FCS Bulletin

Nitrogen fertilizer plant of Mississippi Chemical Corporation, Yazoo City. M. F. C. and its member cooperatives are increasing their investment in this plant which is jointly owned with growers and other cooperatives.

Superphosphate Manufacturing

M. F. C. began manufacturing superphosphate in 1950 at its new acidulating plant at Canton, Miss. The process involves the treating or acidulation of finely ground phosphate rock with sulfuric acid in a rotating vat or mixing pan. From here, it is dropped into a 40-ton standard modern-type den. After curing for 30 days it is moved to the bagging machine or mixing plant.

The daily capacity of the plant on an 8-hour shift basis is about 120

tons. The annual rated capacity is 60,000 tons. Storage space of about 5,000 tons is allocated from the mixing plant. The cost of the plant was approximately $260,000.

As indicated in table 6 on page 32, only 23,000 to 29,000 tons, or less than half of the plant's capacity, have been manufactured each year because of the difficulty of obtaining

sulfuric acid.

Investment in Mississippi Chemical Corporation

Since M. F. C. and its member associations have an investment of $233,500 in Mississippi Chemical Corp., Yazoo City, Miss., and plan to increase this to $400,000, to

manufacture nitrogen materials jointly with growers and other cooperatives, some highlights of this organization are included in this bulletin.

Mississippi Chemical Corp., hereafter referred to as M. C. C., was organized in October 1948 to produce nitrogen compounds for use in agriculture. Approximately 10,000 farmers located mainly in Mississippi bought a total of $4,250,000 of capital stock; cooperatives in the area bought over $250,000; and a bond issue by Yazoo County raised $750,000. Sufficient additional funds were borrowed from Reconstruction Finance Corporation to build a $7.5 million nitrogen plant. It consisted of an anhydrous ammonia plant or unit with a capacity of 120 tons per day, an ammonium nitrate plant with a capacity of 140 tons a day, and a nitric acid plant. These began operation in mid-1951.

Mississippi Chemical Corp. allocated output to stockholders on the basis of stock investments. In 1951-52 it distributed 1 ton of ammonium nitrate for each $100 of stock. In 1952-53, 1 ton of ammonium nitrate was distributed for each $57.50 of stock and 1 ton

of anhydrous ammonia was allocated for each $100 of stock.

Mississippi Chemical Corp. was organized as a regular corporation with dividends on common stock limited to 5 percent a year. In July 1952, however, it amended its charter and bylaws to provide that patronage refunds shall be paid on purchases after meeting various provisions for paying dividends on stock, retiring indebtedness, and accumulating working capital. Also, the amendments provide that the directors shall have authority to

enter into a contract with any lending agency not to pay cash refunds to members without the prior consent of such agency.

Sales during the fiscal year ended August 31, 1951, were $859,778 and substantial loss resulted from low output and various difficulties in getting into production. Sales during the 10-month fiscal year changed to end on June 30, 1952, were $3,897,383 and net margins totaled $268,499. During this period the plant produced 25,532 tons of anhydrous ammonia at 70 percent

Table 4.-Fertilizer purchases by patrons from Mississippi Federated Cooperatives during fiscal years ended May 31, 1948-53

1 Manufactured by Mississippi Federated Cooperatives (A. A. L.).

: After bonuses to employees but before dividends on capital stock and equities.

of capacity and 36,651 tons of ammonium nitrate at 86 percent of capacity.

Mississippi Federated Cooperatives was one of two distributors of solid products and handled about 20 percent of the output. From 400 to 500 dealers, including many large farmer-users and local co-ops sold the remainder. Transports

owned by M. C. C. distributed liquid products directly from the plant.

In the summer of 1952, a decision was made to double the capacity of the solids plant and add 50 percent to the capacity of the ammonia plant at a cost of approximately $4,750,000. General stock sales raised $1,800,000 for the first phase of the program, and Yazoo County approved another bond issue of $600,000. The remainder is to be obtained from retained savings and additional loans.

