THE UNIVERSITY OF ILLINOIS LIBRARY 6^0.7 \ / c>-o. 2-3 UNIVERSITY OF ILLINOIS BULLETIN No. 318 COSTS AND MARGINS AND OTHER RELATED FACTORS IN THE DISTRIBUTION OF FLUID MILK IN FOUR ILLINOIS MARKET AREAS BY C. A. BROWN UKBANA, ILLINOIS, DECEMBER, 1928 ACKNOWLEDGMENT The author expresses his appreciation to the vari- ous agencies and individuals whose cooperation made this study possible. Special recognition is due those milk distributors who submitted their records to the author for thoro examination. Valuable service was also rendered by government and state bureaus, mu- nicipal health departments, chambers of commerce, milk and cream jobbers, condensing and cheese manu- facturing companies, creameries, producer and dealer organizations, transportation agencies, and several other organizations interested in dairying. CONTENTS PAG" INTRODUCTION 173 SOURCE OF DATA 174 MILK PRODUCTION 175 Production in State as a Whole 175 Production in Chicago District 179 Production in St. Louis District 179 Production in Peoria and Quincy Districts 180 Factors Influencing Rate of Production 181 Seasonal Variation in Production 182 Seasonal Variation in Butterfat Content 187 MARKETING AGENCIES AND CONTRIBUTORY ORGANIZATIONS... 191 Milk-Bargaining Associations 191 Milk Distributing Agencies 192 Transportation Agencies 194 Milk Dealers' Bottle Exchanges 197 Municipal Health Departments 200 ASSEMBLING AND PROCESSING PLANTS 203 Country Milk Plants 204 City Pasteurizing Plants 206 STATISTICS ON CONSUMPTION 209 Per Capita Consumption in Three Markets 211 Trend in Chicago Sales 212 Seasonal Variation in Milk and Cream Sales 214 Daily Variation in Sales 220 Demand for Different Sales Units 225 SURPLUS MILK 231 Causes of Dealer 's Surplus 232 Better Transportation Reduces Dealer 's Surplus 232 Problem Varies with Size of Market 23.'! Largest Dealers Carry the Surplus 233 Effect of Dealers' Surplus on Producer Prices 234 Amount of Surplus in Illinois Markets 235 Disposal of Surplus Milk 236 Skim-Milk Disposal 238 COSTS AND MARGINS IN MILK DISTRIBUTION 239 Distribution of the Consumer's Dollar 241 Distribution of Consumer 's Quart Price 245 Analysis of the Expense Dollar 246 Profit and Loss on Various Sales Units 259 Outlook for Distribution Costs .262 172 BULLETIN No. 318 PAGE FACTORS AFFECTING DEALERS ' MARGINS 263 Intensity of Dairying 264 Transportation Advantages 264 Butterfat Content of Milk 265 Surplus Milk 266 Standard of Milk Quality 267 Proportion of Different Units Sold 267 Wages 267 Efficiency and Net Profit of the Dealer 268 Miscellaneous 268 SUMMARY AND CONCLUSIONS 269 APPENDIX . . . . , 273 COSTS AND MARGINS AND OTHER RELATED FACTORS IN THE DISTRIBUTION OF FLUID MILK IN FOUR ILLINOIS MARKET AREAS BY C. A. BROWN, Associate in Dairy Economy A permanent and healthy growth of dairying depends in great part upon the proper application of economic principles within the industry, cooperation among its various divisions, and an intelligent understanding of its policies by the public. Undoubtedly, controver- sies that have occurred in the past have occasionally caused consumers, to be skeptical regarding milk quality, and the cry of "profiteer" has at times resulted in a partial boycott of milk. The vast number of improvements in quality and service, which necessarily have raised costs, appear to have been generally overlooked by the consuming public. In the period previous to the past few decades the marketing of fluid milk was a very simple process. Producers delivered their own product in the raw state, dipped it from cans, and poured it into re- ceptacles provided by consumers. Centers of production were close to markets. Restrictions relating to quality of product, whenever imposed, were very lenient. Raw milk was generally preferred. Wholesale milk prices were low and consumers received milk at prices ranging from about five to eight cents a quart. There were but two principal parties producer and consumer to any controversy that may have arisen. . The rapid growth of cities produced a corresponding enlargement of fluid -milk markets. An increasing rate of consumption, along with the increase in population, further increased the demand for milk. The zones of production gradually enlarged, their limits extending farther and farther away from the cities. In the case of the larger cities production centers were extended so far from markets that coun- try receiving stations became essential to efficient marketing. The public standard of milk quality has gradually become higher, generally resulting in regulatory measures requiring milk pasteuriza- tion and sanitary production and distribution. In most localities it has become impossible for the individual producer to market his own product. Production has become specialized; marketing commercial- ized. Intervening agencies have gradually supplanted individual pro- ducers as marketing agents, and problems in the industry therefore involve now not only producers and consumers, but also a number of intermediary parties. 173 174 BULLETIN No. 318 [December, Specialization and increasing complexity among the various branches of the dairy industry have made it rather difficult for any one branch to become familiar with the operation of the others, or for the public to have an adequate knowledge of the industry as a whole. Under these conditions harmony and unity of action, which are essential to efficient marketing and to the general welfare of any industry, have not been so prevalent as they might have been. While the principal object in the present study was to obtain data concerning dealers' costs and margins in the four large markets 1 for which Illinois farmers and dairymen produce milk, discussion of other important factors in the field of distribution is placed first in order that the reader may have a better background for the consideration of the material on costs and margins. This survey is not presented as a highly detailed study, for it would have been impossible to cover so large a field within the allotted time. It is believed, however, that the facts here presented display a fairly definite and representative picture of the general field of fluid- milk distribution in the four principal markets supplied by Illinois producers, and will open the way for further detailed analyses. SOURCE OF DATA The actual gathering of the information contained herein began about April, 1926. In addition to a general summary of facts concern- ing the dairy industry in the state as a whole, detailed information was obtained for four leading markets, Chicago, St. Louis, Peoria, and Quincy. The work was greatly facilitated by the cooperation of milk dis- tributors and jobbers, municipal health departments, chambers of com- merce, government bureaus, transportation companies, producers and dealers associations, and other agencies indirectly interested in the marketing of fluid milk. The records of the larger milk dealers located in the centers of consumption were the source of the material on costs and margins. In practically every case, several weeks were spent at each dealer's place of business making detailed examination of all records pertaining to marketing. Production, transportation, processing, sales, and cost records were among those that were scrutinized. Examination of cost records corresponded in a general way to balance sheet audits. No attempt was made by the investigator to check the valuations of the tangible and intangible property, the values on the balance sheets being- accepted as there shown. 1 In a "market" is included the area served by distributors whose main offices are located in the city. Thus the suburbs of a city are included as well as the city proper. 1928] MILK DISTRIBUTION ix FOUR ILLINOIS MARKETS 17.5 MILK PRODUCTION The gradual shifting oi' the center of population to the AVest has contributed materially to the advancement of dairying in Illinois. The rapid growth of cities within and near the borders of the state has developed favorable markets. In fact the general distribution of cities over the state has made it possible for dairying to become an important enterprise in practically every county. The nearness of production areas to consumption centers in Illinois tends to lower certain distribution costs, principally transportation, and thereby makes it possible for the producer to receive a larger part of the consumer's dollar. With the state's relatively large urban population, a large portion of the production is sold at the more re- munerative prices of fluid-milk markets. Production in the State as a Whole Dairy cows have been decreasing in numbers since January 1, 1925. Estimates made at the beginning of the years 1926, 1927, and 1928 were, respectively, 1.0, 5.8, and 7.7 percent below the 1925 estimated figures. On January 1, 1928, there were 968,000 milk cows in the state. The distribution of these is shown in Fig. 1. The decline in numbers may be attributed to various causes, among them the urgent need of cash by farmers, resulting in a relative increase in the sale of veal calves, tuberculin test regulations, increased competition with Wisconsin dairy sections, and lastly, competition of dairying with other types of farming. Altho there are no recent Census figures with which to measure the exact increase in production per animal, it is estimated that the recent increase has more than counterbalanced the decrease in the number of animals, as it did in the five-year period 1919 to 1924, when the state increased its production of milk 17.45 percent. Increases in the northern and central sections during this period were appre- ciably above the state average (Fig. 2). The growing demand of the Chicago market for fluid milk stimulated production in these northern counties. Increases in the central section may be attributed to an exten- sion of the Chicago market into a few counties of this area, to the grow- ing demand of cities within the area, and to a trend toward more diversified farming. The southern section has not had the same rate of growth in production as the other two sections of the state, altho several southern counties, because of good transportation facilities to the St. Louis market, are exceptions to this general statement. The production of milk in Illinois counties and those adjacent in bordering states is shown in Fig. 3. The counties in the northeastern section of the state, which supply the Chicago market, produce much more milk than those in the other two sections of the state. McHenry 176 BULLETIN No. 318 [December, county produced 50,000 gallons of milk to the square mile and a total of about 31 million gallons for the year 1924. Production in the central and southern sec- tions is rather uniformly dis- tributed, with the exception of the counties which supply the St. Louis market; these produce about 80 percent of the milk dis- pensed in this market. Altho there were fewer milk cows in Illinois in 1926 than in 1925, the total 1926 produc- tion was approximately 3 per- cent larger, being nearly 528 million gallons. 1 While this is a large amount, still it represents a production per square mile that is small compared with that of Wisconson and eastern Iowa. It seems logical to expect that. Illinois dairymen will always en- counter very intense competition from these two states, especially from Wisconsin, in which dairy- .ing apparently is the most re- munerative type of farming. Climatic conditions in Wisconsin generally are not so favorable for other profitable types of agri- culture. The growing season, for example, does not begin soon enough to encourage intensive truck farming, nor is it long enough to insure a mature corn crop every year. Silage, however, which is an excellent feed for dairy cows, can be produced during the shorter growing period. Legumes, such as clover, alfalfa, and certain other valuable dairy feeds, are well adapted to the soil and climate. Competition from Wisconsin milk producers on the Chicago fluid market has been materially increased by the adoption of improved methods of transportation. Hence any move- ment in the Illinois part of the Chicago dairy district having as its FIG. 1. NUMBER OF MILK Cows IN ILLINOIS COUNTIES ON JANUARY 1, 1928 (Each dot represents 1,000 cows two years old or older) The greatest concentration of milk cows occurs in the northeastern part of the state, which supplies the Chicago fluid-milk market, and in the northwestern part, which produces milk chiefly for cheese manufacture. (Data from Illinois Crop and Livestock Statistics.) 1 Circular 360, Illinois Crop and Livestock Statistics, issued by the U. S. De- partment of Agriculture cooperating with the Illinois Department of Agriculture. MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 177 object the expansion of dairying, would have to reckon with intense competition from the north. Because of the large urban popula- tion of Illinois, a large portion of the milk produced is used for fluid consumption. Cream to be used in butter manufacture is produced mainly by farmers outside of the fluid-milk sections. There is a large num- ber of condensaries in the state, and cheese factories utilize much of the milk produced in the northwestern part. A large annual output of ice cream is needed to supply the demand in the cities. In 1924 the state produced 58 million pounds of creamery butter, 94 million pounds of condensed and evaporated milk, and 13 million gallons of ice cream. These major products by no means constitute the total manufactured output, for considerable quantities of milk powder, casein, malted milk, and soft cheese also are manufactured. The climate of Illinois is well adapted to the dairy industry, and to the production of certain legumes, corn, and other important dairy feeds. The demand of several of the large markets supplied from this state is steadily increasing. Dealers and producers are more generally organized in their respective groups, and there is considerably more understanding and cooperation than formerly between both groups of organizations, tending toward arbitration and the betterment of condi- tions in the industry. These conditions seem favorable to the expansion FIG. 2. CHANGES IN AMOUNT OF MILK PRODUCED IN COUNTIES OF ILLINOIS DURING THE FIVE-YEAR PERIOD 1919-1924 Production generally increased thruout the state during this five-year period, the average increase for the state as a whole being 17.45 percent. Decreases were confined largely to the southern counties. The production of only three counties declined more than 20 percent. (Based on U. S. Census of Agriculture, 1920 and 1925.) 178 BULLETIN No. 318 [December, FIG. 3. MILK PRODUCTION IN COUNTIES OF ILLINOIS AND ADJACENT STATES, 1924 The figures indicate the number of thousands of gallons of milk produced per square mile in each county during 1924. Production was much more intensive in northern Illinois and in central and southern Wisconsin, which section supplies the bulk of milk for the Chicago market. (Based on figures from U. S. Census of Agriculture, 1925.) 1928] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 179 of the industry in Illinois, tho if farmers were to increase milk pro- duction too rapidly, such a supply of fluid milk could be created that relatively lower prices would be necessary to absorb it. The large amount of labor necessary in milk production is, however, a factor which tends to curb rapid expansion. Production in Chicago District The fluid-milk markets available to Illinois producers consume the output of many thousands of dairies. The Chicago market alone now uses the production of approximately 35,000 dairy farms. This milk, hoAvever, is not all purchased from Illinois producers. It comes from seven states ; namely, Wisconsin, Indiana, Michigan, Minnesota, Iowa, and Ohio, tho Illinois and Wisconsin supply more than 80 percent of the total. Regardless of the advantage which certain Illinois counties enjoy because of nearness to the Chicago market, and their ability to supply the entire demand of Chicago consumers it is very doubtful, with the large amount of competition from Wisconsin, whether the state will ever supply more than 50 percent of the total consumption of this market. At the present time it supplies about 40 percent. A slight increase, however, probably will occur, as it is expected that the ma- jority of those dairymen who lost their market when the tuberculin test regulations went into effect \vill eventually regain it. Since the state is in the heart of the corn belt, where dairying is somewhat a matter of choice, it is probable that higher fluid-milk prices or lower corn and hog prices would encourage the production of fluid milk. The result of a survey of 3,620 dairy farms located in northeastern Illinois and southern Wisconsin, which supply the Chicago fluid-milk market, is shown in Table 1. The Illinois farms, 48 percent of which were operated by tenants, averaged ton acres more per farm than those in Wisconsin. As would be expected on the high-priced Illinois land near Chicago, the percentage of acres in pastures was smaller than in areas more distant from the city. Furthermore, in dairy sections more intensive dairying would generally be expected on the higher priced land, a fact which is substantiated by the data showing that there is one head of cattle for each 5.5 acres in Illinois, in comparison with 6.1 acres in Wisconsin farms. There were more heifers, however, per acre on the Wisconsin farms. Practically all the dairies fed silage, tho the percentage following this practice was somewhat greater in Wisconsin than in Illinois. Production in St. Louis District Approximately 80 percent of the fluid milk consumed in St. Louis is produced in Illinois and 20 percent in Missouri. About one percent 180 BULLETIN No. 318 [December, TABLE 1. SOME FACTS CONCERNING NORTHERN ILLINOIS AND SOUTHERN WISCONSIN DAIRY FARMS IN CHICAGO DAIRY DISTRICT, 1925 Illinois Wisconsin Total number of dairy farms surveyed 2 699 921 Average size of farms, acres 139 129 Percentage of landowners operating farms 52 61 Percentage of tenants operating farms 48 39 Ratio of pasture acres to total acres 1:4.1 1:3.8 Total cattle per dairy, average 25 21 Milk cows per dairy, average 19 15 Heifers over 1 year old, per dairy, average 3 3 Heifers under 1 year old, per dairy, average 3 3 Ratio of purebred sires to total cattle 1:71 1:44 Daily sales per dairy, average, in pounds 325 232 Percentage of dairies operating milking machines 18 18 Percentage of dairies using silos 85 95 of the Missouri production is produced in the dairies of the city. Ship- ments of sweet cream, however, are made occasionally from the state of Indiana. In 1917, according to the data contained in an unpublished government survey, 74 percent of the market supply came from Illinois and 26 percent from Missouri. The dairies located within the city itself supplied 20 percent of this latter amount, all of which was consumed in the raw state. The increasing demand for pasteurized milk, however, has gradually reduced the sales of raw milk, exclusive of certified milk, to a small percentage of total sales. Good roads and excellent transportation facilities undoubtedly have been influential in enabling Illinois producers to supply approximately 80 percent of the fluid-milk demand of this market. Production in Peoria and Quincy Districts Fluid-milk production for the Peoria market is confined to three counties. Of the total market requirements, Peoria county supplies approximately 50 percent ; Tazewell county, 33 percent ; and Woodford county, 17 percent. With the Peoria market situated near the center of this production area, transportation presents relatively fewer dif- ficulties than it does in the Chicago and St. Louis markets, which are located at one edge of the production districts. The maximum haul in the Peoria district is only 50 miles. Even tho Quincy is located just across the river from Missouri, approximately 90 percent of its fluid-milk consumption is produced in Illinois. Here again, improved surface roads have been instrumental 1988] MILK DISTRIBUTION IN FOUK ILLINOIS MARKETS 181 in enabling Illinois producers to secure practically all the trade of a border market. Factors Influencing Rate of Production The quantity of milk produced responds more quickly to increases in profits than does the supply of some of the other livestock products. The volume of milk production available for fluid-milk sales may be increased to a considerable degree by changes in methods of feeding the cows, by reducing the amount of milk fed to calves, as well as by increasing the number of producing animals. Variations in the total amount of milk produced that result from increases or decreases in the number of dairy cattle are much slower than those due to other factors mentioned, and occur gradually in response to protracted periods of relatively high and low prices. Annual variation in milk sales per farm may be regarded as an approximate measure of the effect of various economic influences upon dairying. The rate of production in the Chicago district declined con- siderably during the four-year period beginning with 1917 (Table 2). The average yearly production for this period was about 11 percent below the fifteen-year average (1912 to 1926) notwithstanding the fact that during the same four-year interval producer milk prices were slightly more than 30 percent higher. During the war period, the prices of dairy products increased relatively less than the prices of TABLE 2. YEARLY VARIATION IN AVERAGE MILK SALES PER FARM IN CHICAGO DISTRICT DURING THE FIFTEEN YEARS, 1912 TO 1926 1 (Based on receipts at a group of plants that obtained milk for fluid distribution in the Chicago market) Year Number of farms Average annual sales per farm Pounds Percentage of 15-year Average 1912 1 445 1 584 1 827 2 013 2 084 2 019 2 063 2 265 3 084 3 344 3 502 3 665 3 855 3 855 2 961 81 233 86 636 90 696 91 444 90 260 80 411 71 418 83 216 77 951 87 179 88 705 91 934 98 533 105 109 92 463 87 812.53 92.5 98.6 103.3 104.1 102.8 91.6 81.3 94.8 88.8 99.3 101.0 104.7 112.2 119.7 105.3 100.0 1913 1914 1915 1916 1917 1918 1919 1920 . . . 1921 1922 1923 1924 1925 1926 Average 'Farms are located in Illinois and Wisconsin. 182 BULLETIN Xo. 318 [December, other commodities. The average farm wage during this period was above the prewar level. Not only wages, but high feed prices, greatly increased the cost of producing milk. Other types of farming, involv- ing less labor than dairying, were yielding very remunerative returns, and consequently relatively more time was devoted to the production of other commodities at the expense of milk production. High grain prices tended to encourage direct marketing of grain in preference to indirect marketing thru livestock. At the outbreak of the war favorable veal and beef prices encouraged farmers to sell more old cows and calves than usual, and consequently there were fewer cows on the farms to produce milk during the 1917-1920 period. In 1921, when readjustment from war conditions was in progress, and when other types of farming had become relatively less profitable than dairying, farmers began gradually to devote more time to milk production. The abnormal demand for manufactured milk products created by the war had abruptly stopped, and producers in fluid-milk districts w r ere soon able to add good cows to their herds at greatly reduced prices. Not only did increased numbers of producing animals increase the production per farm, but lower feed prices, together w r ith the adoption of better production methods, increased the rate of pro- duction per animal. Thus the 1921 farm milk sales in the Chicago district were approximately 12 percent greater than in 1920. This rate of increase was greatly curtailed the following year by a cut of approximately 10 percent in producer milk prices which followed a 2-cent reduction, from 14 cents to 12 cents, in the retail price of quarts. This price, however, w r as raised to 13 cents in January, 1923, and to 14 cents in July, and as a result the 1923 yearly average of producer milk prices was raised about 37 percent above that of 1922. Both retail and average producer prices remained practically unchanged during the tw r o years following ; the producer prices having the effect of stimulating production to a level much above the average for the entire period. The abrupt decline from the previous year, occurring in 1926, was the result of the eradication of cows which showed a positive reaction to the tuberculin test. Seasonal Variation in Production That there is considerable variation in milk production among the different months of the year in each district and among districts is shown by Table 3 and Fig. 4. A large spring surplus occurs in the St. Louis dairy region. The average maximum production for the four-year period 1922-1925 oc- curred in May and averaged 49 percent above the monthly average. The minimum, which occurred in September, was 38 percent below the monthly average for the period. The difference between the high and 19X8] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 183 TABLE 3. SEASONAL VARIATION IN MILK PRODUCTION IN FOUR DAIRY DISTRICTS OF ILLINOIS 1 (Figures are based on total receipts at milk plants and represent percentage of aver- age month during period specified) 2 Month Chicago 1925 St. Louis 1922-1925 Peoria 1926-1927 Quincv 1924-1926 January 89.6 109.5 79.9 99.4 February 86.1 104.8 78.6 95.8 March 99.7 117.5 90.6 106.1 April 100.6 120.5 95.9 108.9 May 119.8 149.0 129.1 123.9 June. . 