Mxhr^rp xr£
l^nmlturei
Xliberal Hris
Mpccchnolojgg
STATION BULLETIN 426
JULY 1956
IJNH LIBRARY
3 maDD DDLia MSMD
Distributing and Handling
Grain-Feeds in New Hampshire
I. Characteristics of Milling
and Distributing Firms
By
George B. Rogers and Harry C. Woodworth
AGRICULTURAL EXPERIMENT STATION
UNIVERSITY OF NEW HAMPSHIRE
DURHAM, NEW HAMPSHIRE
(7 a in ^ lLa a*~2-
NO.^^' Contents VlO,4«-4-4€0
no. 460
1. Introduction 3
2. The Market for Grain-Feeds 3
a. Quantities purchased 4
b. Value of purchases 4
c. Size of feed-consuming units 4
d. Potential requirements 5
3. Assembly, Milling, and Distributing to Retail Outlets 9
a. Sources of supply 10
b. Number of firms 10
c. Mixed feed ingredients 10
d. Milling-in-transit privileges 11
e. Non-transit ingredients 12
f. Comparative advantage on ingredients 15
g. Transportation to retail distributing points 15
4. Company Policies, Pricing Practices, Terms 17
a. Method of distribution 17
b. Division of market area 17
c. Sales and service policy 18
d. Pricing and terms 19
e. Steps by companies to promote efficient handling 20
f. Relative importance of grain-feed sales 21
5. Retail Outlet Characteristics 21
a. Number and location of retail outlets 22
b. Importance of multiple-outlet firms 22
c. Size of business 22
d. Percent of delivered sales 24
e. Average size of delivery 25
f. Frequency of delivery 26
g. Efforts to improve farm receiving and handling 26
6. Conclusions 27
Distributing and Handling
Grain-Feeds in New Hampshire
1. CHARACTERISTICS OF MILLING AND
DISTRIBUTING FIRMS
by
George B. Rogers, Research Economist
and
Harry C. Woodworth, Agricultural Economist*
1. Introduction
THE ASSEMBLY and distribution of grain-feeds is a vital link in the
agriculture of New Hampshire. Heavily dependent upon the mixed-feeds
industry are the poultry and dairy industries which together account for
almost four-fifths of the State's agricultural income.
Less than two percent of the tonnage of grains and mixed feeds used
annually in the State is home-grown. As a deficit feed-producing areaf New
Hampshire must draw the bulk of its feed needs in such a way as to obtain
adequate nutritional standards for its livestock at a cost not disadvantageous
to its competitive position. Obviously, grains and mixed feeds should logical-
ly cost more per unit in this area than in surplus grain areas, other things
being equal, but the difference in cost should not exceed the selling ad-
vantages accruing to New Hampshire producers through such things as
nearness to market, higher quality, and volume.
It is the mutual concern of the grain companies and their outlets and
their farmer customers to see that the feed needs of New Hampshire live-
stock are supplied at the minimum practicable cost. It is equally important
that the efficiency of grain handling on the farm, as well as in the various
stages of distribution, keeps pace with that in other areas.
Therefore, the objectives of this study were twofold: (1) to appraise
the present system of assembling, distributing, and handling grain-feeds;
and (2) to explore means of effectuating greater efficiency in that system.
2. The Market for Grain-Feeds
BEFORE PROCEEDING to a descriptive analysis of the assembly, dis-
tribution, and handling of grain-feeds, delineation of the needs to be
met is in order. How large is the market for mixed grain-feeds in New
Hampshire? What livestock enterprises are the major users? What are
the area differences? What is the influence of size of consuming units?
* Professor Woodworth originated this study and initiated much of the field work
prior to his death on September 18, 1953.
fAskow, W. R., and V. J. Brensike, The Mixed Feeds Industry, Marketing Re-
search Report No. 38, Bureau Agricultural Economics, U.S.D.A., May, 1953, Table 5
and p. 19. Of 16 states having the smallest production of mixed feeds, four, including
New Hampshire, were deficit with respect to all seven major feed ingredients.
Quantities Purchased.
It is estimated that in 1949 there were over 281,000 tons of grain-
feeds purchased in New Hampshire. Almost 60 percent of this total was
needed in three counties: Hillsboro, Rockingham, and Merrimack (see
Figure 1), which are by far the most important poultry areas in the State,
as well as of major importance in dairying.
Poultry feed requirements accounted for 182,000 tons or about 65
percent of the total. Of the remainder of almost 100,000 tons, needs for
milk cows accounted for about two-thirds and other cattle and calves
about one-seventh. Thus, poultry and cattle together required all but about
20,000 tons of total feed purchases in 1949. or 93 percent.
Value of Purchases.
According to 1950 census data. New Hampshire farmers paid $22,619,737
for feed for livestock and poultry in 1949. Purchases by specialized poultry
farms accounted for S13, 544,544 and purchases by specialized dairy farms
for $6,596,686, or a total of $20,141,230. Figure 2 shows the total dollar
expenditures for feed for livestock and poultry by counties and economic
areas, and by specialized dairy and poultry farms by economic areas, for
1949.
The preceding census figures are for all feeds (grain, hay, etc.) pur-
chased. It is estimated that 1949 purchases of grain-feeds alone in New
Hampshire amounted to over $20 million. This represented about 48 percent
of the total gross income from sales of livestock and livestock products. For
poultry, purchases of grain-feeds usually account for 65-70 percent of per
unit production costs, while for milk production, only 20-25 percent of unit
production costs are for purchased grain-feeds.
Size of Feed-Consuming Units.
Having examined briefly the size and area distribution of the market
for grain-feeds in New Hampshire from the standpoints of quantity and
value, a short discussion of the sizes of consuming units is in order.
Table 1 shows some measures of grain-consuming livestock in New
Hampshire, both on an aggregate and per farm basis, as derived from 1950
census data. These figures again indicate the predominance of poultry
(mostly chickens) and cattle (mostly milking cows and other dairy stock)
among the grain-consuming livestock population. Average numbers per
farm reporting indicate a relatively larger average unit size for chickens,
eggs, turkeys, and cattle than for other categories, but such averages do not
truly reflect the unit size distribution. Neither are the census classifications
on chickens, eggs, and turkeys mutually exclusive.
For a more revealing look at the unit characteristics for the New
Hampshire market of grain feeds, there are presented in Table 2 the 1950
census distribution of farms by numbers of cows, chickens sold, and chicken
eggs sold. These data show that New Hampshire has relatively more smaller
herds (under 10) of cows than either New England or the United States.
With respect to chickens sold, there is little difference between New Hamp-
shire and the New England average; both considerably exceed the United
Table 1. Measures of Grain-Consuming Livestock in New Hampshire, 1950
Total
Farms
Average Number
Number
Reporting
per Farm
Reporting
Chicken eggs sold
24,780,0141
4,417
5,610.11
Chickens sold
4,913,947
3,934
1,249.1
Chickens on hand
April 1, 1950
2,079,705
6,673
310.2
Turkeys raised
97,734
306
319.4
Turkeys on hand
Jan. 1, 1950
5,831
113
51.6
Ducks raised
4,323
343
12.6
Geese raised
1,113
140
8.0
Guineas raised
85
7
12.1
Pheasants raised
3
Pigeons raised
1
Cattle, all ages
109,658
8,287
13.2
Milk cows
56,685
7,585
7.5
Horses
8,614
4,375
2.0
Mules
110
68
1.6
Hogs and pigs, all ages
12,752
2,165
5.9
Sheep and lambs, all ages
7,423
489
15.2
1 Dozens
Source: 1950 Census of Agriculture
States average in the proportion of farms raising larger flocks. Taking
chicken eggs sold as a measure of laying flock size, it is apparent that
there are relatively more New Hampshire farms with larger flocks than in
the other areas shown.
