Copyriglit 191(5, by Win. Frank Glenn IllillllHI \\\m\ C REAM ODUCERS UIDE WM. FRANK OLENN South Sioux City, . . . Nebraska fic5 JUN 10 1916 ^CI.A434389 INTRODUCTION. The character and standing of most men are known best a1 home. Malicious statements calculated to discredit the motives of others, usually bear a most searchinr^ scrutiny. In the absence of corobora- tive or contradictory evidence to the contrary, the reader may assume at least that fifteen years of actual participation in a given line of business, naturally qualify one to speak with authority. Individuals, business firms and bankers, of South Sioux City, Neb., will verify the writer's claim of integrity, qualification, character and standing. Wm. Frank Glenn. CREAM PRODUCERS' GUIDE. The contents of this gui(h^ is of special interest and great importance to cream producers. Should the inference be made that there-is notliing UiOi'e you migiit know with advantage to yourself, ijuch inference must Springs from selfish motives; no other procf is needed to convince the intelligent farmer that he should know all there is to know. If you have been led to believe that the Avhole irabject of buying, transporting, manufacturing and gelling of cream and butter was^ too complicated for the ordinary producer to understand, stop and reflect. You would hardly expect that those interested only in the pi'ofits would exj)lain in detail. 8 A thorough understanding of botli the buying and selling is not only desirable, but a positive necessity. You may already know in a meager Avay some- thing of sampling, grading, testing, and shipping, but here your information stops. Your ability to see clear through and around any private or business matter, is due to the knowledge you possess concerning the matter under considera- tion. You should know to a reasonable degree of certainty, not only the buying cost of cream, the cost of transportation and other expenses in connection with it up to the time it is delivered at the creamery, but there are many other things that are of extreme importance to you. The system under which you are selling your 9 cream rjhoiild be tliorouglily understood in all its details. Above all others you should post yourself on the following subjects, especially when your success or failure in the dairy business depends so much on knowing' them : The highest coniniissions paid for buying cream. The lowest commission paid for buying cream. The churn over run. The manufacturing cost of butter. The selling cost of butter. The relative cost of buying cream in your own state as compared with others. The variation in station prices paid. ^he percentage of butterfat produced in the vari- ous months of the year. 10 The relation of shortage to station hiiyiiiy, r.-ul churn over run. The reason for the destruction of the local creamery. The unnecessary expense of the ordinary system of handling creaui. The birth of the centralized ereaiii(M*y. The buying practices. The unreasonable profits. The cause and effect of reducing buyers' com- missions. The manufacturers' profit. The buyers' net profit. The reason why centralized creameries get the business and profit, whether sold at the station or shipped direct. 11 The cold storage as a price leveler. A thorough study oi these pages wiii give yon a fairly accurate knowledge of the subjecta mentioned. Condensed illustrations of certain paragraphs con- tained herein, to which your attention is especially directed, will be found on pages -^ — to ' . 12 THE ORDINARY STATION SYSTEM— AN OUT- GROWTH OF PAST NECESSITY. 1. The producers of cream, being interested mainly in the essential elements of the creamery business, as affecting them — therefore our remarks here will be brief and made with the sole object of being understood rather than bewilder the reader with nonessential matter. BIRTH OF THE CENTRALIZED CREAMERY. 2. Reducing the manufacturing cost of butter, by churning it in large quantities was the primary and accepted object for the birth of the centralized creamery. Later developments, however, lead us to speculate on the real designs of the promoters. 13 CAUSE OF THE DESTRUCTION OF THE LOCAL CREAMERY. 3. Cash bn3ung stations were established in the central western states some twenty years ago. Many of the local country creameries at that time found it profitable on account of fancy prices offered, to sell their cream to the centralized creameries instead of churning it. Later, on account of dissatisfaction in the matter of testing, and the reduction of prices, a few of them attempted to re-open for business, but by that time buying stations had been established in all territory surrounding them, as well as in their own town, making it difficult to operate a local creamery on a paying basis. It was no longer optional with him as to what the paying price should be for cream ; he was compelled to meet the station prices or close his creamery, which was done in many cases. 14 VARIATION IN STATION PRICES. 