Costs of producing and distributing market milk in the Billings-Laurel area of Montana
by Roy Blanch
A THESIS Submitted to the Graduate Committee in partial fulfillment of the requirements for the
Degree of Master of Science in Agricultural Economics
Montana State University
© Copyright by Roy Blanch (1941)
Abstract:
Date on cost of production and cost of distribution of market milk were supplied by 26 operators
located in the BillInge-Laurel market area. These data were used to determine the per quart cost of
producing and the per unit and per quart equivalent cost of distributing market milk for each operator.
The average production cost of the 22 producers and the average distribution cost of the 11 distributors
were also calculated. An analysis was made to determine the factors exerting the greatest in-fluence in
causing the wide variation in costs among individual operators.
The average cost of producing milk was 4,19 cents per quart and the range among individual operators
was from 2.78 cents to 5.92 cents. Labor and feed were the largest costs, accounting for 40 per cent and
36 per cent respectively of the total cost.
The average cost of distributing market milk was2.79 cents per unit of fluid sales and 3.82 cents per
quart equivalent. The range among individual operators in these costs was from 2.01 cents to 5.24 cents
per unit and from 2.63 cents to 6.25 cents per quart equivalent. The largest single cost of distributing
market milk was for labor which accounted for about 60 per cent of the total cost. The costs of truck
operation and of depreciation were the next largest costs, accounting for 12 per cent and 8 per cent
respectively of the total cost.
The retail price of market milk in Billings was 11cents per single quart and 10 cents per quart when
four or more quarts were taken. The milk handled by the operators furnishing data, however, was sold
both as market milk and as surplus milk. The latter was sold in the form of manufactured products at
lower prices.
The factors exerting the greatest influence in causing the wide variation among individual operators in
costs of producing and distributing market milk were found to be as follows: 1. Production per cow 2.
Size of herd 5. Volume of milk handled during the year 4. Labor efficiency 5. Use of equipment to
varying capacities 6. Lack of an organized credit system. COSTS OF PRODUCING AND DISTRIBUTING MARKET MILK
IN THE BILLINGS-LAUREL AREA OF MONTANA
by
Roy B lanch
A THESIS
S u b m itte d t o th e G rad u ate Comm ittee
i n p a r t i a l f u l f i l l m e n t o f t h e re q u ire m e n ts
f o r t h e D egree o f M aster o f S cie n ce
i n A g r i c u l t u r a l Econom ics a t
M ontana S t a t e C o lle g e
Approved*
.
7
.
I n C h a rg e - Of M ajor Work
C hairm an, E xam ining C om m ittee
C hairm an, G rad u ate Comm ittee
Boseman, M ontana
J u n e , 1941
/V37f
3 5 * )^
-2 -
TABLE Of CONTENTS
Page
LIST OF ILLUSTRATIONS...................................................................................
4
ABSTRACT..................................................................................................................
6
PA T I t
INTROP CTION...................................................................................
7
PurposeB o f t h e S tu d y . .................................................................
8
S o u rces and C h a r a c t e r i s t i c s o f th e F a t a . .......................
9
D e s c r ip tio n o f t h e M ark et. ........................................................
12
Govem m ent A g en cies in t h e Ma rk e t .......................................
14
Montana L iv e s to c k B oard.................................................
Montana M ilk C o n tro l B o a rd .........................................
14
17
d e f i n i t i o n o i T e m s .........................................
18
Method o f A n a ly s is . ...........................
20
PAtT I I i
PRODUCTION OF MARKET ILK....................................................
C r e d i t s . ................................. ................. ............................... ........... %
9'41
V alu e o f C a lv e s ...................................................................
V alue o f M anure..............................
Cow A p p r e c ia tio n ....................
B y -p ro d u c ts ................
C o s ts . .....................................................................
L a b o r..................................................
f e e d . .........................
B u ild in g s and E quipm ent.................................................
Cow D e p r e c ia tio n ...........................................
H a u l i n g . . . ............ ................
A s s o c ia tio n D ues, L ic e n s e s , and T ax e s.................
M is c e lla n e o u s .....................
22
24
24
24
24
24
24
28
30
34
36
37
37
38
I a c t o r s A f f e c tin g P ro d u c tio n C o s ts . ......................
39
V olum e..........................................
P r o d u c tio n P e r Cow................................
S iz e o f H erd ...........................................
39
41
46
66108
—3**
PAFT I I I .
Investm ent P er Cow...................................................... ..
D ista n c e From M a r k e t.............................................................. ..
Page
47
47
DISTRIBUTION OF MAFKET MILK...............................................................
63
D is tr ib u t io n C osts C l a s s i f i e d . . . . . ............ *........................ ..
66
I a c to r s A f fe c tin g C osts o f D ist r i b u t t o n ...........................................
62
Volume. ..................................... .................................................
I n v e s tm e n t.......................
L ab o r Ef f i c i e n c y ............................................................................... .. •
T ru ck O p e r a ti o n ....................................................................................
D e p r e c i a t i o n ........................................
S u p p lie s ................
R e p a ir s .......................................................
Bad D e b t s . . . . . ................................ ............... * ....................................
B o t t l e s . ......................
A ll O th e r....................................................................................................
70
70
80
80
82
82
83
84
85
Summary and C onclus i o n s . ......................................... ............... ..
APPENDIX A:
SUPPLEMENTARY TABLES..........................................................................
88
ACKNC LELC ................................................. ............................................................................
96
LITL AT..'
97
CITED AND CO SULTED.................................................................................
>
•4 LIST Qi ILLUSTiiATIOfiS
Page
F ig u re I .
&Iap show ing t h e l o c a t i o n o f B i l l i n g s and L a u r e l, M ontana.......... 13
F ig u re 2 .
Kap show ing th e l o c a t i o n o f p ro d u c e rs and d i s t r i b u t o r s
c o o p e r a tin g in t h i s s tu d y , 26 o p e r a t o r s ................................................. 16
F ig u re 3 .
R e la tio n b etw een l a b o r c o s t p e r q u a r t o f m ilk p ro d u ced
and v a lu e o f o p e r a t o r ’ s l a b o r p e r m onth, 22 o p e r a t o r s ................. 31
F ig u re 4 .
R e la tio n b etw een c o s t o f a l f a l f a p e r q u a r t o f m ilk p ro ­
duced and t o t a l p r o d u c tio n c o s t p e r q u a r t , 22 o p e r a t o r s ............ S3
F ig u re 6.
R e la tio n b etw een c o s t o f c o n c e n tr a te s p e r q u a r t o f m ilk
o red u ce d and t o t a l p r o d u c tio n c o s t p e r q u a r t , 22 o p e r ­
a t o r s . . . . . ................... .. .............. .......................................... ............. .................. 33
F ig u r e 6 .
R e la tio n betw een t o t a l c o s t p e r q u a r t o f m ilk p ro d u ced an d ,
p e r q u a r t in v e s tm e n t in b u il d in g s and eq u ip m en t, 22
o p e r a t o r s .................................................................. ............................................... .. 36
F ig u re 7 .
R e la tio n betw een t o t a l c o s t p e r q u a r t o f m ilk p ro d u ced and
t o t a l volum e o f m ilk h a n d le d , 22 o p e r a t o r s . . . . . . ...................
42
R e la tio n betw een l a b o r c o s t p e r q u a r t o f m ilk p ro d u ced and
o t a l volum e o f m ilk h a n d le d , 22 o p e r a t o r s . . . . . . . . . . . . . . . . . . .
43
R e la tio n b etw een t o t a l c o s t p e r q u a r t o f m ilk p ro d u ced an d ,
a v e ra g e p r o d u c tio n p e r cow, 22 o p e r a t o r s .
44
F ig u r e 8 .
F ig u re 9 .
F ig u re 10. R e la tio n betw een l a b o r c o s t p e r q u a r t o f m ilk p ro d u ced an d ,
a v o ra e p r o d u c tio n p e r cow, 22 o p e r a t o r s . .
4
4
F ig u r e 11. R e la tio n betw een fe e d c o s ts p e r q u a r t o f m ilk p ro d u ced an d ,
a v e ra g e o r e d u c tio n o e r cow, 22 o p e r a t o r s . ................... ................. ..
46
F ig u re 12 . R e la tio n b etw een b u il d in g s and eq u ip m en t c o s t p e r q u a r t o f
m ilk o red u ce d a n d , a v e ra g e p r o d u c tio n p e r cow, 22 o p e r a t o r s . . 46
F ig u re 13 . R e la tio n betw een t o t a l c o s t p e r q u a r t o f m ilk p ro d u c e d an d ,
a v e ra g e num ber o f cows in t h e h e r d , 22 o p e r a t o r s ............................ 49
F ig u re 14. R e la tio n b etw een l a b o r c o s ts p e r q u a r t o f m ilk p ro d u ced and
a v e ra g e number o f cows in t h e h e r d , 22 o p e r a t o r s . . . . . ................
50
F ig u r e 1 5 . R e la tio n betw een b u il d in g s and equipm ent c o s t s p e r q u a r t o f
m ilk p ro d u ced and a v e ra g e number o f cows in t h e h e r d ,
22 o p e r a t o r s ............................................................................................................... 51
-6 »
Pago
I'lg u r e 16 .
F ig u r e 17.
F i I:u re 18 .
F ig u re 19.
F ig u re 20.
F ig u re 21*
F ig u re 22 .
F ig u re 23 .
F ig u re 24 .
F ig u r e 25 .
F ig u r e 26 .
F ig u re 27.
F ig u r e 28.
F ig u r e 29.
F ig u re 3 0 .
F ig u r e S I .
F ig u re 32 .
R e la tio n b etw een d i s t r i b u t i o n c o s ts p e r u n i t o f f l u i d
s a l e s and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a t o r s .............. ....
66
R e la tio n b etw een d i s t r i b u t i o n c o s ts p e r q u a r t e q u i v a le n t
and t o t a l q u a r t e q u i v a l e n t s , 11 o p e r a t o r s . ...................................
66
R e la tio n betw een d e l iv e r y c o s t p e r u n i t o f f l u i d s a l e s and
t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a t o r s . .................. ....................
67
R e la tio n b etw een d e liv e r y c o s t p e r q u a r t e q u iv a le n t and
t o t a l q u a r t e q u i v a le n t s , 11 o p e r a t o r s .................................................
67
R e la tio n betw een p l a n t c o s t p e r u n i t o f f l u i d s a l e s and
t o t a l u n it s o f f l u i d s a l e s , 11 one r a t e r s .........................................
69
R e la tio n b etw een p l a n t c o s ts p e r q u a r t e q u iv a le n t and
t o t a l q u a r t e q u i v a l e n t s , 11 o p e r a t o r s . ............................................ ..
69
R e la tio n betw een t o t a l in v e s tm e n t p e r u n i t o f f l u i d s a l e s
and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a t o r s . . . . . .....................
71
R e la tio n b etw een t o t a l in v e stm e n t p e r q u a r t e q u iv a le n t and
t o t a l q u a r t e q u i v a l e n t s , 11 o p e r a t o r s ................................................
71
R e la tio n betw een in v e s tm e n t i n d e l iv e r y eq u ip m en t p e r u n i t
o f f l u i d s a l e s and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a t o r s .
72
R e la tio n b etw een in v e s tm e n t i n d e l iv e r y eq u ip m en t p e r q u a r t
e q u i v a l e n t s , and t o t a l q u a r t e q u i v a l e n t s , 11 o p e r a t o r s . . . . . .
72
R e la tio n betw een l a b o r c o s ts p e r u n i t o f f l u i d s a l e s and
t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a t o r s ....................................... ..
74
R e la tio n betw een l a b o r c o s ts p e r q u a r t e q u i a l e n t an d t o t a l
q u a r t e q u i v a l e n t s , 11 o p e r a t o r s ............................................ ............... ..
74
R e la tio n betw een p l a n t l a b o r c o s t s p e r u n i t o f f l u i d s a le s
and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a t o r s .......................... ..
75
R e la tio n betw een p l a n t l a b o r c o s ts p e r q u a r t e q u i v a le n t and
t o t a l q u a r t e q u i v a l e n t s , 11 ope r a t e
.....................
75
R e la tio n betw een d e l iv e r y la b o r c o s t p e r u n i t o f f l u i d s a le s
and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a t o r s ...................................
76
R e la tio n b etw een d e l iv e r y la b o r c o s ts p e r q u a r t e q u iv a le n t
and t o t a l q u a r t e q u i v a l e n t s , 11 o p e r a t o r s . .........................
76
R e la tio n b etw een t r u c k o p e r a to r s c o s ts p e r u n i t o f f l u i d
s a l e s and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a t o r s . . . . . . . . . .
81
6m
C O STS OF PRODUCING AND D IS T R IB U T IN G MARKET M IL K
I N TEE B IL L IN G S -L A U R E L AREA OF MONTANA
ABSTRACT
Data on c o s t o f p ro d u ctio n and c o s t o f d is t r ib u t io n o f market
m ilk were su p p lie d by 26 o p e r a to r s lo c a te d in th e B illin r s - L a u r e l market
a r e a . These d a ta were used to d eterm ine th e per quart c o s t o f producing
and th e per u n it and per quart e q u iv a le n t c o s t o f d is t r ib u t in g market m ilk
fo r ea c h o p e r a to r . The average p ro d u ctio n c o s t o f the 22 producers and
th e average d is t r i b u t i o n c o s t o f th e 11 d is t r ib u t o r s were a ls o c a lc u la t e d .
An a n a ly s is was made t o determ ine th e f a c t o r s e x e r tin g th e g r e a t e s t in ­
flu e n c e in c a u s in g th e w ide v a r ia tio n in c o s t s among in d iv id u a l o p e r a to r s .
The average c o s t o f producing m ilk was 4 .1 9 c e n t s per quart and
th e range among in d iv id u a l o p e r a to r s was from 2 .7 8 c e n t s t o 6 .9 2 c e n t s .
Labor and feed were th e l a r g e s t c o s t s , a cco u n tin g f o r 40 per c e n t and 36
per c e n t r e s p e c t i v e ly o f th e t o t a l c o s t .
The average c o s t o f d is t r ib u t in g market m ilk w as 2 .7 9 c e n ts per
u n it o f f l u i d s a l e s and 3 .8 2 c e n ts per quart e q u iv a le n t . The range among
in d iv id u a l o p e r a to r s in th e s e c o s t s was from 2 .0 1 c e n t s to 5 .2 4 c e n ts per
u n it and from 2 .6 3 c e n t s to 6 .2 5 c e n ts per q u art e q u iv a le n t . The la r g e s t
s in g le c o s t o f d is t r ib u t in g market m ilk was fo r la b o r w hich accou n ted f o r
about 50 p er c e n t o f th e t o t a l c o s t . The c o s t s o f t r u c k o p e r a tio n and o f
d e p r e c ia tio n were th e n e x t la r g e s t c o s t s , a cco u n tin g fo r 12 per cen t and
8 per c e n t r e s p e c t i v e ly o f th e t o t a l c o s t .
The r e t a i l p r ic e o f m arket m ilk in
q u art and 10 c e n t s per q u art when four o r
handled by th e o p e r a to r s fu r n is h in g d a ta ,
m ilk and a s su rp lu s m ilk . The l a t t e r was
p rod u cts a t low er p r i c e s .
B i l l i n g s was 11 c e n ts per s in g le
more q u arts were ta k e n . The m ilk
however, was so ld b o th as market
s o ld in th e form o f manufactured
The f a c t o r s e x e r t in g the g r e a t e s t in f lu e n c e i n ca u sin g th e wide
v a r ia tio n among in d iv id u a l o p era to rs in c o s t s o f producing and d is t r ib u t in g
market m ilk were found t o be a s fo llo w s :
1.
2.
3.
4.
5.
6.
P rod u ction p er cow
S iz e o f herd
Volume o f m ilk handled during the y ea r
Labor e f f i c i e n c y
Use o f equipm ent t o v a ryin g c a p a c it ie s
Lack o f an o rg a n ized c r e d i t sy stem .
-7 -
PART I .
INTRODUCTION
N u tr itio n a l a u t h o r it ie s have r e eomr,ended a gueu-t o f m ilk a day fo r
c h ild r e n and a p in t a day fo r a d u lt s , l /
On a w eigh ted a v erage b a s is t h i s
i s eq u al to about one and o n e -th ir d p in t s per c a p it a .
Y et a t p r e se n t th e
average consum ption o f m ilk in th e U nited S t a t e s i s n o t more th an h a l f t h i s
amount. 2 /
Some consumers would in c r e a s e t h e i r consum ption o f q u a lit y
m ilk i f ad ju stm en ts in th e p r e se n t p r ic e r e la t io n s h ip s were i n s t i t u t e d ,
" h /
These ad ju stm en ts may ta k e th e form o f h ig h e r consumer in com es, o f
governm ental s u b s id i e s , o r o f low er m ilk p r i c e s .
S tu d ie s o f th e S t . L o u is , B oston , New York, and o th e r m arkets
have shown t h a t consumers appear t o be much more in t e r e s t e d in low p riced
m ilk than th e y a re in i t s n u t r it io n a l v a lu e . 4*/
T his f a c t seem s to
in d ic a t e th a t a g r e a te r in c r e a s e in th e consum ption o f m ilk co u ld be
o b ta in ed i f th e p r e s e n t sp onsors o f e d u c a tio n a l programs would c e n te r
more a t t e n t io n on th e i n s t a l l a t i o n o f econ om ies in p ro d u ctio n and d i s t r i ­
b u tio n in o rd er t o g iv e consumers th e low p r ic e d m ilk th ey w ant.
The c o n d it io n s c o n tr ib u tin g to h ig h c o s t s o f producing and d is ­
t r ib u t in g m ilk have e x is t e d fo r many y e a r s .
P r im a r ily , th e s e c o n d itio n s
e x i s t becau se o f th e natu re o f m ilk p ro d u ctio n and d i s t r i b u t i o n , w hich I s
l / Recommended by b r. E . V. McCollum o f Johns Eopkins U n iv e r s ity ,
Dr. H. C. Sherman and Dr. Kary Swartz Rose o f Columbia U n iv e r s it y .
B a r t l e t t , R. W ., " In cr ea sin g th e Consumption o f Milk" from D airy Manufac­
t u r e ’ s Short Course Manual, I l l i n o i s E x te n sio n S e r v ic e , 19 3 8 , p . 145.
2 / B a r t l e t t , R. W ., " S t. L ou is M ilk Problems W ith Su ggested
S o lu tio n s ," 1 1 1 . Exp. S t a . B u i. 4 1 2 , p . 1 6 1 , 1935.
3/
y
I b id .
I b id .
-e c h & ra c te riz e d by t h e p re s e n c e o f many firm s engaged in th e b u s in e s s in
one m a rk e t a r e a .
I t has been fou n d t h a t t h e s e c o n d itio n s r e s u l t In
I n e f f i c i e n c i e s w hich a r e l a r g e l y due t o s m a ll y e a r ly volum es o f b u s in e s s ,
i n e f f i c i e n t u s e of l a b o r , and d u p li c a ti o n s o f f a c i l i t i e s u t i l i z e d in
p r o d u c tio n and d i s t r i b u t i o n .
C o n s e q u e n tly , c o s ts o f p r o d u c tio n a r e in
many c a s e s c o n s id e r a b ly g r e a t e r th a n n e c e s s a r y , w hich r e s u l t In a low
r e tu r n t o t h e p r o d u c e r , a h i h p r i c e t o t h e consum er, o r b o th .
p r o d u c tio n anti d i s t r i b u t i o n
I f m ilk
c o s ts a r e to b e reduced and m ilk consum ption
i s t o be in c r e a s e d , t h e ways o f re d u c in g
su c h c o s ts and t h e i r r e l a t i v e
m e rits m ust b e c o n s id e r e d .
M ilk p r o d u c tio n and d i s t r i b u t i o n in some o f t h e s m a l le r m a rk e ts ,
s u c h as th e one in v o lv e d in t h i s s tu d y , h av e n o t been c o m p le te ly d iv id e d
i n t o s e p a r a t e f u n c ti o n s .
U n lik e t h e u s u a l p r a c t i c e in l a r g e c i t i e s whore
d i f f e r e n t firm s p e rfo rm t h e
f u n c tio n s o f p r o d u c tio n and o f d i s t r i b u t i o n ,
b o th o f th e s e f u n c tio n s may
b e p erfo rm e d in th e s m a lle r m a rk e ts b y one
f ir m .
In t h e B l l l i n g s - L a u r e l a r e a t h e r e a r e s e v e r a l in d i v id u a l s p e r­
fo rm in g o n ly one o f t h e f u n c tio n s e i t h e r p r o d u c tio n o r d i s t r i b u t i o n ,
w h ile o th e r s p e rfo rm b o th f u n c ti o n s .
P u rp o se s o f th e S tu d y
The p u ip o s e s o f t h i s s tu d y a r e : ( I ) t o d e te rm in e t h e c o s ts o f
p ro d u c in g and d i s t r i b u t i n g m ark et m ilk in th e c i t i e s o f B i l l i n g s and
L a u r e l, M ontana, as an a i d t o th o s e p ro d u c e rs and d i s t r i b u t o r s who may
w ish t o u s e su c h in f o r m a tio n in th e w orking o u t o f a more b a la n c e d
l / R in e a r , E a r l Ti., h M llk D i s t r i b u t i o n C o sts o f P ro d u c e rD i s t r i b u t o r s and S u b d e a le rs i n New J e r s e y , " New J e r s e y Exp. S t a . B u i. 6 6 3 ,
p 66.
-S econom ic u n i t ; (2 ) t o a n a ly z e t h e c o s ts i n c u r r e d in th e p r o d u c tio n and
d i s t r i b u t i o n o f m a rk e t m ilk and th e f a c t o r s a f f e c t i n g c o s t s so t h a t
i n d i v id u a l o p e r a t o r s may com pare t h e i r o p e r a tio n s w ith o th e r s in th e a r e a ;
( 3 ) t o i n d i c a t e t h e c o n d itio n s t h a t e n a b le one dairym an t o p ro d u c e o r
d i s t r i b u t e m ilk a t a lo w e r c o s t th a n a n o th e r in o r d e r t h a t f a c t o r s a f f e c t i n g
t h e c o s t s may b e r e a r r a n g e d t o conform w ith th e lo w e s t c o s t c o m b in a tio n ;
(4 ) t o i n d i c a t e p o s s i b l e ways w hereby d airym en may red u ce t h e i r c o s t s o f
p ro d u c in g and d i s t r i b u t i n g m ark et m ilk in o r d e r t o red u ce t h e p r i c e and
s t i m u l a t e co n su m p tio n ; (5 ) t o g iv e a b a s i s by w hich th e consum er may
d e te rm in e w h e th e r o r n o t he i s p ay in g u n j u s t i f i a b l y h ig h p r i c e s f o r m ilk ;
and (6 ) t o f u r n i s h governm ent a g e n c ie s w ith in fo rm a tio n t h a t may b e o f
v a lu e in c a r r y i n g o u t t h e i r p ro g ram s.
S o u rc e s and C h a r a c t e r i s t i c s o f Efeta
The in t e r v ie w m ethod was em ployed i n o b ta in in g t h e s e d a t a .
A
s c h e d u le was p re p a re d t o f a c i l i t a t e g a t h e r in g t h e e s s e n t i a l in fo rm a tio n
and t h e d a ta w ere re c o rd e d on th e s c h e d u le d u r in g th e in t e r v ie w w ith
ea c h o p e r a t o r .
T w e n ty -e ig h t o f t h e 57 li c e n s e d dairym en s u p p ly in g f l u i d m ilk t o
t h e B i l l i n g s and L a u re l a r e a c o o p e r a te d in t h i s s tu d y by s u p p ly in g d a ta
c o n c e rn in g t h e i r d a i r y e n t e r p r i s e .
The re c o rd s o f two o f t h e s e l a t e r had
t o be d is c a r d e d .
o s t o f t h e o p e r a to r s who f u r n is h e d d a ta keep no fo rm a l re c o r d s .
The f o u r d i s t r i b u t o r s and t h e one p r o d u c e r - d i s t r i b u t o r k e e p in g com plete
r e c o r d s do n o t s e g r e g a te c o s t s betw een t h e m ark et m ilk e n t e r p r i s e and
10o th e r e n te r p r is e s .
S e v e r a l o f t h e o p e r a t o r s m a in ta in e d r e c o rd s on p a r t s
o f t h e i r e n te rp ris e s .
R ecords when a v a i l a b l e s u p p lie d t h e d a t a .
When r e c o rd s wore n o t
a v a i l a b l e , c o s ts wore com puted on th e b a s i s o f in f o r m a tio n s u p p lie d by
th e o p e ra to r.
When j o i n t c o s ts w ere in v o lv e d , t h e p r o p o r tio n o f th e
t o t a l c o s t c h a rg e d t o m a rk e t m ilk was c a l c u l a t e d on a p e r c e n ta g e b a s i s .
Two s u c h b a s e s w ere u s e d ; ( I ) t h e p r o p o r tio n o f th e t o t a l u s e o f
equipm ent t h a t was d ev o te d t o t h e m ark et m ilk e n t e r p r i s e and (2 ) t h e p ro ­
p o r ti o n o f t h e t o t a l g ro s s r e c e i p t s o f t h e b u s in e s s t h a t came from th e
s a l e o f m ark et m ilk .
Equipm ent c o s ts w ere c a l c u l a t e d b y u s in g th e f i r s t
m ethod b e c a u se t h e p r o p o r tio n o f t o t a l eq u ip m en t u sed by t h e m a rk e t m ilk
e n t e r p r i s e v a r ie d w id e ly among o p e r a t o r s .
