Fe SOVATRY HEN ey th ce x. La Gea Kishin 3 ? or ay | UNITED sTATE CLARENC BULLETIN No. 639 Joint Contribution from the Bureau of Animal Industry, JOHN R. MOHLER, Chief and the Bureau of Markets, CHARLES J. BRAND, Chief _ THE MARKET MILK BUSINESS OF _ DETROIT, MICH., IN 1915 - By and GUSTAV P. WARBER, Bureau of Markets CONTENTS Page Economic Phases of the Market Milk Business . . . . . . ieee tied Market Demands and Sources of PET SoA 8 as ak at carer ece ere Dae - Buying Milk from Farmera . . 5 ss 1 te ww ww ew il ae Prices Paid to Farmers . . . 0 0 0 ss te Sp eiie tattace 4 Collecting and Handling Milk in the Comb g 5 io) geo ete! Sheree 8 Cost of Collecting Milk at Country Stations . . . .. . . «10 Transportation of Milk to the City .........4..2ese4.e.4. 11 Cost of Milk Delivered to the City . . . . . Sites ep neltemie newatd tie, wee Trade Demands in Detroit . ......2...4.. ay ted ek aoe Preparing Milk for City Distribution . . .....-... axionletaers ole Before Compulsory Pasteurization . . . ..... 2. eu ae 16 After Compulsory Pasteurization . ........2..00.4. 17 WASHINGTON GOVERNMENT PRINTING OFFICE 1918 Monograph d d~\ LO oxen Se et sae wh as ae Jo RE eB BE re ES EE. CLEMENT, Dairy Division, Bureau of Animal Industry Singita S DEPARTMENT OF AGRICULTURE ~ - | Washington, D. C. eae -- February 15, 1918 ‘= 4 a P . ) ys 3 wes ADF 4 257 : y f \ D. of. D. MAR 15 1918 UNITED STATES DEPARTMENT OF AGRICULTURE BULLETIN No. 639 Joint Contribution from the Bureau of Animal Industry, JOHN R. MOHLER, Chief, and the Bureau of Markets, CHARLES J. BRAND, Chief Washington, D. C.. A February 15, 1918 THE MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. By CLARENCE E. CLEMENT, Dairy Division, Bureau of Animal Industry, and GusTAV P. WARBER, Bureau of Markets. CONTENTS. Page. Page. Economicphasesofthe market milk business. 1 | Preparing milk for city distribution. ........ 16 Market demands and sources of supply ....-. 2 Beforecompulsory pasteurization........ 16 Buying milk from farmers.............--..-- 4 Aftercompulsory pasteurization. ....... 17 Prices paid to farmers............--..--- 4 Capital invested and cost of handling Collecting and handling milk in the country. 8 milk.at.city/plantst csoesusce A. - eccs 18 Cost of collecting milk atcountrystations. 10 | City distribution of milk.............:.....- 19 Transportation of milk to thecity..........- 11 | Summary of comparative costs of finding Cost of milk delivered to the city............ 13+)y,-sand distributing milk. 2.256 4 .6goss Cee 23 Trade demands in Detroit................--- 14) 1 MO DHOHISIONS sets ere on. 2k ae caccte cose ee 27 ECONOMIC PHASES OF THE MARKET MILK BUSINESS. Preliminary studies by the Department of Agriculture have shown the existence of many uneconomical practices in the market milk business. These practices have been largely the result of the rapid changes that the business has undergone in recent years. Con- stantly increasing demands for market milk in the larger cities of this country have resulted in such a rapid increase in the business of “middlemen ” or dealers that many fundamentally uneconomic mar- keting practices have developed and wasteful leaks have been allowed to occur daily. In short, efficiency systems have not kept pace with the growth and development of the business. Nots.—This bulletin should be of interest to milk dealers, city and State milk-inspection officials, consumers’ leagues, producers’ organizations, and students of the subject of market milk. 19462°—18—Bull. 6839———_1 2 BULLETIN 639, U. S. DEPARTMENT OF AGRICULTURE, In the present study is presented a general analysis of the market milk business as conducted in Detroit, Mich., during the year 1915, with a view of indicating some of the fundamental explanations of existing market conditions and milk marketing practices in the larger American cities. The cost of milk, wages, and many items of expense have increased greatly since the data were obtained, and for that reason no attempt has been made to show absolute cost and profit figures. Some cost analyses are presented, however, in a way that will point out fundamental tendencies not dependent upon transitory changes in prices and which help to explain some of the prevailing market practices. The city of Detroit, Mich., was selected for the study primarily because in many respects milk marketing methods in that city are representative of those in other large cities of the United States. Since the pasteurization of market milk had been made compulsory by ordinance in Detroit three months before the investigations were begun, the selection of that city also permitted a study of the effects of compulsory pasteurization upon the number of dealers engaged in the business and upon the methods of handling and distributing milk MARKET DEMANDS AND SOURCES OF SUPPLY. The average quantity of market milk consumed daily in Detroit during August, 1915, was approximately 47,569 gallons, and of market cream 5,953 gallons. Based upon an estimated population of 600,000 this would provide approximately 0.63 of a pint of milk and 0.08 of a pint of cream per capita daily. The consumption is not uniform throughout the year, however. The shipments of milk during May and June were the highest of the year, but the receipts were in excess of the city consumption during those months. According to the records of one of the largest dealers, the market demand for milk in per cent of the yearly consumption is shown below by seasons: Per cent of total. Spring’ si _ 4nd. yy gees were aa Beer ales Salon mene 26. 7 StmMmenw ot. fee GR ee ee ee 30. 2 Wail 2 eee es ee ee ee 20.9 Written. = 2 ee eee ee ee Se oe 22. 2 100 Tt will be noted that the consumption during the summer months was one-half higher than during the fall months. 1 Most of the data upon which this study is based were collected during September and October, 1915. Figures of total quantities of milk handled and general information con- cerning the nature of the business of all the dealers were obtained from the records of transportation companies and the files of the milk-inspection department of the Detroit board of health. The cost analyses were based upon the records of certain typical dealers. MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. 3 Figure 1 shows the area from which the supply of milk and cream was obtained, each dot representing one 10-gallon can of milk or cream. The small squares show the location of country milk stations where milk was collected, weighed, and cooled before it was trans- ported to the city pasteurizing and bottling plants. The figure aa fw WAR é a fuerte > | | [ [* SEEeaeea CALHOU 4 Q Aes : LA ltt ~) s CKSO ‘ eJac n- GA \ wee —_ RAILROADS |----ELECTRIC LINES * ONE 1O GAL CAN o COUNTRY MILK STA. Fic. 1.—Sources of milk and cream supply of Detroit, and the steam and electric rail- ways over which most of it is transported to the city. shows that the greater part of Detroit’s supply of milk was pro- duced within 30 miles of the center of the city. Some shipments of cream originated in zones 100 miles distant or more. Because of the stringent regulations of the board of health in regard to city dairies. the quantity of milk produced within the city was negligible. 4 BULLETIN 639, U. 8. DEPARTMENT OF AGRICULTURE. BUYING MILK FROM FARMERS. Figure 1 also shows the necessity for middlemen to handle and _ distribute the greater part of the city’s supply. Farmers living more than 6 or 8 miles from town generally considered it impracticable to deliver their milk to the consumers. The quantity of milk pro- duced on the average farm in that territory is not sufficient for economical market distribution by the farmer. To realize the great- est labor income he usually deems it advisable to devote his entire attention to farming operations. In Table I the milk dealers operating in Detroit during the month of August, 1915, are grouped according to the quantity of milk handled as well as the quantities supplied to other dealers who did. not buy from farmers direct. TABLE I.