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Friday, March 14, 1958
pounds of raw sugar are to be In proportion to the immediately preceding interval.

c Transportation allowances to pro ducers. The price for sugarcane speci fied in this section shall be applicable to sugarcane delivered to the mill: P ro vided, That 1 where the producer delivers sugarcane to the mill at his ex pense, the processor shall make an al lowance to the producer equal to 50
percent of the commercial carrier rate for loading sugarcane at the farm and for its transportation to the mill; or 2
where the processor loads sugarcane of the producer and transports it to the mill at his own expense, the processor may charge such producer 50 percent of the applicable commercial carrier rate.
d Reporting requirements. The processor shall submit in duplicate to the Caribbean Area Agricultural Stabiliza tion and Conservation Office, Santurce, Puerto Rico, for approval a certified statement of the actual deductions made in determining the f. o. b. mill price of raw sugar, and a certified statement of the actual gross sales price per gallon of blackstrap molasses.
e Subterfuge. The processor shall not reduce returns to the producer below those determined in accordance with the requirements in this section through any subterfuge or device whatsoever. -?
STATEMENT OF BASES AND CONSIDERATIONS

a General. The foregoing determi nation establishes the fair and reason able price requirements which must be met, as one of the conditions for pay ment under the act, by a producer who processes sugarcane of the 1958 crop grown by other producers.
b Requirements of the act. Section 301 c 2 of the act provides as a con dition for payment, that the producer on the farm who is also directly or in directly a processor of sugarcane, as may be determined by the Secretary, shall bave paid, or contracted to pay, under either purchase or toll agreements, for sugarcane grown by other producers and processed by him at rates not less than those that may be determined by the Secretary to be fair and reasonable after investigation and due notice and oppor tunity for public hearing.
c 1958 price determination. This Determination differs from the 1957
etermmatio11 in the following prinnf n, aspects: 1 The minimum share yield of raw sugar per 100 pounds sugarcane which the processor is to assign to the producer is thp aPProxhnately 10 percent; 2
, es Payment is based on the 2 2 ? . ! 10 cents per gallon or the reXL?1 pi ice per gallon actually by the. Processor; 3 the retm iw sampling sugarcane and the establishing correlatmm , f i 2 bet ? en the laboratory power juice wSle aPd the factory crusher SUcrose are eliminated;
sugar i S V b mU1 Price for raw from the mo!, calculated by deducting sugar actJierag!v market price of raw PeSes and delivery exexpenses iord t fixed rate for such made in banges have also been Qe n the definition of settlement
FEDERAL REGISTER
period for the handling of odd days at the end of the grinding season, and in the method fo r determining the recov eries of raw sugar during a settlement period when all sugarcane received and tested is not processed.
A public hearing was held in Christiansted, St. Croix, Virgin Islands, on October 15, 1957, at which interested persons were afforded the opportunity to testify with respect to fair and reason able prices for the 1958 crop. The rep resentative of the Virgin Islands Cor poration recommended that the require ment for establishing a correlating fac tor between the laboratory power mill juice and the factory crusher juice brix and sucrose be eliminated since tests have shown that its use had substan tially no effects in calculating the yields of sugar from sugarcane delivered by in dividual producers; that the sampling method be modified to permit the com positing of samples of sugarcane of pro ducers who make three or more deliver ies during the day; that the sugar yield formula provide for the determination of an estimated quantity of sugar for sugarcane received but not processed during the settlement period; and that the f. o. b. mill price be calculated by deducting from the market price of raw sugar actual selling and delivery ex penses instead of a fixed rate for certain items of such expenses. The witness stated that the fixed rate for certain items of selling expenses which he had proposed for the 1957 crop and which was incorporated into the determination for that crop was based on estimated costs of shipping sugar in bulk, but that actual expenses were higher than antici pated. He also recommended that the producers share of net returns from sugar be reduced from 63 to 57 percent for sugarcane yielding 10 percent sugar, and that corresponding reductions be made at other sugar yield levels. He stated that data now available on pro duction and processing costs suggest that the share of sugar which producers have been receiving is too high. The witness also recommendedjthat the molasses pay ment to producers be based on the quoted market prices at which molasses is sold in nearby areas rather than the price received by the processor. He stated that the processor is bound by contract to sell its molasses to certain local users and that the price obtained in the past has been substantially lower than the market price in other areas. The witness stated he did not think it was fa ir to producers to base their share of molasses receipts on a price less than the market price.
A representative o f small producers testified that there was no objection to producers sharing the actual costs of shipping sugar, but believed that a max imum of around $4.00 per ton of sugar should be set for selling and delivery ex penses, other than ocean freight and unloading at destination. The witness stated he had no objection to the elimi nation of the correlating factor nor to the proposed composite method o r sam pling sugarcane. He also stated that he saw no justification for a reduction in the producers share of sugar and rec
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ommended that this proposal not be adopted. A producer stated that he agreed with the proposal to eliminate the correlating factor, with the proposed method of composite sampling of sugar cane, and that he had no objection to sharing the actual cost of selling and delivery expense on sugar, provided a maximum was fixed. He also stated that in view of the drought conditions during the current crop and its probable ad verse effects on sugarcane production, he saw no justification in the recommended reduction of the producers share of sugar.
Consideration has been given to the recommendations made at the public hearing, to the results of investigations, to the financial position of producers and the processor, and to other perti nent factors.
The Virgin Islands Corporation is the largest sugarcane producer and the only processor in the Virgin Islands. Both the sugarcane production and processing operations have resulted in substantial losses each year since the formation of the Corporation, except in 1956 and 1957
when substantial profits were realized from the production of sugarcane al though losses continued to be sustained on the processing of sugar. During the past five years Vicorp reported process ing losses ranging from about $600,000
in 1954 to $100,000 in 1957. The sub stantial reduction in the processing loss in 1957 enabled the Corporation to real ize a small profit for the first time on its overall sugar operations. The smaller processing loss in 1957 was attributable primarily to more efficient factory op erations which reduced the percentage of lost time and which increased the per centage of sugar recovered from the sucrose in cane and to improvements in methods of handling and shipping raw sugar.
Sugarcane is also produced by about 325 independent producers in the Virgin Islands. About 300 of these producers grow 15 acres of sugarcane or less. The price for sugarcane provided in fair price determinations for prior years applicable to the purchases from independent pro ducers by the Corporation has been based in large part upon the pricing structure developed in price determina tions issued for Puerto Rico. In view of the Corporations operating losses in the past in both the production and process ing of sugarcane the standards custom arily considered in price determinations could not be applied in the customary manner and it was deemed equitable to relate returns to producers to those ob tained by producers in other offshore producing areas.
During public hearings held in early 1957 by the Committee on Government Operations of the U. S. House of Repre sentatives, the activities of the Virgin Islands Corporation were studied with a view to appraising its future. Testimony . was presented to the Committee that under current conditions the Corpora tion was required to pay a price for sugarcane higher than that indicated either by reference to 1 prices in Puerto Ricoafter considering quality d if ferences; or 2 the Corporationscom-