for instance, guarantee of an average level of weekly work rather than an individual weekly level. It should also encourage the larger independent growers to contract for a greater number of imported workers so that the few remaining local cutters may be shared. Intense effort should be directed toward assuring a cane cutting crew of at least 400 imported workers and from 50 to 100 local workers during the grinding season. Provision of an adequate flow of cane to the factory would shorten the crop season by about 35 days and would result in a savings of about $35,000. It is not anticipated that any part of this savings can be realized in 1957.

Ever since the war and until the last year or so, Vicorp's losses with respect to sugarcane production as well as raw sugar processing have been so large that Virgin Island cost data have not been regarded as a practical basis for establishing the value of sugarcane. Accordingly, the Secretary of Agriculture's determination of a fair and reasonable price for sugarcane in the Virgin Islands has been modelled largely on the comparable determination for Puerto Rico. Vicorp is now producing sugarcane at a cost low enough to suggest that the present determination ascribes too large a share of the returns from raw sugar to the sugarcane producer and too small a share to the processor. With respect to sugarcane grown by the corporation, the determination has no effect except to indicate a profit on field operations at the expense of a larger loss on factory operations which in turn may entail pressure for wage increases in the field. With respect to cane purchased from other growers, the determination actually establishes the price which the Corporation must pay.

Virgin Island sugarcane contains about one-third more fiber than Puerto Rican cane and for that reason is substantially more costly to process and would continue to be even if the factory achieves a high standard of efficiency. This fact independently indicates that the share of returns ascribed to the factory should be larger than in Puerto Rico by more than the present slight differential.

3. At the next fair price hearing, the Corporation should recommend to the Department of Agriculture reduction of the growers' share of the returns from raw sugar for the 1958 and subsequent crops substantially below the present 63 percent for sugarcane yielding 10 percent sugar. A percentage of 57 is recommended. This would increase Vicorp's returns by $40,000. Growers would be out of pocket very little in comparison with their 1956 returns provided the factory successfully improves its recovery ratio which would add $20,000 to growers' returns in addition to the $13,000 growers now are assured because of the conversion of the Corporation's sugar handling to bulk shipment. Adjustments to inventory of stores were quite nominal in 1954 but amounted to $45,000 in 1955 and to $34,800 in 1956. It is anticipated that there will be another substantial writeoff in 1957. These charges cover both writeoff's because of obsolescence and materials recorded in perpetual inventories but not physically on hand at date of count. The management feels that a portion of the losses actually occurred in earlier years. However, the General Accouting Office in its certification of the balance sheet of the Corporation as of June 30, 1953, made no qualification with respect to the inventory of materials and supplies. In any event, the operation cannot stand losses of such magnitude if it

is to succeed. They are much too large in relation to the quantity of supplies required in the sugar operation. Quite independently of the writeoff, supplies and services charged to the factory are abnormally high and should be reduced substantially.

4. The President and Comptroller should give personal attention to reorganizing the Corporation's stores handling procedures with the objectives of reducing losses because of obsolescence through better planning and purchasing practices and assuring themselves that supplies removed from stores are needed in operations, charged to the proper activity, and used therein. As compared to 1956, factory supply and service costs should be reduced by $90,000.

Because of the soils of St. Croix, high fiber cane will continue as a problem. The experiment station is currently cooperating with the Corporation to bring in and develop varieties adaptable to St. Croix which may have lower fiber content without sacrifice of yield or sucrose

content.

5. Cooperative effort between the Corporation and the experiment station should be continued and intensified to import, test, develop, and disseminate improved cane varieties suitable to St. Croix.

During the last 3 years, while the Corporation has been endeavoring to improve operations related to its major activity, the production of sugarcane and sugar, little attention has been devoted to the development of short-season crops for the local, Puerto Rican, and mainland market. It has been established in the past that tomatoes and beans can be produced economically but marketing has posed too serious a problem for private operators. Establishment of a marketing apparatus is difficult for a new area principally because buyers with a need for a reliable source of supply do not care to risk dependence on an untried source. Vicorp, which incidentally could stand one crop failure on commercial-scale acreage better than a private operator, is also in better position to devote the effort necessary to establishing market outlets which later may be shared by individual producers. If sugar production is proved by the course of future events not to be competitive with production in other domestic areas, there would be little point in continuing it, sustained as it is by the importation of foreign canecutters. In that eventuality, any progrsss made in the development of alternate uses for local labor, even though minor, would be helpful. 6. Vicorp should initiate a program aimed at the development of the production and marketing of short-season crops on a commercial scale.