—WMilk dealers who bought from farmers during August, 1915, according to volume of business. Number of} Per cent of gallons supply ; Numberiof Nee, Per cent of| sold to sold to Gallons handled daily. lants handlea | total city dealers dealers Pp F dail supply. not buy- | not buy- y- ing from ing from farmers. farmers. Less than 150 gallons. ..............-.+.--- 6 336 0.63)... 25. Selec eee 150 to 250)allons apse ee een 3. Me aoe 35 5, 594 10. 46 569 10.17 Zo) TO S00 PaANOnS Peer ..e see oe eee ee oe 11 3, 960 7.41 915 23.11 50L to.) 000i gallonsaic. =. . ss ees eee cee 5 3, 365 6. 29 1,195 35. 51 More than 1,000 gallons............-.-..--- 11 40, 205 75.21 2,165 5.38 Totals: 2.5 5e. on eee 68 53, 460 100. 00 4, 844 9.06 Sixty-eight dealers in Detroit bought milk from farmers direct and had plants for preparing it for market distribution, either through their own or other dealers’ equipment. The grouping of the dealers in accordance with average quantities of milk handled daily shows that the greater portion of the business was handled by com- paratively few dealers. PRICES PAID TO FARMERS. Most of the larger dealers paid for milk on a butterfat basis, while the majority of smaller ones bought their milk by weight or measure without allowing premiums or making deductions based on butterfat content, sediment test, bacterial content, or the score of the dairy farm on which it was produced. The larger companies usually based their monthly price quotations to farmers upon a butterfat test of 3.5 per cent. For each one-tenth of 1 per cent butterfat the milk tested below 3.5 per cent the price was reduced 2 cents a hun- MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. 5 dredweight. For milk testing more than 3.7 per cent a premium of 2 cents for each one-tenth of-1 per cent butterfat was paid. When compared upon a common basis the prices actually paid by the vari- ous dealers were found to vary considerably. Figure 2 shows the average prices (f. 0. b. Detroit) paid by milk dealers handling different quantities of milk during 1915, as well as the rather wide seasonal variations in prices paid to farmers. A fundamental reason for these variations is that at certain seasons the quantity of milk supplied by farmers is either above or below the city demands, because farmers generally can not regulate their daily.and seasonal production in accordance with the varying de- mands of city consumers. As farmers generally did not utilize the 19IS JAN. Fes. Mar. Apr. May JuNE Juty Auc. Sepr. _Ocr. Nov. Oec. Siang “ if fe oe NX a AVERAGE OF ALL DEALERS woeee AV. OF DEALERS OPERATING 1-5 WAGONS —— » 6-29 sae come i ” td) 90-/50 * Fic. 2.—Average prices paid farmers by all milk dealers, grouped according to number of delivery wagons operated by each. milk produced in excess of the demands for market milk, the dealers bought all the milk. That necessitated the manufacture of cheese, butter, or condensed milk, which seldom yield as much as market milk. Some of the dealers who had no facilities for the economical disposal of skim milk actually dumped it into the sewers. The prices paid by the larger dealers fluctuated more than those paid by the smaller ones. The latter also usually paid the highest prices for their milk, which is explained in part by the fact that the former obtained their supplies from localities farther from the city, where competition for market milk was not so keen, and where in- creased costs of transportation tended to reduce the prices paid to the farmer as is shown in Table II. 6 BULLETIN 639, U. S. DEPARTMENT OF AGRICULTURE. TasLeE I1.—Transportation costs in relation to farmers’ prices. regane | Farm | cost ¢ ‘rueking B c uck ng A ost to ruc * ost to Shipping station | cost Peelion | dealer Shipping station | cost Opal. dealer number. 10-ga jen eas .0. be number. 10-ga jot ee to | f-0- db. Be ae Detroit, | Detroit. a Detroit, | Detroit. | BS A 3 See ere a $0.15 $1.53 $1.68 hae tesa se atee eee $0. 20 $1.53 $1.73 Beass weet Oee Bee 1 1 DGS IN OSS CS Ae. RBS one 1.42 1.64 Be eee Ste ae ae 15 1.53 1.68 OG crite oo BPR} 1.42 1.65 Beers DeLee lea 175 1.53 L705" lO Se eee ~24 1.36 1.60 Draaasseisies Caen cae 175 1.42 1st een | fb A es ee ee 28 1.28 1.56 Goss Ac ee case 175 £53 iia (OST i eee eS De ee -30: 1.23 1.53 This table shows that although there was a tendency to pay less for milk or cream as the distance and cost of transportation increased, “1915 Fic. 8.—Comparisons of average prices paid by Detroit milk dealers with value of the milk if the cream had been delivered to local creameries and the skim milk fed to live stock on the farm. the prices actually paid to farmers depended upon other factors as well. In territory where farmers could sell to local creameries or cheese factories the prices for milk were influenced by the prevailing market prices of butter and cheese. Table III and figure 3 show the relation between average prices paid by the Detroit milk dealers in 1915 and the average monthly wholesale butter quotations in Chicago. The table and figure also present the estimated possible returns which farmers might have obtained if they had marketed their cream at local cooperative cream- erles, whose product is generally sold in accordance with Chicago quotations. The estimated returns are based upon the assumption MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915, 7 that skim milk has a value of 30 cents a hundredweight for feeding purposes. Ninety pounds of skim milk were allowed for each 100 of whole milk. - apie I1].—Average prices, by months, paid for 100 pounds of 3.7 per cent milk by all classes of milk dealers in Detroit; also estimated average returns for butterfat delivered to a local creamery. Average prices paid per hundredweight | Possible returns of milk. from creameries.? Average For but- Months. prices per! For but- |terfat plus pound for terfat per} 27 cents Small | Medium | Large All | butter. | iradreal for 90 dealers. | dealers. | dealers. | dealers. weight of| pounds of milk, skim milk, C ° $1.91 $1. 884 $1. 836 $1. 876 31.7 $1.321 $1. 591 1.91 1. 884 1. 823 1. 872 80. 437 1. 264 1. 534 1.91 1. 864 A rire 1. 848 27. 204 1.119 1.389 1.68 1.678 1. 442 1.60 30. 375 1. 262 1. 532 1.68 1.63 1.180 1.73 27. 46 1.130 1. 400 1.68 1. 588 1. 235 1.501 27.175 1.118 1. 388 1.795 1.618 1.343 1. 585 25.5 1.042 1,312 gu, 1.68 1.720 1.523 1. 641 24. 293 - 987 1. 257 Pe EIN ak ase Spasiwiacineie amie sje 1.68 1. 760 1.616 1. 685 25. 016 1.020 1 See ELD Bp aah atl fe 1.91 1. 851 1. 733 1. 831 27. 156 1.117 1.387 Iie Se ee oa ee 1.91 1. 864 1. 780 1. 851 30. 025 1. 246 1.516 WOME ae os = Secs os Sass sat 1.91 1.942 1. 860 1.904 33. 208 1.390 1.660 Wopad average:... 5.25... 2: 1. 805 1.774 1. 595 1,744 28. 295 1. 168 1.438 1 Butter prices are the monthly averages of Chicago quotations on the basis of which most of the creameries of that section sell their butter. 2 These returns are computed on basis of 3.7 per cent butterfat in milk and on the basis of 22 per cent overrun in butter manufacture, and a cost of 2.42 cents a pound for manufacture. The table and figure also show that there was no constant relation between the monthly average wholesale prices of butter in the Chi- cago market and monthly average prices paid for milk by Detroit dealers. Farmers in that territory generally received higher prices for milk than they would have obtained if they had delivered the cream to local creameries for the manufacture of butter and had fed the skim milk on the farm. Farmers have found that it requires great care and expense to produce and deliver daily a good grade of market milk, whereas three deliveries a week are usually sufficient for buttermaking purposes. At certain seasons of the year, however, some of the dealers bought milk for less than it would have yielded the farmers if it had been utilized in the manufacture of butter and the feeding of live stock, which may be explained by the fact that the companies which own and control country milk stations may obtain virtual buying monop- olies in certain localities. The prices paid to farmers for milk usually depend upon existing competition. Small dealers who do not own or control country milk stations are generally unable to buy milk in distant areas. In the abset.ce of market information and ac- tive competition of manufacturing plants it may also be possible to buy market milk for less than it would yield for manufacturing purposes. 