Irrespective of the preceding comparisons, however, it is clear from
the New Hampshire figures themselves that any feed distributor is likely
to make the majority of his stops or sales (number, but not necessarily
tonnage) to small units. See Table 2.
Potential Requirements.
It is possible to estimate the size of the potential market for grain-
feeds in any one year by applying per unit feed requirement estimates to
the appropriate U.S.D.A. series on numbers on hand, raised, and produced.
One such series of per unit feed requirements is shown in Table 3.
Using the preceding rates of feeding, and including a correction for
grain produced on farms, the figures for Table 4 were derived. These data
show the increasing importance of poultry production from 1949 to 1953,
and correspondingly the larger share of the feed market which poultry-
feeds constitute. This is particularly true of chickens, commercial broilers,
and turkeys. Relative declines from 1949 to 1953 were indicated for work
animals, milk cows, other cattle and calves, hogs, and laying hens and
pullets. Absolute declines were indicated for work animals and hogs.
STATE
* Total 281,380 tons
t Poultry 182,450 tons
t Milk Cows 66,580 tons
Figure 1. Estimated tons of grain-feed purchased
Hampshire by counties in 1949.
in
New
AREA
Dairy 2,733
Poultry 2,128
Total 5,787
AREA 2 & A
Dairy 3,864
Poultry 11,417
Total 16,834
Figure 2. Expenditures for feed for livestock and poultry in New Hampshire
by counties in 1949 (thousands of dollars).
Table 2. Farms Reporting Cows, Chickens Sold, and Chicken Eggs Sold,
Distributed by Unit Categories, 1950 Census
Farms Reporting Cows, Including Heifers that Have Calved,
by Numbers of Cows, Percent Distribution
Area
Number of Cows
1-4
5-9
10-49
50 - 99 100 & over
(percent of farms)
u. s.
53.3
19.7 24.9
1.3
0.8
New England
50.6
12.5 35.0
1.7
0.2
New Hampshire
57.4
14.5 27.4
0.6
0.1
Farms Reporting Chickens Sold, by Numbers Sold, Percent Distribution
Area
Number of Chickens
Under
400 - 800 - 1600 -
3200 &
400
799 1599 3199
over
(percent of farms)
u. s.
92.7
3.3 1.5 0.9
1.6
New England
61.7
11.9 10.3 7.2
8.9
New Hampshire
59.1
13.4 12.0 7.4
8.1
Farms Reporting Chicken Eggs Sold, by Numbers of Dozens Sold, Percent Distribution
Area
Number of Dozens of Eggs
Under
1600-
5000 &
1600
4999
over
(percent of farms)
u. s.
85.0
12.3
2.7
New England
63.0
15.6
21.4
New Hampshire
60.0
15.5
24.5
Source: 1950 Census of Agriculture
Table 3. Per Unit Feed Requirements for Various Classes of Livestock^
Time
Feed Requirements
Class of Livestock
Period
Unit
per Unit
(pounds)
Horses, mules, colts
Year
Head
1,500
Milk cows
Year
Head
1,930
Other cattle and calves
Year
Head
700
Ewes
Year
Head
75
Hogs
Market age
Cwt.
640
Hens and pullets
Laying year
Head
85
Chickens raised
Laying or
market age
Head
22
Commercial broilers
produced
Market age
Head
12
Turkeys raised
Market age
Head
74
Turkey breeder hens
Hatching season
Head
130
1 Except for turkey breeder hens, unit requirements taken from Productive Ca-
pacity of New Hampshire Agriculture • 1955 (mimeographed).
8
Table 4. Numbers of Grain-Consuming Livestock and Estimated
Feed Requirements, New Hampshire, 1949 and 1953
Numb(
srs of
Grain-Feed
Requirements
Grain-Consuming
Percent
Livesl
ock
Tons
Distr:
ibution
1949
1953
1949
1953
1949
1953
(1000)
(1000)
Horses, mules,
colts (head)
11.0
7.0
8,250
5,250
2.87
1.62
Milk cows
(head)
69.0
70.0
66,585
67,550
23.18
20.82
Other cattle and
calves (head)
46.0
50.0
16,100
17,500
5.60
5.39
Ewes (head)
4.0
5.0
150
187
.05
.06
Other sheep and
lambs (head)
3.0
3.0
75
75
.03
.02
Hogs (cwt.)
42.6
30.2
13,648
9,664
4.75
2.98
Hens and pullets
(head)
2,389.0
2,552.0
101,532
108,460
35.36
33.44
Chickens raised
(head)
5,114.0
6,033.0
56,254
66,363
19.58
20.45
Commercial broilers
produced (head)
3,362.0
7,261.0
20,172
43,566
7.02
13.43
Turkey breeder
hens (head)
7.0
7.0
455
455
.16
.14
Turkeys raised
(head)
109.0
145.0
4,033
5,365
1.40
1.65
Total grain-feed
requirements^
287,254
324,435
100.00
100.00
Corn and oats
for grain-
5,424
4,776
Purchased grain-feed
requirements
281,830
319,659
1 Preceding figures do not include miscellaneous poultry or pets, for which yearly
figures on numbers are not available.
- Do not include small amounts of other grains, not separately reported for New
Hampshire by U.S.D.A. Agricultural Marketing Service.
3. Assembling, Milling, and Distributing to Retail Outlets
IT WAS NOT a purpose of this study minutely to analyze the feed in-
dustry from the standpoint of mill location and operation or milling
practices and costs, but it is pertinent to the study to observe briefly such
locational and institutional factors as bear upon the pattern of feed dis-
tribution and handling within the State. This section briefly treats assem-
bling, milling, and distributing to retail outlets before proceeding to policies,
practices, terms, and retail outlet characteristics.
The gathering of all the ingredients which go into modern grain-feeds,
the blending of these into a large number of specialized forms with con-
sistent analysis, and the delivery of grain-feeds to various distribution points
in proper quantities and at the correct prices is indeed a highly complex
business. It appears that the corporations and cooperatives servicing the
retail grain trade are doing a relatively efficient and competent job in se-
lecting, assembling, and milling ration materials at the lowest cost. Most of
these companies have either nation-wide connections or contacts, and are
probably in a position to adopt as many of the advances in volume handling
of grain as the particular requirements of the local market will permit.*"
Sources of Supply.
Grain-feed needs in New Hampshire are met from mills within and
without the State. However, the latter group accounts for about 65 percent
of total sales. Where are the feed companies selling in New Hampshire lo-
cated? What factors explain these locations? Where do mixed-feed in-
gredients originate? What services are performed by feed companies?
How are retail feed stores supplied?