COMMENTS ON CONCLUSIONS AND RECOMMENDATIONS OF PRIOR REPORT

1. A successful effort to establish the Government-operated sugar enterprise on a self-sustaining basis would be advantageous to both the residents of St. Croix and the Government. The conclusion still stands for the reasons stated on page 2 of the prior report subject to the following modification: The tourist trade and the construction of private homes by former or present mainland residents have progressed at an accelerated pace during the last 3 years. Assuming a continuation of this trend, the construction and operating effort involved will further supplement the role of the sugar

enterprise in providing a broad base for the island's economy.

With

no misgivings whatsoever, the sugar industry can be permitted to contract in terms of employment although this need not imply contraction in terms of volume of production.

2. The Corporation's policy should be reoriented from one of expansion to use in the most profitable proportions of the labor, equipment and land resources available to it. Net rather than gross returns should be emphasized.

This recommendation is repeated with emphasis now that tourism and private residential construction are on the upswing. It should be noted that the Corporation in the last 3 years has directed its policy along the lines indicated and should continue the principle as its prime consideration in all policy decisions.

3. Decisions concerning the most desirable use of Vicorp's land resources should be made with only limited consideration to the labor employment opportunities of each enterprise. The recommendation is more cogent today than 3 years ago. The operation should not be regarded as a relief agency. As noted earlier, private construction and tourism are replacing Federal construction as claimants for labor. There is no involuntary unemployment during the harvest season and the attitude of Crucians toward agricultural work persists and strengthens. All but a very small proportion of the Corporation's cane now is cut by imported harvest workers.

4. Efforts such as the successful one of July 1952 to increase wage rates by legislation regardless of the economics of the situation should be opposed steadfastly by the Corporation and resisted by civil authorities until a balance between productivity and wages is achieved.

The recommendation is repeated. A balance between productivity and wage rates has not been achieved although the gap which existed 3 years ago has been narrowed. If the trend continues, the Corporation may be in a position at some time in the future to consider wage increases on a selective basis but it should not be placed in the position of having to make such increases to comply with legislative requirements until productivity is very substantially above the present level.

5. To the full extent possible, large scale public construction should be concentrated during the nonharvest period in the last half of each year.

The large scale public construction program has tapered off and is nearing completion. There is no present indication that another such program is contemplated within the next few years. Many of the workers engaged in the program have been absorbed in private construction. It is not suggested that any effort be made to synchronize private construction activity with the labor requirements of the sugar industry but it is expected that this will occur to a considerable extent automatically as the result of the greater availability to the construction industry of labor during the nongrinding season, which is also the off-tourist season.

6. The President and his agricultural consultant should survey the Corporation's sugarcane land exhaustively and base their decision to retain or retire fields strictly on their best forecast of the relative net returns from sugar versus alternate uses. Uneconomic sugarcane land should be retired not later than the year

when it ordinarily would be replanted and in any event not later than when the direct cost of cultivating the ratoons, harvesting, and milling can be fully recovered from the sugar obtained. The statement immediately preceding this recommendation indicated that one quarter (800 acres) of Vicorp's sugarcane land was not suited to the production of that crop, that such land cost 45 percent more per acre than suitable land to cultivate and yet yielded only 80 percent as much sugar. Since that time, Vicorp has sold about 150 acres of this land and removed an additional small acreage from cultivation. By far the largest portion is still in production. Some of it has been better drained in the meantime and in the view of management most of it, recently replanted, is producing satisfactorily. However, weather conditions in the last few years have been favorable. This land is definitely inferior and over a long span of years with the cycle equalized it may not pay its way. There is other more suitable land not now in sugarcane on the island and not presently available to the Corporation. As a long term objective, the Corporation should aim to get St. Croix's sugarcane on the most suitable land and to drop marginal land. Since at best St. Croix will find it difficult to compete with other domestic areas, it is important that every situation be exploited as fully as possible.