F o r exam ple:
Ten p e r c e n t o f
one o p e r a t o r ’ s t o t a l eq u ip m en t may be u s e d by th e m a rk e t m ilk e n t e r p r i s e
and 30 p e r c e n t o f h is t o t a l g ro s s r e c e i p t s may come from t h e s a l e o f
m a rk e t n ilk p r o d u c ts , w h ile 40 p e r c e n t o f a n o th e r o p e r a t o r ’ s equipm ent
may be u se d b y m ark et m ilk and t h e s a l e o f m a rk e t m ilk p ro d u c ts a c c o u n t
f o r o n ly 20 p e r c e n t o f h i s t o t a l
ro se r e c e i p t s .
C h arg in g equipm ent
c o s ts o f t h e s e o p e r a to r s on th e b a s is o f t h e p e r c e n ta g e o f g ro s s r e c e i p t s
woulc n o t be j u s t i f i e d .
I f t h i s m ethod had b een u s e d , t h e f i r s t o p e r a t o r
w ould have had an eq u ip m en t c o s t to o h ig h and t h e seco n d a c o s t to e lo w .
However in d i v i d in g t h e t o t a l c o s t o f b u i l d i n g m a in ten a n ce betw een th e
m a rk e t m ilk and o t h e r e n t e r r i s e s o f t h e b u s in e s s p e r c e n ta g e o f g ro ss
r e c e i p t s i s th e i o re l o g i c a l m ethod t o u s e .
T h is r e s u l t s from th e
d i f f i c u l t y o f d e te r m in in g th e p e r c e n t o f t h e t o t a l u s e o f t h e b u ild in g s
-1 1 -
d e v o te d t o m a rk e t m ilk and b e c a u se a l l t h e e n t e r p r i s e s o f t h e b u s in e s s
r e q u i r e th e u s e o f t h e b u i l d i n g , i t i s r e a s o n a b le t o c h a rg e ea c h in
a c c o rd a n c e w ith i t s p e r c e n ta g e o f t h e t o t a l g ro ss r e c e i p t s .
In fo rm a tio n n eed e d f o r t h i s a n a l y s i s c o n s is te d o f a co m p lete
re c o rd o f a l l c o s ts in c u r r e d in p ro d u c in g and d i s t r i b u t i n g m ark et m ilk .
S in c e t h i s s tu d y i s c o n c e rn e d o n ly w ith t h e p r o d u c tio n and d i s t r i b u t i o n
o f m arket m ilk , d a ta w ere o b ta in e d o n ly on t h i s p o r ti o n o f t h e in d iv ­
i d u a l 's fa n n in g o p e r a t i o n s .
The o p e r a to r s f u r n i s h i n g d a ta showed c o n s id e r a b le i n t e r e s t in
t h e s tu d y .
Due t o t h i s and t h e freedom w ith w hich in f o r m a tio n was g iv e n ,
i t i s b e lie v e d t h a t th e s e d a ta w ere r e l a t i v e l y a c c u r a te .
B ecause o f th e num ber o f d airym en o p e r a tin g in th e m a rk e t a r e a and
t h e u n w illin g n e s s o r i n a b i l i t y o f some d airym en t o g iv e in f o r m a tio n , i t
was im p o s s ib le t o o b ta in d a ta from a l l o p e r a t o r s .
S in c e c o m p le te c o s t
d a t a w ere n o t o b ta in e d from a l l d a iry m e n , i t i s d e s i r a b l e t o d e term in e
w hat p e r c e n t o f th e t o t a l m a rk e t m ilk consumed in t h e m a rk e t was h an d led
by t h e o p e r a to r s f u r n i s h i n g d a t a .
i n t i i c e t e s t h a t a b o u t 65 p e r uc
A rough p e rc e n ta g e was com puted and
o f t h e t o t a l m ilk m a rk e ted in th e a r e a
was from t h e dairym en whose re c o rd s a r e u s e d in t h i s s tu d y . 6 /
S in c e t h i s s tu d y in c lu d e s b o th p ro d u c in g and d i s t r i b u t i n g c o s t s ,
i t was n e c e s s a r y t o s e t a p o in t a t w hich p r o d u c tio n c o s ts end and d i s t r i -
6 / T h is p e r c e n ta g e f i g u r e was com puted in th e f o llo w in g m a n n e r:th e
p e r c a p i t a co n su m p tio n o f m ilk in c i t i e s an d v ll a g e s in th e U n ite d S ta t e s
was i u l t i p l i e d b y th e com bined p o p u la tio n s o f L a u re l and B i l l i n g # . Then t h e
p ro d u c t was d iv id e d in to t h e t o t a l m ilk h a n d le d by th e 11 o p e r a t o r s f u r n i s h ­
in g d a t a .
-1 2 -
b u tio n c o s ts b o j-in .
T h is p o in t was s e t on t h e b a s is o f t h e c o s ts in c u r r e d
b y t h e p ro d u c e r who s e l l s h i s m ilk in b u lk t o t h e d i s t r i b u t o r .
The p ro ­
d u c e r ’ s c o s t s , e x c e p t f o r h a u l in g , c e a s e a f t e r th e m ilk e n t e r s t h e m ilk
ho u se and i s c o o le d .
In c a l c u l a t i n g p r o d u c e r - d i s t r i b u t o r 's c o s t s , t h i s
p o in t was ta k e n as t h e d iv id in g l i n e b etw een p r o d u c tio n and d i s t r i b u t i o n
c o s ts .
D e s c r ip tio n o f t h e Market
The C ity o f B i l l i n g s , c o u n ty s e a t o f Y ello w sto n e C o u n ty , i s lo c a te d
on th e n o r th bank o f th e Y ello w sto n e R iv e r in s o u th c e n t r a l Montana
(fig u re I ) .
Due t o i t s
f a v o r a b le l o c a t i o n as a d i s t r i b u t i n g p o in t f o r a la r g e
a r i c u l t u r a l a r e a , i t i s a r a p i d l y grow ing c i t y .
The 1930 c e n su s r e p o r ts
i t s p o p u la tio n as 1 6 ,3 8 0 w hereas p r e lim in a r y f ig u r e s f o r 1940 r e p o r t i t as
2 3 ,3 1 3 , an i n c r e a s e o v e r t h e 1930 f i g u r e o f 6,9 3 3 o r 4 2 .3 p e r c e n t .
L a u r e l, M ontana, w ith a p o p u la tio n i n 1940 o f 2 ,7 6 4 , i s lo c a te d 16
m ile s s o u th w e s t o f B i l l i n g s .
T h is c i t y owes i t s grow th c h i e f l y t o th e
f a c t t h a t i t i s a f r e i g h t te r m in a l on th e N o rth e rn P a c i f i c and th e C h ic ag o ,
B u r lin g to n , and Q uincy r a i l r o a d s .
The e x t e n s iv e r a i l r o a d r e o a i r and con­
s t r u c t s or s h o p s , t o g e t h e r w ith a l a r g e o i l r e f i n e r y , f u r n i s h employment f o r
many men.
C o n d itio n s f a v o r a b le t o t h e p r o d u c tio n and s a l e o f m ark et m ilk a r e
common t o b o th c i t i e s .
F i r s t , a d e q u a te s u o p lle s o f fe e d car be o b ta in e d a t
lew p r i c e s b e c a u se o f t h e g e n e r a l p r a c t i c e o f in c lu d in g a l f a l f a and g r a in s
in t h e c ro p r o t a t i o n s y s te m s .
S eco n d , t h e grow ing p o p u la tio n o f th e
c i t i e s p ro v id e s an ex p an d in g m ark et f o r t h e s a l e o f m ilk anc c ream.
MONTANA
I
SCOBEY
P U N T YWOOD
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OANlE l s I s h e h i 0 AN
CUT BANK
• CHINOOK
LIBERTY
HAVRE •
• SHELBY
CHESTER
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L AI NE
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J UD I T H
• WIBAUX
• LEWISTOWN
• TERRY
POWELL
TOWNSEND ^
MUSS E L S H E L L
HARLOWTON
WHITE SULPHUR
SPRINGS
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• ROUNDUP
FO RSYTH
CUSt ER
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BROADWATER
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lodge)
GOLDEN I
VALLEY
WHEATLAND
BOULDER
YELLOWSTONE
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LIVINGSTON
BILLINGS
P OWDE R
CARBON
BIG HORN
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broadus
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DILLON •
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D A W S O N
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• MISSOULA
f i e l d
GREAT F A L L S
L o c a tio n o f B i l l i n g s and L a u r e l, M ontana
R
WIBAUX
-1 4 -
The o p e r a to r s engaged in th e d a ir y in d u str y in t h i s a rea may be
c l a s s i f i e d in to th r e e groups; p rod u cer, p r o d u c e r -d is tr ib u to r , and d i s ­
t r ib u t o r .
The d is t r ib u t o r s are lo c a te d in or near th e C ity o f B il lin g s
and d e r iv e t h e ir s u p p lie s o f fr e s h m ilk from th e p ro d u cers, th e m a jo rity
o f whose farms l i e n o r th e a s t o f th e c i t y a lo n g th e Y ello w sto n e R iv e r .
The
p r o d u c e r -d is tr ib u to r s are lo c a te d p r in c ip a lly on th e v a l l e y f lo o r to the
w est o f th e c i t y ( f ig u r e 2 ) .
Government A g en cies i n th e Market
Montana L iv e sto c k S a n ita r y Board - Producers and d is t r ib u t o r s o f market
m ilk i n th e S ta te o f Montana must com ply w ith th e req u irem en ts o f th e Montana
L iv e sto c k Board.
The r u l e s , r e g u la t io n s , and o rd ers o f t h i s board are de­
sig n ed to gu aran tee t o th e consumer th e p ro d u ctio n o f a s a n it a r y p ro d u ct.
M ilk produced and handled in accordance w it h t h e r e g u la tio n s o f th e Montana
L iv e sto c k S a n ita r y Board i s d e sig n a te d a s in s p e c te d m ilk .
A ll d a ir ie s
w ish in g to produce m ilk and cream f o r f lu id consum ption must secu re a
l i c e n s e to do s o from t h i s board#
Such d a i r i e s must th en b e in sp e c te d
a n n u a lly by an o f f i c i a l a p p oin ted by th e board and must sco re n o t l e s s th a n
70 p o in ts on an o f f i c i a l sc o r e c a r d .
Ary m ilk purchased by m ilk p la n ts
from d a ir i e s n o t e n t i t l e d to s e l l in s p e c te d m ilk must p a s te u r iz e a l l such
m ilk b efo re s e l l i n g i t to th e consum er.
Furtherm ore, u n in sp ec ted m ilk
cannot be mixed w ith or added to m ilk so ld under the c l a s s i f i c a t i o n o f
in s p e c te d m ilk .
O f f i c i a l sta n d a rd s f o r th e s a le o f f l u i d m ilk p ro d u cts p u b lish ed in ,
" L iv esto ck S a n ita r y Laws o f Montana," Montana L iv e sto ck S a n ita r y Board, 1 9 2 7 ,
are a s f o l l o w s i
T. 3 N.
NEWTON
R. 27 E.
SHEPHERD
Q SALLANTINE
T. 2 N.
HUNTLEY
R. 26 E.
I. I N.
R. 24
T. I S.
R- 23 E.
LAUREL
LEGEND
•
PRODUCERS
O PRODUCER-DISTRIBUTORS
® DISTRIBUTORS
SCALE I INCH- 2 MILES
F ig u re 2
L o c a tio n o f p ro d u c e rs and d i s t r i b u t o r s
c o o p e r a tin g in t h i s s tu d y
—1 C —
I#
A l l m ilk must c o n ta in n o t l e s s th a n 3 ,2 5 per c e n t b u t t e r f a t
and n o t l e s s than 8*6 per ce n t s o l i d s n o t f a t .
2.
A ll cream so ld a s w hipping cream must c o n ta in n o t l e s s than 30
per c e n t b u t t e r f a t and n o t more th a n .2 per c e n t o f a c id r e a c t in g su b sta n ce
c a lc u la t e d i n term s o f l a c t i c a c id ,
3.
Raw m ilk s h a ll n ot c o n ta in more than 1 5 0 ,0 0 0 b a c t e r ia per
m illilite r .
4.
Raw cream s h a ll n o t c o n ta in more than 3 0 0 ,0 0 0 b a c t e r ia per
m illilite r .
5.
P a s te u r is e d m ilk s h a ll n o t c o n ta in more than 3 0 ,0 0 0 b a c te r ia
per m i l l i l i t e r .
6.
P a ste u r iz e d cream s h a ll n o t c o n ta in more th a n 1 5 0 ,0 0 0 b a c te r ia
per m i l l i l i t e r .
The fo llo w in g grad es o f f l u i d m ilk are so ld to consumers in th e
B i l l i n t S m arket.
1.
In sp ecte d raw m ilk or p a s te u r iz e d m ilk c o n ta in in g n o t l e s s th a n
3 .2 5 per c e n t or more than 4 .0 0 per c e n t b u t t e r f a t .
2.
In sp ecte d raw or p a ste u r iz e d c o f f e e creem c o n ta in in g not l e s s
th an 20 per c e n t or more th an 25 per c e n t b u t t e r f a t .
5,
In sp ected raw or p a ste u r iz e d s p e c ia l cream t e s t i n g n o t l e s s than
25 per c e n t or more th a n 30 per c e n t b u t t e r f a t .
4.
In sp ecte d raw o r p a s te u r iz e d w hip pin g cream t e s t i n g n o t l e s s
th an 30 per c e n t or more than 36 per c e n t b u t t e r f a t .
6.
In sp ected raw or p a s te u r iz e d cream c o n ta in in g 36 per cen t or
more b u t t e r f a t
-1 7 6«
not
le s s
7,
In sp e c te d
th a n
raw o r
o n e -h a lf o f
p; s t e u r l n e d
one
per cen t
cream ed b u tte r m ilk
o r m ore th a n
3 ,5
per
c o n ta in in g
cen t b u tte r fa t,
In sp ected raw o r p a s te u r is e d c u ltu r e d or n a tu r a l b u tte rm ilk
c o n ta in in g n ot l e s s than o n e - h a lf o f one per c e n t o r more than one per
cent b u tte r fa t,
8,
In sp ecte d raw or p a s te u r is e d sk in m ilk c o n ta in in g l e s s than
o n e - h a lf o f one per c e n t b u t t e r f a t ,
Montana M ilk C ontrol Board - T h is market i s a ls o s u b je c t to the
r u l e s , r e g u la t io n s , and powers o f th e Montana M ilk C ontrol Board.
The
Board i s o p e r a tiv e and e x e r c is e s the fo llo w in g powers; t o f i x by o f f i c i a l
ord er:
( a ) The minimum p r ic e s t o be paid b y th e m ilk d e a le r s to pro­
d u cers and o th e r s fo r m ilk . The ord ers o f th e Board w ith r e s p e c t to th e
minimum p r ic e s t o be p aid to producers and o th e r s s h a ll a p p ly to th e
l o c a l i t y or sone i n w hich th e m ilk i s produced in r e s p e c t t o th e market
or m arkets in w hich m ilk so produced i s s o ld , and may vary in d if f e r e n t
l o c a l i t i e s or to n e s or m arkets a cco rd in g t o v a ry in g u se s and d if f e r e n t
c o n d it io n s . Each ord er f i x i n g p r ic e s or h a n d lin g ch a rg es may c l a s s i f y
m ilk by form s, c l a s s e s , grades c r u se s a s t h e Board may deem a d v is a b le
and may s p e c if y th e minimum p r ic e s t h e r e f o r .
(b )
m ilk in i t s
consum ption
lic e n s e d or
consum ption
d e a le r s .
The minimum w h o le sa le or r e t a i l p r ic e s to be charged fo r
v a r io u s grad es and u ses handled w ith in th e S ta te fo r f lu id
and w h eresoever produced when s o ld by m ilk d e a le r s whether
u n lic e n s e d , to consum er; b y s t o r e s to consumers ex ce p t fo r
on th e p rem ises where s o ld ; by m ilk d e a le r s t o o th er m ilk
A minimum w h o le s a le or r e t a i l p r ic e t o be charged f o r m ilk s h a ll
n ot be f ix e d h ig h er than i s n e c e s s a r y to co v er th e c o s t s o f o r d in a r ily
%e f f i c i e n t and econom ical m ilk d e a le r s , in c lu d in g a rea so n a b le retu rn upon
n e c e s s a r y in v e stm e n t.
The Board may, upon i t s own m o tio n , o r upon a p p lic a t io n in w r itin g
from any m arket, or from any p a rty a t i n t e r e s t , a l t e r , r e v is e o r amend any
-1 8
o f f i c i a l o r d e r t h e r e t o f o r e made by t h e Board p ro v id e d t h a t b e f o r e m aking,
r e v i s i n g , o r am ending an y o r d e r f i x i n g p r i c e s t o b e ch a rg e d o r p a id f o r
m ilk in any o f i t s g ra d e s o r u s e s , t h e Board s h a l l h o ld a p u b l i c h e a r in g
on su ch m a t t e r in t h e same m anner p ro v id e d h e r e i n f o r t h e o r i g i n a l f i x i n g
o f p ric e s .
The r e t a i l p r i c e t o b e c h a rg e d f o r m ilk in q u a r t b o t t l e s s h a l l
n o t b e more th a n tw ic e t h e p r i c e p a id by th e d i s t r i b u t o r t o t h e p ro d u c e r
f o r th e same g ra d e and b u t t e r f a t c o n te n t o f f l u i d m ilk p u rc h a s e d from th e
p ro d u c e r by su ch d i s t r i b u t o r . The B oard s h a l l make a d ju s tm e n t f non th e
b a s ic r a t e in p r i c e s o f m ilk s o ld in l e s s q u a n t i t i e s th a n q u a r ts and a t
w h o le s a le .
In any m a rk e t, w here t h e p r o v is io n s o f t h i s A ct a p p ly , i t s h a l l
be u n la w fu l f o r an y p r o d u c e r , p r o d u c e r - d i s t r i b u t o r , o r d i s t r i b u t o r t o
p ro d u c e , t r a n s p o r t , p r o c e s s , s t o r e , h a n d le , d i s t r i b u t e , buy o r s e l l m ilk
u n le s s su ch d e a l e r b e d u ly li c e n s e d as p r o v id e d by t h i s A c t. I t s h a l l be
u n la w fu l f o r any su ch p e rs o n t o b u y , s e l l , h a n d le , p r o c e s s , o r d i s t r i b u t e
m ilk w hich h e knows o r h a s re a so n t o b e l i e v e h as been p r e v io u s l y d e a l t
w ith o r h a n d le d in v i o l a t i o n o f any p r o v is io n o f t h i s A ct. Tho Board may
d o e lin e t o g r a n t a l i c e n s e , o r may su sp e n d o r rev o k e a l i c e n s e a lr e a d y
g r a n te d , upon due c a u s e and a f t e r h e a r i n g , i j
The o p e r a tio n o f t h i s law in th e m ark et may b e a f a c t o r a f f e c t i n g
t h e e f f i c i e n c y w ith w hich m ilk i s b e in g p ro d u ced and d i s t r i b u t e d .
D e f i n i t i o n o f Terms
A num ber o f te rm s u se d in t h i s r e p o r t have n o t b e e n s ta n d a r d i z e d .
In o r d e r t o i n d i c a t e c l e a r l y t h e i r m eaning t h e fo llo w in g d e f i n i t i o n s a r e
given*
P ro d u c e r - a dairym an who p ro d u c e s m ilk and s e l l s i t i n b u lk to
d is tr i b u to r o r a p ro d u c e r-d is trib u to r.
P r o d u c e r d i s t r i b u t o r - a p ro d u c e r o f m a rk e t m ilk who p ack ag es and
s e l l s h is f l u i d m ilk p r o d u c ts d i r e c t t o t h e consum er o r t o a n o t h e r r e t a i l e r .
He m a in ta in s a m ilk r o u te and may su p p lem en t h is own p r o d u c tio n by p u r c h a s -
i j M ontana
pp 12-13#
i l k C o n tro l B oard% aw . Mimeographed Copy, 1939,
-1 9 in g m ilk Jrom a p ro d u c e r o r a n o th e r p ro d u c e r- d i s t r i b u t o r *
D i s t r i b u t o r - an in d i v id u a l o r f ir m t h a t p u rc h a s e s m ilk from
p r o d u c e r s , p r o c e s s e s i t f o r s a l e in f l u i d form t o r e t a i l e r s and co n su m ers.
f:fci\-fat o r f l u i d m ilk - m ilk t h a t h as been p re p a re d f o r human
co n su p ti o n w ith o u t b e in g c o n v e rte d i n t o a n y o t h e r p r o d u c t.
I l u i d s a l e s - in c lu d e s s a l e s o f m ilk i n th e form o f f l u i d m ilk ,
f l u i d c ream , b u t t e r - m i l k , c h o c o la te m ilk and s k im -m ilk .
U n it o f f l u i d s a l e s - a l l f l u i d s a l e s a r e s o ld in v a r io u s s i z e
c o n t a in e r s ra n g in g from g a llo n s t o o n e - h a l f p i n t b o t t l e s .
Each c o n t a in e r
i s c o n s id e re d a u n i t r e g a r d le s s o f i t s s i z e , i . e . , each h a l f - p i n t , p i n t ,
q u a r t , o r g a llo n i s c o n s id e r e d one u n i t .
Q u art e q u i v a le n t - r e f e r s t o one q u a r t o r f l u i d s a l e s .
I t is
c a l c u l a t e d by c o n v e r tin g a l l f l u i d s a l e s i n t o q u a r t s , i . e . , two p in t s a r e
e q u a l t o one q u a r t e q u i v a l e n t , one g a llo n i s e q u a l to f o u r q u a r t e q u i v a le n t s .
W holesale - r e f e r s t o th e s a l e o f m ilk and m ilk p ro d u c ts to
s o r e s , r e s t a u r a n t s , and o t h e r l a r g e consum ers a t w h o le s a le p r i c e s .
R e ta il - f lu i d s a le s a t r e t a i l p r ic e s .
IflIk ho u se - r e f e r s t o t h e room o r b u il d in g and t h e equipm ent u sed
b y t h e p ro d u c e r in c o o lin g and s t o r i n g h i s m ilk u n t i l i t i s d e l iv e r e d t o t h e
d is trib u to r.
Ilfllk p l a n t - r e f e r s to t h e room o r b u i l d i n g and th e equipm ent u sed
b y th e d i s t r i b u t o r in p r o c e s s in g t h e m ilk .
P r o c e s s in g r e f r i g e r a t i n g m ilk .
c o o lin g , p a s t e u r i z i n g , s o e a r a t in g t h e cream , b o t t l i n g ,
-2 0 D i s t r i b u t i o n - r e f e r s t o a l l s e r v i c e s p erfo rm ed a f t e r th e m ilk
e n t e r s t h e m ilk h o u se and is c o o le d , u n t i l i t i s p u rc h a s e d and p a id f o r
b y th e consum er.
D e liv e r y - t r a n s p o r t i n g th e f l u i d m ilk from th e m ilk p l a n t to th e
p u rc h a se r.
C o st o f p r o d u c tio n
- r e p r e s e n t s a l l t h e c o s ts i n c u r r e d in th e
p r o d u c tio n o f m ark et m ilk*
C o st o f d i s t r i b u t i o n - i s t h e c o s t o f d i s t r i b u t i n g th e f l u i d
p ro d u c ts and r e o r e s e n ts a l l th e c o s ts in c u r r e d from th e tim e t h e m ilk i s
re c e iv e d a t t h e p l a n t u n t i l i t i s d e l iv e r e d t o and p a id f o r by th e p u r­
c h a se r*
Cow a p p r e c ia ti o n - in c r e a s e in th e v a lu e o f cows d u r in g t h e y e a r
due to grow th and in c r e a s e d c a p a c it y o f m ilk p r o d u c tio n .
Cow d e p r e c ia ti o n - d e c re a s e in t h e v a lu e o f cows d u r in g th e y e a r
b e c a u se o f a g e , im p ro p e r c a r e , and i n j u r y . Sj/
Method o f A n a ly s is
The p r e s e n t a t i o n o f t h e c o s t o f p r o d u c tio n and d i s t r i b u t i o n f a c t o r s
and t h e i r a n a l y s i s is d iv id e d in t o tw o m a jo r p a r t s .
The c o s t s and th e
f a c t o r s a f f e c t i n g c o s ts o f p ro d u c in g m ilk a r e p r e s e n te d and d is c u s s e d as
P a rt I I .
D i s t r i b u t i o n c o s t s and th e f a c t o r s a f f e c t i n g c o s ts a r e p r e s e n te d
i n l i k e m anner in P a r t I I I .
In each o f t h e s e p a r t s t h e f a c t o r s a f f e c t i n g
i t s c o s t a r e a n a ly z e d as f o ll o w s t
F i r s t , t h e m ark et as a w h o le; se c o n d .
Changes in th e m a rk e t p r i c e o f cows d u rin g t h e y e a r r e s u l t i n g
from f l u c t u a t i o n s in th e p r i c e l e v e l w ere e le m in a te d in co m p u tin g a p p r e c ia ti o n
and d e p r e c i a t i o n o f cow s.
21t h e c h a r a c t e r i s t i c s o f th e in d i v id u a l e n t e r o r i s e ; and t h i r d , th e d if f e r e n c e s
betw een i n d i v id u a l o p e r a to r s #
A verages a r e u sed t o i n d i c a t e th e c h a r a c t e r ­
i s t i c s o f t h e m a rk e t as a w h o le.
S c a t t e r d iag ram s a r e eraoloyed t o
i l l u s t r a t e t h e s a l i e n t f e a t u r e s and d i f f e r e n c e s o f t h e i n d i v i d u a l e n t e r ­
p r is e s #
In o r d e r n o t t o r e v e a l th e i d e n t i t y o f th e in d i v id u a l o p e r a t o r ,
eac h has b een a s s ig n e d a num ber.
R e fe re n c e t o th e same num ber w i l l i n d i c a t e
t h e same o p e r a t o r th r o u g h o u t t h e s tu d y .
O p e ra to rs I t o 16 i n c l u s i v e a r e
p r o d u c e r s , o p e r a to r s 14 t o 22 a r e p r o d u c e r - d i s t r i b u t o r s , w h ile o p e r a to r s
23 th ro u g h 26 a r e d i s t r i b u t o r s .
