TREADS IJi T:E INT1GRATZO
OP OOO2BRATIV DIIT PRODUCTS
8 lB TR3 P.&OXPIQ BORTL:
4
by
ILLRON QUINT1N £OOBL
A TSIS
subnitted to
OIUGOII STATE COLLEGE
in partial fuLfillment of
the requireezite for the
ao8ree of
&STBR OP 8OXEliO
June 1949
I1IG
School Graduate of
Dean
Redacted for Privacy
Committee Graduate chool
of Cha1,man
Redacted for Privacy
Economies Agricultuxa1 of Depar{ent of Head
Redacted for Privacy
APPROVED:
Tue awhor wiao to
re ni; approciatton to to
several )erom qIo, throuti tile providing of 1nfOrat1OXI
relative to the theei, ,iave ileled imieeurbly.
.rticular reconition is due Dr. D. B. DeAoaoh, £rofesor of Agricultural oononios and roteseor L
fotter, in Okiarge, Division of Agricultural Joonoioa,
both of the Oregon Btate Uolloe, for their oonetructie
critiois and valuable euestions.
TABLE OF C ONTENTS
Preface .
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PART I
A BACICGROWW TO THE STUDY
Chapter
I. Early Deelo.ent of the Dairy Industry . .
II, Growth oi' Large..Scale Private Qrganizatitons
III. Production of Cheese arid BtitVer . .
12
PART II
E1TRANCE OF PRODUCERS COOPERATIVES
. .. ..
Early COoperatives
.
Organization of Cooperatives Aster 1915 . .
VI. Federation of Local Marketing: Organizations
IV.
V.
.14
. 18
. . 38
.
PART III
REGIO]AL SALES ORGANIZATION
VII. Challenge Cream and Butter Association .
VIII. United Dairymen's Association . . .
,
Ix. Interstate Associated Creameries .
X. Marketing Agreements Between Regional
Marketing Associations
. . . . . .
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,
,
43
. . 50
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. 54
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.
. '72
PART IV
OWNERSHIP OF PRIVATE ORGA1IZATIONS
BY COOPERA!IV38
XI.
Consolidated Dairy Products Company .
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75
Sunimary
. . . . .
Conclusions
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88
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92
Table
Page
1.
eStern Oregon Cooperatives, 1901 . . . .
2
Volume Reports of the Tilla. ok County
0reatcry Association for the years
1909 to 194?
. a
a.
3. 1,oana Aade to Interstate Associated
a
16
4:
Creerj.es and Its fle:bers by the
?ed.ora]. i'srm Board
.
61
A Condensed Statement of the
$ter Pool
Operations of Interstate Aesociated
Creameries, Y; ra 1931 to 1946
68
Total iounde of Chse Reoeied tear1
by the Interstate esooiated Crsaerjea,
Years 193]. to 1946
.
,
a
69
The Peroentge of Each oore o itter
Handled by the Iritemtate L3ooiated
ODeaoriee, y Yeia: Years 1931 to 1946
71
Aproxi ; te $to rage Caps city, in oun4s,
Owned by the Consolidated Dairy Products
COt
a
a
Distribution of
porated i1k by the
Consolidated Dairy Products Co i .;fl7 at
theYearsndjng.
I'rofit ad ioea tatemont for
orthezm 'iry Pioduots oan'
87
mxx TAI3LS
ioju1ation of Oregon and Washington,
Years 1850 to 19
a
a a
Production of on!at Dry L41iz Solids
(for human oon1tion) and Canned J4ilk
in the States of Washington and Oregon,
p
II.
a
S
S
94
a
96
in4 Totals by Years, for the Years
1930 to 194r6
a
a
a
a
a
III. Production of Cheese in the States of
ashington and Total
Production, by Yere, 1930 to 1946
Oregon and
a
0
IV.
2rOdu3tion Of Buttor iii tbe States of
Qreon an WaE11jntOfl
£roduct1on, .y Tears, 1913 to 1947 . . ,
Returns Made by ti'e Con olidatel Dairy
2roduoto Company to the United Dairymen'e
Aasooiation, and Tbrougb This Association
to Its Teribers Per $eleoted Tears .
Oonparatjye
ua1 Piuree of ¶io$a1 ttsr
*
V
9
98
ouudae Slipped by Lbers of Interstate
Associated Oreamer1es to ChaUne Cream and.
tter Association a4 to Intrstate
Aseociated Creameries, 'Zoars 1931 to 1946
99
PREF AE
Albert E. Engtretson was an ouatanding man in the de
velopment of cooperative marketing in the State of Oregon.
In niemory of this man there was established the Engbrobaon
kesearcb Foundation, the purposo of which was to advance
the cause of cooperative marketing, thereby to aid the
farmers of Ore'on.
Research fellowships are granted to graduate students
for the purpose of carrying on studies in both manufac
turing and marketing of dairy products, It was under th
A. E. 1ngbretson Metnorial Fund that the writer was assigned
a study of the trends in the integrab ion of the marketing
channels of the cooperative dairy products manufacturers.
There has been a gradual devo1opmon of cooperatives
within the Pacific Northwest, Except for brief histories
of a few of the concerns, there has been little printed as
it pertains to such a development and as it pertains to the
integration of the marketing functions. This dissertation
is an attempt to explain the trends in this integration
and certain other important factors that have brought about
the integration.
PithT I
A BACKGkOU.D T
TfIE S(JDY
ThINDS I} THE INTEGLTI ON
OF CuOPERATVJE DAIiY PHODUCT$ MAR1TING
CUANNEL
IN THE PACIFIC 10RThWI8T
CHAPTER
EARtY DEVELOPMENT OF THE DJtIHY IIIDTJSThY
Lives t ock Origin in the Pacific Northwest
A brief summary of the background of the dairy industry
in the Pacific Northwest Ia Important to an understanding
of the various aapect3 included In the Integration of the
niarkotin channels of the dairy product manufacturing ccoperatives.
ui.
a.t.I .
A. Slacuxn, a special agent for the United
States, was duly impressed with the Willaniette Valley an
the surrounding area, and it was through his efforts in
the early 1830's that sufficient finances wore obtained
with which to import 700 head of livestock from California.
Those cattle were of Inferior breoding, originally developed
in Mexico, and provided a weak basis upon which to develop
the groat dairy industry which has now emerged.
Following the early importation of livestock, there
were numerous shipments into this area at later dates, Production, however, was a very haphazard affair, for the
common native cattle were forced to sustain life throughout
a or, 0. .;
:s cry
0
ø 'veopmon
Dairying in Oregon; 1836 to 1936. 2p. 1936
(Typewritten)
he year on whatever reed was obtainable. As a result of
poor breeding and no winter feed, production was very
erratic.
marketing was carried on within the local area of
production, and the manufactured products, butter and
cheese, were produced on the farms.
Early Creamery Development
It was not until the 1880's that a commercial dairy
industry in the northwest began to develop. By that time
&ppend1x Table I) population had increased to approximately
250,000. Cities were being developed and a demand created
for larger quantities of manufactured dairy products.
:r 1880 there had been imported a number of purebred
dairy cattle; land had been cleared and the production of
such crops as oats and wheat for winter feed was being
carried on quite extensively.
A number of privately-owned creameries were started
in the vicinity of the main points of population.
The
cream, hand skimmed on the farm, was delivered to the
ereamerjes at irreuiar intervals and furnished the raw
materIal for very poor butter. The area of supply covered
and the capacity of tne plants, In all cases, was very
small due to limited transportaton facilities.
In 1883 the first creamery separator was installed and
in 1885 the Barmingbon Creamery was built. Following this
new development, the farmers brought the whole milk to the
creamery where It was separated. The butter produced was
of a better qua1iy for the milk was delivered to the
creameries at more frequent intervals than had been the case
in the delivery of cream. This method of operation continued for only a Low years. About 1900 centrifugal eepa
rators had developed sufficiently to provide most farms
having dairy cows with such machines. The procedure
reverted to the supplying of cream, rather than whole milk,
to the creamery and the quality of the manufactured product
dropped to its original level.
The tenyear period from 1890 to 1900 represented the
!reatest expansion ever made in the dairy industry of the
northwest over an equal period of time. During this tin.
year poriod, the number of dairy cows in Oregon increased
from 114,156 to 122,447, an increase of 7 per cent; milk
production increased from 25,042,276 gallons to 48,582,9
gallons, or a 94 per cent increase; and creameries in-'
creased in number by 1327 per cent; production per cow
Increased 85 per cent.2 It is known that the expansion of
the dairy industry in the State of Washington was also
phenomenal, althou&h adequate statistics are not available.
In. the two years alone, from 1895 to 1897, the number of
butter and cheese factories in Oregon increased 65 per cent,
while the output of butter increased 184 per cent.
2. Report of the 12th Annual Meeting of the Oregon D*iry
men's Association, 1903. 7Op. Oregon State printing
Office, Salem, Oregon
This ten-year period of 1S90 o 1900 also saw the
establishment of a few centralizers. Centralizers, it might
be explained, is a term used to denote central plants in
cities which assemble by rail crac from large areas. The
cream is either shipped to the centralizers by the farmers
along the rail line or by centralizer-owned cream-buying
stat; ions
From 1900 to 1904 there was a great increase in population in the Pacific Northwest and the demand for dairy
products out-ran production,
that front 1900 until
approximately 1920 there was a substantial importatl.on of
butter and cheese from outside of the area.3 This increased
demand greatly stimulated the production and the manufac-
turing of butter and of cheese in the fol1owin years.
L3oth butter and cheese were manufactured in a large
nwmber of small plants, These plants were limited in size
by the density of the surrounding production area. Butter
was produced principally by plants and on farms nearer to
the areas of consumption. This was due to the perishability
of butter in the absence of adequate storage facilities.
Cheese was never produced to any large extent on the fa
but was produced in small factories some distance from the
point ol' consumption., This was due to the fact that cheese
was less perishable than butter and could therefore be produced in areas that were oo far from market for butter
od.uctio
Vlilsber, G. H.; A History of the Development o
Dairying in Oregon; 1836 to 1936. iSp. 1936 (Typewritten)
5
Market; in
Channels
Local butter and cheese plants produced a relativel
small portion or the total production consumed in the
densely populated areas. A wholesale receiver was consee
quently necessary to assemble the products from the
numerous and distant creameries. The marketing channel
from the wholesale receiver depended upon his location with
respect to the deniand for the product; if there was adoquate demand within a relatively short distance from tile
point of assembly, his sales would, in a large majority o
the cases, be made directly to jobbers. This has been the
normal marketing procedure in the northwest where there
was not, until approximately 1920, an appreciable out-ofstate movement of butter. In other states, however, where
there was a large amount ci' butter in out-ot.atat;e move-
ment, the wholesale receiver ordinarily shipped in large
quantities to other wholesale receivers who distributed
the product to the local jobbers.
In many instances, especially in the markets surrounding Portland and Seattle, the wholesale receivers,
even during the early 1900's, were tending to integrate
within their functions the distributive processes
formerly being performed by the jobbers; that was to die-
tribute directly to the retailers.
ciri
and LTmortabion
6
The writer was unable to ascertain the exact amount of
the various dairy products which were ahtpped into Oregon
and Washington durinij the early period. Substantial quanti-
ties of butter were shipped into the two states until ap..
proxi!rlabely 1920, s was previously stated, However, ft is
doubted that there was ever any large amount of cheese
hipied into thea states, tor the cheese was quite expen
ye for a majority of the population.
Until approximately 1910 butter prices were based on
e quotations made by the Elgin Board of Trade at Elgin,
IllInois. It was from the states surrounding Illinois that
a large portion af the butter was received and northwest
prices were ordinarily about two cents higher than the prices
quoted on the Board of Trade at Elgin, This difference re
flected transportation costs.
CHAFTER II
7
GROWTH OF LARGE..SC ALE .PRIVATE ORGMTZATI ON$
Most of the integration of marketing functions came
after World War I It was a result of many factors, one of
which was the growth of powerful prIvate organizatIons.
These organizations began their development in the norhb
west at approximately 1910, It was about ten years later,
however, before they gained the power which, In many
oases, they have managed to hold till the preeent time.
ondens eries
The channels of distribution of evaporated end con
densed mi]k have always been quite different frog those of
butter and cheese. The canned rL11k industry was, from the
oinntng, developed unô.er conditions of an integrated
nuu'koting syetoti, that Is, the bulk of the marketing of
condensod and evaporated milk was made by large menufacturers nd jobbers who fulfilled, the rkat3.ng Thnotione
in many Cases do to the retail level, 13y 1910 there were
3 oondonsorios most of those were small operators, and
the bulk of their output was sold to large-scale manu
cturers sad jobbers and Thholed With the brand ns
at
the purchasers. Aa example of this was the purchase of its
prod!ct fto ;ny of the small privato manufacturers by the
"Carnation" was the
brand name used; this brand nane later became nationally
PacifIc Coast Condensed MIlk Company.
8
In the early years the Mt. Vernon Cresm Company and
the Pacific Coast Condensed Milk Company wore the out.
standing condensed and evaporated m111 manufacbtiring and
marketing concerns in the northwest.
known.
PrevIous to, and during, 1912 there were relatively
Low condonseries in the State of Ore&on. The Pacific Coast
Condensed Milk Company had two loeatione in Oregon; one at
Forest Grove, and the other at Iiilsboro. It is not known
what poroente of the product marketed was purchased from
other concerns and what percentage was manufactured in their
company-owned plants. There was a total of seven conden-.
series in Oregon at that time, but the remaining concerns
were relatively small and marketed most of their product
through the larger manufacturers and under the brand names
of the purchasers.
Ttuloughout the years, a major portion of the output of
condensed and evaporated milk has boon produced within the
State of Washington. For a compariion between WashIngton
ar.d Oreon in the amount processed, refer to Appendix
Table II.
