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(leveloped at first in such intensive dairy districts as New York State, northern Illinois, Minnesota, and Wisconsin.

Then came the hand cream separator, which made it possible for the farmer to separate his cream on the farm. This meant that the farmer could carry his cream to market in a can or two, and that he was able to make the trip to the creamery at less frequent intervals. It also meant that the skim milk was retained on the farm for feeding to livestock. Under this system it developed that a creamery could use cream collected over a much wider territory than in the wholemilk creamery.

The hand separator brought about a most important development in butter making: Whereas creameries had been located only in sections that specialized in milk production, it now became possible for creameries to develop in those s ctions of the country where general farming and grain farming prevailed. This was fortunate both for farmers and for city consumers. In the first place, it opened up a new market for farmers who kept only a few cows as a side line. On the other hand, cities had been growing so rapidly that they were making important inroads in butter sections for their freshmilk supply. The che se industry was making inroads into some of the most important dairy sections of the country. And, finally, the demand for condensed and evaporated milk mant the location of condenseries in these same milk-producing regions. If the hand separator had not made practically all farms in the United States a source of butterfat for butter production, butter would certainly have become much more of a luxury than it is to-day.

As a result of these changes, there have developed two distinct types of creameries in the United States. The first is the small local creamery which draws its raw material from a restricted area and to which the farmers haul their cream in their own wagons or trucks. The genuine whole-milk creamery is almost a thing of the past, but the small local creamery plays an important part in butter production, drawing its supply of cream from adjacent territory. It is in this field that cooperative ownership has made such strides.

The other type of creamery is the “ centralizer." This is a much larger unit and draws its supplies principally by express shipment over railroads, often from points some distance away.

This type of creamery furnishes an invaluable outlet to those great sections of the country which do not raise enough milk to support small local creameries. So we see that there is a field for both th: small Creamery and the centralizer. In fact, it might be considered that each one is absolutely necessary in its particular field. Needless to say, the packer, in so far as he manufactures butter, falls into the centralizor class.

MARKETING METHODS. Along with these changes in the methods of butter production there has developed a diversity of marketing methods. Beginning with farm-made butter, a large part of it is consumed on the farm; the surplus is taken to the country store and traded for merchandise. and the country store sells this butter to village consumers. Ther. was formerly a surplus that found its way to distant markets, but farm production has given way to factory production to such an extent that dairy butter is used now only on the farms and in small towns. An increasing number of farmers have given up butter making altogether.

This brings us to the small local creamery, which disposes of its product in a variety of ways. A little of it is sold direct to retail stores, especially since chain stores have come into existence. Some is also sold to jobbers in distant cities, who in turn sell to retail dealers. And a large part is also sold through wholesalers or commission dealers, who in turn sell in large quantities to jobbers, who finally pass it on in small quantities to retailers. The method varies in different cities. In New York, for example, it is very common for this butter to be handled first by wholesale receivers and then by jobbers. In some cases, wholesale receivers in New York sell to jobbers in smaller cities in New England, New York, and New Jersey. In many other cities the local creameries sell to jobbers, who in turn sell direct to retailers.

In the main, it may be said that the typical trade channel for small local creameries is through the wholesale receiver and the jobber. The wholesale receiver sends solicitors out among the creameries and gets them to ship their output to them, guaranteeing a certain definite price, usually based on the New York quotation. The wholesale receiver thus assembles butter of various qualities and in fluctuating quantities, and steadies the flow into the hands of jobbers and retailers. Both the wholesale receiver and the jobber perform necessary functions, but these functions are not so very complicated and their margin of expense is relatively smal!.

Now we come to the centralizer. Because of his greater volume of business, he is able in many cases to attend to his own selling. In other words, instead of relying on wholesalers and jobbers, he establishes his own distributing houses in the principal consuming markets and sells direct to retail dealers. This is not always the case. by any means. Many of them sell to wholesalers and oftentimes to meat packers, as will be pointed out below. It is not unusual for them, or for other dealers of butter in the Central West, to make sales in eastern markets through brokers. On the whole, the distribution of centralizer butter may be said to be more direct than the distribution of butter made in small local creameries.