19462°-—18—Bull. 6892 8 BULLETIN 639, U. S. DEPARTMENT OF AGRICULTURE. COLLECTING AND HANDLING MILK IN THE COUNTRY. The milk dealers in Detroit obtained their supplies of milk and cream: either from individual farmers direct or through country recelving and cooling stations. The smaller dealers usually gathered their supplies near by, mainly because they could not afford the investments in country receiving stations, through which the larger dealers collect the most of their supplies from the more distant areas of production. (See fig. 1 and Table IV.) Most of the supply which came from neighboring territory was gathered from farms by means of wagons or motor trucks owned by the city dealers. Con- siderable quantities of both milk and cream were also shipped directly to the city by farmers who lived near railway stations or crossroads milk-shipping platforms. There was keen competition for all sup- ples of milk or cream directly accessible to the city. In order to obtain milk from many farmers who lived too far from railroad stations or shipping platforms to make direct shipping prac- ticable, it was necessary to establish facilities for collecting milk enough at one place to permit more economical transportation to the city plant. Farmers generally do not consider it advisable to make daily trips for delivering milk when the shipping station is more than 5 miles away. An additional advantage of the country receiving and cooling stations was that milk could be cooled to the proper tem- perature before it was shipped to the city; furthermore, the inspec- tion and buying of milk according to quality was expedited. When a farmer watches the sampling of his milk and the making of sediment and butterfat tests he understands better the justice of paying differ- ent prices for different grades of milk. It often happens that dairy products can be manufactured more economically in the country than in the city, and for that reason the larger milk companies fre- quently operate country milk plants, where the surplus not required for market milk trade may be converted into other products. Table IV shows the quantities of market milk obtained through country stations during June, 1915. TABLE IV.—Milk obtained through country stations dwring June, 1915. Numbe Number of gallons ofatations| received monthly. peters Number from hi ore Number of wagons operated by dealers. aftieslers.| “which shipped milk was} From From econ received.| stations. farms. = WG0) Geers cick cob sc axe onjamrae aries aoe een oee Dg) Se alee tetayet= Leterare atateiatetere ata 201,600) Ic... nites @ TOLZ0Et SR St Se ae BB. EEE il 22 356, 224 239, 005 59. 8 SUICO 150). noc S in antacc ose nm cige << see a eee eee | 2 51 1, 002, 606 153, 257 86.7 Metal «Fe Sec o¢ oe ic ar, a Se 68 73 1, 358, 830 683, 862 66.5 MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. 9 The total number of gallons handled by different groups of dealers, _as shown in Tables I and II, does not correspond to the total shown in Table IV, because large quantities of milk were bought from farmers by those dealers and not used for market milk purposes but manufactured into butter, cheese, condensed milk, powdered milk, and casein. : The larger companies obtained the greater part of their supply through the country milk stations or “collecting depots,” which they usually owned. A few of the country stations were owned either by farmers’ cooperative associations or by indiviaual farmers whose dairy houses were equipped to handle truck loads of milk pro- duced on neighboring farms. (See PI. I, fig. 1.) The typical milk-receiving station consisted of a wooden-framed building equipped with a small boiler, apparatus for washing and sterilizing milk utensils, scales for weighing milk, and a tank for holding the cans of milk in ice water until time to ship to the city. During the winter natural ice was usually stored in an adjoining building for use in the summer. Stations which skimmed or utilized surplus milk at certain seasons had additional and more expensive equipment, such as receiving tanks, mixing vats, cheese vats, sepa- rators, churns, pasteurizers, coolers, and equipment for condensing milk. (See Pl. I, fig. 2.) Table V shows the relation of the amounts invested in 16 country milk stations to the number of gallons handled daily. TABLE V.—Relation of investment in country stations to gallons of milk handled daily during June, 1915. | Gallons of milk han- a died daily. Investment Pyle Station number. Soe a ngs allon 2 ieee handled Cooled. Skimmed. | ©4UP * | daily. Hi) hoe eee $380. 00 $4.94 iL ae eee en 818.00 6.60 ly? ee ee eee 8 FE 440. 00 2.59 QUO Vosges cedars 876.00 3.88 317 |. Leia. 1,325.00 4.18 CORRE SEES Yes 1,675.00 4.39 i ee oe 8 609. 00 1.36 AGS! |. Jo ick cee 1, 325.00 2.85 779) LIse aL 3, 450. 00 4.43 G42! cto cpmaaes 4,553. 00 5.41 Vj009 | 2ai21 2, 253. 00 2.23 760 720 1, 800. 00 1.22 738 830 1,952. 00 . 24 Et al eee 4, 752.00 2.49 1,404 1, 155 2, 053. 00 .80 SE GBDI:|. eee 5, 745. 00 2.16 760)\|2 ee eee 2, 125.00 3.17 _ The investment in the stations does not bear a direct relation to the quantity of milk shipped. Some of the stations were creameries or cheese factories which had been converted into receiving stations, 10 BULLETIN 639, U. S. DEPARTMENT OF AGRICULTURE. and neither the buildings nor the equipment had been specially pro- vided for the milk-station business. In some cases the investment was larger than necessary when neither milk skimming nor dairy manufacturing was done. Table VI shows the daily expense of maintaining and operating the stations included in Table V. TaBLE VI.—Average daily expense of collecting and handling milk at country stations during June, 1915. Gallons handled daily. | Deprecia- tion and | Tabor and | Routecosts| Total Average ey 2 | Supplies | ofcollect- | station pee Cooled. | Skimmed. | and equip-| ‘Plant. | ing milk. | expenses. | pondied. Station number. ment. $0390) ¥ soc ateooe $1.07 $0. 013 3 bs 1.06 - 008 c 1.10 - 006 i 1.62 - 007 : 2.19 . 006 - 2.34 . 006 ; 1.24 . 002 : 3.06 - 006 ; 9. 56 - 012 i 8.09 - 009 Pe 3.70 - 003 2.87 13. 87 17.54 -O11 3. 53 10.08 14. 48 009 3.97 4.05 10.13 005 EC UI Bee Serre 4.81 001 BHGS (24 Cre eee 8.18 003 Average... 2.48 7.14 5. 64 007 The average cost per gallon of milk for operating the stations varied greatly. When surplus quantities of milk and cream were manufactured into butter, cheese, etc., at country stations, the operat- ing expenses were increased. Some stations, however, show higher operating expenses than others, because the cost of collecting the milk in the country was included in the statement of expenses. COST OF COLLECTING MILK AT COUNTRY STATIONS. The prices paid for milk were usually based upon its delivery f. o. b. the city plant. The cost of transportation, therefore, must be deducted in order to obtain the farmers’ actual net returns. In order to get sufficiently large supplies at some stations the milk dealers had established “ milk-collecting routes” for collecting milk and cream from farmers living as far away as 10 miles. At 19 country milk stations there were 848 patrons, of whom 503 had their milk delivered by paid route men. The farmers’ share of the costs of country collecting averaged 123 cents a hundredweight and varied from 8 to 18 cents a 10-gallon can. In addition to the amount paid by the farmer, the milk dealers were sometimes obliged to pay the route men a bonus of from $2 to $3 a MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. Tit trip, depending upon the length of the route. The varying costs on different routes at a single country station for country collecting are shown in Table VII. TasLe VII.—Cost of collecting milk, by routes, June, 1915. Average Number A . total cost Pounds of | Paid by Paid by Number of route. ee. milk. farmers. | company. | ».Po 0 ag. weight. Rees icicle Se einen naam nial = clsinin © oieisl~ minim == 01 6 a 3 Te 4 Bee tees at $0. 