119 1 112 8 136.5 109 9 July 108.4 93.1 125.2 106.5 August 99.6 75.6 112.9 99.0 September 91.7 62.3 93.3 86.2 October 96.0 72.8 88.6 86.1 November 90 5 82 4 84.6 85.2 December 98.9 99.7 84.8 93.0 Total volume (pounds) on which percent- ages are based 647,217,469 117,491,991 69,001,699 15,174,190 'Trend removed. 2 Not corrected for varying number of days in different months. low points was not so great in the Peoria district, but the production was more irregular than that of the Chicago and Quincy districts, neither of which had a variation greater than 40 percent. Favorable weather and pasture conditions raised the spring and early summer production to a maximum in all four districts. Spring freshening, furthermore, had some buoyant effect on milk flow in cer- tain districts. Production was materially reduced during the late summer and early fall months, when the weather is normally hot and dry, the pastures scanty, and flies plentiful ; and a flow near the minimum was generally reached during the period from September to November. During this time of the year pastures usually must be supplemented with other feeds. Thruout this season the milk flow is especially dependent on the general management of the herd, which involves such factors as kind and amount of feed, the number of late fall-freshening cows, and amount of care given the animals. Differences in production among districts were also largely the result of variations in the practices just mentioned. Since dairying is the major type of farming in the Chicago territory, we should naturally expect efficient dairy methods to be used in this district. One evidence that they are used is that the milk flow is more uniform in this district than in other Illinois production areas. Greater uniformity in production generally enables producers to utilize labor more efficiently and to take advantage of the relatively higher prices of fluid milk that occur in most markets during the fall 184 BULLETIN No. 318 [December, and winter. Gross returns in this period of the year, however, may not be large enough to induce producers to adopt fall freshening and heavy feeding very extensively, for even tho price is the main con- sideration it is not the only one. Conditions on the farm may not be Qercert 150 MO 130 110 110 100 90 80 10 Percent Jf.t Qum Chic Peoi >uis cy 150 / \ ago ~/a _ HO y i 130 n \ N 120 / ^^ / V k L\ > i 110 X \ > / / V H. \ \ 100 *^ ''/> S \ 1 I ^ ^ X^> 90 *^^i 1 / / \ > U^t -t s^K; 60 y \ \ / 7_ 10 60 \ / 1,0 10 O 3 10 o lli^fltf*SI^ FIG. 4. SEASONAL VARIATION IN MILK PRODUCTION IN FOUR DISTRICTS IN ILLINOIS The greatest irregularity in production occurs in the St. Louis and Peoria fluid-milk areas, where production per farm is smallest. The St. Louis district produced almost two and one-half times as much milk in the season of maximum pro- duction as it did in the period of minimum production. See Table 3 for time intervals on which the data are based. Aver- age monthly production equals 100. favorable to making the changes necessary to obtain greater uni- formity in production. On farms where dairying is incidental to other types of farming, where there are large areas of pasture, or where feed is scarce, the higher prices are less effective than in intens- ive fluid-milk districts. The effect of the World War on the seasonal production of milk in the Chicago dairy district is shown by Fig. 5 and Table 39 of the Appendix. It is evident that the spread between the three months of highest production and the three months of lowest production was greater during the war period than it was either before or afterwards. Thruout this period practically all types of farming were profitable, MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 185 some more so than dairying. Partly on account of high wages and relatively large returns for agricultural products other than milk, there was a greater tendency than usual for dairy farmers to diversify and engage in less intensive types of farming in connection with dairy- Percent /30 /ZO //O 100 90 60 70 60 50 40 30 20 /O o_ I I I I I I I I I I I I I Average production of three highest months in each yeor. Average production of three lowest months in each year. Difference in prod between three highest and three lowest months Line of trend Average monthly producr/on for /f-yeor period = IOO percent Percent /30 /ZO //O /OO 90 80 70 60 50 40 30 ZO /O n FIG. 5. SPREAD BETWEEN MAXIMUM AND MINIMUM PRODUCTION IN THE CHICAGO DAIRY DISTRICT EACH YEAR FROM 1912 TO 1926 The average monthly production for the fifteen years is indicated as 100. The area above and below this line shows the extent to which the average production of the three high months of each yrar and the three low months deviated from the fifteen-year average. The World War added greatly to the irregularity of production between seasons. The lower graph is another expression of the facts shown by the upper graph. Here a single curve is used to show the difference between the three high months of each year and the three low months. Trend removed. (See Table 39, Appendix.) ing, usually at the expense of milk production. Furthermore, feeds were relatively high in comparison to returns for milk, so farmers were prone to feed less heavily. Consequently in the months of April, May, and June, when the rate of milk flow is normally less dependent upon care of the herd and feeds to supplement pastures, the proportion of the year's production was greater than during corresponding 186 BULLETIN No. 318 [December, months in years preceding or following the war. With few exceptions the three highest months for the fifteen years were April, May, and June, and the three months of lowest production occurred between August and November. Following the close of the war, when grain and feed prices started to recede, heavier fall and winter rations began to have their effect in producing a more uniform flow of milk, and by 1921 normal relation- ship was again established between winter and summer production. Greater uniformity in the flow of milk thruout the year undoubt- edly would make relatively higher producer prices possible, for returns from surplus products are generally lower than from fluid milk. Altho prices are generally higher in Illinois districts during the season of least production, failure of production to respond to the larger re- turns seems to indicate that producers as a whole believe that the returns are not yet sufficient to warrant a change in practice. Generally speaking, considerable attention is paid to uniformity of production in intensive dairy districts. In the Chicago section, where dairying is the major type of farming on many farms, production per farm is larger than in any of the three other districts studied and also more uniform (Table 4). As a rule, in the central and southern sec- TABLE 4. DAILY MILK PRODUCTION PER DAIRY FARM IN FOUR DISTRICTS OF ILLINOIS (Figures are based on daily milk receipts at dealers' plants) Month Chicago: average for 1925-1926 St. Louis 1 : average for 1922-1925 Peoria: 1927 Quincy: average for 1924-1926 Pounds Percentage of average month Pounds Percentage of average month Pounds Percentage of average month Pounds Percentage of average month 277 286 287 284 330 347 303 278 266 265 265 283 95.8 98.9 99.2 98.2 114.1 120.0 104.7 96.1 92.0 91.6 91.6 97.8 120 128 129 137 164 128 102 83 71 80 94 110 107.0 114.1 115.0 122.2 146.2 114.1 90.9 74.0 63.3 71.3 83.8 98.1 71 78 83 96 115 125 112 103 84 79 78 77 77.4 85.0 90.5 104.6 125.3 136.2 122.1 112.3 91.6 86.1 85.0 83.9 157 167 172 184 205 188 174 164 141 134 139 152 95.3 101.4 104.4 111.7 124.4 114.1 105.6 99.5 85.6 81.3 84.4 92.3 March July . .... Average month . . . 289 . 25 100.0 112.17 100.0 91.75 100.0 164.75 100.0 Total volume (pounds) on which figures are based 949,868,753 117,491,991 35,003,017 15,174,190 'The figures representing St. Louis production are based upon the inner district only. The rate of production in the outlying districts is lower. MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 187 tions of Illinois, dairying is carried on as a supplementary type of farming. Fewer cows are kept on farms, heavy winter feeding is not so extensively practiced, and production per animal is less than in the northern part of the state. Such conditions are not generally conducive to a uniform flow of milk thruout the year. Seasonal Variation in Butterfat Content The monthly variations in butterfat tests among the Chicago, St. Louis, Peoria, and Quincy districts can readily be followed by refer- ring to Table 5 and Fig. 6. While it is beyond the scope of this study to ascertain the effect of all factors which influence milk tests, still a part or all of the following conditions undoubtedly partly account for the variations shown in this graph. The low tests thruout the late spring and early summer months shown in all four districts are due to the heavy feeding of grass during this period and the high milk flow. The increase in test immediately following this period coincides with a low milk flow resulting partly from short pastures. Increases thru the remainder of the year result from a variety of conditions. In the fall, many dairymen begin to supplement pastures with other feeds. As winter approaches they continue to feed more heavily, and consequently in December the cows are on full feed. The effect of the fall freshening of cows is not to be overlooked, since it temporarily increases the butterfat content. TABLE 5. SEASONAL VARIATION IN AVERAGE BUTTERFAT CONTENT OF MILK PRODUCED IN FOUR DAIRY DISTRICTS IN ILLINOIS (Figures represent percentage of butterfat in milk as received at dealers' plants) Month Chicago 1926 St. Louis 1 1927 Peoria 1927 Quincy 1925 January 3.53 3.8 3.67 3 92 February ~! 3.48 3.7 3.56 3 83 March 3.50 3.7 3 49 3 69 April 3.55 3.6 3 55 3 61 May 3.50 3.5 3.45 3.67 June 3.44 3.5 3.49 3 65 July 3.43 3.5 3 54 3 67 August 3.48 3.8 3 66 3 67 September 3.53 4.1 3 75 3 71 October 3.64 3.9 3 86 3 88 November 3.67 4.0 3.92 4.05 December 3.68 3.9 3.93 4.06 Approximate average monthly receipts (pounds) on which tests were based 32,778,577 18,000,000 2,695,683 423,500 'The butterfat content of milk varies greatly in different sections of the St. Louis district, owing to differences in breed. The higher fat-producing breeds pre- dominate in the outlying districts. 188 BULLETIN Xo. 318 [December, Another fact that must be taken into consideration is that these tests are based on receipts at dealers' plants, and hence some of the varia- tion in butterfat test in the Chicago and St. Louis markets may have been the result of different producing areas being drawn upon in different seasons of the year. The tests of each particular district, it is to be noted, follow about the same general trend thru the year. Measuring Gross Returns on Basis of Butterfat Content. Gross returns for milk per unit of butterfat depend largely upon the butter- fat content of the milk. Producers are generally inclined to consider relative returns for milk on a butterfat basis when making comparisons among butterfat, fluid-milk, cheese, and other market outlets. The demand of the market is a very important factor in determining the butterfat standard that a dairy district should endeavor to approach in order to harmonize most advantageously with economical produc- tion. In districts in which the butterfat standard of the producer payment plan is 3.5 percent, we find the majority of the dairies pro- ducing milk with a butterfat content ranging around that particular standard. The 3.5-percent butterfat standard upon which milk prices are generally based, and the usual price differential for milk testing above or below 3.5 percent ordinarily have reacted as a price penalty against the production of milk testing higher than the standard. By way of illustration, let us assume that the base fluid-milk price is $2.50 per 100 pounds, with a 5-cent differential for each point above or below a 3.5-percent standard. One hundred pounds of 3-percent milk would return the producer $2.25, a rate of 75 cents for each pound of butter- fat contained therein; 100 pounds of 4-percent milk would return $2.75, a rate of 68.75 cents per pound of butterfat; while 5-percent milk would return only 65 cents per pound of butterfat. Briefly, as the butterfat test rises above the standard, the average return per pound of butterfat declines. Rates per pound of butterfat, when based on other milk prices, are also shown in Fig. 7. Dairymen may feel that it makes little difference if the rate per pound of butterfat for high-testing milk is less than that for butterfat in milk with a low test, since the actual returns for ICO pounds of 4-percent milk are larger than the amount received for an equal volume of 3-perccnt milk. It is necessary, however, to take into consideration the significance of the fact that milk flow, as a rule, varies inversely with butterfat content. That is, the average milk flow of low-testing cows, as a whole, is greater than that of high-testing cows. This fact is well known among dairymen and needs no further elucidation. 19X8] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 189 FIG. 6. SEASONAL VARIATION IN BUTTERFAT CONTENT OF MILK IN FOUR ILLINOIS DISTRICTS The butterfat content is lowest during the surplus season, when production is highest. The maximum varia- tion occurred in the St. Louis district, where the butter- fat test varied from 3.5 percent to 4.1 percent. The graph is based on data from dealers' testing records for one year in each dairy district : Quincy and Chicago, 1925'; Peoria, 1927; and St. Louis, 1927. See Table 5. Since the producer with a high-testing herd will have a lower vol- ume of production per cow than the producer with a low-testing herd, the rated price per pound of butterfat becomes of great im- portance to him. On the basis of gross returns, the prices commonly 190 BULLETIN No. 318 [December, 3.0 3.1 3.2 3.3 3.4 J.S 3.6 3.7 J.8 3.9 4.O 4.1 4.2 4.3 4.4 4S 46 4.7 4.8 4.9 5.0 Percent burterfot FIG. 7. RATINGS FOR BUTTERFAT IN MILK SOLD AT VARIOUS FLUID-MILK PRICES WITH THREE, FOUR, AND FIVE-CENT DIFFERENTIALS From the above graph it is possible to ascertain gross ratings per unit of butter fat in 100 pounds of fluid milk when the milk is sold at the above prices. Prices are based on a 3.5-percent butterfat standard, with differen- tials of 3, 4, and 5 cents for each point above or below the standard. When 3.5-percent milk sells at $2.50 per hundredweight, the butterfat rating is 71.4 cents a pound. If the milk tests 3.8 percent fat, and a differential of 5 cents a point is being paid, the rating would be 69.7 cents a pound for the butterfat. The graph is applicable only from a practical standpoint, for above or below certain prices the curves reverse upon the application of particular differentials. paid for fluid milk based on the 3.5-percent standard with the usual differential tend to inflict a penalty on milk with a high butterfat content. Net returns for milk, however, depend not only upon gross returns per hundred pounds of milk but also upon production costs as well; but if production costs of high-test and low-test milk are practically the same, it is obvious that net returns will be proportionate to gross returns. 1 Some dealers have created a consumer demand at premium prices for milk high in fat, and consequently pay prices that encourage its *For information pertaining to feed costs of production based on butterfat content of milk, refer to Circular 318 of this Station, by W. L. Gaines. MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 191 production. The demand for high-testing milk, altho yet relatively small, is increasing in a majority of the large markets, and many far- sighted breeders, recognizing this fact, are endeavoring to raise the butterfat standard of their herd by selection and breeding. The lower fat producing types of dairy cattle still prevail in most fluid-milk, cheese, and condensary districts of Illinois, while the higher fat yield- ing types predominate in cream-producing sections. MARKETING AGENCIES AND CONTRIBUTORY ORGANIZATIONS The more important agencies that engage either directly or indi- rectly in the process of marketing are producer milk-bargaining asso- ciations; distributing agencies, consisting of dealers, jobbers, and brokers ; and auxiliary organizations such as transportation agencies and bottle exchanges. In addition to these there is the health depart- ment which specifies the conditions under which milk for fluid con- sumption shall be produced and marketed. Milk-Bargaining Associations Producer milk-bargaining associations are organized for the pur- pose of obtaining greater economic advantages for their members. The success of these organizations depends mainly upon the type of leadership, the cooperation of the individual members, and the amount of service rendered. Under the guidance of capable leadership, they are generally considered a desirable adjunct to marketing. There are several of these organizations operating in various parts of the state, some achieving greater success than others. A good example of this type of organization in the state is the Illinois Milk Producers' Association at Peoria. This association began operations in October, 1926, with about one thousand members, under the management of the Dairy Marketing Division of the Illinois Agri- cultural Association. At present there are about 1,100 members, who produce about 90 percent of the total production of the Peoria fluid- milk district. The cooperation given the association by producers and dealers has enabled it to render a very valuable service to milk marketing in that particular section. The milk marketing plan used by the Association was devised after an inspection and study of various plans used in other cities. In ac- cordance with its provisions, milk is classified on the basis of the pur- pose for which it is to be used, and producer milk prices are based upon the market value of the different milk classes. There are three classi- fications. Class 1 includes all milk sold in bottles, both wholesale and retail ; all milk sold in bulk ; and milk from which wholesale and retail 192 BULLETIN No. 318 [December, bottle cream is derived. Milk disposed of in bulk as fluid sweet cream and that used in the manufacture of condensed whole milk and soft cheese containing butterfat is included in Class 2. Class 3 includes the milk used in manufacturing butter and that from which frozen cream for storage is derived. The net price paid producers, ordinarily called the pool price, is based on the average returns for milk of all classifications. Because of the lower prices paid for surplus milk than for other milk under this scheme, the pool price becomes relatively lower as surplus milk in- creases and correspondingly higher as it decreases. The prices paid for surplus milk are based chiefly upon the general level of manu- facturing markets, and hence milk dealers, by manufacturing dairy products from surplus milk, are enabled to compete with establish- ments making the manufacture of dairy products their main business. Dealers are thereby encouraged to manufacture dairy products more extensively, and in so doing the local market for milk is expanded. See Table 40 of the Appendix for prices paid in the Peoria district based on the different classifications. The following constitute some of the more important obligations of the producer to the Association : 1. To deliver all milk produced in such form as agreed upon by the Associa- tion to the plant or other destination designated by the Association, with the exception of that used for home and farm consumption. 2. To establish the Association as sole agent for handling, manufacturing, and marketing of all milk delivered. 3. To authorize the Association to receive, grade, pool, standardize, manu- facture, or sell all or a part of the milk. 4. To grant a commission of 5 cents per hundred pounds for milk sold by the Association. 5. To produce and keep milk under sanitary conditions until delivered. 6. To permit inspection of the dairy and to correct conditions regarded as being undesirable by the Association. 7. To submit all serious controversies as to grade, weight, and test of milk to the Association for adjudication and settlement. 8. To instruct the Association to collect for his account any money which any person, firm, or corporation may owe for milk delivered by the producer. 9. To sell milk in compliance with price classifications and prices arranged between Association and buyers. Milk Distributing Agencies Dealers, jobbers, and brokers who serve as connecting links between producer and consumer are generally known as middlemen. As milk marketing has become complicated, these intermediary groups have gradually supplanted individual milk producers as marketing agents. Service of Dealers. From the standpoint of scope of operation, retail dealers are undoubtedly the most important of the three groups. 1923] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 193 Their service usually begins upon receipt of milk in the raw state and ends with its delivery to the ultimate consumer or local retailer. A dealer may supply either the wholesale or retail trade or both. The wholesale trade consists of hotels, restaurants, schools, grocery and delicatessen stores, and other similar establishments that purchase milk in large quantities. Retail distribution necessitates house to house delivery, generally by horse and wagon. In addition to dis- tributing milk, dealers have sponsored and financed the major portion of the advertising of the past. Furthermore, they may manufacture as well as distribute, depending upon the amount and disposition of surplus milk that they handle. During the season of heavy production a large quantity of surplus milk is manufactured into condensed prod- ucts by certain distributors, and in some localities distributors make the major portion of the ice cream. Place of Jobbers in Milk Trade. The jobber purchases milk or cream either from producers or wholesale dealers and dispenses it to other dealers. A large volume of business is usually required to sup- port middlemen who engage only in the jobbing of milk. For this reason, they are generally found only in large milk markets. Occa- sionally milk distributors and dairy manufacturers, in practically all markets, dispose of job-lots of milk to other dealers, but since they do not make a permanent business of jobbing, their supply is somewhat irregular and hence uncertain from the standpoint of the buyer. Fur- thermore jobbers sometimes distribute to the wholesale trade. The main sources of supply for cream jobbers are usually areas outside of the regular fluid-milk district, where milk may be bought below the current fluid-milk prices. Since transportation costs favor the shipping of a concentrated product, cream constitutes the bulk of their shipments. Lower transportation rates, resulting from the use of tank cars, have enabled jobbers to supply other markets outside the sphere of the local district much more extensively than was possible previous to the introduction of this method of transportation. It is no longer unusual for whole milk to be shipped in tank cars from Illinois or Wisconsin to distant southern markets. Tank-car shipments of cream and ice-cream mix produced in mid-western districts are occa- sionally shipped to eastern points. The extensive growth in production and consumption, as well as improvement in milk transportation, has enabled jobbers to render a much more valuable service to distribution than formerly. They arc often relied upon to supply the emergency needs of milk distributors. Distributors, instead of carrying a large amount of milk in excess of the regular daily demand, may restrict their purchases to normal re- quirements and depend upon the local jobber for milk and cream when the regular supply is insufficient. 