The sm a ll num ber o f re c o rd s o b ta in e d from th e L a u re l a r e a , and t h e
s i m i l a r i t y o f t h e f a c t o r s a f f e c t i n g th e c o s t s o f p r o d u c tio n and d i s t r i b u t i o n
i n t h e two c i t i e s i n d i c a t e s t h a t i t i s d e s i r a b l e to c o n s id e r t h e two as one
m a rk e t.
O perators numbered 14 and 16 a r e p ro d u c e rs and o p e r a t o r s 21 and
22 a r e p r o d u c e r - d i s t r i b u t o r s who a r e l o c a t e d n e a r and m a rk e t t h e i r m ilk
in L a u re l
-2 2 PART I I .
PRODUCTION OF MARKET MILK
The c o s t o f p ro d u c in g m ilk in c lu d e s t h e sum o f a l l th e c o s t f a c ­
t o r s w hich e n t e r i n t o i t s p r o d u c tio n .
T h ese f a c t o r s v a ry w ith th e d i f f ­
e r e n t p ro d u c e rs and a c c o u n t f o r t h e d i v e r s i t y in t o t a l c o s t s among p ro ­
d u c e rs.
In o r d e r t o f a c i l i t a t e an a n a l y s i s , th e f a c t o r s p e r t a i n i n g t o
p r o d u c tio n c o s ts a r e c l a s s i f i e d as f o llo w s .
( I ) c o s t s , w hich a r e made up
o f l a b o r , f e e d , b u il d in g s and e q u ip m e n t, cow d e p r e c i a t i o n , h a u l in g , a s s o c i a ­
t i o n d u e s , l i c e n s e s , t a x e s , and m is c e lla n e o u s ; (2 ) c r e d i t s , made up o f
m ark et v a lu e oi c a lv e s a t b i r t h , v a lu e o f manure p ro d u c e d , cow a p p r e c i a t on and s a l e o f b y - p r o d u c ts .
C o sts and c r e d i t s a r e in t u r n a f f e c t e d b y . ( I ) volum e, (2 ) p ro ­
d u c tio n p e r cow, (3 ) s i z e o f h e r d , and (4 ) d is ta n c e from m a rk e t.
A summary o f t h e c o s ts o f p ro d u c in g m ilk d u rin g t h e y e a r e n d in g
November I , 1940 i s p r e s e n te d in t a b l e I .
T h is summary in c lu d e s a l l th e
c o s t s o f t h e 22 dairym en who f u r n is h e d c o m p le te c o s t d a ta .
The n e t cos i o i p r o d u c in g m ilk in t h e B i l l i n g s - L a u r e l a r e a was
4 .1 9 c e n ts p e r q u a r t .
L ab o r and fe e d w ere t h e two m ost im p o r ta n t c o s t
f a c t o r s , c o n t r i b u t i n g 40 p e r c e n t and 36 p e r c e n t re s s e c t i v e l y .
The
re m a in in g 24 p e r c e n t o f th e t o t a l c o s t was d iv id e d among b u i l d i n s and
e q u ip m e n t, cow d e p r e c i a t i o n , h a u l in g , a s s o c i a t i o n dues - l i c e n s e s - t a x e s ,
and m is c e lla n e o u s ( t a b l e I ) .
$ / H errm an, I . I . , S t e l z e r , R. 0 . , and B ow ling, S . A ., "A S tu d y o f
t h e C o sts I n c u r r e d by 61 Farms in t h e Morgantown and F airm o n t M arkets in
1 9 3 4 -1 9 3 5 ," West V ir g in i a A g r ic u lt u r a l E x p erim en t S t a t i o n B u l l e t i n No. 2 6 8 .
23
TABLE I . AVEl-AGE COSTS AND PROPORTIONATE DISTRIBUTION OF
COSTS OF PRODUCING -OLK RER COlV AND PER QUART,
BILLINGS-LAU PEL AREA, 1940
C o st p e r
cow
D o lla rs
Item
C o st p e r P e r c e n t
q u a rt
of to ta l
C ents
C o sts
L abor
Feed
Use o f b u il d in g s and eq u ip m en t
Cow d e p r e c ia ti o n
H a u lin g
A s s o c ia tio n d u e s , l i c e n s e s , and ta x e s
M isc e lla n e o u s
T o t a l c o s ts
$72
66
16
8
7
2
10
1 .8 2
1 .6 4
.3 9
.2 1
.1 7
.0 6
.2 6
180
4 .6 4
9
4
I
.2 3
.1 0
.0 2
14
.3 6
166
4 .1 9
4 0 .1
3 6 .2
8 .6
4 .6
3 .7
1 .1
6 .7
100
C r e d its
V alue o f c a l f a t b i r t h
Panu re
B y -p ro d u c ts
T o t a l r e tu r n s
N et c o s t o f p ro d u c in g m ilk
&/
BfZ Tw enty-tw o o p e r a to r s
6 4 .3
2 8 .6
7 .1
100
-2 4 -
C r e d lts
In t h e p r o d u c tio n o f m ilk , j o i n t p ro d u c ts a r e a l s o produced#
T hese
j o i n t p r o d u c ts , c o n s id e r e d as c r e d i t s , a r e d ed u cted from t h e g ro ss c o s t s o f
p ro d u c in g m ilk in o r d e r to o b ta in t h e n e t c o s t s .
These j o i n t p ro d u c ts a r e
c l a s s i f i e d and com puted a s f o llo w s i
V alue o f c a lv e s -
C alv es a t b i r t h w ere v a lu e d a t th e m ark et p r i c e
and a c c o u n te d f o r 64 p e r c e n t o f t h e t o t a l c r e d i t s .
Tho m ark et p r i c e o f
c a lv e s a v e ra g e d $9 p e r cow, a r e l a t i v e l y h ig h v a lu e h e lp in g t o red u ce th e
c o s t o f p ro d u c in g m ilk .
V alue o f m anure - O p e ra to rs e s tim a te d th e v a lu e o f m anure p ro d u c e d .
T h is ite m a v e ra g e d $4 p e r cow o r 29 p e r c e n t o f th e t o t a l c r e d i t s .
Cow a p n r e o i a ti o n - In th o s e c a s e s w here t h e t o t a l o f th e e n d in g i n ­
v e n to ry v a lu e o f th e h e r d , s a l e s , and l o s s e s was l a r g e r th a n th e b e g in n in g
in v e n to r y , p u r c h a s e s , and v a lu e o f h e i f e r s fre s h e n e d d u rin g th e y e a r , t h e
n e t in c r e a s e was te rm e d cow a p p r e c i a t i o n .
T his c r e d i t ite m was p r a c t i c a l l y
n e g l i g i b l e and was in c lu d e d in b y - p r o d u c ts in t a b l e I .
B y -p ro d u c ts -
The s a l e s v a lu e o f b y - p r o d u c ts , in c lu d in g cow h id e s ,
dead a n im a ls , o ld d a i r y eq u ip m en t and fe e d b a g s , was s u p p lie d by th e o p e r­
a t o r and t o g e t h e r w ith cow a p p r e c i a t i o n c o n t r i b u t e s 7 p e r c e n t o f th e t o t a l
c r e d i t s o r an a v e ra g e o f |1 p e r cow.
C o sts
Among in d i v id u a l o p e r a to r s t h e r e was a wide v a r i a t i o n in th e p e r
q u a r t c o s t o f p ro d u c in g m ilk .
p e r q u a rt.
The ran g e was from 2 .7 8 c e n ts to 6 .9 2 c e n ts
The m a jo r it y o f t h e o p e r a t o r s ' p ro d u c tio n c o s ts f lu c t u a t e d
c l o s e l y a b o u t t h e a v e ra g e ; how ever, two o p e r a to r s had a p r o d u c tio n c o s t p e r
26-
q u a r t b elo w t h r e e c e n ts an d t h r e e in c u r r e d a c o s t above 6 c e n t s .
In a n a ly z in g c o s t s , a v e ra g e f i g u r e s may f a l l t o r e p r e s e n t th e
t y p i c a l s i t u a t i o n in t h e m ark et b e c a u s e o f th e w ide v a r i a t i o n in c o s ts
among i n d i v i d u a l o p e r a t o r s .
PXirthermor e , in d i v id u a l f ig u r e s a r e v a lu a b le
in i n d i c a t i n g th e v a r i a t i o n s i n c o s t s .
The t o t a l c o s t p e r q u a r t o f p ro d u c in g m ilk o f ea c h o p e r a t o r i s
p r e s e n te d in t a b l e I I .
The d a ta in t h i s t a b l e , a l s o , i n d i c a t e t o what
e x t e n t th e I n d iv id u a l o p e r a t o r ’ s t o t a l c o s t was made uo o f : ( I ) l a b o r ,
(2 ) f e e d , (3 ) b u il d in g s and eq u ip m e n t, (4 ) cow d e p r e c i a t i o n , (5 ) h a u lin g ,
(u ) a s s o c i a t i o n dues - l i c e n s e s - t a x e s , and (7 ) m is c e lla n e o u s .
C ost
f i g u r e s ap e a r in g in t h i s t a b l e have been a d j u s t e d f o r c r e d i t s g r a n te d . 1 0 /
T h e r e f o r e , th e c o s ts a p p e a r in g r e p r e s e n t t h e n e t c o s t t o t h e o p e r a to r s
and w i l l b e te rm ed c o s ts d u rin g th e re m a in d e r o f P a r t I I .
The d a ta in t a b l e I I I i n d i c a t e f o r each o p e r a t o r t h e p e rc e n ta g e
t h a t each o f t h e 7 item s o f c o s t is o f h i s t o t a l c o s t .
The c o s t o f la b o r
a c c o u n te d f o r th e l a r g e s t p e r c e n ta g e o f t h e t o t a l c o s t o f 17 o p e r a t o r s ,
w h ile fe e d was th e m ost Im p o rta n t c o s t ite m o f 6 o p e r a t o r s .
T h ere was a w ide v a r i a t i o n among in d i v id u a l o p e r a t o r s in th e p e r
c e n t o f th e t o t a l c o s t expended f o r th e d i f f e r e n t c o s t ite m s .
However, t h e
p e r c e n ta g e d i s t r i b u t i o n o f th e t o t a l c o s t among th e d i f f e r e n t c o s t item s
a p p a r e n tly h as no a f f e c t uoon th e t o t a l q u a r t c o s t o f p ro d u c in g m ilk .
IO / A d ju stm e n ts w ere made as f o llo w s : th e i n d i v id u a l o p e r a t o r 's
g ro s s c o s t o f each o f t h e 7 c o s t item s and h i s t o t a l c r e d i t s w ere d e te rm in e d .
The t o t a l o f th e c r e d i t item s was th e n m u l t i p l i e d by t h e p e rc e n ta g e t h a t
each o f t h e c o s t item s was o f th e t o t a l so t h a t th e t o t a l o f t h e c r e d i t item s
was d iv id e d among t h e c o s t item s a c c o r d in g t o t h e i r p e r c e n ta g e o f th e t o t a l
c o s t . T hese c r e d i t s w ere th e n s u b t r a c t e d from th e d i f f e r e n t c o s t item s t o
g iv e th e n e t c o s t o f eac h o p e r a t o r .
TABLE I I .
COSTS OF PROD CINS HLK PEB QUART, BY OPERATORS,
BILLIN36-LADREL AREA, 1940*
A ll
c o s ts
C ents
L ab o r
Feed
Cents
Cents
B ld g s.
and
e q u ip ­
ment
Cents
I
2
3
4
2 .9 6
4 .7 9
£ .3 0
3 .9 0
.9 0
1 .6 3
1 .8 0
1 .5 0
1 .1 0
1 .6 6
2 .1 0
1 .4 0
.2 0
.6 6
.6 0
.3 0
.3 9
.4 0
.1 6
-
.0 9
.0 6
.4 1
.4 2
.0 7 .
.0 6
.0 3
.0 5
.2 0
.2 4
.2 0
.2 3
5
6
7
8
4 .2 9
3 .4 8
6 .8 6
4 .4 1
1 .8 6
1 .3 2
2 .6 7
2 .0 0
1 .6 6
1 .2 9
1 .8 1
1 .2 2
.1 8
.2 0
.7 1
.2 2
.0 7
.2 9
.1 8
-
.4 0
.2 4
.1 8
.7 0
.0 3
.0 7
.0 3
.0 6
.2 0
.0 7
.2 8
.2 1
e
10
11
12
4 .0 4
4 .2 2
5 .2 6
4 .3 7
2 .0 2
1 .8 6
1 .6 8
1 .6 3
.9 7
1 .4 6
1 .0 0
1 .3 2
.3 0
.2 0
.3 9
.2 2
a»
.3 5
-
.5 3
.1 6
.1 2
1 .1 3
.0 5
.0 2
.0 7
.1 7
.2 0
.1 4
.1 0
13
14
16
16
6 .0 7
4 .9 2
6 .2 0
6 .9 2
2 .4 9
2 .0 6
1 .3 0
2 .3 4
2 .0 3
1 .7 8
2 .0 0
2 .1 4
.1 0
.3 4
.7 4
.7 7
-
-
.0 2
.0 1
.1 0
.0 3
.4 3
.2 8
.5 6
.3 5
17
18
19
20
3 .7 1
3 .9 8
3 .3 7
3 .8 9
1 .6 0
1 .6 8
1 .4 0
2 .2 7
1 .7 6
1 .2 0
1 .1 4
.7 8
.11
.6 7
.1 6
.4 9
.4 0
.0 9
-
.0 2
.0 2
.0 4
.0 2
.2 2
.2 1
.2 3
.2 4
21
22
3 .9 6
2 .7 8
1 .6 7
.8 9
1 .6 7
1 .5 6
.2 6
.1 0
.0 9
-
—
-
.0 2
.0 2
.3 5
.2 1
Average 4 .1 9
1 .6 8
1 .5 2
.3 6
.1 9
.1 6
.0 4
.2 4
Farm
no.
Cow
d e p re c ­
ia tio n
H aul­
in g
Cents
A sso c.
d u es,
li c e n s e s
ta x e s
Cents
Cents
C ents
M is c e l­
la n e o u s
&.
.4 6
.2 9
•
* D ata in t h i s t a b l e hav e been a d j u s t e d f o r c r e d i t s
-2 7 -
TABLE I I I . PROPORTIONATE DISTRIBUTION OF COSTS OF PRODUCING
MILK, BY Or1ERATOFB, BILLIN38-LAUREL AREA, 1S40
T o ta l
Labor
Feed
No.
H aul­
in g
P e t.
A sso c,
d u e s,
lic e n s e s
& ta x e s
P e t.
is c e lla n e o u s
P e t.
P e t.
P e t.
100
100
100
100
3 0 .5
3 4 .0
4 7 .2
3 8 .5
3 7 .2
3 8 .8
2 9 .6
3 5 .9
6 .6
1 1 .6
7 .7
7 .4
1 3 .2
8 .3
3 .2
-
3 .3
1 .1
7 .8
1 1 .0
2 .4
1 .3
.6
1 .3
6 .8
5 .0
4 .0
5 .9
100
100
100
100
4 3 .1
3 7 .9
4 6 .6
4 6 .6
3 6 .4
3 7 .0
3 0 .9
2 7 .6
4 .2
5 .9
1 2 .2
4 .9
1 .6
8 .3
3 .0
-
9 .3
6 .9
3 .0
1 5 .6
.6
2 .1
0. G
1 .6
4 .8
1 .9
4 .7
4 .9
9
100
100
100
100
5 0 .6
4 5 .7
4 8 .8
5 5 .0
2 4 .0
3 4 .6
3 0 .7
3 0 .2
7 .4
4 .8
1 1 .9
4 .9
1 .2
-
1 3 .2
3 .8
3 .5
2 5 .G
0 .6
1 .7
4 .2
4 .7
4 .4
2 .6
4 9 .1
4 1 .9
3 3 .7
3 9 .6
4 0 .1
3 6 .2
3 9 .3
3 6 .1
1 .9
6 .8
1 4 .3
1 3 .0
9 .1
*
15
16
100
100
100
100
0 .5
0 .2
2 .0
0 .6
8 .4
5 .8
1 0 .7
6 .0
17
18
19
20
100
100
100
IOC
4 3 .0
4 9 .6
4 1 .6
58 .3
4 7 .4
3 0 .1
3 3 .9
2 0 .0
3 .1
1 4 .4
4 .8
1 2 .6 -
-
m
1 1 .9
2 .4
-
-
0 .5
0 .7
1 .2
0 .4
6 .0
5 .2
6 .7
6 .3
21
22
100
100
4 2 .2
3 1 .9
3 9 .6
56# O
6 .7
3 .7
2 .3
0 .3
-
0 .5
0 .6
8 .8
7 .6
100
4 0 .1
3 6 .2
8 .6
4 .6
3 .8
1 .0
5 .7
«
P e t.
U3 t o 6 - CD
Cow
dep re o ia tio n
P e t.
1#
B ld g s.
and
equip­
ment
P e t.
1 0
1 1
12
1 3
H
8 .4
-
-
-
4 .9
-
*
26L ab o r a c c o u n te d f o r o v e r 45 p e r c e n t o f t h e t o t a l c o s t o f p r o d u c in g m ilk
o f 8 o ertVvCrs, and o f t h e s e , 4 had a t o t a l c o s t p e r q u a r t above th e
a v e ra g e o f t h e 22 o p e r a to r s and 4 had a c o s t belo w .
Feed am ounted t o o v e r
36 p e r c e n t o f t h e t o t a l c o s t o f 12 o p e r a t o r s and t h e s e , t o o , wore e q u a lly
d iv i d e d , 6 had a c o s t above and 6 below t h e a v e ra g e .
The w ide v a r i a t i o n among i n d i v id u a l o o e r a to r s in t h e p e r q u a r t c o s t
o f p ro d u c in g m ilk a p p e a rs t o b e , from r e s u l t s o f t h i s s tu d y , c a u s e d by
d i f f e r e n c e s in th e p e r q u a r t c o s t o f th e ite m s m aking up th e t o t a l c o s t and
t h e s e i n t u r n a r e a f f e c t e d b y d if f e r e n c e s i n su ch f a c t o r s as t o t a l volume
o f m ilk n ro d u c e d , p r o d u c tio n p e r cow, and s i z e o f h e r d .
An a n a l y s i s o f
t h e s e c o s t item s and r e l a t e d f a c t o r s s h o u ld i n d i c a t e why c o s t s v a r y , th e
e f f e c t t h a t th e d i f f e r e n t ite m s o f c o s t and r e l a t e d f a c t o r s hav e upon th e
t o t a l c o s t , and as a r e s u l t may a s s i s t d airym en h a v in g h ig h p r o d u c tio n c o s ts
i n a d j u s t i n g "i e i r e n t e r p r i s e s t o conform t o low c o s t c o m b in a tio n s .
Labor - L ab o r c o s t s in c lu d e th o s e f o r th e o p e r a t o r , t h e u n p a id
f a m ily , t h e h i r e d h e l p , and h o r s e l a b o r as exoended on th e p ro d u c tio n o f
m ilk .
O p e r a to r ’ s tim e s p e n t in th e d a i r y e n t e r p r i s e was d e te rm in e d and
c h a rg e d a c c o rd in g t o t h e r a t e o f t h a t ty p e o f l a b o r as was u n p a id fa m ily
la b o r.
H ire d h e lp was c h a rg e d a t th e a c t u a l r a t e p a id p lu s t h e s h a r e o f
b o a rd and room and o t h e r s e r v ic e s f u r n is h e d by th e o p e r a t o r c o rre s o o n d in g
t o th e tim e s i e n t in th e d a i r y e n t e r p r i s e ,
at
ll/
H orse l a b o r was v alu e d
I p e r day and c h a rg e d t o th e d a i r y e n t e r p r i s e a c c o rd in g t o th e tim e s p e n t.
l l / ~ T h e a llo w a n c e u sed f o r b o a rd and room was $30 p e r m onth, o t h e r
a llo w a n c e s w ere d ep e n d e n t on t h e ty p e o f s e r v i c e f u r n is h e d .
-2 9 -
'an l a b o r a c c o u n te d f o r 97 p e r c e n t o f th e t o t a l and h o ru e l a b o r , so
s.nnl] as t o b e a lm o s t n e g l i g i b l e , 3 p e r c e n t .
B ecause o f t h e r e l a t i v e
u n im p o rta n c e o f h o r s e l a b o r i t was c o n s id e r e d d e s i r a b l e t o com bine man and
Jio rse l a b o r and a n a ly z e them as l a b o r c o s t .
j-Lo
,.G ta l
c e n ts ( t a b l e T l ) .
c o s t of la b o r p e r q u a r t o f m ilk p roduced a v e ra g e d 1 .6 8
Among in d i v id u a l o p e r a t o r s t h i s ite m ra n g e d from .9 2
c e n ts t o 2 .6 7 c e n ts p e r q u a r t.
The r e l a t i v e im p o rta n c e o f t h i s c o s t item and th e w ide ran g e
e x i s t i n g among in d i v id u a l o p e r a to r s s u g g e s t t h a t i t i s one o f th e most
im p o rta n t s i n g l e item s c a u s in g t h e w ide v a r i a t i o n in t h e t o t a l c o s t p e r
q u a r t o f p ro d u c in g m ilk .
O p e r a to r 's l a b o r a v e ra g e d $117 p e r m onth and th e ra n g e among
in d i v id u a l o p e r a to r s was from $30 t o $200 p e r m onth.
Of t h e 22 o p e r a t o r s ,
tw o v a lu e i t ’ e i r l a b o r a t $80 p e r m onth, f o u r a t $90, n in e a t $100, one
at
120, two a t $125, one a t $150 and t h r e e a t $200.
Unpaid fa m ily l a b o r a v e ra g e d $65 p e r m onth and ran g ed among e n t e r -
p r i s e s from *40 t o $93.
The 17 o p e r a to r s u t i l i z i n g u n p a id l a b o r e v a lu a te d
i t ns f o ll o w s i two betw een $40 and $69 p e r m o n th , 13 betw een $60 and $ 7 9 ,
and two b etw een $80 and $99.
The v a lu e o f h i r e d h e lp a v e ra g e d $64 p e r m onth.
Ten dairym en h ir e d
h e lp d u rin g t h e y e a r and o f t h e s e , sev en p a id a wage p lu s a llo w a n c e s
b etw ee n $50 and $69 p e r m onth, one $170, one $175, and one $105.
I h e v a r i a t i o n s in th e m o n th ly v a l u a tio n o f o p e r a t o r 's l a b o r may
have an e f f e c t upon th e p e r q u a r t c o s t o f l a b o r .
The r e l a t i o n s h i p betw een
t h e p e r q u a r t c o s t o f l a b o r and th e m o n th ly v a lu e o f th e o p e r a t o r 's l a b o r
-3 0 -
i s in c
a te d in x ig u r e 3»
Ae th e v a lu e o f o p e r a t o r 's l a b o r in c r e a s e s
t h e c o s t p e r q u a r t o f l a b o r te n d s t o c e c r e a e e u n t i l t h e v a lu e o f o n e r a t o r 's
la b o r re a c h e s $130 p e r month and th e n t h e r e i s an i n d i c a t i o n t h a t th e
c o s t o f la b o r p e r q u a rt in c re a s e s .
The v a r i a t i o n s among i d iv id u a l o p e r a to r s
in th e m o n th ly v a lu e o f o p e r a t o r 's l a b o r a r e a p o a r e n tly o f f s e t t o some
e x t e n t by d i f f e r e n c e s in t h e in d i v i d u a l o p e r a t o r 's w orking e f f i c i e n c y .
T h ere
was no r e l a t i o n s h i p betw een p ro d u c tio n c o s t s and u n p a id fa m ily l a b o r o r
betw een c o s ts and h i r e d h e lp .
^eed “ *»ed was t h e second l a r g e s t s i n g l e ite m o f c o s t , a c c o u n tin g
f o r 36 p e r c e n t o f th e t o t a l ( t a b l e I I I ) .
The c o s t o f fe e d a v era g ed 1 .6 2
c e n ts p e r q u a r t ( t a b l e I l ) , and th e ra n g e among in d i v id u a l o p e r a t e rs
was from . / 8 c e n ts t o 2 .1 4 c e n t s .
Feed c c u ts in c lu d e c o s ts in c u r r e d
f o r a l f a l f a , p a s t u r e and f i e l d , s u c c u l e n t s , c o n c e n t r a t e s , and s tr a w
u t i l i z e d by th e m ilk in g h e r d .
Feed r a i s e d on th e farm was v a lu e d a t th e
p r i c e i t co u ld be s o ld f o r a t t h e farm .
C o st o f p a s t u r e and f i e l d w ere
c h a rg e d a t t h e l o c a l r e n t a l r a t e s and v a r i e d in a c c o rd a n c e w ith th e
q u a lity .
D airym en in t h i s a r e a u s u a l l y o p e r a te a g e n e ra l farm upon which
th e y grow a m a jo r p o r ti o n o f th e fe e d f o r t h e i r d a i r y h e r d s .
M ill fe e d ,
d r ie d b e e t p u lp , m in e ra l f e e d s , and b r e w e r 's m a lt were th e n r i n c i p a l fe e d s
p u rc h a s e d .
A l f a l f a was t h e o n ly h ay th e 22 d airy m en fe d t o t h e i r m ilk in g
h e rd s and a c c o u n ts f o r 43 p e r c e n t o f t h e t o t a l c o s t o f fe e d ( t a b l e IV ).
O p e ra to rs fe d an a v e ra g e o f 3 .8 to n s o f a l f a l f a p e r cow a t an a v e ra g e c o s t
L abor c o s t p e r q u a r t
o f m ilk p ro d u ced
(c e n ts )
3-
2
7 '? « *
H-Clt
O
* if
Z/
I
I
$100
I
$150
!