THE PART PLAYED BY THE MEAT PACKER.

The fundamental reason why the packer became interested in the listribution of dairy products lies in the fact that he had developed a far-reaching sales organization for the distribution of perishable products, namely, meats. The large meat packer has from the first sold practically his whole meat output direct to retailers, and to accomplish this direct distribution he has had to develop a system of branch distributing houses, located throughout the country Small points that can not be reached from branch houses are supplied by direct refrigerator-car shipments from plants, filling orders taken by salesmen who make regular trips over specified territories.

The great need in the development of this widespread distributing system has always been volume of business, and hence there has naturally been a desire to handle such products as are adaptable to sale through the distributing organization that had been developed. It was around 1900 that the large packers began in a small way to handle butter, eggs, cheese, and poultry.

The packers had refrigerator cars and refrigerator equipment in their branch houses, so that dairy products were easily added to the products they already handled. Also, they are sold largely to the same class of retailers that handles meats, and consequently the same salesmen could sell them. It was also found that retail dealers were asking the packers to supply them with these perishable products. Deliveries could be made in the same wagons, and bills could be made out by the same accounting force. In other words, the organization for handling these perishable products was already in existence and it was only logical that the packers should begin to handle them. By so doing, the packers made a better economic utilization of their facilities; the added volume tended to decrease unit selling costs both on the meats and on the butter, cheese, and other products handled. A new and more direct market was opened to producers; a new source of supply was made available to consumers.

So far, the packer has been considered only as a distributor, or merchandiser of dairy products. Packers buy large quantities of butter from other manufacturers, but they have also become manufacturers themselves. This is true, for example, of the company which the author of this paper represents. Having found that we could handle butter efficiently, it naturally followed that we wanted to look for a surer and more constant source of supply. We therefore erected what we call produce plants, in such States as Illinois, Iowa, Nebraska, Missouri, and Kansas, as well as other States in the Central West. At most of these produce plants we have butter factories; these same plants collect, candle, and pack eggs; and they also assemble, feed, and pack poultry. There is much of significance to the dairy producer, both in the manner in which these creameries are located and in the fact that they are combined with poultry and egg plants.

As for the location of these creameries, they are scattered about in farming regions where dairying is not a highly specialized occupation, but where it is carried on as a secondary farm enterprise. This is true in general of the States enumerated above. Corn and hog production, as well as cattle feeding, constitute the main farming operations. Although increasing rapidly, dairying and poultry raising are of secondary importance. The density of the dairy cow population is not great enough to justify the establishment of small local creameries or milk condenseries, except in certain unusual sections. There are not enough large cities within easy shipping distance to cause much of a demand for market milk. It is obvious, therefore, that medium-sized creameries, scattered throughout this area, perform an invaluable function in the assembling of butterfat. in the manufacture of butter, and in distribution to distant localities.

These creameries have had an important influence in improving the quality of butter manufactured. They have done all they could to improve the quality of cream shipped by individual farmers, and they have encouraged the thorough cleansing of the cream

separator and dairy utensils on the farm. As a result there has been a noticeable improvement in the quality of cream delivered to the creameries. After the cream is received, everything is done to make the best possible quality of butter. The cream is Pasteurized and it is handled throughout in the most approved equipment. Yeast and mold tests are frequently made.

Above all, the matter of thorough sanitation receives principal consideration. Every precaution is taken concerning the construction, equipment, and utensils, as well as in the actual handling of the product. The net result of all these precautions has been, and is , a progressive improvement in the quality of the raw material and in the quality of the finished butter and in its keeping qualities.

Now let us consider the importance of combining these creameries with the handling of eggs and poultry. In the first place, practically all the buttermilk from the creamery part of the plant is used for feeding poultry, thereby converting it into a valuable meat product of fine quality. When the butter volume is light, the volume of poultry handled is heavy, so that overhead expenses are kept at a minimum. Naturally, the same management can look after these various enterprises;

the same refrigeration equipment can be used for all products. Even the farmer finds it convenient to market cream and eggs together; he often brings both of these products on a single trip to the produce plant.