194 BULLETIN No. 31 8 [December, Milk Brokers. Milk brokers are generally found only in our larg- est cities. In Illinois they are established in the Chicago market. They do not, as a rule, purchase milk outright, but simply estab- lish contact between buyers and sellers of milk. The extent of their service depends principally upon the amount of territory that may be included within the scope of their operations. As is generally true in respect to brokers of many commodities other than milk, they are able to render their greatest service when it is possible to extend their trade transactions beyond the local market. Previous to the intro- duction of refrigeration and the tank car in milk transportation, the operations of milk brokers were confined almost entirely to the local market. With the present transportation facilities it may become practical, for example, for brokers to establish trade connections be- tween southern dealers and Illinois producers. Transportation Agencies The combined efforts of milk equipment manufacturers and trans- portation companies have effected valuable improvements in milk transportation. The application of improved temperature-control equipment and modern methods of handling, and the employment of greater economy of space in milk shipments enables milk to withstand shipping periods of one or two days without appreciable changes in quality, and also greatly reduces transportation costs per unit of volume. Two very outstanding examples of modern equipment are the tank car and tank truck. They not only furnish more volume per unit of space and require less labor in loading and unloading, but are much more effective in protecting milk from the influence of outside tem- peratures than the equipment which was used formerly. It is evident that the use of this type of equipment has great possibilities, for within the short interval that has elapsed since its introduction a large portion of the milk supply of several of the large milk markets has been shifted to this method of transportation. Motor transportation has gradually supplanted the horse and wagon as a means of individual direct delivery of milk to pasteurizing plants or receiving stations. Considerable time has been saved by farmers who use the automobile and truck. The producer only a few miles from the plant may deliver milk daily by motor and return to the farm within an interval of approximately half an hour, while two or more hours would be required with horse and wagon. As a rule indi- vidual delivery of milk, however, is practical only for farmers who live near the plant or receiving station. Collective delivery of milk has proved practical in many localities, especially where rail facilities are inadequate. Producers club to- 1928} MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 195 gether and select one of their number, or employ someone outside the group, to deliver milk for the entire group. In districts where the laily production is small enough so that one man can handle the jutput of a dozen or more dairies there is more saving than in in- tense dairy regions. Collective delivery is extensively used in the Peoria district, where there are about a hundred collection routes operating with an average load of approximately 1,200 pounds of milk per route. The rout emeu enlarge their income by hauling other commodities as well as milk. The plan may be used to haul milk to rail loading points, country receiving stations or plants, and to city plants. Dealers who transport milk by motor may do so in cases, cans, or tanks. A large percentage of the milk supply produced within 65 miles of Chicago is hauled by motor. In the St. Louis district more than three-fourths of the total fluid milk used is taken to market in this manner. Peoria trucks practically all of its milk. This is also true in Quincy, which ships only about 5 percent of its milk by rail. The fact that the maximum haul is approximately 50 miles makes it practically impossible in these two districts, under present conditions, for any other system of transportation to compete successfully with the method of trucking milk in cans from the farm. In the trucking zones of Chicago and St. Louis, where a much larger milk supply is available and where the maximum truck haul is more than a hundred miles, the tank truck has partly supplanted the trucking in cans. Tank trucking is a much more economical method of transportation than trucking in cases or cans wherever the volume to be hauled is sufficient. It makes necessary, however, the establish- ment of country receiving stations, an expense that may sometimes be avoided when milk is trucked in cans. Not only is it possible to haul a much larger volume per load, but less labor is required in loading and unloading. Dealers w r ho bottle all milk in the country are of course unable to use the tank car for city hauling. In the St. Louis district, where a large portion of the milk supply is bottled in the country, milk is hauled in large trucks which carry approximately 270 cases of 12 quarts each. Even tho bottling milk in the country entails higher transportation costs, the added expense is counteracted by cheaper labor in the country plants. In the Chicago district, where country plant labor is unionized, the tendency has been to reduce the amount of milk bottled in the country. This has been true especially since the introduction of modern methods of transportation. Consumer in- difference to country bottled milk has also been a factor. Very little milk has been transported by rail in the small dairy districts since the development of improved roads and motor trans- portation. Individual shippers, who produce milk for small markets, 196 BULLETIN Xo. - [December. generally hav. 31 <*eam lines to develop tc a ill compete with other methods of Some ': rail shipments, however. Q in small dairy distri ta I tensr [airy seel - the number of producers is _ sid - ilk is shipped direct by rail, by individual pro- M an 10 percent of tb Si L lia ra] : is - ipped direct I lacers. During July. 192S. there were ap- _ _ dividual shippers sending milk to the Chicago market. There will always be some producer- se circumstances will favor this method and the number in the _ r o district has probably p the minimum. Individual shipments are usually sjgag ars vithout refrigeration, a condition which is long distance hauls. The temperature of the milk is :itrol in the summer time, shipments during th, t season being exposed many times to the hot sun at the station platform and to < in baggage cars. In large markets small dealers lo not operate country re< _ stations obtain a large portion . - ". '"'ply from individual <.: - .ippers. : stal - which on accouir n, insufficient voluir. lo not warrant tank-car shipments, ship their milk by rail in cans to the city processing plants. In the Chicago i'-t the major: 1 si <>ns are lo "tore than 65 miles from the city, the greatei rtion of the milk received at stations "-mile zone being trucked to market. Bottling plants similarly loea* - - rail lines to ship milk to market. The cost ingl :>ttled milk to the Chicago and St. Louis markets from country plants averages more than twice as much as the cost of -_ .lion can shipments in cars (Table 7 . The introduction of the tank car into the field of milk transporta- tion has exerted a great influence upon dairying, particularly in cer- tain localiri^. Approximately 55 percent of Chicago's total supply is brought to market in them (Table 6). Daily shipments in tank cars to Chicago are made from milk production centers more than 300 miles distant. The nauls range from about 25 to 360 miles. More than 250 of these cars are now operating in the Chicago district, the majority of them being used for bringing whole milk from the country receiving stations to city bottling plants. Even cities in the south have been served with milk from the Chicago district by means of these cars ; and it is doubtful whether, without their use. Chicago dealers could have obtained an adequate supply of milk from tested cows at the time the ordinance was enforced which required all milk sold in Chicago to come from cows reacting negatively to the tuberculin test. Every car is equipped with two glass-lined tanks, each tank having a capacity of about 25,000 pounds. These tanks are well insulated. 19S8] MILK DISTF.IBL TABLE 6. MANNER OF TRANSPORT: . '' : - . : . _ M - Pa ataf - - - Tank cars . Tank trucks. . . Enclosed truck- Rail (bottled and car 2 L7 ' - 100.0 figures obtained from records g - making it possible to haul milk or miles wil temperature. Tests have shown the av _ _ - - _ _ es to a hundred miles under norm; . ' facturers are now _ re to buy them. This is esjx . _ 3 1 a - limited amount of capital. The in:- *rever, is not larg sidering the utility and durability < t r and tl . *rans- portation costs tha- result . rik-ear rates 1 mately one-third lower than 10- gallon c tes (Tal 7 . Aside from the advantaa : in loading and unloads. - milk ma pumped into and I 'hem. There are. of course, limi' lions 1 their Qfi ' .ving to their very introduction, many dealers are not wholly prepared for their immediate adoption on a L:- Xot all city milk plants are located on rail switch- s unloading directly from the car into the holdine the plan* are all of the receiving stations situate I fi *o have ss 1 rail transportation. Large central statioi> structed at rail shipping points, and milk from stations not rably located for rail transportation may be trucked in tank trucks to the central rail shipping center. In districts where the daily recei: tfi a station are not larere enough to approach tank-car capacity, tank trucks may be used to truck the milk from two or more smalle: tions to the central shipping station and thereby make it possible to load the car to its rated capacity. Milk Dealers' Bottle Exchanges In the process of city milk distribution, milk hot: - from the owners in a variety of ways. Retail and wholesale milk buyers may purchase milk from several different sources, either di- rectly from dealers or indirectly thru stores. The routemen generally do not take the time to inspect the name, brand, or trademark on the bottle, but collect all that are left for them. Milk bottles often pass into the hands of traders and may be sold to unscrupulous milk 198 BULLETIN No. 318 [December, TABLE 7. RAILROAD RATES' FOR TRANSPORTING MILK FROM OUTLYING SHIPPING POINTS TO CHICAGO AND ST. Louis, APRIL 1, 1928 Town Miles by rail Cents per 100 pounds Percentage tank rate is of can rate Cases 2 10-gallon cans Tank car 40,000 pounds minimum To Chicago from: Palatine . . . 111. 26.1 45.0 46.0 50.6 52.0 54.0 60.9 67.7 85.0 85.4 86.0 89.0 91.1 106.0 119.6 121.8 125.6 126.0 127.0 130.0 151.0 158.0 184.2 195.5 204.0 258.3 275.0 19.0 25.0 25.0 32.0 40.0 41.0 49.0 58.0 62.0 76.0 98.0 101.2 46.5 100.8 83.3 52.3 83.3 54.3 60.1 54.3 106.6 64.0 106.6 65.9 62.0 65.9 71.7 81.4 71.7 127.9 120.2 93.0 127.9 127.9 147.3 151.2 141.5 170.5 170.5 69.8 71.7 81.4 79.5 83.3 83.3 89.1 93.0 96.9 102.7 112.4 114.3 31.4 34.9 31.4 33.7 31.4 34.3 34.3 34.3 45.9 37.8 45.9 36.6 40.1 44.8 45.4 44.8 45.4 45.4 51.8 45.4 55.2 45.4 50.0 50.0 60.5 57.6 61.6 30.2 31.4 34.9 34.3 37.8 36.1 37.8 39.5 41.9 44.2 47.7 49.4 21 21 21 21 21 21 24 24 24 24 24 24 24 25 27 27 28 28 28 28 31 31 33 33 34 37 37 66.9 60.2 66.9 62.3 66.9 61.2 70.0 70.0 52.3 63.5 52.3 65.6 59.9 55.8 59.5 60.3 61.7 61.7 54.1 61.7 56.2 68.3 66.0 66.0 56.2 64.2 60.1 Manteno 111. Plato Center . . 111. Maple Park . . . 111. Burlington. . . .111. Spring Grove. .111. Silverlake. . . . Wis. Hebron 111. Teegarden . . . Ind. Mukwonago Wis. Monterey. . . .Ind. Avalon Wis Janesville. . . .Wis. Waukesha. . .Wis. Freeport . . 111. Slinger . Wis. Kewaskum . . Wis. Lena 111. Servia Ind. Adell Wis. Garrett Ind. Blanchardvillc Wis. Appleton .... Wis. New London . Wis. Holgate Ohio Arpin Wis. Waterloo. . . .Iowa To St. Louis from: O'Fallon .... Mo. Lebanon ... 111. Bunker Hill. ..111. Trenton .... 111. Breese 111. New Douglas. . 111. Carlyle 111. Hillsboro .... 111. Irving 111. Ramsey 111. Westervelt 111. Effingham .... 111. 'Obtained from company tariff sheets. 2 Cases may contain 12 quarts, 24 pints, or 48 half-pints. Both case and can rates are for less than carlots. dealers, who make a practice of using bottles marked with trade names or insignia other than their own. Milk dealers in large milk markets generally have considerable diffi- culty in retrieving bottles wliich have been misplaced or have otherwise 1528} MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 199 passed from their possession, unless some effective means is provided for such a purpose. In an endeavor to cope with such a situation, dealers in some markets have formed organizations, generally known as bottle exchanges, which recover stray milk bottles and return them to their rightful owners. Such organizations usually prohibit mem- bers from using any bottles other than their own. They also are in- strumental in obtaining from dealers outside of the organization bottles belonging to members of the organization. This is possible because of laws and ordinances requiring that dealers refrain from using bottles branded with markings other than their own in dispensing milk. If some agency did not intervene in this way, a small percentage of dealers might provide practically all the bottles used in a particular locality. The history of the bottle exchanges shows that success depends largely upon type of management, the spirit of cooperation of indi- vidual members, and the number of members. It is generally con- sidered essential that the total membership of a milk dealer's bottle exchange represent the major portion of the distribution, otherwise the exchange may find difficulty in accomplishing the purpose for which it was organized. Since its organization in 1919 the Chicago Milk Dealers' Bottle Exchange has been successful in developing an annual exchange of more than 57 million bottles. For the past six years this organiza- tion has delivered a yearly average of more than 42 million stray bottles to the milk dealers of the city (Table 8). Under the terms of agreement, each member is permitted to purchase one share in the TABLE 8. BOTTLES RETURNED ANNUALLY TO CHICAGO DEALERS BY MILK DEALERS' BOTTLE EXCHANGE, 1922-1927 Year Bottles returned 1922. . 28 121 155 1923 . . 33 622 267 1924 37 911 794 1925 46 320 898 1926 48 638 691 1927 57 662 117 Average 42 046 154 NOTE. See Table 46 in the Appendix for data on losses of bottles and other containers in 1926. Exchange for each milk wagon license required and obtained in his particular business. The dealer is required to sign a written agree- ment not to use in his business bottles branded with any name, brand, trademark, or symbol other than his own, nor to authorize or will- ingly permit other dealers to use bottles branded with his markings. 200 BULLETIN No. 318 [December, He also agrees to permit representatives of the Exchange to search for, inspect, and collect all bottles branded with markings other than his own. The first violation of any part of the agreement relative to misuse of trademarks makes the dealer liable to a fine of not to exceed $100, and a second violation may result in a cancellation of the contract for the Exchange's services. In collecting bottles, it rarely happens that much resistance is encountered, but when such a condition arises and cannot be overcome without legal procedure, a writ of replevin is generally served upon the illegal possessor. After the bottles have been assembled at the exchange plant and those of each dealer separated, they are delivered to the original owner, who is charged one and one-half cents per bottle for the service. The dealer in turn receives three-fourths of a cent each for all bottles other than his own that are accepted by the organization. In the Chicago market the most serious difficulties which formerly resulted from the use of milk bottles have been surmounted. Prac- tically all the dealers are members of the organization and, with few exceptions, comply with its provisions. Unscrupulous dealers who use bottles other than their own arc rare exceptions. Municipal Health Departments The prime consideration in a food for human consumption is its wholesomeness. This is especially true of milk, which is universally regarded as being indispensable to child growth and development. Public interest in the wholesomeness of food and drink has resulted in the creation of municipal health departments in our larger cities. The service rendered by a well-organized health department and the re- sponsibility of such a department to the public are immeasurably great. Recognition of these facts by municipal health authorities has greatly reduced the death rate in our large cities. A large portion of the time and effort of health bureaus is spent in the creation and enforcement of regulatory measures which tend to the development and maintenance of wholesomeness in milk. The past five years have witnessed remarkable accomplishments in this di- rection in Illinois markets. By far the larger part of all the milk consumed in the large mar- kets of the state is pasteurized, as shown by the data in Table 9. Even in cities where pasteurization is optional, pasteurized milk is gradually supplanting raw milk in response to public preference. It is gen- erally true, within certain limitations, that the larger the city, the greater the precautions which are taken in handling milk. In most of these larger markets where pasteurization is compulsory, frequent checks are made to determine the efficiency of pasteurization. Pasteur- ization temperature records are kept, and milk samples procured by MILK DISTRIBUTION ix FOUR ILLINOIS MARKETS 201 TABLE 9. MISCELLANEOUS DATA PERTAINING TO QUALITY OF MILK' CONSUMED IN ST. Louis AND CERTAIN ILLINOIS CITIES, JANUARY 1, 1928 Cities Number of milk pas- teurizers Percentage of milk pasteurized Prevailing test of milk consumed Compulsory pasteuriza- tion Tuberculin test ordinance Population estimate Aurora 6 100 Yes Yes 47 000 Bloomington 3 90 No No 40 000 190 100 3.5 Yes Yes 3 150 000 6 75 No Yes 40 000 3 33 No Yes 25 000 Jacksonville 3 75 No Yes 16 000 Joliet. . . 22 100 3.8 Yes Yes 43 800 Peoria 5 94 3.7 No Yes 1 100 480 Quincy 4 70 3.5 No No 39 131 Rock Island . . 83 91 No No 42 000 St. Louis 38 98 3.8 No Yes 5 821 000 NOTE The information in this table was obtained from city health departments Certified milk has not been considered in this table. In some markets between 1 and 2 per- cent of the total milk consumed is certified. s Effective June 1, 1928. 'Part of milk distributed in Rock Island is pasteurized in Davenport and Moline. 'Maximum bacterial count allowed on milk consumed in raw state is about 50,000. 5 Effective March 21, 1930. municipal health inspectors are tested for numbers of bacteria. The maximum bacterial count that is allowed varies among the different markets. The score card is generally used in grading milk plants. Furthermore, in certain districts the health departments specify the type of equipment which they regard as essential to efficient pasteuri- zation and enforce its use. Several cities in the state have enacted ordinances requiring that all milk and cream for fluid consumption be supplied from cows which react negatively to the tuberculin test. The consumption of tuber- culosis-free milk is regarded as particularly important in districts where raw milk is consumed. Illinois Model Milk Ordinance. The Illinois Department of Public Health, with the cooperation of the State Department of Agriculture, has drafted what may be termed a model milk ordinance, which is now available for the consideration of interested parties and organizations, particularly health and food departments of Illinois municipalities. While the ordinance may require some modifications to meet local con- ditions, it nevertheless serves as a guide for drafting municipal regula- tions. Following is a brief digest of the more important provisions of the ordinance. Those who engage in the business of dispensing milk to the trade are required to secure a license upon payment of a small fee. Administration of the ordinance is under the jurisdiction of the municipal health department, which is permitted to use its own discretion when emergencies arise that are not considered in the ordi- nance. Quantities of regular milk of less than gallon lots when sold to the retail trade must be sold in containers with the net contents and distributor's name thereon. This provision not only dispenses with the dipping of milk on routes, which may result in spreading of contagious diseases, but requires that each dealer 202 BULLETIN No. 318 [December, use only his own containers. As would be expected, adulteration of milk in any manner whatsoever is strictly forbidden. It is provided that milk which is sold for consumption in the raw state should be derived from healthy cows, as de- termined by veterinary inspection, and shall not contain more than 100,000 bacteria per cubic centimeter. Raw milk, like pasteurized, must be labeled as such on the container or part thereof. Persons on farms and in dairies who handle raw milk must not only be free from contagious diseases, but those who have previously had typhoid or paratyphoid fever must show by medical examination that they are not carriers of these diseases. The requirements regarding the sani- tation of premises, equipment, and containers undoubtedly are conducive to a clean and safe milk supply. The board of health created by this ordinance is empowered with the right to prosecute any violations of its provisions. Altho this model ordinance is probably better adapted to condi- tions in the average size of market, than in the large market, it in- cludes many of the fundamental requirements for the safeguarding of the milk supply of any city, large or small. Regulations in tlie Chicago Market. Following are some of the more important activities in which the Chicago Health Department has engaged for the purpose of providing a wholesome supply of milk to the city. 1. Strict enforcement of pasteurization of all milk. 2. Chemical and bacteriological inspection of milk supply. 3. Enforcement of an order requiring that all milk and cream served in restaurants and similar eating places be supplied in bottles, or other con- tainers, sanctioned by the Health Department. 4. Prohibition of hand-capping of milk bottles. 5. Enforcement of an order requiring that all trucks hauling milk from the country bo equipped with properly ventilated and enclosed truck bodies. 6. Establishment of maximum temperature limitations for raw milk coming into the city. 7. Periodical surveys of milk and cream sold in Chicago. 