I
$200
V alue o f o p e r a t o r ’ s l a b o r p e r month
F ig u r e 3 . R e la tio n b etw een l a b o r c o s t p e r q u a r t o f m ilk
p ro d u ced and v a lu e o f o p e r a t o r 's l a b o r p e r m onth,
22 o p e r a to r s
32 >
TABLE IV. FEED COSTS AND PROPORTIONATE DISTRIBUTION FOR
THE DIFFERENT FEEDS PER QUAFT OF MILK PRODUCED, BY
OPERATORS, BILLI OS-LAUREL AREA, 1940
T o ta l C o st
C ents P e t.
A lfa lfa
C en ts P e t.
P a s tu r e &
F ie ld
C ents P e t.
Conee n t ra te s
S u c c u le n ts
C ents P o t. C ents
P e t.
IfI oa M H
1 .6 7
1 .5 4
1 .4 9
1 .4 2
100
100
100
100
0 .3 2
0 .6 3
0 .6 8
0 .4 1
28
35
39
29
0 .0 7
0 .3 0
0 .3 1
0 .2 1
2
17
21
16
0 .7 0
0 .8 8
0 .6 0
0 .7 6
61
48
40
53
CD —3 O C l
F ara
No.
1 .6 3
1 .2 4
1 .7 3
1 .2 9
100
100
100
100
0 .6 6
0 .6 3
0 .6 3
0 .5 7
43
51
36
44
0 .1 9
0 .2 0
0 .3 8
0 .1 9
12
16
22
15
0 .6 8
0 .4 1
0 .7 2
0 .5 1
45
33
42
39
9
10
11
12
0 .9 9
1 .4 4
1 .1 1
1 .4 4
100
100
100
100
0 .3 3
0 .6 3
0 .4 7
0 .7 6
34
37
42
53
0 .1 7
0 .3 4
0 .1 0
0 .1 0
17
24
9
7
0 .4 9
0 .4 4
0 .6 4
0 .4 8
49
30
49
33
13
14
15
16
2 .1 3
1 .8 8
2 .2 2
2 .2 4
100
100
100
100
0 .8 7
1 .0 1
1 .0 6
1 .3 4
41
54
48
60
0 .4 0
0 .2 4
0 .2 0
0 .1 0
19
13
9
5
0 .8 6
0 .6 3
0 .9 6
0 .8 0
40
33
43
35
.
•
-
-
17
18
19
20
1 .7 9
1 .2 5
1 .1 2
0 .7 4
100
100
100
100
0 .7 0
0 .5 6
0 .3 8
0 .6 9
39
45
34
80
0 .1 1
0 .0 6
0 .2 1
0 .1 2
6
5
19
16
0 .9 8
0 .4 0
0 .4 6
0 .0 3
65
32
41
4
0 .2 3
0 .0 7
-
18
6
-
21
22
1 .7 8
1 .5 7
100
100
0 .4 8
0 .8 4
27
64
0 .1 3
0 .1 1
7
7
0 .9 6
0 .6 2
54
39
0 .2 1
-
12
-
Ave .
1 .6 8
100
0 .6 7
43
0 .1 6
10
0 .6 8
44
0 .0 4
3
0 .5 8
9
•
-
0 .0 4
■
mm
3
w
•
0 .0 2
0 .1 3
2
9
*
0 .1 0
7
■32-o­
o f $7 p e r to n w hich am ounts t o a t o t a l c o s t o f $27.
On a q u a r t b a s i s ,
t h e a v e ra g e c o s t was .6 7 c e n ts and t h e ra n g e among o p e r a to r s was from
.3 2 c e n ts t o 1 .0 6 c e n ts ( t a b l e IV ).
The r e l a t i o n s h i p betw een th e c o s t o f a l f a l f a p e r q u a r t o f m ilk p ro ­
duced and t o t a l c o s t o f p r o d u c tio n i n d i c a t e s t h a t low c o s ts o f a l f a l f a a r e
a s s o c i a t e d w ith low c o s ts o f p ro d u c in g m ilk and as a l f a l f a c o s t s in c r e a s e ,
t o t a l p ro d u c tio n c o s ts te n d t o in c r e a s e ( f i g u r e 4 ) .
P a s tu r e and f i e l d c o s ts a v e ra g e d $6 p e r cow.
The a v e ra g e c o s t p e r
q u a r t o f m ilk p ro d u ced was .1 6 c e n t s , t h e ran g e among i n d i v i d u a l o p e r­
a t o r s ..as from .0 6 t o .4 0 c e n ts ( t a b l e IV ).
The w ide v a r i a t i o n in th e o e r q u a r t c o s t o f p a s t u r e and f i e l d i s
due in p a r t t o d i f f e r e n c e s in t h e q u a l i t y and t h e q u a n t i t y o f p a s tu r e and
f ie ld used.
A num ber o f o p e r a to r s d id n o t h av e a c c e s s t o an a d e q u a te
s u p p ly o f p a s tu r e and f i e l d and so w ere f o r c e d t o hand fe e d t h e i r m ilk in g
h e rd s d u rin g a l l o r a l a r g e p a r t o f t h e summer m onths.
O th e rs u se d p a s tu r e
and f i e l d s o f i n f e r i o r q u a l i t y a n d , a l s o , w ere f o rc e d t o su p p lem en t t h e i r
p a s t u r e and f i e l d b y hand f e e d in g .
No r e l a t i o n s h i p was e v i d e n t b etw een c o s t
o f p a s tu r e and f i e l d p e r q u a r t o f m ilk p ro d u c e d and t o t a l c o s t p e r q u a r t
o f o re d u c in g m ilk .
C o n c e n tra te s a c c o u n te d f o r 44 p e r c e n t o f th e t o t a l fe e d c o s t.
T h is ite m a v e ra g e d .6 8 c e n ts p e r q u a r t o r $27 p e r cow.
H ow ever, among
'
in d i v i d u a l o p e r a t o r s ex trem e v a r i a t i o n s w ere p r e s e n t , i n d i c a t i n g
d i v e r s i t y among o p e r a to r s in t h e am ounts o f c o n c e n tr a te s f e d .
reat
The range in
th e c o s t p e r q u a r t was from .0 3 c e n ts t o .9 8 c e n ts ( t a b l e IV ).
The r e l a t i o n s h i p b etw een c o s t o f c o n c e n tr a te s p e r q u a r t o f m ilk
C o st o f a l f a l f a p e r
q u a r t o f m ilk p ro d u ced
(c e n ts )
1.2
-33
_
I
I
I
I
3
4
5
6
(c e n ts )
T o ta l p r o d u c tio n c o s t p e r q u a r t
F ig u re 4 . R e la tio n betw een c o s t o f a l f a l f a p e r q u a r t o f m ilk
p ro d u ced and t o t a l p r o d u c tio n c o s t p e r q u a r t, 22 o p e r a to r s
C o st o f c o n c e n tr a te s
p e r q u a r t o f m ilk p ro d u ced
(c e n ts )
1.2
-
to
3
4
5
6
(c e n ts)
T o ta l p r o d u c tio n c o s t p e r q u a r t
F ig u re 5 . R e la tio n b etw een c o s t o f c o n c e n tr a te s p e r q u a r t o f m ilk
p ro d u c e d and t o t a l p r o d u c tio n c o s t p e r q u a r t , 22 o p e r a to r s
-3 4 -
pro< tcod end t o t a l c o s t o f p rod u ction Ie I l l u s t r a t e d In f ig u r e 6»
The
r e la t io n s h ip Ie alm ost f l a t I n d ic a tin g t h a t th e o o e t o f c o n c e n tr a toe has
l i t t l e e i e c t unon th e t o t a l c o s t p er quart o f producing m ilk .
C on cen trates fed by d a ir y on In t h i s stu d y In clu d e d ried b eet
p u lp , m i l l fetid , b a r le y , o a t e ,
e a t , c o m , m o la sses and m in eral f e e d s .
The f i r s t fo u r o f t h e s e were th e p r in c ip a l fe e d s u sed .
E u ocu len t f e e d s . In clu d in g c o m s i l a g e and brew er’ s m a lt, were fed
by e i i t o f th e dairymen fu r n is h in g d ata and c o n s t it u t e o n ly 3 p er cen t o f
th e t o t a l c o s t o f fe e d .
Each o f th e o p e r a to r s numbered I , 4 , 8 , 1 0 , 1 2 , 1 8 ,
and 19 who fed s u c c u le n t fe e d s had a lo w er t o t a l c o s t p er q u art o f feed
th a n t « average o f th e group, w h ile t h e r e a i n i n g o p e r a to r , number 21,
fe e d in
may
s u c c u le n ts in cu rred a h ig h e r than average p ro d u ctio n c o s t .
e th a t t h e u se o f s u c c u le n t feed s te n d s t o reduce feed c o s t s .
It
However,
s u f f i c i e n t d ata a r e n o t a v a ila b le t o a c c u r a te ly determ ine t h e a f f e c t th a t
fe e d in
s u c c u le n ts has upon t h e t o t a l c o s t o f fe e d .
Straw was u sed f o r bedding by th e 22 dairym en.
An a v era g e o f
1 .4 2 to n s c o e t ng $ 1 .9 0 p er cow was u t i l i s e d .
B u ild in g s and e g ilp r - e - 1 - P u lld ln r e and equipment c o s t s In clu d e th e
c o s t o f r e p a ir s . In su ra n ce, d e p r e c ia tio n on b u ild in g s which was charred a t
4 p er c e n t and on equipment charred a t t h e average r a te s o f d e p r e c ia tio n
fo r th e a r e a , 1 2 / t a x e s , determ ined by th e a s s e s s e d v a lu e on th e average
l g / Average d e p r e e ia tio n ra tes f o r th e B lllin g s - L a u r e l area were
Obteined-Trom Pr. J . A, N e ls o n , P r o fe s s o r o f D airy In d u stry , Montana
S t a t e C o lle g e .
-3 5 -
in v e s tm e n t tim e s t h e m illa g e r a t e , 1 3 /e n d i n t e r e s t on in v e s tm e n t a t t h e
ra te o f 5 p e r c e n t. 1 4 /
B u ild in g s and eq u ip m en t c o s ts a c c o u n te d f o r 8 .6 p e r c e n t o f th e
t o t a l c o s t o f p ro d u c in g m ilk .
T his ite m a v e ra g e d .5 6 c e n ts p e r q u a r t end
t h e ra n g e among in d i v id u a l o p e r a to r s was from . 10 c e n ts t o .7 7 c e n ts
(ta b le I I ) .
S in c e t h e c o s ts o f b u il d in g s and eq u ip m en t a r e d ep e n d e n t l a r g e l y on
t h e i r v a lu e , t h e w ide ran g e e x i s t i n g among o p e r a to r s i s an i n d i c a t i o n o f
t h e d i v e r s i t y in t h e ty p e s o f b u ild in g s and equipm ent u s e d .
The r e l a t i o n ­
s h ip betw een t h e t o t a l c o s t p e r q u a r t o f p ro d u c in g m ilk and t h e in v e stm e n t
in b u l l d i n s and eq u ip m en t p e r q u a r t , i n d i c a t e s t h a t low p r o d u c tio n c o s ts
a r e a s s o c i a t e d w ith low in v e s tm e n ts and as in v e stm e n ts i n c r e a s e p ro d u c tio n
c o s ts te n d t o in c r e a s e ( f i g u r e 6 ) .
E f f i c i e n c y in th e u s e o f b u ild in g s and
equipm ent may depend t o a g r e a t e r e x t e n t upon th e ty p e o f b u il d in g s end
e q u ip e n t and th e c o n v e n ie n c e o f t h e i r a rra n g e m e n t r a t h e r th a n t h e i r v a lu e .
Cow d e p r e c ia ti o n -
D e p r e c ia tio n o f cows was o b ta in e d by sub­
t r a c t i n g t h e c l o s i n g in v e n to r y , s a l e s , and l o s s e s from t h e o p en in g in v e n to r y ,
p u r c h a s e s , and v a lu e o f h e i f e r s fre s h e n e d d u r in g th e y e a r .
In th o s e c a s e s
w here th e t o t a l o f t h e c l o s i n g in v e n to r y , s a l e s , and lo s s e s was l a r g e r , t h e
,
in c r e a s e was c r e d i t e d as a o n r e c ia ti o n and a n n e a rs in c r e d i t s .
I n t e r e s t on
IV
I n th e S t a t e o f Montana th e a s s e s s e d v a lu e o f b u i l d i n g s , mac h i n e r y , and equ ip m en t f o r t a x i n g p u rp o se s i s 30 p e r c e n t an d f o r li v e s t o c k
i t i s 33 p e r c e n t . The a v e ra g e m illa g e r a t e o f ta x in B i l l i n g s was 92 m i l l s ,
o u t s i d e th e c i t y i t was 63 m i l l s . F o r o p e r a to r s lo c a te d n e a r L a u re l th e
m illa g e r a t e was 6 0 .8 m i l l s .
1 4 / T h is r a t e i s u se d b e c a u se i t a p p ro x im a te s t h e g o in g r a t e o f
i n t e r e s t c h a rg e d on lo a n s made f o r t h i s ty p e o f in v e s tm e n t.
-36-
T o ta l c o s t p e r q u a r t
o f m ilk p ro d u ced
(c e n ts )
/6
7
3
13
5
4 .
iy
2.
IS
3 <
22
I
2
3
(c e n ts )
4
5
6
In v e s tm e n t in b u il d in g s and equipm ent p e r q u a r t o f
m ilk p ro d u ced
F ig u re 6 . R e la tio n b etw een t o t a l c o s t p e r q u a r t o f m ilk p ro d u ced
and p e r q u a r t in v e s tm e n t in b u il d in g s and eq u ip m en t,
22 o p e r a to r s
-3 7 -
in v e stz n e n t i n cows was c h a rg e d a t 5 p e r c e n t .
T h ir te e n o f th e 22 o p e r a to r s had a c o s t o f cow d e p r e c i a t i o n .
S in c e
a l l t h e o p e r a to r s in t h i s s tu d y do n o t have a c o s t o f t h i s ite m , a v e ra g e s
o f t h e group would m is r e p r e s e n t th e s i t u a t i o n .
The d a ta in t a b l e s I l and I I I i n d i c a t e t h e o p e r a to r s who had a
c h a rg e o f cow d e n r e e la ti o n a n d , f o r each o p e r a t o r , th e c o s t p e r q u a r t and
t h e p e r c e n ts e o f th e t o t a l c o s t t h a t i s a c c o u n te d f o r by t h i s
item .
Cow d e p r e c i a t i o n had l i t t l e a f f e c t upon t h e t o t a l c o s t p e r q u a r t
o f p ro d u c in g m ilk .
Seven o f th e 12 o p e r a t o r s in c u r r i n g a c o s t o f cow
d e p r e c i a t i o n had a t o t a l p r o d u c tio n c o s t ab o v e th e a v e ra g e o f th e group
w h ile t h e o th e r 6 had a p r o d u c tio n c o s t b elo w th e a v e ra g e .
H a u lin g - T h ir te e n p ro d u c e rs fo llo w th e p r a c t i c e o f d e l i v e r i n g
t h e i r m ilk t o d i s t r i b u t o r s in B i l l i n g s .
The p r e s e n t s y s t e
o f h a u lin g in
u s e i s f o r eac h i n d i v id u a l p ro d u c e r t o d e l i v e r h is m ilk p e r s o n a l l y , o r
f o r two o r more n e ig h b o rs t o a g re e t o an a rra n g e m e n t w hereby one o f them
h a u ls h is n e i g h b o r 's m ilk as w e ll as h i s own.
The d a ta in t a b l e s I I and I I I i n d i c a t e f o r each o f t h e 13 p ro d u c e rs
t h e p e r q u a r t c o s t and t h e p e r c e n ta g e t h a t h a u lin g i s o f th e t o t a l .
For
th e s e 13 prod c e r s t h e t o t a l c o s t o f h a u lin g a c c o u n te d f o r 6 .8 p e r c e n t o f
t h e i r t o t a l c o s t o f p ro d u c in g m ilk and t h e a v e ra g e c o s t was .2 7 c e n ts p e r
, q u a rt.
A s s o c ia tio n d u e s , l i c e n s e s and t a x e s - T hese c o s t ite m s a c c o u n te d
f o r one p e r c e n t o f th e t o t a l c o s t o f p r o d u c in g m ilk ( t a b l e I I I ) .
The
a v e r a e c o s t f o r th e 22 o p e r a t o r s was .0 4 c e n ts p e r q u a r t , and th e ran g e
was from l e s s th a n .0 1 c e n ts t o .0 7 c e n ts ( t a b l e T l) .
-3 8 -
S in o e th e s e c o s ts a r e r e l a t i v e l y f ix e d f o r t h e in d i v id u a l e n t e r ­
p r i s e , changes in th e s e c o s ts a r e d ep en d en t upon changes in th e p r e s e n t
o r g a n iz a ti o n o f t h e in d i v id u a l e n t e r p r i s e o r changes in t h e r e l a t i v e c o s t
o f t h e s e ite m s .
Changes in t h e m illa g e r a t e o f t a x , l i c e n s e s , o r a s s o c i a ­
t i o n cues u s u a l l y , h ow ever, a f f e c t a l l e n t e r p r i s e s by re d u c in g o r
in c r e a s i n g t h e i r c o s ts ro u g h ly in p r o p o r tio n t o t h e i r p r e s e n t c o s t .
’ is c e l la n e o u s - M is c e lla n e o u s c o s t s , in c lu d in g th e c o s t o f h erd
s i r e a t a f l a t two d o l l a r f e e , m e d ic a l s u p p lie s and s e r v i c e s , fe e d g rin d ­
in g , t e l enhone, s t r a i n e r d i s c s , and d a i r y m agazines a c c o u n te d f o r 5 .7
p e r c e n t o f th e t o t a l c o s t o f p ro d u c in g m ilk ( t a b l e I I I ) .
The a v e ra g e
c o s t was .2 4 c e n ts p e r q u a r t and th e ran g e among in d iv id u a l o p e r a to r s
was from .0 7 c e n ts t o .6 6 c e n ts p e r q u a r t .
S in c e t h e in f o r m a tio n n e c e s s a r y t o c a l c u l a t e th e I n d iv id u a l
d a iry m a n ’ s c o s t o f h e rd s i r e was n o t a v a i l a b l e , a u n ifo rm r a t e o f $2 was
used. 1 5 /
As c o n d itio n s e x i s t in th e a r e a , a number o f dairym en b e lo n g in g
t o th e D a iry Im provem ent A s s o c ia tio n r e c e iv e d th e s e r v ic e o f a governm ent
h e rd s i r e f r e e , e x c e p t f o r th e c o s t o f t h e s i r e ’ s f e e d , c a r e , and h o u sin g
w h ile i t was on t h e o p e r a t o r 's farm .
O th e r o p e r a to r s e i t h e r m a in ta in a
h e rd s i r e o f t h e i r own o r h i r e th e u s e o f a n e ig h b o r ’ s .
T h is c o s t a c c o u n ts
f o r 21 o e r c e n t o f th e t o t a l o f m is c e lla n e o u s c o s t s .
H i i l e m is c e lla n e o u s c o s t s , e x c lu d in g th e c o s t o f b u l l s e r v i c e , a r e
im p o rta n t in t o t a l , i n d i v i d u a l l y t h e y a r e so s n a i l t h a t an a n a l y s i s o f each
JLb/ T his f i g u r e was c o n s id e r e d a p p l i c a b l e by J . 0 . T r e ts v e n ,
P r o f e s s o r o f D a iry I n d u s t r y , and 0 . A. P a r s o n s , A s s is t a n t P r o f e s s o r o f
Econom ics and S o c io lo g y , M ontana S t a t e C o lle g e .
-39wouId be o f l i m i t e d v alu e#
S in c e th e s e c o s ts a r e d ep en d en t upon th e
o r g a n iz a ti o n o f t h e e n t e r p r i s e and p r a c t i c e s em ployed by t h e o p e r a t o r s ,
r e d u c tio n s in t h e t o t a l o f m is c e lla n e o u s c o s ts is a problem o f each
i n d i v id u a l dairym an#
F a c to rs A f f e c tin g P ro d u c tio n C o sts
Volume - The volum e o f m ilk p ro d u ced by in d i v id u a l o p e r a to r s was
o b ta in e d from D a iry Im provem ent A s s o c ia tio n re c o rd s when a v a i l a b l e .
Io r
p ro d u c e rs who had no D a iry Im provem ent r e c o r d s , volume was b a s e d on s a l e s
p lu s th e m ilk u sed on t h e farm .
The s a l e s o f m ilk were o b ta in e d from th e
s ta te m e n ts o f th e p l a n t s t o which m ilk was d e l i v e r e d , r e c o rd s o f th e p ro ­
d u c e r - d i s t r i b u t o r s , c r in f o r m a tio n f u r n is h e d by th e o p e r a t o r .
O p e ra to rs
e s tim a te d t h e amount o f m ilk u s e d in th e home, th e amount f u r n is h e d t o
h i r e d h e l p , and t h a t fe d t o l i v e s t o c k .
Volume o f m ilk h a n d le d v a r i e d w id e ly among i n d i v id u a l o p e r a t o r s .
The ran g e was from I t , 240 q u a r ts t o 3 1 9 ,2 1 4 qua t s ( t a b l e V ).
Two
o p e r a to r s h a n d le d more th a n 1 7 5 ,0 0 0 q u a r ts and 3 h a n d le d l e s s th a n 1 3 0 ,000
q u a rts .
Volume i s a f a c t o r a f f e c t i n g t h e c o s t o f p ro d u c in g m ilk .
The r e ­
l a t i o n s h i p b etw een volume and th e t o t a l q u a r t c o s t o f p ro d u c in g m ilk i n d i ­
c a t e s t h a t h ig h p ro d u c tio n c o s ts a r e a s s o c i a t e d w ith low volum es and as
volum e in c r e a s e s t h e p e r q u a r t c o s t o f p ro d u c in g m ilk te n d s t o d e c re a s e
(fig u re 6 ).
T h is r e l a t i o n s h i p i s e v id e n t u n t i l volume h a n d le d exceeds
1 7 5 ,0 0 0 q u a r t s .
O n e ra to rs num bered I and 1 6 , h a n d lin g a b o u t 3 0 0 ,0 0 0 -ju a rts
had a p r o d u c tio n c o s t o f 2 .9 5 c e n ts and 5 .9 2 c e n ts r e s p e c t i v e l y .
The p ro ­
d u c tio n c o s t o f o p e r a t o r num ber I s e e s t o i n d i c a t e a c o n t in u a ti o n o f th e
40-
TABIil V. VOLUME OF MILK PRODUCED, SIZE OF HERD AND
AVERAGE P PODUCTIO, PER COW, BY OPERATOR,
BILLINGS-LAUHEL AREA, 1940
1e r a No.
Volume
Q u a rts
S iz e o f
H erd
No. o f Cowe
P r o d u c tio n p e r
Cow
(iu a rts
I
2
3
4
3 0 4 ,2 3 2
173,612
8 8 ,7 5 3
1 0 6 ,272
41
32
19
17
7 ,4 2 0
5 ,4 2 6
4 ,6 7 1
6 ,1 9 2
5
6
7
8
91 ,8 7 8
1 1 3 ,8 0 8
53,830
6 5 ,0 6 5
27
28
16
17
3 ,4 0 3
4 ,0 6 6
3 ,3 6 4
5 ,8 2 7
9
10
11
12
6 7 ,3 7 1
56,7 5 7
74,3 0 1
3 9 ,4 6 6
12
16
12
12
5 ,6 1 4
3 ,7 8 4
6 ,1 9 2
3 ,2 8 9
13
14
15
16
1 2 ,4 1 0
1 7 ,8 5 0
1 6 ,2 4 0
3 1 9 ,2 1 4
5
6
6
126
2 ,4 8 2
3 ,5 7 0
2 ,6 4 0
2 ,5 3 3
17
18
19
20
110,699
6 3 ,9 8 8
52,5 4 2
3 1 ,5 2 6
22
16
16
12
6 ,0 2 7
3 ,9 9 9
3 ,9 0 9
2 ,6 2 7
21
22
113,482
1 4 4 ,3 0 4
45
35
2 ,5 2 2
4 ,3 7 3
T o ta l
2 ,1 2 6 ,4 9 9
534
9 6 ,6 1 4
24
A verage
3 ,9 8 0
■41Banie g en era l r e la t io n s h ip e v id e n t when l e s s e r volum es a re in volved *
How­
e v e r , th e h ig h c o s t o f o p era to r number 16 in v a lid a t e s th e assum ption th a t
th e g en era l r e la t io n s h ip c o n tin u e s .
S in c e t h i s o p e r a to r 's h ig h c o s t i s due
t o h is r e l a t i v e l y high c o s t par quart o f la b o r , fe e d , and b u ild in g s and
equipment ( t a b le I I ) i t may be t h a t th e c o n tin u a tio n o f th e r e la t io n s h ip
i s in d ic a te d by th e p ro d u ctio n c o s t o f o p era to r number I i s c o r r e c t .
However, a d d itio n a l in fo rm a tio n i s needed to s u b s t a n t ia t e t h i s assum ption.
Frequency d is t r ib u t io n s i l l u s t r a t i n g t h e r e la t io n s h ip s between
la b o r c o s t s and b u ild in g and equipment c o s t s , and volume o f m ilk produced
p e r herd in d ic a t e t h e same c o r r e la t iv e ten d en cy as n oted ab ove, o n ly fo r
la b o r t i e r e la t io n s h ip i s more pronounced ( f ig u r e s 7 and C ).
Volume had no a f f e c t on feed c o s t s .
t h a t v o l.
N e ith e r was th e r e ev id en ce
e a f f e c t e d th e c o s t per quart o f cow d e p r e c ia tio n , h a u lin g o r
m is c e lla n e o u s .
However, th e r e was a ten d en cy f o r o p era to rs h a n d lin g la r g e r
th an average volumes to have a h ig h er than average c o s t per quart o f
a s s o c ia t io n d u es, l i c e n s e s , and t a x e s .