100 ee See ets saicinicioadiacwtesdue< one 14 4 ; 327 See acc ese RSE as ene seen Sas ee 11 32, 402 32.40 32.40 199 Lo J Ee ee ee ae ee 13 35, 815 46.18 75. 00 338 PE OSG 5 ocicaccenintmeccccble otcmans s 14 30, 242 45.96 87.50 441 Ot ee wa ee tee 20 67,911 117.72 117. 72 346 ee eens hs wcfeicimiaiciermini-aic son ce oases 23 , 732 91.09 91.09 299 Do. 20 ee ee 16 48, 544 76. 76 76. 76 316 ee oe os 2s Sais sadn a nicins deleewaem wae ll 43, 153 43.16 60. 00 239 Tle do eee Se ee ee eee eee eee 4 11, 629 14.09 14.09 242 TRANSPORTATION OF MILK TO THE CITY. A large portion of the milk produced within a radius of 20 miles of Detroit was “trucked” to the city plants either by team or by au- tomobile, but the greater part of the total monthly receipts of milk and cream was shipped on either steam or electric railroads. Table VIII gives the total quantities of milk and cream (both sweet and sour) which were received in Detroit during the month of July, 1915. TABLE VIII.—Quantities of milk received in Detroit during July, 1915. A Per cent Means of transportation. Gallons. of total. ° [TEEPE WET 6 (oS Aa td Ae a an RE ANE a oS a a Re a ee 630, 990 41.8 CTRL hc 8» SS SS 1 es 2 0 AR * ee ee a 637, 860 42.3 PLETED TRE Thy 7 Bh Et dP eA Tay Se ae A et SS i a DA ee 239, 780 15.9 LADD. size GS Bee P Het HBr Been see SE eee pallens! i \ SSRI tad len ae eee 1, 508, 630 100.0 The electric lines provided milk cars with side-extension decks which permitted two tiers of cans, while the shipments on steam roads were handled in ordinary baggage cars. The farmers delivered their milk to the shipping stations early in the morning, and most of it arrived in Detroit by noon of the same day. Very little milk was in transit more than 4 hours. In warm weather it was “ precooled ” either on the farm or at the country milk stations before it was shipped, as refrigeration was not provided (except in one instance) by the roads. Table IX gives a comparison of the milk and cream tariffs (effec- tive August 1, 1915) for shipments of 10-gallon cans of milk or cream into Detroit on the various transportation lines. 12 BULLETIN 639, U. S. DEPARTMENT OF AGRICULTURE. TABLE [X.—Comparison of transportation rates on electric and steam railways in the Detroit market milk territory during the year 1915. Distance, in miles, for which rates apply. Hates per nee | 10-gallon etroi Pere Michi ; gan Grand Grit meget < Marquette Central Trunk Ge cil). Railroad. Railroad. Railroad. $0.15 1-30 1-25 1-25 1-17 20 Ne ae ae seer 1-25 1-25 18-55 ey) I ame ee eS 26-30 26-30) || Soe cle 22 31-35 31-35 S1-3b>_ |hicchaaeeees 23 36-40 36-40 OOO! sles Soe oe 24 41-45 41-45 ARAB 8 et ree asec 25 46-50 46-50 46-50 56-75 26 51-60 51-60 '51=60). oil eb emcs tae 27 61-70 61-70 61100 a ee ereeee eee 28 71-80 71-80 WL BO ual A eae eee 29 81-90 81-90 81-90 Viilcetcaoe eee 30 91-100 91-100 91-100 76-100 In order to transport bottled milk from a milk-bottling plant about 30 miles from Detroit, an insulated milk car on the electric line was equipped with brine pipes by means of which the car could be refrigerated. Refrigeration was obtained by connecting the brine coils under the ceiling of the car with the brine tanks in the country milk plant, and while the car was being loaded the cold brine was pumped through the coils, thus cooling or refrigerating the car. Milk containers made of fiber were used in place of glass bottles. (See Pl. I, fig. 1.) The concrete roads which extend into the country surrounding Detroit make it possible to haul a considerable portion of the milk direct from the farms or country milk stations to the city milk plants. Both horse-drawn and motor trucks are used for the pur- pose, although, because of their greater speed, the latter are super- seding the former, especially on long hauls. From a number of country milk stations milk was trucked to the city plants by the same men who had charge of the receiving and cooling operations. The actual amounts paid by milk dealers to per- sons who hauled milk from country stations to the city, by either motor or horse truck, were ascertained at several stations. Table X presents a comparison of the trucking costs with the transportation rates for equal distances by rail. TABLE X.—Costs of trucking milk compared with rail transportation rates. Average Comparative transportation number | Distance costs per can. Number of station. ofcans | hauled we hauled | (miles). | pryeKs Steam | Electric daily roads. roads. | ee ae eee ee ee gee he Ee SS eeeoen 30.7 12} $0.15 $0. 20 $0.15 yea Se eee ee oe eee Ce Ae AF 31.6 <2, v5 . 20 15 peek bo Med. Lhe ees eee 46.5 12 . 15 20 15 Be Sor ee a aor = Sachi te ees 40.5 15 Bi (7G) 20 15 YTS REPL ZR RL EEE 255. 4S ee Se eee 112.5 15 -175 20 15 aC oo TER eo oo lok eee 49.4 20 -175 20 15 Oe eee oR sc Gas aiwljaie is Gee's 5, ho = 2,2 6 ROE ea 41.1 25 175 20 ie ete aioe eee Pa ao 5 clare eigre aiblolalarusace ie fee ania ieee eee 43.7 25 -175 20 15 Bul. 639, U. S. Dept. of Agriculture. PLATE I. Fia. 1.—ONE OF THE NEWER COUNTRY STATIONS WHERE MILK WAS RECEIVED AND COOLED BEFORE BEING TRUCKED TO THE CITY OR TO THE RAILWAY SHIPPING POINT. Fia. 2.—A CONDENSARY FROM WHICH SHIPMENTS OF MARKET MILK WERE MADE IN SUCH QUANTITIES AS WERE REQUIRED FROM DAY TO Day. Bul. 639, U. S. Dept. of Agriculture. PLATE II. Fic. 1.—INTERIOR VIEW OF A SPECIAL REFRIGERATOR CAR USED FOR TRANSPORTING MILK IN FIBER CONTAINERS FROM A COUNTRY MILK PLANT TO DETROIT. Fic. 2.—A City PASTEURIZING AND BOTTLING PLANT HANDLING APPROXIMATELY 145 GALLONS DAILY AND SUPPLYING TWO DELIVERY WAGONS. The total investment in plant and equipment was $4,274, which was an average of $29.48 per gallon handled daily. Bul. 639, U. S. Dept. of Agriculture. PLATE III. Fic. 1.—ONE OF THE LARGEST CiTy MILK PLANTS, WITH A CAPACITY FOR HANDLING APPROXIMATELY 15,000 GALLONS DAILY. The average per gallon investment for the group of largest plants in Detroit was approximately $30. = 2) wea ee OB A DOO ORO Fia. 2.—ATTRACTIVE BUT EXPENSIVE EQUIPMENT. The disproportionate per gallon investments in equipment between small and large dealers are caused mainly by the well-kept and attractive horses, barns, wagons, and wagon sheds. Such costly investments, however, together with other advertising expenses, are necessitated by competition. MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915, 13 In most cases the cost of trucking was less than the cost of trans- portation by steam railroad and the same as by electric road. It should be explained that electric lines did not serve those stations where costs of trucking were higher than the rates for equal dis- tances on the electric railways. When the milk was shipped by either steam or electric roads, an additional cost of about 14 cents for each 10-gallon can was usually incurred in trucking the milk from the city terminal milk platform to the city milk plant. COST OF MILK DELIVERED TO THE CITY. Figure 2 and Table III show the average prices paid by small, medium, and large dealers for milk f. 0. b. Detroit. As shown in Table IV, the smaller dealers did not receive their supplies through country milk stations. To show the total cost of milk f. 0. b. Detroit when received through country stations, and the relation of the costs of collecting and handling at these stations, the records of certain typical stations were obtained from a few dealers and are presented in Table XI. TABLE XI.—Relation of daily handling and transportation expenses at country plants to prices paid farmers and total cost of milk f. 0. b. Detroit during June, 1915. Costs of collecting and Expenses of Matalicdstiof milietiot b Paid farmers. handling at country | transporting to station. Detroit. Detroit. Station number. In per In per Net cent of Gost Cost cent of | Total Amount]! price |Amount jamount per |Amount| per [Amount amount| cost erday.| per j|perday.| paid paid per Pp gallon. fain gallon. | per day.| gallon. | per day. farm- | gallon. ers. ers. $1.07 1.5 | $0.013 $1.13 | $0.014 $9.20 | 131.3 | $0.119 1.06 8.8 - 008 1.83 014 14.89 12 1.10 6.4 - 006 4.73 027 22.83 | 134:2 132 1.62 7.3 - 007 3.37 014 26.99 | 122.6 119 2.19 7.3 - 006 2.57 008 34.76 | 115.8 109 2. 34 5.3 - 006 5.70 014 52.04 | 118.2 136 1.24 2.8 - 002 6.7 014 51.94 | 118.0 116 3.06 5.6 - 006 6.97 014 64.03 | 118.5 137 9. 