8. Engineering survey of pasteurizing equipment to determine the extent of defects, if any. 9. Adoption of an ordinance requiring that all cattle supplying milk for the Chicago market react negatively to the tuberculin test. 10. Maintenance of country dairy registration and inspection, including in- spection of country milk plants and dairies. Following is a copy of the recent amendment to the Chicago health code prohibiting the sale of milk from cows which develop a positive reaction to the tuberculin test: "All milk, cream, skim milk, or buttermilk which shall be delivered into, sold, offered for sale, or distributed for purposes of food, in the City of Chicago shall be from healthy cows free from disease. For the purpose of determining the con- dition of such cows, each and every animal in the herds from which milk shall be obtained shall be certified by veterinarians authorized by the commissioner of health, and shall have been examined within one year of the time when milk is accepted therefrom. The commissioner of health may also consider certification from otlrer veterinarians when the herd is under State or Federal supervision and shall have been examined within a like time. The examination to be made of such animals shall be of such a character as to enable the veterinarian to determine whether the animal is free from contagious or infectious diseases of all kinds and to certify thereto. The test may be repeated when it is deemed advisable or 1928} MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 203 necessary by the commissioner of health. In case such examination is under Federal or State authority the owners of the herds may obtain certificates or blanks from the commissioner of health for purposes of certification by such Federal or State Veterinarians. Any cow added to a herd that has been exam- ined and on which a certificate has been issued shall be examined when it is first added to the same. All cattle found to be unhealthy shall be immediately ex- cluded from the herd which is certified as hereinbefore provided, and any milk therefrom shall be withheld from the market. Any diseased animal found in the herd at any time shall be entirely removed from the premises wherein the certified herd is kept within thirty days after the discovery of such disease." St. Louis Regulations. On March 21, 1928, the city of St. Louis, which secures approximately 80 percent of its total milk supply from Illinois producers, approved a new milk ordinance requiring that after March 21, 1930, which is two years from the date of approval, all of its milk supply must be produced by cows free from tuberculosis as determined by the tuberculin test. Beginning April 21, 1928, how- ever, the tuberculin test requirement became effective for cows that produce fluid milk for consumption in the raw state. Practically all other provisions became effective one month from date of approval. Altho pasteurization is not absolutely compulsory in the St. Louis district, it is practically so, since very rigid restrictions are placed upon milk that is consumed in the raw state. The maximum bacterial count allowed for such milk is approximately 50,000 bacteria per cubic centimeter. Strict control is maintained upon the entire milk supply from farm to ultimate consumer. A medical inspection is required annually for every person connected with a dairy or milk plant whose work brings him in contact svith the production, handling, storage, or transportation of milk or milk products. Rigid enforcement of the above provisions and all similar ones that are now effective should provide a safe milk supply of high quality for this district. Peoria and Quincy Regulations. Strict enforcement of the new milk ordinance of Peoria which became effective June 1, 1928, should assure a milk supply of high quality. The ordinance not only pro- vides that the milk be produced and handled under proper sanitary conditions but also that it be supplied by cows that react negatively to the tuberculin test. Even tho pasteurization is not required in Quincy, 70 percent of the milk supply is pasteurized. ASSEMBLING AND PROCESSING PLANTS Expansion of markets and changes in the standard of milk quality are largely responsible for our present complex system of distribution in which many agencies and instrumentalities arc employed. In some of the large markets of the state the demand for milk is now so large that the outer boundaries of production areas have been extended a hundred miles or more beyond the local consumption centers. In such districts, country milk plants including receiving stations and 204 BULLETIN No. 318 [December, pasteurizing plants have been established by jobbers and dealers for the purpose of facilitating the process of marketing (Fig. 8). Only a small portion of the milk supply of Illinois markets is pasteurized in the country, by far the greater majority of the pasteurizing plants being located in cities. Country Milk Plants Chicago District. Eighty-five of the 242 plants which receive milk outside of Chicago for consumption in this market operate pasteur- izers (Table 10). Altho Illinois supplies a large amount of the fluid milk consumed in Chicago, there are fewer country pasteurizers and receiving stations in this state relatively than in Wisconsin. A large portion of the Illinois area that regularly produces for the fluid-milk market is close enough to Chicago so that milk is trucked directly to TABLE 10. NUMBER AND LOCATION OF COUNTRY PLANTS HANDLING MILK AND CREAM UNDER SUPERVISION OF CHICAGO HEALTH DEPARTMENT 1 , JANUARY 1, 1928 State Pasteurizers Receiving stations Number Percentage of total Number Percentage of total Illinois 15 .58 6 4 1 1 85 17.6 68.2 7.1 4.7 1.2 1.2 100.0 31 108 14 4 19.8 68.8 8.9 2.5 Wisconsin Indiana Michigan Iowa . . Ohio Total 157 100.0 'The number of country plants in operation varies during the year, many more operating in the summer than in the winter. city. All these country plants, regardless of their location, are required to comply with Chicago Health Department regulations. Only a part of these pasteurizers are bottling plants. The practice of bottling milk in the country is not engaged in so extensively as formerly. It increases transportation costs, as case shipments are much more costly than those by way of can or tank. Cooling expenses, chiefly for ice and refrigeration, are materially increased. Plant over- head costs are usually greater than they would be if this milk were bottled in connection with that bottled in the city. The disadvantages of such a practice apparently greatly outweigh the advantages, espe- cially since consumers have appeared to be rather indifferent to the slogan ' ' bottled in the country. ' ' St. Louis District. About 68 percent of the total St. Louis supply is handled thru country milk-receiving stations, of which there are 1918] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 205 FIG. 8. MILK PLANTS IN ILLINOIS AND NEIGHBORING STATES, JANUARY 1, 1928 In the territory outside of Illinois only those country receiving and processing plants that supply the Chicago and St. Louis markets are shown. Many of the plants handling milk for fluid consumption in Chicago are more than 200 miles from the city. Forty-nine of the 53 stations receiving milk for St. Louis are lo- cated in Illinois, 206 BULLETIN No. 318 [December, fifty-three. Forty-nine of these are located in Illinois. Three of the forty-nine pasteurize and bottle milk. A great majority of these sta- tions receive less than a thousand gallons of milk daily (Table 11). About two-thirds of the milk supply is handled by stations having TABLE 11. NUMBER AND CAPACITY OF COUNTRY RECEIVING STATIONS HANDLING MILK AND CREAM IN ST. Louis DAIRY DISTRICT', JANUARY 1, 1928 Gallons received per day Number of re- ceiving stations Percentage of re- ceiving stations in each group Percentage of total milk received Accumulative percentage of milk received 1- 300. . . 5 9.43 1.67 1.67 300- 500. . . . 11 20.76 8.05 9.72 500- 800. . . . 15 28.30 15.83 25.55 800-1,000.... 5 9.43 7.84 33.39 1,000-2,000. 12 22.64 29.01 62.40 2,000-5,000 4 7.55 19.61 82.01 5,000 and over. . Total 1 53 1.89 100.00 17.99 100.00 100.00 of these receiving stations also operate pasteurizers and bottling plants. a daily capacity of more than a thousand gallons. Besides the four milk-receiving stations in Missouri, there are also two other stations which handle sweet cream only. Peoria and Quincy Districts. The nearness of production areas to the Peoria and Quincy markets renders it unnecessary to operate coun- try receiving stations. The milk supply of these two cities is hauled directly from farm to the city plants of dealers. City Pasteurizing Plants Illinois consumers are becoming more particular about milk quality. They no longer tolerate the dipping of milk and usually require that it be pasteurized. As a result, pasteurizing and bottling plants have become an essential part of the machinery of distribution. Chicago. The milk dealers of Chicago, of whom there are 196, were operating 190 pasteurizing plants within the city on January 1, 1928. A majority of these are located on the south side (Fig. 9). Eleven of the pasteurizing plants handle more than 50 percent of all the fluid milk consumed (Table 12). About 25 percent of the dealers pasteurize between 100 and 200 gallons daily. The number of small dealers in the Chicago market, however, has been decreasing within the past few years. Mergers among them have been rather frequent, especially since the enforcement of regulatory measures in milk processing and the action of other factors increasing the costs of dis- tribution. Under present conditions it is rather difficult for dealers 1988] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 207 FIG. 9. FLUID-MILK PASTEURIZING PLANTS AND ICE-CREAM FACTORIES IN CHICAGO, JANUARY 1, 1928 Very few pasteurizers in the city handle more than 15,000 gal- lons of milk daily. Most of the ice-cream factories are located near the center of the city, where consumption is greatest and where railroad terminals are convenient. in this market to maintain their business unless their volume of trade is large enough to make possible low overhead costs. 208 BULLETIN No. 318 [December, TABLE 12. NUMBER AND CAPACITY OF PLANTS IN CITY OF CHICAGO WHICH PAS- TEURIZE MILK FOR FLUID CONSUMPTION, JANUARY 1, 1928 Gallons pasteur- ized per day Number of pasteurizers Percentage of pasteurizers in each group Percentage of total milk pasteurized Accumulative percentage of milk pasteur- ized 1- 100 . . 26 13.69 .60 .60 100- 200 . . 48 25.26 2.22 2.82 200- 300 . . 21 11.05 1.62 4.44 300- 500 . . 19 10.00 2.26 6.70 500- 1,000 .. 22 11.58 4.91 11.61 1,000- 5,000 .. 43 22.63 28.79 40.40 5,000-15,000 .. 6 3.16 15.54 55.94 15,000-and over. 5 2.63 44.06 100.00 Total 190 100.00 100.00 St. Louis. There are thirty-eight plants operating in St. Louis and two plants in East St. Louis which pasteurize milk for fluid con- sumption (Fig. 10). Two large pasteurizers at Highland, Illinois, Fluid Mil* Posrevrizars FIG. 10. PLANTS PASTEURIZING MILK FOR FLUID CONSUMPTION IN ST. Louis AND EAST ST. Louis, JANUARY 1, 1928 More than 75 percent of the pasteurized milk consumed in East St. Louis is handled by plants in St. Louis and in Highland, Illinois. 1928] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 209 and a smaller one at Waterloo supplement the milk supply of these plants. Their entire output, however, is not consumed within the city itself; a small portion is used to supply the suburban trade. East St. Louis, with approximately 80,000 inhabitants, depends chiefly upon the plants of St. Louis for its pasteurized milk. The relative amounts of milk handled by the pasteurizers are indicated in Table 13. TABLE 13. NUMBER AND CAPACITY OF PLANTS IN ST. Louis DAIRY DISTRICT WHICH PASTEURIZE MILK FOR FLUID CONSUMPTION, JANUARY 1, 1928 1 Gallons pasteur- ized per day Number of pasteurizers Percentage of pasteurizers in each group Percentage of total milk pasteurized Accumulative percentage of milk pasteur- ized 1- 100 . . 7 16.28 .59 .59 100- 200 . . 11 25.59 1.74 2.33 200- 300 . . 5 11.63 1.52 3.85 300- 500 . . 2 4.65 .75 4.60 500- 1,000 .. 8 18.60 6.16 10.76 1,000-10,000 .. 8 18.60 31.22 41.98 10 ,000 and over 2 4.65 58.02 100.00 Total 43 100.00 100.00 'Thirty-eight of the pasteurizers are located in the city of St. Louis, two in East St. Louis, two in Highland, 111., and one in Waterloo, 111. A small portion of the milk consumed in St. Louis and suburbs is not pasteurized. There are eighteen milk peddlers in St. Louis and fourteen in East St. Louis who do not operate pasteurizers but either purchase milk from dealers or produce it in city dairies. The milk output of the producer dairies in the two cities is consumed chiefly in the raw state. As has been previously stated, this source of supply is only a very small part of the total consumption. Peoria and Quincy. There are five pasteurizers operating in Peoria and four in Quincy (Table 9). Peoria consumes about 94 per- cent of its milk in the pasteurized state, Quincy about 70 percent. STATISTICS OF CONSUMPTION Differences in food habits is one of the most important factors affecting the rate of milk consumption in the different markets. Thus the preponderance of a certain nationality in a particular district may be the determining factor in the amount of milk consumed. Some nationalities prefer a large amount of milk in the diet for both adults and children, while others restrict its consumption largely to children. Generally speaking, however, the American people, regardless of the 210 BULLETIN No. 318 [December, H AH . H S CD m n 2" 2 c w t, o ^^ 2 ^ g-2 SI g| o c O O H OH C i J.O g^ ^"D. ^3 "Sj 2 ^ CD ^, oS OT 2 +s 03 ^ g CO C 1X3 1 ^ CO CD 8 83 c C u (^ g _ o O o lliw .3, 3 *" 3 CM 00 00 o o 1-H wa ^ CO f- "i S CO I-H CD CO i 00 00 co eo 2 nj ^ Is? c^ CD 00 3o,M ; C^ & O S CD =P g (N ||||| tS 00 ||8o| ^ CO CO CO 0^ ^ ' ,2 CO I-H 10 CO CO CM O "*"' 3 ' ^ CM co * O^3 IM CO i L ' #) r-H fi. IO 35 gsS (M T3 gjJ'S cu 2r ** '.3 lf*Sft a 2- a TJ O CD 3 ? 10 S OJ 00 rS fe" 3 S 1 H & ^ . (N (N OJ P, co CO 05 <* 00 O 02 ^ (N 02 CN CM <-T o> O) O5 i-H 1-1 a fcT Lf CD fl} jO a ^ a p a fc Q 03 (-1 ^>1 ^T 1 73 a C o o .2 o 03 M^ 0^ =3^ J ^S 'CS 8^ O 02 PM 1 c a-% > 0.3 3 '43 fl o ' O C +10 /v ^ -10 ~v\ r^ V 15 N^ -JO +/0 pint n r of milk t ^~ Reh x^ nl +10 c ^ r ft /* ^v_ __y -/o / V V ^l V \J -10 -20 i y -20 +/0 / \j\ '/rtAJ In oft 7//A, / v^/ LA isole t^ +10 -^V sA /* -/o f -7 V -^/ t? "v V -10 -10 t ^ -20 + 10 +10 f to/f-t ^tnt-s i*t . r^S ^/Yf * <^ /?/ c /ie<7/7 ,/?/ (7^/ -10 ~\t W~> "^"V ^. -/o +10 + 10 -10 -zo 110 I/O 100 90 80 70 +IC +10 ttalf-P/nU 32-percenf cream ,Geto// o 2 A. pa ^ >--\ J rt A A/ /V> -10 V ^ \A -V V n 'V V, -10 V /zo 110 _ h idexi. >fm o/oyrr, wrtii '~\ Tlnd( /J//7 ?j ^; ' ///// 7^/^. 100 / / \ ~'-^ "^, ^^ -X~^- 90 .x~ n Normal distribui AcTual dev/atioi from normal di EE/np/oymenf aye Index of emplo/i /^/7 60 7J ',fA 70 ' j 100 /5K 77^ /c Q /O Q FTTTTTTTm 1922 /Q23 /9Z4- /02S W6 FIG. 12. COMPARISON OF MILK AND CREAM CONSUMPTION IN THE CHICAGO MARKET, 1922-1926, WITH INDEX OF EMPLOYMENT IN ILLINOIS The "normal" distribution curve in Fig. 11 is here shown as the base line in each case. The percentage de\ 7 iation from this normal is shown by the curve. With the exception of half -pints of 32-percent cream, the curve showing consump- tion follows in a general way the curve of employment. The abrupt decline in pints of milk in December, 1922, was caused by a one-cent raise in price. 216 BULLETIN No. 318 IM * S "o a c c3 W . K H d ^ s si O J 55 O > ij X O hM T C I '3p . x O STJ is o 0^3 Is -4 w C3 cc .So 'O ^ 220 BULLETIN No. 318 [December, 130 tzo no 100 so 80 70 Q_ Peoria Quincy St. Louis Chicago Half -pints of cream 130 120 110 {00 90 80 70 Q_ FIQ. 14. SEASONAL VARIATIONS IN MILK AND CREAM SALES IN FOUR MARKETS Milk sales were fairly uniform thruout the year in all four markets, while cream sales showed considerable decrease during the summer months. All units of measure are included in the "regular" milk sales except third-quarts. Cream sales are based on cream containing 22 and 32 percent butterfat. See Table 17 for base distribution and time intervals. Trend removed. Daily Variation in Sales Scarcely less important than seasonal variations are daily irregu- larities. The demand for certain units of milk and milk products varies greatly on different days of the week. Whipping cream is an outstanding example of this, the Sunday sales often being greater than those of any three or more other days. The daily variation in the different sales units of milk, cream, and miscellaneous milk products in the four large markets Chicago, St. Louis, Peoria, and Quincy is shown in Tables 18, 19, and 20. The distribution of certified milk was rather uniform (Table 18). Since most of this product is consumed by children, there is no apparent reason why large irregularities in its distribution should occur. 1988] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 221 1 00 C^ CD CiOOOO t* CD CO t^ rHOlC0 CO t^ 1C CO CO CO "5 t>- E -4-i 03 02 O O Ci O C5 O i-H rH t^ 000000 O O O CO rH CO t^ CO CO oooo rH rH rH co ic ic co 00 O O O rH rH CO * COC 1C CD O 00 rH o, H c0 O^ *O C 1 ^ ^O 00 *C CO CO O CO t> 00 COCO 1C CO rH OO CO rH H I-H O GO ^ O t^- O O5 Oi OOO ooot^-* o oooo 1^ O rH CO oooo rH 1C O 00 O-* OOO CO rH O O | ^ O ^ GO 00 CO 1 s * 00 00 ^t* OO 1 * O O rH t> O * OrHrHCO 1 SO rH CO . rH O O OOOO rH O O O * O CO U5 CO rHO O EH 1 ^t t* *O ^H GO *O Tt*ceot^ COt^ O CD OO 00 COCO CO rH kC ^* g 800 ooo COCOrH O OO rH 00 CO O O O oooo O * 00 t^- i i O O O COt^ t^ O CO rH O rH | 1C OO O CO CO rH ^ rH O I s - O-* O O COCOt-rH t^ OOOrH 9 O rH OO CO O rH OOO OOO COCO OO OOOCO oooo * 1C CO rH rH OOrH CO O 1C rH CO rH OTJ< EH 1 O CO rH ICCOCO O O CO CO CO 1C rH 1C OOO * CD CO O-* 1C O rH O ^f CO 00 "^ OOO O CO O OOOOO t^ rH GO t^- rH OOO t^ CD <* O OO O t^ rH CO OCO s 03 OO 1C CO OOO rH COCO CO CO C OO 00 O CO CO O O 1C O O g 02 OOO 00 O 00 rH CO O l> O l> OO CO O O CO O 00 or^co co CO CD CO t^ rH CO CO CO CO-* t^ 00 s 1 s '.2 '. '.2 ' K UM*M (3 ^^8'3 03 . O '3 . Ifo =3 Or^'C fl ,1^11 ' .22 '. ' Certified milk Quarts Pints Pasteurized milk Gallons J a ffi a 'S. K 222 BULLETIN No. 318 [December, e ' II tf * 0!J Q ^O Z ( S >> s ^ 6- 55 3 o > 31 1 O rH 00 Oi O500O rH >> rHOCO 1C Wedne SS je^Sjt t-(Nt-rH (MOO COO 1 H rH r^ coco * CD CO CO 00 (NCDCN05 Tt< rH COO5 o CT> T*< OOCO 00 O5 OOO CD t^ O rH 08 CO O5 O5 00 t-t-05t- T3 3 (N t^OOO CO O (N O5 rH i 1 rH co eo co t> , 10 "# 10 OS IOTJ4 ^HO OTf OOS CM CO CO 72, il O oco o o (N t^ i-H O (N (N (N O CO IN OS O t^ " 1 0- 00 lOOs (NO 00-* CO CO 0^0 H o o 1 1 1 1 OSO 1 1 os co oo 1 ( T 1 5 oo COIN coo OS 00 OS OS OS 03 T) CO 0^ i-H O Os OS OS OS (NCM "# O t^ i-H CO o> T3 h- o oo * (N 00 oco 00 i-iO (N (N OS i-H co i-( lOOs OS 00 OS OS CO Os Os os 35 OOS (Nb. CO U3 Tt<0 lOO ^0 OSOS^H i 00 00 00 CM 00 CM i-H co i t * o 0000 OS OS 00 H .-1 i-H ^ 00 t^ >> OS CO Tt*0 00 ^HOO t-T-l t-^ 1-H l^ O TJ g O5 * O5 O O CO TJ S (M CO iO - TjH o 2 lO ^^ ^ *j ^ J b- -^ 03 O5 'o7 S *"* 4) ci ^ J 1 '3 CO O5 ^ ^ - -rHO^fO ^H ro CO iM O O3 - CD CO rfi ^ & h in * S. -co -H O IO O5 O5 O O * CO i-i i ( >o 1 t JB 13 fi CO O r-H 1^ O5 t^ i-H CD r-H CO T1 fe O CO O> 1-1 CO O t^- C5 O O - COCO-*'-i tO > . IO 8 1 CD tf t> 10 * g. -00 rH o CD r- o -co O O -00 1-1 I I o Tj< 1 1 r-( CO * 00 1 1 10 ca 02 CD i-H Tf< 2 Uc? I 1 '3 U5 CD C33 g -CO ON r-j ^ 8 "~ co~ S O i i O i i i-H rf T3 4 . . . . cr a 1 : : : :3 g T3 B -.2 o |1 "gg^-3,;^ rj 303 tn 3 U *3 *J "S -3- 5^3^.33 PH > ^OO'H^M o 1 09 | "o > 19S8] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 227 Cream Sold Mostly in Half-Pints. Regardless of the butterfat test within the 20 to 40 percent range, the half-pint is the most popular unit in which cream is distributed to the retail trade (Table 22). In Chicago half -pint retail sales of 22-percent cream were 88.77 per- cent of the total retail cream sales ; in St. Louis they were 44.78 per- cent, and in Peoria, 67.33 percent. Half-pint wholesale sales of 22- percent cream varied from approximately one-fourth to one-third of total wholesale cream sales. A half-pint of cream generally is sufficient to supply the demand of the average household. Quarter-pints are much in demand in St. Louis. Many households now serve coffee only for breakfast, and a quarter-pint of cream for the coffee is usually sufficient for the average sized family. Much wholesale cream is sold in bulk to confectioners who manu- facture their own ice cream, to large hotels and restaurants, and to drug stores that use a large amount of cream and have facilities to handle it in bulk form. In Chicago bulk cream sales constitute about 50 percent of all wholesale cream sold to the regular trade. Establish- ments which use only a small amount of cream generally purchase it in quart bottles, since with limited facilities it is more conveniently handled in that form. Certified Milk Sold Mostly in Quarts. The factors responsible for the popularity of quarts in the sale of regular milk also account for the large percentage of quart sales of certified milk (Table 23). A quart more nearly supplies the average household requirements and generally is less expensive proportionately than are pints. Retail quart sales ranged from 77 percent to 88 percent of the total sales in three markets. Very little of the milk was sold wholesale. Cocoa Drinks Sold Mostly in Pints. Cocoa drinks are ordinarily used in addition to milk. They are regarded by many as a luxury for children, rather than as a milk substitute, and hence they are sold mostly in the smaller units of measure. Cottage Cheese. A variety of volumes are employed in dispensing cottage cheese to the trade. In St. Louis the gallon is the standard measure for bulk sales, while in the other two markets the pound is most commonly used. The largest proportion of this product is gen- erally sold in containers with a capacity ranging from ten ounces to one pound. Proportion of Liquid Milk Products Marketed in Various Forms. The relative distribution of the more important liquid milk products to the retail trade is shown in Table 24 and Fig. 15. Fluid-milk sales constituted approximately three-fourths of total milk sales in the markets of Chicago, St. Louis, and Peoria. Slightly less than one- fourth of all milk sales was sold as cream. The remainder was sold 228 BULLETIN No. 318 [December, f-iO^O^O .... COCi^i-i Oi O CO i| "c fe ^H 00 O 1C .... ^^^QQ Qi CO CO .... 00 1-1 a I 03 CO 2i C^ '3 C^ d CO * 00 00 I s - I s * ^ ?*^ - O *O CO -T-HI to IQ G LC CO Sco ~ 5 < 1 ^ * CC *~O t*** ' ^H ^H ^H O^ t^ So co 1-H H a 5 ,2 "S CO *O t*^ ^^ O5 O5 O5 ^^ I s * ^ H C^3 -^ OOOSi-i^OOO t-OiOOOO O O ? 3 3 .2 ^ X 'O o ^ ^4 ^* ^H 00 O5 ^H CO CO ' * ^ ^H C*^ C^ ^^ o o H 2 D J O5 g :SSSS :^S : : : : s < 'v 3 j -^ i {X r-H Tj<(N 1-H .... d 2 O 00 1 ( s rz: ; s !i "3 i-H O CO T}< >C 00 CO < 2 o 4 T3 "3 ' .... c. O C CO CO.... fl . . . . o 43 1 : 2 : : : ^ 4 c3 S * O 2 . . . . o 5 ^ ^- ' "a? < c ' ' ' ' .2 o i ; i ; o3 : : : o g : : :^-| g : : : ^ : : '.% O ^ ~* CD O C^ ro" "S M bl *~ *l3 -do oj ri J? I : S "i - - _ " ^ ^ ^ ( "^ O ^^SSSS u 230 BULLETIN No. 318 [December, TABLE 24. PERCENTAGE OF TOTAL MILK DISPOSED OF IN RETAIL SALES AS WHOLE MILK, CULTURED MILK, COCOA DRINKS, AND CREAM IN THE CHICAGO, ST. Louis, AND PEORIA MARKETS (Reduced to 3.5-percent milk base) Chicago 1925-1926 St. Louis 1925 Peoria 1926-1927 Milk (excluding certified) 68.77 74.94 79.61 Cultured milk 1.51 1.75 .94 Cocoa drinks .96 .59 Cream 28.76 23.31 18.86 Ratio of milk to cream sales 100.00 2.39:1 100.00 3.21:1 100.00 4.22:1 Volume (pounds) on which per- centages are based 935,380,301 63,578,262 6,902,010 in the form of liquid by-products ; namely, cultured milk and cocoa drinks. From an economic standpoint the most significant point in connection with these data is the ratio of milk to cream sales, since cream is generally the more profitable of the two products. Other 10Q Chicago St. Louie Peoria 40 20 E2Z3 Milk CZ3 Cultured milk Cream Cocoa drinks FIG. 15. PROPORTION OF TOTAL MILK SOLD IN VARIOUS FORMS TO THE RETAIL TRADE IN THE CHICAGO, ST. Louis, AND PEOKIA MARKETS The ratio of milk to cream sales was highest in Chicago, 2.39 to 1, and lowest in Peoria, 4.22 to 1. The St. Louis milk distributors did not handle cocoa drinks. See Table 24 for data on which graph is based. MILK DISTRIBUTION ix FOUR ILLINOIS MARKETS 231 conditions being the same, the larger the portion of the milk supply consumed as cream, the more favorable is the position of the market from the standpoint of the distributor. Chicago, with a ratio of 2.39 units of milk to 1 of cream, has the most favorable position of any of the three markets in this respect. Peoria, with a ratio of 4.22 units of milk to 1 of cream, is in the least favorable position. Several reasons have been suggested for the variation in the ratio of milk to cream sales in different localities. More than three-fourths of the total cream consumed by the regular fluid-milk trade con- tains approximately 22 percent butterfat (Table 22). Since this is used chiefly as coffee cream, it apparently would be logical to believe that climate, nationality, and other factors influencing the amount of coffee used would have some effect upon the rate of cream consumption. Price undoubtedly has considerable bearing upon cream sales. As it is possible to use condensed milk in place of cream, relatively high cream prices would be expected to encourage the use of substitutes. SURPLUS MILK The term surplus milk has acquired various meanings as applied to production and distribution. From the standpoint of the dealer, surplus is sometimes thought of as being milk in excess of fluid-milk sales. It is also regarded as milk in excess of the sales of all dairy products processed and manufactured by the dealer for distribution to the fluid-milk trade. The first definition would include sweet cream within the meaning of surplus milk. This would seem illogical since surplus is generally regarded as a burden to the dealer in a flat-price market, and sweet cream is one of the dealer's most profitable products. In this discussion the term surplus milk, from the standpoint of the distributor, is used to designate all milk in excess of that which is regularly dispensed to the fluid-milk trade in various product forms except that dispensed in the form of butter. Cream, cultured milk, cocoa milk drinks, and cottage cheese are therefore not considered as surplus products but as a regular part of the fluid-milk trade re- quirements. Butter is included as surplus mainly for two reasons. The returns on butter manufactured from excess milk are generally smaller than those incurred from the sales of the other by-products which are regularly dispensed to the fluid-milk trade ; and the aver- age firm does not manufacture butter from excess milk, but does manufacture the other by-products. Since milk sold for manufacturing purposes yields a much smaller gross return than that sold for fluid consumption, dealers in districts where it is necessary to carry a large surplus, and where a flat price is paid producers for all milk, are at a disadvantage when fluid-milk prices are much above those paid by manufacturers. When milk is Bur: N U [December, "i~ed and priced in accordance with ta -. as is the case in - listriets, SOT] s g - tag ;> to the deal' Causes of Dealer's Surplus The Lealer's sar] si from the ope- more f several diffei ;:iiformity in production is by far the most imp< . _ milk. A- .ed on pages IS 2 .:.'