Number of Firms.
A compilation from the feedingstuff inspection lists for the State indi-
cated 36 firms selling complete mixed grain-feeds in New Hampshire in
1953. f While Table 5 reflects states in which the home offices of these
firms are located, there is some similarity between the patterns of home
office and mill locations. In terms of number of firms, most brands of feed
sold in New Hampshire originate from mills outside the State.
The 17 firms in New Hampshire, Massachusetts, and Vermont listed in
Table 5 sell almost entirely within
Table 5. Location and Number of Firms New England. Four are essentially
Selling Complete Mixed Feeds in cooperatives in type. Ten, including
New Hampshire, 1953 ^j^g Cooperative, operate entirely
within, or are intended to service
primarily, the State of New Hamp-
shire. The 19 firms listed in states
outside New England sell over a
wider geographical area (many on
a near-national basis). The locations
of these firms probably reflect, in
order of numbers, these factors: (1)
nearness to the concentration of the
nation's milling capacity in the Great
Lakes area; (2) nearness to surplus
grain areas; and (3) relatively cen-
tral location within area serviced.
Mixed Feed Ingredients.
The complexity of modern grain-feeds, and the magnitude of the task
of assembling ingredients, is well illustrated by a compilation of the num-
State
No. of Firms
New York
11
New Hampshire
10
Massachusetts
4
Pennsylvania
3
Vermont
3
Illinois
2
Missouri
1
Michigan
1
Maryland
1
Total
36
* For a discussion of methods in the Southwest see Hudson, W. J., and E. K.
Henschen, The Transportation and Handling of Grain by Motortruck in the Southwest,
Produce and Marketing Administration, U.S.D.A.. May, 1952.
tDavis, H. A., and V. F. Staab, Inspection of Commercial Feedingstuffs, made for
the State Department of Agriculture, Station Bulletin 403, Agricultural Experiment
Station, July, 1953.
10
ber of firms selling feed ingredients in New Hampshire.* Twenty-four
separate states and several provinces of Canada are represented in Table 6.
The number and location of these firms reflects primarily the supply sources
for New Hampshire mills.
Milling-in-Transit Privileges. f
One of the principal reasons why feed mills serving New Hampshire
can be located at various points of retail distribution in the State lies in
the so-called milling-in-transit privileges permitted by the railroad tariff
rules.
Freight rates are commonly higher per ton-mile for short distances
than for long distances. This follows from the fact that rates must absorb
two terminal charges irrespective of the length of haul. Thus, the sum of
two local rates (Origin point A to Intermediate point B; Intermediate point
B to Destination C) exceeds a through rate (Origin point A direct to Des-
tination C, even through Intermediate point B). If this were the situation
with respect to all feed ingredients, mills would tend to locate either at
the source of most feed ingredients or at the point of sale of mixed feeds,
depending upon the comparison between rates on ingredients and mixed
feeds and upon other cost factors.
Milling-in-transit privileges, however, have tended to equalize the rate
burden and permit the matter of mill location to be largely decided by other
considerations. Shipments of grain, grain products and by-products, and
certain related itemst carry milling-in-transit privileges, i.e., the "stopping-
off" of shipments of feed materials in transit at an intermediate point for
the purpose of processing, mixing, and reshipping to a subsequent desti-
nation at no increase above the through rate (other than certain incidental
charges for switching and transit privileges). This privilege rests upon the
fiction that incoming transporation to the (intermediate) transit point and
the outgoing transporation from the transit point, which in fact are separate
and distinct shipments, constitute a single continuous shipment of the identi-
cal article from origin to final destination.
Rules governing transit privileges differ in the various railroad freight
classification territories. The single compelling factor for the difference is
the geographical location of the classification territory itself. New England,
insofar as railroad territorial classification is concerned, is geographically
located at the end of the line. One interesting feature of this revolves around
the "Boston grouping". This means that the transportation charge from
origin to any destination in New England is the same with the exception of
arbitrary points on the Maine Central and Bangor and Aroostook Railroads,
regardless of whether the shipment is "stopped off" at an intermediate point
in New England for milling-in-transit purposes or diversion, or proceeds
directly from origin to destination. Thus, with respect to rates on transit
items alone, there is practically no locational advantage to be had within
New England.
* Davis, H. A. and V. F. Staab, op. cit., and Registered Ingredient List, New
Hampshire Department of Agriculture, October 1, 1952.
t This section is based largely upon a paper by J. E. Bressette, General Traffic
Manager, Ghas. M. Cox Co., dated January 2, 1951, Explanation of Milling-in-Transit
Privileges as Applied in New England Territory, and correspondence with Mr. Bres-
sette in December, 1953, and January, 1954.
t Including brewers' and distillers' grains, soybeans, cottonseed, linseed, meals.
u
Certain other details with respect to New England transit privileges
are worthy of note. Within New England (as throughout official territory)
the privilege of applying the through rate from the transit stations is re-
stricted to the transit portion of any mixed feed prepared at that point.
Transit privileges within New England extend for a period of 12 months at
through rates applicable from origin to final destination, with an extension
of an additional 12 months for a small additional charge. This means grain
can be stored enroute, milled, mixed, and shipped at the through rate, within
the preceding time considerations. New England is very favorably lo-
cated insofar as transit privileges are concerned on feedstuffs and grain
from Canadian origins. This undoubtedly contributes to the importance of
Canadian firms as suppliers of feed ingredients to New Hampshire mills
(see Table 6).
The preceding discussion has merely scratched the surface of one of
the most complicated transportation subjects, and there are many exceptions,
modifications, and deviations from the general rules. However, to further
classify the general principles, insofar as New England is concerned, two
examples are presented below.
The rate for grain shipped from Chicago, Illinois, to St. Albans, Ver-
mont, or to Portland. Maine, in early 1951, was 431/0 cents per 100 pounds
in lots. The Chicago-Portland rate was still 43V2 cents per 100 pounds even
though the shipment was "stopped off" at St. Albans for milling-in-transit
or diversion.
In late 1953 carloads of brewers' grains moving from Milwaukee, Wis-
consin, to Concord, New Hampshire, carried a rate of 44 cents per 100
pounds (plus 12 percent plus 3 percent tax), irrespective of whether the
shipment moved directly from origin to destination, or "stopped off" in
western New York for milling-in-transit.
The principal point to remember in connection with the milling-in-
transit privilege is that it generally means for New Hampshire that the
rate-cost of the transit portion of grain-feeds is the same irrespective of
destination point or where milling is done. Since transit items constitute
such a large proportion of grain-feeds (as can be observed in Table 7) the
milling-in-transit privilege has much to do with the co-existence in the New
Hampshire market of brands produced by local mills and mills at other
widely separated points.
Non-Transit Ingredients.
It has been previously noted that grains, grain products and by-
products, and related items (milling-in-transit items) included such feed in-
gredients as brewers' and distillers' grains, and soybeans, cottonseed, and
linseed and their meals. The principal non-transit items in the average mixed
grain-feed are, therefore, such things as meat scraps, fish meal, dried whey,
powdered skimmilk, molasses, and various nutritive and biotic supplements.