It was riot untIl after the end of orld ar I that
large-scale rtanafactnrIn and dIstributin: of condensed and
evaporated milk eae into teIn, The Carnation Milk
Procts Company, wlch 1;eca.e the priinaz'' private cmcern
iri the northwest, wao 1ncorporated on July , 1920, and
wa soon oe o' tho two leading condensed and evaported
raactw'In& md marl -ting oompanIe In the United States.
This company purchased
9
and established numerous plants in
bhe various dairying states and 'by
1934 the Carnation
lLilk
Products Company owned and operated 34 plants in the United
States.
Their principal plants in the norbhweat were at
Hilisboro, Oregon, and at Mt. Vernon, Washington.
As stated
previously, however, the number of plants owned and operated
do nob give an adequate picture of the total product due to
the amount purchased from small condensories.
While the Pacific Coast Condensed Milk Company, which
used the UCarnationU brand, and its successor, the
Carnation Milk Products Company, was the dominant factor
in Washington, the Nestles Food Company maintained the same
This company, although small with regard
status in Oregon.
to total holdings, is said by persons well acquainted with
the dairy industry history in this state, to have had a
very decided effect on the dairy industry in certain
sections.
One of their plants was at Bandon and the other
at McMjrznvilie,
Due to the unavailability of records there
is no accurate measurement of the effect which this company
had on the dairy industry or on the development of co
operatives.
Market ing Channels
Evaporated
and condensed milk can be handled
by the
regular wholesale grocers along with other canned or dry
products since these do nob require special storage or re
trigorat ion.
Small operators and the specialized
10
middleman have never been important factors in the handling
of condensed and evaporated milk, except in retailing and
to a small extent in wholesaling. Considering the United
States as a whole, nearly half
the sales of condensed
and evaporated milk made by the leading manufacturers are
to wholesale grocers who in turn sell to retailers.4 Sales
to chain stores, however, are almost wholly made directly
by the manufacturers. In these instances, the chain stoles
maintain specialized purchasing and distributing depar
menta which serve as wholesaler for their retail outlets.
Meat Packers and &rocery Chains
J3oth Swift & Company and Armour & Company maintained
centralizing plants in Seattle and Portland in addition to
owning a few creameries in territories surrounding major
points of consumption. Centralizing plants, as has been
explained previously, also called 'oentra1tzers, are
large plants assembling the raw product by railroad from a
wide area. These two meat packers were the largest butter-i
marketing companies in the United States between 1928 and
1930. They were much more of a factor in the dairy industry
in Washington than in Oregon, but in each state a tremnendous volume of business was handled by them. They were tm.
portant factors in the distribution of butter and cheese
for many bars since they d1etribaed these products along
4. Proker, H. K., Colebank, A. W., and. Hoffman, A. C.
Large-Scale Organization in the Dairy Industry.
U.S.D.A. Circular No. 527. July 1939. 44p.
with their meat products. Gradually, however, these
cerns have sold their manufacturing plants but have continued to distribute a small amount of cheese and butter to
the retailers aloz their regular routes.
With the growth of the chain stores in the early 12Oa
the functions of the middleman were taken over by the chain
store organization, and they are, to an increasing extent,
buying their butter and cheese directly from the
manu.faoturera. Chain stores, in some few instances, have
purchased manufacturing concerns and so perform all of the
marketing functions from the farm to the consumer.
It is impossible to measure, in this study, the effect
of the meat packers and chain stores in the development of
dairy marketing for statistics on the gross sales by the
various concerns are not available. It may be surmised,
however, that the status of the meat packers iu the dairy
industry is declining, while the status of the chain
stores La expanding Lairly rapidly.
CHAPTE1i
PRODUCTION OF CHEESE AND EUTfR
Cheese
Appendix Table III shows the amount of cheese
processed in the two states. Oregon has been the loader.
The main cheese-producing area in Oregon is along the
coast. This is an excellent dairy area, but was very late
in developing adequate roads and railroads. This lack of
tranaparbaton encouraged cheese production since cheese
is less perishable than butter end could be shipped by
boat to the Portland market.
The production of cheese in Oregon has continued due
'to the extensive markets which have been developed as a
result of a superior product, extensive advertising,
the federation of small msnufacturin plants it9 an
efficient marketing organization.
Cheese production did not develop to such an extant
in Washington since the main datrying area of the whole
state is more accessible by road and railroad to important
markets.
s a result the production of butter and condensed
and evaporated milk bocame more important than the production of cheese.
Buber
In Appendix Table IV ta shown the relative position of
the wo 8 ates in the production f butter. Until the en
of World 'ai' II, Vashington led. There has oeen a gradual
upward rend in the Oregon production of butter. Trhis up
ward trend has been principally due to the federation of
the local cooperatives and the resulting increaBed narketinS
efficiencies and greatly improved quality of product.
JVd
ana
xo
onamia
II
gALLVrrJ003
CHAPTER IV
14
EARLY COOPERATIVES
Producers Cooperatives
1897 there were 11 producers 000pratves in the
Pacific North t. These organizations were formed for a
number of reasons, but these reasons greatly differ from
the reasons for the estab1isbmert of the later cooperatives. The formation of cooperatives, throughout their
history, has tended to result primarily from producer
dissatisfaction with existing market agencies, or froi a
desire for aEencies of a newer and different type.
The very early cooperative creameries resulted from
a lack of interest on the part of private capital in the
building of creameries. This was conon 'era dairying on
a commercial scale was relatively new and the financial
possibilities of creamery operation unknown, In those
ce-see, a group of farmers would build a plant through
either a stock conpany or a cooperative. Such producers
cooperatives during this early period represented only a
small percentage of the total number of plants in
operation.
33y 1901 there were 71 creameries in Western Oregon
making either butter, cheese, or both; 17 of these orgaui
zations h.d been established during the year 1900. Of
these 71 creameries only 6 were cooperatives. The total
value of the 71 creameries was $136,30.00, or a value of
1,924,37 per plant; these 71 creameries had total patrons
of 1,733. The average value of the six cooperatives as
listed in Table 1 is 3,758.O0, which was much larger than
the value of the privately-owned plants. All these plants,
however, seem sma.1l when measured by present-day standards,
Table 1
JWFiiRN OREGON C OOPERATIVEa, 1901
Value
N
Estab- of
liahod lant Butter Cheese Patrons
0
Clatsop Dairy
Asaociaion
Coos Bay Creamery
Albany Creamery
Association
Laurance Cheese Factory
Tillamook Dairy
Asrociation
Tillanjook Creamery
Association
:OUO
0'ego.n
1901,
1896
1892
l,330
1895
1900
3,400
750
25
1892
4,700
48
1895
3,400
9,000
60
62
x
x
35
rtculturalxporiment Bulletin N. 65,
ag30, 31.
At the time of the organization of the earliest cooperatives, there were no basic laws guiding their moorporation or operation; consequently, those cooperatives were
far different front those formed in later years, after the
passage of promoting and enabling legislation. It was not
necessary that all, or even part, of the patrons held atock
in the organization, nor was it necessary that a stockholder be a patron of tho concern. In a number of cases, a
large portion of the stock was held by one man, while the
16
remaining amount was held by the patrons.
Most of the concerns made a fixed charge to the patrons
for the making of the butter; at that time the charge was
quite we1l-estblished at 2 1/4 cents per pound.
3arg aining Ae moles
Another plan which was quite prevalent in the early
period was the formation of a bargaining agency for the purpose Qf bargaIning with the processor. The benefits to the
members was determined by the strength of the bargainIng
power oi' those cooperating. This type of formation lasted
for only a short period of time. The plan was to organize
a creamery association composed wholly of those who fur.
nished milk to seine creamery. This creamery association
entered into a contract with the creamery to manufacture
the milk delivered, and to deliver the butter In Portland
at a stipulated price per pound, usually 3 1/2 cents.
Accounts of the patrons were kept by the secretary of the
creamery association whose remuneration was a stipulated
price for each monthly statement made to each patron.
Restrictions
larly Cooperative Foation
Ith the development or production and demand, more
manufacturing plants were established, but tiie percentage
of cooperatives remained very low. Previous to 114 there
was no special enab1ir legislation for cooperatIves; in
fact, the Sherman Ant iTruat Act of 1890 decidedly
.7
restricted their development. Oregon did not pass 000p
erative legislation until 191
CHAPTH V
CGA1IiZATI
18
OF COOPiATIVL A?ThF 1915
Basic Reasons Behind Their Formation
cooperative sales association is a voluntary busi
zs oranzation eat&bli3hed by its member :atrons to
market farm products for their direct benefit 5
The cooperative nay have a number of' reasons for its
formation; among these mig
low returns from private
organizations, wide marketinc margins by private concerns,
inadequate services, and in some instances, unfair treatigent by these private concerns. A more basic reason,
however, is the sma11.sca1e production of most farmers, and
their attempt, through cooperation, to pool their products
an effort to provide more officent marketing.
a8geidiess of the need for cooperatives, enabling
legislation aided or encouraged their legal formation. This
legislation came as a ref1eoion of the change in the views
of the public, with relation to the possible place of cooperatives in our economy.
tabo Laws
a earlier coo erative maricetin organizations were
Bakken, H. H., Sobaars, L A. The Economics of
Cooperative Marketing. McGz'aw-iiifl Book Company Inc.
1937. 3p.
incorporated under tlie general corporation laws of tb.e abate
in which organized. Later special statutes were passed in
most states and intended to facilitate the organization and
operation o± uoh 000peratives in aoi cases to make it
easier for cooperatives o be eligible to the several advantages granted coopera ives by Federal 3tatutea.
The original act of this nature inOz'egon was
n 1909. This was repealed and a new Act passed in 1915.
This new Act represented the moat advanced thoug in the
Dnited tats n hat tizne. This Act has been amended rnanr
times since 1915. Many of these amendments came as a re-
suit of the passage, in a number of states, of the so
called Standard Marketing Act, although this Act was not
adopted In Its entirety in Oregon. Ovor 48 amendments
were made in the Oregon ct from 1929 to 1935; these
amendments resulted in the development in Oregon one of
the broadest liberal Acts in the United 8tates.
The cooperative laws o± dashington followed a similar
history. At the present time both states have 'aws about
equal a to advantages.
Federal Laws
associations are incorporated
under state rather than Federal statutes. Federal legislation, however, has granted many special privileges and
Cooperative rtiarketin
exettons to cooperative!, partioularlLin je fielde of
6. Gatlin, G. 0., The tOregon Plan" of Cooperativo
Organization. 1932. ip. (Mimeograph)
20
credit, income taxes, and anti.trust legislation.
Federal legislation has also attempted to define cooperatives, at least those to which Federal legislation te
intended to apply.
Federal definition is now widely
sceopted even where it has no legal application,
Clayton Act of 1914
Many cooperatives are, or may be considered as, 'teombinat ions in restraint of trade" and in violation of our
anti-trust laws under the Sherman Anti-Trust Act. Congress
therefore passed the Clayton Act as an amendment to the
Sherman Anti-Trust Act. This amendment exempted agricul-
tural and horticultural organizations from the reatric.
tions ci' the Act; however, the provisions only applied to
non-stock cooperatives and did not clarify the status of
the capital stock associations. There arose a great demand to exempt both types of associations since many
farmers' organizations were formed under the capital stock
plan. ThIs demand resulted in the enactment of the Capper
Volstead Act eight years later.
Capper-Volstead Act of 1922.
The Capper-Volstead Act
very defInitely defines the types of association of agricultural producers which are to be considered as
"cooperabive&' by the Federal government.
The out-
standinn features of this definition are:
1.
Each nioniber is allowed one vote, or, If voting
on a stock basis, dividends on the stock earnot
exceed B per cen
on-tember busj,noss niay not exceed in value that
o' the niehers.
The Secretari of Agriculture may determine whether
the associations have unduly enhanced rtcos as a
result of monopoly or restraint of trade,
Orgnizatiaris with and without capital etok (in
a legal sen?Je) are pmitteth
Aaoc1ation are restricted to agrl2ultural
producers.
MarketIng agreements are sanctioned.
7, The associations are to operate for the benefit of
their members.
Associations may or may not be incorporated.
Act Creating a Division of Cooperative Maz'ketin
This act, in 1926, created the Division of Cooperative
Marketing in the Bureau of Agricultural Economics for the
purpose of doing national research and extension in the oo
operative field. It was authorized:
1, To acquire, analyze, and disseminate economic,
statstjoaj. and historical information about co
operative asociatlons,
To study all phases of cooperation and publish the
results.
bakker, H, H., chnars, W. A The Eoonon!tcs of Coop.'
erative Marketing. McGraw-Hill Book Coipany Inc. 19'7
203 p.
a.he snrveys of accounts and other phases o
cooperative practice 'or the cotmerative ass ociau.
Pc
T
ens at their request.
advise conittees of producers desIrous of
aisociations.
acquire Inforraatlon of crop prospects. prices,
fermI
arket movements, Sr. d receipts, and through
nar&in' specialists t, disseminate such in
format ion o cooperatives and to others.
To promote the knowledge of cooperative principles
and pracjees for the development of cooperatives
in this country.
permit associations of agricultural producers
to exchange past, prosen
and. prospective crop,
market, statistical, economic, and other similar
i1'ormat Ion.
In 1929 this division was taken over by the Foderal
Farm Board. since 1933 it has been a research and service
division of the Farm Credit AdministratIon,
Ar1cultura1 MarkotinLAct of 1929
The policy of thIs act was: "To promote the affective
merchandising oC agricultural commodities In Interstate And
foreign comeree,
the industry of agriculture will
be placed on a basis of economic equality with other
industries, and to that end to protect, control, and
stabilize the currents of Interstate and foreign commerce
in bhe Msrketin
products
1.
