HW#2 (American Crystal Sugar Company)_Problem_Set_Solution

HW#2 (American Crystal Sugar Company)_Problem_Set_Solution...

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Agribusiness Strategy Case Study #2 Sept. 23, 2008 American Crystal Sugar Company: Diversification in the Corn Sweetener Industry (Response) Economic Environment Prominent yet subtle differences can be sited throughout history between the raw sugar and corn sweetener (HFCS) industries. An outside observer may think that sugar and sweetener are synonymous; however, in respect to these two industries, they differ in various ways. Their target audiences are quite different and due to these differences the end products made from, or combined with the raw sugars vary as well. Despite these differences, they are in direct competition with one another because many times depending on other various factors one may become a substitute for the other. This is why they can and should be studied adjacent to one another. Sugar, compared to sweetener was the first to hit the market within the United States, establishing its own particular niche. It has been common practice for sugar companies to be privately owned and organized. Moreover, the final product, sugar, of these companies comes predominantly come from sugar beets and sugar cane. Sugar can be extracted from many plants, being that it is one of the bi-products of photosynthesis. Ease of extraction, volume, and cost among other important factors led to the use of sugar beets and sugar cane and the dominant sources of sugar. Sugar beets are said to represent about 35% of the world’s sugar production. Following the introduction of various market participants outside of the United States around the 1970’s, sugar prices fell to some of their all time lows. US market participants would have become almost non-competitors had the government not enacted policies which enabled US
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companies to become more competitive. Government intervention within the industry continues to be seen today, enacting more policies that have expanded the acreage allowed for crop harvesting. Currently sugar beets and corn are the most sought after crops for the production of sugar and other sweeteners. Growth continues to expand by leaps and bounds as well, this due to an ever increasing demand from industrial and non-industrial consumers. Exhibit 4 located in the case study highlights the growth of capacity and production within the industry between 1980 and 1994. Production is coming from all fronts; in Mexico sugar cane is almost infinitely
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This homework help was uploaded on 02/20/2009 for the course AEM 4270 taught by Professor Gloy,b.a. during the Spring '08 term at Cornell University (Engineering School).

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HW#2 (American Crystal Sugar Company)_Problem_Set_Solution...

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