56 9.6 -012 11.67 014 | 120.23] 121.4 154 8.09 9.5 - 009 23. 57 027 | 116.66] 137.2 138 3.70 3.4°| = .003 27. 23 026 | 138.93 | 128.6 137 17. 54 21.1 - 011 17.47 O11 | 118.01} 142.1 137 14. 48 14.7 - 009 16. 23 010 | 128.71} 131.3 167 10.13 3.7 - 005 51.47 026 | 328.60} 123.0 172 4.81 3.4 - 001 33. 67 013 | 179.48 |} 127.2 128 8.18 2.8 - 003 71. 83 026 | 364.01} 128.1 136 Average...| 87.00 -113 5. 63 7.0 006 17. 88 017) 110.70) 126.3 134 The “net prices” paid farmers at different stations during the month of June, 1915, varied from-9.2 cents to 14.8 cents a gallon. These prices are not the same as those quoted in the schedule of prices for milk delivered f. 0. b. Detroit, but are what the farmers actually received at the particular stations after transportation costs had been 14 BULLETIN 639, U. S. DEPARTMENT OF AGRICULTURE. deducted. The average costs of collecting, handling, and transport- ing to city amount to approximately 25 per cent of the net price paid to the farmers. The last column of the table shows that the cost of milk delivered in Detroit varied considerably, depending upon where it was bought and the varying costs of collecting, handling at sta- tions, and transportation to the city. The dealers paid varying prices in different communities, in accordance with the local competi- tive conditions and the city demands for market milk. There’ was no fundamental cost basis for the prices which then prevailed in the Detroit territory. (See also Table IT and fig. 2.) TRADE DEMANDS IN DETROIT. The business of milk dealers usually consisted of a combination of wholesale and retail trade. ‘The wholesale trade required milk and cream in both cans and bottles; hotels, restaurants, ice-cream manu- facturers, and bakeries generally purchased bulk goods, while hospi- tals, sanitariums, saloons, and soda fountains required both bulk and bottled goods. Retail stores also bought bottled goods at wholesale prices. Prices paid by that class of trade varied greatly, depending largely upon the grade and quantity purchased, as well as upon changing market conditions. Wholesale prices for common milk generally fluctuated around 22 cents a gallon in bulk and 7 cents a quart in bottles. The retail trade of milk dealers consisted of sales to families and (for luncheon) to office and factory workers. The retail price for common milk in Detroit during June, July, and August, 1915 (the time covered by this study) was about 8 cents a quart. Table XII shows the variation of demand on retail milk routes. TaBLE XII.—Variable demands of retail customers for milk, cream, and other milk products, by different retail routes. . Certified and Butter-| Average | Common milk-| ~" special. Cream. milk. | daily sales. ® o be aly (la Jala [ale » fs la ls fe ele Be jo Number of |S /2 |2/8 Ele lle |3l2 GB le le le ele & leg customers 0 PF TR | = 8 - ale Se ae 3 | Se onroute. | SS Z/ Esa) So 2| Foe) aoals wloe|o y/o 2) Son 2 mH | RO S 1439/51, 510},,9/61,,9/0).3] |, S/Sal.9/S1.9) g g we = BIBEISIBE SIES/ SIRE lS BRlsalBglsalegisles) 21 2] 2 le B/$8/8/88)8 1/85/83 /8S/5 sss sss ss sss; 6 | 2 | = Is Els (Els (Sls [Sls |Sls (8 ls 8 ls (Els | s | 5 | 2 12 Zi |i 141 14 |i 1 We Ia im Ia ie AY Ay & < ti) 1 Tones oe 122/34. 7|236/67.2) 3] 0.8} 4) 1.1) 3] 0.8] 34] 9.6] 24] 6.8! 4] 1. 11$24. 44/$0. 069/$247. 00)$0. 703 DUE eos eee 92/42. 9|130/60. 7} 5} 2.3)..-|....]..-|...- 7| 3.2) 12] 5.6) 2) .9) 14.50) .067| 183.00) .855 SAd occ mescee 156/45. 4215/62. 6} 4] 1.1) 5] 1.4) 4] 1.1] 43/12.5] 25] 7.2] 8] 2.3] 27.70) .080) 409.00) 1.192 74 bee pee 09/39. 9/188/68. 8] 3] 1.0} 4] 1.4) 5] 1.8] 30/10.9} 35]12.8) 10] 3.6) 22.22) .081) 261.00) .956 3192 2 130/40. 7/207|64. 8) 8] 2.5) 2] .6)...]..-.. 28] 8.7) 28] 8.7] 10) 3.1] 24.02) .075) 339.00) 1.062 BOD eae s aeeee 129136. 2123916764 | peel eeeelemelecte | oan cece 51/14.3] 57|16.0} 6) 1.6) 26.54) .074) 351.00) .985 BRles eee aoeee 134/39:81252|7520l. i) oe ees eens. -6-c8. 12) 3.5 1 13} 3.8) 22. 61 067) 234. 7.1 a arene ee 83/53: 11251|72.9] 1] .2) 4) 1.1)-.-].... 8| 2.3] 4] 1.1] 10) 2.9) 26.54) .077) 321.00) .933 HQasisecsw2 157/45. 9/250173. 0] 10} 2.9) 2) .5| 2]) .5) 33] 9.6] 25] 7.3] 6] 1.7] 28.62) .083] 440.00) 1.286 1 DA ee rae, OA 0/56. 0} 70/56.0) 2) 1.6] 2) 1.6) 3] 2.4) 20/16. 12| 9.6) 7| 5.6} 11.83} .093} 176.00} 1.408 Average, 300. |128/42. 6/204/68. 0/3. 7] 1.2/2.3 7\1.7| .5/26.6] 8. 8/22.3] 7.4/7.6] 2.5] 22.90] .076) 296.00) .986 MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. 15 The table shows also that the milk dealers of Detroit handled a variety of goods in various-sized containers, some of which were demanded by relatively few customers. This custom has developed - because it was found advisable to supply the exact quantities in the kind and size of containers demanded. To increase the demand for SLUNE 1915 6 G + i CLUMPED GRHHVGLVHLELEKY VOLREKVD i. agiziscanm S 40 iio. ada X 36 i am ae eee N 36 | BF X 22 Ne S$ 2 N 2. § 2. . 2.2 20 (= QALY RECEIPTS I) PER CENT OF SUPPLY RECEWLD DURING THE 7-IONT/7 QULE SALES IW PER CENT OF SAULLS OF (0LN OURING THE 1IONT74 Fig. 4.—Daily fluctuation in receipts and sales of milk in per cent of total supply and sales for the month. some special goods certain dealers often advertise them extensively, because it also tends to increase the sales of common milk and cream. The fluctuating daily demands in relation to the monthly sales of market milk are illustrated by figure 4. The daily sales of market RouTe NOMBERD— VIA (20599 (A0 se’ 7 als ta W112 18 4 Q a ~! \j200 #1000 bt 3 G 754 9 & : 6 100 ape & 9 Q 25 y S 5 a -G ——Sieee | Ox = Ni —-—FINTS OF MILK _—— QUARTS OF MILK --Y2 PINTS OF CREAM —-----G/LLS OF CREAM Fic. 5.—Chart showing one day’s sales on 14 retail routes serving approximately an equal number of customers. VALUE OF ROUTE mae LQUARTS OF BUTTERMILK milk are shown in per cent of the total sales for the month. In order to furnish the exact quantities of goods that might be required by the trade at any time and hold the business, it was necessary for milk dealers to have on hand a sufficient quantity of goods to supply all probable demands. To avoid excessive losses from surplus 16 BULLETIN 639, U. S. DEPARTMENT OF AGRICULTURE. CV YMOOOM SAP Go \ > —— ISLE Park Lea Fie. 6—Location of city milk plants in Detroit before compulsory pasteurization. quantities which were not needed by the trade, dealers utilized the surplus by manufacturing it into some less perishable product, such as butter, cheese, or condensed milk. The various demands of consumers for goods put up in different- sized containers are graphically illustrated in figure 5. Although there were approximately an equal number of customers on each of the 14 routes, and though the value of sales was approximately the same, the demands for goods in different-sized containers varied greatly. To supply the demands for market milk and its deriva- tives it was necessary for dealers to equip their plants properly for distributing in the city the milk received from various producers in the country. PREPARING MILK FOR CITY DISTRIBUTION. BEFORE COMPULSORY PASTEURIZATION. Prior to the enforcement of the milk-pasteurization ordinance there were 158 milk dealers in Detroit, and the “ plants” were situ- ated in different parts of the city, as shown in figure 6. Twenty-four dealers used the “ flash ” method of pasteurization and 19 the “ hold- ing” process. There were 91 dealers who bottled raw milk, each MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. PF @ @ Ue) "SAY @ Je YMCOGM>. 9 Ww SELLE ISLE PARK Fic. 7.