and oils in 1959 was about the same as the 72 million pounds reported previously as used in 1957, but total plasticizer use increased from 442 to 524 million pounds. However, new and improved plasticizers from fats and oils increased in use with the increase in total use of plasticizers. The information was reported in the Fats and Oils Situation, November 1960, and reprinted as the supplement to AMS-382, "The Market Potential for Fats and Oils in Plasticizers."

H. OTHER

1. Market potentials for products from new crops for industrial, feed, food, or pharmaceutical uses.—As part of the Department's new crop research program, market potential evaluations for new crop materials for industrial, feed, food, or pharmaceutical uses are carried out to provide an economic basis for the selection of crops with the greatest potential for further development and field testing.

As a result of findings revealed by this research, commercial firms have become better acquainted with the potential new crops and the future possibilities for processing and marketing them. Particular interest has been shown toward Vernonia anthelmintica, a new oilseed crop that yields epoxy-type oil for plasticizers and other uses. The Department has been urged to seek early commercial development of this new oilseed crop.

2. Market potentials for water soluble gums and mucilage other than starch.— Water-soluble gums and mucilages (other than starch) can be supplied from cereal grains or from new crops. These materials could compete with or replace imported materials. There is a need for and research has been initiated to determine the modifications needed in gums from domestic sources to promote their commercial use in a wide variety of products. Gums are used in adhesives, cosmetics, emulsions, gelatins, bakery and beverage products, pharmaceuticals, textiles, paper, oil-well drilling fluids, detergents, photographic specialities, coatings, and soil conditioners.

3. Market analyses of maple sirup and other maple products.-A cooperative agreement has just been entered into with the Pennsylvania State Agricultural Experiment Station to study some of the problems involved in reducing maple processing costs and expanding markets.

Work was initiated to identify the present and potential market for maple sirup and other maple products; to develop alternative marketing procedures adapted to a central evaporator plant; and to study the economics of supplying a central evaporator system with sap.

4. Market potentials for Hawaii farm products.-Research in cooperation with the Hawaii Agricultural Experiment Station has been initiated to determine the economic feasibility of broadening the base of Hawaiian agriculture by developing new markets for diversified Hawaii products such as Kona coffee, macadamia nuts, and fruits and juices. Market tests will be conducted to introduce Hawaiian products in new markets to ascertain their acceptability and salability and to provide estimates of potential demand to guide market development efforts. Marketing and merchandising practices will be evaluated to determine improvements required for full exploitation of market expansion possibilities. In addition, research was conducted involving the economics of the Hawaiian beef industry in 1962. Preliminary results of this research show that Hawaii's beef industry is confronted with revolutionary developments, which have brought it face to face with a difficult financial situation. These developments are greatly increased imports of both high- and low-quality beef, the latter originating in foreign production areas having low costs; changes in the demand structure for beef; changes in the type of Hawaiian retailers and in their business practices; need to change to higher quality-higher cost beef; and higher costs of labor, land, materials, equipment, taxes, and transportation.

Mr. WHITTEN. In the areas of utilization-and that has become a kind of open sesame around here, everybody would rather utilize instead of giveaway or store our surplus commodities.

The "64-dollar question" is how can we utilize them? Last year I believe it was almost a $5 million increase for utilization research. This year we learned some of the difficulties which follow from large increases.

One was that this happened right after the college graduates had gotten jobs, and it has been quite a slow process to find people to fill the bill that they have.

What, if you have the information, appears to be the area of utilization research that appears more promising, or have you reached any point of such determination?

Mr. KOFFSKY. We have some specific areas to suggest. There are a number of value. One area in which our people have been very much interested has been new forms of and new uses for starch.

There is a feeling also that stretch cotton, for example, can provide an important outlet. An important objective, too, is to develop new or improved products to help maintain markets which agricultural products traditionally have had but which may lose further to new synthetics such as detergents, resins and latexes in paints, and manmade fibers. Here is where stretch cotton is important.

Mr. WHITTEN. Let me see if I can understand this thing. Somebody comes up with an idea at the laboratory. Then they come up

with a product and you go out and see whether it will take. Or do you out and see what the country needs and then go down there and give them the idea and they try to come up with what you think will work?

Mr. KOFFSKY. It works both ways. ARS scientists develop a product, for example, and ask us then what is the economic potential for this product.

Secondly, in our work on market potentials, we do find leads for other products that might be developed, or might be reworked, or revised in some way to meet a special need in industry.

I would have to say this, Mr. Whitten, in research frequently you don't know what you are coming up with finally. The main thing is that there are many new products coming forward and it takes quite a bit of analysis and review to determine whether or not they have a commercial market potential. It is often necessary to demonstrate the economic feasibility and potentials of new products in order to get them on the market.

Mr. WHITTEN. What does analysis consist of? Do you and Sherman Johnson, and two or three of your people, get down there in the office and say "What do we think this is going to do?" Do you think about it? Or do you send out people and take a sampling from housewives and others to see what it is that they are buying?

Or, do you assimilate the reports from the various companies which release periodically what sales are, say, by one of the chainstores in regard to food, or maybe one of the larger department stores with regard to clothing? How do you go about this analysis business?

Mr. KOFFSKY. We have a research staff working on these problems and there are various techniques which we use. One is market testing, where a new product is put into an actual marketing situation to determine whether or not consumers will buy it and in what quantities.

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Mr. WHITTEN. What did you do? How did you make the analysis? What did it consist of? What was the starting point; what did do; and when did you reach the analysis and what did you do with it after you got it?

Mr. KOFFSKY. We can cite several of our market tests on new products such as potato flakes, superconcentrated apple juice and a new wheat product. In cooperation with utilization research people and with producer groups a test market site is selected and the new product stocked on the shelves of supermarkets in order to cover as many prospective consumers as possible in the market. The product is introduced through promotion financed by our cooperators outside Government. Sales are audited for a period of time so we can tell how the product is accepted in comparison with already successful products. Consumers are interviewed to ascertain their awareness of the availability of the product, how many times they have purchased it, and what they like and don't like about it. A determination can then be made of how the product is likely to fare on a commercial basis. This information is published and widely distributed to private firms, producers, and other interested parties. The tests furnish positive research findings on sales levels, repeat purchase patterns and consumer acceptance. How a product measures up in these key elements determines its likelihood for commercial success.

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