Table 7 shows the estimated proportions of milling-in-transit items in
selected grain-feeds. Non-transit items make up the balance. Obviously, these
proportions are only approximations; deviations from these figures might
occur due to different animal protein levels, relative ingredient prices, and
a variety of other reasons. The point of predominance of milling-in-transit
items in most grain-feeds, however, is well substantiated by these approxi-
mations.
12
CJPi
CO
IT)
a
E
0
I
Z
c
<u
c
-o
0)
-o
X
<u 3
^1 U C 'U
T3 03
3 (u a. 3 1?;
S;i; 3 3
.■3 3
^ 03
0)
E
o
SiS as
0)
^ 2 OJ c/1
S'« as
aj o a IJ
bjj 1-. 3 3
c .5 "^ "^
t, o a m
^3 .S
3 m _
to -3 S~
O ^ rt"*
in
„ o .3 ij S
en jh ^ p-ii _5
3 a 23"a
to
'^
feO
C3
CO O •
CJUZ
LO fO (M (M CSI c^ I— I 1
o f:; o S -^
•3 -Q ^ 3 • . cj
:S^ o CO© co-H"3
CSI (M (M 1
-i.«
o
§"
-3
01 • .5 •« -3 _: CO CO
LOtJ''*(>4i-Hi— If— li— I
<n >H _B o 3
Pa ' — * "-H *^^ to —4
vOLO^t'^fOCOcOlM
CO o 3 J;^ 3
5 -3 oj . _• "- CO "^
LC'J'TjiCslf— li— II— (^H
o
>H CO
? 3
U CO
• -a .
J3
2:cj:q;^^SaH;S
•-O00'^'^''^fO5S'^'Ni— ii— II— '
CO
-o
CO
3
3 o >H ^ CO O I
With respect to the effect of non-transit ingredients upon feed costs, it
would obviously pay local mills to utilize local sources to the maximum,
other things being equal. Indeed, the listing of firms selling mixed-feed in-
gredients in New Hampshire includes a number of New England seaboard
suppliers of meat scraps, fish meal, milk by-products, and supplements.
Other than the preceding, it is difficult to generalize about the com-
parative advantage in transportation rates on non-transit items as between
New Hampshire mills and those in other states. The transportation cost of
non-transit items originating in the Midwest would tend to be about the
same for all mills serving the feed needs of the State. For some other items
like molasses, several sources of supply may be used alternatively or simul-
taneously.
Molasses is used in considerable amounts in mixed dairy feeds. Points
of origin are associated with sugar refining, i.e., beet .sugar refineries of
the West, cane sugar refineries in Louisiana, seaboard refineries of off-shore
production from such areas as Cuba and Puerto Rico, or refineries located
in off-shore areas from whence molasses is shipped in ocean tankers. A
nearby mill obtaining supplies via Atlantic port cities in tank trucks might
have to pay local freight on this item in the mixed feed from the mill to
point of destination. On the other hand, inland mills shipping molasses con-
taining dairy feed to the State would have to pav two local freight charges
on the item, one from ocean port or western refinery to the mill and the
other from mill to destination.
Most shipments of meat scraps originate in the packing plants of the
Midwest. Hence, there would be no general advantage in favor of nearby
mills on this item except insofar as they could obtain supplies from nearby
packing plants. Similar reasoning would hold for milk bv-products. On
items like fish meal, however, nearby mills would generally have a freight
advantage over inland mills shipping into New Hampshire.
Table 7. Estimated Proportions of Mi!ling-in-Transit Items in Selected Grain-Feeds^
Percentage
Milling-in-transit
Items
100%
90-99
80 89
70-79
Under 70
Poultry Feeds
Scratch Feed
Chick starter
All mash, grower
All mash, layer
All mash, turkey grower
All mash, breeder
Reg. grower
Reg. layer
Reg. breeder
All mash, turkey starter
Reg. turkey grower
Reg. turkey breeder
High animal protein supplements
Milk product supplements
Dairy Feeds
20% dairy ration
32% supplement
16% dairy ration
14% fitting
Calf starter
Calving ration
Milk substitute
1 Based upon composition data of New England College Conference rations and
Eastern States feeds.
14
Comparative Advantage on Feed ingredients.
It has been noted previously that transportation costs on milling-in-
transit items shipped to New Hampshire in mixed feeds or for mixing by
local mills are equalized, and most of the mills serving New Hampshire are
not required to pay extra charges on milling-in-transit items used in their
mixed feeds."" On non-transit items, the weight of advantage would appear
to rest with local mills.
Primarily within the area of non-transit items each mill serving the
local market would theoretically have the opportunity to exploit its par-
ticular location by using those ingredients and preparing those feeds which
would take advantage of any rate advantages it might have. In practice, this
opportunity would be somewhat limited by the consideration of obtaining
approximate nutritional equality with the products of other mills.
Hence, it is concluded that local mills are generally in a favorable
competitive position insofar as ingredient costs are concerned when compared
to other mills shipping grain-feeds to New Hampshire. No information is
available to enable an appraisal of comparative milling costs or total costs
to be made. There is also a possible exception to the preceding statement,
occurring when, and if, mills outside New Hampshire are able to control
prices and/or supplies of certain key ingredients through corporate struc-
tures or informal agreements.
*»'
Transportation to Retail Distributing Points.
Because of the relatively smaller costs of out-shipments under milling-
in-transit privileges, it is usually advantageous to grain mills to deliver large
orders by freight rather than truck, even though the distance may not be
great. This situation tends to favor a system of local retail outlets; dis-
courage long-haul trucking of grain feed into New Hampshire from one
central location to local users or handlers; and limits the effectiveness of
either bagged or bulk delivery of grain-feed from local mills to distant
users. Hence, the grain mills, both private and cooperative, have built up
a network of local stores or local dealers, though some grain-feed moves
direct from mill to farmer in carloads.
A survey of the grain companies serving New Hampshire indicated
that over 95 percent of volume shipments from mills to local retail outlets
or farmers arrived by rail. The exceptions to the general pattern occur
where retail outlets or farmers are located relatively close to local mills
or where rail facilities are no longer available.
A recent example of the latter situation is found in the discontinuance
of the Suncook Valley Railroad line between Suncook and Barnstead. Estab-
lished retail distributing points, such as those at Epsom. Chichester, and
Pittsfield, which formerly received grain by railroad car. must now rely
upon truck hauls from the mill or other railroad unloading points. The
same is true of carlot distributors or farmers receiving in carloads.
Figure 3 shows the locations of railroad lines serving New Hampshire
as of 1954, and some discontinued since 1940, and the location of retail
dealers. With present technology and conditions, the abandonment of a
*One exception might be materials arrivino; at eastern port cities such as Boston.
Inland mill locations would be at a disadvantage with respect to total rail freight on
rail shipments originating at port cities, but the disadvantage would pertain only
to that part of the feed which the mill reshipped back to coastal areas.
15
EXISTING RAILROAD LINES
R.R. LINES DISCONTINUED
IN RECENT YEARS
RETAIL GRAIN-FEED
OUTLETS
Durham, n.H,
Figure 3. Railroad lines serving New Hampshire and the location
of 178 retail grain-feed outlets in 1954.