.: 33, this m;. ttril 1 1 several liffi Norm: i is ts 1 - - the moir B April. I and June, and the lowest during the late fall and winter months. [jet us sap] res the total milk supply f ten t] is I prod rs 1 i t tl - - milk and j season n the surplus a and pi> per dair _ per- hat amount in ei as the reg ing they purchase only from farmc. Befosal to 1 :-usand dairies wou. _ _ r fluid-milk production. ^ : altho not entirely :rm, is i. : regular as production. The largest variation gener :.g the months of July an : A g ; F :i charge higher when shipping to such mark- Problem Varies With Size of Market Dealers, except I. large on<- itieslarg gbtof -port cream jobl _ - - milk that in smaller cities do not Sh demand for fluid milk temporarily increase, these distributors may the milk thai is regularly a sed demand, and replenish th lired cream su] jobbers. In so doing, deal ra surplus. Distribu I in milk must carry soi si i ' I these i too small to support cream jobber- suiting from recurrent flu* tot larg - incidt; :.ilk and cream from jobbers in *". ities. < a ' emergency E - ssitate the rying surplus. In the small cities not and where the - y small dealer ut not often, contract with farmers to take b'.v - :-f the total weekly milk production durm_ >:ich a contract usually can be made only with farmers having but i- however, for dealers To use this method of avoiding surplus to any great extent. Largest Dealers Carry the Surplus Large dealers, in distrio :here are no regular cream jobbers operating, carry practically all the surplus milk for the n. Even in markets where cream jobbers operate, one or more of the largest dealers generally must carry a surplus owing to the fact that their emergency requirements may be greater than the supply of cream jobbers. The magnitude of the I of large dealers generally enables them to command the requi: ~al for financing the manu- facture of surplus milk. Emergency demands of small dealers ordinarily are not large and may be supplied from any one of several c milk and cream. Often they rely upon large distributors for their incidental needs. Small amounts of milk and cream are occasionally available at ice-cream factories and condensaries located in the district. Small dealers who carry a surplus are generally at a great disadvantage. 234 BULLETIN No. 318 [December, owing to the fact that their surplus output is too small and irregular to command a favorable market outlet. Effect of Dealers' Surplus on Producer Prices There is no escaping the fact that, either directly or indirectly, the amount of surplus milk in a market is reflected in the returns that the producer receives for his milk. In markets offering a flat price for all milk, prices are reduced roughly in proportion to increases in the amount of surplus. In markets where the producer's price is based on the use made of the milk, variations in the amount of surplus cause variations in the pool price. Flat-Price Plan. Two principal plans for the purchase of milk are followed in the state. The bulk of the milk is purchased on a flat price basis ; that is, milk dealers contract to pay one price for all milk for a particular period. At times, however, some modifications are made in this plan. In a few districts, during the surplus season, some of the dealers pay the prevailing milk price for only a definite amount of milk, such amount being based upon producer receipts during one or more previous months of lowest production for the year. Milk in excess of this amount is purchased from the producer at a reduction. In districts where dealers purchase on a flat-price basis, it behooves them to maintain their surplus at a minimum or else take large losses on such milk should the prices which they are paying producers be much higher than prices paid by manufacturers. Generally speaking, the spread between prices paid producers by fluid-milk dealers in these districts and those paid by manufacturers is inversely propor- tional to the amount of surplus that must be carried by milk dealers ; that is, the spread is large when the surplus is small and small when the surplus is large. Consequently, in markets where the flat-price system is operating and dealers of necessity carry considerable surplus, average prices to producers are nearer than otherwise to the general level of manufacturing prices. Price Based on Purpose for Which Milk Is Used. A somewhat more satisfactory plan may be carried out in districts where producers and dealers are well organized. Two or more classifications of the milk supply are made according to the purposes for which the milk is to be used. The prices paid producers for milk sold in fluid form are based mainly on consumer prices for such milk, while prices for milk used for manufacturing are in line with the general price level of manufactured milk products. The adoption of such a plan in the Peoria district has encouraged milk dealers to enlarge their manu- facturing facilities, and thereby has enlarged the market for milk in that particular dairy section. Producers generally take tadvantage of 1928] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 2.'i r ) larger market capacity and increase their production even tho in- creases in surplus will result in lower pool prices. Amount of Surplus in Illinois Markets The amount of surplus milk and the difficulties arising from it have at times been exaggerated in Illinois markets. The various conceptions of the meaning of surplus undoubtedly have been partly responsible. Generally speaking, in flat-price markets conditions of the recent past have enabled dealers to reduce either the amount of surplus milk or the losses generally arising from it, tho there are a few exceptions to this rule. Chicago. The amount of surplus carried by Chicago distributors is less than it formerly was. Furthermore, there are more dealers than formerly that do not maintain any surplus whatever, and those who do have substantially reduced the amount. As previously mentioned, many distributors now depend upon the cream jobbers for additional requirements. It is evident from the data in Table 25, which is representative of a large part of the distribution in Chicago, that a material reduction TABLE 25. PERCENTAGE OF SURPLUS MILK RESULTING FROM DISTRIBUTION OF APPROXIMATELY ONE-THIRD OF CHICAGO'S MILK SUPPLY', 1921-1927 Year Percentage surplus based on total purchases 1921 7.8 1922 6.4 1923 6.1 1924 7 3 1925 3.7 1926 1.9 1927 3.6 'This distribution cannot be taken as representative of the market as a whole, since only the very largest dealers carry a large amount of surplus. In calculating the surplus, all milk and cream purchases were converted to a 3.5-percent butter- fat base. in the amount of surplus has occurred during the seven-year period beginning with 1921. Surplus milk resulting from approximately one- third of Chicago's total distribution declined from 7.8 percent in 1921 to 1.9 percent in 1926, but rose to 3.6 in 1927. The amount of surplus for 1926 was somewhat lower than normal, owing to restrictions in supply resulting from tuberculin test requirements. St. Louis. The large distributors in the St. Louis district handle a large volume of surplus milk. Many large milk plants are equipped with machinery for manufacturing surplus milk into various products, including condensed and evaporated milk, ice cream, and butter. This 236 BULLETIN No. 318 [December, market is not located in an intensive dairy district, nor is it near other large markets. Consequently there are no large cream jobbers upon whom the distributors can depend for additional purchases. Quincy. Surplus milk has never appreciably burdened Quincy distributors. Competitive outlets for milk in this district, except the butterfat markets, are minor in comparison with the milk supply of the district. A potential supply much larger than the demand of this fluid-milk market is available at the fluid-milk price practically thru- out the entire year. Adequate transportation facilities make it pos- sible for Quincy distributors to command this supply on short notice. This market, like Chicago and St. Louis, purchases on a flat price basis. Peoria. The Peoria market receives considerable surplus milk. Thru the operation of a milk marketing plan producers are paid manu- TABLE 26. MONTHLY VARIATION IN SURPLUS MILK IN PEORIA MARKET 1 OCTOBER 1, 1926, TO JANUARY 1, 1928 (Based on approximately 90 percent of total distribution to fluid-milk trade) Year Month Percentage surplus 1926 October 23.62 November 23.47 December 22.37 1927 January 23.07 February 31.78 March . . .... 29.36 April . 36.04 May 51.32 June 58.73 July 55.41 August 52.20 September 43.51 October 39.29 November 33.01 December 32.98 Prices paid for surplus milk in this district are based on wholesale butter prices and are less than those paid for the milk used for fluid consumption. facturer's prices for their surplus. The amount of surplus in the Peoria district has been increasing during the past year (Table 26). The minimum surplus for the year 1927 was 23.07 percent and occurred during January, while in June a maximum of 58.73 percent accumu- lated. Disposal of Surplus Milk Surplus milk may be converted into a variety of manufactured products. A large portion in most markets is manufactured into 1928] MILK DISTRIBUTION IN FOUK ILLINOIS MARKETS 237 condensed and evaporated milk. Milk, when manufactured in this form, is considerably reduced in volume and greatly enhanced in keep- ing quality, enabling it to be stored in a small space for long periods of time. Some dealers operate condensing pans in connection with their milk plants ; others operate condensaries and evaporating plants in the districts of production. The amount of surplus milk that is condensed and evaporated by Chicago distributors is much less than formerly (Table 27). These distributors, as a rule, must sell their condensed product at wholesale prices, as their output is too irregular for the development of a favor- able retail market. Consequently in flat-price markets dealers often can reduce their losses on surplus milk more effectively by selling the milk direct to condensed-milk manufacturers who have an established retail trade, than by condensing it themselves. Eastern sweet-cream markets now provide an outlet for much of the surplus milk of Chicago. TABLE 27. DISPOSAL OF SURPLUS MILK RESULTING FROM DISTRIBUTION OF AP- PROXIMATELY ONE-THIRD OF CHICAGO'S MILK SUPPLY, 1921-1926 Year Evaporated Sold to manufacturers 1 1921 perct. 42 perct. 58 1922 42 58 1923 36 64 1924 11 89 1925 19 81 1926 13 87 'Milk was sold both in regular form to condensing and evaporating plants and as cream chiefly to ice-cream manufacturers in other cities. Very few Chicago distributors manufacture any large amount of butter from surplus milk, even tho sales of butter on retail routes are large. The major portion of the butter dispensed thru this sales channel is purchased in the open market. Unlike Chicago distributors many large distributors in St. Louis, Peoria, and Quincy manufacture much of the butter for the milk route trade. The butter, which is made of sweet cream from whole milk, is of excellent quality and generally commands a premium on the routes. However, unless some profitable disposition is made of the skim milk resulting from the separation of the cream for butter- making, the manufacture of surplus milk into butter generally proves a costly means of disposing of it. Large milk distributors in down-state sections somewhat generally engage in the manufacture of ice cream and thereby provide a more remunerative outlet for surplus milk than that provided by the usual 238 BULLETIN No. 318 [December, sales channels. This surplus outlet is especially well adapted to dealers having a large wholesale milk trade. With such a combination, sales and delivery costs per unit of product may be maintained within very reasonable limits. Skim-Milk Disposal Milk distributors that have a large sweet-cream trade or those that manufacture their surplus milk into butter have large quantities of skim milk to dispose of. In the past much of it was allowed to run into the sewer since it was generally considered difficult to utilize it in a manner that would pay handling charges and yield a profit. Cultured milk and cottage cheese manufacture provide favorable out- lets but the demand for these products is relatively small in proportion to the available supply of skim milk. Farmers use skim milk for feed- ing purposes, but the demand for this purpose does not always com- mand a price that will defray handling charges. In recent years much of this skim milk has been converted to powdered form, and this seems to be a fairly profitable manner of disposal. The demand for powdered skim milk has been increasing, and the price has been sufficiently high to return the average manu- facturer a profit above the total cost of production. Research in animal nutrition has demonstrated beyond doubt its feeding value and thereby increased the demand for it- Manufacturing of skim-milk po\vder, however, is applicable only to large-scale production. The original investment, covering installation, machinery, and equipment costs, together with the costs of operation, require large outlays of capital and volume production is necessary for profitable operation. The greater portion of the skim-milk powder made from the surplus of milk distributors is therefore manufactured in dairy districts which support large distributing organizations. Chicago being a large cream market, it is obvious that dealers would handle a large amount of skim milk. A substantial portion of this is used in the manufacture of skim-milk products. Figures based on an average annual skim-milk production of more than 100 million pounds for the years 1921 to 1926, indicate that more than 50 percent of that used for the manufacture of by-products was converted into powder (Table 28). Less than 5 percent was used for casein manu- facture. The amount used in the manufacture of cocoa drinks and soft cheese has been steadily increasing. In 1926 approximately 6 percent of the total output represented in the table was used for making cocoa drinks and about 3 percent for soft cheese manufacture. During the six-year period farmers purchased large quantities of fikim milk from country bottling plants for feeding purposes. Sales 1928] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 239 TABLE 28. YEARLY DISPOSAL OP SKIM MILK IN CHICAGO, 1921-1926 (Figures indicate percentage of total yearly supply and are based on average yearly skim-milk production of more than 100 million pounds) Disposition and uses 1921 1922 1923 1924 1925 1926 Sold to trade 1 15.49 12.02 15.30 11.57 12.42 14.84 Sold to farmers 54.70 54.19 9.88 46.31 32.63 12.74 Cultured milk manufacture 10.16 8.50 9.13 7.23 8.30 11.70 Cocoa drink manufacture 2.16 3.50 5.85 Soft cheese manufacture .50 1.14 1.24 1.59 3.04 Powdered milk manufacture. . . . Casein manufacture 15.85 3.80 24.79 54.43 3.69 26.21 5.28 33.46 1.18 36.80 .51 Condensed skim-milk manufac- ture . 6.43 6.92 14.52 Total 100.00 100.00 100.00 100.00 100.00 100.00 Principally to manufacturers. to farmers, however, declined from 54.7 percent of total skim milk handled in 1921 to 12.74 percent of that carried in 1926. It is ex- pected, that farmer purchases will continue to decline, owing to the fact that dealers are gradually discontinuing the bottling of milk in the country, since tank-car shipments, because of their greater economy, are gradually supplanting case shipments. Very little, if any, skim milk is sold to the retail trade, as the cost of delivery is out of proportion to its value as a food product. Of the amount that was sold for all purposes in the period covered by this study, manufacturers purchased the greater portion. The average annual amount sold to the trade was approximately 13 percent of the total. COSTS AND MARGINS IN MILK DISTRIBUTION But little information has been available to the public heretofore concerning costs and margins in the business of milk distribution. Marketing agencies as a whole have been reluctant to submit complete sets of cost records for inspection and publication, and furthermore the various systems of keeping records has made the securing and com- piling of such information difficult. The cooperation of a representative number of milk dealers in the four leading markets of Illinois made possible this publication of facts relating to distribution costs. In the compilation of the data many difficulties were encountered, principally on account of the diversity of methods used in keeping financial records, but most of such diffi- culties have been overcome in so far as practical considerations are concerned. One obstacle nearly always met when compiling cost records of various organizations is that of varying fiscal years. The records 240 BULLETIN No. 318 [December, used in this survey were based upon twelve-month periods beginning as early as November 1 and as late as May 1. The greater part of them, however, began on January 1. Since neither the time nor the necessary data were available to rearrange the costs so as to base them on exactly the same period, the figures in the annual cost tables do not always represent the same identical period tho they do in every case represent twelve months of operation. The fiscal year is given as the calendar year that includes the greater portion of the twelve-month period. From a practical standpoint, the resulting inconsistency would appear insignificant, since no abrupt changes occurred during the period covered by the study in the distribution costs in any of the districts surveyed. Because of different systems of accounting used by different com- panies it was necessary to adopt rather general classifications in sum- marizing expense data. A brief description of these follows : Net Sales. These consist of the gross receipts from the sale of milk and milk products less discounts and allowances. Wholesale as well as retail sales were included in so far as wholesale sales were made by the dealers whose records w r ere studied. Some of the firms handled bulk milk as a part of the wholesale business. Cost of Product. Under this head is included the net cost of all milk and milk products that were sold plus milk that was lost in the process of marketing and usually referred to as shrinkage. Records were not always kept by all of the cooperating distributors of the loss of milk that occurred during distribution, but the data that were available for the various districts indicate that this loss was about the same in all and hence similar to that shown for the Chicago dis- trict in Table 44 in the Appendix, which averaged about 1 percent of the total milk purchased. Gross Margin. The gross margin is the difference between net sales and the cost of the product. If an organization is to yield a net profit upon its regular business operations, this gross margin must of course be larger than the total of all expenses. Purchasing, Receiving, and Processing Expense. This classifica- tion is practically self-explanatory. The expense incurred generally began with costs of soliciting milk in the country and terminated after the milk had been processed, bottled, and loaded in wagons or trucks at the loading platform of the pasteurization plant. Some of the dealers, howerver, who cooperated in this work did not operate country receiving stations. All container costs, including cans, cases, and bottles, were charged under this classification. Selling and Delivery Expense. Under selling and delivery are in- cluded all expenses incurred in advertising and promoting the sale of 1928] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 241 milk and in its delivery. It includes rent of barns, garages, and all other buildings such as stores or distributing stations which may be considered necessary to selling, and the maintenance of horses, wagons, motors and any other equipment used in the distribution of the prod- uct. The initial stage of delivery began at the loading platform of the pasteurizing plant after the product had been loaded for the milk salesmen. Where distributing branches were operated, the expenses of transporting the product from the pasteurizing plant to the dis- tributing branch, plus unloading, refrigeration, reloading, and other related expenditures, were put in this classification. Wages con- stituted considerably more than 50 percent of the expenditures in this group. General and Administrative Expense. The greater portion of the expense in this group included executive and general office salaries. In addition, a few general costs are included which could not be placed elsewhere without complication. Taxes may be given as an example of such an item. Net Income. This is the portion of the income remaining after all expenses are subtracted, and represents earnings on investment. It is available for dividends to stockholders, expansion of the business, compensation for business risks, as well as for certain types of taxa- tion. In adverse years expenses of some firms were found to be greater than gross margins, which meant that the business during that fiscal year had been operated at a loss. Depreciation is not given a separate heading but was charged against the property used in each of the other classifications. Distribution of the Consumer's Dollar The distribution of the costs involved in the marketing of fluid milk in the Chicago, St. Louis, Peoria, and Quincy areas for different periods during the years 1924 to 1927 are shown in Table 29 and Fig. 16 on a percentage basis. By reading 100 as 100 cents, or $1.00, and the other figures in the same way, the reader can see what costs and what margin of profit entered into each dollar which the consumer paid for fluid milk. It is believed that the figures in this table give an accurate picture of the cost of distribution in so far as the records of the companies co- operating in this study are representative of the different markets. It must be emphasized, however, that conditions in the four markets are by no means identical, and any attempt to pass judgment upon the comparative efficiency of their agencies of distribution might prove misleading. At best, only a rough parallelism can be established 242 BULLETIN No. 318 [December, TABLE 29. COSTS AND MARGINS IN MARKETING FLUID MILK IN FOUR MARKETS SUPPLIED BY ILLINOIS PRODUCERS (Expressed in percentages of net sales) Chicago 1925-1926 St. Louis 1924-1926 Peoria 1924-1926 Quincy 1924-1927 Net sales 100.00 100.00 100.00 100.00 Cost of product 45.68 51.44 65.87 69.18 Gross margin 54 32 48 56 34.13 30.82 Purchasing, receiving, and processing expense 15.20 10.77 16.26 12.36 Selling and delivery expense . . General and administrative expense 32.14 3.54 29.92 2 75 9.95 6.18 12.48 3.22 Total expense. . . . 