23
agricultu.?ai commodities and their toad
J3r rdnimizing poeulation.
By preventing inefficient and wasteful ietIods of
distribution,
By ancourggin the orgarization of produoci's into
associations under theIr control for greater unity
of effort in market ins.
4. By aiding in preventing and contro11in surpluses
Ii any agricultural commodity through orderly production and distribution.
principal features of this act were as follows:
Provided for the creation of a Federal Farm Board,
Provided for the appointntent of oomiodity advisory
coittees which were to advise the board members,
Provided for a revolving fund of 500 mIll on
dollars from which loans were to be made to cooporative associations f or merchandising purposes,
construction of facilities, conmodity Ia
extendizig the menbership of the cooperative
ass ociations.
Provided i'or the establishment of a stabilization
corporation to handle surplus agricultural
commodIties,
In 1933 the Federal Farm f3oardwa abolIshed but
Bakken, H.
Schaarz, M. A. ¶Zhe Econonijee of
Cooperative Marketing. eGraw..Hill Book Coipany Inc.
1937 pp. 287-288.
24
certain of its functions were taken over by the Farm Cz'edi
Adninjatrat ion whiob set up the Banks for Cooperatives to
make the following loans:
1.
Operating capital loans fox' such purposes as
making advances to patrons on products delivered
for marketing, paying labor, freigh and general
overhead expenses, providing for various other
operating needs, and refinancing operating ins'
dobtedness loans,
Physical facility loans nob to be in excess of 60
pox' cent of the appraised value of the security.
These loans must be secured by mortgages covering
plants and equipment and based on the valuation
of the fixed or immovable portions.
Commodity loans, secured by commodities, for such
purposes as making advances to its member's and
meeting expenses of handling, processing, and
marketing the products pledged.
lb will be noted that the Banks fox' Cooperatives are
not authox'jzed to make loans "to extend the membership of
cooperative associations
Revenue Act of 1926
This act was a boon to the cooperative organizations
f or it exempted thorn from taxation of their net inc omea.
Internal Fnie Act cf 19M
2
This act also exempted the cooperative associations
from paying capital. stock and excess profit taxes; certain
conditions must be fulfilled by the association in order
to be olirible for the exemption; however, these conditions
are practically the same as those Conditions nece8aary in
order to be eligible under the Capper-Voletead Act
and most of the State laws.
Promotional Holp from the Federal Exteniün Service
The Federal Extension Service also helps in the da
velopment of cooperatives. Those Extonion workers like-
wise help pivato organizations in the same field but there
has been a endoncy to go farther in the assistance given
cooperatives.
'tonaion MarketIng Specialists give information and
advice on both the incorporation and operation of 000p
erative8 but may not participate in membership drives or
handle finances of those cooperatives.
Orep'on Dairyinen's Cooperative Loague
28
9rijin and Purpose
The Orepon Dairymen's Cooperative League was the Cu).
nitnation of two preoodi.i organizations, the Oregon Milk
Producers and the regon Dairymen's Leaue. The Oregán
Milk Producers dealt with only milk in the Portland area.
As the original purpose of such an organization was to
bettor the price received for the milk entering the Per
land area, it was felt that sufficient bargaining power
was not being obtainec from such an organization. The
Oregon Milk Producers was reorganized into the Oregon
Dairymen's League on september 14, 1917.
The Oregon Dairymen's League was given the power to
sell all of the milk, within the Portland area, produced
by its members. A commissIon of 5 cents pox' hundredweight
and 1 1/4 cent per pound of butterfat wore withdrawn from
the proceed returns. In addition, penalties were fixed
for such members who failed to live up to the agreemen
The Oregon Dairymen's League failed, due to the lack
of facilities for the handling of the surplus milk which
came into the market as the price received by the members
was increased. The League was quite effective in
increasing the returns to producers, but after a short
period of operation it became apparent that there must be
provided facilities for the handling of the surplus milk.
In an attempt to develop a more efficient organization,
the 0reon Dairy.ren'3 Coop ative Loague was organtzod on
JLtne 3, 1920.
Its objects were to prontote, foster and encotu'a;e the
business of producing rr1lk and milk products
This was
the first effort made to interato the function of bar
atn:nz for the price of fluid ailk and the functions of
manffaeturi.ng the surplus iiik and marketin. the products
so obtained.
This association va of the centralized type, which,
unlike the federated a ociaions, dispense with autcrnomous local associations, The farmers become direct mem
bers of the centralized associatIon through purchase of
rnborship certificates, r s-.iares of stock, and through
the signing of marketing ontrac
this type of
a3aocig;ion, control and a horlty are cenra?ized In
headquarter organizatIon, whereas th the federate
association control Is decentralized in the autonomous
local associations,
The central organIzation has charge of all funetior
Incident to the market distributIon of its menbers
products, Most associations attempt to control as large
a portIon of the market supply as posoibie in order that
the. association iay have :rcnopoly power in tbe market,
The Oregon DairymerL's iy-Products Corporation was
organized to handle the surplus. It was a corporation in
which the Dairymen's Cooperative League hold a majority
f the comnon stock, The aiount of the coron stock was
,500e00.
The By-Products Corporation also issued one 2
1ial' niliion dollars of preferred Stock at 7 per cent. Of
the conion stock, single shares were placed in the hands
various individuals in order to qualif them as stockholdevs, arid as directors.
on
The farmer members contracted all of their milk to the
Oregon Dairymen's Cooperative League, which sold in the
bottle and can trade only the amount which they felt most
profitable. The milk remaining was transferred to the
Oregon Dairymen's By-Products Corporation for iaanutaetui'e.
Contracts were made with the members for a period at
5 1/2 years with drastic penalties for any members failing
to deliver their milk for that period of time, if they
continued production. Vith these contracts as a basis for
continued operation, the Oregon Dairymen's By..Producta
Corporation purchased approximately 30 butter and cheese
plants itbin the State of Oregon. These plants were pur-
chased at post-w*r prices and the funds with which these
plants were obtained came from unclosed pools and from the
issue of preferred stock.
Problems iii
xecnFurictts
The principal problem which arose was the inability of
the By-Products Corporation to efficiently use the surplus
milk in the Portland area end return to the members for
their milk a price equal to tiat paid by private manu- 29
factupers for the milk produced by the non-members,9 T
prduet1n area uir
jn Port?
a major
portion of the fluid milk within the state and the increase
in price received by the members, which also resulted in
increased prices to non-members, brought too great a supply
of milk into the market,
The availability of competent managel's became a second
problem, fox' the organization became large in a very ahox't
period of time and there was little chance for the training
of men for the managerial positions,
Di a into r & Ian
As a result of management difficulties and poor re
turns to the members from the surplus milk, the Members of
Clatsop County voted to withdraw from the League, flOt.m
withstanding contracts signed by the members, Before any
conciliation could be carried out, these former members had
withdrawn and had formed the Lower Columbia River Dairymen's
Ms oclat Ion,
Somo regions of the state had been previously dominated
by private large-scale concerns and the operation of coop..
erativos in competition with these private concerns had
resulted in quite adequate benefits to lbs members, The
original plants had, been purchased in the region of Coos
Ballard, F. L., 1tOregon Dairymen's League Dieban
}Loard'a Dairyman, 62:614 (December, 1921).
and. Curry Counties in order to obtain for the members of
the Oregon Dairymen's Cooperative League greater returns
than had prev1ou1y resulted from sales by the prcdueers
to the Nestles Food Company which had more or less domi
nated this area. The members located in this area were
mare contened with the operation
the organization tb.sn
in other parts of the state where conflIcts with private
organizations had nob demanded that a cooperative be
0±
formed.
asic ftea3Ons
As has previously boo-n mentioned, the primary problem
and reason for the disintegration of the organization came
as a result of the inability of the League to make an
adequate return to the members for their enJarged euppi
of surplus milk within the Portland area. This inability
was due principally to inefficient marketing of the
products which were processed from the surplus milk, in
competition with more etficienbly..opepated private concerns.
Management problems brought about a large amount of
personal dissention among bho various members and managers,
Unclosed pools, seven months behind the agreed closing
time, is a good example of these management probloma.
These unclosed pools totalled approximately one..fourth of
the entire production of some of the dairymen.
The farmers wore given little or no voice in the
operation of the concerns and were not given records of the
weirh and prices received for their jilk.
I
The organiz.tion attetpted to expand too rapidlr and
attempted to acquire a monopoly position which it was unab
to attain. This resulted in the payment of ethorbit ant
prices for the plants purchased and resulted in the issu
amos of preferred stock at high rates of interest. The
organization found it impossible to pay the 7 per cent
inboreat rate on the issuance.
The inabIlIty of the League to hmtdle laeaca1e
msriu.faoturing and mass distribution ol' the produote of the
producers economIcally brought about the formation of the
Low P
j us
Colu.rnbIa CooperatIve Dairy Association in Apr11, 1922,
provious to the liquidation of the 0reon Dairymen's
Cooperative League,
The Lowor Columbia Azsooistion
functioned In a concentrated dairying region rather than
statewIde, and, duo to the large output within that area
and the nearby market of Portland, felt that It could
economically manufacture and market the products of its
members.
Th
formation of cooperatives in 0re.on was at a
minImum until a'oroxImabely 1929, at which time there were
10 cooperativos, which were included in the 108 creameries
and 70 cream-buyig sta1ons within the state.1°
10.
Cooperative Lmrketing fld Purchsi.xig in Oregon.
xtensjon Bulletin 416. November 1929. 7 p.
52
Cooperative formation had made much less progress than- bad
been the case in the surrounding states.
In a number of
dairy states, cooperative marketing had been a vital factor
in bringing about marked improvement in
quality; however,
this has usually been accomplished through the federation
of small cooperatives into a large organization11'
The impetus to the formation of cooperatives came
about 1926 as a result of low agricultural prices in coinparison with non-agricultural prices, growing stu'pluses of
dairy products of a poor quality, and dissatisfaction with
large-scale private organizations.
Demands by various
groups Interested In the welfare of the farmers brought
about the passage of laws to give cooperatives powers
rights felt necessary to efficient operation,
After 1930, as a result of the foregoing factors,
there were many cooperatives formed from stock companies
which had been In existence £ or previous long periods of
time.
Most of the organizations were formed with the undex
standing that there would result a federation of the local
producers cooperatives which would serve as a sales agency
for (the products producted by the numerous small coop-
eratives.
These manufacturiuR plants, while still stock
companies, had narketod their surplus products, not re-
quired for the local trade, through wholesalers of whom
It was felt were makin exhorbitant rofita. The were
11. A Dairy rogram in Oregon.
tension Bulletin 413.
April 1929. 12 p.
also marketing their products under many different brand
names and were able to develop no great demand for the
products of the individual concerns.
3
pairy Cooperative Association
Although the return o the members fiom the Oregon
Dairymen's League was very unsatisfactory, the dissolution
of this organization solved no problems, Immediately after
the liquidation of this concern there developed a greater
need than before for a cooperative organization in the
Portland area, Conditions in this market had become un
satisfactory to both distributors and producers of milk.
The producers were receiving prices too low bo enable
theLn to deliver a good quality product to the market; this
factor was mainly due to the oversupply of milk. The low
prices received for the milk caused many of the producers
to become producer distributors in an effort to obtain
larger returns for their product. The result was that all
of the distributors were operating on a small volume of
sales and consequently on small margins. Th; producers,
ifl reality, were competing in the fluid milk market and
in the manufactured milk market and constantly decreasing
the returns to the distributors who wore delivering over
50 per cent of their product to retail stores, while the
producer distributors delivered to an increasing number
of homes.
a
o
dicntentj in he iortland and
alem areas tho Dairy Cooperttve AsooiaIon wait formed
in Deceiiber, l92, and began operation In Auuat i93l
Th&s organIzation also had aufficiont equipment and per
sonnel to facilitate the economical nanutactirirw. of the
surplus IUilkb
The Dairy Coopei'ajve Aoiabin beori a charter
member of the interstate A ociated Creameries in order
provide themselves with iie marketing faoilitie needed
of thi dairy pros, which
wore maiufactured from the
urplua milk end which wore not
coaumd Withifl their local area. Interstate Associated
Creameries will be discussed In Chapter IX.
31u1'lng Couoerativs
Gonsoljdajo
of man
cxin c
tiye carJe a
an out-growth of competition between the vartoua produeer
cooperatives. any of' these local nanufacturing coop..
eratives were large enough to manufactu'e efficiently but
nut large enough to market efficiently In distant markot.
pe
In 1933 the Grand Ronde Cooperative Creamery con..
solidated. itself with the Union County Ceoperatve Creamery
in order to eliminate competition between the two concerns
and to obtain better operating efficiency in the pro
ductign of the manufactured products.
inother example Is the consolidation of the ionnio
Cooperative Creamery and Warehouse and the ?armerst
35
Cooperative Creamery at Canton. This came as a result of
coaoetjtion between the Monmouth Cooperative Creamery nd
warehouse and the Farmers' UnIon Cooperative Creamery at
3herldan. The concern at; SLher:tdan over-ran the marketing
area formerly controlled by the association at Monmouth
and neceasjtat;ed the consolidation of the Monmouth oonoern
with the organIzation at Canton. This resulted In the
struction of a new plant at MoMinnville, Oregon. In 1940
the Farmers' Union Cooperative Creamery at Sheridan consolidated with the newly-formed Farmers' Cooperative
Creamery at McInnvtlle due to the Inability of the former
concern to obtain returns for its members equal to tha
which would be obtained through pooling its members'
products with those of the me!nbers already belonging
the caoperattye at MeMirinville,
caive Development in Vashinton
Cooperative In Washington, after 1915, were formed
much more readil than had been the ease in Oregon. The
growth and power of the private organizations, as was previously mentioned, very often provide a number of basic
reasons for the formation of cooperat;jveg Within the
tato of Washington large-scale private organizations had
deve?o,ed earlier and to a larger extent than in Oregon.