16
particular rail route is likely to have repercussions upon the costs of dis-
tributing grain-feeds. If there are retail grain-feed distributing points lo-
cated on the line, the abandonment foreshadows one of the following if
no alternative method of transportation grain-feeds is available which will
be at least as cheap as by rail:
(1) The local storage and/or receiving point can be served from
other points by truck, with local distribution by truck.
(2) Other storage points can take over the local truck distribution
routes, with the local storage and/or receiving point eliminated.
If the company (or companies) operating from the local storage and/or
receiving point allocates all of any additional distributing costs to the
local territory in question, the effect on prices in the local territory may be
quite noticeable. However, if any additional distributing costs are absorbed
into the overall company operations (in the event of multiple-outlet firms),
the effect on prices in the local territory will be less pronounced. But, to
return to an earlier premise, it is likely that feed costs in the local territory
will be increased, since under most conditions shipment to local storage
and/or receiving points is cheaper by rail than by truck.
4. Company Policies, Pricing Practices, Terms
THE INFLUENCE of the parent company or supplying mill upon retail
distribution is considerable. Directly or indirectly this influence is
asserted through vertical integration (company owned stores or authorized
dealerships), and/or by service or sales policies. Since about 65 percent
of the grain-feed sold in New Hampshire is of brands milled by out-of-state
companies, the situation in the State with respect to policies, pricing prac-
tices, and terms is probably not much different than in other Eastern areas.
In order to evaluate the preceding, questionnaires were sent to all of
the feed companies whose brands were known to be sold in New Hampshire
and a number of retail outlets were visited.
Method of Distribution.
Of 16 companies reporting, 5 made sales entirely through company-
owned retail facilities. Nine companies sold at least one-half the total volume
through company-owned retail outlets; 7 sold at least half the total volume
through agents.
Ten companies reported 5 percent or less of total volume went directly
from mill to farmer; two companies each reported 8-25, 26-49, and 50 and
over percent of total volume going directly from mill to farmer. In some
of the preceding instances, retail facilities were physically located at the mill.
All companies probably did some distributing from railroad cars; at
least four concentrated on this method as much as possible. Some stressed
pickup at the car by the producer.
Division of Market Area.
The question of dividing the State into market areas for individual
retail outlets concerned 10 companies out of 16. The 10 companies took
steps to minimize territorial conflicts through the main office, district offices,
or local fieldmen, depending on the particular company's assignment of re-
17
sponsibilities. One company indicated it used local trade surveys as a basis
for determining market areas. Other companies undoubtedly follow a similar
approach. All companies with more than one company-owned store or agent
had these dispersed to provide the opportunity for volume.
The companies indicating no participation by the main office in divid-
ing territory for retail outlets probably found this step unnecessary. Some
had only one retail outlet in the State. In some instances this was at or
near the mill. Others had retail outlets at widely separated points, with dis-
tances between these points in excess of that which could feasibly be served
from such points by truck.
Where the companies engaged in dividing territory into market areas
for their own outlets, there was some coincidental similarity in market areas
hut for the most part each company's pattern differed from the others.
This is a function of numbers of outlets, the exact location ( based upon the
random dispersion permitted bv milling-in-transit equalization), and insti-
tutional considerations evolving from retail outlet acquisitions, consolida-
tions of firms, and traditional servicing of particular territories from particu-
lar points. The most similarity in market areas was observed in and around
the principal cities, in which a large number of different companies had
retail outlets.
Retail outlet managers played an important role in delineating the final
line between their units. Usually these arrangements were somewhat in-
formal, but within the broad policies of the parent company or supplying
mill.
Sales and Service Policy.
In addition to influencing method of distribution and division of the
market area, parent companies or supplying mills play an important role
in product differentiation and relationships with producers.
Industry people frequently refer to particular brands as "low-priced
feeds", "high-priced feeds", or "quality feeds", though these terms are
applied from the viewpoint of the particular individual's affiliation. One
group contends that set formulas embodying the latest nutritional advances,
with cost varying with weighted prices of the set quantities of the various
ingredients, are the best buy for the producers. Another group stresses
that it is just as progressive on nutritional matters, but shifts the propor-
tions of different ingredients within a given analysis to take advantage of
lower cost ingredients for its customers. Many companies carry a "standard",
"regular", "utility", or "price" line, plus a "quality", 'high-energy", or
"high-efficiency" line, in order to meet competition in both directions and
offer its customers various alternatives.
All companies engaged to some extent in what has come to be called
service work. Service is carried on in various ways and to varying degrees.
With some companies or brands the main reliance for service work is the
individual retail outlet, supplemented by a small main office and/or field
service staff. Others place the greater emphasis upon a larger main office
and/or field service staff, with the individual retail outlet in a secondary
role. Service is generally "free"; actually it is an overhead cost borne to
a degree by user and non-user alike. However, in many cases the particular
service stands the individual producer using it less than if he actually hired
it done. Service also brings to the producer a breadth of specialized skill
and information he himself probably does not possess.
18
Pricing and Terms.
For about two-thirds of the companies submitting data, it was indi-
cated that selling prices in retail outlets were generally fixed by the main
office. This was accomplished through periodic price lists. For most of the
others, the individual retail outlet determined its own markup over cost;
some companies suggested markups over cost at each outlet. Quoting special
quantity rates and submitting bids for sales to institutions were left to in-
dividual retail outlets in about two-thirds of the cases.
There was variability in the terms quoted relative to charge for delivery,
credit, cash discounts, and quantity discounts. These often varied with differ-
ent outlets affiliated with the same company. They also reflected the differing
emphasis on method of sale from company to company.
Parent companies and/or their outlets obviously incur additional costs
for deliveries and credit. There are also economies on quantity sales. Thus,
the important question here is whether their customers obtain consideration
for doing their own hauling, paying cash, or buying in quantity or pay the
same as those who receive delivery service, use credit, and buy in smaller
amounts. Within the past year some additional companies have moved from
the latter policy toward the former, a desirable step in aligning services
and prices.
At the time these particular data were collected most companies and
a majority of the retail outlets contacted either charged for delivery direct-
ly or extended a discount on store pickups, sometimes coupled with consider-
ations for cash or quantity. The usual charge for delivery or discount for
pickup was 5 or 10 cents per 100 pounds. Where the producer unloaded from
the car and hauled, he was extended an additional 5-10 cents per 100
pounds discount by some companies.
The subject of credit can be separated into short term (up to 30 days)
or longer term (60-90 days or over). The avowed policy of only a few
units was "no credit". Most units, however, extended "free" a courtesy
period of 7-30 days in consideration of the spacing of producer income
checks or the particular billing practices they followed. Within the short-
term "free" credit range, there was sometimes no additional discount for
spot cash. The usual discount for spot cash or payment within the short-
term period was 5 to 10 cents per 100 pounds. On longer-term credit in-
dividual outlet and/or company management approval was generally re-
quired. Six percent interest was the rate usually charged on these accounts.
Some units are known to be currently over-extended on longer-term credit,
and there have been a certain number of forced settlements in the State
in recent years. This situation is sometimes a danger of attempting to main-
tain or build volume in established territory or under conditions of un-
planned production expansion. The indirect cost of precarious credit policies
falls in the long run upon cash and credit customers alike.
