Mead Lover's Digest #106 Tue 30 March 1993

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John Dilley, Digest Coordinator


Honey Subsidies. ("Jim Ellingson")

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Date: Mon, 29 Mar 93 13:04:59 -0600 
From: "Jim Ellingson" <>
Subject: Honey Subsidies.

In Mead Lover's 99, Dick Dunn asks about the status of honey

Before getting to his questions, I'll give a bit of background.

My father, Herman Ellingson, started his beekeeping business in the
50's. My brothers and I worked in the business from the age of 8. It
was very much like a family farm or ranch. By the 70's, the business
had expanded to 4000 hives with annual honey production of 400,000 to
1,000,000 pounds, depending on the weather and a thousand other
variables. My father died in 1976 and 5 of the 6 children have moved
on to other pursuits. My brother David currently runs 3000 hives and
has 3 full time employees.

Much like a small farm the capital outlay for a business of this size
is on the order of a half a million dollars. Gross revenues are on the
order of $60-$80 per hive or $200k with 3000 hives. (I haven't worked
directly with the business since 1982, but recently asked David about
the subsidy issue. The numbers I'll use are "Ball Park" figures. Like
any other commodity, the price of honey fluctuates.)

The wholesale price for honey is around 50 cents per pound. There are
credits for low moisture and light color, deductions for high moisture
and dark color. (BTW, maximum moisture content is 18.6%. Any higher
and it ferments! Imagine that! }:~) )

The price support program dates to 1980 or so. One of the reasons for
the program was/is to keep commercial beekeeping viable so the
(commercially kept) bees can continue to provide essential

Many crops such as almonds, sunflowers and all fruits, REQUIRE
pollination and the yields are strongly dependent on it. Bees are far
and away the most effective pollinators. We used to earn $20 (?) per
hive (on 50 hives) for pollinating sunflower plants for a seed
company. This is the first time I've heard that the reason for the
program was the military's need for a domestic supply of beeswax. Of
course, in Washington and in politics, all things are possible. }:~)

Agricultural subsidies are based on the cost of production, plus some
profit margin.

Let's do a reasonably accurate example.

The current support price is 52 cents per pound which is 2 cents above
the market price. While the honey never leaves the producer's
warehouse, the government "buys" it for the support price (52). The
producer then "buys it back" for the 1.5 cents per pound less than the
current market price (48.5). The producer then sells the honey on the
open market (50). As if this wasn't sticky enough, the government
takes one cent per pound from the support price to fund the Honey
Board. So the producer gets 51 cents per pound and the HB gets 1 cent
per pound.

The government verifies the production and then "pays" the producer the
difference between the support and market. The producer then sells the
honey. The size limit on the program is around 300,000
pounds/producer/year. So the most any producer will receive this year
is about $7500.

US HONEY PRODUCTION is about 180 million pounds per year. US HONEY
CONSUMPTION is approximately 220 million pounds per year. Assuming all
of the honey was covered by the program (it isn't) the cost of the
program is less than 5 million dollars per year.

Contrast this to the US sugar lobby's strangle hold on imports, the
EEC's protection for rape (canola) seed producers, or the Japanese rice
or beef import bans, all of which "cost" billions of dollars in either
lost trade revenues or higher consumer prices and the ludricousness of
this flap over honey price supports becomes clear. Why The Economist
and Bill Clinton are focusing on this is beyond me. My guess is it's a
diversion or smoke screen. Being few in number, honey producers are
not able to put up much of a fuss. (unlike the bees! }:~) )

The US import duty on honey is 1 or 2 cents per pound. Export duties
as high as $1.00 per pound are not uncommon.

So, to answer your questions:

> – How heavily is honey subsidized now?

Not very heavily. It appears they were phasing out the program long
before bashing it became such popular sport (diversion).

> – How much of subsidies go to large producers vs small?

I can't quote percentages, but their is the size limit. Some producers
have 10K or more hives, but not many. David's production is about 0.2%
of the total. I suppose he's in the top 100 as far as size of
operation and he's near the production limit. He's getting about five
(?) thousand dollars this year.

> – How much honey is imported vs domestic? How does that split

out > against "whole" versus heavily-filtered and processed
"super- > market" honey? >What I'm really getting at is "How
is this going to affect our precious raw >ingredient?" I'm guessing
that the less-processed honey is already less >affected by a world
market because it probably isn't shipped as far and >isn't in
competition with imports.

We consume more than we produce, so we need to import about 20 percent
of our annual production or 40 million pounds. Honey from Minnesota,
Montana and the Dakotas goes for a premium because it's light in color
and has a mild flavor (clover, alfalfa, etc.) Bottlers blend this
honey with cheaper darker (often imported) honey.

Honey ships and keeps well so that isn't a problem. The price of
"less-processed" honey IS directly affected by the US and world market

Beekeeping is a great hobby. I suspect you'll be able to find a small
producer to sell you 40 or 50 pounds of honey, no matter what. Bees
are important for other reasons. If the commercial producers go out of
business, "Supermarket Honey" will get darker and the trade deficit
will increase by 100 million dollars. (Maybe they can bleach it with
Camden tablets. }:~) )

The impact from the loss of pollination will be much greater.

These opinions are biased of course. But as I've stated, the program
was a very low buck deal and appeared to be on its way out before the
hoopla. The support price had been as high as 60 cents per pound and
while none of the expenses have come down, the current support price of
52 cents, has.

Cheers, Jim

Jim Ellingson
AHPCRC/University of Minnesota tel 612/626-8088
1100 Washington Ave. S., Minneapolis, MN 55415 fax 612/626-1596

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