4. In many instances tlie price set for tlie local ereamerymen exceeded the station i)riees paid at out- side points wliere there was no local creamery; there being two or more stations in his town by this time, one or the other of the buyers would for some un- known reason fail to receive instructions to lower or raise his paying price to correspond with the other, when a price war Avould be started immediately, lasting for days and possibly weeks, with the local ereamerymen perhai)s staking his last dollar in the attempt to protect his business from destruction. 15 UNNECESSARY EXPENSE. 5. The word "lU'Ccssity " used in llic lioading of this eluiptc'i- ai)i)li(.'s to the ordinary station system of ereain bnying. Below is listed the station equipment and various items of expense necessary to success- fully carry on the business on this plan: ; Testing equipnu'ut. ,; :; Shipping cans. Check books. Report books. Acid for testing. Stationery. Oil for heating w^ater. Drayage on cream to depot. Banking arrangements. Transportation charge on cream. Drayage at destination. 16 Clerical expense at office. Coal for heating station. Lighting of station. Water rent. Guaranteed salaries at some stations. Koturning equipments from discontinued stations. Buyers' commission on butter fat. Telephone rentals. Postage stamps. Revenue stamps. Station rent. Advertising. Field superintendent's salary and expense. Loss on account of unreliable buyers. 6. It will be shown later that many of these items of expense are wholly unnecessary even under the station system. 17 CHANGED CONDITIONS. 7. In the betrinniii^, it is well to remember that the employmeut of superinteudents. or instructors in sampling and testing cream, arranging for station building, etc., had a proper place in the business. Conditions are reversed today as there are more buyers who fully understand the business in detail, than there are places to put them. 8. Under this system each buyer must contribute to the salary and expense of field superintendents an item of .i>50 per year. If this should seem unreason- able to you. or l)e disputed by others, inqnire as to the numl)er of stations the one calling on your buyer oversees. It will be found not to exceed 54. Divide this number into $2,700. his salary and expenses, showing that the buyer's proportion is the amount named abov<\ The superintendent is no doubt a jolly good fellow and possibly the buyer feels that the money is well spent. He i)iay have been running 18 his pit'st'iit station for only eig'ht or ten years and f»'ols tlip ih'cpssity of an oxport to clieek up his accounts, yet ho would roscnt tlio insinuation tliat a ii:iiardian 1>t' appointed to handle his affairs. 9. The custom in the past has ])ccm to fui-nish almost anythinji: that mii^ht he reipiired iji ordei* to estahlisli a station at any given point. The fact that thei'c are already several stations there has hut little heai'in*^ on the ease. 10. Shouhl tht^ pi'ospective huyer I'efuse to acce{>t the proposition on a commission hasis, and he sccuhmI to have iuHuence in that community, he Avould he paid a ^uarante<'(l salai-y. a station ecjuij)- nu'iit would he ship])ed out to Inm. rent and other expense woidd he ari-anired foi'. when he would attempt to hny tlie cream then g'oing" to the other buyers. 19 Mistake of Overzealous Superintendent. 11. His adaptability for the cream business may have been overestimated by the Held superintendent ; possibly llie butter fat bought during the first month would not exceed 200 pounds. The buying cost of this butter fat to the company would be 20 cents, in addition to the price of the fat. 12. The buyer may give numerous excuses why lie bought so little cream and make great promises for the future. He is left there for another month on the same basis and with the same result, when he is finally replaced by one supposed to possess busi- ness getting qualities. Another two months' attempt to gain a foothold and the equipment is shipped back to the company to be sent out to some other point. Like throwing ^now balls against the side of a barn. Some of them stick. 20 :I3. The producer not giving this matter any par- ticular attention, may say this is the business of the company. Let them pay the bills. But, as you arc the main spoke in the wheel in producing the raw material, these methods affect the price received for yoi "^ cream. 11. If you would attempt to conduct your own affairs in the same manner, paying $1.50 for a pound of steak when the regular price is 15 cents, $20 for a sack of flour when it may be bought for $2, or $G00 for a wagon, the usual price of which is $60, you woidd immediately be considered incapable of look- ing after your own business^ Anyone knows you would go broke, and still you wonder why the other follow continues to prosper. 15. Unreasonable and uncalled for prices for cream are sometimes paid over a large territory, the outward reason given that some company contracts with a buyer who formally bought for some other 21 company, who within the 30 day limit as set by cus- tom, g-entlemen's agreement, business courtesy, de cides to again go into the business of buying cream. 