This created an earlier need fr cooperatjves
The basis for cooperatives dates to approximately
1916, at which time there was, In most sections of western
Washington, a siall number of outlets for the producers'
milk. These outlets were to large-scale private organi-.
zations processing evaporated and condensed milk. Returns
to the producers fluctuated drastically due to the fact
that these private concerns were also processing condensed
and evaporated milk in the middle west and wore seeking to
balance the supply with their needs from the northwestern
area. Because of the flucbuatinc returns to the producers,
approximately eight counties organized bargaining coop-
eratives to bargain with the various outlets over the price
to be received by its members. The private organizations
refused to recognize the bargaining associations, At about
this time World ar I produced an increased demand for the
manufactured products, and increased returns to the producers. During this period as high as 90 per cent of the
total production of milk was sold to these private
organizations in certain sections of Western Washington.
At the oloso of Vorld War I and the resulting decrease
in demand for dairy products, these private concerns found
their warehouses full and refused to purchase any more
ndlk from the producers. Producers cooperatives developed
out of the bargaining associations as a result of the decrease in demand for milk, These cooperatives .t first
operated only community churns and sold the buttep to large
wholesale organizations, This method of operation was
wholly unsatisfactory because the wholesale organizations
were the main outlets for the butter, and there resulted
much competition between the cooperatives.
The United Dairymen's A3aociatiøn was formed to
37
attempt to coordinate the actions of the local producers
cooperatives and to attozpt to prevent competition among
them. This organization induced the Consolidated Dairy
Products Company to act as a jobber for their butter. The
resulting benefits from the marketing of the large amounts
of butter through an efficient jobber handling only the
products of the local cooperatives, brought about the for
mation of other producers cooperatives. The local coop
erative associations borrowed huge amounts of money and
purchased and constructed manufacturing plants capable of
operatin more efficiently than was possible for the smallscale private organizations. The increased volume of
products marketed through the jobbing concern resulted in
increased marketing efficiencies arid better returns to
the producers than had been possible by selling the
products o private organizations,
CHA1T
VI
FiDERATI ON OP LOG M NRTING OROIIZATI ONS
TillaDlook County Creamer' Association
Snail eheese factories end creameries were organized
in the early 1900's in Tillamook County. 3utter was the
main product at the time of their formation. Due to inadequate marketing facilities and the greater perishability of butter as conipared to that of cheese, the
procossin. of cheese gradually replaced the production of
butter.
Inadequate marketing facilities end extreme
competition for the markets in Tillamook County brought
about a federation of these small cheese factories and
creameries in 1909. This was a selling organization for
the hend1in of the entire output of the member factories,
The Portland market was the principal outlet, h5.pmerits were made by water, since there were no roads nor
railroads, and sales wore made to specialized middlemen
in the area of consumption, who packaged the product and
distributed it under their brand names arid directly t
the retailers.
Immediately after the formation of this selling
organization there began a trend away from the Portland
market. Large amounts of cheese were being shipped into
the Portland market and the competition was more
strinen than was the case in the California market
Shipments were made into the California area in packa,d
form and sold to speeialied cheese middlemen to be sold
the San Francisco and Los Ange1e markets,
on
Previous to the year 1)19, the association relied upon
competitive cheese buyers and ordinary market outlets
dur1ii this period Tiliamook cheese did not gain prmi
nence in the markets for there was no brand identity. The
product was of superior quality, but it was only with the
establishment of a brand name, a marketing program and an
advei'tjajnj program that; it became nationally known, and
thereby able to demand a top price.
Distribution is now tending toward the mass methods,
with the exact method of marketing depending upon the area
in question. In the California market, sales are made
principally to jobbers within the area; in some areas,
however, sales are made directly to the retailers.
The association has purchased storage facilities in
the major marketing areas; such facilities have been main
tamed for a number of years in Los Angeles, San Diego,
San Francisco, Oakland, and Portland. Storage facilities
have been purchased within the past two yearn in Sacra.
mento, ?resno and Spokane. It is to the markets lying
near their storage facilities that sales are made
directly to the retailers,
The association, moreover, has made considerable
progress in :I.mproving the production methods by the hiring
40
of more efficient cheesemakers, a factory and farm field
service, by better plant management, and by the use at the
better transportation facilities which booam.e available.
This has resulted in a gradual reduction in the number at
factories from 43, at the time of the orgsnization of the
association, to 16 factories at the present time.
Along with the decrease in the number of manufacturing
plants there has been a gradual increase in the output1
Table 2 shows the trend in the output of cheese from 1909
to 1947.
Advertising, by cooperative associations, is playing
an increasingly greater role; this deve1oncnt has resuited from the increased use of trade names for the
products marketed.
In 1935 the Tillamook County Creamery
Arsooiation spent approximately 1.5% of gross sales for
advertising; this figure was somewhat below the average
listed for most of the marketing cooperatives who were
advertising on a national scalø at that time.
From the foregoing discussion it can be seen
there baa been a gradual evolution from small organizations
to the federation of these plants into a sales organi
capable of marketing on a national basis.
Effective results have been obtained through the use of a
trade name and advertising. The famous "Tillamook on the
Rind" has been especially effective. This refers to the
practice of printing the word "TilJ.amook" repeatedly
around the rim of the oheesewbeel so that when the cheese
zat ion which
4:
was cu even quile nia11 I)ieees wail carry he brand
tT1i1amookU
b1e 2
V0L
REP0RT OP !f H TIUAMOOK COifl CAY Mt0C1MX
POE TfLI 1!A1tS 1902 TO 17
1910
1911
1912
1913
23,639,61414
19114
33
214431,8C
29,1395114
2,4,07
2,506,612
2.619
31,566
36
38,603,101
14,335,817
1414,901j03
14,
1918
1919
145,100,156
1
56,71i9,190
5,036,900
6,091,259
1915
1916
1917
11
12
I
53,522,289
59,932,123
59,1430,293
63,877,9
66,8013714
6,722
6,615,957
7413,076
7,386,100
2149
6,782,(6
67,027,795
65,901,395
61,178,726
7,1477,579
67,672,236
28,373,891
7,6114,116
61
1926
1927
6,16,6O0
7,285,114
6,792,3
7,165,317
71,11,]
7,827,359
62,677,6'3
7.
67,130,812
70,fl631
8,01i8,373
472
7,578,003
8,035,332
8,5143,691
76,873,5144
8,
76,922,559
8
82,0714,673
814,143,069
9,305,696
,659,976
%,661,175
89,071,363
95,061,670
9,720,978
87,23,e06
914,309,6%
9,6314,623
1Q,9,873
11,139,566
9.735,662
104 ,*4
10,
.176
9 37,077
lO.507$16
'TiOID ¶'IV !oIavzIffvoTo
LT
LLiIG
CUJ
VII
JJT1E4 .SSO CIATiOT
The Ohallewje Cream and Batter Aociation of Cali..-
foria Is the oldest and second largest of the regional
si1es agonciet in the United states marketing dairy
roduote cooperatively.'2 Althouçh this organization bas
not been a predominate factor in marketing in the north.west, from 1939 to 1946 it extended its operation area
over a major portion of Oregon. There are, at the present
tixno, two Oregon organizations operating as members of
this regional sales agency.
Qzationa]. ietgr
The Dsirmeu's Cooperative Creamery Association was
formed in 1910 at Tulare, California. Its or:niz9tion
arose from the discontent nong the California dairmen
in the iarketin of their cream through private concerns.
At first all marketing w.s done through commission
men operating on a contract basis. This was quite
successful the first yser, but failed when the shipments
into the LaOS Angeles market came in oompetition with the
products tield. in storage by the commission agent. As a
consequence the butter was graded 10 by the commission
hoizee. A similar situation occurred in the Lan hT1naiaoo
arm re t tU11 atration.
pera ng
0S0
Batter Aasociatloxi" U. 8. Departent of Agriculture, Ciroular 0.119 (Liay, 1940), . 1.
Challenge Cream
are a.
4
Similar difficulties for the Rivordale Cooperative
Creamery resulted in cooperation between these two ean
corns. The Challenge Cream and Batter Association was
formed in January, 1911, a partnership of the Tulare and
Riverdale cooperatives.
This concern had two main outlets for butter, One was
retail packages bearing the Challenge brand and sold
directly to retailers; another was butter in balk lots to
wholesalers who packaged the butter and sold it in coripe
bition with the newly.formod Challenge brands. The latter
outlet was very unsatisfactory in that tiie large dealers
in most cases fought the growth of the cooperatives
through the refusal of shipments, and through payment to
the sales organization for lower grades of butter xegard..
less of the actual grade of the product received,
The Danish Creamery Association was admitted into the
organization in January, 191?. The Challenge Cream end
Butter Association was reorganized at that time in order
to conform to the California cooperative law, The Danish
Creamery Association was an old established firm with an
established demand f or its products; however, this orgaui'ui
zabion had been marketin the products through a private
firm and its nob returns were lower than the returns to
the other cooperatives. The reorganization gave the
volume necessary for a more efficient marketing organi..
zation and established outlets for & well-known brand of
4
dairy products. Following the reorganization in 1917,
there was a gradual expansion in the number of affiliated
locals, in the variety and quaitity of the products
handled, and in the number of distributing plants.
hated Locals
Following the formation of this federation of dairy
cooperatives in California, there was a gradual growth in
the number of local units which joined the organization.
Pwo cooperative creameries located in Idaho joined the
Challenge Cream and Butter Association in 1925. Three
local cooperative organizations in Wyoming joined at a
later date, followed by the Arago Oregon Cooperative
Cheese plant in 1937.
All of theac local cooperatives had formerly marketed
their products in the California inax'keta in competition
with themselves and with Challenge. Through federating
themselves with an established marketing concern, the
products of the various local associations are pooled and
sold under one brand name.
Group Mebrahip
A group of six local cooperative creameries located
in Woa tern Colorado came into the Challenge Cream and
Butter Association under on membership in 1930. These
creameries, although small and making but limited
46
shipments to California markets, needed a satisfactory out..
let In that state for their butter; consequently, they
organized the Iesbern 1ope Cooperative Creameries Corpo..
ration in order to hold one membership in Challenge and to
carry on other activities cooperatively within their loc.
area.
The Interstate Associated Creameries, a regional
marketing association for the 0rezon area, was formed in
1930. Interstate joinod the Challenge Cream and Butter
Association in 1939 in order to better perform the butterniarkoting service for the 0reon members, and to eliminate
the competition which had prevailed in the California
market between these two regional sales agencies, This
phase of the integration of the marketing channels will be
better discussed under the heading of the Interstate
Associated Creameries.
Sales Outlets
Each of the Challenge affiliated local cooperatives
is assigned to deliver its products to either the toe
Angeles or to the San Francisco branch, sometimes referred
to as the Southern Division and the Northern Division,
respectively. The general plan is f or each local to ship
to its assigned branch, although the sales agency may
divert products tron one of these markets to the other
instruct a local cooperative to ship all or part of its
47
products to the other sales branch for a short period. All
of the a -of-state member cooperatives, except nine of the
eleven in Oregon, shipped o the more southern California
units. These market assignments are largely on the basis
of the volume of product to be sold with respect to ad-i
vantageous selling and transportation costs.
Distributing Plants
The Challenge Cream and I3utter Association has various
distributing plants; in 1840 there were 11 in California.
These attempted to carry as large amounts as possible of
their product directly to the retail stores.
Challenge sells its butter in two ways. A large
portion of its sales are of print butter to retail store
hotels, and restaurants; but a certain amount of the starplus batter is still marketed in bulk to wholesale receivers and to jobbers.
pregon, ernborsb
Interstate Associated Creameries withdrew from
Challenge in 1946, as will be later explained, in order
dissolve and allow all members of the Oregon sales organi'.
zation to join the United Dairyien's Association, &
regional sales organization in the $tate of Washington.
This move was due to the inability of Challenge to handle
the powdered milk produced by the Oregon members.
Tw
Oregon producer cooperatives are members
Challenge at present.
Arago Cooperative Cheese Association
This organization became affiliated with Challenge in
1937 to obtain a more efficient outlet for its cheese.
Due to the marketing trend toward mass diatrtbu.t ion, i
became necessary for this tall organization to seek a more
economical plan for marketing its producb, At the present
time a major portion of the output of the Arago Coop
erabivo Cheese Assootation is shipped directly to $an
Francisco in the raw form. The cheese is then aged and
marketed, under the brand f the Challenge Cream and Butter
Association.
Ro
ie Valley Dair Cooserativo
This producers cooperative was formed October 6, 1944,
and became, upon incorporation, a member of Challenge.
The Rogue Valley is geographically isolated from an
large market f r fluid milk. As a consequence the dairy
men have been arced to accept prices quoted by the
privately..owned manu.facturing plants.
The dairymen became
so dissatisfied with the narketing conditions that, after
severa]. unsuccessful attempts, a producers cooperative
was
formed.
This local organization produces both buter and cheese
in relatively 8mall quantitioa, and, as did the local
cooperative at Arago, Oregon, affiliated ttelf with the
California sales association to obtain the benefits of
mass distribution and to benefit from the ise of a well'
known brand name.
0
uwrrEi) DAIR!EN'S AOCIATtON
on
The factor which necessitated the formation of a
regional marketing agency in Washington was the develop.ø
mont of numerous small cooperatives in the Western
Washington area. These producer cooperatives were manu
facturing small amounts of unstandardized products, a
large portion of which was marketed outside of the local
area.