Quantity discounts were quite generally specified; only a few units
indicated none. At the retail unit level, the most common quantity discounts
came at one and five tons. For the former, the average was 10 cents with
a range of 5-20 cents per 100 pounds. For the latter, the average was 18
cents and the range 15-30 cents per 100 pounds. Reported carlot discounts
ranged from 25-65 cents per 100 pounds, including unloading by the pur-
chaser and cash. Where prices were quoted at producer's railroad point,
$1.00 per ton discount was quoted on a straight vs. a mixed car,
19
In no instance encountered was there a specified penalty against the
producer because of inconvenicence to the feed dealer in making deliveries.
It is known that such a policy has been tried in other areas. In one instance,
10 cents per 100 pounds was assessed for second-floor deliveries. The general
approach of New Hampshire outlets has been to work with the producer
to improve the arrangements for receiving and handling at the farm,
and/or to explore possibilities for using auxiliary unloading equipment, it
being held that "competition" forces dealers to countenance many incon-
venient or inefficient situations.
Steps by Companies to Promote Efficient Handling.
A series of questions was asked feed companies relative to steps they
took to promote efficient handling at three stages: from the mill to the
retail outlet, in retail outlets or warehouses, and between retail outlets or
warehouses and the farm. Inquiry was also made relative to their policies
on routes and making suggestions to producers on improved handling of
grain feeds at the farm.
The steps listed, as adopted by various companies to promote efficient
handling from the mill to the retail outlet, were as follows: all rail ship-
ments; use of milling-in-transit to the maximum and over quickest routes;
local trucking by dealers near mill; carload orders must be received 24
hours before manufacturing run is established; advance orders and car-
door service; grouping localities for combined shipments; all carload ship-
ments; loading according to approved methods to insure safe delivery; load-
ing so car can be unloaded in proper sequence for delivery; prompt ship-
ments to dealers; ship same day order received; feed made today, shipped
tonight; belt conveyor from mill to car.
Some companies indicated they had no control over and/or informa-
tion about what dealers did in outlets or warehouses and between these and
the farm. The following were given as promoting efficient handling by re-
tail dealers: determining best location for stock; handling and piling in
groups; encouraging quick turnover of stock; following iirst-in - first-out
policy on stock; advance orders and car-door service; use of fork-lift
trucks, chutes, elevators.
Steps to promote efficient handling between the retail outlet or ware-
house and the farm were listed as follows: regular scheduled weekly de-
livery routes; advance orders and cardoor service; deliver as much as pos-
sible from car to farm; set up routes on systematic basis to save mileage
and time; prompt delivery; promote bulk feed; portable labor-saving devices.
Of 16 companies reporting, 7 indicated some to extensive participation
by main or district offices and/or fieldmen in studying delivery route re-
arrangement. An additional four indicated knowledge of extensive study
of the subject by retail outlets. These studies were described as "periodic",
"every six months", and "annual".
Three companies indicated they refused business where purchases were
too small to justify route operation. Four others indicated that they could
usually work such business in on established routes or make other arrange-
ments. Three companies indicated they had upon occasion refused business
because producers refused to cooperate relative to convenience of unloading
and handling at the farm.
About all of the companies indicated they made suggestions to farmers
to promote more efficient handling of grain-feeds upon arrival and after
20
arrival at the farm. This was done through printed material, local dealers,
and sales and service personnel. Answers to the question, "Are the farmers
you service as a group willing to carry out programs to promote more
efficient handling of grain upon arrival and after arrival at farm?" ranged
from an unqualified "yes" to "relatively reluctant". Other comments were
"varies", "for most part", "in some cases", "one out of four", "more
aggressive farmers think of these things themselves". The reactions of
'co^
individual dealers are discussed in a later section.
Relative Importance of Grain Feed Sales.
The majority of the companies contacted sold other lines of merchandise
in addition to grain-feeds through their New Hampshire dealers. Out of
8 companies supplying details, 2 sold only grain-feeds. For the remaining 6,
grain-feeds accounted for 72-90 percent of total sales. Other lines of im-
portance were building supplies; farm, barn, and poultry equipment; seeds,
fertilizer, spray materials; coal, oil, other fuel. There were considerable
differences in the ranking of the secondary lines from company to company.
Table 8 shows the relative importance of grain-feed sales and secondary
lines for the 8 companies.
Table 8. Importance of Grain-Fted Sales and Secondary Lines
for New Hampshire Retail Outlets of Eight Companies, 1953
Company
Percentage
Dollar
Distribution
Sales
Second Most
(Where
Important Group
Indicated)
Grain Feeds
0th
er Sales
%
Total Sales
Group Designation
A
100.0
B
100.0
C
D
90.0
83.0
10.0
17.0
5.0
12.0
Poultry
equipment
Seeds, fertil-
E
83.0
17.0
12.0
izer, spray
material
Equipment
F
G
81.0
75.0
19.0
25.0
13.0
Building
supplies
H
72.0
28.0
10.0
Building
supplies
5. Retail Outlet Characteristics
T^O CONCLUDE the discussion of the characteristics of feed distribution
J- and handling, there is herein presented description and data on retail
outlet characteristics. Paralleling the aggregative and unit-size growth of
poultry and dairy production has been the growth of larger-sized specialized
grain-feed businesses. Formerly, distribution through such outlets as general
stores, hardware stores, and other retail businesses primarily concerned with
lines other than grain-feeds, was of greater relative importance. Now many
21
of these businesses handle no grain-feeds at all. With the growth of special-
ization in the grain-feed business has come the opportunity for operating
economies and relatively lower net costs to producers.
Number and Location of Retail Outlets.
Figure 3 shows the location by towns of 178 retail grain dealers
in New Hampshire in 1953. The numbers by counties were as follows:
Hillsboro 40; Merrimack, 26; Rockingham, 23; Grafton, 22; Coos, 16;
Cheshire, 14; Strafford, 13; Carroll, 9; Belknap, 8; and Sullivan, 7. The
preceding numbers include some general stores, but probably do not fully
reflect the number of general stores, hardware stores, and other retail
businesses, primarily concerned with lines other than grain-feeds, who may
still sell some grain-feeds.* However, the percentage of total grain-feeds
sold through these latter outlets is undoubtedly small.
Figure 3 shows the predominant effect of railroad routes upon the
location of retail outlets.
Importance of Multiple-Outlet Firms.
From data available, it seems reasonable to conclude that the majority
of retail grain-feed outlets in New Hampshire are part of the distributive
setups of firms supplying more than one outlet within the State. There were
78 retail outlets owned by or aflfiliated with three companies furnishing
this type of data. The number of owned or affiliated outlets of seven com-
panies (including the preceding three) was 100. These data are known to
exclude two or three additional companies who have a substantial number
of owned or affiliated retail outlets, and also do not include any companies
with only two or three outlets in the State.
Size of Business.
The question of size of business of retail outlets can be approached
in a number of ways. Herein, this is done on two bases: (1) comparison
between areas (counties), and (2) measures of variation between individ-
ual units. The former is of limited use inasmuch as the political units
(county) involved probably bear only partial relationship to the economic
units (trade areas for retail outlets). However, such a comparison was the
best available inasmuch as political units form the basis for the breakdown
of pertinent statistical information. The latter approach is based upon data
from about 25 individual retail outlets, or 14 percent of the total number
shown in Figure 3. The outlets forming the sample are concentrated in
the southeastern quarter of the State.