P rod u ction par cow -
The p ro d u ctio n p er cow was o b ta in ed by
d iv id in g th e t o t a l volume o f m ilk by th e average number o f cow s.
There was
c o n s id e r a b le v a r ia t io n among herds in th e average volume o f m ilk areduced
p er cow.
The average f o r th e 643 cows in th e stu d y was 3 ,9 8 0 quarts and
th e range su ong in d iv id u a l herds ..as from 2 ,4 8 2 quarts to 7 ,4 2 0 quarts
( t a b le V ).
The v a r ia t io n in th e amount o f m ilk produced p er cow i s one o f th e
im oortan t fa c to r s a f f e c t i n g t h e c o s t o f producing m ilk .
The r e la t io n s h ip
betw een th e t o t a l c o s t o f producing m ilk and th e a v e ia g e p ro d u ctio n o er cow
i s in d ic a te d in f ig u r e 9.
High p rod u ction c o s t s are a s s o c ia t e d w ith low
4 2'
T o tal c o st p e r q u art
o f m ilk p roduced
(cen ts)
6 ,
/6
7
z
I_ _ _ _ _ _ _ _f _ _ _ _ _ _ _ I_ _ _ _ _ _ _ _I _ _ _ _ _ _ _ I _ _ _ _ _ _ _ _I _ _ _ _ _ _ _ T-_
50
100
160
200
250
Thousands o f q u a r ts o f m ilk
F ig u re 7. R e la tio n b etw een t o t a l c o s t p e r q u a r t o f m ilk
p ro d u ced and t o t a l volum e o f m ilk h a n d le d ,
22 o p e r a to r s
300
"
-43-
L ab o r c o s t p e r
q u a r t o f m ilk p ro d u ced
(c e n ts )
7
2 .5 .
13
/6
io
2. 0 .
if
99
/8
IO
Zl
' 1 ,1
IX
1 .5 -
I
n
H6
if
. .
1 0
I
I t I
I
50
I
100
I
I
150
200
250
Thousands o f q u a r ts o f m ilk
F ig u re 8. R e la tio n betw een l a b o r c o s t p e r q u a r t o f
m ilk p ro d u ced and volume o f m ilk h a n d le d ,
22 o p e r a to r s
300
—44—
T otal c o s t p e r q u art
o f m ilk p roduced
(c e n ts)
6
-
/r
/J
5 -
i:
8
s ,Q
4 -
f
n
1
25
I
I
40
55
1
70
A verage p r o d u c tio n p e r cow in hun d red s o f q u a r ts
F ig u re 9. R e la tio n betw een t o t a l c o s t o f q u a r t o f m ilk
p ro d u ced a n d , a v e ra g e p r o d u c tio n p e r cow, 22 o p e r a to r s
L ab o r c o s t
p e r q u art
(c e n ts )
/3
/6
2°
2 .0 .
/r
v f to
-8/
/7 SL
1 .5 .
//
1. 0-
L
25
40
55
I
70
A verage p ro d u c tio n p e r cow in hundreds o f q u a r ts
F ig u re 10. R e la tio n betw een la b o r c o s t p e r q u a r t o f m ilk
pro d u ced an d , a v e ra g e p ro d u c tio n p e r cow, 22 o p e r a to r s
•45“
p rod u ction p er cow and as th e p rod u ction o e r cow In crea ses th e p e r quart
c o s t o f producing m ilk ten d s t o d e c r e a se .
A ll th e c o s t s o f ta k in g care
o i a cow in an a v erage farm herd is a p o a r e n tly about th e same r eg a r d less
o f w hether or n o t sh e i s a h ig h o r a low p rod u cer.
When r e la t io n s h ip s a re i l l u s t r a t e d betw een th e c o s t p er quart o f
la b o r , fe e d , and b u ild in g s and equipm ent, end p rod u ction p er cow, th e same
c o r r e la t iv e ten d en cy as n oted above i s I n d ic a te d , o n ly fo r la b o r and fe e d ,
th e r e la tio n s h ip is more pronounced ( f ig u r e s 10, 11 and 1 2 ).
There was no e v id e n c e o f a r e la t io n s h ip between production per
cow and th e rem aining c o s t i t e is.
However, th e 6 op era to rs w ith an average
p rod u ction p er cow below 3 ,0 0 0 quarts had a m isc e lla n e o u s c o s t p er quart o f
•3 6 c e n ts whereas th e a v erage f o r th e 22 o o e r a te r s was .2 4 c e n t s .
The
rem aining o p e r a to r 's c o s t o f m isc e lla n e o u s item s p er quart flu c tu a te d
c l o s e l y about th e average f o r th e grouo ( t a b le I I ).
S iz e o f h erd - The s i z e o f d a iry herds v a ried among o p era to rs from
6 t o 126 cows per h erd .
E igh teen p er ce n t o f th e 22 herds had l e s s than
10 cows and 18 p er c e n t co n ta in ed more than 40 cows ( t a b le V ).
S iz e o f herd i s a n o th er im portant f a c t o r a f f e c t i n g th e e f f i c i e n c y
w ith which m ilk was produced.
The r e la t io n s h ip between th e t o t a l c o s t per
quart o f producing m ilk and th e number o f cows in th e herd i s i l l u s t r a t e d
in fig u r e 13.
High p ro d u ctio n c o s ts a re a s s o c ia t e d w ith sm a ll herds and
as th e s i z e o f herd in c r e a se s p rod u ction c o s t s tend t o d e c r e a se .
The 6 la r g e s t herds were more e f f i c i e n t in u t i l i z i n g la b o r , having
an average c o s t p er quart o f 1 .4 8 c e n ts as compared w ith an average c o s t
p e r quart o f 1 .9 7 c e n ts in cu rred by th e 7 s m a lle s t h erd s.
T his r e la t io n s h ip
Peed c o s t s p e r q u a r t
o f m i lk produced
(cen ts)
46—
1 3
/6
IS
2 .0
3
!.Er
/
1 . 0-
i<y
L
I
25
I
40
I
55
70
A verage p r o d u c tio n p e r cow in h u n d red s o f q u a r ts
F ig u re 11. R e la tio n betw een fe e d c o s ts p e r q u a r t o f m ilk
p ro d u ced a n d , a v e ra g e p r o d u c tio n p e r cow, 22 o p e r a to r s
B u ild in g and equipm ent
c o s t p e r q u a rt
(c e n ts )
.6-
18
.4
//
16
H-
Il
.2.
S
V
A verage p r o d u c tio n p e r cow in h u n d red s o f q u a rts
F ig u re 12.
R e la tio n b etw een b u ild in g s and equipm ent c o s t p e r
q u a r t o f m ilk p ro d u ced and a v e ra g e p r o d u c tio n p e r cow, 22 o p e r a to r s
—47between la b o r c o s ts and s i a e o f herd i s in d ic a te d in fig u r e 1 4 .
The
la r g e r herds aro a b le t o u t i l i z e la b o r more e f f i c i e n t l y b eca u se as th e
s i z e o f herd in c r e a se s th e amount o f la b o r req u ired does n o t in c r e a se
> p r o p o r tio n a te ly , th u s r e s u lt in g in a low er c o s t o f la b o r p er quart o f
m ilk produced.
S iz e o f herd had a s l i g h t e f f e c t on feed c o s t s .
O perators having
th e 6 l a r g e s t herds had an average fe e d c o s t o f 1 .6 4 c e n ts compared to
1 .4 1 c e n ts in cu rred by th e 7 o p era to rs h avin g th e 7 s m a lle s t h erd s.
The
la r g e r o p era to rs purchased a g r e a te r p ro p o rtio n o f t h e i r t o t a l feed which
may be th e cau se o f t h e i r h ig h e r feed c o s t s .
T e la r g e r herds u t i l i z e d b u ild in g s anc equipment more e f f i c i e n t l y
than th e s m a lle r h erd s.
The r e la t io n s h ip betw een th e p er quart c o s t o f
b u ild in g s and equipment and s i z e o f herd in d ic a t e s th a t 6s th e s i z e o f
herd in c r e a s e s th e c o s t o f b u ild in g s and equipment d ecrea ses ( f ig u r e l b ) .
S iz e o f her.- had no d e f i n i t e e f f e c t on cow d e p r e c ia tio n , h a u lin g , a s s o c ia t io n
dues - l i c e n s e s - t a x e s , and m is c e lla n e o u s .
Investm ent p er cow - Investm ent in cows had no e f f e c t on th e p er
quart c o s t of producing m ilk .
duo In
R e la tio n sh ip s between t o t a l c o s t o f pro­
m ilk and in v estm en t p er cow and betw een c o s t and p er quart in v e s t ­
ment in cows in d ic a te d no c o r r e la t iv e te n d e n c ie s .
Among most o f th e in d iv id u a l o p era to rs th e r e was a ten d en cy t o
va lu e cows about th e same and, c o n se q u e n tly , th e v a lu es o b ta in ed do n ot
r e p r e se n t th e c o r r e c t v a lu e from a p ro d u ctio n view p o in t.
D ista n c e from market t o t a l c o s t o f producing m ilk .
D ista n c e from market had no e f f e c t on th e
The 6 o p era to rs lo c a te d o v er 15 m iles from
TAPLE V I. DISTANCE ° R ODUCKAND DIS" RTBUTORS OF MLF ARE
FRO’' THEIR MARKETING CENTER, BILLINGS-LAGREL AREA
nY OpErATOP, 1940
Farm
Number
1
2
3
4
M iles From
Market C en ter
0 .5
5 .0
3 .6
2 5 .0
5
5 .5
6
6.0
7
8
4 .5
1 7 .0
9
10
11
12
2 2 .0
2 6 .0
2 2 .0
3 0 .0
13
14
16
16
2 .0
0 .5
2 .0
6 .0
17
18
19
20
2 .0
4 .0
2 .0
7 .0
21
1 .0
22
8.0
A verage
9 .1
-49T o ta l c o s t p e r q u a r t
o f m ilk p ro d u ced
(c e n ts )
5 -
\S
a
If
3
4 4.0 l^ f
Ji
IT
ii
t\
3-
10
20
30
40
50
A verage num ber o f cows in t h e h e rd
F ig u re 13. R e la tio n betw een t o t a l c o s ts p e r q u a r t o f m ilk
p ro d u ced an d , a v e ra g e num ber o f cows in th e h e rd , 22 o p e r a to r s
130
50-
L ab o r c o s t s p e r q u a r t
o f m ilk p ro d u ced
(c e n ts )
r
2 .5
16
2.0
Xl
1 .5
1.0
-
I
10
20
30
40
50
A verage number o f cows in th e h e rd
F ig u re 1 4 . R e la tio n betw een l a b o r c o s ts p e r q u a r t o f m ilk
p ro d u ced an d , a v e ra g e num ber o f cows in th e h e r d , 22 o p e r a to r s
130
51-
B u ild in g s and equipm ent c o s ts
p e r q u a r t o f m ilk p ro d u ced
( c e n ts )
0 . 4 ';
/fe
0 .3 .
0.2
-
20
.
130
A verage number o f cows in t h e h e rd
F ig u re 1 5 . R e la tio n b etw een b u il d in g s and equipm ent c o s ts p e r q u a r t
o f m ilk p ro d u ced and a v e ra g e num ber o f cows in th e h e r d ,
22 o p e r a to r s
-5 2 -
t h e m a rk e t c e n t e r had an a v e ra g e c c c t o f 4 .0 3 c e n ts p e r q u a r t w h ile t h e 5
o p e r a t o r s lo c a t e d l o s s th a n 3 m ile s from t h e m ark et had a c o s t o f 4 .1 8
c e n ts p e r q u a r t ( t a b l e V l) .
H a u lin g was th e o n ly c o s t ite m a f f e c t e d by d i s t a n c e from m a rk e t.
As m ig h t be e x p e c te d , o p e r a to r s f a r t h e s t from th e m a rk e t c e n t e r had th e
h i g h e s t a v e ra g e h a u lin g c o s ts p e r q u a r t o f m ilk p ro d u ced w h ile th o s e n e a r
th e m a rk e t had th e lo w e s t.
PAIff I I I .
DISTRIBUTION OF MAHKET MILK
’i l k d is t r ib u t in g plantF s e l l t h e i r products in v a rio u s s i z e o f
c o n ta in e r s ranging from h a lf - p in t s to g a ll o n s .
The c h a r a c te r o f f lu id
s a lo s o f each o p e r a to r may v a ry to such an e x te n t th a t comparing c o s t s
o n ly on th e b a s is o f e i t h e r u n it s o r q u arts would be o f lim it e d v a lu e .
The two measures o f volum e, ( I ) u n its o f f l u i d s a le s and (2 ) quart
eq u iv a le n t 3 are used to e lim in a t e t h is d e f e c t and t o in c r e a se th e degree
of c o m p a r a b ility .
To o b ta in quart e q u iv a le n t s , u n its are co n v erted in to
volume in term s o f q u a r ts, e . g . fo u r h a l f - p i n t s equal one q u a -t e q u iv a le n t,
one g a llo n eq u als fo u r quart e q u iv a le n t s .
N in ety -tw o p er c e n t o f th e t o t a l u n it o f f lu id s a le s were s o ld in
h a lf - p in t and quart c o n t a in e r s .
P in t and g a llo n c o n ta in e r s r e c e iv e lim it e d
u su a g e, a cco u n tin g fo r o n ly 8 p er ce n t o f t h e t o t a l .
The d ata in t a b le VII
show th e number o i f l u i d s a le s s o ld in each s i z e o f c o n ta in e r and th e per
c e n t each i s o f t h e t o t a l .
In th e c a lc u la t in g o f average c o s t s , no d is t in c t io n i s made concern­
ing th e ty p e o f pro. u c t making up th e t o t a l volume o f f lu id s a l e s .
The data
in t a b le V III in d ic a t e th e p ro p o rtio n o f t o t a l f lu id s a le s a r i s i n g from ( I )
market m ilk , (2 ) market cream, (3 ) c h o c o la te m ilk , and (4 ) o th e r p ro d u cts, l t i /
1 6 / Otner prod u cts in c lu d e b u tte r m ilk , and sk im -m ilk . V ffiiT eother
p rod u cts and c h o c o la te m ilk in v o lv e a h ig h e r c o s t o f p ro d u ctio n , t h e i r volume
i s so sm a ll in com parison t o th e t o t a l volume o f f lu id s a le s t h a t no e f f o r t
was 'Rde to s e g r e g a te t h e i r c o s t s . C on seq u en tly, th e h ig h e r c o s t o f pro­
d u ctio n o f such p roducts i s c a r r ie d by th e t o t a l volume o f f lu id s a l e s .
Pi'e >er u n it c o s t o f d e liv e r y f o r I I k e - s i z e c o n ta in e r s would be th e same
r e g a r d le s s o f th e c o n te n t.
54'
TABLE V II. SALES QI FLUID MILK IN UNITS AND QUART EQUIVALENTS,
SIZE OF CC TAIi-:ER, TOTAL FOR 11 OPERATORS,
BILLIliJS-LAUEEL AREA, 1940
Y
S iz e o f C o n ta in e r
Number
H a lf p i n t
P in t
Q u art
G allo n
T o ta l
U n its________
~^er cen t
Q u art e q u i v a le n t_________
Number
Per cen t
1 ,0 4 8 ,4 3 6
4 1 .7
2 6 2 ,1 0 7
1 4 .2
1 3 2 ,1 7 6
6 .3
6 6 ,0 8 8
3 .6
1 ,2 7 2 ,5 3 8
6 0 .6
1 ,2 7 2 ,5 3 8
6 9 .1
6 0 ,0 0 9
2 .4
240,037
13.1
2 ,5 1 3 ,1 6 9
100.0
1 ,8 4 0 ,7 7 0
1 0 0 .0
-£ft—
TABLE V III. TOTAL SALES OI ILUID HLK, IN UNITS AND QUAlT
EQUIVALENTS, BY TY0E OF PRODUCT, BI LLIN3S-LAUPEL
"ARKET ArEA, 1940
P ro d u c t
O per­
a to rs
U n its
Number
P er cent
Q u art e q u iv a le n t
Number
Per cen t
H lk
11
2 ,0 3 9 ,4 6 0
8 1 .2
1 ,5 6 9 ,8 3 6
8 4 .7
Cream
11
3 5 6 ,2 7 1
1 4 .1
2 0 3 ,6 1 6
11 .1
C h o c o la te
M ilk
3
7 0 ,7 0 4
2 .8
2 2 ,1 5 8
1 .2
O th e r
4
4 7 ,7 2 4
1 .9
6 6 ,2 6 0
3 .0
2 ,5 1 3 ,1 6 9
1 0 0 .0
1 ,8 4 0 ,7 7 0
1 0 0 .0
T o ta l
-5 6 -
The l l u i d s a l e s o f th e 11 o p e r a to r s a r e d iv id e d b etw een w h o le s a le
and r e t a i l s a l e s .
The d a ta in t a b l e IX I n d i c a t e th e p e r c e n t o f th e t o t a l
volum e o f f l u i d s a l e s o f in d i v id u a l o p e r a to r s t h a t was s o ld r e t a i l and th e
p e r c e n t s o ld w h o le s a le .
An a v e ra g e o f 50 p e r c e n t o f th e t o t a l u n i t s o f
f l u i d s a l e s and 65 p e r c e n t o f t h e q u a r t e q u iv a le n ts w ere s o ld a t r e t a i l
s to ^ s and 50 p e r c e n t o f th e t o t a l u n i t s and 45 p e r c e n t o f t h e q u a r t
e q u iv a le n ts w ere s o ld w h o le s a le .
The p e r c e n ta g e change b etw een u n i t s and
q u a r t e q u iv a le n ts i s due t o th e f a c t t h a t a l a r g e number o f t h e w h o le s a le
s a l e s w ere made in h a l f - o i n t c o n t a i n e r s .
The 4 d i s t r i b u t o r s , 2 3 , 2 4 , 2 6 , and 2 6 , s o ld 6 3 .8 p e r c e n t o f t h e i r
t o t a l u n i t s end 6 0 .4 p e r c e n t o f t h e i r q u a r t e q u iv a le n ts w h o le s a le w h ile
t h e p r o c u c e r - d i s t r i b u t o r s s o ld 1 8 .5 p e r c e n t o f t h e i r t o t a l u n i t s and 1 6 .0
p e r c e n t o f t h e i r q u a r t e q u i v a le n t s w h o le s a le .
The h ig h p e r c e n ta g e o f t h e i r
t o t a l volum e o f m ilk s o ld w h o le s a le by t h e d i s t r i b u t o r s may b e a f a c t o r i n f lu e n c in
t h e i r c o s t s o f d i s t r i b u t i o n as i t i s n o rm a lly c o n s id e r e d l e s s
c o s t l y t o d e l i v e r m ilk s o ld w h o le s a le th a n t o t h e in d i v id u a l consum er b e ­
c a u s e o f th e l a r g e r volum e o f m ilk d e l i v e r e d a t each s to p .
D i s t r i b u t i o n C osts - C l a s s i f i e d
To f a c i l i t a t e a n a l y s i s , th e t o t a l c o s ts o f each o p e r a t o r have been
c la s s if ie d in to ;
c o s t.
( I ) p l a n t c o s t , (2 ) d e l i v e r y c o s t , and (3 ) a d m in is tr a t io n
P la n t c o s t in c lu d e s a l l c o s ts in c u r r e d from th e tim e t h e m ilk e n t e r s
t h e p l a n t u n t i l i t i s b o t t l e d and read y f o r d e l i v e r y .
D e liv e ry c o s ts in c lu d e
a l l c o s ts in c u r r e d from th e tim e t h e m ark et m ilk p ro d u c ts a r e b o t t l e d u n t i l
I
th e y a r e d e l iv e r e d to th e c u sto m e r.
A d m in is tr a tio n c o s ts in c lu d e a l l ite m s
t h a t a r e n o t s p e c i f i c a l l y in c lu d e d in e i t h e r o f t h e o th e r two c l a s s e s o f
TABLE IX .
RETAIL AND WHOLESALE SAl,ES OF FLUID MILK IN UNITS AND jUART
EQUIVALENTS, BY OPERAT'DES, BILL I r SS-L AUFEL A! HA, 1940
P la n t
____
U n its o f f l u i d S a le s
No*________ T o ta l_________
P e ta fl
100
P er
100
Per
cent
U n its
cent
U n its
W h olesale"
100
Per
U n its
cent
Q u art E q u iv a le n ts
T o ta l
F o t a ir
100 ^ t .
100 v t .
Per
e q u iv a le n ts c e n t eq u iv a le n ts
Per
cent
W holesale
loo Qt.
Per
e q u iv a le n ts cen t
23
9,015
24
26
26
2 ,1 6 4
2 ,5 6 2
3 ,7 6 9
100
100
100
100
2 ,7 4 4
1 ,6 1 6
1 ,0 2 5
940
3 0 .4
7 5 .0
4 0 .0
2 5 .0
6 ,2 7 1
538
1 ,6 3 7
2 ,8 1 9
6 9 .6
2 6 .0
6 0 .0
7 5 .0
6 ,1 7 3
1,539
1 ,3 1 7
2,8 1 3
100
100
100
100
2 ,3 0 6
1 ,1 5 4
527
703
3 7 .4
7 5 .0
4 0 .0
2 5 .0
3 ,8 6 7
385
790
2 ,1 1 0
6 2 .6
2 5 .0
6 0 .0
7 5 .0
16
3 ,1 9 0
950
420
548
278
100
100
100
100
100
3,1 6 1
630
420
648
139
9 5 .0
6 6 .7
1 0 0 .0
1 0 0 .0
5 0 .0
29
315
139
1 .0
3 3 .3
5 0 .0
2 ,7 3 6
814
420
493
239
100
100
100
100
100
2,7 2 9
543
420
493
120
9 9 .7
6 6 .7
1 0 0 .0
1 0 0 .0
5 0 .0
7
271
0 .3
3 3 .3
IPO
6 0 .0
805
409
9 5 .6
4 0 .0
37
613
4 .4
6 0 .0
56 .4 5
8 ,2 0 0
17
18
19
20
21
22
T o ta l
Ave.
941
1 ,3 1 9
100
100
803
628
8 5 .3
4 0 .0
138
792
1 4 .7
6 0 .0
842
1 ,0 2 2
100
100
2 6 ,1 3 2
100
12 ,5 5 2
4 9 .9
2 ,5 8 0
5 0 .1
8 ,4 0 8
100
2 ,2 8 5
100
1,141
1 ,6 7 3
100
1 ,1 4 4
10,208
928
745
44 .5 5
I
cn
V
58 c o s ie y e t e r e in c u r r e d in t h e o p e r a t io n o f t h e b u s in e s s .
!lie u c ta l d i s t r i b u t i o n c o s ts o f t h e 11 o p e r a to r s a r e shown in t a b l e
X.
I h is t a b l e a l s o p r e s e n ts t h e am ount and t h e p e r c e n ta g e t h a t ea c h o f t h e
t . i r e e c l a s s e s o f c o s t - p l a n t , d e l i v e r y , and a d m i n i s t r a t i o n , a r e o f th e
to ta l.
Among i n d i v id u a l o p e r a t o r s th e p e r c e n ta g e o f th e t o t a l c o s t ch arg e d
f o r t h e in d i v id u a l c l a s s e s o f c o s t v a r ie d as w id e ly r e l a t i v e l y as th e t o t a l
c o s t.
D i s t r i b u t o r s 23, 2 4 , 25 and 26 had h ig h e r and a more u n ifo rm p e r c e n t­
ag e oi t h e i r t o t a l c o s t f o r p l a n t th a n t h e re m a in in g o p e r a t o r s .
Those f o u r
o p e r a to r s a r e d i s t r i b u t o r s who have l a r g e p l a n ts and m a in ta in a more co m p le te
s o t o f eq u ip m en t, in c lu d in g p a s t e u r i z i n g eq u ip m en t, th a n t h e rem a in in g p r o ­
d u c e r - d i s t r i b u t o r s who do n o t o a s t e u r i z e t h e i r m ilk and who hav e l e s s e q u io m en i.
The d i s t r i b u t o r s , b e c a u se o f t h e a d d i t i o n a l p r o c e s s in g , in c u r a d d i t i o n ­
a l p la n t c o s ts .
The a v e ra g e c o s ts and t h e p e r c e n ta g e o f t h e t o t a l c o s ts t h a t each o f
t h e t h r e e c l a s s e s o f c o s t a c c o u n te d f o r w ere: p l a n t , $2840 o r 4 4 .5 p e r
c e n t ; d e l i v e r y , #2628 o r 4 1 .2 p e r c e n t ; a d m i n i s t r a t i o n , #915 o r 1 4 .3 p e r
c e n t.
T h ere was a g r e a t e r v a r i a t i o n in th e p e r c e n ta g e o f t h e t o t a l c o s t
s p e n t f o r a d m i n i s t r a t i o n th a n f o r e i t h e r p l a n t o r d e l iv e r y .
The d a ta i n t a b l e XI p r e s e n t f o r in d i v id u a l o p e r a t o r s ( I ) t h e t o t a l
u n i t c o s t o f d i s t r i b u t i o n , (2 ) th e d i v i s i o n o f th e t o t a l u n i t c o s t among t h e
d i i i e r e n t c l a s s e s o f c o s t s , and (3 ) t h e a v e ra g e u n i t c o s t o f d i s t r i b u t i o n
i o r ',he 11 o p e r a t o r s .
T his same in f o r m a tio n on a q u a r t e q u i v a le n t b a s is i s
g iv e n in t a b l e X I I .