16. Thousands of dollars have been squandered in the above manner, the producer benefiting greatly should he by chance be in tlie war zone. The excess price i)ai(l is often ten or more cents i)er i)ound on the butter fat, as shown by market quotations, and the prevailing prices paid in other states and localities. 17. Either these vast amounts come from the profits of the business or the price paid to the pro- ducer. Just as there is calm after a storm, the general price falls after these price wars, even to a point lower than normal. 22 18. If these amounts come from the profits of the business, then we must .conclude jthat tfe^y . arie UNREASONABLY LARGE. If the price that J:he farmer receives for his cream is less than it should be (and as it surely is) he has a reftiedy that may e^kily be applied. •? . , . Volume the Only Redeeming Feature. 19. To secure a large volume of cream, the cash station system is admitted superior to any other known method. In ■ this particular it may be con- sidered a success, but from the viewpoint of the pro- ducer it requires a great stretch of imagination to give it the stamp of approval. Reduction of Commissions. 20. During the latter part of 1915 the centralized creameries operating in tlie central western states began reducing the buyers' connnissions, AS IF' BY 23 INSTRUCTIONS FROM ONE CENTRAL HEAD. During this roconstnietion or acljnstment of a buy- ing basis, buyers who attempted to contract witli other companies found there was nothing to be gained by a change, providing' they could do so. 21. The guaranteed salary features of many com- mission contracts were discontinued, as were also the straight salary contracts in mostly all instances. Exceptions to this were made, however. 22, Buyers' contracts today stipulate a commis- sion ranging from 1^2 cents per pound on the butter fat delivered at depot, to 2 cents per pound on the butter fat and all expense allowed. 24 23. It is seen that there is a difference of more than 1 cent per ponnd in the actual buying cost of the butter fat to the manufacturer in the flush summer montlis, as the overhead expense under the 2 cent contract will equal eight-tenths (8-10) of a cent in some eases, making this butter fat cost two and 8-10 (2 8-lOc) cents, while in the slow months of winter it will run to three (8c) cents or more. 24. As a cream pi'oducer the subject of salaries and commissions are of vital importance to you. Other features of the business connecting the chain of circumstances leading to, and being a vital part, are no less essential to a thorough understanding of the whole subject. 25. The entire territory of one field superinten- dent figured recently, covering a period of one year, 25 v.'llii Iv.-enty-six v.'orkin^; days to the month and at ten hours a day, — it was found that the average wage received by all buyers was ten cents (10c) per hour, or one ($1.00) dollar per day, on the reduced com- mission basis, while on the former basis the figures show $1.30 per day. 26 ANALYSIS OF REDUCING BUYERS' COMMIS- SIONS. 26. In connection with the justice of reducing buyers' commissions, or the necessity for so doing, when the facts bearing on the matter are considered, the average day laborer receives from 20c to 25c per hour. The former amount will serve your pur- pose for comparison. 27. The buyers were told in the argument pre- sented as to why the commissions should be reduced ; that the cost of buying the cream had reached a point where it was no longer possible to meet the direct shipping' prices; that this was caused prin- cipally by the high commissions being paid to the buyers. 27 CAUSE AND EFFECT OF REDUCING BUYERS' COMMISSIONS. 28. Analyzing the reason, one is brought to the conclusion that tiiere are too many hnyers ; that the reduced commissions make it impossible for all of them to remain in the business of buying cream. The burden of this most practical method of eliminating the amount of comi)etition fell on the buyers. No manufacturer intended to discontinue business at any of the points where he might be represented, yet all of them professed the positive necessity of com- pelling their buyer to handle the cream on the lower commission basis. Each expected the other manu- facturer's buyer to make so little that he would starve out (while his own buyer was being used to further the plan, and bring about the desired re- 28 suits). The process is certain (but the system em- ployed must be condemned). A clean cut division of territory would conflict with federal laws (it might be shown that there was a combination in restraint of trade). To avoid this, the buyers is put on the job. Being an obedient, trustworthy fellow, he uiay be counted on to do his best. 29. A further analysis and consideration of the unnecessary expense found in the ordinary system of cream buying, is conclusive evidence that the buyers' commissions are of secondary consideration in comparison. A close inspection of the methods, and items of expense enumerated below is convincing evidence that the buyers' commissions are really a very small portion of the total. (Study the list care- fully). 