Sales for the year ended June 30, 1953, totaled $5,598,034 with net savings of $1,328,442 realized after allowing for tax amortization. Pa

Bagging mixed fertilizer at M. F. C.'s plant at Laurel, Miss.

tronage refunds declared for the year totaled $1,090,960. During the period 61,724 tons of ammonium nitrate and 13,851 tons of anhydrous ammonia were manufactured and shipped to stockholders and agents. On June 30, 1953, capital stock outstanding was $6,249,895 and the surplus account was -$253,020 due to prior losses, writeoffs of organization expenses, and current income taxes. Net fixed assets were $7,401,816 and total assets were $10,850,006.

Volume and Operating Results

During the last 6 years purchases by patrons from M. F. C. of straight materials consisting mostly of basis slag have ranged from 94,339 to 138,419 tons. Volume in 1951-52 represented about 28 percent of all shipments of materials in the State. (See Appendix table 7.) Gross margins realized were from 70 cents to $1.31 per ton. (See table 4.)

Patrons purchases of mixed goods and other materials from the plants of M. F. C. reached 62,960 tons in 1952-53. They consisted of 42,057 tons of mixed goods, 14,156 tons of superphosphate and 6,747 tons of other straight materials. (Most of the remainder of the superphosphate manufactured was used in mixing operations.) Net savings a ton ranged from $2.43 to $5.03 per ton the last 6 years. This was based on total tons handled as the association did not show separate net margins on mixed goods, superphosphate, and straight materials.

The 1952-53 operating statements of the 3 plants showed considerable variation in net margins

ranging from $2.42 to $5.03 a ton. (See table 5.) When the three statements were combined, gross margins after deducting bags, freightout, and inspection fees, averaged $7.92; expenses were $4.76; and net margins, including other revenues, averaged $3.23 a ton.

Table 6 shows costs and approximate savings in manufacturing superphosphate in the Canton plant the last three years. These items are based on production at less than 50 percent capacity because of the shortage of sulfuric acid. In 1952

53 the total materials and manufac⚫ turing costs were $17.65 a ton, or 88 cents for each unit of phosphoric acid.

If the association had not manufactured its superphosphate but had purchased it from other manufacturers, f. o. b. their plants, the cost would have been approximately $19 a ton, or $1.35 more than its own cost. In addition, M. F. C. would have had to pay transportation costs from the nearest available manufacturing point. This probably would have been Hattiesburg, Miss., on which the charges would have been $2.79 a ton. Thus, the total savings to the association on superphosphate used in mixing amounted to about $2.82 a ton in 1952-53 compared with $2.19 a ton in 1951-52 and $3.20 a ton in

1950-51.

Total purchases of fertilizer by patrons from M. F. C. were $5,174,643 in 1952-53 compared with $284,446 in 1935-36.

Patronage refunds declared on fertilizers during the last 5 years are

shown in table 7. The association changed from "a dollar" to "a ton" basis for declaring refunds on M. F. C. Clover brand mixed fertilizer in 1952 because delivered prices varied due to freight, and because some associations did their own hauling.

Benefits and Possible Improvements

One of the objectives of this study was to indicate the principal benefits which farmers and their local cooperatives have received from M. F. C. It is difficult to measure benefits from the fertilizer services rendered by M. F. C. since its organization. No one knows what the level of margins and quality would have been and how much fertilizer would have been available if M. F. C. had not been in the picture.

Some of the more tangible benefits, however, which farmers have received are as follows:

1. Most of the $2.4 million of net savings of M. F. C. to date have come from fertilizer operations. They have been largely retained in the business to improve facilities. and services to local associations and their members.

2. Indirect savings have been made for farmers through M. F. C.'s regulating effect on prices or margins. For example, M. F. C. reported that early in 1952 it refused to raise its prices $2 a ton on mixed fertilizers along with other companies. As a result prices soon dropped again and farmers in Mississippi were saved many thousands of dollars on their plant food bill.

Table 5.-Operating statements of fertilizer manufacturing plants of Mississippi Federated Cooperatives (AAL) for the fiscal

Item

year ended May 31, 1953