—System of city distribution of market milk in Detroit after compulsory pasteurization. handling from 40 to 1,500 gallons daily. Only a few of the smaller plants were equipped with steam boilers, the greater portion using gas heaters to furnish hot water for washing the milk bottles and utensils. Forty-four dealers purchased pasteurized milk in bulk from 23 other dealers, which they bottled and sold to both retail and wholesale trade. The records of the Detroit Board of Health showed higher bacterial counts in milk pasteurized by the flash method than that pasteurized by the holding method. The pasteurized milk which was purchased from other dealers often showed higher bacterial counts than the samples of the raw milk before pasteurization. The bacterial counts were usually higher in the pasteurized milk purchased from other dealers for bottling than in that which was pasteurized and bottled in the same plant. AFTER COMPULSORY PASTEURIZATION. The pasteurization ordinance which became effective May 1, 1915, required that all milk be pasteurized by the holding process in plants equipped in accordance with regulations adopted by the milk- inspection department of the city board of health. 18 BULLETIN 639, U. S. DEPARTMENT OF AGRICULTURE. August 1, 1915, three months after the pasteurization ordinance became effective, there were 68 plants in which milk was prepared for market distribution. Approximately 75 per cent of the total milk supply was pasteurized by 11 dealers whose average daily output per plant was more than 3,600 gallons. About 10 per cent of the city’s milk supply was distributed by small dealers who purchased their supplies from other dealers who operated pasteurizing plants. (See fig. 7.) CAPITAL INVESTED AND COST OF HANDLING MILK AT CITY PLANTS. To show the investments required for milk plants and equipment, and the varying costs of handling milk in preparing it for distribu- tion in the city, the records of 28 representative dealers were obtained. Table XIII shows the varying investments in relation to the operat- ing costs in the plants, according to increasing costs of handling. TABLE XIII.—Relation of cost of handling to capital investments, supplies, and labor in twenty-eight city milk plants. Investments. Supplies.? Labor. Handling beget cost per andle: Per gallon gallon. daily. 8 Per Per Total. ena Per day. gallon. Per day. gallon. Cents. Cents. Cents. 2.3 1, 600 $13, 300 $8. 31 14. 96 0.9 $13. 68 0.9 2.4 350 , 320 12.34 11. 84 12 1.99 -6 2.6 9, 706 267, 575 27.57 70.01 Aes 167. 82 £7, 2.6 2, 16, 824 8.41 16.57 8 27. 21 1.4 PATE 850 7,154 9. 54 5. 48 Ai | 10. 68 1.4 2.8 1, 450 41, 643 28. 72 9.76 si 14.25 1.0 3.1 1, 450 18, 720 12. 90 18. 42 1.3 17.03 1.2 3.3 2 1,917 8.71 2.45 iit 3.81 17 3.3 340 3, 502 10.30 3.24 1.0 5. 98 1.8 3.4 470 2,527 5.38 4.87 1.0 9. 86 2.1 3.6 400 5, 312 13. 28 4.20 1.0 7.40 1.9 Ont, 165 3, 029 18. 36 1.95 { 1.2 2.71 1.6 3.8 2,119 97, 457 45.99 11.79 -6 47.31 2.2 3.9 7, 595 17. 87 5.61 1.3 712 ey 4.4 335 4, 542 13. 56 5. 43 1.6 5. 98 1.8 4.4 100 1, 186 11.87 1.64 1.6 2.00 2.0 4.5 310 3, 847 12. 41 5.18 1.7 5. 84 1.9 5.2 230 4,927 21. 42 2.35 1.0 1.13 3.1 §.2 1,300 7,315 5.63 36.10 2.8 9.97 8 5.3 1 1,829 18. 29 1.18 1.2 2.99 3.0 5.4 240 7,141 29.75 3.70 1.5 6.04 2.5 5.4 530 20, 251 38. 21 6. 76 1.3 10. 54 1.0 6.1 135 1, 829 13.55 1.57 1.2 5. 60 4.1 6.8 2,705 31.82 1.24 1.5 3.00 3.5 6.8 1, 260 110, 592 87.77 33. 78 207 21.80 an 7.0 145 274 29. 48 3.58 2.5 4.70 3.2 7.1 90 2, 762 30.69 2.18 2.4 2. 56 2.8 7.2 40 1, 725 43.13 51 1.3 1.50 3.8 Ave. 4.4 940.9 23, 778 21.97 10. 23 1.4 15. 23 2.01 1 These unit costs include charges for Bepreciaiion and interest on capital invested, supplies, and labor expenses (all the items which could be definitely charged against handling in plant). 2 Supplies include charges for fuel, ice, power and light, bottles, caps, washing powder, brushes, etc. A study of the table reveals rather wide variations in the costs of handling milk in the different plants, many of which are caused by the varying proportions of bottled and bulk milk handled. The > LO ee ee ne ner ae re OT AL A ee EY cart of MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. 19 average costs per gallon handled at the different plants, therefore, are not exactly comparable, for it does not cost so much to pasteurize and put into cans the milk sold to other dealers or to wholesale trade - as it does to pasteurize and bottle milk for the retail trade. It is important to note the disproportionate investments in milk plants and equipment. The investments per gallon handled daily range all the way from $5.38 to $87.77, and illustrate the lack of standardization of milk plants and equipment. It is obvious that a relatively low investment greatly reduces the interest and deprecia- tion charges against each gallon handled. In those plants where the operating costs per unit were the lowest, the investments per gallon were generally comparatively small and the expenditures for sup- plies and labor in proportion to capital invested were greater. (See Pl. II, fig. 2, and Pl. ITT, fig. 1.) Some of the disproportionate investments may be accounted for by the fact that some plants were old and handled a large proportion of bulk milk, whereas others were newly built for the purpose of in- creasing the business. CITY DISTRIBUTION OF MILK. The number of milk dealers engaged in the business of distributing milk in Detroit, August 1, 1915, and the size of the business of those dealers grouped according to number of delivery wagons operated, are shown in Table XIV. TABLE XIV.—Quantity of milk and cream distributed daily by dealers (grouped according to number of wagons operated). Average Gallons sold daily. Total Number number Number of wagons. of al of wag- E fk ar dealers. | ,, ons per e obcotdh. agons. | Goaler. Milk. Cream. PE eects 0 dan acteme dca outer ese 127 201 1.5 15,179 271 28.8 ‘DO iets EER A ele i SOe s 7 80 11.4 8, 340 367 16.3 MEMEAU Site worse ese Nio ee Sea's oc eae cet oes 4 70 17.5 6, 050 215 a HY os La a RE a Sa 2 235 117.5 18, 000 5, 100 43.2 On August 1, 1915, there were 140 milk distributors, or 18 fewer than on May 1, when the pasteurizing ordinance became effective. - Of these dealers 127 operated from 1 to 5 wagons each. Two of the larger companies, operating more than 30 delivery wagons each, together distributed nearly 44 per cent of the total milk supply of the city. Figure 7 is a graphic presentation of the system of distribution which prevailed in August, 1915. The locations of the milk-pasteur- izing and bottling plants are indicated by squares. The areas of the squares represent the relative quantities of milk pasteurized in the 20 BULLETIN 639, U. S. DEPARTMENT OF AGRICULTURE. plants. The small circles indicate the location of the different dealers in the city. The number of radii within the circle represents the number of delivery routes operated by each dealer. When a dealer purchased his supply from a pasteurizing and bottling plant, a broken line shows his connection with the plant from which the supply was obtained. A comparison of the map with figure 6, which presents conditions on May 1, 1915, shows that the number of city milk plants was reduced on August 1, but that the number of milk dealers had not decreased greatly. . In addition to the dealers referred to in figure 7 there were two dealers who operated plants in the country where milk was pasteur- ized, bottled, and shipped to Detroit. By selling to hotels, restau- rants, and factories it was possible for one of the suburban plants to sell practically its entire supply at wholesale. The other plant bot- tled a considerable portion of its supply in the country, and either shipped the remainder in bulk to the city or manufactured it into cheese. This plant used fiber containers instead of glass bottles for goods sold in retail quantities. Instead of delivering direct to con- sumers, which would have required an investment in retail delivery equipment and the maintenance of a city sales organization, arrange- ments were made with grocery stores to retail the milk. There were some objections to the use of fiber containers, but storekeepers gen- erally accepted them, because no losses were incurred by the failure of customers to return the empty bottles. The use of these containers was very successful for that class of trade. Table XV shows the proportion of retail and wholesale trade of dealers handling different quantities of milk. TABLE XV.