29 Buyers' coniinissiou. Station rent. Coal for station. Lighting of station. Acid for testing. Postage stamps. Revenue stamps. Drayage on cream to depot. Transportation charge on cream. Investment in station equipment. Deterioration of station equipment. 30 Unnecessary Expense Found in the Ordinary Cash Station System. Telephone rentaL Superintendent's salaries and expense. Guaranteed salaries at some stations.. Straiglit salaries at other stations. Freight charges on station equipments in the spring, and their return in the fall. Report hooks. Check books. Order blanks. Commission blanks. Stationery. Two-thirds of clerical expense at office. Loss due to unreliable buyers, etc. 31 30. The list shown inidev tiie line, with the possi- ble exception of telephone rental, are unnecessary. 31. The above, he may have been informed, brpught the buying cost to the prohibitive figure of about 5c per pound of butter fat, which was sub- stantially correct regardless of the number of pounds handled. 32. In other woi'ds, when the price of butter fat is 20 cents per pound at the station, as it usually is in the liusli of summer months, more or less, the cost of buying and delivering it to the creamery, clerical expense included, is about one-fourth the price received by the farmer. 33. You may now figure what portion of this buying cost the buyer receives as a commission, — whether he is to blame, or is it the fault of the system. 32 34. It would appear that some of tlie niorc economical buyers were able to bank the greater portion of the $1.30 they received under the old basis, hence the advisability of reducing it to $1.00. 35. The value of butter fat is determined by five factors : The price paid for the butter fat in cream form ; buying ; transporting ; manufacturing, and selling cost. 33 CHURN OVER RUN. 36. Some producers are quite familiar with the subject of churn over run ; a very large majority of them, however, know no moi-e about it than (h)es the average num of testing ereaiu or nuiking cheese. 37. A few years ago there was no limit to tlie r.inount of moisture that might be put into butter. At that time the buttermaker who could inject the most moisture, and at the same time produce a suit- able grade of butter with the necessary firmness to stand up, was in demand. o8. The ingredients of butter are butter fat, casein, salt and water. With no limit to the amount of water that might be used, it was not uncommon for the churn over run to show 30% or 35%. 39. Today the moisture in butter is regulated by Jaw and stipulates 16% as the maximum amount. It 34 is found necessary in order to comply strictly with thii law, to use slightly less than this; which with the other ingredients produces a churn over run of 24% to 25%, depending of course on the accurate testing of the cream at the station, in so far as the maiuifacturer is concerned. 40. For the purpose of calculation Ave will nse the lower figure of 24% as a reasonable churn over run. IMost manufacturers exceed this amount, which means that from each 100 pounds of butter fat there is 124 pounds of butter made. 35 BUYING COST OF BUTTERFAT. 41. Tlic average buyers' commission will not ex- ceed 2Vl>c per pound on the butter fat bought, includ- ing all exi)ense of" the station and drayage, on the reduced commission basis. TRANSPORTATION COST OF BUTTER FAT. 42. The average transportation charge does not exceed ly^ cents per pound on the butter fat. MANUFACTURING COST OF BUTTER. 43. The manufacturing cost including all ex- pense, does not exceed %c per pound on the butter fat. 36 SELLING COST OF BUTTER. 44. The average selling cost does not exceed i/oc per pound on the butter fat. "io. The above shows a total buying, transporting, mauufacturing and selling cost of SVi cents per pound on the butter fat. 46. We believe in being liberal, both in practice and the consideration of any subject, nuiking ample allowance for variation in the price of material, additional cost of labor, etc., and an extra 1^4 cent per pound on the butter fat is allowed, making the total cost of all expense attached to the buying, manufacturing and selling of butter 5^/^ cents per pound. 37 PERCENTAGE OF BUTTER FAT PRODUCED IN THZ3 VARIOUS MONTHS OF THE YEAR. 47. Iloro wo desire to eall your attention to the percentage of butter fat produced and bought in certain monthr; of the year, covering a period of six (6) years over a wide territory. 48. SIXTY-FIVE PER CENT of the year's pro- duction of butter fat in tlie central western section of llic country is ])ro(luced during the months of May, June, July, August and September. 49. FIFTEEN PER CENT is produced in the months of October, November and December. r)0. Twenty per cent is proiluced in the months of January, February, March and April. 