There are presented in Table 9 measures of the size of business of
retail grain-feed outlets by counties and larger cities, as compiled from data
presented earlier and from the 1948 census of Manufacturers. The data on
average tons sold per dealer in 1953 show the tendency for a larger-than-
average size of business in the leading feed-grain consuming counties of
Hillsboro, Rockingham, and Merrimack. The above-average figures for
Strafford and Sullivan counties result from the assumption that in-county
dealers make sales approximating the county consumption. This is invalid
for some areas, including the two preceding ones, as it is known that out-
* The New Hampshire Register for 1953 listed 326 general stores and 151 retail
hardware stores. No information is available to indicate the number selling grain-feeds.
22
of-county dealers make greater quantitative sales within those counties than
dealers from those counties do in other counties. If data permitted the ad-
justment of the figures on average tons sold per dealer for these variations,
the figures for Belknap, Cheshire, Grafton, Hillsboro, Merrimack, and
Rockingham counties would probably be adjusted upward; those for other
counties, downward.
The data showing averages per establishment in 1948 reflect numbers
of units and production patterns as of that year. With the expansion of
poultry production, particularly since 1948, these relationships have un-
doubtedly been significantly modified. However, these series are interesting
in that they show the relatively small average size of business still char-
acterizing many retail grain-feed outlets. In another respect they show the
location of relatively larger average-sized units in the larger cities than for
counties as a whole.
Table 9. Measures of Size of Business, Retail Grain-Feed Outlets, by Counties and Cities
Averages
per Esta
iblishment.
19483
Full-time
Average
Paid
Tons Sold
Sales
Payroll
Total
Employees
Political
Number of
Per Dealer
Per Year
Per Year
Employees
Nov. 15
Unit
Dealers^
19532
($1000)
($1000)
(No.) 4
(No.)
Counties:
Belknap
8
1,220.0
272.0
14.0
6.4
5.6
Carroll
9
1,012.2
96.6
2.8
2.6
1.2
Cheshire
14
1,446.4
146.0
6.1
3.6
2.4
Coos
16
888.7
138.9
5.7
3.2
2.4
Grafton
22
1,244.5
165.3
8.7
4.1
3.1
Hillsboro
40
1,682.7
247.3
10.4
5.0
4.3
Merrimack
26
1,592.3
235.9
11.2
6.1
5.6
Rockingham
23
2,400.4
186.5
9.2
5.1
3.5
Strafford
13
1,900.0
31.3
4.7
3.7
2.2
Sullivan
7
1,784.3
151.0
8.2
4.0
3.2
State :
178
1,580.8
193.7
8.8
4.5
3.6
Cities:
Claremont
3
200.0
9.2
4.2
3.7
Concord
9
326.0
13.2
5.8
5.0
Dover
5
304.5
11.5
4.7
4.0
Keene
6
196.3
7.3
4.2
2.8
Laconia
4
Manchester
11
228.2
12.1
5.6
5.1
Nashua
6
313.6
11.0
5.2
4.6
Rochester
6
185.3
8.3
4.0
3.3
^Source: Figures 3.
2 Source: Figures 3 and 1.
3 Source: Census of Manufacturers, 1948. Derived from data for "hay, grain, feed
stores" and "feed, farm, garden supply stores".
4 Sum of total paid employees, workweek ended nearest November 15, and active
proprietors and unpaid family workers, unincorporated businesses.
Average annual volume in 1953 for 22 retail grain-feed stores, mostly
in the southeastern quarter of New Hampshire, was under 4,000 tons per
23
store. Fifty-four percent of the stores sold less than 2,000 tons per store
annually. Frequency distribution by annual tonnage is given in Table 10.
Table 10. Frequency Distribution by Annual Quantity of Grain Feed Sold, 22 Stores
Tons of Grain-Feed
Sold Per Year
Number of Stores
Average Tons
Sold Per Store
Under 500
500-999
3
3
266
686
Under 1,000
1,000-1,999
6
6
952
1,430
Under 2,000 12 2.382
2,000-3.999 5 3.320
4.000-5,999 2 4.440
6,000-and over 3 14,821
22 3,625
Percent of Delivered Sales.
One of the primary problems of retail grain-feed outlets is the ques-
tion of delivery service. The characteristics evaluated in this and the two
following sections are the proportions of delivered and non-delivered sales,
average size of delivery, and frequency of delivery.
Of 412 farms in the Gilmanton-Barnstead area* 183 or 85.5 percent
obtained delivery service. This area was selected because it contained many
small, scattered farms, and would presumably point up some of the prob-
lems involved in delivery service.
For 24 retail grain-feed outlets, mostly in the southeastern quarter of
New Hampshire, 83.1 percent of their sales were delivered (weighted aver-
age basis). These outlets as a group
Table 11. Frequency Distribution by Percent Covered an area generally regarded
of Delivered Sales of Grain-Feed as more productive for grain-feed
24 Outlets businesses than the Gilmanton-Barn-
stead segment alone. The frequency
distribution by percent of delivered
sales is shown in Table 11.
Outlets which made no delivered
sales were all units selling relatively
small amounts of grain-feed as a
convenience and as a sideline to
other enterprises. Other outlets de-
livering less than one-half of their
volume stressed cardoor service.
Since all available data indicates
more than four-fifths of the grain-feed
tonnage sold is delivered, this subject
is rather extensively analyzed in a
subsequent part of this publication.
* Also includes some farms in adjacent tovyrns.
24
Percent of
Number of
Delivered Sales
Outlets
None
3
1- 9
1
10- 19
0
20- 29
1
30- 39
0
40- 49
0
50- 59
1
60- 69
1
70- 79
2
80- 89
6
90-100
9
24
Average Size of Delivery.
Available data indicate considerable variation in size of delivery,
both to individual farms and on the basis of retail unit averages for all
deliveries. In an earlier part of this publication it was pointed out that
any feed distributor is likely to make the majority of his stops or sales
(number, but not necessarily tonnage) to small units. A proof of this
premise is offered by data on the 183 farms obtaining delivery service in
the Gilmanton-Barnstead area (Table 12).
Table 12. Average Weekly Use of Grain-Feed on 183 Forms Obtaining
Delivery Service in the Giimanton-Bornstead Area
Accumu-
Accumu- Number
Percent
lative
Total No.
lative of Bags
Average Weekly
No. of
of
Percent
of Bags
Percent
Percent Delivered
Use of Feed^
Farms
Farms
of Farms
Weekly
of Bags
of Bags Per Farm
5 bags or less
6 to 10 bags
120
21
65.6
11.4
65.6
77.0
183
160
9.4
8.2
9.4
17.6
1.5
7.6
10 bags or less
11 to 20 bags
Over 20 bags
141
19
23
77.0
10.4
12.6
77.0
87.4
100.0
343
307
1,291
17.6
15.8
66.6
17.6
33.4
100.0
2.4
16.2
56.1
183
100.0
100.0
1,941
100.0
100.0
10.62
1 Mostly delivered weekly.
- Average.
