On the day the Congressional committee began its investigation, raw sugar was selling in New York for 3.86 cents per pound, and the testimony regarding the cost of refining was no doubt based on this price for the raw sugar entering the refining operations.
It is therefore fair to assume that under normal conditions, with raw sugar at about 3¾ cents, the average cost of refining in the United States is 62½ cents per 100 pounds. This includes every item from the time the raw sugar is landed on the dock until the refined is loaded on the cars or boats for shipment. It includes the selling and overhead expenses, but not the transportation charges after the sugar leaves the refinery.
During the last six years (1909-14 inclusive) the actual differential in the United States between the purchase price of raw sugar and the selling price of refined has been 82½ cents per 100 pounds. The difference between this figure and the cost of refining represents the refiner’s gross profit; in other words, about 20 cents per 100 pounds, out of which he must pay for all additions and improvements to his plant. The remainder is available for returns on capital invested. This difference varies with the time of year and in different localities, but the average will probably hold good.
A refiner of cane sugar buys his raw product in the open market and must pay for all his operating and administration expenses and obtain his profit from the margin between the buying price of raw and the selling price of refined sugar. The cost of refining is not constant, as it varies with the fluctuating values of fuel, containers, labor, and particularly the cost of raw sugar. If it costs 62½ cents per 100 pounds to refine sugar with raws at 3.86 cents per pound, it will cost about 82½ cents per 100 pounds with raw sugars at 6 cents, assuming that such items as fuel, containers, labor, etc., remain constant. This is due to the greater value of the raw sugar lost in refining, to the heavier insurance premiums and higher interest charges. With high-priced raws, the margin between raws and refined must be proportionately greater to offset the increased cost of refining.
The refiner, like the consumer, would prefer to see sugar selling on a low basis, while the producer always hopes for the opposite.
SHIPPING DEPARTMENT
Here will be found every modern convenience for the rapid loading of cars and steamers. Adequate railway trackage is provided for the handling of shipments moving by rail, and on the waterfront side of the warehouses there is ample berth room for steamers that carry the sugar to cities and towns on the inland waterways and the seacoast, together with points tributary thereto. Facilities are also at hand for local delivery by drays.
Railroad cars are sometimes sent to refineries by water, on car barges, to be loaded with sugar and then towed to what are known as railroad terminals, where the cars are taken from the barges and started on their journey to destination. The capacity of a car varies from twenty-four thousand to one hundred thousand pounds. If an amount of sugar equal to that consumed in the United States in 1915 were loaded into cars containing 1000 sacks of 100 pounds each, it would require 81,087 cars, which would make up a train 768 miles long.