51. June, July, August and September, being the most important in relation to the station i)rices i)aid, 38 ' f '■':•] ■ •\ i- ■■■>: there is 54% of the year's butter fat bought diirirfg « •, ■ >t-> these months. These percentages are affected to a certain extent by weather conditions, but the figures may be taken as substantially correct. 52. We will assume that th(^ Elgin market or New York firsts, which are the ones ordinarily referred to, is quoted at 30 cents, and that the station i)rice is 26 cents, or 4 cents under these markets. 53. It will be found that the above fairly repre- sents the average station price during the months of June, July. Augxist and September, in relation to these markets. 54. On the above basis 100 pounds of butter fat Avould cost .+26; to this add the church over run of 24 pounds, making 124 pounds of butter. This butter sold at one cent uiuler the nuirkets, or 29 cents, has a value of .+35.96. 39 55. The difference in the cost price and the selling price, it will be seen, is $9.96. 5G. We will now deduct the buying, transporting, manufacturing and selling cost, which is 5i/o cents per pound, or $5.50 per hundred, leaving a balance of $4.46. 57, The station price you understand is not always 4 cents under the markets, it being 3 cents at times, especially when there is very little to be bought. Again, the price will be 5 cents under these markets at times, during the months of June, July, August and September. 58. You will keep in mind that the churn over run is of much greater value when the paying price for butter fat and the selling price of butter is high. 40 59. On the basis of 100 pounds of butter fat bought, and the markets quoted at 35 cents, making tlie selling price 34c, the churn over run of 24 pounds has a value of $8.16, while if the selling price of but- tei- is 24 cents the churn over run is worth $5.76. 41 OEJ^ITIIALIZED CREAMERY GETS THE BUSI- NESS AND PROFIT, WHETHER SOLD AT THE STATION OR SHIPPED DIRECT. 60. The volume of butter fat bought during the flush, or summer months, is affected but little by the station prices paid. The producer is very busy dur- ing]: that season of the year; he gives the matter but little attention, but sliould he do so, there is no alternative. Tlis cream must be sold and the paying prices are uniform. Under this condition, if the buyer is paid IV2 (^^'I'ts per pound on tlu' butter fat, a ten gallon can of cream nets liim 36 cents, figured at 24 pounds of butter fat to the can, or 48 cents, if he is paid a commission of 2 cents per pouud on the butter fat, provided, however, he has none of the station expense to pay. 42 Should the lower prices be the means of conii)elling a great many farmers to ship their cream direct, the bnyers' commission of course is less, but as some creameries operating on the station buying system, are interested in, or own direct shipping creameries, and quote direct prices at points where they operate stadons, (in his ease) they ^-et -^e 'iiiHiiies.s tnir-^'fl-ov with the proiit, whether it is sold at the stations or shipped direct. Yon are told of the great advantages of the station buying system, by the manager in charge of the plants operated on that plan, while the one having charge of the direct shipping plant bombards you with circular letters in the attempt to show why your ci'eam should be shipped direct to the creamery, 43 that the commission paid to the buyer would be saved, etc. Both of the gentlemen above mentioned, draw their salary froiii the same employer, which is equivalent to shipping to Jones, or Jones. 44 BUYERS' NET PROFIT. 62. The example below show.s the buyers' income and net profit, from a station buying 30,000 ])ounds of butter fat per year, where the commission received is iy2 cents j)er pound on the butter fat and 15 cents per each 10 gallon can of cream shipped. 6.3. The months of June, July, August and Sep- tember are figured separately in this example, when the station price will be found to be around 4 cents under the markets. 64. FIFTY-FOUR PER CENT of the year's total butter fat is bought in the above four months, or 16,200 pounds in this example. 45 65. Tile 1)ii.v('1''h coimuis.sioii on 16,200 pounds is $243.00 66. Tlie allowance of 15 cents per eai) is. . . 86.25 Total commissions $329.25 67. Buyer's Expense: The item of coal is omitted. Rent at $7 per month $ 28.00 Oil for heating water 2.00 Drayage on 575 cans, at 5 cents 33.75 Postage on reports 1.33 Revenue stamps .66 Washing })owder " .66 Total expense $ 66.-40 Total connnissions $329.25 Total expense 66.40 Buyer's net profit for four months $262.85 46 68. FORTY-SIX PER CENT of the year's buttei- fat is bought in the months of October, November, December, January, February, March, April and May, an average of 51/2% per month. GO. In the month of May alone the production is 11% and is considered one of the big months of the year, yet it is placed in the doubtful column in so far as the profits arc concerned, due to the uncertainty of the buying prices of butter fat at the stations. It may be said with some degree of certainty that the price paid for butterfat during the last half of JMay, correspond with June, July, August, and September, or 4c under the markets. 