Another important feature of these produce houses is the manner in which the goods are marketed. Butter, for example, does not have to be shipped to a wholesale receiver, who in turn may reship it to a jobber in some neighboring city before it finally reaches the retailer. At the packer's produce plant, solid refrigerator carloads of butter, eggs, and poultry are made up and shipped direct to branch distributing houses, from which sale is made direct to retailers by the packer's selling organization. There are no unnecessary handlings, and direct shipment means that these perishable goods are placed in the hands of retailers in the shortest possible time. The whole system is managed from a country-wide and even a world-wide point of view, from headquarters in Chicago, where the needs of the various markets are studied, refrigerator cars are routed, and buying and selling operations are supervised.

Another feature of the distribution of dairy products by meat packers is the extent to which they have branded and advertised the butter they sell. Other butter manufacturers, of course, have also done this in an important way; but the large packers, with their national distributing organizations, are in a particularly good position to do this. The company which the writer represents sells the same brand throughout the country, and in very large volume. All this makes for standardization of quality, lower marketing costs, and a more extensive market for dairy producers.

Though cheese is not made or handled through these so-called produce houses, because they are not located in the cheese-making districts, it may be mentioned in passing that the large packers have become important factors in the distribution of this product for much the same reason that they began to handle butter, eggs, and poultry. The company represented by the author, for example, makes heavy purchases of cheese in the principal cheese districts of Wisconsin and New York. The product is shipped direct in our refrigerator cars to our branch houses in consuming sections throughout the country, where our refrigerator rooms and our sales and delivery organizations are well adapted to the handling of this product.

Enough has been said to show that there have been very good economic reasons for the handling of dairy products by the meat packers. It is not surprising to learn that they have become one of the most important factors of the country in this trade and that their produce plants and selling organizations have become an integral and vital part of the dairy marketing machinery of the United States.

Chairman MINER. I am very glad indeed to present that paper for discussion because I think it is a pretty fair exposition of one of the phases of development in this very rapidly growing industry. and it has occurred to me that there are some questions undoubtedly that have arisen in your minds, as they have in my mind, and one is the question whether in those isolated sections to which you refer there is a cooperation on the part of larger producers, such as yours. with the local monetary powers in an endea ver to further develop the raw material in that section. But that is merely my question when the time comes. I leave it to you gentlemen for discussion.

Mr. WILLOUGHBY (of Florida). I would like to ask the speaker if it is the custom of his company to cooperate with local creameries in securing their product and distributing it under the brand name of the company, and if that has been found successful, just how much the company proposes to develop this sort of distribution. Personally, I think it is a very admirable thing.

Dr. WELD. I think there is very little bought from the small local (reameries. Most of them market through different channels, through wholesalers and jobbers. We have made some attempt in the past to get some of the local creameries of Wisconsin and Minnesota, for example, to ship to us, and some of them do. But we have never made any very great efforts. We are concerned more with volume business and we buy more from big producers from whom We can buy car lots at a time. We are great on car-lot business.

Mr. WiLLOUGHBY. Would it not be advisable, however, in those sections where dairving is undeveloped, for example, the southeastern States near my home, for the packers where they find creameries that meet their requirements to purchase from them in quantities sufficient to distribute in that locality? Armour does that.

Dr. Weld. I think we do that to a certain extent, and we would certainly be glad to handle any output of local creameries in that

WaV'.

Mr. W'ILLOUGHBY. How much are you willing to develop that sort of thing!

Dr. WELD). I think we have tried to develop that in the South. Just how far we have gone in that I am not sure. I will take that mp with our people, though, and see what they are doing and see if they are doing all that they ought to do.

Mr. WILLOUGHBY. It would be very helpful to the southeastern airy industry if the creameries that are now being established in Georgia and Alabama and already established in Tennessee and

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