This marketing organization was formed in an effort
to by..pass some of the large dairy processing and selling
organizations which marketed the products under their owii
brands. Its purposes were:
1. To prevent competition among the local coop
erativea in the marketing of their products.
To develop one brand name for the products being
produced by these producers cooperatives.
To standardize the product and to maintain
high a quality product as was possible,
is regional marketing agency was formed in 1918 to
carry out the purposes noted. Its facilities consisted of
an ofiioe in charge of one person who acted as advisor on
production problems, and as an organizer for the various
producer groups desiring to form new cooperatives,
51
The first products were narketed through Several local
jobbers in the Seattle area. Those cooperatives felt tb.a
cooperation between them would benefit all and would elimi
nate the competition that then prevailed between them.
Consolidated
Da1ry
Products Coipany
ThIs oopany was incorporated under the laws Of
Washington In 1920 as a private corporation to act as t
axelusive jobber for the United Dairyixen'a Association.
It was formed with the understanding that, when funds were
available, it would be purchasod by the members of the
United Dairymen's Association.
The Consolidated Dairy Products Company was formed by
ian well versed in the marketing field and with numerous
marketing contacts outside of the United States, pz'inoi
pally in Alaska. As a result the company operated quite
a
efficiently and to the satisfaction of the
members.
The
main business of the company was to assemble the goods for
sale to retailers or to jobbers; it handled, from the begin..
ning, a wide variety of related products, all capable of
being distributed through mass distribution channels.
The Puxohaa e of an Intere3t in Consolidated
n 1925 three of the members of the regional
kebing association purchased 49 per cent of the stock of
the Consolidated Products Company. This was the first time
in the history of the Pacific Northwest that local produoem
cooperatives had integrated marketing functions be the
point of owning an interest in a private concern for the
purpose of marketing their products, The jobbing concern
continued to operate on a profit basis, but 49 per cent of
the profits were returned to these three local 000pe'ative
which in turn distributed this profit on the basis of
patronage to their members,
The Consolidated Dairy Products Company continued
market the products of' the remaining members of the
regional marketing association which owned no stock in the
sales organization.
urohase of Consolidated
The United Dairrmon's kasociation, in 3.930, purchased
100 per cent of the stock of the Consolidated Dairy Produe
Company, which, as a result, became its exclusive sales
agency. The operation of this agency will be discussed in
a later chapter. Federal legislation played an active par
in this integration since he Federal Farm 3oard tinanc4d
the purchase.
Function of the United Dairymen's Association
ketin Areernents
All local producers cooperatives, who desire to
members of United, must sign marketing agreements.
become
The
obligations of United, however, are carried out by
ConsolIdated, The details of this agreement will be dia'cussed when examining the operation of the latter.
Distrtbutjon of Profit to the
emoers
The primary function of United is that of diatz'.buting
the profits received from the operation of Consolidated to
the member associations in the ratio of the volume of
patronage received from each of the members,
The board of directors meets annually to aseez'tain
the amount of stock and the amount of cash that is to bS
returned to the members, Reference to Appendix Table V
wi].l show the expenses of operation of the regional
marketing organization and the returns to the
associations,
member
Growth of the United Dair man'a Association
This organization was formed by seven local coop.
ex'ative organizations; at the present time there are 44
members. As well as growth in the number of members and
In volume of products marketed, cash and stock returns to
members have tripled since 1931. The writer again refers
to Appendix Table V.
CHAPL
INTERSTATi ASSOCIATED CEAIIE3
Conditions Pri
its Formation
Production and
In Oregon there was almost continuous diautiataotion
with the marketing conditions for butter following the dis..
solution of the Oregon Dairymen's League. By 3.928 the
butter industry was rated as the most important phase of
the state's dairy business. In that year, of the
940,000,000 pounds of milk produced, 400,000,000 pounds
were used for the manafacturjn of butter.a'3
3y 1928 the production of butter within the state had
about doubled the 1919 figure; this was an increase
in butter production from 13,279,369 pounds to 26,781,038
pounds; of this amount, approximately 2,300,000 pounds
were sent to the San Francisco and Los Ane1ea markets.
Feports received from these California markets stated that
the larger percentage of the butter received was of
mediocre quality and that some of it was very poor, The
following in a frequency distribution of the scores of 265
samples taken from butter produced within the State of
Ore on in 192814
Wi1tor, G.R., and. Carpenter,
B3.tter and Cheese" Oregon iitenaion
0. 5,1
M!.y 1940. 16 p.
Larrabee, E.S. and Wilster, .U. "Tb, bitter Industry af
Ore8on
xperiment Station Bufletin 68. December 1929.
Sc ore
92 score end above
90 to 91.5 score
90 to 90.5 score
below 90 score
con
all samples
5
'1.2
30 9
41.1
20 8
A factor leading to the poor quality buttez' produced
in this state was the fact that a considerable amount of
the better quality cream was shipped into Washington and
Idaho for the purpose of making butter, which was, in
turn, marketed in California. These two states were able
maintin a much higher quality output than Oregon as a
result of the activities of the federated cooperatives who
gave constant help to the improvement of quality of the
product8 of the member associations.
A prinoipa]. portion of the Oregon butter was produced
ho Willaniette Valley and in the Port3.snd area, The
primary purpose of much of the milk produced in these
areas was for the fluid milk trade with only the surplus
milk used in the meking of butter. Butter was conse
quent].y a secondary factor in the section of the state
producing the major portion of the total output.
Markets
All creameries in Oregon were confronted with serious
marketing problems for there had developed very strong
compobitton. thch of the butter was boo poor for out'ofabate movement. Portland, boinr the central market in the
state, received a major portion of the products marketed
J6
outside o the local nrea of product Ion, and he wide vaz,iN
atian in quality wa a coziion criticism of the wholesaler.
d jobbera. These middlemen found it practically im..
possible to build up a regular trade in that the products
varied constantly and round it necessary, in moat eases,
to detsoraine the quality of each lot of butter received
and then attempt to dispose of those lots to a paz'ticular
trade which required that grade of butter, The scores of
butter ranged front 83 to 93 during this period.
A oonstant attempt was made to improve the qualit
the butter being shipped to out-ofstato markets in an
effort to alleviate the constantly increasing surpluses
occurring in the markets within the state. In reality,
this attempt resulted in a segregation of the butter of
better quality for outu.of..state consumption and the con
eumption of the poorer quality product within the state,
In 1927 only 10 per cent of the butter shipped to the
Calif ox'nia marked scored 92, while in 1928, 3 per cent of
the butter scored 92 and above, as the following dtstz'i'
bution will how.15
So ore
Per cent of all sazaplee
92 score and above
91 score
90 score . .
below 90 score
15.
'i1stor, G. ii., and Carpenter, saul.
Oregon hitter and Cheese" Oregon
o. 541. iy 1940. 19 p.
35,0
25.0
26.0
14.0
'Marketing
teziion Bulletin
Conferences
e1at1n' to Pormatton of a Federation of Coo
A conference of the agricultural leaders of the state
held in 3azrnary, 1924, at Corvallis, Oregon, It was
brought out at this conference that the chief problem of
the dairy industry was that of marketing its excess
products in ou-of-state markets, Zn an attempt to show
the growth of the dairy industry, it was stated that the
1910 consumption o butterfat in the state exceeded prow
due tion by four million pounds; in 1920 production ex
ceeded consumption by two and onefoupth million pounds,
It was recognized at this time that a program of quality
improvement of butter produced within the State of Oregon
would be greatly aided by coordinating the marketing of
cooperative creameries.
There were yearly meetings held. from 1924 to 1929 by
the 1oadin dairymen and attempts were made at that time
to federate the cooperatives of Oregon; each of the
efforts failed. In the meanwhile comparisons of the
Pacific Coast markets indicated that the Portland market
(1) was the lowest priced market on the coast; (2) aupi
plied the pporeat grade butter; and (3) had the lowest
percentage of butter marketed by cooperative creameries.
Efforts
fedorate the cooperatives of Oregon h
h han4icaDa3 1 lack of vo1unie (2) 1
sport of the Oregon Aricuitura1 oonomic Q,
Conference, January 23 to 25, 1924, Oregon .Itate
College, pp. 5-6.
1929, in
November
416, Bulletin 1xtension College State Oregon
Oregon in Purchasing and Marketing Cooperative 17.
outhwea s the and on Ore in d
of
cooperatives member of up made be would This Creameries.
Associated Interstate the aa known be to organization
State the in cooperatives dairy
an form would Oregon of
the that docided finally
was
It affiliated.
'os
should
cooperatives Oregon the which with organization the to
as debated cooperatives local and hold were ileetings
organization. marketing statewide a into cooperatives local
the of federation the forced policy This organization.
marketing regional a with themselves affiliate to agree
purposes, construction or merchandising for money borrow to
desiring cooperatives, producers local that was 1929, in
policies the of ne
formed Board, 'arm Federal the of
192 of kct Marketinr
gr1cultural
conditions, marketing n and prices in
improvement force to hem enable to money sufficient had
and products quality high of volume markotin sufficient
bad felt, was it organizations, those of ithor
California. o State the for asacotation marketing
f ate thc fc eocietion
regional the op tnton
mietb*E retonal the either use shon Oreut that felt
dsix7men ledtn Lie of .few
hxiic&pe tkuoo first
the overeoe to citfti.cult triai1y it rwde that ditions
con. tbitive
sert (4 and. oy;
58
5
Was hin? t on.
The format ion of S uc Ii a re i onal market in
organization together with the help and advice of the
Federal Farm Board azd the Federal Extension Service en
abled the local cooperatives to obtain Federal Farm Board
loans, Interstate Associated Creameries was then the
youngest of the regional sales organizations on the Pacific
Coast.
a Reiona3. 8a1
The purpose of Interstate was to market all of the
butter and cheese produced by its member units in excess
of that amount required for consumption within the area of
the local cooperative. The excess production of each
creamery over requirements for local oc;sumption was
pooled with the excess output rece1ved from the other cooperatives; competition was thereby eliminated. Production
riitht therefore be maintained at maximum efficiency and
effective selling be maintained.
F,tnancin
of the Regional Sales Organization
All loans made by' the Federal Farm Board were made
directly to Interstate Associated Creameries; and through
an ar'reeritent, these funds were reloaned. to its members.
The interest coil ected from the latter in excess of that
charged by the Federal Farm Board was placed in a reserve
fund to cover any defaults which might occur.
60
Table 3 shows the loans made by the Farm Board.
By
January, 1934, the original loan to the association of
3O, 000 had been repaid and by January, 1935, all loans
the members of the Interstate Associated Creameries bad
also been paid in full.
It was necessary that a certain anount of the stock
be subscribed to before it was legally permissible to
operate the organization. Therefore all member organiza.
tione subscribed for, end gave a note for, a 4,0OO stock
subscription. This subscription was repaid out of a 1
deduction from gross sales,
erve Fund
An amount equsl. to 1% of the gross sales was withheld each month from the net proceeds of the members, to
create a reserve, or working capital fund. This fund was
evIdenced periodically by the issuance of preferred stock
certificates to the members. Dividends were accrued
monthly and payable one year from the date of issuance of
the certificates.
orat Ion of the Org anizaton
Poolinz of the Products
PoolIng involves three functions when used in the
operation of a cooperative marketing organization. These
three functions are:
61.
Table 3
LOANS MADE TO IW$TA!E ASSOC1A
ITS
BY T]{E
Loan to the Intera
Associated Creeriss
Loans through mt state
0/31
CRE.A)1UE8 AND
1 3/8 %
$30,000.00
1 1/%
$ 6,750.00
6/12/31
1 3/8 $
20,0oo.00
6/12/31
1
Asøoj&jed Creameries to
mnber usooiationsg
1 0reon Cooperative
37.50 to be paid each
3 months btirning
9/30/31
Eugene Farmers Crean
$5,000 to be paid each
year beginning 6/12/33,
$2,500 to be paid each
year beginnIng 6/12/33
$10,000.00
Eagle Dair'men'g
'ti',.
,907.07 to be paid
each
r beginnin
8/122
31%
e19,535.38
Total Borrowed
*86
Source, Report of Interstate Associated Creameries by the Certif&
Pubi ic Accountant,, I D. Wood & Conpeny, Deoember 31
p. 5
2
e physIcal mInglIng of the products
The combining of expenses of operation
The lumping of z ales ret urns and the .ppor t
of net returns among the metbei'
peraiives in
proportion to the product contributed by each.
Handling and istribution of Px!odue a
All products were paid for at the curTent market
price at the tIme Z the acbual negotiation with the mern
ber wilt. This method cave the member concerns the
authority to hold products if they should feel that prices
would raise in the near future,
In a majority of cases the products were shipped from
the loct producing concerns to the Interstate sociated
uoriea warehouse in Portland to be pooled with the
products of the other members. Freight charges from the
member to the warehouse of the sales agency were not
pooled duo to the differences in distances and consequent
differences IA freight charges. In many eases, shipments
were made directly from the producers cooperative to the
purchasers of the product A wido geographical dispersion
of members facIlitated cheaper distribution of the
prouots, sInce siiip'ients could be made directly to the
purchaser.
The larger amount of the products of Interstate were
marketed through wholesale rniddlemen.
That i*etbod of
iarket ir
llowed the termination o the mart I
nent between the t-iree regional iaarkettng oranizatjon
wblch will be diccussed In a following chapter.
. large amount of the packagIng and branding was done
at the PorUand waohouso, except those shiptaenvs to be
acie direct from the member to the purchaser, in which
cases the members did the packaging.
:1:
0
of Challen'e Orear and &itt
The annual poundage of butter handled by Interstate
Associated Creameries Increased 2.68 tImes from 1931 to
1938.