70. These percentages show that a station buying 30,000 pounds of butterfat per year, will buy an 47 average of 5% or 1,500 pounds per luontli IVoin October 1 to April 30. They show that the average monthly amount of butter fat bought from October 1 to May 31 is 1,650 pounds, or 51/2%. The yearly income of a buyer having 30,000 pounds of butter fat on the above basis is $556.10 His expense for the year may be figured at. . . 150.00 Buyer's net income for year .$406.10 On the station buying system the average butter fat bought at all stations is near 20,000 pounds, or one-third less than the above example, a yearly income of .$270.78. 48 MANUFACTURER'S PROFIT. On 1G,200 pounds of bntterfat, with the markets at 2G cents, the station price 22 cents, and tlie buyer's coiiDTiission ly^ cents on tlie I)utterfat, and 15 cents per 10 gallon can drayage : Cost of butter fat ^8,564.00 Buyer's commission 329.25 Transportation cost 243.00 iManufacturing cost 121.50 Selling cost 81.00 Total cost $4,338.75 Butter fat bought, pounds 16,200 CJiureh over run, pounds 3,888 Total butter manufactured, pounds 20,088 Butter sold at, per pound 25c Total value of butter $5,022.00 Total cost of butter fat 4,3B<^.fl^ Balance $683.25 49 VARIATION IN BUTTER FAT— COST AT DIFFERENT STATIONS. 72. Ill tlie various departments of government work tliere is a fixed commission or salary. Men qualified for these positions know in advance what to expect in the way of remuneration. There is no discrimination — whether he be a congressman, sena- tor, attorney general, postmaster of some large city, or one in a town of 200 inhabitants. 73. Moulders in a foundary where piece work is the system in effect all receive a certain price for turning out a certain piece of work. 74. The cream buyer must first secure a license, or in other words, qualify for the position. After doing so, is there any logical reason why he should not receive the same commission as other buyers buying for the same manufacturer? 75. The commission and expense must be con- sidered in connection with the buying cost of the butter fat at any given point. 50 H'^HEBT COMMISSIONS PAID FOR BUYING CREAM. ,'. . . ciiiaps Buyer No. 1 lias a coiiti-act whereby he i-?. paid 2 cents per pound on fhe butter fat, rent o*" s 10, drayage on his cream to the de})ot, postage oi>. his ■ cports, kerosem- for heating wattu*, and the coal for heating purposes. He may buy 3,500 pounds of l)utter fat per month in June and July. The cost of buying this butter fat is as follows: Buyer's commission $70.00 Rent 10.00 Drayage 7.50 Postage on reports 50 Kerosene 50 Coal 3.50 Total expense $92.00 Average cost per pound, 2 6-1 Oc. 51 77. In contrjist, Huyci' N(>. 2 iiiny I'cHcivc 1 i/o (HMits per pomid on the l)utl('i' fat, and 15 cents \)vy call (lra\'a,uc. whh tlic same amount of l)iil1ci- fat bought. I buyer's commission $52.50 I)ra\aii»' 21.75 Total oxpcnsr tl<74.25 AvoragT cost per pound, 2 1-lOe. 78. Biiyei- No. 8 has a contract calling for 11/4 " ocnts i)cr .pound on the butter fat and 5 cents dra.y- age. He also buys tlie same amount of butter fat.- 1 - ' u . .,..■ 52 LOWEST COMMISSIONS PAID FOR BUYING CREAM. Buyer's commission $52.50 Drayage 7.50 Total expense • ' $60.00 Average cost per pound, 1 7-lOc. 79. It would appear that the actual yearly buying cost to the manufacturer would be the amount shown above, namely : Two and six-tenths cents per pound in the first example^ two and one-tenth cents in the second and one and seven-tenths cents in the third. That is not the case, however. 80. In example No. 1 there is a fixed expense, such as rent, kerosene, and coal, whether there is 3,500 pounds of butter fat bought in a month, or 53 1,500 as would be the case in winter montlis. The total expense of the lower amount would be $47.60 and the cost per pound to the manufacturer 3 1-lOc against 2 6-lOc as shown in the example. 81. In examples No. 2 and No. 3 the buying cost to the manufacturer remains stationery at 2 1-lOc and 1 7-lOc. 54 DISCRIMINATION IN STATION PRICES PAID IN ADJOINING STATES. Disc-riiHiiiatioii in station pi'iccs, ))etween adjoining states, is a general pi-aetice aniong centralized cream- eries, since state laws pievent the practice within states. The variation is often (8) cents per ponnd on the butter fat. Investigation always reveals. , th^ * , cause. An instance is here cited of a farmers" cream- ery being built at Fi-emoiit, Neb., at the beginning of 1916, which accounts foi- the station prices in Nebraska being from 1 to -^ cents higher than they liave been in Iowa and Soutli Dakota during the past two or three months, or during March, April and ]May. Tlu' farmei's of Nebraska have benefited, and may j)ossibly continue to do so if their plant succeeds in weathering tlu' discrimination period, which it may do if business niethodsj arc; applied. 55 SHORTAGE AT STATION. 