50 88 43 44 32 39 28.06 Net income 3.44 5.12 1.74 2.76 Percentage of distribution on which figures are based 35 to 45 25 to 40 50 to 60 45 to 55 Note. The major part of the sales in these markets excepting Peoria were retail sales. The wholesale sales included bulk milk sales. among the markets, and the reader must bear this in mind thruout the discussion. Not only prices, but ratio of wholesale sales to retail sales, affect total receipts from milk sales. Obviously the total money received from a given quantity of milk will be larger if sold at retail prices than if sold at wholesale prices. The ratio of wholesale to retail sales varied somewhat according to locality. In the Chicago, St. Louis, and Quincy markets wholesale sales are only a small percentage of total sales. In the Peoria market they represent more than 50 percent of the net sales. In this market a large proportion is delivered by inde- pendent route owners, and it was therefore impossible to obtain enough data based on retail sales to furnish an accurate basis for com- paring the data of this market with the data of the other markets. Gross Margin, Since the gross margin is the spread between the price the dealer pays for milk and the price at which he sells it, we should expect margins to vary among markets, as prices are not uni- form thruout. Producer milk prices, as well as consumer prices, have averaged higher in Chicago than in any of the other three markets. The gross margin in this market must necessarily be large in order to meet the high costs of distribution. In Quincy, where distribution costs have been lowest, the spread is smallest. This particular market is somewhat unique, however, in that its consumer prices have been lower than those in any of the other markets while prices paid pro- ducers have compared rather favorably with those of the other markets. 1928] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 243 Total Expense. Approximately 51 cents of the consumer's dollar was utilized for total expense of distribution in the Chicago market. In St. Louis about 43 cents was required. In Quincy, the lowest of the four markets, 28 cents was needed; in Peoria, 32 cents. Since 100 Chicago St. Louis Peoria Quincy YJ_A Cost of product II I ll Purchasing, receiving and processing ES Selling and delivery exp. I J General and administrative expense DO Net income FIG. 16. COSTS AND MARGINS IN MILK DISTRIBUTION IN FOUR MARKETS The total length of each bar represents a sales dollar. In Chicago and St. Louis, where marketing costs are higher, the producer received a smaller part of the con- sumer's dollar than in Peoria and Quincy. See Table 29 for data on which graph is based. wages make up a large portion of this expense, total expenses were naturally higher, relatively, in the larger markets. Union labor handles the milk supply of both Chicago and St. Louis, but the rate of wages is much higher in Chicago. Purchasing, Receiving, and Processing, The character of the rec- ords made it impossible to break down this classification into three sep- arate accounts. Since some of the dealers whose businesses were studied combine these expenses into one account and others combine some two of them, it was necessary in this study to consolidate them. Purchasing and receiving expenses were naturally higher in the Chi- cago and St. Louis markets, where country receiving stations were operated. In Chicago approximately 15 cents of each dollar was used to de- 244 BULLETIN No. 318 [December, fray the costs in this classification; in St. Louis 11 cents was used; in Peoria, 16 cents ; and in Quincy, 12 cents. In Peoria processing made up a larger proportion of the sales dollar than in the other mar- kets owing to the fact that the sales there were chiefly wholesale and delivery expenses therefore low. Selling and Delivery Expense. Approximately 32 cents of the con- sumer 's dollar was required to sell and deliver milk in Chicago; in FIG. 17. AVERAGE DISTRIBUTION OF THE MILK CONSUMER'S DOLLAR IN FOUR ILLINOIS MARKETS, 1925-1926 In these markets approximately 46.9 cents of the consumer's dollar goes to the producer. Distribution expenses have used 49.7 cents, and 3.4 cents has been left as net income to the dealer to cover interest on investment, business risks, etc. (Table 29) St. Louis 30 cents. In both markets this expense was much higher than the total of all other distribution expenses. The wage rate paid drivers was largely responsible for this fact. In Peoria less than 10 cents on each dollar was required to meet the expense of selling and delivery, while in Quincy about 12!/2 cents was required. In Peoria and Quincy the dairy employees receive lower wages, and this was reflected in lower selling and delivery costs. Low delivery costs in Peoria, how- ever, may be partly ascribed to the fact that the milk business was largely wholesale. General and Administrative Expense. These costs made up only a small part of the total expense. With the exception of Peoria, an outlay of less than 4 cents of the consumer's dollar was used for gen- 1928] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 245 eral and administrative costs. Since this expense is about the same for either wholesale or retail distribution, it would be highest per sales dollar in the market having the largest wholesale business provided other conditions were the same. Hence this expense, on the basis of the sales dollar, was highest in Peoria, where 6.18 cents was required. Net Income. The average profit per sales dollar varied from 1.74 cents in the Peoria market to 5.12 cents in St. Louis. In the Chicago market the dealers realized 3.44 cents and in Quincy 2.76 cents. Net losses from a year's business operations were seldom encountered. Average Distribution of the Consumer's Dollar in Four Markets. The data obtained from the cooperating firms in the four markets are combined in Fig. 17 to show the average distribution of the consumer's dollar. While these data are for large markets, and hence are not truly representative of the cost in small Illinois cities, these markets absorb more than 50 percent of the total milk produced in Illinois for fluid consumption and the data therefore have considerable signifi- cance. The average distribution of the consumer's dollar for all four mar- kets is very similar to that for the Chicago market, as will be noted by comparing Fig. 17 with Table 29. This is to be expected since the dis- tribution on which the Chicago figures are based is much greater than the combined distribution represented in the other three markets. Distribution of Consumer's Quart Price When the total monetary receipts of all milk dealers operating in a market are divided by the total quantity of milk sold, it is found that the average selling price of a quart is considerably less than the retail quart price. This is due to the fact that dealers in fluid milk dispense milk to the trade in different forms, in a variety of units, and at various prices. In the Chicago market the wholesale quart price is 13 cents, which is one cent less than the retail quart price. The price of wholesale gallons, when sold in lots of 5 to 20, generally ranges from 32 to 40 cents, which is at the rate of 8 to 10 cents a quart. Again, a quart of 22-percent cream retails for 64 cents, and approxi- mately 6.3 quarts of milk containing 3.5 percent of butterfat are re- quired to yield a quart of 22-percent cream. Hence each quart of milk sold as 22-percent cream yields a gross return of approximately 10 cents, or 4 cents less than the retail quart price for milk. Even distributors who supply only the retail trade usually fail to realize an average return per quart equal to the retail price of a quart bot- tle of milk. The average price per quart for retail milk sales in the Chicago 246 BULLETIN No. 318 [December, district for the two years 1925 and 1926 (based on approximately 18 percent of the total distribution) was 12.9 cents, which is 1.1 cent less than the retail price for milk in quarts (Table 30). The total cost of marketing the retail quart was 7.1 cents. Of this amount about 4.6 cents was spent for selling and delivery. After the retail dealer had paid the farmer for his milk and had met the expenses of TABLE 30. DISTRIBUTION OF THE CONSUMER'S AVERAGE PURCHASE PRICE FOR RETAIL MILK AND MILK PRODUCTS ON THE BASIS OF A QUART OF 3.5 PERCENT MILK (Based on total retail sales for all volumes, involving an average distribution of ap- proximately 200 million pounds yearly. At least 95 percent of the sales were retail.) Customer's purchase price cents cents 12.9118 Cost of milk 5.3294 Gross margin 7.5824 Purchasing, receiving, and processing expense 2.1968 Selling and delivery expense 4.5988 General and administrative expense .3160 Total expense 7.1116 Net income .4708 marketing, he had a net income of approximately one-half cent a quart. Since this study was made, wages for all dairy employees in the Chi- cago market have been increased $5 a week. This increase in wages has been offset in some cases by better distribution methods. Many dealers have effected savings by increasing the efficiency of labor in their plants and by combining milk routes. Analysis of the Expense Dollar A detailed analysis of the expenses incurred in the process of dis- tributing milk in the Chicago, St. Louis, Peoria, and Quincy markets is shown in Tables 31 to 35. By combining certain accounts general expense classifications have been made that render the figures for the different districts fairly com- parable (Table 31). The individual detailed accounts of each district (Tables 32 to 35) which make up the general expense classifications usually are not comparable. In one district, for example, the labor account may include wages and commissions, while in another it may refer only to wages. Lack of uniformity in accounting was respon- sible for this variation among districts. The data in Table 31 are shown graphically in Fig. 18. 1928] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 247 TABLE 31. EXPENSES INCURRED IN MARKETING FLUID MILK IN FOUR MARKETS SUPPLIED BY ILLINOIS PRODUCERS (Figures indicate percentage of total expenses absorbed by each item) Chicago 1925-1926 St. Louis 1924-1926 Peoria 1924-1926 Quincy 1924-1927 Labor, salaries, and com- missions 65.11 49.49 43 56 50 94 Processing and operating, materials and supplies . . Taxes 10.81 .72 17.40 .98 12.36 .92 19.04 1 49 Insurance 1.07 2.12 2.84 1 47 Depreciation 3.63 8.90 8 43 7 03 Rentals .57 .93 3 74 Transportation 9.21 4.97 .59 .09 Communication .37 .35 .61 25 Professional services .15 .56 .77 .44 Unclassified 1.75 6.27 8.20 5.61 Advertising 1.65 1.74 6.39 3.55 Repairs, maintenance, and construction supplies . . . Operating services 3.97 .99 4.22 2.07 8.91 2.68 4.97 5.12 Total 100.00 100.00 100.00 100.00 Approximate average an- nual volume (pounds) on which percentages are based 40,000,000 40,000,000 10,000,000 6,000,000 Labor, Salaries, and Commissions. A larger share of the expense dollar was used in defraying the combined expense of labor, salaries, and commissions than for any other expense grouping. In Chicago as much as 65 cents in each dollar was used for this purpose. Of this amount the major portion was paid to route salesmen. Each Chi- cago milk driver, during the period covered by these data, received a minimum wage of $45 a week plus commissions, the commissions being paid on the basis of sales points. 1 A point was credited to the driver for the sale of a quart or pint of milk or a half -pint of cream, and a half -point was allowed for a third-quart or half-pint of milk (Table 45, Appendix). Six-tenths cent per point was paid to drivers for all points acquired in a week in excess of 1,333. By referring to Table 36 we find that the average retail driver in Chicago during these two years had a weekly total of 2,097 points. Hence on the basis of these figures the average weekly commission was approximately $4.58. This does not take into account the additional commission on eggs, butter, cheese, and a few other products. For the sale of each dozen of eggs, pound of butter, or package of cheese containing 10 to 16 ounces, the driver received one cent. Six dollars and twenty-five 1 Beginning May 1, 1927, the minimum wage was increased $5 a week for all unionized employees in dairies, as mentioned on page 246. 248 BULLETIN No. 318 [December, IQQ Chicago St. Louis Peoria Quincy 30 EZ3 iiiiiiin i i i ii _ fflfflnill Labor, salaries, and commissions Processing and operating materials and supplies Taxes Insurance Depreciation Rentals Transportation nnm Communication Professional Unclassified Advertising Repairs, maint., and construct, supplies Operating services FIG. 18. ALLOCATION OF DISTRIBUTION EXPENSES IN FOUR MARKETS Amounts spent for labor, salaries, and commissions were smallest in Peoria, where much of the milk is delivered by inde- pendent route owners. Table 31 shows figures on which graph is based. cents has been estimated as the total weekly commission paid for retail delivery. The relief man for the seventh day received a total com- pensation of about $9. Hence the wage cost of operating a retail milk wagon for a week of seven days was approximately $60. 1988] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 249 The majority of the wholesale drivers in Chicago did not receive commissions, but were paid salaries of $48 per week of six days. If to these wholesale and retail driver expenses are added the cost of a two- weeks vacation period for each man and the salaries paid for route supervision and inspection, the expenses per week are increased several more dollars. In St. Louis the system of payment was somewhat different. The retail drivers received a minimum salary of $35.75 per week 1 plus commissions. Commissions were calculated on a monthly base, one cent per point being paid retail drivers for all points over 6,250. Re- lief drivers were paid $42 a week. Wholesale drivers received one- half cent per point for all points in excess of 12,500 plus a minimum salary of $37 a week. In comparing the two large markets the reader should not overlook the fact that sales points did not always repre- sent the same sales units in the two localities. The differences are in- dicated in Table 45 of the Appendix. The amount paid any other single class of employees was gen- erally less than that paid drivers. Officers' salaries in every instance were only a small percentage of the total expenses of this group. A fraction less than 50 cents of the expense dollar was used to pay the costs of labor, salaries, and commissions in St. Louis. About the same amount was required in Quincy, while in Peoria this expense was about 6 cents less. Processing and Operating, Materials, and Supplies. This was the second largest group of expenses, ranging from approximately 11 to 19 cents per expense dollar in the different districts. Bottle costs were one of the largest items in this classification. In Chicago, St. Louis, and Quincy they made up approximately one- fourth of it (Tables 32, 33, and 35). The expenses for other con- tainers, such as cans and cases, was by no means negligible. Very few people other than distributors realize the extent of the loss incurred in the use of bottles for distributing milk. Many are broken in the process of handling, while others permanently pass out of the possession of their owners in a variety of ways. Certain large Chicago firms during the year 1926 had to replace their quart bottles that were in daily use about every twenty-five days. Pints had to be replaced in slightly less than half of that time. Cheese jars lasted only about 4 daily delivery trips (Table 46, Appendix). Bottle losses in Chicago, even tho large, are believed to be as small as, or smaller, 1 St. Louis drivers, both wholesale and retail, were not put on a six-day week working basis until September 15, 1926. From September 25, 1924, to September 15, 1925, they were allowed a day off every 14th day ; from September 15, 1925, to September 15, 1926, they were allowed every 10th day. 250 BULLETIN No. 318 [December, TABLE 32. ALLOCATION OF EXPENSES INCURRED IN FLUID-MILK MARKETING IN CHICAGO, 1925-1926 (Based on average yearly milk distribution of approximately 40 million pounds) Percentage Percentage of total expenses Labor, salaries, and commissions i lountry - l.tifi Motor transportation 1.81 City processing 7.91 General plant 3.76 Platform 2. 85 Barn 4.13 Route sales 68.64 General sales 5 . 07 General administration 4.15 100.00 Processing and operating, materials, and supplies Supplemetary ingredients (chocolate, salt, etc.) 3 . 87 Bottles and bottle caps 28.91 Butter and cheese containers 1 . 87 Cans, cases, and crates 6.09 Ammonia and coarse salt .19 Coal 11 . 74 Gasoline, oils, and grease 1 . 37 Ice 12.09 Lighting supplies (lanterns, oil, electric bulbs, etc.) .72 Cleaning supplies 1 . 39 Laboratory supplies .03 Small tools .05 Tires .01 Horse feed, bedding, and miscellaneous 26.40 Stationery and office supplies 3.90 Miscellaneous (milk tags, bottle carriers, etc.) 1.37 100.00 Taxes Insurance. . . . Depreciation Auto trucks 5.93 Horses, wagons, and equipment 28. 38 Buildings 17.79 Fixtures 4.24 Machinery and other dairy equipment 43 . 66 Rentals General plant, sales stations, tank cars, barn and stables, etc. Transportation Miscellaneous country and general. Freight and cartage to city Trucking city 100.00 .59 79.03 20.38 100.00 65.11 10.81 .72 1.07 3.63 .57 9.21 1928] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 251 TABLE 32. ALLOCATION OF EXPENSES INCURRED IN FLUID-MILK MARKETING IN CHICAGO, 1925-1926 Concluded (Based on average yearly milk distribution of approximately 40 million pounds) Percentage Percentage of total expenses Communication Postage, telephone, and wires Professional services Collection, legal, accounting, and veterinary. Unclassified Country and city processing 6 . 70 Memberships and dues 6 . 70 Subscriptions and donations 6.05 Property damaged 1 . 72 Interest paid 7.97 Reserved for bad debts 54 . 45 Miscellaneous 16.41 100.00 Advertising Repairs, maintenance, and construction supplies Buildings 5. 44 Machinery and equipment 10. 36 Can repairs 1.09 Autos 1 .32 Furniture, fixtures, and equipment 1 . 77 Construction materials, (lumber, pipe, iron and steel, paints, oils, wire, etc.) 2. 33 Repair parts 2. 56 Horses 24.41 Wagons 45.32 Harness 5.40 100.00 Operating services Light 17.62 Power 25.49 Water 19 . 68 Hauling 4.25 Messenger 3.40 Towel service 4 . 73 Miscellaneous (auto service, laboratory, calculating, etc.) 24 . 83 100.00 Total expenses . .37 .15 1.75 1.65 3.97 100.00 relatively, than those in the other districts, owing to the efficient meth- ods of bottle recovery employed in that market. A large part of the expenses in this classification were for delivery and other transportation costs. Of the other expenditures, fuel and ice were generally the largest in each of the four districts. 252 BULLETIN No. 318 [December, TABLE 33. ALLOCATION OF EXPENSES INCURRED IN FLUID-MILK MARKETING IN ST. Louis, 1924-1926 (Based on average yearly milk distribution of approximately 40 million pounds) Percentage Percentage of total expenses Labor, salaries, and commissions Salaries 14.65 Wages and labor 77. 19 Commissions 8. 16 100.00 Processing and operating, materials, and supplies Cans and cases 9 . 27 Manufacturing .56 Butter and cheese containers 3 . 75 Bottles and bottle caps 24 . 64 Refrigerating agents (ammonia, calcium chlorid) .73 Uniforms, including laundry .47 Fuel 6.72 Ice 4.44 Small tools .09 Lighting supplies .26 Miscellaneous supplies and expenses 2.48 Sanitary supplies 2. 17 Laboratory supplies .24 Stationery and office supplies 2 . 59 Horse feed, bedding, and miscellaneous 16.89 Gas, oil, and grease 15. 70 Tires 8.55 Garage and auto supplies .45 100.00 Taxes Insurance Depreciation Buildings 1 . 37 Office furniture .63 Machinery and equipment 24.44 Trucks 32.92 Delivery stations 40 . 12 Water system .52 100.00 Rental Transportation Hauling 99.52 Freight and cartage to stations .48 100.00 Communication Postage, telephone, and telegraph Professional services Legal, auditing, veterinary, collection 49.40 17.40 .08 2.12 8.90 .03 4.97 .35 .58 19S8] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 253 TABLE 33. ALLOCATION OF EXPENSES INCURRED IN FLUID-MILK MARKETING IN St. Louis, 1924-1926 Concluded (Based on average yearly milk distribution of approximately 40 million pounds) Percentage Percentage of total expenses Unclassified Fees and dues 2.51 Bonuses 1 . 57 Interest and premiums 19 . 07 Cash deficit .40 Loss on property 33 . 62 Loss on merchandise .37 Bad debts 4.79 Miscellaneous 30. 66 Personal injuries and property damages 1 . 72 Commercial service 1 . 22 Subscriptions and donations 2.96 Equipment written off 1.11 100.00 Advertising Repairs, maintenance, and construction supplies Buildings 3.21 Repairs on furniture, fixtures, and equipment 1 . 00 Repairs on machinery and equipment 27 . 95 Repairs on outside improvements .91 Repairs on cans and cases 2 . 90 General supplies and repairs 8. 77 Motor repairs 43. 23 Harness repairs 2 . 39 Wagon repairs 9 . 64 100.00 Operating services Light and power 62. 52 Water 17. 4f Towel service 1 . 45 Laboratory service 2. 76 Miscellaneous (testing milk, storage and commission, returned bottle expense, etc.) 15.80 100.00 Total expenses 8.27 1.74 4.22 2.07 100.00 Taxes. Licenses are included under this classification. All taxes except those paid on income to the Federal government are a part of this figure. The more important items included in this classification are state franchises and corporate fees, personal and real property and vehicle taxes, and fees for milk licenses. The total outlay for these expenditures was in every district less than 1.5 percent of all expenses. 254 BULLETIN No. 318 [December, TABLE 34. ALLOCATION OF EXPENSES INCURRED IN FLUID-MILK MARKETING IN PEORIA, 1924-1926 (Based on average yearly milk distribution of approximately 10 million pounds) Percentage Percentage of total expenses Labor, salaries, and commissions Labor.. 712.00 Salaries and commissions 27 . 94 100.00 Processing and operating, materials, and supplies 10.69 Ice 6.31 General supplies 80. 67 Stationery and office supplies 2 . 33 100.00 Taxes Insurance. . . . Depreciation Buildings 27. 53 Furniture and fixtures 7. 62 Machinery and equipment 40 . 49 Auto trucks 21 .46 Horses and wagons 1 . 87 Miscellaneous 1 . 03 100.00 Rentals Transportation Freight, drayage, and storage Communication Postage, telephone, and telegraph Professional services Medical, auditing/legal, and collection. Unclassified Loss on stock and property sales 7 . 36 Loss on bad debts 23 . 58 Interest paid 48 . 92 Miscellaneous expense 12. 71 Fees and dues 4. 72 Donations 2. 71 100.00 Advertis'ng Repairs, maintenance, and construction supplies Buildings 3.64 Furniture and fixtures .09 Machinery and equipment 16.90 Autos and wagons 64 . 18 General supplies and repairs 15. 