In 1938 slightly over S million pounds of butter
was shipped to out-of-state markets, since only about 2
million pounds were consumed within the trade area of
Interstate members.18 Oregon was a surplus buttez'-pro.
ducing state, as was each of the other western states,
excepting California.
From 1931 to 1935 there was a marketing agreement be..
twoon Interstate, United and Challenge; this agreement
will be discussed in Chapter X. Following the termination
of this marketing agreement, butter was shipped into the
California market In competition with the products
marketed by Challenge.
The butter produced by the Oregon
was sold throu
obbers and wholesalora. The
18. Farm Credit dministration. "Operating Methods of
Challenge Cream and Butter Association" U. S. Department of Agriculture, Circular 0-119 (Ltiay, 1940) , p. 1.
Ore:on product, be1n
4
sold under little'advex'tjaed brands,
gave lower returns than would otherwso have beoLlpossible.
It wa
felt hj both Challenge and Interstate that
corrective measures should be taken.
This culminated in an
arrangement whereby Interstate Associated Creameries held
a membership in the Challenge Cream and Butter Assoolati
in the interest of the local members of the Oregon mar
keting organization,
This affiliation was completed in
April, 1939.
By this time Challenge had expanded its area of
supply,
Members were located in Idaho, California,
Wyoming, Utah, Colorado, Nevada, New Mexico, and Tex*s,
well as the new members from Oregon and southwestern
Washington,
With this affiliation, local control of manu
facturing and merchandising in Oregon and southwestern
Washington continued without change, but; the competItion
with Challenge in California was eliminated.
Reference to Appendix Table No. VI shows the amount
of butter handled by each of the two organizations. All
products produced by the members of Interstate to be
marketed outside of their local area of distribution were
labeled with the brand of the Challenge Cream and Butter
/saociation.
Trends in Marketi
Dunn the World War XI Period
5
The war brought about many changes in the dairy
tndwtry. The Dairy Cooperative Association began, in
1934, production of the first milk powder to be processed
within the State of Oregon; the Farmers' Cooperative
Creamery at Me1innville installed milk powder equipment in
193e3, These Were later followed by the eugene Farmers'
Creamery.
Interstate Associated Creameries was organized to m
ket only buttex' and cheese. When an attempt was made to
induce this organization to market the milk powder produced
by three of its members, an objection was raised by the
remaining members.
It was teared that milk powder would
tend to compete with the butter and cheese already
marketed by Interstate. These remaining members, cones.
quently, desired that the local member units, producing
milk powder, do their own marketing.
The Challenge Cream and Butter .&asociation was like'.
wise not equipped for marketing mtlk powder, and since a
major portion of the ii1k powder is consumed outside of the
main areas of production, adequate marketing necessitated
Lacilitlea not readily available to local manufacturing
units These thiee units manufacturing milk powder, there
fore, in 1940 became limited members of the Jnited
Da1rymena Association which was the only association
on the Pacific Coast equipped to market the powder.
ubaidj.es and pricinz during World War II encouragod
a diversion from the manufacturing of butter to the pro
duction of other milk products desired by the government,
66
This diversion resulted in an increased production of mi.Th
powder, particularly whole milk powder, and this in turn
tended to shift the greater volume of the product marketed
by the Oregon members of the Interstate Aaoeiabod
Creameries to the United Dairyinon's Association.
All of the principal member units in Western Oregon
wore producing milk powder, This shifted more responsibility to the Eastern Oregon members to deliver to
Interstate the volume of products required fez' its
efficient functioning At the sszae time there was an en.'
larged demand for whole milk and niembers who were not
producing milk powder shifted much of their production
from butter to bottled milk.
These two factors resulted in a serious drop in the
volume f butter to be marketed through Interstate. To
this lower volume was added the rise in wage rates and in
prices of supplies and equipment, Interstate therefore
found itself in a critical position.
Meetinui Held to Consider Solution
Special meetings were held late in 1945 to consider
the problems. Representatives from the three regional
marketing organizations and the Agricultural Extension
67
Service at Oregon 3tabe College were present, Two alternatives were developed,
One was to levy an assessment on the member uni
who were not using the sales agency, This assessment would be maintained until the Production of
butter might be resumed and Interstate's services
needed once again.
Another was to sell all physioal facIlIties of
the Interstate Associated Croaierjes to the
Consolidated Dairy Products Company; all former
members of Interstate to become direct members
of the United Dairymen's Association,
a second was believed most advantageous since it
was impossible to estimate the time which would elapse
until the end of the war and the renewed demand for
butter. Selling all physIcal facilities was also advazitageous since member cooperatives would receive compen
sation for all investments whIch had been made In the
facilities of Interstate. In April, 1946, all detaIls
wore completed,
Interstate Asocisted Creameries was
dissolved and its properties taken over by the Conao1I!
dated Dairy Products Company.
Growth and Benefits Obtained from Interstate
embers
The organization had three charter members at the time
Table 14
A C(1DESEI STATF.T Oi? TUE BUTTER POW OP1TiS OF INTERSTAT)
i;niis ?EAB 1931 TO 19146
S ales
Year
Pounds
2,624,794
3,227,139
1931
1932
1933
2,569,331i
1934
1935
1936
Grose
1939 (9 tno
.62.204
141
3,3
69
14,
19
14
77
1939.1940
19U.1
19142-1943
91434%4
t95
i191a6
5)
7,s ,052 1,954,809.06
556,745 1,414
pound
794.84 $ .272
5,1473,852 i ,861 ,706.94
1937
1938
Ezpr S 03
.27
2,677,3143
3905
.214
or
.
o
OCIMTh)
Net Froceeda
Per
Total.
Total
ound
aales
p26,9414.22
$ .010
.007
.0131
3.76
3.19
6.15
,850.62
638,401.42
515,045.70
.262
.197
.2005
.0127
.0104
.0097
5.05
3.51
2.92
806,933.36
1,324,953.39
.2376
.2806
.3219
21,e3; .20
33,759.74
.250
.291
.332
142,927.33
.314
.276
.260
53,979.41
66,934.
147,631.61
2.90
3.42
3.31
.328
71,114.06
65,891.28
8.71
4.85
14,;47.80
143,1481.07
6,704,903
.476
156,061
.0233
,607 2,359,640.86
5
4,317,279 1,9148,520,84
680,504
193,089.33
.451
148,134.68
116 ,4%.27
12,411.11
.0339
182
1,4143,823.70
1,807,727.53
1, ; 7,874.70
71j5,333.05
14.89
3,032,8214.71
6.28
7.52
6.43
2,211,506j.
1,802,024.57
180,673.22
96.214
96.81
93.85
914.95
96.49
97.08
.3302
.2666
97.10
96.58
96.69
.2784
.3815
91.28
95.15
.14174
.41714
93.72
92.48
93.57
1,393,8148.66
1,490,157.00
sales
.14523
.2655
9541
Sources R*rds ot the Interstate Asseolated Creaier1es
03
of formation. The following year, 1931, five additional
69
cooperative member associations were organized. The con..
solidation of five nonmembor cooperatives with member
units resulted in a. larger volume.
Volume of Product
Pablo 4 shows the volume of butter handled by Interstate each year of operation.
Table 5 shows the volume of cheese marketed. Cheese
has not been as important as has butter. The concentrated
cheeso-nu&i.ng section is in Tillamook County, and the
manufacturing plants there formed their own marketing
federation rather than affiliate with Interstate.
Most
cheese handled by Interstate had been produced in plants
processing butter as a major produc
Table 5
TOTAL POUNDS OP CE& ICIVBD YRLY BY ThE INTER3TME
.S0CIATI) CREAiERIES, YAR8 1931 TO 1946
1931
1932
1933
1934
1935
132
48
692
829
1939
1940
1942
1943
1944
1945
1946
(A ri]. 15)
ce: Roper on the Interstate Associated
by the Certified Public Accountants
204
2,624
698
1,408
2,059
680
Cream
ies
Returns to Members
70
In the last analysis, the question of the efficiency
of any concern is determined by the profitability of the
operation of the organization. Consequently, to determine
the efficiency of the operation of the Interstate
Associated Creameries one must evaluate the returns made
its members. Gross sales, expenses, and net proceeds
per pound of butter handled through ho pool operations
ape given in Table 4. It is found from this table tht
there was no correlation between the volume of butter
handled by the organization and the expenses per pound
for sales.
quality Improvement, As is shown by Table 6 there
was an increase in the quality of the butter marketed
prior to the war years. With the wartime demands and the
diversion to products other than butter by the members
located in Western Oregon, quality declined; also, OPA
pricing policies did not encourage quality.
Table 6
E OF EACH SCORE OF BUTTER RANDLPJD BY THE INTERSTATE
.TED CREAMERIES, BT YEARS z !EARS 1931 TO 19h6
Tear
1933
1931i.
Per cent of
93 to 90
score
57.9
51.9
58.1
79.1
1935
1936
Per cent of
90 score
end Ufld*5
12.1
18.
Ii,1 .9
20.9
*
70.3
68.9
76.h
29.7
31.1
23.6
1939
19394iO
52.3
b7 .7
141.142
68.6
31J
I
63.2
68.8
69.8
51.6
36.8
31.2
30.2
1937
1938
191Oi3
191
19
1546
7 .0
*
ormgt ion not ayatlable
53.0
*
Sources Reports of the Interstate Aesooiated Creameries b3r the
Certified Publjø A000mtanta
CHAPTER 1
MEKETING AO1EEENPS JETW1EN REGIOILAL MARKETING
3OCIATIO
Laws Pert ainin to the 4geemerib
Anoth6r phase in the integration of marketing
functions was brought about; by the passage of the Agri
cultural Marketing Act of 1929, and the Capper..Volstee4
Act. These acts legalized a type of monopoly nob allowed
private organizatIons, rather Lb sanctioned strong marketing
agreemonts between the various federated cooperative
organizations. This mgrkotin agreement; was made to bring
about cooperation between the regional associations in an
effort to better compete with the large private marketing
concerns through the sharing of markets, a device which
Illegal for private organizations.
Prior to the actual operation of the Interstate
Associated Creameries, on August 20, 1930, a marketing
agreement was made between the Interstate Associated
Creameries, the United Dairymen's Association, and the
Challene Cream and Butter Association.
This rnarketin agreement was to extend from January 1,
1931, to 1)eoembar 31, 1935. The purpose was to eliminate
speculation, waste., competition, and the duplication of
faci1itIes and to more efficiently perform the marketing
functions in their local trade area.
73
of Oporabjon
These regional marketing associations, through this
marketing agreement, were allowed to sell only within their
own trade territory, as defined by the agreement, and any
sales to be made outside of this territory had to be made
through the regional marketing association receiving the
product who acted as a commission agent. The association
rooeivinp the product undertook to sell at the highest
possible price, However, if the price obtatnable wan not
acceptable to the shipping concern, the shipper might then
sell its product in the territory of the receiving
association. t could not, however, sell at a price less
was originally quoted by the racetvin association.
Result
n theory, this method or marketing was advantageous
for all but in the actual practice the purpose, as was
stated in the agreement, was not the result. Oregon was
more rapidly becoming a surplus area and the volume
marketed in out-of-state markets by Interstate was increasing even more rapidly. A very large amount of the
butter and cheese was consequently being sent into the
California. markets in competition with those products
handled by the Challenge Cream and Butter Association.
The California sales agent would follow the practice of'
marketing the products of its membors to their best
advantage.
74
The excess demands in that market would then
receive the produot from Washington and Oregon. This re
suited in the best California markets receiving the
products that were locally produced and the poorer markets
receiving the products from the states to the north.
Another undesirable feature was that shipments from
out..of..state points were made under the brand names used
the area of manufacture. There was little advertising
these brand names in the area of consumption, even
though the quality might be equal to that of the local
products. Upon termination of this agreement in 1935 it
wa not renewed.
PART IV
0V4&ERSHIP OF PRIVATE ORGANIZATIoNS BY COOPERATIVES
CHAPTER XI
75
CONSOLIDATED DAIRY PRODUCTS COMPNY
Operation
The consolidated Dairy Products Compsny is given com
plete authority to transact all business in the operation
of the sales organization. The duties of the United
Dairymen's Association have been previously stated and
include such functions as the signing of the markotirg
agreement with all members and the distribution of profits,
received from the sales agent, o the members of United.
Marketing Agreement with the Member Coo eratives
The marketing agreement between United and its mem-
bers will be discussed in connection with the functions of
Consolidated, since this organization has complete
marketing authority.
The marketing agreement between the local producer
cooperatives and tt.e United Dairymen's Association is as
follows:
1.
The sales agent is an exclusive agent to market
and sell 11 products manufactured or received
by the local plants, except that amount which
the local concerns may sell for consumption pur
poses within their local areas. The sales agent
is authorized to define the units within which
such locally-oonsu.med products may be sold.
76
e sales agent agrees to sell all products pi'o
duced by the local cooperat:Lvos and from the sales
proceeds, deducts the following amounts: (As of
January 1, 1948)
vaporated milk, when sold to the retail trade
per case
Evaporated milk, when sold to the wholesale
grocers or to the Government
per case
Butter, Cheese, Powdered Milk, and butterfat con
tamed in the sweet cream, when sold to
wh.olosale trace
. . . . .
per' lb.
Fluid milk sold to the wholesale dealers of
eattlo . . . . . . . . . . .
per 1.00 lbs.
Condensed Buttermilk Paste, when sold to the
wholesale trade
1/8 per lb
The amounts deducted may be modified or increased
from time to time as determined by the board of dii'ectore
of the sales agency, Such charges or deductions are used
for the purposes of covering all handling oosta, costs and
expenses of carrying on the business of the agency, and
for establishing such reserves as may be deemed necessary
by the directors.