The a v e ra g e c o s t o f d i s t r i b u t i n g m ilk was 2 .7 9 c e n ts p e r u n i t o f f l u i d
69'
TABLE X. COSTS OI DISTRIBUTING ILlIID MILK PRODUCTS
BY OPERATORS, BILLINGS-LAUBEL MARKET AREA, 1940
P la n t
lo ta l
c o s ts
^er
cent
23
24
25
26
#23,462
5,16 9
6,163
12,73 1
16
17
18
19
20
21
22
O p e ra to r
T o ta l
A verage
D e liv e ry
A d m in is tra t io n
p@y
Amount
cent
Per
Amount____ c e n t
Amount
p@r
cent
100
100
100
100
#11,051
2 ,4 7 5
2 ,4 4 6
6,3 7 1
4 7 .1
4 8 .0
4 7 .4
6 0 .0
#9,791
1,9 7 3
2 ,0 3 6
4 ,1 3 0
4 1 .7
3 8 .2
3 9 .4
3 2 .6
# 2 ,6 2 0
711
681
2 ,2 3 0
1 1 .1
1 3 .8
1 3 .2
1 7 .5
7 ,5 7 4
2 ,1 4 1
2 ,2 0 0
1 ,5 2 9
1 ,4 9 5
100
100
100
100
100
3 ,0 2 9
669
743
512
489
4 0 .0
2 6 .1
3 3 .8
3 3 .6
3 2 .7
2,7 3 9
1 ,0 1 5
1 ,3 0 5
917
800
3 6 .2
4 7 .4
6 9 .3
6 0 .0
5 3 .6
1 ,8 0 6
667
152
100
206
2 3 .8
2 6 .6
6 .9
6 .6
1 3 .8
4 ,6 1 6
4 ,1 4 8
100
100
2,211
1 ,3 6 9
4 7 .9
3 2 .8
1 ,8 7 0
2 ,3 3 6
4 0 .6
5 6 .3
536
454
1 1 .6
1 0 .9
7 0 ,21 8
100
3 1 ,2 4 6
4 4 .5
28,911
4 1 .2
10,062
1 4 .3
6 ,3 8 3
100
2 ,8 4 0
2 ,6 2 8
916
60-
TABLE X I. COSTS OF DI8TRIBUTIK3 FLUID MILK PER UNIT OI
FLUID SALES, BY OPERATORS, BILLILUS-LAUREL
MARKET AREA,
1940
O p e ra to r
T o ta l
lc e n ts )
2 .6 0
2 .3 9
2 .0 1
3 .3 9
23
24
25
26
Pl ant
(c e n ts )
1 .2 3
1 .1 5
.9 6
1 .7 0
D e liv e r y
(c e n ts ;
1 .0 8
.9 1
.7 9
1 .1 0
A d m in is tr a tio n
(c e n ts )
.2 9
.3 3
.2 7
.6 9
16
17
18
19
20
2 .3 7
2 .2 6
6 .2 4
2 .7 9
6 .3 8
.9 5
.6 9
.7 7
.9 4
1 .7 6
.8 6
1 .0 7
3 .1 1
1 .6 7
2 .8 8
.5 6
.6 0
.3 6
.1 8
.7 4
21
22
4 .9 0
3 .1 4
2 .3 6
1 .0 3
1 .9 9
1 .7 7
.6 6
.3 4
2 .7 9
1 .2 4
1 .1 6
.4 0
W eighted
a v e ra g e
e/
U olghted by volum e o f s a l e s
SI
TABLE X I I .
COSTS OF DISTRIBUTING FLUID MILK PEH QUAFT
EQUIVALENT, BY OPB ATORS, BILLIRCS-L AUREL
MARKET AREA, 1140
O p e ra to r
T o ta l
( C e n ts )
23
24
25
26
3 .8 0
3 .3 6
3 .9 2
4 .6 3
1 .7 9
1 .6 1
1 .8 6
2 .2 7
1 .5 9
1 .2 8
1 .6 5
1 .4 7
.4 2
.4 6
.6 1
.7 9
16
17
18
19
20
2 .7 7
2 .6 3
5 .2 4
3 .1 0
6 .2 6
1 .1 1
.6 9
1 .7 7
1 .0 4
2 .0 4
1 .0 0
1 .2 5
3 .1 1
1 .8 6
3 .3 6
.6 6
.6 9
.3 6
.2 0
.8 6
21
22
6 .4 8
4 .0 6
2 .6 2
1 .3 3
2 .2 2
2 .2 8
.6 4
.4 6
3 .8 2
1 .7 0
1 .5 7
.5 5
W eighted
a v e ra g e a /
P la n t
( C e n ts )
W eighted by volum e o f s a l e s
D e liv e ry
( C e n ts )
A d m in is tr a tio n
(C e n ts )
-62BfiI e s and 3 .8 2 c e n ts p e r q u a r t e q u i v a l e n t .
Among i n d i v i d u a l o p e r a to r s
t h e u n i t c o s t ran g ed iro m 2 .0 1 c e n ts t o 6 .3 8 c e n ts and th e q u a r t e q u iv a le n t
c o s t ran g ed from 2 .6 3 c e n ts t o 6 .2 6 c e n t s .
The f o u r d i s t r i b u t o r s had an
a v e ra g e p e r u n i t c o s t o f 2 .6 6 c e n ts and a o e r q u a r t e q u iv a le n t c o s t o f
3*92 c e n t s .
The w ide d i f f e r e n c e betw een t h e u n i t and q u a r t e q u iv a le n t c o s t
f o r th e s e o p e r a to r s i s due t o th e l a r g e volum e o f s a le s made in l e s s th a n
q u a r t- s iz e c o n ta in e rs .
The sev en p r o d u c e r - d i s t r i b u t o r s had a p e r u n i t c o s t
o f 2 .7 8 c e n ts and a q u a r t e q u i v a le n t c o s t o f 3 .1 7 c e n t s .
A g r e a te r p ro o o r-
t i o n o f t h e t o t a l f l u i d s a l e s o f th e s e o p e r a t o r s was made i n q u a r t o r g a l l o n s iz e c o n ta in e rs .
P l a n t , d e l i v e r y , and a d m i n i s t r a t i o n c o s ts a r e made up o f such item s
as l a b o r , i n t e r e s t , r e o a i r s , d e o r e o i a ti o n , s u p p lie s and b o t t l e s .
The d a ta
in t a b l e X I I I p r e s e n t t h e a v e ra g e o f t h e s e c o s ts f o r th e g ro u p o f 11 o p e r­
a to rs .
The d a ta i n t h i s t a b l e a l s o show t h e a v e ra g e c o s t b o th on a u n i t
and a q u a r t e q u i v a le n t b a s i s and t h e p e r c e n ta g e t h a t each ite m o f c o s t i s
Oj t e t o t a l o o s t .
EIaoh o f t h e s e item s o f c o s t w ill be a n a ly z e d in an
e f f o r t t o d e te rm in e t h e i r e f f e c t on th e t o t a l c o s t o f d i s t r i b u t i o n .
F a c to r s A f f e c tin g C o sts o f D i s t r i b u t i o n
The w ide v a r i a t i o n among in d i v id u a l o p e r a to r s in t h e c o s t o f
d i s t r i u t i n g m ilk i s c a u se d by d if f e r e n c e s among o p e r a to r s in su c h f a c t o r s
as volum e, in v e s tm e n t, l a b o r , tr u c k o p e r a t i o n , d e p r e c ia ti o n , s u p p l i e s ,
r e p a i r s , bad d e b t s , b o t t l e s and o th e r c o s t s .
A n a ly sis o f t h e s e f a c t o r s
i n d i c a t i n g t h e i r e f f e c t on t h e t o t a l c o s t s h o u ld p o i n t o u t why c o s ts v a r y ,
t h e r e l a t i o n s h i p s e x i s t i n g b etw een f a c t o r s , and may a s s i s t d i s t r i b u t o r s
and p r o d u c e r - d i s t r i b u t o r s in re d u c in g some o f t h e i r c o s t s .
63'
TABLE X I I I . AVERAGE COSTS AND PERCENTAGE OF TOTAL COST
PER UNIT OF FLUID SALES AND PER (jUART EQUIVALENT,
11 OPErATORS, BILLINGS-LAUKEL AREA, 1940
Item o f c o s t
L ab o r
A verage c o s t
p e r u n it of
f lu id s a le s
(c e n ts )
P er cent
A verage c o s t
p e r q u a rt
e q u iv a le n t
(c e n ts )
P er cent
1 .3 9
4 9 .8
1 .9 0
4 9 .9
T ruck o p e r a tio n
.3 3
1 1 .8
.4 6
1 1 .8
D e p r e c ia tio n
.22
7 .9
.3 0
7 .9
S u p p lie s
.1 5
5 .4
.2 1
5 .6
R ep airs
.1 3
4 .6
.1 8
4 .7
Bad d e b ts
.1 0
3 .6
.1 3
3e 4
Power and f u e l
.1 0
3 .6
.1 4
3 .7
In te re s t
.0 8
2 .9
.1 0
2 .6
B o tt le s
.0 7
2 .5
.0 9
2 .4
In s u ra n c e
.0 6
2 .2
.0 9
2 .4
L ic e n s e s and ta x e s
.0 6
2 .1
.0 8
2 .1
M is c e lla n e o u s
.1 0
3 .6
.1 4
3 .6
2 .7 9
1 0 0 .0
3 .8 1
1 0 0 .0
T o ta l
—64'
Volume - The volum e o f l l u l d m ilk h a n d le d by in d i v id u a l o p e r a to r s
fu m is h in
d a ta d u r in g t h e y e a r from November I , 1939 t o November I , 1940
v a r i e d from 2 7 ,7 4 0 t o 9 0 1 ,6 3 6 u n i t s o f f l u i d s a l e s and from 2 3 ,9 0 7 t o
61 7 ,3 1 6 q u a r t e q u iv a le n ts ( t a b l e XIV).
Volume o f m ilk h a n d le d has a d e f i n i t e
t r i b u t i n g m ilk .
e f e o t on th e c o s t o f d i s ­
A d e f i n i t e r e l a t i o n s h i p i s i n d i c a te d betw een t o t a l c o s t o f
d i s t r i b u t i o n and volum e o f m ilk h a n d le d ( f i u re s 16 and 1 7 ) .
h a n d le d i n c r e a s e s , t o t a l c o s t s te n d t o d e c r e a s e .
A volume
T his r e l a t i o n s h i p is
more s i g n i f i c a n t betw een volum e h a n d le d and c o s t p e r q u a r t e q u iv a le n t th a n
betw een volum e and c o s t p e r u n i t .
B oth show a h ig h e r d e g re e o f r e l a t i o n s h i
when volum e h a n d le d i s l e s s th a n 1 6 0 ,0 0 0 u n i t s o r q u a r t e q u i v a l e n t s .
The
6 o n e r a t e r s h a n d lin g o v e r 1 6 0 ,0 0 0 u n i t s had an a v e ra g e d i s t r i b u t i o n c o s t
pe
u n i t o f 2 .6 2 c e n ts w h ile t h e 6 o p e r a to r s h a n d lin g l e s s th a n 1 6 0 ,0 0 0
u n i t s had a c o s t p e r u n i t o f 3 .6 2 c e n ts o r c Sb p e r c e n t h i g h e r c o s t .
On a q u a r t e q u i v a le n t b a s i s t h e 4 o p e r a to r s h a n d lin g o v e r I L0 ,0 0 0 had a
c o s t o i 2 .7 c e n ts and th e 7 h a n d lin g u n d e r 1 5 0 ,0 0 0 had a c o s t o f 2 .8 3
o e t its , o r e c o s t o n ly 2 p e r c e n t h ig h e r .
The 58 p e r c e n t lo w e r c o s t p o r
u n i t o f t h e o p e r a to r s h a n d lin g t h e l a r g e volum es is due m a in ly to th e
l a r g e p r o p o r tio n o f t h e i r t o t a l s a l e s t h a t w ere made in l e s s th a n q u a r t
s is e c o n ta in e rs .
O p e r a to r 26 h a n d lin g o v e r 1 5 0 ,0 0 0 u n i t s had l e s s th a n
1 5 0 ,0 0 0 q u a r t e q u i v a l e n t s .
The h ig h c o s t o f th e o p e r a to r s h a v in g l e s s th a n 1 5 0 ,0 0 0 u n i t s o r
q u a r t e q u iv a le n ts was due m a in ly t o t h e i r i n e f f i c i e n c y in d e l i v e r i n g m ilk .
The r e l a t i o n s h i p s b etw een d e l i v e r y c o s ts and volume o f m ilk h a n d le d a r e
i n d i c a t e d in f ig u r e s 18 and 19.
These r e l a t i o n s h i p s i l l u s t r a t e th e same
c o r r e l a t i v e te n d e n c y as n o te d b etw een t o t a l c o s ts and volum e, o n ly a h ig h e r
65*
TABLE AIV.
O p e ra to r
SAI.ES OL ILUID VILK PRODUCTS IN UNITS
MD QUART EQUIVALENTS, BY OPERATORS,
BILLir US-LAU LEL MARKET AREA, 1940
U n it o f s a l e s
Number
Per c en t
Q uart eq u iv alen t""
Number
P er cent
23
24
26
26
9 0 1 ,5 3 6
2 1 6 ,4 1 5
2 5 6 ,2 3 0
3 7 6 ,9 3 6
3 6 .9
8 .6
1 0 .2
1 4 .9
6 1 7 ,316
1 5 3 ,9 1 7
1 3 1 ,6 7 4
2 8 1 ,3 3 4
3 3 .6
8 .4
7 .1
1 6 .3
16
17
18
19
20
5 1 8 ,9 8 0
94,6 3 6
4 1 ,9 7 6
6 4 ,7 5 0
2 7 ,7 4 0
1 2 .7
3 .8
1 .7
2 .1
1 .1
2 7 3 ,6 9 7
8 1 ,3 9 5
4 1 ,9 7 5
4 9 ,2 7 6
2 3 ,9 0 7
1 4 .9
4 .4
2 .3
2.6
1 .3
21
22
9 4 ,1 1 6
1 3 1 ,946
3 .8
5 .2
84,1 8 6
1 0 2 ,194
4 .6
5.5
2 ,6 1 3 ,1 6 9
1 0 0 .0
1 ,8 4 0 ,7 7 0
100.0
T o ta l
-66
T o ta l d i s t r i b u t i o n c o s t
p e r u n it o f f lu id s a le s
(c e n ts )
U n its o f f l u i d s a l e s in th o u sa n d s
F ig u re 16. R e la tio n betw een d i s t r i b u t i o n c o s t p e r u n i t o f
f l u i d s a l e s and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a to r s
T o ta l d i s t r i b u t i o n c o s t
p e r q u a r t e q u i v a le n t o f
f lu id s a le s
(c e n ts )
Q u art e q u iv a le n ts in th o u sa n d s
F ig u re 17. R e la tio n betw een d i s t r i b u t i o n c o s ts p e r q u a r t
e q u iv a le n t and t o t a l q u a r t e q u i v a l e n t s , 11 o p e r a to r s
D e liv e ry c o s t p e r
u n i t o f f l u i d s a le s
(c e n ts )
-6 7 -
T o ta l u n i t s o f f l u i d s a le s in th o u s a n d s
f i g u r e 18. R e la tio n betw een d e l i v e r y c o s t p e r u n i t of f l u i d
s a le s and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a to r s
D e liv e ry c o s t p e r
q u a r t e q u iv a le n t
(c e n ts )
T o ta l q u a r t e q u iv a le n ts in th o u sa n d s
f i g u r e 19.
R e la tio n betw een d e l i v e r y c o s t p e r q u a r t e q u iv a le n t
and t o t a l q u a r t e q u i v a l e n t , 11 o p e r a to r s
-6 R ciegree o f c o r r e l a t i o n i s p r e s e n t .
The a v e ra g e p e r u n i t c o s t o f th e 5
o p e r a to r s h a n d lin g more th a n ILO1OOO u n i t s was one c e n t com pared t o an
a v e ra g e c o s t o f 1 .8 5 c e n ts in c u r r e d b y t h e 6 o p e r a to r s h a n d lin g l e s s th a n
15 0 ,0 0 0 u n i t s , an 86 p e r c e n t d i f f e r e n c e in p e r u n i t c o s t .
The same
co m p ariso n on a q u a r t b a s i s i s 1 .0 6 c e n ts t o 1 .2 8 c e n ts o r a d if f e r e n c e
in c o s t o f 21 p e r c e n t .
The l a r g e p r o p o r tio n o f th e t o t a l f l u i d s a l e s ,
h a n d le d b y th e l a r g e r o p e r a t o r s , s o ld w h o le s a le a cc o u n t m a in ly f o r th e
d if f e r e n c e i n th e p e r u n i t d e l i v e r y c o s t b etw een th e l a r g e and sm a ll o p e r ­
a to rs .
I t i s d o u b tf u l, h ow ever, i f W h o lesale s a l e s a c c o u n t f o r a l l o f t h e
d i f f e r e n c e in d e l i v e r y c o s ts betw een l a r g e and sm a ll o o e r a to r s on a u n i t
b a s i s o r much o f t h e d if f e r e n c e on a q u a r t e q u iv a le n t b a s i s .
O p e ra to r
n u fiber 5 in c lu d e d in t h e group h a n d lin g l a r g e volum es s o ld o n ly 6 p e r c e n t
o f h is m ilk w h o le s a le y e t has a low d e l i v e r y c o s t .
I t i s e v id e n t t h a t t h e
o o e r a to r s in t h i s s tu d y h a n d lin g l a r g e volum es o f m ilk e n jo y a t l e a s t 15
p e r c e n t lo w e r d e l iv e r y c o s t s b e c a u se th e y a r e a b le t o o p e r a t e tr u c k s
n e a r e r t c th e optimum c a p a c it y th a n t h e o p e r a t o r s h a n d lin g s m a ll vo lu m es.
No d e f i n i t e r e l a t i o n s h i p i s e v id e n t betw een p l a n t c o s ts and volum e
o f rd lk h a n d le d ( f i g u r e s 20 and 2 1 ) .
Any a d v a n ta g e due to volum e t h a t may
n o r.ie I I y be p r e s e n t 3s a o p a r e n tly o f f s e t , in t h i s s tu d y , b y t h e h ig h e r in ­
v e stm e n t in b u il d in g s and eq u ip m en t, t h e u s e o f more eq u ip m e n t, and th e ad ­
d i t i o n a l c o s t o f p a s t e u r i z a t i o n in c u r r e d by t h e d i s t r i b u t o r s h a n d lin g th e
l a r g e v olum es.
Volume o f m ilk h a n d le d had no e f f e c t on th e c o s t o f a d m in is tr a t io n
( f i u re s 22 and 2 3 ) .
d id v e ry l i t t l e
A num ber o f o p e r a to r s h a n d i n g sm a ll volum es o f m ilk
i f any a d m i n i s t r a t i v e work.
69P la n t c o s t p e r
u n it o f f lu id s a le s
(c e n ts )
T o ta l u n i t s o f f l u i d s a le s in th o u s a n d s
F ig u re 20.
R e la tio n b etw een p l a n t c o s ts p e r u n i t o f f l u i d s a le s
and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a to r s
P la n t c o s t p e r
q u a r t e q u iv a le n t
(c e n ts )
1. 0
-
T o ta l q u a r t e q u iv a le n ts in th o u san d s
F ig u re 21.
R e la tio n betw een p l a n t c o s ts p e r q u a r t e q u iv a le n t
and t o t a l q u a r t e q u i v a l e n t s , 11 o p e r a to r s
-7&
In v e s tm e n t - The t o t a l in v e s tm e n t i s an im p o r ta n t f a c t o r a f f e c t i n g
t h e c o s t o f m ilk d i s t r i b u t i o n .
The r e l a t i o n s h i p s betw een t o t a l in v e stm e n t
and th e volum e o f s a l e s a r e i l l u s t r a t e d in f i g u r e s ZZ and 2 3 .
In t h i s
s tu d y , c o n t r a r y t o what i s n o rm a lly e x p e c te d , in v e stm e n t p e r u n i t and p e r
q u a r t e q u i v a l e n t te n d t o in c r e a s e as volum e h a n d le d i n c r e a s e s .
T his
r e l a t i o n s h i p betw een in v e s tm e n t and volume o f s a l e s becomes more o renounced
when shown on a p l a n t in v e s tm e n t b a s i s .
The 4 d i s t r i b u t o r s h av e an i n v e s t ­
ment p e r q u a r t e q u iv a le n t c o n s id e r a b ly h i g h e r th a n th e o re d u c e !—d i s t r i b u t o r s .
T h is i s due p r i m a r i l y t o t h e l a r g e r p l a n t s and a d d i t i o n a l p a s t e u r i z i n g e q u ip ­
ment o o e r a te d by th e d i s t r i b u t o r s .
O p e ra to rs h a n d lin g s m a ll v olum es, a l s o ,
do a l a r g e r p r o p o r tio n o f t h e i r work by hand th a n t h e o p e r a t o r s h a n d lin g
l a r g e volum es and c o n s e q u e n tly , u t i l i z e l e s s eq u ip m en t.
When in v e s tm e n t in d e l i v e r y eq u ip m en t i s r e l a t e d to volum e o f m ilk
h a n d le d t h e c o r r e l a t i o n becomes n e g a t iv e , a s volume in c r e a s e s in v e stm e n t p e r
u n i t d e c re a s e s ( f i g u r e 2 4 ) .
An e x p la n a tio n o f th e d i f f e r e n t r e l a t i o n s h i p s
e x i s t i n g betw een p l a n t and volum e and d e l i v e r y equipm ent and volum e, i s t h a t
o p e r a t o r s h a n d lin g s m a ll volume can o p e r a te w ith a minimum o f in v e s tm e n t in
p l a n t and equipm ent b u t th e y a r e fo rc e d t o m a in ta in a t r u c k f o r d e l iv e r y
p u ro o s e s .
The h i g h - p e r u n i t in v e stm e n t in d e l iv e r y eq u ip m en t o f o p e r a t o r
num ber 23 i s due t o t h e new t r u c k s t h i s o p e r a t o r p u rc h a s e d d u rin g t h e y e a r .
A dm inistra-i io n equipm ent was m a in ta in e d o n ly by t h e d i s t r i b u t o r s and
p r o d u c e r - d i s t r i b u t o r number 16 and a c c o u n ts in p a r t f o r t h e h ig h e r t o t a l
in v e s tm e n t o f t h e o p e r a to r s h a n d lin g t h e l a r g e volum es o f m ilk .
L ab o r e f f i c i e n c y -
The c o s t o f l a b o r i s th e m ost im p o rta n t s i n g l e
ite m c o n t r i b u t i n g t o th e t o t a l c o s t o f d i s t r i b u t i o n .
The 11 o p e r a to r s had
T o ta l in v e s tm e n t p e r
u n it o f f lu id s a le s
( c e n ts )
T o ta l u n i t s o f f l u i d s a l e s in th o u s a n d s
F ig u re 22.
R e la tio n betw een t o t a l in v e stm e n t p e r u n i t o f f l u i d
s a l e s and t o t a l u n i t s o f f l u i d s a l e s , 11 o o e r a to r s
T o ta l in v e s tm e n t p e r
q u a r t e q u iv a le n t
(c e n ts )
2 .5
23
3 .0 .
2 .5 .
2.0
2o 2i
2fc
18
Ib
1 .5 .
150
300
450
600
750
900
T o ta l q u a r t e q u iv a le n ts in th o u sa n d s
F ig u re 23.
R e la tio n b etw een t o t a l in v e s tm e n t p e r q u a r t e q u iv a le n t
and t o t a l q u a r t e q u i v a l e n t s , 11 o p e r a to r s
In v e s tm e n t in d e liv e ry equipm ent p e r u n i t o f f l u i d
s a le s
(c e n ts )
11
-7 2 -
22 .
U n its o f f l u i d s a l e s in th o u sa n d s
F ig u re 24. R e la tio n betw een in v e s tm e n t in d e l iv e r y equipm ent p e r u n i t
o f f l u i d s a l e s and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a to r s
In v e s tm e n t in d e l i v e r y equipm ent
p e r q u a r t e q u iv a le n t
( c e n ts )
23
Q u art e q u iv a le n ts in th o u san d s
F ig u re 25. R e la tio n betw een in v e s tm e n t in d e l iv e r y equipm ent p e r
q u a r t e q u iv a le n t and t o t a l q u a r t e q u i v a l e n t s , 11 o p e r a to r s
-7 3 -
an a v e ra g e l a b o r c o s t o f 1 .4 0 c e n ts p e r u n i t and o f 1 .9 0 c e n ts p e r q u a r t
e q u i v a l e n t , o r a b o u t .0 p e r c e n t o f th e t o t a l c o s t o f d i s t r i b u t i o n .
The
ran;;e amon ; in d i v id u a l o p e r a to r s was from 0 .6 3 c e n ts t o 3 .2 5 c e n ts o er u n i t
o i f l u i d s a l e t and from 0 .7 4 c e n ts t o 3 .6 7 c e n ts n e r q u a r t e q u i v a le n t .
The
w ide range e x i s t i n g among o p e r a to r s and t h e r e l a t i v e im p o rta n c e o f t h i s c o s t
ite m i n d i c a t e s t h a t i t i s a m a jo r c a u s e o f t h e p r e v io u s ly n o te d wide v a r i ­
a t i o n among o p e r a t o r s in t o t a l c o s t o f d i s t r i b u t i o n .
The r e l a t i o n s h i p b etw een l a b o r c o s ts and volume o f s a l e s is i l l u s ­
t r a t e d in f ig u r e s 26 and 27.
The h ig h e s t l a b o r c o s ts a r e a s s o c ia t e d w ith
t h e lo w e s t volume o f s a l e s and as volum e h a n d le d in c r e a s e s l a b o r c o s ts te n d
to d e c re a se .
H owever, a f t e r volum e h a n d le d re a c h e s 1 6 0 ,0 0 0 u n i t s o r q u a r t
e q u i v a l e n t s , volume h a n d le d seems t o have l i t t l e
f u r t h e r e f f e c t on la b o r
c o s ts .