19 43.56 12.36 .92 2.84 8.43 3.74 .59 .61 .77 8.20 6.39 100.00 8.91 19S8] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 255 TABLE 34. ALLOCATION OF EXPENSES INCURRED IN FLUID-MILK MARKETING IN PEORIA, 1924-1926 Concluded (Based on average yearly milk distribution of approximately 10 million pounds) Percentage Percentage of total expenses Operating services Light and power 49 26 Water 42 22 Towel service 6.06 Miscellaneous (garbage hauling, scale, boiler and elevator in- spection) 2.46 100.00 2.68 Total expenses 100.00 Insurance. The disbursements for insurance covered in most cases three types of risk; (1) loss by fire, theft, etc., of real and personal property; (2) loss by death of employer or employee; and (3) loss by accident, either to employees or to any person or property the blame for which could be placed upon the company. Insurance in all four districts was only a small part of total expenses, ranging from 1.07 to 2.84 cents per expense dollar. Better buildings which are less subject to fire and other destructive forces, more efficient use of build- ings, materials, and equipment may have been partly responsible for the comparatively low insurance expenditures per unit in the Chicago district ; and again some corporations may have borne a larger portion of their own insurance risk than others without charging it especially as an insurance item. Depreciation. Depreciation costs were variable, ranging from 3.63 cents per dollar of expense to 8.90 cents. The variation may be attributed primarily to the different policies of the several cooperating companies in handling these costs as well as to the type of buildings and equipment. The policies of a business organization in regard to its accounting methods are usually controlled by the head account- ant. Since the personal element is thus involved in the estimates upon which depreciation rates are based, considerable variation among com- panies would naturally be expected. Rentals. The fact that most milk dealers included in the survey have been established for a long time, and for this reason own most of their buildings and equipment, would in a large measure account for the low rental costs. These were practically negligible in all mar- kets except Peoria, where 3.74 cents of each expense dollar was used. In individual districts, however, conditions may be such as to make it more economical to rent than to purchase outright. 256 BULLETIN No. 318 [December, TABLE 35. ALLOCATION OP EXPENSES INCURRED IN FLUID-MILK MARKETING IN QUINCY, 1924-1927 (Based on the average yearly milk distribution of approximately 6 million pounds) Percentage Percentage of total expenses Labor, salaries, and commissions Salaries 21.02 Wages and labor 56. 57 Commissions 22 . 41 100.00 Processing and operating, materials, and supplies Cans, cases, crates 7 . 54 23.07 General supplies (butter supplies and ingredients, and plant sup- plies, etc.) 28. 66 Office supplies 2.13 Horse feed and miscellaneous expenses 15. 73 Gas and oil 9 . 02 Fuel 13.85 100.00 Taxes Insurance. . . Depreciation Buildings 17.63 Office furniture and equipment 2 . 69 Machinery and equipment 51 . 03 Auto trucks 12.07 Horses, wagons, etc 16. 58 100.00 Transportation Freight and drayage in Communication Postage, telephone, and telegraph . Professional services Auditing and veterinary services. . Unclassified Miscellaneous expenses 59.49 Loss on equipment junked 1 . 64 Loss on equipment sold 14.44 Interest paid .20 Bad debts 19.30 Discounts milk checks .35 Subscriptions and donations 4 . 58 100.00 Advertising. 50.94 19.04 1.49 1.47 7.03 .09 .25 .44 5.61 3.55 1988] MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 257 TABLE 35. ALLOCATION OF EXPENSES INCURRED IN FLUID-MILK MARKETING. IN QUINCY, 1924-1927 Concluded (Based on the average yearly milk distribution of approximately 6 million pounds) Percentage Percentage of total expenses Repairs, maintenance, and construction supplies 24.24 Machinery and equipment 30.72 Cans, crates, cases 3.22 Auto trucks 24.80 17.02 Operating services Power and light 100.00 50.72 4.97 Water 45.25 4.03 100.00 5.12 Total expenses 100.00 Rental charges for general plant buildings and equipment, sales stations, barns, and transportation equipment, were the principal ex- penses in the rental group. Transportation. Expenses grouped under transportation include those paid directly for transportation services, among which were the freight and trucking charges generally incurred in hauling milk from country to city. Costs resulting from the use of carrier equipment owned and maintained by the distributors themselves are placed in other classifications. The distance intervening between production centers and markets was a factor of much importance in determining transportation costs. In the Chicago district, where the maximum haul was more than 350 miles, these costs were about 10 percent of the total expenses, while in the St. Louis district they were only approximately 5 percent. In the Peoria and Quincy markets, where country stations were not operated and the farmer delivered the milk to the city plant, they were less than 1 percent. Communication. Under this head are included expenditures for postage, telephone, and telegraph. These ranged from a quarter of a cent to approximately six-tenths of a cent per expense dollar in the four markets. Professional Services. These expenses were for skilled service such as rendered by veterinarians, accountants, lawyers, collection agents, and other professional men. Like the expenses for communi- cation, they made up a very small part of the expense dollar. 258 BULLETIN No. 318 [December, TABLE 36. SEASONAL VABIATION IN WEEKLY PoiNT 1 SALES PER ROUTE IN CHICAGO AND ST. Louis MARKETS 2 Chicago, 1925-1926 St. Louis, 1923-1925 Retail Retail Wholesale January . . . points 2 092.25 2 120.88 2 142.00 2 144.00 2 132.73 2 125.05 2 042.25 2 050.80 2 126.25 2 083.13 2 064.80 2 036.50 2 096.72 perct. 99.79 101.15 102.16 102.25 101.72 101.35 97.40 97.81 101.41 99.35 98.48 97.13 100.00 points 2 398.66 2 429.00 2 371.00 2 396.33 2 328.66 2 277.33 2 184.00 2 194.00 2 275.00 2 363.66 2 433.66 2 382.33 2 336.14 perct. 102.68 103.97 101.49 102.58 99.68 97.48 93.49 93.92 97.38 101.18 104.17 101.98 100.00 points 5 245.33 5 443.66 5 714.33 5 642.00 5 803.00 6 141.33 6 101.66 6 041.00 5 775.00 5 646.66 5 443.66 5 243.00 5 686.72 perct. 92.24 95.73 100.48 99.21 102.04 107.99 107.30 106.23 101.55 99.30 95.73 92.20 100.00 February. . Marclf April May June July. . August September October November . . December . . . Weekly average Approximate ave- rage annual vol- ume on which data are based 186, 000 ,000 pounds 63, 000, 000 pounds 32, 000, 000 pounds ^ee Table 45, Appendix, for allocation of points. 2 The sales included all dairy products disposed of to the regular trade. Unclassified. The unclassified expenses exhibit considerable vari- ation in amount according to the particular market. In Chicago they were less than 2 cents per dollar. The range in the other three markets was from 5.61 cents to 8.20 cents. These variations are largely due to differences in the items placed here. There is much difference of opinion among accountants regarding the exact category to which some expenditures belong. Some accountants, for example, charge bad debts to sales, while others make no attempt to classify this ac- count definitely but place it in the unclassified group. The failure to adopt a uniform system of accounting renders exact comparability impossible. Advertising. The amount spent for advertising in the two larger markets, Chicago and St. Louis, was less than 2 percent of all ex- penditures. Costs in Quincy were proportionately about twice as large (3.55 percent) and in Peoria more than three times as large (6.39 percent). This appears to be quite natural when it is considered that there are more distributors in the larger cities by whom this expense may be shared, and also that more people can be reached per dollar spent where population is more dense. The importance of advertising, from the standpoint of the farmer, is apparent when it is considered that the rate of milk consumption per capita, as well 1928} MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 259 as population, determines the capacity of the farmer's market for milk. Dairymen in some localities have begun to realize the beneficial effect of advertising upon the expansion of their markets, and where organized are using some of their own funds for this purpose. Repairs, Maintenance, and Construction Supplies. The outlay for this classification was rather uniform in three of the four markets. With the exception of Peoria, approximately 4 to 5 cents in each dollar was spent for these purposes. In Peoria the expenditure was about twice as great (8.91 percent). The major portion in all markets was spent for the maintenance of transportation and of plant equip- ment and machinery. Only a small part of the total was, as a rule, spent for construction supplies and for the upkeep of buildings. Operating Services. The total cost of such service as heat, light, power, and water for commercial purposes depends principally upon the degree of efficiency exercised in their use and the rates charged for them. In Chicago these expenses constituted about 1 cent of the expense dollar and in Quincy about 5 cents. The other two markets ranged from 2.07 to 2.68 cents. Rates generally vary with locality. Usually rates for power are higher in the small cities. Furthermore, in the smaller municipalities, where the volume of business is generally much less than in the larger markets, it is impossible to use such services as efficiently as in the larger markets. In some localities firms consider it more economical to supply their own service in one or more of these lines. There are organizations, for example, that drill and operate their own water wells, and produce the required electrical power with their own generators. Profit and Loss on Various Sales Units So far the discussion has been based upon the operation of the business as a whole and scarcely anything has been said concerning the costs and margins of the different dairy products and sales units. Unless dealers ' and producers ' organizations know which products and sales units are the more profitable, they cannot develop their markets so as to yield maximum returns. A study of this phase of the milk distribution business was made in the Chicago market. The data are based on operations during 1924 and cover a retail distribution of approximately 150 to 200 million pounds of milk (Table 37). The major portion of the cream supply included in this distribution was purchased from cream jobbers, and hence only a very small amount of surplus was carried. Returns on the different products and sales units depend not only on the prices received but also on the volume handled and the efficiency of the dealer as well. 260 BULLETIN No. 318 [December, TABLE 37. UNIT PROFITS AND LOSSES ON RETAIL MILK AND CREAM PRODUCTS IN CHICAGO MARKET, 1924 (The milk and cream included are a part of a total distribution of approximately 150 million pounds of milk; by-products, 200 million pounds.) Products Unit profit or loss 1 Equivalent per quart of 3 . 5-percent milk Whole milk Quarts . . cents .752 .752 Pints -1.560 3.120 Half-pints - .936 -3.744 Sweet cream, 22 percent Half -pints 1.730 Half-pints, on 3.5 percent milk base 2 .275 1.100 Sweet cream, 32 percent Half-pints 2.060 Half -pints, on 3.5 percent milk base .225 .900 Cocoa drinks Pints .893 Cultured skim milk Quarts .643 Cottage cheese Three-quarter pound cartons .887 bosses are represented with a minus sign before the figures. 2 It requires 6.286 quarts of 3.5 percent milk to make one quart of 22-percent cream. Since one half -pint of this cream yielded a profit of 1 . 730 cents, four half -pints yielded a profit of 6 . 92 cents. Hence, equals 1.10 cents, which was the 6.286 profit per quart of 3.5-percent milk when sold as cream in half -pints at the retail price. Similarly 9.143 volumes of 3.5-percent milk are required to make a corre- sponding volume of 32-percent cream. Whole Milk. Of the volumes listed in the table, quart sales of milk were the only whole-milk sales returning a profit ; for each quart sold to the retail trade there was a net margin of .752 cents. Pints were sold at a loss of 1.56 cents each ; which, on a quart basis, would be 3.12 cents. This loss occurred in spite of the fact that pints sold for 8 cents, which was 1 cent more than half the quart price. The fact that the cost of handling pints was practically equal to that re- quired for handling quarts was largely responsible for losses on pints. As shown by Table 46 in the Appendix, the number of pint bottles lost was twice as great, relatively, as quarts. Furthermore, a pint bottle costs only slightly less than a quart. Again, the costs of pro- cessing, selling, and delivery, and administration were about the same for pint as for quart volumes. When we consider that it cost the retail distributor between 7 and 8 cents to handle a quart of milk 1928] MILK DISTRIBUTION- ix FOUR ILLINOIS MARKETS 261 TABLE 38. COMPARISON OF AVERAGE PRICES PAID PRODUCERS FOR FLUID MILK IN FOUR MARKETS, 1923-1927, AND PRICES PAID BY DAIRY MANUFACTURERS (Chicago monthly fluid-milk prices f.o.b. country station are taken as 100, all other prices are expressed as percentages of these. 1 All based on 3 . 5-percent milk) Month St. Louis fluid-milk prices f.o.b. country station Peoria fluid-milk prices f.o.b. city* Quincy fluid-milk prices' f.o.b. city Condensary prices 4 f.o.b. condensary Hypothetical returns to cream producers 5 January 91.7 94.4 104.4 86.9 77.4 February 91.7 93.7 103.2 85.7 77.4 March 87.2 93.6 104.0 84.4 78.4 April. . 80 5 89.2 99 6 81.3 70.5 May 71.7 86.5 105.5 79.3 70.0 June 73.5 85.0 106.8 78.2 71.3 July 73.8 79.3 97.7 72.7 64.8 75.0 80.0 96.2 73.8 65.4 76 9 81 5 99.2 75.4 70.0 October 82.4 85.1 102.0 78.8 74.1 November 87.4 88.2 104.3 80.7 79.5 December 90.1 92.5 104.7 84.2 81.8 'For actual prices see Tables 49 to 52 in Appendix. 'The reader must not overlook the fact that the prices paid for milk in the Peoria, Quincy, and condensary districts are f.o.b. city, while those paid in Chicago and St. Louis are f.o.b. country station. 'From 1924 to 1927 only. ^Prices were obtained from market reports of the Bureau of Agricultural Economics, U.S. Department of Agriculture, and are based upon the average prices paid producers in the eastern section of the Northern-Central states. These percentages were based upon hypothetical returns to producers for cream used for butter man- ufacture, which returns were calculated by multiplying the average Chicago monthly prices of butter extras plus 20 percent by 3.5, the latter figure being the number of pounds of butterfat in 100 pounds of 3. 5-percent milk. and only slightly less to handle pints, we realize why pints were sold at a loss of 1.56 cents. It must not be inferred, however, that individual milk dealers would profit by sacrificing their pint customers and thereby abandon- ing that part of their business entirely. The sale of pints increases the volume of business and thus lowers overhead expenses. It absorbs a part of the expenses that would have to be borne by quarts. Hence the elimination of pint sales would result in a smaller net profit on the sale of quarts. Were it not for the fact, however, that the dis- continuance of pint sales altogether might cause a decline in the per capita consumption of milk, dealers would profit materially by such a change. Cream. As already stated, in most markets cream is one of the most profitable milk products the dealer sells to the regular trade. In the Chicago market during the period studied, for each quart of 3.5-percent milk sold as 22-percent cream in half -pint bottles, a net profit of 1.1 cents was realized, which is considerably more than that realized from the sale of a quart of fluid milk. The profit from 262 BULLETIN No. 318 [December, 32-percent cream was .9 of a cent. The cream upon which these margins were figured was bought from jobbers at a price equivalent to approximately 85 percent of the price paid for cream in the form of fluid-milk. If these dealers had obtained this cream from milk pur- chased at the current fluid-milk prices paid producers in the Chicago district during 1924, the margin of the 22-percent cream would have been reduced by about 85 hundredths of a cent a quart of milk plus the extra expenses of separating. By-Products. Prices realized for by-products in the Chicago mar- ket in 1924 were high enough to yield the average dealer a fair return provided his volume was not too small. It is more or less essential that all dealers supply their trade with these, since certain consumers confine their milk and cream purchases to dealers who handle them. Information such as the foregoing indicates to dealers the kinds of products which it would be to their advantage to push by advertis- ing or otherwise. It is of value to dairy councils, producer organiza- tions, and other agencies interested in increasing the sale of milk, since the prices that different markets can pay for milk are influenced by the sales ratios among the various profitable or unprofitable sales units. The data given in Tables 21 and 24, showing the ratios of pints to quarts and milk to cream in the four markets covered in this study, are of special interest in this connection. Outlook for Distribution Costs Up to this point the discussion has been based on data for various periods extending in some cases to as recent a time as the mid-part of 1928. Many important facts about the milk business have been brought, in a general way, to the reader's attention. Production areas, as well as the markets have been analyzed. The agencies and instru- mentalities of distribution have been discussed. Trends in consump- tion have been determined, whenever sufficient data were available, which should give at least a general idea of what may be expected in the future. Conditions, however, do not remain static, but new developments and additional improvements continue to appear. Ab- solute predictions as to the future are therefore impossible, altho a study of the past reveals certain facts of value when planning for the future. Since 1927, the last year for which financial data are presented, distribution costs as a whole have been increasing. Two factors are mainly responsible for this situation : a demand by the public for a safer and better milk supply and increases in the wage rate. More stringent health regulations have either been passed or are contem- 1988} MILK DISTRIBUTION IN FOUR ILLINOIS MARKETS 263 plated for the near future. A new ordinance became effective in St. Louis in April of this year (1928), requiring a product of higher quality and thereby necessitating additional expense for distribution. Peoria likewise has passed such an ordinance. On May 1, 1927, as previously stated, wages in the Chicago district were increased $5 a week for all unionized employees in milk establishments. As the margin between producer and consumer prices in this market re- mained practically the same in 1927 as it was in the two previous years, profits must have been reduced unless dealers were able to balance the increased expense by more efficient marketing. (Deal- ers' margins for the years 1908 to 1927 inclusive are shown in Table 47 of the Appendix.) There are a few factors, on the other hand, that tend to reduce present distribution costs, tho they do not amount to much in the aggregate. The more extensive use of tank cars has enabled dealers to ship milk at lower rates, but this is small as compared with the increases in other distribution costs that have taken place, for the total cost of transportation has never made up a large part of the total distribution costs. The fact that increases in the cost of distribution have not always been met with proportionate increases in the dealers' margins has made it difficult for dealers with only a small volume of business to survive. Hence bankruptcies and mergers have been rather frequent, and the result has been that greater volume per dealer has slightly reduced overhead costs. With the increasing insistence upon a product of better quality and with no apparent evidence of a reduction in dairy wages, there appears to be scarcely any possibility of a reduction in distribution costs within the near future unless duplication in marketing can be substantially reduced, making possible a larger volume of distribution per unit of marketing machinery, or unless entirely new systems of distribution are evolved. FACTORS AFFECTING DEALERS' MARGINS Marketing costs vary with different markets. To account for the variations between markets, it is necessary to become familiar with the factors that influence them. One approximate measure of market- ing costs often used is the margin between the price paid the producer for a quart of milk and the retail price paid by the consumer. This difference is often termed the dealer's margin. In Chicago from 1922 to 1927 this margin averaged between 8 and 8.8 cents on a yearly basis (Table 47, Appendix). A much more accurate measure of total distribution costs would be the gross margin between the cost of all milk purchased in a market 264 BULLETIN No. 318 [December, and total receipts from its sale. Such data, however, are not readily available and the less accurate measure is generally employed. Re- gardless of its inaccuracy, however, it may be of practical value when making approximate comparisons provided it is used with discretion. One error especially that must be avoided when comparing districts is the use of station milk prices to calculate the margin in one district and city prices in another, for the difference between these two prices is usually large enough to render such a comparison very misleading. Following is a discussion of some of the more important factors, affecting dealers' margins. Intensity of Dairying Differences in the degree of intensity in dairy production in the various districts has already been noted. In the territory supplying Chicago, approximately 35,000 gallons or more of milk is produced annually per square mile, while in the Peoria district the production per square mile is only approximately 6,000 gallons (Fig. 3). The average daily production of milk per dairy was approximately 290 pounds in the Chicago district and only 112 pounds in the St. Louis district (Table 4). Under such conditions receiving stations in the St. Louis section would normally handle a smaller volume and hence station overhead charge would be higher. From the standpoint of these and other related considerations purchasing costs would there- fore be much greater in the less intense dairy district. Another important advantage in an intense dairy district is its adaptability to the use of the tank car. Since the tank car has a rated capacity of 50,000 pounds, little if any economy could be effected by its use in other than intense production sections. The tank-car rates for a minimum of 40,000 pounds over distances of 25 to 275 miles ranged from 52.3 percent to 70 percent of the less-than-carlot rate for 10-gallon cans of milk for the same distance (Table 7). Transportation Advantages Surfaced roads and rail facilities are the more important transpor- tation advantages affecting dealers' margins. Illinois' system of paved roads makes it practical for a large portion of the milk supply pro- duced within a radius of 75 miles of the markets to be trucked. As these roads are rather uniformly distributed thruout the state, differ- ences in trucking cost among different markets on a mileage basis are small. In most large markets the bulk of the milk produced beyond a radius of 75 miles is transported by rail. Altho rail facilities are very good for the state as a whole, some markets, owing to location and larger capacity, have greater advantages than others. 1928] MILK DISTRIBUTION IN For;; ILLINOIS MARKETS 2t'>."