3. The local cooperative has the right to tame the
price for vihion the product is to be sold. When
the marketing
order for such
products and notifies the member, the products are
hilled to the sales agency and payment is made to
the local member wit1i1n a period of ten days.
From the payment is to be deducted the amount of
the ooxnmbn, less the usual cash discount.
a local cooperative must also reimburse the
sales agency for the fretght of the products from
the local manufacturing plant to the location of
the sales agency.
All standards and classifications of quality, pre..
scribed by the sales agency, must be followed b
agenc,v has
n
the local member.
tha event that the local member should make a
sale to another concern outside of its sales area
it must pay to the sales agency the authorized
deductions.
Under this type of an arrsngemerLt, the marketing
agency takes title to the products and may sell
the products as the owner thereof.
1 rights of the marketing agency may be
exercised by and/or through any corporation owued
or controlled by this marketing agency.
In purchasing the products of the local coop..
erative, in c-ase there is an amount due the mar
ketng agency from the local concern, the
proceeds from the sale of the products may be
applied upon the amount receivable,
The principal benefits obtained by the marketing orb.
ganizat ion from a marke;ing agreement is the assurance of a.
more or 1885 definite volume of business.
ago Faot1ttie
One objective of a:y regional marketing agency is
stabilize and better the prices through regulating the floe
to market. Adequate storage facilities are consequently
necessary. This is especially true with respect to dairy
products, the produetioi of which is very definitely
seasonal. It is not known how much effect the storage of
butter has in the stabIlization of butter prices; however,
it is known that butter prices do not fluctuate as they
cUd in the past years when there were few concerns with
adequate storage facilities,
Cheese. One of the steps in he marketing of choose
is the assembling
the product froni the factories to
warehouses where it is aged or processed for market.
In Table 7 is given an approximation of Consoli..
dated's storage capacity for the two principal products,
butcer ad cheese.
bl
assembling of butter nearer to production
79
Table 7
STORAGE CAPACITY, IN POtflLDS, 0
C0OLIDATED DAIRY PRODUCTS COI'A1iY
ROXI1MT,
Location
Butter
At Seattle, Washington
000,000
At Tacoma, 1ashin.gb on
200,000
1,500,000
10,000
At Portland, Oregon
500,000
750,000
ens zo
naolidated Dairy
d, Oregon
cducts
sources rather than in the large central markets is a cornparatively new development."9 The statement as to the
assembling of butter may be made as to most of the other
dairy products having approximately the same TaluS per
unit of product as has butter, and requiring approximately
the same storage facilities. This assembling is partly
due to the motor truck which makes it possible to assemble
the products from short distances for car load shipment
and provides an economy in the marketing of the products.
sch warehouae listed in Table I assembles the
products produced at the member producers cooperatives
located nearest the warehouse with respect to freight
charges.
The assembling oi the products nearer to the
19, Proker, R. K., Colobank, A. W, Boffman, A. C.,
Large-Scale Organization in the Dairy Industry,
U.S.D.A. Circular No. 527, July 1939, 37p.
80
productiQn source, however, does not hold true as it per's.
taina to such products as powdered ndlk and evaporated
milk. These products have certain production, storage, and
shipping qualities which, in total, ordinarily do nob allow
economical assembling of the products. These factors may
be listed as follows:
1, Such products, as previously mentioned, are not
produced in a number of small manufacturing plants
within an area but are, on the whale, produced by
a few large, widely-dispersed plants.
2. These products do not require special storage
facilities and can be stored until final shipment
with a minimum of expense at the manufacturing
plant.
Production of these products is ordinarily on *
large scale and the output of one plant can be
shipped in quantities large enough to effect
economies in the coat of transportation,
butin with Retard to the Location of saembl
There is an attempt made to distribute products from
the plant located nearest to the point of consumption.
The branch plant at Portland, Oregon, which assembles the
products from the members who are located in Oregon and
Southwestern aahington, handles most of the products
being shipped to the Hawaii and California markets.
83.
The plant at Tacoma, Washington, has a smaller storage
capacity and. is equipped far little more than distribution
within the local area surrounding the city.
The rain plant, at Seattle, assembles from a wider
area. It has the largest capacity and handles shipments
to other states, excluding Oregon and California, and all
overseas shipments, exclud.tn Hawaii,
Pooh
Powdered milk and evaporated milk payments are
operated on a pool basis. In sales by Consolidated, the
product of any member may be shipped to the purchaser, but
all members havinF that product in storage receive a share
o± the proceeds. This method of operation is necessary
when the product is nob assembled at one point.
The other daIry products are pooled physically
members are paId tho wholesale price at the date the
products are sold, minus the "Estimated Costs of' $ale&'
and cash discount which are withdrawn at the time of pay..
ment of the proceeds to the members.
The price paid by the sales agent for the products
tends to equal the wholesale price for the products a
that time. In the case of some products, principal of
which is butter, the actual wholesale price is determined
by the manager or the Consolidated Dairy Products Comanyd
The prices, however, must be kept in line with the
82
wholesale prices ir,. other parts of the United ates in
order that there will not be heavy movements of the product
into the state or out of the state in order to equalize the
prices over the large area.
The price decisIons reached by the manager are quoted
to all member plants end the members attempt to market
their looally'.so1d products at the prices quoted. They
may vary prices from those stated by Consolidated, but
ordinarily this is not done.
Distribution of Products by Consolidated
An Intricate daily system. of inventory shows the
holdings of each product by each member. With this know
ledge, Consolidated can order shipment of products trom
the members located nearest the destination of the shipments
onfat Dry Iilk Solids. Local sales of this product
are made almost wholly to bakerIes and, f or the most p
in LCL lots.
Previous to World War II a large part of the product
wai sold in the eastern states. Due to the 50 per cent
increase in freight rates during the wax', the eastward
movement of this product has decreased since the percen-
tags Increase in freight rates places the western
marketin concerns at even more of a disadvantage with
respect to the competiruj firms in the Great Lakes Region,
The only alternative, as a consequence of the freight rate
63
Increase, is to sell in the closer areas, of which Cali.
fornia has become more important. In this area there has
developed extreme competition between the Consolidated
Dairy Products Company and the Golden State Creameries,
California corporation. both of these concerns are oom
peting for the western markets, as well as competing for
the sales to the Commodity Credit Corporation.
All purchases made by the Commodity Credit Corpora..
tion from the Consolidated Dairy Products Company are
shipped from Portland.
This product was developed during
the war, during which time the government purchased the
entire output. There was flQ prewar ezportence with the
Whole Milk Powder.
marketing of this product, so after the war it was neces.
sary to develop market outlets quickly, There has
developed a reasonably good export market. The greatest
demand is ii the European area; however, Alaska, Hawaii,
and Mexico are gradually expanding their purchases.
The Commodity Credit Corporation is still purchasing
quite large amounts in canned form for delivery to West
Coast ports for export. The northern shipping point is
Seattle, Washington.
There is a limited sale of the bulk powder to the
various relief agencies who re-package the product for
shipments abroad.
Table 8
DISIJ3UTlON OF EVAP0RAT1D MILK BY ThE C01SOLIDATED DAIRY PRODUCTS COMPABTY
AT
0
'}
YEARS ENDING
195
eases
Seattle
Western Washington
Eastern Washnton
Montan a
Idaho
California
Oregon
36,117
126,161
72,097
139,596
165,747
90,965
139,485
1149,619
7,1439
U2,128
46,1461
9,628
16,256
11,215
9,436
12,500
14,760
51,721
1414,382
23,520
26,398
8,750
1.666
66,189
31,058
502
41,628
59,884
29,651i
10,7%
214,335
33,209
12,782
Fxport
Gov.rrmett
45,O414
Nestles
cases
115,725
19)470
19,C44
20,872
Utah
19145
cases
121,411
Alaska
Texas
Florida
19140
39,715
211,1147
5,960
Eastern Ihitod Stat..
British Goverrt
Source: Reeords of the Consolidated Dairy Products Cesap 7
14,606
127,079
26,997
65,000
33,900
1,0214,969
vaporated Milk.
Table 8 shows the trend in the di
tribution of evaporated milk; it is regrettable, however,
that figures were not obtainable for the postwar years.
The northwestern tinited States has been the principal
marks b for this pr oduc t during t he pas t s are All of the
local trade is made through jobbers and wholesalers, who
are equipped for the mass handling iii conjunction with
other food products.
el's was a large volume of evaporated milk exported
following the end of World War II; 347,618 cases were ex
ported in 1946 and 254,75 cases in 1947. alee are
ordinarily made to the sales agent located in the area of
consumption of the foreign country. Deliveries, however,
are made direct to the person or concern purchasing the
product from the agent. These shipments have been
prinoipally to Alaska axid to the Philippines. A i'ela
tively large quantity is still purchased by the governiaent
and by the Comxiodity Codit Corporation. These purchases
are f.o.b,, the plant.
Previous to World War II there was a very
large ou ofsbate movement of butter from Oregon and Wash
ington. At present sales are made to California only
during the flush season and when northwestern facilities
are filled to capacity. There is not enough storage
capacity to nest local demand through the low production
periods. During these periods shipments are received from
i3ubter.
State Brand Creameries at Mason City, Iowa. State Brand
Creameries is likewise a member of United but ships ui
butter only during the low production periods in the nortb
west.
The principal export movement of butter is to Alaska
and to Hawaii, Almost none is exported to other markets
because a major portion of the Pacific Island and fareastern markets are controlled by the Australian concerns.
These Australian concerns are able to market their butter
much cheaper in the islands lying nearer to Australia than
are the concerns within the United States, The principal
market for the Australian butter is the PhilipDines.
Cheese. The principal market for cheese is in tb
Pacific Northwest and California; however, three to four
oars per year are shipped to Washington, 1). 0. The
California markets receive only the surplus cheese which
is above consumption requirements within the areas of
production.
Outside Purchases
The United Dair'men'a Association is holding company.
A holding company frequently owns no land, machinery or
other such property, but owns and holds the securities of
other corporations, The United Dairmen'a Association
holds all stock in the Consolidated Dairy Products
Company, which, in turn, holds a very large portion of the
7
stock of the Northern Dairy Products Company.
Consolidated frequently finds it expedient to supplement products, receivod from members, with outside
purchases and the Northern Dairy Products Company makes
these outside purchases,
In Table 9 is a typical profit and. loss statement for
the concern. The accounts are maintained on a profit end
loss basis. Since its organization, it has operated almost
wholly at a loss, due to its purchases of products arid sale
of these products to the Consolidated Dairy Products
Company at approximately the purchase price. Care is taken
that the organization does not operate at a profit in order
to avoid income tax.
Table 9
NORTHRI DAIRY PEO]JCT8 CO2ANY
Profit and Lo 8tatemen
For 6 Months Ended October 31. 1945
&ALES;
Butter Sloa
,
.
. .
Raw Milk Sales .
.
Powdered Milk Sales
NTSAI28 . . .
*
$341,460.21
COST OI GOODS SOLD*
Butter Purchases .
Raw Milk Purchases
Powdered Milk Purchases
Total Handled . .
GROSS LOSS ON SALES
OPERATING EPENSE
Administz'atiire 32xpenae
Tx nd License Expense
Total Operating Expenses
NET OPERATING LOSS
*
191,112.09
54 545.61
*
. . .
$8,
ç45,553.lo
191,112.09
55.315.83
&MMARY
I was nob until the 1880's that creameries were doveloped. Wholesale receivers assembled the products from
the various small plants for sale within that area.
Oregon and Washington there was no appreciable outot
state movement of dairy products until approximately 1920,
Most of the integration of cooperative marketing
channels in the northwest came after World War I.
canned milk industry, whose products lend themselves to
mass distribution along with products of the food line,
expanded more rapidly than did other phases of the dali'
industry. The Carnation Milk Products Company was the
primary concern in the State of Washington, while the
Nestles Food Company was most important in Oregon.
Swift & Company and Arnioura & Company were also
powerful organizations in the butter and cheese marketing
until approximately 1930. They distributed these products
along with theIr meat products.
The early cooperatives were establIshed in the 1890's
a
esulb of the lack of private capital in certain
areas. after about 1915, however, cooperatives were
formed duo to dissatIsfaction wibh large-.scale profit type
organizatIons. Th113 diñatisfaotion was allegedly due to
many things, principal of which were: low returns to th
producers, wide marketing margins, inadequate services,
unfair treatment.
Enabling and promoting legislation was passed by
Oregon and other states as a result of the realized needs
for cooperatives, Most state incorporation laws were
enacted earlier than federal laws but were frequently
modified to better fit into various federal regulations,
Cooperative development in Washington became active
about 1915 as a result of the growth of powerful. 1arge
scale organizations, The United Dairymen's Association,
a regional marketing organization, was formed in 1918 in
an attempt to coordinate the actions of the local producers cooperatives who had developed to compete with the
private organizations
The first suecesaful federation of local creameries
and cheese factories came with the development of the
Tillamook County Creamery Association.
Cheese was the
principal product and through banding together the members
were able to guarantee quality and to market their cheese
efficiently in distant markets,
The Challenge Cream and Butter Association, a region.-
1 marketing organization, having as its principal area
the State of California, was formed as a result of the
need for efficient marketing facilities for the products
£ their small producers cooperatives
Due to the poor quality of the butter produced by the
Oregon cooperatives and the resulting poor prices reoeived, the Interstate Associated Creameries was formed as
a regional marketing organizattcrn for Oregon and aoutb
western Washington. This organization was formed in 1930
in order that the local producers cooperatives within the
stsate might obtain loans for the improvement and expansion
of their facilities, for the formation of a regional
marketing organization was one of the requirements of the
Federal Farm Board.