—Relation of retail to wholesale business. Average| Quarts sold daily. Per cent sold. number Number of wagons. of wag- ee Si ons per F hole- - ole- dealer. Retail. sale. Retail. sale. OF 05 RS cae i a ae RE e-em sa aetna aa LD 34, 752 25, 964 57.2 42.8 Giton Snes ee Bk ek Cane te, ya tel 11.4 20, 700 12, 660 62.0 38.0 LG TOTO Sw ate oa eee ome ace cee ate Soe ee tesa eee 17.5 12, 900 11, 300 53.3 46.7 SITO:150 roe de he es es eer Can ae 117.5 45, 600 26, 400 63.3 36.7 Different dealers had various proportions of wholesale and retail. business, and there was no definite relation between the quantity of milk handled and the proportion of wholesale to retail sales. The relation of the size of a dealer’s business to the daily variation in quantities of market milk sold at wholesale and retail is shown in figure 8. While the records of both the larger and smaller dealers showed considerable variation in their total daily sales, the sales of MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. 21 the larger companies fluctuated less than those of the smaller ones, possibly because their ownership of country stations enabled them to provide an ample supply and better facilities for utilizing any sur- plus. The smaller concerns, because of the comparatively small quantities handled, usually found the manufacture of by-products to be less profitable than the selling of a temporary surplus to whole- sale trade even at greatly reduced prices. The small dealers usually made both wholesale and retail deliveries from the same wagon, while the larger dealers generally operated their wholesale routes separately. Because of the irregular and ex- acting service required by the wholesale trade, a large part of the sales to that class of trade is often made by special delivery trucks. Figure 8 gives a graphic presentation of the comparative amounts of wholesale business of large dealers handled by special delivery. Table XVI shows the investment required for delivery equipment in relation to the cost of delivering milk from city plants to the various classes of trade. TABLE XVI.—Relation of costs per quart delivered to investments in delivery equipment, average number of quarts delivered per wagon, and per cent of sales at retail for 28 dealers. Investments in deliy- ery equipment. Average Number uarts Cost per of deliv- | delivered Eon cant quart.! Per ery per at retail Total allon | wagons. warn Z , delivere ily. daily. Cents. 0.5 $1, 005.00 $3.24 1 1,240 0.0 -8 956. 4.35 3 293 | 77.3 9 1,527 9.25 1 660 50.0 1.1 14, 899.10 8.92 14 477 54.5 1.2 527. 4.06 2 260 73.1 1.2 7, 280.00 6.31 12 384 62.5 1.2 2, 480. 00 6.12 4 405 47.1 LZ 8,779.00 6.05 14 414 93.3 - 1.2 870.00 8.70 1 400 77.2 1.3 2,907.00 12.11 3 320 60.0 1.3 1, 180.00 8.74 1 540 77.3 1.3 40, 050. 85 18.90 14 605 58.9 1.4 170, 090. 04 17.52 99 392 81.3 1.4 15, 055. 50 9.45 16 400 53.3 1.4 692. 00 8.14 1 340 62.5 1.4 2,096.00 6.45 3 433 76.9 1.4 8,779.00 6.86 14 366 34.5 1.5 3,030.00 10. 10 4 300 65.0 1.5 1, 160.00 4.64 5 200 50.0 1.5 1; 595. 50 6. 94 3 307 73.8 1.5 575.00 14.38 1 160 85.0 7 1.6 1,570.00 17.44 2 180 61.5 1.6 2,740.00 8.06 4 340 74.5 1.6 7,375.00 17.35 4 425 65.0 tar 785. 50 7.85 2 200 64.3 1.7 2, 623. 33 7.83 3 447 71.4 1.8 2, 831.50 5.34 6 353 80.0 2.5 29, 225. 35 23.19 20 252 56.9 21.38 211,881.75 29.58 29 2396 263.9 1 These unit costs do not include items of administration, office expenses, advertising, licenses, insurance, taxes, and other miscellaneous expenses. 2 Average. 22 BULLETIN 639, U. S. DEPARTMENT OF AGRICULTURE. Table XVI shows that the cost of delivering a quart of milk in the city is dependent upon many things besides the average number of quarts delivered daily by each delivery wagon. The most economical delivery was effected by a dealer who sold bottled milk exclusively, but delivered in relatively large quantities to retail stores only. The dealer whose delivery cost per quart was the highest had comparatively small average sales per wagon in relation to the proportion of sales made to wholesale trade. The figures suggest possible economies in milk distribution if all sales were made through the medium of established retail stores. The table, however, does not indicate the cost of delivering to the consumer by the retail stores, The item “investments in delivery equipment” includes horses, barns, wagon sheds, automobile trucks, delivery wagons, and sundry articles used in delivering milk. The reasons for the wide variations WEEKLY BUSINESS OF A DEALER OPERATING OVER ONE HUNDRED WAGONS. SUVOAY vrovosy Zz 5 a Le 7UESOAY WEDNESOAY eee THURSOAY ERE RA SS FRIDAY SATURDAY WEEALY BUSINESS OFA OLALERP OPERATING LESS THAN FIFTEEN WAGONS. SUNDAY roy a —————} a a Cte d AMOUNT SOLO a — rem. a novocestace{——] ee srccia: 221°, Fic. 8.—Relation of size of business to fluctuations in daily sales at wholesale and retail. in delivery investments per gallon delivered are the varying propor- tions sold at wholesale, and the fact that some of the larger dealers had unusually high-priced horses and very costly stables. Such un- usually large investments in delivery equipment are maintained for advertising as well as for direct utility. (PI. III, fig. 2.) Figure 9 illustrates the cost of city delivery in relation to amount of sales on 14 city delivery routes. Routes Nos. 1, 7, and 9 were en- gaged in a strictly wholesale delivery of bottled milk to retail stores, restaurants, and hotels. The business on the other routes consisted mainly of retail delivery at the family door, with only a few de- liveries to grocery stores. : The heavy line in the figure shows the variation in the value of daily sales on the routes. Pasteurizing and bottling expenses at the city plant are included in the item “cost of goods.” The item “cost MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. 23 heal of goods and selling expenses” does not include overhead charges for taxes, administrative expenses, or losses occasioned by breakage or spoilage of goods on routes. The chart is designed to show the ‘profit from business on different sales routes. Some routes show a good margin of profit, while others are run at an actual loss. The dealer he would expand his business under existing competition often finds it advisable to build up new routes at the expense of other routes which are profitable. Such expenses are the inevitable results - of any competitive system of distribution. Figure 9, like Table XVI, suggests that considerable savings in delivery costs can be effected through a more centralized distributing organization. ROUTE i MMMMBERG— || 26 G8 4 5 B27 1B) SS Oe Me 12> 139 4 30 isa) lop) ~ (ee) oO oO oa oO Cost oF Gooos ANo Gross RECEIPTS FROM SALES - oO ies] oO N oO rs) —-_-—NUMBER OF BOTTLES RECEIPTS OR VALUE OF Gooos CasT oF Gooos AND SELLING EXPENSES See CosT of Gooos Fig. 9.—Average number of bottles delivered and value of sales in relation to cost of goods and expenses of delivery on 14 selected routes. SUMMARY OF COMPARATIVE COSTS OF HANDLING AND DIS- TRIBUTING MILK. In the foregoing tables and figures only such expenses were in- cluded as might be definitely allocated or fairly apportioned to either the expenses of handling milk in plants or of delivering in the city. Miscellaneous expenses, insurance, taxes, and charges for advertising, administrative, and office expenses were not included in any tables or graphs. In order to bring out some of the comparative advantages and disadvantages of small and large businesses, these items of ex- pense are included in Table XVII, which shows the average per gallon investments and expenses of 28 dealers grouped according to the number of gallons handled daily. 24 BULLETIN 6389, U. S. DEPARTMENT OF AGRICULTURE. TABLE XV II.—Comparative investments and costs per gallon of handling and distributing milk by 28 dealers grouped according to quantities handled. —_ ee Sw SSSSSeSeSSSssSsSsSSSsSSSSsssssmsmsssssseses Dealers grouped A according to K number of gal- For handling. For delivery. For administration. = S lons handled +) ® daily. laa q : , ge |g | ae le rot |e Dl Ss a ge g a | ee [f ea |f 84|2 4) Sea =| 2 HO 1" HO |O HS] > op ° Saale ° c) mo. co) mo. CUlsg | 2 bord Be ard ad Brg 4 Al g Ss %® | pe ioe 2 lod 2o| oa Z a S 2 3g | S| BS [8a] ~. Bg 83] > Bal|Sei-]/.1/5 1/81/31 4 a @| 8a esl 2] .| 84 PSs] .