IVhen r e l a t i o n s h i p s a r e shown b etw een p l a n t l a b o r c o s t s and t o t a l
volum e, and betw een d e l iv e r y l a b o r c o s ts and t o t a l volum e ( f i g u r e s 28 t o
31 i n c l u s i v e ) , t h e r e i s i n d i c a t i o n o f n e g a t iv e c o r r e l a t i o n .
c r e a s e s t h e c o s t o f l a b o r te n d s t o d e c r e a s e ,
As volume in ­
t’l i i l e o p e r a to r s h a n d lin g
l a r g e volum es o f m ilk have an a d v a n ta g e in l a b o r c o s ts f o r b o th p la n t and
c e l ! v e r y c o s t s , t h e i r a d v a n ta g e i s g r e a t e r in r e s p e c t t o p e r u n i t p l a n t c o s t s .
E xtrem e v a r i a t i o n s in t h e c o s t o f l a b o r a r e p r e s e n t among in d i v id u a l o p e r­
a t o r s h a n d lin g a b o u t t h e same volume o f m ilk , i n d i c a t i n g t h a t f a c t o r s o t h e r
th a n volum e a r e e x e r t i n g a m arked in f lu e n c e on th e t o t a l c o s t o f l a b o r .
iih ile i t may b e n o rm a lly e x p e c te d t h a t l a b o r c o s ts p e r u n i t
d im in is h w ith an in c r e a s e in in v e stm e n t p e r u n i t , a fre q u e n c y d i s t r i b u t i o n
o f t h e s e d a ta show ing t h i s
r e l a t i o n s h i p would be o f no v a lu e .
The
-7 4 L ab o r c o s t p e r
u n it o f f lu id s a le s
(c e n ts )
U n its o f f l u i d s a le s in th o u sa n d s
F ig u re 26.
R e la tio n betw een l a b o r c o s ts p e r u n i t o f f l u i d s a le s
and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a to r s
L abor c o s t p e r
q u a r t e q u i v a le n t
(c e n ts )
Zd
Z-
2225 #
I -
150
300
450
600
750
Q u art e q u iv a le n ts in th o u sa n d s
F ig u re 27.
R e la tio n betw een l a b o r c o s ts p e r q u a r t e q u iv a le n t
and t o t a l q u a r t e q u i v a l e n t s , 11 o p e r a to r s
-75'
P l a n t la b o r c o s t p e r
u n it o f f lu id s a le s
(c e n ts )
1 .5 -
1.0
.
0 .5 -
U n its o f f l u i d s a l e s in th o u s a n d s
F ig u re 28.
R e la tio n b etw een p l a n t l a b o r c o s ts p e r u n i t o f f l u i d
s a l e s and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a to r s
P la n t la b o r c o s t p e r
q u a r t e q u iv a le n t
(c e n ts )
2.0 .
1 .5 -
1.0
.
0 .5 -
Q u art e q u iv a le n ts in th o u sa n d s
F ig u re 29.
R e la tio n betw een p l a n t l a b o r c o s ts p e r q u a r t e q u iv a le n t
and t o t a l q u a r t e q u iv a le n ts
D e liv e ry l a b o r c o s t
p e r u n it o f f lu id s a le s
(c e n ts )
0.5
-7 6 -
.
U n its o f f l u i d s a l e s in th o u sa n d s
f i g u r e 50.
R e la tio n betw een d e l i v e r y la b o r c o s ts p e r u n i t o f f l u i d
s a l e s and t o t a l u n i t s o f f l u i d s a l e s , 11 o p e r a to r s
D e liv e ry l a b o r c o s t
p e r q u a r t e q u iv a le n t
(c e n ts )
Q u art e q u iv a le n ts in th o u sa n d s
F ig u re 3 1 . R e la tio n betw een d e l iv e r y l a b o r c o s ts p e r q u a rt
e q u iv a le n t and t o t a l q u a r t e q u i v a l e n t s , 11 o p e r a to r s
-7 7 d is t r i b u t e re a r e n o t on a co m p arab le b a s i s w ith p r o d u c e r - d i s t r i b u t o r s
in t h i s r e s p e c t due t o t h e i r in v e stm e n t in p a s t e u r i z i n g eq u ip m en t and t h e
a u d i t i o n : I c o s t o f l a b o r th e y in c u r r e d in p a s t e u r i z i n g m ilk .
tr.
Two d i s -
u to r s t h a t had h ig h e r th a n a v e ra g e in v e s tm e n t p e r u n i t had a lo w er
th a n a v e ra g e p e r u n i t l a b o r c o s t .
As t h e s e d i s t r i b u t o r s a l s o p a id h ig h e r
th a n a v e ra g e wages t h e r e is some i n d i c a t i o n t h a t in v e stm e n t i n equipm ent
has an e f f e c t upon l a b o r c o s t .
I t may b e t h a t t h e e f f e c t o f in v e stm e n t
on l a b o r c o s t depends upon th e ty p e o f in v e s tm e n t as w e ll as upon th e
am ount.
L arg e in v e s tm e n ts in b u ild in g s c a n n o t b e e x p e c te d t o in c r e a s e
l a b o r e f f i c i e n c y b e c a u se b u il d in g s a lo n e do n o t d e c r e a s e t h e amount o f
l a b o r r e q u ir e d t o h a n d le t h e m ilk .
N e i t h e r can l a b o r c o s ts be d e c re a se d
when in v e s tm e n t i s p u t i n t o equipm ent w hich i s d e s ig n e d t o p r o c e s s
f l u i d s a l e s and w hich r e q u ir e s a d d i t i o n a l l a b o r t o o p e r a t e .
From a s o c i a l
s t a n d p o i n t , how ev er, i t i s d e s i r a b l e t o d i s t r i b u t e a q u a l i t y p ro d u c t
even th o u g h t o do so r e q u ir e s i n c u r r i n g h ig h l a b o r c o s t s .
The p r i c e o f l a b o r is a n o th e r f a c t o r t h a t may in f l u e n c e la b o r
c o s ts .
The a v e ra g e v a lu e o f o p e r a t o r 's l a b o r was $155 p e r m onth.
The
in d i v id u a l wage r a t e s c h a rg e d f o r t h e 11 o p e r a to r s were as f o ll o w s t
f o u r ch a rg e d t h e i r l a b o r a t 4100 p e r m onth; o n e , $ 1 2 0 ; one $175; f o u r ,
$200; and one #300 p e r m onth.
»hero is no i n d i c a t i o n o f a r e l a t i o n s h i p betw een t h e v a lu e o f
o p e r a t o r 's l a b o r p e r m onth and e i t h e r th e p e r u n i t o r q u a r t e q u iv a le n t
c o s t oi la b o r.
Two o f t h e o p e r a to r s h a v in g t h e h ig h e s t wage r a te s had
a n e r u n i t la b o r c o s t below a v e r a g e , w h ile two o f th e o p e r a t o r s h av in g
v e lo w e s t wage r a t e s had th e h ig h e s t p e r u n i t la b o r c o s t s .
A p p a re n tly
-
78 -
t h e v a r i a t i o n s in wage r a t e s w ere o f f s e t by v a r i a t i o n s in in d i v id u a l
o p e r a t o r ’ s w ork in g e f f i c i e n c y .
H ire d l a b o r was em ployed by e i g h t o p e r a t o r s .
I t was c h a rg e d a t
t h e a c t u a l r a t e p a id p lu s a llo w a n c e s and v a r ie d from $66 t o $200 p e r m onth,
d e p en d in g on th e a b i l i t y and t r a i n i n g o f t h e in d iv id u a l w o rk e r.
A la r g e
p r o p o r tio n o f th e h i r e d l a b o r was em ployed b y t h e d i s t r i b u t o r s who p a id
h ig h e r a v e ra g e r a t e s th a n th e p r o d u c e r - d i s t r i b u t o r s .
P r ic e o f h i r e d l a b o r
seems t o have had no d e f i n i t e e f f e c t upon t h e p e r u n i t l a b o r c o s t .
The
f o u r d i s t r i b u t o r s p a y in g h ig h e r th a n a v e ra g e wages had p e r u n i t la b o r
c o s ts t h a t f l u c t u a t e d c l o s e l y a b o u t t h e a v e ra g e f o r th e 11 o p e r a t o r s .
U npaid f a m ily l a b o r was u t i l i z e d by 4 o p e r a to r s and c o n s is te d
o f t h e l a b o r o f t h e sons and d a u g h te rs and t h e w ife o f t h e o p e r a t o r .
It
was u s u a l l y em ployed on a p a r t - t i m e b a s i s , w ashing b o t t l e s and b o t t l i n g
t h e m ilk .
The e f f e c t o f u n o a id fa m ily l a b o r upon th e o e r u n i t c o s t o f
l a b o r i s d i f f i c u l t t o m easure b e c a u se o f t h e sm all num ber o f o o e r a to r s
u s in g fa m ily l a b o r .
Two o f t h e 4 o p e r a to r s u s in g i t , ho w ev er, had p e r
u n i t l a b o r c o s ts below a v e ra g e and t h e o t h e r 2 had l a b o r c o s ts above
a v e r a g e , i n d i c a t i n g t h a t u n p a id fa m ily l a b o r had l i t t l e
c o s t o f la b o r.
e f f e c t on th e
17/
O th e r f a c t o r s in f l u e n c in g l a b o r e f f i c i e n c y a r e t h e ty p e o f
r o u te m a in ta in e d b y eac h o p e r a t o r , th e d e s ig n o f th e d e l i v e r y t r u c k , and
t h e a b i l i t y o f th e d r i v e r .
P la n t s h a v in g a h ig h p e r c e n ta g e o f w h o le s a le t r a d e u s u a ll y have
th e l a r g e s t number o f u n it e d e l iv e r e d p e r s t o p .
17/
One man, on t h i s ty p e
O p e ra to rs num bered 2 3 , 1 6 , 18 and 22 u se d u n p a id fW n ily la b o r.
-
79 '
Oi r o u t e , i s a b le t o d e l i v e r a l a r g e r num ber o f u n it e p e r day th a n th e
d r i v e r who i s f o r c e d t o c o v e r t h e e n t i r e c i t y , d e l i v e r i n g o n ly a s m a ll
num ber c l u n i t s a t each s t o p .
per
The r e s u l t i s , o r s h o u ld b e , a lo w er
-n it l a b o r c o s t b e c a u se o f th e l e s s tim e r e q u ir e d n e r u n i t .
P la n ts
hav in r, a h i^ h p e rc e n ta g e w h o le s a le t r a d e h av e a n o th e r a d v a n ta g e o v e r
p l a n t s d e l i v e r i n g d i r e c t t o t h e consum er due t o th e l a r g e p r o p o r tio n o f
w h o le s a le s a l e s made in h a l f - p i n t s i z e c o n t a i n e r s .
The same tr u c k is
c a p a b le o f d e l i v e r i n g a l a r g e r number o f h a l f - p i n t s th a n q u a r ts p e r
lo a d w hich red u ce s th e p e r u n i t l a b o r
go
;
t when h a l f - p i n t s a r e h a n d le d .
The d e s ig n o l t h e v e h i c l e u se d in d e l i v e r i n g m ilk may have an
e i f e c t on l a b o r e f f i c i e n c y .
A number o f o p e r a to r s w ere d e l i v e r i n g t h e i r
m ilk in t o u r i n g c a r s and h a l f - t e n t r u c k s w ith low s id e s and no t o p .
T ru ck s d e s ig n e d f o r d e l i v e r i n g m ilk oan h a u l l a r g e r lo a d s th a n l i k e - s i z e
t r u c k s w hich have no s id e s o r t o u r i n g c a r s .
The d r i v e r can lo a d and
u n lo a d h i s t r u c k a t th e p l a n t m ere r a p i d l y and w ith g r e a t e r e a s e and has
g r e a t e r a c c e s s i b i l i t y t o t h e b o t t l e s o f m ilk w h ile on t h e r o u te th a n th e
d r i v e r d e l i v e r i n g m ilk in a v e h i c le n o t d e s ig n e d as a m ilk d e l i v e r y t r u c k .
The p r e v io u s l y n o te d h ig h d e l i v e r y c o s ts o f t h e o p e r a to r s h a n d lin g sm a ll
volum es o f m ilk may in p a r t be a t t r i b u t e d t o th e s e f a c t o r s .
The p e r s o n a l i t y and a b i l i t y o f t h e man on t h e r o u te i s an
im p o rta n t Ja c t o r a f f e c t i n g d i s t r i b u t i o n c o s t s .
The man on t h e ro u te
m ust p e r s o n a l l y c o n t a c t t h e cu sto m ers and t h e im p re s s io n he makes i s
im p o rta n t in s e c u r in g and m a in ta in in g c u s to m e rs .
The d r i v e r i s , a l s o ,
in s tr u m e n ta l in o b ta in in g t h e c u s to m e rs ' c o o p e r a tio n in r e tu r n i n g
80 b o t t l e s and making p ay m en ts, th u s re d u c in g b o t t l e c o s ts and lo s s e s from
bad d e b t s .
T ruck o p e r a t io n - The second l a r g e s t c o s t ite m in d i s t r i b u t i o n
was t r u c k o p e r a t i o n .
The a v e ra g e u n i t c o s t o f o p e r a t in g t h e d e l iv e r y
t r u c k wss 1 1 .8 p e r c e n t o f t h e t o t a l c o s t , o r .3 3 c e n ts o e r u n i t o f
f l u i d s a l e s and .4 5 c e n ts p e r q u a r t e q u i v a le n t ( t a b l e X I I I ) .
Volume o f m ilk h a n d le d has a m arked e f f e c t upon t h e p e r u n i t
c o s t o f t r u c k o p e r a tio n when volume i s b elo w 1 6 0 ,0 0 0 u n i t s
( f i g u r e 3 2 ).
The p e r u n i t c o s t te n d s t o d e c re a s e s h a r p ly as volum e in c r e a s e s to
1 5 0 ,0 0 0 u n i t s and th e n rem ains a p p ro x im a te ly c o n s ta n t .
has an optimum c a p a c it y o f a b o u t 1 6 0 ,0 0 0 u n i t s .
A t r u c k e v i d e n tly
O p e ra tin g b elo w t h i s
c a p a c i t y in c r e a s e s th e p e r u n i t c o s t b e c a u s e th e c o s t o f o p e r a t in g a
t r u c k i s a b o u t th e same r e g a r d le s s o f w h e th e r o r n o t t h e t r u c k is
f u l l y o r p a r t l y lo a d e d .
A d d itio n a l f a c t o r s i n f l u e n c in g th e c o s t o f o p e r a t in g tr u c k s
a re * ( I ) volum e o f m ilk d e l iv e r e d p e r m ile o f r o u te t r a v e l e d ;
( 2 ) con­
d i t i o n o f t h e ro a d s ; (3 ) s i z e o f th e t r u c k ; ( 4 ) a d a p t a b i l i t y o f th e t r u c k
t o th e jo b ; (5 ) e f f i c i e n c y o f th e t r u c k in r e s p e c t to th e u s e o f
as,
o i l , t i r e s , e t c . ; and ( 6 ) th e c a r e w ith w hich th e d r i v e r o p e r a te s h is
tru c k . 1 8 /
D e p r e c ia tio n - D e p r e c ia tio n c o s ts w ere t h i r d i n im p o rta n c e and
a c c o u n te d f o r 7 .9 p e r c e n t o f th e t o t a l c o s t .
The w e ig h te d a v e ra g e c o s t
1 8 / Arrrientr o u t , W. ?■'. and S t i l z e r , F. 6 «, wM ilk - D is tr i b u tio n
C o sts in e s t V i r g i n i a ," West V ir g in i a A g r i c u l t u r a l E x p erim en t S t a t i o n
B u l l e t i n No. 27 0 , 1936, pp 2 4 . A llm en d in g er , W erner, "Bozeman V ilk
and Cream D i s t r i b u t i o n , " U n p u b lish e d M a s te r 's T h e s is , M ontana S t a t e
C o lle g e , 1940, pp 6 4 -6 7 .
—8 1 -
T ru ck o p e r a tio n c o s t p e r
u n it o f f lu i d s a le s
(c e n ts )
1 .5 -
0 .5 -
U n its o f f l u i d s a l e s in th o u s a n d s
F ig u re 3 2 .
R e la tio n betw een t r u c k o p e r a tio n c o s t p e r u n i t s o f
f l u i d s a l e s and t o t a l u n i t s o f f l u i d s a le s
-8 2 p e r u n i t o f f l u i d s a l e s was •2 2 c e n ts and p e r q u a r t e q u i v a le n t •30
c e n ts.
D e p r e c ia tio n c o s t s a r e l a r g e l y c e o e n d e n t upon th e v a lu e and
ty p e o i e q u ip m e n t.
Some ty p e s o f eq u ip m en t have h ig h e r d e p r e c ia ti o n
r a t e s th a n o t h e r ty p e s and a f f e c t c o s t s a c c o r d in g ly .
Those o p e r a to r s
h a v in g r e l a t i v e l y l a r g e in v e s tm e n t in eq u ip m en t f o r t h e volum e o f
m ilk s o ld had th e h ig h e s t p e r u n i t d e p r e c i a t i o n c o s ts w h ile o p e r a to r s
w ith low d e p r e c i a t i o n c o s t s had a s m a l le r in v e s tm e n t.
A num ber o f
o p e r a to r s w ith s m a ll in v e s tm e n ts u se d hand methods r a t h e r th a n m ach in ery
to
o t h e v a r io u s ty p e s o f work c o n n e c te d w ith d i s t r i b u t i n g m ilk .
S u p p lie s - S u p p lie s , in c lu d in g t h e c o s t oi i c e , w ashing pow der,
d i s i n f e c t i n g m a t e r i a l , f l y s p r a y s , b o t t l e c a p s , and f i l t e r s , a v e ra g e d
•16 c e n ts p e r u n i t o f f l u i d s a l e s and .2 1 c e n ts o e r q u a r t e q u i v a l e n t .
V a r ia t io n s among in d i v id u a l d i s t r i b u t o r s w ere due t o su ch f a c t o r s as
t h e p r ic e s p a i d , t h e q u a n t i t y o f s u p p lie s u s e d and t h e k in d o f equipm ent
o p e r a te d .
O p e ra to rs h a n d lin g l a r g e volum es o f m ilk w ere a b le t o o b ta in
p r i c e a d v a n ta g e s by b u y in g s u p p lie s in l a r g e q u a n t i t i e s .
Equipm ent u sed i s o f s p e c i a l Im p o rta n c e , inasm uch a s some
o p e r a t o r s u s in g e l e c t r i c r e f r i g e r a t o r s hav e l i t t l e o r no c o s t f o r i c e .
The c o s t o f e l e c t r i c i t y was in c lu d e d in pow er and f u e l .
R e p a irs - T h is ite m o i c o s t a c c o u n te d f o r 4 .6 p e r c e n t o f th e
to ta l co st o f d is trib u tio n .
The a v e ra g e c o s t p e r u n i t o f f l u i d s a le s
was .1 3 c e n ts and t h e p e r q u a r t e q u i v a le n t c o s t was .1 8 c e n t s .
The ran g e
among i n d i v i d u a l d i s t r i b u t o r s in th e p e r u n i t c o s t was from .1 6 c e n ts t o
.2 0 c e n t s .
T hese v a r i a t i o n s in c o s t a r e due t o su ch f a c t o r s as a g e , ty p e
-
83 -
o f e q u ip m e n t, in v e s tm e n t in equipm ent p e r u n i t of f l u i d s a l e s , o r i c e
o f r e p a i r w ork, and th e c a r e u se d in h a n d lin g eq u ip m en t.
The n a tu r e o f t h e s e f a c t o r s make them d i f f i c u l t t o m easure
q u a n tita tiv e ly .
However, g e n e r a l te n d e n c ie s can be p o in te d o u t.
I n d iv ­
id u a l p ie c e s o f equipm ent u s u a l l y r e q u ir e g r e a t e r e x p e n d itu r e s in th e
way o f r e p a i r s w ith a d v a n c in g a g e .
T rucks and r e f r i g e r a t o r s a r e ty p e s
o f equipm ent w hich have h ig h e r r e p a i r c o s ts th a n b o t t l e r a c k s , c a n s ,
and w ashin
ta n k s .
The e f f e c t o f in v e s tm e n t in equipm ent on r e p a i r
c o s ts i s D ependent uoon a g e , ty p e o f eq u ip m en t, and t h e g e n e r a l r e p a i r
p r a c t i c e fo llo w e d by th e o p e r a t o r .
The c o s t o f r e p a i r work i s d ep en d en t
upon t h e s k i l l and wage o f th e m ech an ic and t h e p r i c e o f t h e m e c h a n ic a l
p a rts u sed .
C are in h a n d lin g i s e s p e c i a l l y im p o rta n t b e c a u se k e e p in g
t h e m achines p r o p e r ly o i l e d , g r e a s e d , and o p e r a t in g sm o o th ly can g r e a t l y
red u ce r e p a i r b i l l s .
Pad d e b ts - L o sse s from bad d e b ts am ounted t o .1 0 c e n ts p e r u n i t
o f f l u i d s a l e s and .1 3 c e n ts p e r q u a r t e q u i v a l e n t , o r a b o u t 3 .5 p e r c e n t
o f th e t o t a l c o s t o f d i s t r i b u t i o n .
T h ere was a w ide v a r i a t i o n in t h i s
ite m a. ong I n d iv id u a l o p e r a t o r s , th e ran g e b e in g from z e ro t o .5 4 c e n ts
p e r u n it o f flu id s a le s .
T h is v a r i a t i o n i s du e, to some e x t e n t , t o th e
d i f f e r e n c e in o p in io n o r a c c o u n tin g p r a c t i c e among i n d i v i d u a l o p e r a to r s
as t o w hat c o n s t i t u t e s a b ad d e b t.
The p r o d u c e r - d i s t r i b u t o r s in c u r r e d l a r g e r l o s s e s from bad d e b ts
th a n t h e d i s t r i b u t o r s .
T h is may be due t o t h e p r o d u c e r - d i s t r i b u t o r s
g r e a t e r d e s i r e t o h o ld each c u s to m e r even th o u g h he may b e a q u e s tio n a b le
-8 4 -
c ro d it ris k .
P r o d u c e r - d i s t r i b u t o r s a r e l i k e l y to be more l e n i e n t w ith
c o l l e c t i o n s in o r d e r t o g a in o r t o k eep c u s to m e rs , w h ereas, l a r g e
d i s t r i b u t o r s do n o t v a lu e in d iv id u a l cu sto m ers as h ig h ly .
19 /
uo d e f i n i t e c r e d i t p o li c y was fo llo w e d by t h e m a jo r it y o f th e
o p e ra to rs .
They depended upon t h e i r judgm ent o f th e i n d i v id u a l c u s to m e r 's
c r e a i t r a t i n g i n e x te n d in g c r e d i t .
H owever, d u r in g th e in te r v ie w s e v e r a l
m en tio n ed t h e n eed o f an o r g a n i s a t i o n which would f u r n is h c r e d i t
r a t i n g s o f t h e i r c u s to m e rs .
In a d o p tin g a p o li c y f o r th e e l im i n a tio n o f lo s s from bad
d e b t s , i t i s c e s i r a b l e t o p la n t h e e l im i n a tio n o f th e l o s s b e f o r e c r e d i t
is
iv e n .
^ood ju d g m en t o f th e c u s to m e r 's c r e d i t r a t i n g and l i m i t i n g t h e
amount o f c r e d i t e i t h e r on an amount o r a t i n e b a s is a r e tw o s u c c e s s f u l
ways u s e d in c o n t r o l l i n g e x te n s io n o f c r e d i t and th e r e b y re d u c in g lo s s
irom bad d e b t s . 2 0 /
Use o f m ilk t i c k e t s o r checks is am .I h e r m ethod o f
e l im i n a tin g l o s s e s .
Vi/hen t i c k e t s a r e u s e d , m ilk i s l e f t w ith a cu sto m er
o n ly in exchan g e f o r a t i c k e t and an em oty b o t t l e .
s o l d t o th e c u s to m e r f o r c a s h .
21/
The t i c k e t s a r e
O p e r a to r 1 9 , u s in g t h e t i c k e t
m ethod in t h e B i l l i n g s m a rk e t, r e p o r te d no lo s s from bad d e b t s .
b o ttle s -
The a v e ra g e c o s t o f b o t t l e s p e r u n i t o f f l u i d s a l e s
was .0 7 c e n ts o r 2 .6 p e r c e n t o f th e t o t a l c o s t o f d i s t r i b u t i o n .
These
o a ta show th e ran g e in t h e c o s t o f b o t t l e s among in d i v id u a l o p e r a to r s t o
1 9 / R in e a r , K arl H ., wM ilk D i s t r i b u t i o n C o sts o f P r o d u c e r - I i s t r i b u to r s am S u b d e a le rs i n New J e r s e y ," N. J . A g ri. Exp. S t a . B u l l e t i n No.
663, 1939, pp 2 9 -3 0 .
2Q /
/
21
R ln e a r, E a r l H ., Op. c i t .
I b id
-8 5 -
b e from .0 1 c e n ts t o .1 1 c e n ts p e r u n i t o f f l u i d s a l e s .
The a v e ra g e c o s t o f .0 7 c e n ts f o r b ro k e n and n o n - r e tu m e d
b o t t l e s f o r t h e s e o p e r a t o r s i s c o n s id e r a b ly below t h e w e ig h te d a v e ra g e
c o s t o f .2 3 c e n ts w hich was in c u r r e d by dairym en in t h e Bozeman a r e a
d u rin g t h e y e a r 1939. 2 2 /
T h is i s an i n d i c a t i o n t h a t th e o p e r a to r s in
t h e B i l l i n g s and L a u re l a r e a w ere r a t h e r e f f i c i e n t in th e u s e o f b o t t l e s .
A ll o th e r -
O th e r c o s ts in c lu d e pow er and f u e l , i n t e r e s t ,
l i c e n s e s , t a x e s , in s u r a n c e and te le p h o n e .