> Disregarding the manner in which milk is transported to market, we may say that costs increase roughly in proportion to increases in distances to market. It is evident that it will cost relatively more to transport milk to market in the Chicago district, in which the maxi- mum haul is 361 miles, than in the Peoria and Quincy sections, where the maximum hauling distance is approximately 50 miles. Further- more, when dairy sections are located great distances from markets, the necessity of operating country receiving stations adds to the ex- pense. The geographical location of certain markets forces them to extend their operations much farther than the average market of similar capacity. Chicago, with Lake Michigan as its eastern boundary, is illustrative of such a market. Butterfat Content of Milk The amount of butterfat in milk has a decided influence upon dealers' margins. As shown in Fig. 7. the cost per unit of butterfat decreases as the test increases. For example, if the base fluid-milk price is $2.50 per hundredweight with a 4-cent differential operating above or below a 3.5-percent butterfat standard, 100 pounds of milk containing 3 percent of butterfat would have a value of $2.30, a rate of 76.67 cents for each pound of butterfat contained therein. The same amount of milk with a 4-percent butterfat content would be valued at $2.70, a rate of 67.5 cents per pound of butterfat. One hundred pounds of 32-percent cream, when separated from the 3-per- cent milk purchased at the above price, would cost the dealer $24.53 minus the value of the skim milk. An equal amount of cream when separated from the 4-percent milk would cost $21.60 minus the sales value of the skim milk. In the first case there would be 967 pounds of skim milk; in the latter 700 pounds, a difference of 267 pounds. Should the dealer sell the skim milk at 20 cents per hundredweight, he would receive 53 cents more for the skim milk from the 3-percent milk than from the 4-percent milk. The difference between the cost of the cream from the two sources, irrespective of the skim-milk value, is $2.93. This amount minus the difference in the estimated value of the skim milk (53 cents), equals $2.40. which is undoubtedly a sub- stantial saving to realize on 100 pounds of 32-percent sweet cream. As the milk tests higher, the saving becomes greater. Five-percent milk compared with 3-percent milk yields a saving of $3.84 on 100 pounds of 32-percent cream. Not only is milk that is high in butterfat more economical as a source of sweet cream for the trade, but it is evident that it is also more economical as a source of whole milk provided standardization of milk is permitted in the market. It is obvious from the above that 266 BUU.ETJN No. .", Is [Dcconiit /. distributors, in markets where the milk produced has a low butterfat content, require a relatively larger margin. The Quincy district pro- duced milk with the highest percentage oL' butter J'at, ranging 1 during the year 1925 from 3.61 percent to 4.06 percent. In the Chicago district, where the butterfat content is lowest, the range during 1926 was between 3.43 percent and 3.68 percent. (Table 5) The foregoing discussion has to do with the butterfat content of the milk as purchased from the dairy farm. The percentage of butter- fat in the milk that is delivered to the trade is also of economic im- portance. Since butterfat is the most expensive portion of milk, it is clear that larger margins are required in markets which distribute milk with the higher percentage of butterfat, provided all other condi- tions are relatively the same, than in those distributing milk of low butterfat content. About the only basis we have for comparing the butterfat content of the milk as delivered in the different markets is the butterfat content most generally prevailing. In Chicago during the past yeaT, it has been estimated as having been approximately 3.5 percent; in Peoria, 3.7 percent; and in St. Louis, 3.8 percent. These figures may, however, change at any time. Surplus Milk The volume of surplus milk which a dealer must carry necessarily influences the margin he must allow for expenses. Generally speaking, in districts where flat prices are paid for all milk, losses on the principal surplus products, such as condensed and evaporated milk and butter, generally must be borne by dealers unless fluid-milk prices are practically as low as prices paid by established dairy manufacturers. Profits on the milk sold to the regular trade must be depended upon to absorb the losses. AYhen, however, fluid- milk prices are reduced to the level of manufacturing prices, the fluid-milk producer can well afford to shift to dairy manufacturing markets, since the cost of producing milk for manufacturing purposes is generally less than producing it for fluid consumption. Such a price reduction would therefore result in an insufficient supply of milk for fluid consumption, and it is mainly for this reason that fluid- milk prices paid producers are generally somewhat higher than those paid by manufacturers. (For comparison of milk prices paid by milk dealers and manufacturers, sec Tables .'IS. 40. 49, 50, 51, and 52.) In markets which have a price plan and which pool their milk, the pool price becomes higher or lower with decreases or increases in surplus, owing to the fact that the surplus is purchased at manufactur- ing prices. 1928} MILK DISTRIBUTION ix FOUR ILLINOIS MARKKTS 267 Standard of Milk Quality The serious consequences which result from dipping milk from the can of the distributor to the pail of the consumer and from the con- sumption of raw milk produced under ordinary circumstances are now generally recognized. This is one of the reasons why pasteurizing and bottling of milk are practiced to a greater or loss extent in all the larger markets. Precautionary methods, however, which influence sanitation and efficiency in pasteurization, vary and consequently there arc differences in processing costs among markets. Public demands as enforced thru regulatory measures of municipal health departments differ with locality. The maximum bacterial count permitted in the milk supply of markets is not uniform, and neither are temperature regulations uniform. In general the larger the market the stricter the regulations. Altho improvement in milk quality tends to force an enlargement of the dealer's gross margin, still producers and distributors are eventually amply repaid by the greater sales which result from in- creased per capita consumption. Proportion of Different Units Sold Not all volumes nor all milk products are sold on a uniform profit basis. As indicated in Table 37, there is considerable variation in the net profits from the various units in which milk and its products are sold. Since more than 50 percent of the dealer's milk supply is sold as milk, the greater portion of which is dispensed to the trade in quarts and pints, the difference in profits between pint and quart sales is a very important factor in determining what the margin must be in any particular district. Of equal or even greater importance is the ratio of milk to cream sales, if the margins are as found in the Chicago market. The varia- tions among markets in volume and product sales have been discussed on pages 225. 230. and 231. Wages The effect of wages upon distribution costs has been previously discussed, and their influence upon margins is so evident that it hardly warrants any further elucidation. The rate of wage paid for dairy labor varies according to the district, irrespective of whether labor is organized or unorganized. In the unorganized districts local supply and demand and custom determine the wage rate for the district. In the unionized markets the rate apparently depends not so much upon supply and demand as it does upon the strength of the local union organization and the amount of support given its policies by the public. Altho both the St. Louis and Chicago markets employ union 268 BULLETIN- Xo. 318 [December, labor, wages in Chicago are substantially higher than in St. Louis. As mentioned previously, retail milk drivers in Chicago receive a salary of $50 a week plus commissions, while in St. Louis they receive $35.75 plus commissions. The proportion which wages constitute of total distribution costs in various markets has been discussed on pages 247 to 249 and shown in Tables 31 to o5. Efficiency and Net Profit of the Dealer The efficiency of the milk dealer and the net profit retained by him are largely determined by the intensity of competition in the busi- ness. In most markets, as competition has become more intense a higher degree of efficiency has been developed and the general level of profits has been lowered. The inability of the inefficient distributor to confine his expenses within the limits of the margin of the district has left the field in control of the more efficient, thus increasing the volume of business per dealer and reducing overhead costs. Local conditions result in varying degrees of efficiency in the different markets, and this is reflected in the margins. Net profits are also reflected in the margin; in the four markets under discussion these varied from 1.74 to 5.12 percent of the net sales. Miscellaneous Among miscellaneous factors those that appear to be the most out- standing are investment, per capita consumption, and service, in- cluding also the delivery and housing system, all of which differ among markets and hence are partly responsible for variations in margins between markets. Investments essential to the operation of milk distributing estab- lishments, as would be expected, are higher in the larger cities for reasons that are generally well known. With respect to per capita consumption it may be said that other things being equal, the higher it is the lower the margin that can be accepted, as higher per capita con- sumption means not only a larger volume per market but also that a relatively smaller number of pints will need to be delivered. With respect to service, delivery, and the prevailing housing system, it is obvious that if a greater portion of the population is housed in large apartment buildings, fewer stops will have to be made by the delivery man. SUMMARY AND CONCLUSIONS Milk marketing in Illinois has undergone some very material changes during the past two decades. The boundaries of production districts have been extended farther and farther from the larger centers of consumption. Improvements in transportation have les- sened the perishability of milk in shipment and have relatively re- duced transportation costs. This expansion in area has increased the competition of producers located close to the consuming markets. The quality of milk has generally improved, in response to con- sumer preference. At least 70 percent of the fluid milk now dis- tributed in most of the larger markets of Illinois is pasteurized ; most of our larger cities have adopted ordinances which make pasteuriza- tion compulsory and require that milk come from herds free from tuberculosis. Municipal health bureaus have been established to en- force these provisions and others aiming at a better and safer milk supply. Costs of distributing milk have increased, and hence the margin between prices paid producers and those paid by consumers has in- creased. These higher costs reflect a higher wage level, as well as increased complexity in the milk marketing, improvement in milk quality, and expansion of the dairy production districts. This survey was undertaken primarily as a study of dealers ' costs and margins in the four large markets for which Illinois dairymen produce milk. The study extended over 1925 and 1926 in Chicago, 1924 to 1926 in St. Louis and Peoria, and 1924 to 1927 in Quincy. Data concerning production and consumption are also included to give a representative picture of the general field of fluid-milk distribution. Milk Production. The northern part of Illinois is the only section of the state where dairying is extensively carried on as a major type of farming. Here milk production per farm is almost twice as great as that in any other Illinois dairy district. During the season of lowest production about 35,000 farms produce for the Chicago market. Approximately 40 percent of the total supply comes from Illinois farms. The remainder comes from Wisconsin, Indiana, Iowa, Michi- gan, Ohio, and Minnesota. Production data for the Chicago dairy district based upon from 1,455 to 3,855 farms beginning with 1912 show a rather slow increase in the rate of production per farm in this district. Illinois producers supply about 80 percent of the total amount of milk consumed in the St. Louis market. The other 20 percent is pro- duced in Missouri. In the Quincy district approximately 90 percent is supplied by Illinois dairymen, and the other 10 percent by Missouri dairymen. 269 270 BULLETIN No. 318 [December, Production was largest in the spring months in eaeh of the four districts surveyed. The greatest irregularity in seasonal production of milk occurred in the St. Louis district, where monthly receipts at dealers' plants ranged from 62.3 percent to 149 percent of the average month during the period. The butterfat content of the milk was highest in the St. Louis and Quincy sections. In the St. Louis district the monthly average ranged from a maximum of 4.1 percent to a minimum of 3.5 percent ; in Quincy, the maximum was 4.06 percent and the minimum 3.61 percent. The Chicago range was from 3.43 to 3.68 percent and the Peoria from 3.45 to 3.93 percent. Transportation. Practically all of the milk supply of St. Louis, Peoria, and Quincy is trucked to market. Only 37 percent is trucked to the Chicago market ; of the remainder, which is hauled by rail, 55.5 percent is transported by tank cars. The tank car has played a large part in bringing about the extension of the Chicago dairy dis- trict that has occurred the last five years. At the present time milk is hauled from one production district located approximately 360 miles from the Chicago market. Tank car rates from 27 shipping stations to Chicago ranged from 52.3 percent to 70 percent of the 10-gallon can rate for less than carlots. Milk Consumption. The daily per capita consumption of fluid milk in Chicago in 1927 was .801 pint ; in St. Louis, .666 pint ; in Peoria the daily per capita consumption of fluid milk and cream com- bined was .681 pint. With the exception of St. Louis, milk sales as a whole were lowest during July and August in all four markets. In Chicago sales during each of these two months were about 3 percent below the average month. In Peoria and Quincy, July sales were less than 4 percent below the average month, while August sales were approximately Qy 2 percent below. In St. Louis. December and January were the low months. Cream sales were somewhat more irregular than milk sales. July, August, and September, were the months of lowest sales. The greatest irregularity occurred in the St. Louis market, where sales for different months ranged from 78.4 percent to 111.8 percent of the average. There was considerable variation in milk sales between days of the week. Maximum and minimum quart sales in Chicago, expressed in percentages of average daily sales, were 117.6 percent on Monday, 96.1 percent on Saturday; in St. Louis, 107.9 percent on Saturday, 87.5 percent on Sunday ; in Peoria, 103.5 percent on Saturday, 98.0 per- cent on Tuesday ; in Quincy, 107.9 percent on Tuesday, and 87.8 per- cent on Sunday. Sunday sales of 32-percent cream in the Chicago and St. Louis markets were approximately 2% times average daily sales; in Peoria 19S8] MILK DISTRIBUTION ix FOUR ILLINOIS MARKETS 271 they were approximately 3.7 times the average; while in Quincy they were about 1% times average sales. Altho Sunday sales of 22-. percent cream were largest in all the markets except Quincy, they were not over 11/3 times the average sales. Quincy sales were highest on Tuesday (109.1 percent of the average). Surplus Milk. The Chicago market carries less surplus milk than formerly. Only the very largest dealers, whose demands for cream were so large that they could not be supplied by jobbers, carried any appreciable amount of surplus. Figures based on approximately one-third of the district show that the percentage of surplus in 1927 was less than half of that carried in 1921. In Peoria, where surplus milk is purchased at the level of prices paid by manufacturers, the net pool price paid producers becomes higher or lower with decreases and increases in surplus milk. During 1927 the least surplus was produced in January, 23.07 percent ; and the largest amount in June. 58.73 percent. Dealers' Xet Margins. Data pertaining to the net margins realized upon various retail sales units sold in the Chicago market indicate that milk quarts yielded a profit of .75 of a cent and that milk pints were sold at a loss of 1.56 cents each. In Chicago the ratio of pint to quart retail sales was found to be 1 to 5.62 ; in St. Louis, 1 to 6.11 ; and in Peoria 1 to 5.9. Sweet cream was one of the most profitable milk products handled by Chicago distributors in 1924. When purchased at cream jobber prices, one-half pint of 22-percent cream sold at retail returned the milk distributor a profit of 1.73 cents. The ratio of milk to cream sales, computed on the basis of 3. 5-percent milk, was found to be for Chicago. 2.39 to 1 ; for St. Louis. 3.21 to 1 ; and for Peoria, 4.22 to 1. The Consumer's Dollar. The average dollar spent by the con- sumer for wholesale and retail milk in the four markets studied was distributed as follows during the two-year period 1925-1926: cost of product, 46.90 cents; purchasing, receiving, and processing. 14.89 cents; selling and delivery expense, 31.21 cents; general and ad- ministrative, 3.58 cents; and net income. 3.42 cents. (Fig. 17. page 244). The distribution of the consumer's dollar in eacli of the four markets is shown in Table 29, page 242. Tlie Consumer's Quart Price. A large portion of the Chicago milk distribution, at least 95 percent of which was dispensed to the retail trade, was sold during 1925 and 1926 at an average price of 12.91 cents a quart. Of this amount 5.33 cents was paid to the pro- ducer; 2.20 cents was for expenses of purchasing, receiving, and processing; 4.60 cents was for selling and delivery expense: .31 cent was for general and administrative expense; and .47 cent was the net income realized by the distributor. (Table 30, page 246). 272 BULLETIN No. 318 [December, Analysis of the Dealers' Expense Dollar. An analysis of the ex- . pense dollar reveals considerable range in the four markets, as shown in Table 31, page 247. The largest part of the expense dollar was used in defraying the expenses of labor salaries and commissions. In Chicago during 1925 to 1926, 65.11 cents of each dollar was used for these expenses. In Peoria where expenses for this purpose were lowest, 43.56 cents of each dollar was required during 1924 to 1926. Expenses for processing and operating materials and supplies made up the second largest portion of the expense dollar. They ranged from 10.81 cents to 19.04 cents in the four markets. The re- mainder of the dollar covered depreciation, transportation, repairs, maintenance, and construction, supplies, taxes, insurance, and other expenses, as shown in Table 31, page 247. Dealer's Gross Margin. In the Chicago market the average yearly margin between the price paid producers for their milk and the retail quart price (which difference is often termed the dealer's gross margin) was 8.7 cents in 1925 and 8.5 cents in 1926. In 1927 it averaged 8.6 cents. The increase from the gross margin of twenty years ago (4.7 cents in 1908) is largely the result of increased com- plexity in milk marketing, of wage increases, expansion of the dairy production district, and improvements in milk quality, as stated above. Significant Changes in the Dairy Industry. The above facts in- dicate to the investigator that two economic changes of far-reaching consequence to Illinois dairymen are in process ; namely, decentraliza- tion in production and centralization in distribution. Decentralization in production has been greatly stimulated by recent improvements in milk transportation which render available a milk supply several times larger than the demand of the fluid-milk consumption centers. Dairy- men in regions several hundred miles from large fluid-milk markets, where land, wages, and taxes are relatively cheap, are now enabled to compete with long-established dairymen in districts near the large cities, where land prices, labor costs, and taxes are much higher. Some readjustment to this particular situation is already in progress in northern Illinois. In contrast to production, distribution is gradually becoming more centralized. Economic pressure has forced more efficient methods in milk marketing. Consolidation of distributing agencies has been one way of meeting the pressure for greater efficiency. Since 1923 a significant number of Chicago dealers have either discontinued their business or have merged with others. This movement toward cen- tralization, providing it does not result in the abuses which monopoly makes possible, decreases overhead expenses and places a larger part of milk marketing under the control of more efficient management. APPENDIX 274 BULLETIN No. 318 [December, TABLE 39. SEASONAL VARIATION IN PRODUCTION PER DAIRY, CHICAGO DISTRICT, 1912-1926 1 (Average monthly production for period = 100) 2 Year Jan. Feb. Mar. Apr. May June July Aug. Sept. Oct. Nov. Dec. 1912 99 8 103.9 104 3 109 4 110.2 117 7 101 4 92 2 88.1 88 9 88 9 95 2 1913 .... 92.0 96.0 96.0 102.3 117.4 135.3 104.3 92.8 88.1 84.9 90.1 100.8 1914 102.7 104.7 107.7 109.3 120.0 121.5 95.5 81.3 81.7 88.5 91.6 95.5 1915 99.1 104.1 106.8 111.1 120.3 117.6 101.8 90.3 84.5 86.1 86.1 92.2 1910 102.5 107.7 110 4 106.5 120.7 129.0 106.5 81.6 82.0 80.8 82.4 89.9 1917 110.2 111 6 112 9 118 2 122 2 132 4 111 6 84 5 70.2 70 2 74.7 81 3 1918 .... 103.2 103.7 110.4 112.0 127.0 136.9 99.6 72.1 71.6 74.7 86.1 102.7 1919 102.2 109.6 115.3 118.9 122.4 126.8 91.2 77.2 73.2 80.3 85.5 97.4 1920 110.3 112.9 114.6 112.9 119.0 126.0 94.2 73.2 75.4 79.3 85.0 97.2 1921 98.2 104. 1 108 4 114 8 124 2 115 6 91.7 90 5 84.5 89.6 84.9 93.5 1922 102 8 107 9 109 6 111 2 125 6 121 4 92 2 87 1 80 4 85 4 85 91 4 1923 99.2 102.1 106.2 112.0 121.5 119.0 98.7 88.0 87.2 87.2 86.3 92.6 1924 91.9 97.4 103.2 107.1 120.0 127.0 107.9 91.9 91.1 90.4 84.1 88.0 1925 92.8 96.4 98.2 104.8 121.0 123.6 106 7 97.9 90.6 89.8 86.5 91.7 1926 113.1 114.8 108.4 90.1 111.4 121.6 105.0 92.2 90.5 86.3 83.7 82.9 'Trend removed. Data arc based on receipts at certain milk plants. 'Quantity upon which percentages are based is approximately 25 percent of Chicago's total milk supply for the fifteen- year period. TABLE 40. CLASS PRICES, CHECK-OFFS AND POOL PRICES OF ILLINOIS MILK PRODUCERS ASSOCIATION, PEORIA, FOR 1928 (Per 100 pounds) Month Class 1 Class 2 Class 3 Association check-off Pool price less check-off January $2.70 $2.04 $1.94 $0.06 $2.41 February 2.70 2.00 1.90 .06 2.38 March 2.70 2.09 1.98 .06 2.36 April 2.70 1.89 1.79 .06 2.26 May 2.70 1.82 1.72 .06 2.15 June .... 2.70 1 81 1.70 .05 2.06 July 2.70 1.94 1.83 .06 2.19 2 70 2 06 1.95 .06 2.26 2 70 2 10 2 00 06 2.28 October 2.70 2.08 1.98 .06 2.35 Note. Class 1 consisted of all milk sold wholesale and retail in bottles, as fluid milk or cream, and all bulk milk sales. The above price in this class was for 3.5-percent milk with a 5-cent differential operating above and below this percentage. Class 2 included all milk used in obtaining fluid sweet cream for bulk use, excepting the milk from which cream was derived for butter manufacture or for the manufacture of condensed whole milk and soft cheese containing butterfat. Price in this class was based on butterfat content. Price per pound of butterfat was the price paid for butter extras on the Chicago market plus 3 cents. Class 3 consisted of all milk from which cream was derived for butter manufacture and frozen cream storage. Price was determined on butterfat content same as for Class 2 except that the additional 3 cents was excluded. 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X 10 5 c o IN o o IN o s iO 1C Si 5 l.g *s S 'J. Chicago. X * 1 '- 'S .1 = "s c y. .- O" to n O 1-1 O 03 *c o u PU Quincy. . 22-percent cream Pints c 'c. K 32-percent cream Pints Half-pints 19X8] APPENDIX 277 "o o 5 K PH a 00 Q a o z o < i * I w S PH Q} w T o OJ P CS CN O C O rf< OC OS 00 O CS CN rt "! 00 i i "o. 03 00 --< co d IN t- 00 1^ 1-1 CS CO CN -H OO' CO O CO CN CN - ic oo CO 00 00 IN -^ CO CJ t^ O 1C O 00 1 3 00 (N co co CO 00 oo co co o t~- co rf 00 m op 00 O CS Cs CO rt r- oo' i- c; co' c Cs IV ^ 00 CO cc o )v 00 od -^ CO 00 00 * IN in -H CO O IV CO Cs CO CO CN l--i co t~ 00 O * t~ X O 1 00 O co r>i CO CN (N 00 CO CO CO -i co * * 0) m co CO * CO tN CO CN O CS X CS CO C: OC CS O CO 00 O 93 O CS to' 06 oo * T4H 00 -H CO o o oo co CO I -rf O 2 S cC tv 06 d CS 1-1 X O. 00* 5 CJ --C CS O CS CO t^ CN d " 00 i-^ 1> Cs O CO -H O CS CO m o co in O CN M o F C3 t- CN t- CS 8 CO 50 2 06 to' CO !> CS CO -H d 1" 00 10 CO Cs * ^ 10 CO -H at IN CO 00 t" CS C 7.7 7 li 7.6 7.5 8.0 1923 7 6 7.6 7.8 7.8 8 1 8 2 8 1 8 1 S 1 s 1 S 1 8.1 8.0 1924 8.2 8.2 8.2 8.6 9.1 9.1 8.6 8.4 8.4 8.8 8.8 8.8 8.6 1925 8.8 8.8 8.8 8.8 8.9 B.fl 8.6 8.5 8.5 8.5 8.5 8.6 8.7 1926 8.6 8.6 8.6 8.1 8.6 8.8 8.6 8.4 8.4 8.5 8.6 8.6 8.5 1927 8.6 8.6 8.6 8.6 8.8 8.8 8.5 8.6 8.6 8.6 8.6 8.6 8.6 280 BULLETIN No. 318 [December, '> U 'S3 , M ^. 3 o o "SOOOOOOO OO '-'M go o o iO U5 *O OO'^OOO - OOC '.^ LO O oooooooopmoo C)