|88les/3)/e¢1b |El als ef jel gee als] ee 2 elslzele°-|2/2) 312/48] ¢ 8 Siesie |B) Ss) Bs is [elses 2 |e) Sle )e le te = = 2 iS a ghee NY 1/50 ANDO LESS MS oy N 2 N 451-500 g BL ag N Od wee tendency, however, was for the handling in- vestment to increase <5 with the size of the plant to the point of a plant handling as high as 2,001 to 3,000 gal- lons. The group han- dling 1,501 to 2,000 gal- lons has a dispropor- tionately low invest- ment because in that group the dealers had equipped some _ old wooden buildings for temporary use until QDALLRS GROLPLD ACCORDING FO WO/TBER OF GALLONS AANOLED DAILY LESS THAN 150 CALS. 1001-1500 750/-2000 200/-3000 CIVORE THAN 3IO0O DOLLARS Mi ee EE ee ee thoroughly modern WM 2022 WES TPIENT plants could be con- CW) QLWERY MWWESTIIENT structed and satisfac- 16. 11.—Average investments per gallon for handling ‘i c and distributing milk. torily equipped. Plants handling less than 150 gallons present another exception to the gen- eral tendency which in part can be explained by the fact that they were not operated at full capacity. The figures would also indicate that unless a dealer can handle at least 150 gallons his plant invest- ment charge will be high. It will be noted that in general the larger dealers had greater investments in delivery equipment than the smaller ones. That is in part explained by the fact that many of 26 BULLETIN 639, U. S. DEPARTMENT OF AGRICULTURE. the larger dealers maintained expensive barns and wagons, while some of the smaller ones had much less costly delivery outfits. The differences in costs of supplies and in the charges for interest and depreciation are in the main the result of differences in the per gallon investments. Figure 12 shows radical differences in the cost of supplies in milk plants. As many of the dealers had operated their newly equipped plants for only a short time, and since some plants were not arranged efficiently or were not operated at full capacity, the most economical use of supplies was not possible. Aside from advantages of busi- DEALERS GROUPED ACCORDING 70 —-—~‘NeSS experience, however, and WUMBER OF GALLONS HANOLEO DAILY 8 - differences in the extent to which Nese 9 8 8 8 N machinery was run at full ca- c fo s 2 4 2 89 acity, the larger dealers were % X) \ L ny 3 ae Pp Ys Fa f 2 ¢ S&S § 8 98 §° able to effect considerable econ- Se, eR Te Ua ae omies by the purchase of sup- plies in large quantities. Figure 13 shows that the larger dealers have lower labor costs per gallon in plant operations than the smaller plants, owing to the Eee economies effected through spe- CO wreeesr avo c&erecaron alization of labor. The apparent BEE svcowes exception in the case of the two larger groups is to be explained by the fact that a larger propor- tion of their output consisted of bottled goods than in the case of the smaller plants. In delivering milk, however, there appears to be no definite relation between the size of the business and the per gallon labor costs. ER EA GEae The figures of the comparative Fic. 12.—Variations in charges for in- costs in Table XVII represent the terest and depreciation and cost of sup- expenses of handling at the city DESS ASO RT Pe plant and of delivering to the va- rious classes of trade. They do not include, however, such expenses as are imposed on the business by surplus milk, soured or spoiled milk, shrinkage in handling, shortages on delivery routes, and bad bills. These items of loss or expense of the business were not obtain- able from many dealers, because of a lack of efficient business organ- ization or inadequacy of accounting systems to check such losses. On account of the omission of those items of expense, Table XVII possibly does not bring out all the comparative economies of large MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. oF and small businesses. (See fig. 10.) The losses from spoilage and temporary surplus or shortage of a supply of milk were compara- tively less for the larger dealers. In the case of all dealers, regard- _less of the size of their business, the losses from bad bills were small. Through the use of the ticket system a large part of the retail busi- ness was done on advance payments. It’ is noteworthy that only the larger dealers had expenses listed under the item of advertising. Practically all the dealers had ex- penses which may have been properly listed under that item, but were listed under either administrative or miscellaneous expenses. - Besides the readily recognized expenses of advertising, practically all the dealers made contributions oi gifts of various kinds to gain or retain the good will of consumers. The comparatively expensive de- livery equipment of the larger dealers also has a certain advertis- ing value, although such expenses are not listed under that item. In this connection it is impor- tant to note the lack of uniformity in provision made for the adminis- OQEALEAS GROUPED ACCORL/NG FO NUMBER OF GALLONS HANDLED er 1001-1500 450/-2000' MORE THAM F000 BLESS THAN (50 trative end of the business, but in general the administrative ex- — iT = Hf penses, which included office ex- a ee ee | penses, tended to increase in pro- = Pi FA Fi F ki portion to the size of the business. sy - 3 - a - q : q - 5 H R The smallest dealers had _prac- + + 7 H : z tically no administrative invest- POEL ments. See Table XVII.) Though the larger dealers gener- ally had better administrative organizations, the personal supervision which the smaller ones were able to give to the business was an impor- tant factor in lowering their expenses. Fig. 138.—Variations in cost of labor per gallon. CONCLUSIONS. 1. The démands for market milk in Detroit necessitated arrange- ments for obtaining a supply from farmers living too far from the city to effect an economical distribution of their comparatively small production. (Fig. 1 and pp. 2-4.) 2. The prices paid to farmers by the various dealers competing with one another in the market milk business of the cit'y varied con- siderably. Milk dealers as well as the farmers were dissatisfied with conditions then existing. (Figs. 2 and 3 and pp. 4-7.) 98 MARKET MILK BUSINESS OF DETROIT, MICH., IN 1915. 3. A lack of standardization in the construction and equipment of country milk stations contributed largely to the varying costs of handling milk in the country. (Pl. I and pp. 8-10.) 4, Because they owned the country milk stations the larger dealers were able to obtain milk more cheaply in relatively distant areas of production. (PI. I and pp. 12-14.) 5. Inconvenient train schedules, lack of satisfactory refrigeration facilities, and comparatively high transportation rates prevented some dealers from obtaining a supply of milk from certain areas of production. (Fig.1; Pl. I, fig. 1; Pl. II, fig. 1, and pp. 3, 11-14.) 6. The fluctuating daily demands for market milk and its various derivatives in the city necessitate the use of proper equipment for handling and distributing milk and for the economical utilization of temporary surpluses (Fig. 4 and pp. 14-16.) 7. The variation in costs of preparing milk for city distribution was caused primarily by a lack of standardization in plant construc- tion and equipment, and by the fact that some plants were not run efficiently or at full capacity. (Figs. 11 and 12; Pl. II, fig. 2; Pl. ITI, fig. 1, and pp. 18-19.) é 8. The low cost of delivering milk in wholesale quantities to retail stores suggests possible economies by dealers if such a system of dis- tribution were practiced by all. (Fig. 9; Pl. III, fig. 2, and pp. 19-23.) 9. The cost of handling and distributing in the city does not vary directly in proportion to the number of gallons handled, although the larger dealers.do effect certain economies not possible to the smaller ones. (Figs. 11, 12, and 13 and pp. 23-27.) 10. In the case of many dealers there was evidence of administra- tive weaknesses which affected not only the internal economies of the business but also the relations of the business with producers and - consumers. (P. 27.) O Teese lop Skeeter Wy: ver! ‘ 4. 2 cide e a) . a8 be nam oe Prd vf “3 ‘ #2, ~~ cas i “ or 4 . le A tows = ey rae 37 re ij aS 2 . $ BRS we OORT Was Bei § Tir SP MR eee = ¥ : ; er aye ~ Y - an - ri 8S. 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