7. A chief field administrator and several assistants selected by him should be brought in from one of the other sugarcane areas. These men should be of sufficient stature to gain the respect of the labor foremen and to train those foremen or their replacements in the proper handling of labor.

Vicorp now has an able field administrator and the caliber of the district supervisors is improved as compared to 1953. Effort to obtain more qualified men as supervisors and foremen should be continued.

8. For each supervisor in the field, factory, and rolling stock divisions, management should initiate a policy of preparing in simplified form a periodic statement of performance requirements and a budget of expenses controllable by the supervisor. At the end of each period, supervisors should be called to account. Those who failed most dismally to meet the performance targets (established at realistic and attainable levels) should be removed from their supervisory capacities and their activities turned over to replacements or consolidated with those of supervisors who have demonstrated ability to perform. Concurrently, the best performing supervisors should receive pay increases or promotions. Ultimately there would be a lesser number of better paid supervisors. Progressively, supervisory positions would become more highly valued; more capable men would be attracted to the positions and the dignity of productive labor would be more firmly established on the island. Labor productivity would be lifted toward a level consistent with the productive techniques and equipment available to Vicorp. Periodic cost statements are prepared and used by the president and chief field administrator who informally discuss the situation with supervisors concerned. However, budgets and cost statements are not distributed to supervisors because of the feeling on the part of management that the supervisors are not qualified to use them properly. This may well be so but if so it indicates that the supervisors are not fully competent or that means have not been devised to draw

up performance and cost statements in simplified and understandable style. Not being fully aware of their targets, the supervisors cannot contribute as effectively to solving problems as they otherwise might. Further consideration should be given to this matter.

9. Control of this corporate entity should be simplified to the full extent permitted by law. Preferably, the Board of Directors should establish procurement, property disposal, and employment policies and the officers permitted discretion to act within the limitations of these policies; annual appropriations made to the Corporation; the corporate officers heavily bonded; records maintained according to ordinary commercial procedure, adapted to disclose necessary budgetary information; commercial type financial reports forwarded to Washington monthly; anu a periodic audit performed by the Government Accounting Office. The comptroller reports that only those records and reports required by the Government or needed for internal control are maintained. Nevertheless, this entire area should receive renewed study to assure that unnecessary and unfruitful effort is not expended.

10. The comptroller should assign on a full-time basis to his most able assistant, or a person hired for the specific purpose, the task of revamping and simplifying office routine. Persons freed from clerical duties, if of sufficient caliber, should replace the less able of the present supervisors.

Although there has been roughly a 50 percent turnover in clerical workers since 1953, the total has changed but little. There were 42 in 1956 compared to 39 in 1953 for the sugar and electrical activities. Among the 42 were 6 who in 1953 were charged to direct operations although performing essentially the same work as at present. Accordingly, it may be assumed that a net reduction of three persons has occurred since 1953. There is need for a further substantial reduction in office and clerical personnel.

11. Future capital improvements should not be directed toward increasing the overall capacity of the enterprise but rather restricted to (1) improving sugar recoverability or (2) decreasing labor and material input requirements. Even additions of this nature should be made only to the extent that they can be amortized by operational savings within a relatively short period— say within a range of from 3 to 7 years.

This recommendation has been adopted. After completion of the million dollar capital improvement program in progress at the time of the last study, the factory does, as anticipated, have a potential grinding capacity of 1,800 tons per day, having actually ground an average of 1,700 tons during the 3 days prior to this writing (February 15, 1957) despite a shortage of cane on each day. Capital additions to sugarcane and sugar property during the two completed fiscal years since the last study have amounted to slightly less than a quarter million dollars. They should continue to be held down to very moderate amounts, particularly until it is determined that the sugar industry can be made competitive.

12. An experienced sugar mill mechanical engineer to remain in residence throughout the year should be employed before the start of the next crop.

The factory superintendent is in residence throughout the year and appears to have the factory in good mechanical condition. Unfor

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