Interstate became a member of the Challenge organ
zation in 1939 ifl order to enable a more efficient
marketing of the products of the Oregon members in the
8tate of California which was the major outlet for the
surplus products of Oregon and Washington. At a later
date three of the Interstate members became liiuiibed me
hers of United for the marketing of milk powder. Neither
Challenge nor Interstate was equipped to handle the milk
powder.
uring World War II the production of buttor was re
duced by the diversion ci' manufacture from butter to
products desired by the government. Challenge arid Inter.
state were not equipped for the marketing of these
products. The resulting diversion, therefore, gave
United more volume, since it was the only o1'gILization
equipped for the marketing or such products. As a result
of decreased volume, Interstate was dissolved in 1946 and
Its facilities sold to Consolidated.
The former members
of Interstate became members of United.
91
Further integration was allowed under the
icultural
Marketing Act of 1929 by the sanctioning of marketing
agreements between the three regional marketing aaeooia
tions,
Mother phase in the integratIon was brought about
by legal sanction of the purchase of a private concern by
a cooeravive organization, Consolidated Dairy Products
Company was purchased by the United Dairon's Macelation
as its wtiolly-owned sales aency Marketing agreenents
are made between United and its members but the mekcting
Lunetiona are carrIed out by Consolidated,
Consolidated maintains storage facilities in
Seattle, Tacoma, and Portland in an attempt to provide
steady flow of products to market, These three plants
also assemble products from the nearest members and dia
tribute the products to the purchasing concerns located
nearest that plant.
Consolidatedes outside purchases are oarried on b
a subsidiary, the Northern Dairy Products Company.
a
C ONCLU ION$
Following approximately 1915 there has been a very
definite economic need for cooperative development in the
Pacific Northwest in order to enable such organizations
compete with large and powerful private organizations an4
to meet changing conditions within the dairy industry.
This economic need. brought about federal and. state enabling and promoting legislation.
The cooperatives were given the right to federate
themselves into marketing organizations; the regional marketing organizations thus formed were given the right to
make marketing agreements among themselves as to prices
and quantity of the products to be placed on the market.
The area of supply for the regional marketing
organizations has expanded rapidly; the volume of products
handled has also increased quite rapidly.
Decisions as to the formation of cooperatives,
regional marketing associations, and marketing agreements
between the regional marketing organizations are made by
a limited number of men. There has resulted a natural
tendency for personal interests and views to enter into
problems concerning the producer members. A principal
question of persona interested in the development of cooperatives is whether the cooperatives have reached the
optimum point in the integration of their marketing
£unction and whether the now existjn organizat1ori axe
providing the maximum benoits to is membel'8,
94
POPuLATION OF OR0N AND WASHINGTON, EARS 1850 TO 19145
3,
52,165
11,5914
E,059
1870
90,923
23,955
1114,878
1880
1Th,768
75,116
249,8814
1890
317,7011.
357,232
6714,936
1900
143,536
518,103
931,639
1.910
672,765
1,114,990
1,811.,755
1920
783,389
1,356,621
2,3140,010
1930
953,786
1,563,396
2,517,182
1940
1,089,684
1,736,191
2,1325,875
1,206,000
2 089,000
3,295,000
19145
1
t.
Inoludes popu1t1on (1,201) of parts tkn o form part
of WAshington Territory in 1853 snd 1859
Source of Oregon atatistcsv Popu1ationtijted Stste
Gcverrsu*tt Printing Office, Wahingte, 1914, 16th Caus
or the iited States 19140
Souroe of Washington statietics $ Statistical stract of
the United Statee
Morris H. Tf*nm, United State.
191871
Department of Coomeroe p. 6
Source for estimates on p. 3.0 or Statistical Abstract
Table No. II
DUTI01 OF NONFAT DRT MILK SOLIDS (for }va
CANNED MILK IN THE ST1S 0? W$ItNGT(
BY YWS, FOR T
oouetapttai)
AND
AND ORE9ON, AND TOTAL3
TEARS 1930 TO 191*6
1930
26,100
51,5145
77,6145
1931
18,188
149,1481
67,669
1932
114,213
1933
16,0714
514,1427
70,501
19314
23. .76.8
55,908
77,676
1935
214,667
60,106
814,773
2,872
8,397
11,269
1936
314,0147
67,017
101,0614
3,2914
8
12,026
1937
28,190
66,933
95,123
3,982
1938
31,6149
70,219
101,868
3,631
10,297
13,928
1939
31,825
70,018
101,8143
3,293
8,050
11,3143
19140
35,786
90,250
126,036
4,I97
8,739
13,236
191i.1
14.3,073
112,963
156,036
3,990
7,91414
11,934
19142
38,323
127,8214
166,1147
7,8142
11,1412
19,254
19143
33,5143
109,960
1143,523
7,596
114,408
22,004
3.
14
119,
161,068
6,619
15,988
22,607
1914.5
14.7,296
326,800
1714,096
3,125
11,1422
114,5147
19146
35,687
88,668
1214,355
14,566
7,714].
12,307
b
Souroes
68,659
15,126
ro en
UOtIOII ror hisxa oonsimpt4cn and for animal feed
Production of Manufactured Dairy Products, 19Ij1, Bureau of
Agricultural Eoonios, April 3.91i6
98
Table No. III
PRODUCTION OF CIEB IN TRE STATES 01
ND TOTAL PR0DJCflow, BY TRRS,
1930
14,985
5,038
20,023
1931
16,343
5,875
22,218
1932
15,876
7,906
23,782
1933
15,592
7.736
23,328
193l.
16,699
8,743
25,14142
1935
i6,L37
9,391
25,823
1936
16,568
8,391
214,99?
1937
19,306
3,936
28,
1938
19,9%
9,184
29,180
1939
20.237
9,632
29,869
19140
214,368
9,938
34,306
19141
26,3014
12,
38,881
19142
28,702
12,687
41,389
1914.3
25,151
8,989
314,1140
191414
28,185
9,533
37,718
1914.5
29,745
8,055
37,800
26,C9
7,504
359
Includes all ohaese excepting Full Skin Azican Typo Cheese an
19146
Cottage Cheese
Source; Produotio of Manut..otur,d Dairy Products Rep
Bureau of Agricultural, Economies
Table No, IV
I
TIE STA?ES OF (BGON AND WS}tENG21
AND TOTAL PW0UCTtON, BY YEARS, 1913 TO 1947
PRODUCTION OP BTJ
1913
1914
1915
1916
1917
25,618
23,913
34772
1918
1919
13,279
14,14314
1920
1921
1922
1923
1924
1925
1926
1927
114,293
15,289
17,158
18,128
20.993
21,609
22,737
22,831
20,965
22,580
1929
17,113
18,177
24,313
214,250
31,787
32,007
30,392
32,611
38,6%
39,539
25,157
28,944
31,130
27,229
142,315
147,072
29,9141
52,678
32,i
29,
30,228
52,123
148,838
514,887
1930
1931
1932
1933
1934
1935
1936
1937
1938
1939
1940
1941
1942
1943
19iIi,
194.5
1946
19147
Butter
Sours. t
26,818
29,062
29,029,
27,308
28,318
29,918
29,285
29,617
31,205
31,217
32,130
32,233
29,836
26,547
24,130
18,533
16,1,65
2410
32,257
37,293
35,612
34,1)46
35,170
37,299
35,680
36,115
37,109
36,586
37,025
37,123
59,
66,355
(4,6141
61,45)4
63,L&3
67,217
64,965
65,732
68,314
67,803
69,155
69,656
62,32)4
31,131
27,977
19969
57,678
52,107
38,502
16,572
I3uttei'
The
figures for the State of Washington are frct The State of Washington Biinta1
the Departnent of Agriculture to the Governor
figures for the State of Oregon are frcri The Bieimie.1 Reports of the Dairy and
s&cnej of the Stat. of Oregon
947 figures are frc the Bureau of Agricultural Eeonaioe Reports on the
of anufaotured Dairy Pro dusts
Table No. V
RETURNS MADE BY THE CONS(LIDATED DLIRY PR0DTXTS COMPANY TO THE UNITED DAXRAEN'S ASSOCIATION,
AN]) THROUGH THIS ASSOCIATION TO ITS MEMBERS, FOR SELTED !E.ARS
1931
Ct*vdssiona taken by the
Consolidated Dairy
Products Coipany:
Rcturxas to the tkited
DryuLen's Meooiioni
Per Cent Returned
United Daireten'e Aasooation
Ditdendsz
Total Ceh
Comz,on Stock
Total Cash and Stock
Per Cant of Cmia;joa
R*turnod to
In Cash
1935
1939
9143
19147
*200,687.96
*202.5214.55
$232,219.56
$379,118.29
$429,14707
*1814,002.142
$202,067.02
99.77
$190,565.27
82.06
5LØ.952.93
*378,890.89
88.29
208,98
$131,771.63
35,37O.92
*200,000.00
91.69
$ 143,662.65
$115,000.00
*158,662.65
,000.00
,208.96
21.76
57.30
79.06
h3 ,55
23.73
62.50
86.23
143.65
149.49
$ 50,000.00
*181.771.63
143.Z48
.535,37O.
153,326.41
*203,920.00
*357,246.41
embere *
In Stock
Total Cash and Stock
Pe Cent of Returns to the
149.38
92.93
56.75
21 53
78.28
88.46
52.75
35.73
147.52
141.21
83.25
61.65
140.47
United Dairymen's
lasooiatiori returned
to its Mbers;
Stock
Operation
Dairymen's Aisoelati
25,339.77
93.14
$ l3,858.
Source, Records of the Conaolidet.d Products Conpeny
69.15
2J.2i4
95.39
36.77
8,793.64
8,582.01
9'3.2
53.82
$ 2l.6414.li8
Table No. TX
COMPAEATIV1 ANNUAL FIGURES 0? TOTAL BUTTER POtDAE $TIPPEb BY M!!1W
OF INTERSTATE ASSOC1AT) CREAMEIIES, TO CBALLBG1 0RA) ANI)
88OCIArIoN AND TO INTERSTATE ASSOCIATED CREAMERIES, YEARS 1931 70 195
Challange Cream and
Year
Butter Association
Interstate Associaect Creameries
Total
mda
1931
2,6143,883
2,6143,883
1932
3,227,139
3,227,139
1933
2,569,3314
2,569,3314
1931i.
3,396,062
33%,08
1935
14.006,88Zi
14,006,8L14
1936
14.1s814,786
14,1814,786
1937
5,1473,852
5,473,852
1938
7,062,052
7,062,052
5,556,7145
5556,715
1939 (9 mc.)
1939.19140
li,565,5L114
2,677,3143
7,212,887
19140-19141
3,91451435
2,810,380
6,755,915
1914119t12
3,806,656
3,900,232
7,708,888
191i2l9143
872,558
6,6914,272
7,566,930
19h3ii.19114
6i14,203
5,297,516
5,94,719
5614,773
14,317,504
Sources Recorde of the Interstate Associated Creameries
191414w19145
4,882,277
100
BI BLI 0 G
Wilstor, 0. IL; A History of the D.,1op*eut of
Dairying in Oregon; 1836 to 1936. 2p. 1936
(Typewritten)
Report of the 12th Annual Meeting of the Oregon Dairy
men's Association, 1903. 'lOp. Oregon 3tate Printing
Office, Saletn, Oregon
Wilater, 0. IL; A History of the Doyelopment of
Dairying in Oregon; 1836 to 1936. iSp. 1936
(Typewritten)
roker, H. IC., Colebank, A. W., and Hoffn
1arge-oale Organization in the JM1r7 UdU
T.$.D.A. Circular No. 527. July 1939. "p.
Bakken, H LI.. 3cbaars, ii. A The ]oonomios of
Cooperative
riceting. McGraw-Hill Book Company Inc.
193?. 3p.
Gatlin, 0. 0., The ttoregon 21an of Cooperative
Organization. 1932. ip. (Mimeograph)
Bakken, H. IL, 8qIaars, IA. A. The 1oonomioa Of
Cooperative Marketing. McGraw-Hill book Company
1937. 283p.
bakken, IL H., Sohaars, M. A. The conomies of
Cooperative karketing. McGraw-Hill Book Ooapany
1937. pp.287-288.
11ard; F. .., Oregon Dairyren'a League DiabaMa"
9.
Hoard a Daixywan, 62:614 (December, 921).
Cooperative Marketing and. Purchasing in Oregon.
tenaion Bulletin 416. November 1929. lp.
1]. A Dairy Program in Oregon. Extension Bulletin 413.
April 1929. 12p.
Farm Credit Athinistratiou. "Operating Methods of
Challenge Cream and. Butter Association" U. S.
Departtient of Agriculture, Circular 0-119
(May, 1940), p.1.
7i1stor, 0. IL, and. Carpenter, Paul. "Marketing
Oregon Butter and. Checsee Oregon Extensioii Bulletin
No. 4l. May 1940. 16p.
-
101
14.
arrabee, . S. and i1ater, G. IL, "The Butter
Industry of Oregon" )perinent Station Bulletin 28.
Dec ember 1929.
Vi1ster, G L, and Carpenter, Eaiil. "Marketing
Oregon
tter and Cheese" Oregon Extension Bulletin
No. t41. May 1940. l9p.
eport of the Oregon Agrieultural Boonomic Conferenee,
January 23 to 2i, 1924. Oregon State CoUege, pp.5.6.
Cooperaive Marketing and Purchasing in Oregon in 1929.
Oregon $tate College Extension Bulletin 416,
iovmber, 1929.
r Credit Adcinistration. "Operating Lotbode of
ilenge Orea and Butter Asaooiatión" U, 3.
Bepartcient of griou1ture, Oiroular 0-119
y, 1940), p.
Proker, B. K.
. W., Ioftman, . C.,
nization in the iairy Inthzstz'y,
r 527, July 1939, 37p.
olebank,