82. So imieh lias been said and written on tlie subject of shortage, which is the difference in the number of pounds of butter fat paid for by the buyers, according to his weights and tests, and the number of pounds clainuHl to be received by- the manufacturer, according to tlu» weiglits and tests of their chemist. t -> . / ->\' •'. ^', 56 RELATION OF SHORTAGE TO STATION BUYING AND CHURN OVER RUN. 83. Since the churn over run is affected to a greater or less extent by the accurate or inaccurate weighing and testing of cream at both the station and at the factory, and in view of the custom of charging the buyer with any shortage over 1 per cent as shown by the manufacturer's weights and tests, there is a constant cross fire of opinion going from one end of the line to the other, buyers have been known to receive sharp letters in the latter months of the year in reference to shortage, when their station showed several hundred pounds over run for the previous months of the year. 84. The custom among centralized creameries operating on the station system, is to play for an 57 average, which is less than ono-half of 1 per cent shortage on the total year's business. Some buyers have an actual shortage, especially those who are quite aggressive, but unpopular so to speak, while the buyer who stands well in his community and is able to buy his share of the cream on his mei'its or popularity, usually is made to make up the difference or shortage that the unpopular buyers may show a1 some other point. 85. The above must be seen, is unfair to the pro- ducer who delivers his cream in absolute confidence to a buyer having the goodjvvill and respect of busi- ness men and farmers as well, one who may be, in fact, the sole of honor, but through constant nagging is forced to take some heed of the numerous letters, calling his attention to supposed shortage, when, as a matter of fact, there is no shortage, which is proven by the churn over run obtained by centralized creameries. 58 PERCENTAGE TABLE OF BUTTER FAT BOUGHT. 86. In the table below is shown the percentage of butter fat bought in the several months of the year. This may be considered as the amounts produced also. 5 per cent July ugust September r cent October per cenV^^^-JS^ovember 17 per cent 11 per cent 9 per cent 6 per cent 4 per cent 17 per cent December 4 1-2 per cent 59 COLD STORAGE AS A PRICE LEVELER AS APPLIED TO STORING BUTTER. 87. The percentage table above represents more tlian appears on the surface. A glance at the line drawn from May and June at tlie lower left, to July, August and September at the upper right indicates the LOW STATION or BUYING PRICE PERIOD, 88. The figures 12, (representing the months of the year) divided into 100 per cent, which is the total YEARLY BUTTER PRODUCED, shows, you will observe that the monthly consumption is 8 1-3 per cent. 89. We will now refer to the percentage table, and find that from May 1 to September 30, there is an EXCESS PRODUCED over the amount CON- SUMED of 23 1-3 per cent or about one-fourth of the total. This represents the BUTTER STORED. 90. Now refer- to the line drawn from January, February, March and April on the upper left, to October, November and December on the lower right 60 (represehting the HIGH BUYING and SELLING MONTHS). 91. In the above SEVEN MONTHS the PRO- DUCTION is 23 1-3 per cent LESS than the CON- SUMPTION, and during this time STORAGE BUT- TER is SOLD, at an AVERAGE PRICE of near 32 cents per pound, or 10 cents per pound ABOVE the BUYING PRICE. 92. The farmer having a total of 1,000 pounds of butter fat during the year, sells 65 per cent, or 650 pounds of it for near 22 cents per pound, receiving $143. 93. He sells the remaining 35 per cent, or 350 pounds, for near 32 cents per pound, receiving $112, a total of $255. 94. The manufacturer pays the farmer $255 for 1,000 pounds of butter fat. 95. From this 1,000 pounds of butter fat he makes 1,240 pounds of butter. 61 y(i. FIFTY-EIGHT PER CENT oT tliis huttci- or 719 i)ouiuls is sold between OetolKn- 1 and Ai)nl :jO. for } cent under tlie uuirkets, wliieli is figured at 3 cents above tlie price paid to the farmer at tluvt time, or 35 cents per pound, making the selling price 34 cents per pound, and the amount received ! to the cream, Avith the test bottle at an angle of 1") degrees, letting the acid run down the side of the bottle instead of through the cream. A rotary motion of the test bottle will mix the cream and acid without boiling over. The mixture should be a dark brown color. The bottle should always be held away Irom the face when adding- the acid to tlie cream. 