The a v e ra g e c o s t o f th e s e
ite m s was .4 0 c e n ts p e r u n i t o f f l u i d s a l e s and .5 6 c e n ts p e r q u a r t
e q u iv a le n t o r a b o u t 14 p e r c e n t o f th e t o t a l c o s t o f d i s t r i b u t i o n .
T hese ite m s a r e r e l a t i v e l y f ix e d f o r each o p e r a t o r and can be
changed o n ly b y fu n d am en tal a d j u s t e n ts i n t h e e x i s t i n g e n t e r p r i s e .
They a r e , a l s o , c l o s e l y r e l a t e d and d ep en d e n t upon f a c t o r s t h a t have
been p r e v io u s l y d is c u s s e d .
Any m a jo r ch an g es in su ch f a c t o r s would
n o rm a lly b e r e f l e c t e d in a change in one o r more o f t h e s e ite m s .
Summary and C o n c lu sio n s
The m a rk e t m ilk p ro d u c ts in t h e B i l l i n g s - L a u r e l m a rk e t a r e a
w ere s u p p lie d by p r o d u c e r s , p r o d u c e r - d i s t r i b u t o r s , and d i s t r i b u t o r s
d u rin g 1940.
f i f t y - s e v e n li c e n s e d d airy m en w ere o p e r a tin g i n th e a r e a .
In fo m s a tio n c o n c e rn in g t h e d a i r y e n t e r p r i s e was o t a in e d from 22 o p e r­
a t o r s p ro d u c in g m ilk and from 11 o p e r a t o r s d i s t r i b u t i n g m ilk .
The
volum e o f m ilk h a n d le d d u rin g t h e y e a r , by in d i v id u a l p r o d u c e r s , v a r ie d
2 2 / A llm endin g e r , W erner, hBozeman i l k and Cream D i s t r i b u t i o n , "
U n p u b lish ed M a s te r 's T h e s i s , Montana S t a t e C o lle g e , 1940, pp 62.
” 86”
from 1 2 ,4 1 0 q u a r ts t o 3 0 4 ,2 3 2 q u a r ts and t h a t h a n d le d b y i n d i v id u a l
d i s t r i b u t o r s v a r ie d from 2 7 ,7 4 0 u n i t s t o 9 0 1 ,b36 u n i t e .
The a v e ra g e c o s t o f p ro d u c in g m a rk e t m ilk was 4 .1 9 c e n ts p e r
q u a r t and t h e ra n g e among in d i v id u a l o p e r a to r s was from 2 .7 8 c e n ts to
6 ,6 2 c e n t s .
L ab o r and f e e d were th e l a r g e s t c o s t s , a c c o u n tin g f o r 40
p e r c e n t and 36 p e r c e n t r e s o e o ti v e ly o f th e t o t a l c o s t .
B u ild in g s and
equipm ent a c c o u n tin g f o r 9 p e r c e n t o f t h e t o t a l c o s t , was t h e n e x t
l a r g e s t c o s t o f p ro d u c in g m ilk .
The a v e ra g e c o s t o f d i s t r i b u t i n g m a rk e t m ilk was 2 .7 9 c e n ts p e r
u n i t and 3 .8 2 c e n ts p e r q u a r t e q u i v a le n t .
The range among in d i v id u a l
o p e r a to r s in th e s e c o s ts was from 2 .0 1 c e n ts t o 6 .2 4 c e n ts p e r u n i t and
from 2 .6 3 c e n ts t o 6 .2 6 c e n ts p e r q u a r t e q u i v a l e n t .
L a b o r was by f a r t h e
l a r g e s t s i n g l e c o s t o f d i s t r i b u t i n g m a rk e t m ilk , a c c o u n tin g f o r ab o u t 50
p e r c e n t o f th e t o t a l c o s t.
T ru ck o p e r a t i o n , a c c o u n tin g f o r 12 p e r c e n t
and d e p r e c ia ti o n am o u n tin g to 8 p e r c e n t o f th e t o t a l c o s t w ere th e n e x t
la r g e s t c o s ts .
Im p o rta n t f a c t o r s c a u s in g t h e h i g h e r c o s ts o f p ro d u c in g m ilk
w ere found t o be as f o llo w s i ( I ) sm a ll p r o d u c tio n p e r cow, ( 2 ) s m a ll
volum e o f m ilk h a n d le d by i n d i v i d u a l o p e r a t o r s d u rin g th e y e a r , (3 )
i n e f f i c i e n t u s e o f l a b o r , and (4 ) s m a ll num ber o f cows in t h e h e r d .
P ro m in e n t f a c t o r s c a u s in g t h e h ig h e r c o s ts o f d i s t r i b u t i n g m ilk
w ere:
( I ) s m a ll volum e o f s a l e s d u r in g t h e y e a r , ( 2 ) f a i l u r e t o u se
equipm ent t o optimum c a o a c i t y , (3 ) i n e f f i c i e n t u s e o f la b o r , (4 ) d u p li­
c a t i o n o f s e r v i c e s , and (b ) la c k o f a s a t i s f a c t o r y c r e d i t sy ste m .
T
-8 7 —
Many o p e r a te r e a r e n o t p ro d u c in g and d i s t r i b u t i n g m a rk e t m ilk
a t th e lo w e s t p o s s i b l e c o s t s , l a r g e ly .b e c a u s e th e y a r e u naw are o f
e x is tin g
in e ffic ie n c ie s .
F u rth e rm o re , th e p r e s e n t s t a b i l i s e d p r i c e
sy stem o n e r a t in g in t h e m ark et makes i t d i f f i c u l t f o r some o p e r a to r s
t o expand t h e i r o u tp u t t o ta k e a d v a n ta g e o f econom ies in l a r g e s c a le
o p e ra tio n .
The a b sen ce o f a c o m p e titiv e p r i c e i s a f a c t o r p a r t i a l l y
r e s p o n s ib le f o r t h i s s i t u a t i o n .
G o v e m m e n ta lly c o n t r o l l e d p r i c e sy stem s
a p p a r e n tly a r e n o t l i k e l y t o r e s u l t in econom ies in p r o d u c tio n and
d i s t r i b u t i o n b e in g p a s s e d on t o t h e c u s to m e r.
P la n s t o re d u c e c o s ts o f p ro d u c in g and d i s t r i b u t i n g m ark et
m ilk s h o u ld p r o v id e f o r t h e fo llo w in g *
1.
An in c r e a s e in t h e a v e ra g e p r o d u c tio n p e r cow by u s in g
p ro v en s i r e s , b a la n c e d r a t i o n s , and b e t t e r o a re in h a n d lin g
cows.
2.
An in c r e a s e in t h e s c a l e o f o p e r a tio n s o f some dairym en t o
a t t a i n econom ies t h a t have b een found t o b e a s s o c ia t e d w ith
l a r g e volum e.
3.
Im provem ent in t h e o p e r a t io n and management o f p r o d u c tio n
and d i s t r i b u t i o n p l a n t s .
4.
E lim in a tio n o f u n n e c e s s a r i l y d u p lic a te d s e r v i c e s t h a t a r e
p r e s e n t i n t h e m a rk e t.
5.
Econom ies t h a t may b e o b ta in e d w i l l r e s u l t in lo w e r r e t a i l
m ilk p r i c e s .
88
TABLE XV. COSTS OF PRODUCING ;ARKET MILK,
BY OPERATORS, BILLINGS-LAUREL AREA, 1940
Farm
No.
T o ta l
F eed
L abor
B ld g s• Cow
and
d e p re ­
e q u ip . c i a t i o n
H au l­
in g
(d o ls )
(d o ls )
(d o ls )
(d o ls )
( d o ls )
( d o ls )
3
4
8865
8310
4704
4109
3332
3225
1387
1474
2738
2828
2220
1585
593
951
363
305
1176
690
150
-
300
86
365
452
5
6
7
8
3937
3966
3157
2867
1433
1464
975
774
1699
1500
1439
1305
164
232
384
142
62
330
95
-
9
10
11
12
2724
2396
2412
1723
654
829
725
509
1361
1048
1178
603
202
115
287
86
13
14
15
16
629
879
792
18906
252
318
311
6831
309
368
267
7462
17
18
19
20
4107
2547
2105
1227
1946
766
713
246
21
22
4498
4016
I
2
T o ta l
A verage
A sso c,
M is c e l­
dues,
la n e o u s
lic e n s e s
Ss ta x e s
(d o ls )
( d o ls )
217
31
53
610
419
188
242
365
272
95
458
25
82
18
44
189
76
151
144
-
560
91
91
460
33
I
16
30
116
46
12
60
113
2463
80
920
-
3
2
16
92
53
51
85
1137
1767
1264
874
715
126
366
100
154
250
30
' -
20
17
26
6
248
134
142
77
1778
2247
1899
1283
300
148
101
10
*
-
24
19
396
309
88965
32189
35712
7663
4093
3385
884
6039
4044
1463
1623
3483
186
40
229
200
111
114
112
89
TABLE XVI.
Farm
No.
I
FEED COSTS AND PROPORTIONATE DISTRIBUTION OF COSTS Oi PROlUCING
MARKET MILK, BY OPERATORS, BILLINGS-LAUREL AREA, 1940
P o t. o f P a s tu r e P e t . o f
A lfa lfa t o t a l
and
to ta l
fie ld s
Succu­
le n t
fe e d s
P o t. o f
to ta l
8 .9
-
3
4
$ 980
1092
616
432
2 8 .3
3 4 .7
3 9 .2
2 8 .9
$ 52
526
272
216
1 .6
1 6 .7
2 0 .7
1 4 .5
$306
45
5
6
7
8
610
720
340
370
4 3 .2
6 0 .9
3 6 .6
4 4 .2
175
. 224
202
126
1 2 .4
1 6 .8
2 1 .7
1 5 .1
■
12
9
225
300
346
300
3 3 .7
3 6 .7
4 2 .2
5 2 .7
112
10
11
12
1 6 .8
2 3 .9
9 .2
7 .0
•
72
38
13
14
15
16
108
180
162
4291
4 0 .7
5 3 .9
4 7 .8
5 9 .9
60
42
30
333
1 2 .6
8 .8
17
18
19
20
770
360
240
186
3 8 .9
4 6 .0
3 4 .1
8 0 .2
21
22
540
1219
14287
2
T o ta l
Concen­ P e t . I
tra te s to ta l
$2121
1530
528
799
6 1 .3
4 8 .6
4 0 .1
5 3 .6
626
470
387
329
4 4 .4
3 3 .3
4 1 .7
3 9 .3
6 .7
350
260
398
191
4 9 .5
3 0 .6
4 8 .6
3 3 .6
107
-
-
112
-
-
4 .7
-
147
2539
4 0 .4
3 3 .5
4 3 .4
3 5 .4
125
38
134
38
6 .3
4 .7
1 9 .0
1 6 .4
146
45
-
*
1 8 .3
6 .4
-
1084
266
285
8
54.8
3 2 .0
4 0 .5
3 .4
2 6 .7
6 3 .7
150
160
7 .4
7 .1
240
-
1 1 .8
-
1095
891
54 .1
3 9 .2
4 3 .3
3314
1 0 .1
904
2 .7
14483
4 3 .9
195
76
40
-
3 .0
«■
-
1 .4
8 .8
1 8 .9
90-
j arm Number
A lfa lfa
C o ncent ra to e
m h
ift. ca
.9
2 .1
1 .9
1 .4
.7
.9
.6
.8
Ca -c Cl cn
i ABLE X V II. POUNDS OF ALFALFA, CONCENTFATES, AND SUCCULENTS
FED PEF V
tUAKT OF MILK PRODUCED, BY OPERATORS,
BILLDiSS-LAUPEL AREA, 1940
2.6
2.1
2 .5
2 .3
.7
.5
.8
.6
9
10
11
12
1 .3
2.1
1 .6
2 .5
.5
.4
.5
.5
13
14
15
16
2 .9
4 .0
3 .5
3 .8
1 .0
•6
1 .2
.8
17
16
19
20
2 .0
2 .4
1 .3
2 .0
1 .0
21
22
1 .6
3.9
A verage
2 .2
.7
.77
________S u c c u le n ts
2 .0
1 .9
_
m
1 .4
2 .2
-
3 .8
*
-
.4
.4
.3
2 .3
.7
-
.5
1 .0
.6
-
91-
TABLE X V III. HOURS OF LABOR UTILIZED PER COW AND QUARTS OF
MILK PRODUCED PER HOUR OF LABOR SPENT, BY
OPERATORS, BILLINGS-LAUHEL AREA, 1940
Farm
Number
I
Hours o f l a b o r
p e r cow
q u a r ts o f m ilk
p ro d u ced p e r ho u r
1 0 ,8 0 0
7,332
7 ,2 0 0
5 ,1 5 7
263
229
379
303
2 8 .2
2 3 .7
1 2 .3
2 0 .4
6 ,1 0 0
3 ,6 0 0
4 ,8 6 0
6,6 1 6
7 ,2 0 0
189
128
304
330
600
1 8 .0
3 1 .6
1 1 .1
1 1 .6
9 .4
IS
14
2 ,9 1 6
7 ,7 6 8
1 ,6 6 4
1,2 3 6
1 ,4 3 7
194
646
130
247
287
1 9 .5
9 .6
2 6 .4
1 0 .0
1 2 .4
15
16
17
18
19
1 ,2 0 0
3 6 ,0 0 0
6 ,4 0 0
5 ,1 0 0
1 ,8 0 0
200
286
245
318
112
1 2 .7
8 .9
2 0 .6
1 2 .5
3 4 .7
20
, 21
22
4 ,2 9 0
1 3 ,0 8 0
4 ,9 8 0
357
291
151
7 .3
8 .7
2 9 .0
269
1 4 .8
2
3
4
6
6
7
8
9
10
11
12
'
H ours
T o ta l
A vera e
143 ,616
92TABLE X I X .
IN V E ST ENT IN COHS AND B D IL DIN OS
BY OPERATORS,
Farm
No.
Investm ent in Cows
T o ta l
P er cow
r - t t\ J CO Tj<
9 ,2 6 0
3 ,2 6 0
1,2 9 6
1 ,2 7 5
102
68
CO O
1 ,3 5 0
2 ,8 6 0
1 ,6 0 0
1 ,3 6 0
102
100
226
B I L L IN G S-L A D R E L AREA,
Per quart
AND
E^U I P m i T ,
1940
Investm ent in Bldi s . & E auinm ent
T o ta l
^ er cow
^er quart
4 ,6 1 3
4 ,2 6 6
2 ,3 5 7
2 ,4 8 6
113
133
124
146
1 .6 2
2 .4 5
2 .6 6
2 .3 6
80
1 .4 7
2 .5 0
2 .9 7
2 .0 9
986
1 ,2 0 9
2,7 2 2
919
36
43
170
64
1 .0 7
1 .0 6
5 .0 6
1.4 1
96
60
75
75
1 .7 1
1 .5 9
1 .2 1
2 .2 8
868
12
1 ,1 6 0
900
900
900
913
701
390
72
61
58
33
1 .2 9
1 .6 1
.9 4
.9 9
13
14
15
16
300
560
460
1 0 ,0 8 0
60
80
76
80
2 .4 2
3 .1 4
2 .9 5
3 .1 6
82
618
943
1 2 ,7 0 6
16
74
167
101
.6 6
2 .9 0
6 .1 8
3 . 98
17
18
19
20
1 ,5 7 5
990
1 ,3 8 0
1 ,0 2 0
72
62
86
85
1 .4 2
1 .5 5
2 .2 1
3 .2 4
987
60
950
461
45
4
69
38
.8 9
.0 9
1 .5 1
1 .4 6
21
22
3 ,3 3 8
2 ,3 4 5
74
71
2 .9 4
1 .6 3
1 ,3 9 6
730
31
22
1 .2 3
.5 1
77
1 .9 4
C*- CO
3 .0 4
2 .4 5
1 .4 6
1 .2 1
9
10
11
T o ta l
Ave •
76
50
4 8 ,1 1 8
4 1 ,2 6 2
90
2 .2 6
TABLE XX.
P la n t
LABOR COST PEP UNIT OF FLUID SALES AND PER QUART EQUIVALENT,
BY OPERATORS, BILLIKjS-LAUPEL ArEA, 1940
C ost P e r u n i t o f f l u i d s a l e s
T o ta l
P la n t
D e liv e ry
A dm inis­
t r a t io n
C ents
C en ts
C ents
C ents
C ost p e r q u a r t e q u iv a le n t
T o ta l
P la n t
D e liv e ry
C ents
C ents
C ents
.1 7
.2 3
.0 7
.2 1
2 .0 0
.7 4
.8 3
.9 5
.1 0 6
1 .0 2
.2 7
1 .1 2
.2 1
.1 5
.0 7
.0 7
.7 4
3 .2 5
1 .2 2
3 .6 7
.3 6
• 25
1 .4 3
.5 7
1 .5 0
23
24
25
26
1 .3 7
1 .4 2
0 .9 6
1 .6 4
.5 0
.5 9
.4 9
.7 9
.7 0
.5 9
.4 0
.6 4
16
17
18
19
20
.9 6
.6 3
3 .2 5
1 .0 9
3 .1 6
.3 1
.2 1
1 .4 3
.5 1
1 .2 9
.3 8
.2 1
1 .6 7
.5 1
1 .8 0
21
22
2 .7 0
1 .4 8
1 .9 0
.7 2
.6 8
.3 4
.0 8
3 .0 2
1 .9 2
2 .1 3
.9 4
1 .4 0
.6 1
.6 1
.1 8
1 .9 0
.8 3
Weighted
A verage e /
a/
.4 6
W eighted by volum es o f f l u i d s a l e s .
1 .9 9
1 .8 6
2 .1 9
'
A dm inis­
tra tio n
C ents
.8 3
.7 8
.8 6
.2 4
.3 3
.1 3
.2 7
.4 4
.2 5
1.67
.5 7
2 .0 9
.3 2
.2 5
.1 5
.0 8
.0 8
.51
.8 8
.3 8
.1 0
.8 3
.2 4
94-
TABLE XXI. HOURS OF LABOR UTILIZED IN CISTRI UTIfGr
MARKET MILK AND VOLUME HANDLED PEP HOUR, BY
OPERATORS, BILLIKOS-LAtJ PEL AtULA, 1940
Farm
No.
Hours
23
24
25
26
1 5 ,1 2 0
6 ,6 7 2
5 ,7 6 0
1 0 ,3 2 0
60
32
44
36
41
23
23
27
16
17
18
19
20
4 ,3 2 0
3 ,3 9 2
1 ,4 4 0
1 ,4 4 0
2 ,2 8 0
74
28
29
38
12
63
24
29
34
11
21
22
3 ,3 1 2
6 ,6 7 2
28
20
26
16
41
30
T o ta l
Ave .
Volume h a n d le d p e r h o u r
U n ite
W iart E q u iv a le n ts
60,7 2 8
TABLE XXII. INVESTMENT PEfi OUIT OF FLUID SALES AND
PER QOART EQUIVALENT, BY OPERATORS, EILL!ROS­
EAUREL AfiEAt 1940
T o ta l In v e stm e n t
P la n t In v e stm e n t
D e liv e ry In v e stm e n t
oTfic'e In v e stm e n t------P la n t
Amount P e r
P e rQ t.
Amount P e r
P e r ,.t. Amount
P er
Per Q t. Amount---- N p ------- P e F “ t .
N °.
U n it
E q u iv U n it
E q u iv U n it
E q u iv U n it
Equiv-*
----------------------------------------Rl e n t _____________________ a l e n t_________________
a le n t
________
a le n t
D o lla rs C ento C e n t s D o l l a r s
C ents C e n t s D o l l a r s Cent s C ents'
D o lla rs C ents C ents
23
24
25
26
16,141
4 ,0 5 5
3 ,4 3 3
6,4 0 3
16
17
18
19
20
3 ,1 1 4
1 ,1 5 8
668
481
464
21
22
1 ,6 7 7
1 ,7 1 2
T o ta l
2 .6 1
2 .6 3
2 .6 1
1 .9 2
14,0 6 4
2 ,9 0 3
3 ,0 5 7
4 ,6 9 5
1 .5 6
1 .3 5
1 .1 9
1 .2 5
2 .2 8
1 .8 8
2 .3 2
1 .6 7
1,827
1 ,0 2 7
326
676
.4 8
.1 3
.1 5
.9 8
1 .5 9
.8 8
1 .6 7
1 .1 4
1 .4 2
1 .6 9
.9 8
1 .9 4
2 ,3 8 2
457
12b
245
226
.7 6
.4 8
.3 0
.4 5
.8 2
.8 7
.5 6
.3 0
.5 0
.9 6
642
701
542
236
236
.2 0
.7 4
1 .2 9
.4 3
.8 5
1 .2 9
.4 8
.9 9
-
-
-
1 .7 8
1 .3 0
1 .9 9
1 .6 8
1 ,0 4 7
706
1 .1 1
1 .2 4
.6 9
630
1 ,0 0 6
.6 7
.7 6
.7 5
.9 9
-
-
-
1 .2 2
3 8 ,3 0 6
.5 4
2 9 ,9 1 0
250
125
50
133
.0 3
.0 5
.0 2
.0 4
.0 4
.0 8
• 04
.0 5
.2 4
90
.0 3
• 03
.8 6
1 .6 2
T
648
.42
O
1 .1 9
CD
CM
2 .0 8
2 .9 6
.6 7
.2 5
. 20
7,748
O
1 .6 2
.2 1
to
Ave .
1 .7 9
1 .8 8
1 .3 4
1 .4 4
.0 3
-9 6 -
ACKNOViLEDGVEWTS
The a u t h o r w ould l i k e t o e x o r e s s h is th a n k s an d a p o r e o l a t i o n
t o D r. H aro ld F. H o lla n d s f o r h is c a r e f u l g u id a n c e in a l l p h a s e s o f
t h i s s tu d y and t o T. M o ffet S ilk e r s o n f o r h i s s u g g e s tio n s and c r i t i ­
c is m s .
R e c o g n itio n i s a l s o due th e Work P r o j e c t s A d m in is tr a tio n f o r
a s s i s t a n c e in p r e p a r in g t a b l e s th ro u g h P r o j e c t Ho. O .P. 1 65-1—91-83
(W .P. 3 3 8 6 ).
-9 7 LITERiTURE CITED AND CONSULTED
A ll en d in g e r , A ern er, Bozeman K ilk and Cream D i s t r i b u t i o n , U n p u b lish ed
A s t e r ' s T h e s i s , Montana S t a t e C o lle g e , 1940
A llm e n d in g e r, W em er, C o st o f Bozeman M ilk and Cream D i s t r i b u t i o n ,
Montana S t a t e A g r i. Exp. S t a . , Mimeo. , C ir . No. 2 6 , 1U40
A m en t r o u t , ><» »., and S t e l z e r , R. 0 . , i i l k D i s t r i b u t i o n C o sts in West
V i r g i n i a , West V i r g i n i a A g r i c u l t u r a l E x p erim en t S t a t i o n " B u l l e t i n
No. 270, 1936
B a r t l e t t , P. W., P r ic e s and Consum ption o f M ilk i n S p e c i f i c C i t i e s , As
R e la te d t o I n d u s t r i a l P a y r o lls a n d " Q tlier Economic ! a c t o r s , U n i­
v e r s i t y o 7 I l l i n o i s A g ri. Exp. S t a . B u i. No. 3 9 7 , J a n . 1934
B a r t l e t t , R. W., I n c r e a s i n g t h e C onsum ption o f M ilk, D ep t, o f A g ri.
Economics", E x te n s io n S e r v ic e , U niv . OfnT I T i n o is , A .E. 986, 1938
B a r t l e t t , R. W., Some C onsum ption S t u d i e s , E x te n s io n S e r v ic e U niv. o f
I l l i n o i s , A. E. 1266, 1939
B a r t l e t t , R» MT., S t . L o u is M ilk Problem s w ith S u g g e ste d S o l u t i o n s , U niv.
o f I l l i n o i s A g ri• Exp. S t a . B u i. No. 4 1 2 , 193b
B la n fo r d , C. J . , An A n a ly s is o f D e a le r s ' S a l os o f M ilk and Cream in th e
New York M arket, 1933-1938, C o r n e ll U niv. A r i . Exp. S taT T UuT.
No. 735, 1940
B la n fo r d , C. J . , The M ilk S upply f o r t h e New York M arket, C o r n e ll E x t.
B u i. No. 3 9 6 , New York S t a t e C o lle g e o f A g ri. a t C o r n e ll U n iv .
1938
C a r t e r , E. G ., C lean Milk and I t s P r o d u c tio n , U tah A g ri. Exp. S t a . , Lo a n .
U ta h , C i r c u l a r 2 9 , 1956
C aliierw ood, M. P ., A S t a t i s t i c a l S tu d y o f ; i l k P r o d u c tio n f o r th e New York
M arket, C o r n e ll U niv. A r i . Exp. S t a . , B u i. No. 5 1 8 7 1 9 3 1
C o o p e ra tiv e D a iry M ark etin g C o n fe re n c e , A b s tr a c ts o f P a p e rs G iven a t C oopera t l v e D airy M ark etin g C o n fe re n c e , U n iv e r s ity o f I l l i n o i s ,” 1 . E.' 1324,
J a n u a ry 1940 ~
Dow, G eorge F . , An Economic S tudy o f M ilk D i s t r i b u t i o n in Maine M ark ets,
Maine A g r i. Exp. S ta . B u i. No. 3 9 5 , March 1939
—
Dow, G eorge $ . , An Economic S tu d y o f M ilk P ro d u c tio n C o sts in H erds o f
P ro d u c e r - D i s t r i b u t e r s in M aine, Maine A gri . Exp. s T a . B ui. No. 38 5 ,
1936
98E z e k ie l , I # J e Be , ItoN all, P e Ee , and f 'o r r ie o n , I# Ge , P r a c t i c e s
R e s o o n s ii.le f o r V a r ia tio n s in P h y s ic a l R equirem ents and
Economic C osT^of M llk- Tji-cd u ctI on on W isconsin D a iry Tarmse
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