Seventy-seven percent of the farms (or route stops) involved used 10
bags or less, but accounted for only 18 percent of the total quantity. In con-
trast, the 13 percent of the farms using over 20 bags weekly bought about
two-thirds of the total quantity. For this latter group, the average nuinber
of bags delivered per farm was 56.
Table 13. Variation in Average Size of Deliveries to 183 Farms
in the Gilmanton-Barnstead Area by Stores
No. of Farms
Percentage
No. of
Store
Taking
No. of Bags
Percentage
of Bags
Bags per
No.
Deliveries
Delivered
of Farms
Delivered
Delivery
1
25
377
13.7
19.4
15.1
2
40
157
21.9
8.1
3.9
3
10
llil
5.4
5.7
11.1
4
48
302
26.2
15.5
6.3
5
6
89
3.3
4.6
14.8
6
3
45
1.6
2.3
15.0
7
8
33
4.4
1.7
4.1
8
12
98
6.6
5.1
8.2
9
11
80
6.0
4.1
7.3
10
8
88
4.4
4.5
11.0
11
5
38
2.7
2.0
7.6
12
7
523
3.8
27.0
74.7
183
1,941
100.0
100.0
10.6
25
Information on deliveries to the 183 farms was also tabulated according
to the stores from which deliveries originated. These data, presented in
Table 13, indicate a range of 3.9 to 74.7 bags per average delivery for the
12 stores servicing these 183 customers. These figures are not inclusive of
all the business done by the 12 stores, only of that done in the area surveyed.
Data were tabulated for six retail grain-feed units in Belknap County,
including the entire delivery business for these units within and without
the county. This information (Table 14) shows considerable variation in
the average size of delivery per unit.*
Table 14. Average Size of Deliveries for Six Belknap County Retail Grain-Feed Units
Unit
Percent of
Sales Delivered
Average No. of
Stops per Route
Average No. of
Bags Delivered
per Stop
Range in Average
No. of Bags per
Stop per Route
A
B
C
D
£
F
75
5.3
7.6
3.2- 50.0
80
2.3
27.1
5.0-100.0
88
5.6
17.1
5.6-100.0
90
14.9
16.9
7.0- 75.0
6
5.0
8.0
22
7.0
13.3
Frequency of Delivery.
Less frequent delivery has often been suggested as a means of im-
proving the efficiency of delivery route operation. It was being utilized to
some extent in the areas surveyed.
Of 183 farms obtaining delivery service in the Gilmanton-Barnstead
area, 132 or 72 percent obtained weekly delivery. Thirty-nine or 21 percent
obtained delivery every two weeks; two obtained delivery once a month;
and the remaining 10 obtained delivery 'occasionally'. However, the farms
obtaining delivery service less frequently than once per week included a
substantial number of small customers whose needs for a bag or two of
grain-feed occurred at the wider intervals.
The six dealers located in Belknap County delivered 96 percent of
their route quantities once per week and the remaining 4 percent once
every two weeks. Under the latter category were included deliveries to
several large customers as well as all customers obtaining delivery service
through carlot distributors receiving shipments every other week.
Efforts to Improve Farm Receiving and Handling of Grain-Feeds.
Inquiry was made of 16 retail grain-feed outlets relative to difficulties
in handling at the farm, improvements suggested by the dealer, and the
percentage* of customers making improvements in recent years. More than
half of the outlets indicated considerable difficulties in making farm de-
liveries. The principal obstacles at the farm to rapid and efficient delivery
were specified as: second and third floor unloading, carrying, dumping
bags, old installations and remodeled barns with poor facilities, setting
difficulties (snow, mud), need for two men on upstairs deliveries. Some
* For additional data and analysis relative to this point, see also N. H. Station
Bulletin 427.
26
dealers indicated no second and third floor deliveries now, or that they
used portable elevators or customers had installed them, and that many
customers made alternative arrangements when driveway conditions were
bad.
Some of the improvements suggested by dealers, field men, or through
printed material were: eliminate clogging driveways and walkways, improve
openings and stairways, install ramps and unloading platforms, minimize
second and third floor unloadings, balance requirements per floor, rearrange
grain rooms, prevent mice and rat damage, eliminate opening bags by de-
livery truck driver, install elevators or other auxiliary equipment, and con-
vert to bulk feed.
Some dealers felt that bulk delivery brought the greatest improvement
in making grain deliveries at the farm. Of the dealers indicating improve-
ments through bulk, one estimated this applied to 35 percent of his cus-
tomers. Others thought improvements had come about mainly through farm
expansion and the incorporation of improved feed handling methods in
the new buildings erected. One said "most" producers buying from him
had made improvements in recent years. Two estimated the rate of improve-
ment for all reasons at 5 percent; two at 10 percent; one at 20 percent;
and one at 25 percent.
The general consensus was that the feed dealer was limited in his
power to effectuate improvements in farm receiving and handling facilities,
primarily because competition forced him to provide the services demanded
by producers. Many larger producers are in an enviable position in this
respect; a few take definite advantage of the situation. In some areas, and
on some routes, the loss of a large account might mean a reduction in the
dealer's business of one-fourth or one-fifth. Under such conditions, such
a customer would be in a strong bargaining position. Many producers
seemed willing to consider suggestions, and some to put them into effect,
if cost outlays were not excessive and/or they could realize net savings
thereby.
6. Conclusions
ALTHOUGH it was not the principal objective of this study on marketing
grain-feeds, it was necessary to determine the institutional framework
of the feed milling and distributing industry in order to find those areas
where the system could be made more efficient.
With the resources devoted to this study, the area of retail distribution
was selected for primary emphasis. The second bulletin in the series deals
with that subject. Because of the relationship between achievement of de-
livery route efficiency and farm facilities for receiving and storing grains,
and since the study of delivery routes made possible many farm contacts,
the study was extended to the farm. The third bulletin of the series deals
with prospects for improving the efficiency of the grain feeding operation
on poultry and dairy farms.
The importance of the milling-in-transit privileges of railroad tariffs
in determining feed prices at retail stores is considerable. Against the possi-
bilities it offers for equalizing country prices must be balanced the eco-
nomies of distributing locally from a store of efficient proportions.
27
Another significant point is the great importance of non-price consider-
ations in competing for the farmers' feed business. Variations in formulas
and performance make direct price comparisons a rather difficult task for
the individual farmer.
As farm units increase in size and decrease in number, retail units
can sell the same or larger quantities of feed to fewer customers. This may
increase efficiency as well as changes in route arrangement, frequency of
delivery, and rates of performance.
Management decisions relative to adoption of technological improve-
ments, such as bulk feed, are frequently made on the basis of following the
lead of competitors rather than solely on the basis of short-run costs and
returns. Perhaps these are necessary in the long run for the firm to main-
tain its "share" of the market, but the end result is not always cost
minimization.
28
630.72
N532
no. 426-450
DATE DUE
NOV 4 '64
MkY 19^
Sec^P*^
^^)\2i*m
I
F32a
Live Music Archive
Librivox Free Audio
Metropolitan Museum
Cleveland Museum of Art
Internet Arcade
Console Living Room
Books to Borrow
Open Library
TV News
Understanding 9/11