8ixth. Set test bottle in the lestei-, with another bottle on the oi)iiosite side as a balance. Turn tester for 4 minutes. Then add warm water to bring the butter fat up into the neck or graduation of the test bottle, then turn it two minutes more. Seventh. A curvature will be found at the top of the fat column, the test is read from the dark line of this curvature to the extreme bottom of the butter fat. 69 Note the example below : Pounds of cream 79 Multiply by the test 32 158 237 Pounds of butter fat, (25 2-10) 25.2- Price of butter fat 25c 1260 504 Amount $6.30 Use the Wagner, or Nafiis, 50% straight reading test bottles, graduated to V2%'» aiit^ a 9 ec. pipette. The law requires a buyer of cream to weigh the charge of cream being tested, but the metliod above given is sufficiently accurate for use on the farm, tests made of a thin density of cream will be prac- tically correct, while the reading of a heavy density 70 eream will ho slighly less than would show if the charge l)e weighed, ])iit ))>• tlie use of a pipette you ai'e relieved of tlu^ expense of buying a scale. Complete testing outfits may be bought from the d'eamery Package ^Manufacturing Co., of Omaha, and Chicago, and I'auge in pi'ice from >fi8.r>0 to !|>4.r)0. In oi'dering testing outfits you should include the following : One 2 bottle tester. One 9 cc. pipette. One J) ec acid measure. Two ;")()% cream test bottlers. One whole milk bottle. One skim milk bottle. One pint of sulphuric acid. 71 TESTING WHOLE MILK. Whole milk is tested in the same manner as cream, except that the test bottle used is smaller in the neck, and is graduated to 10%, twice the charge o/wea«^ is used, and also twice the amount of sulphuric acid. TESTING SEPARATED MILK. Skim milk is tested in a special skim milk bottle wliicli has a double neck, and is graduated to 10-100 of 1%. The charge of milk to be tested is put into the bottle through the larger opening, anrl the fat contained in the milk is found in the smaller opening when the test is completed. Greater care must be used in testing skim milk than either creaui, or whole milk, the process is the same as that used in testing whole milk. 72 Keep Separator in Perfect Order. The ordinary cream separator will skim to within ;3-100 of 1%. Should it run over that amount you are loosing too much butter fat. The separator needs attention. Dispose of the Unprofitable Cow. Cows giving milk testing under 3yo% per cent are not profitable, they should be weeded out as quickly as i)ossible. The volume of milk given, of course, must be taken into consideration. Whether you sell cream at a station, make it into butter on tlie farm, or ship it direct, the ownership of a snmll hand tester is by all means one of the principle necessities to successful dairying. 73 CONDENSED COMMENTS ON IMPORTANT PARAGRAPHS, REFERRED TO BY PARAGRAPH NUMBER. No. 3. It is seen that the local country creamery- man unsuspectingly turned over his business to the centralized creamery, finding himself unable later to rectify his mistake, thus causing his almost complete elimination for many years. No, 8. No reflection is intended as to the good in- tentions of field superintendents, only when their expense to the buyer is considered, together with others of a similar nature, is the system represented requiring such expeiise found impractical, and un- able to stand the test of time. No. 15-17. Playing for an average buying cost, in no way justifies the visible injustice to the buyer, who through lack of knowledge accepts lower com- missions than others buying for the same company, or to the producer who may unfortunately live out- side of the troubled territory. 74 No. 19. Consider this paragraph thoroughly now, and again after committing to memory paragraph 48. No. 32. If the buyer's commission is lMi% per pound of butter fat delivered at depot, the cost to the manufacturer when figured on the basis of the butter made, is less than (1 2-10) one and two tenths cents. No. 33. Is the cash station system worthy of your patronage ? No. 40. Your neighbor Smith may res;emble you, l)ut a close inspection will show some difference. No. 48. Why is the price of butterfat near 22 cents at tliis time? I>ecause 65% of all you jn'oduce is being bought. No. 50. Why is the price of butter fat near 32 cents at this time? Because only 20% of all you pro- duce is being bought, and 43 1-3% is being sold. No. 57-59. Add the margin of 4 cents per pound of butter fat, to the value of the churn over run, then have your boy figure it over to see that no mistake is made. 75 No. 71, If this don't suit you, dou't hlainc tlie otlicr folloAV, you liave a remedy. No. 72-81. The buying cost of butter fat uuiy have some bearing on tlie ])riee you receive. No. 82-8;"). There are two kinds of buyers. One ships the manufacturer more butter fat than he pays for, while the other ships less. No. 86. Knowing this percentage table by heart, means dollai's to you. No. 101. A microscope has no [)lace here, it looks too large even >vith the naked eye. Nos. 104-107. That none of this may escape your attention, better talk it over yith your wife. Nos. 108-120. AVheu you manufacture butter ui addition to produce the crinim, it should all be No. 1 grade. No. 105. Kefer to No. 101— then to No. 135— and again to No. 101. 76 THE ONLY PROFITABLE AND ECONOMICAL SYSTEM OF MARKETING CREAM. Ample evidence lias already been presented to show the intelligent farmer that the cash station sys- tem is fai" too expensive to be longer considered as a profitaliie method of ^r.arketing cream, even if ! aiidled in f e most economical way. The