Average monthly and yearly price of milk and butter from 1895 to 1899, etc.-Cont'd.

1 From The Milk Reporter. The figures apply to New York territory.

14. EXPORT TRADE IN DAIRY PRODUCTS.

Our export trade in dairy products should on general principles be the best in the world, owing to our rich supply of pasturage, corn, and fodder of various kinds on which dairying is dependent. Yet quite the contrary is the fact. Our extra creamery butter sold from 3 to 63 cents lower than the best Dutch butter in the London markets for the year 1897.1

Of course our butter competes, but it stands at a disadvantage compared with Continental butter. Much of this disadvantage is due to the fact that foreign markets have received our inferior grades of surplus butter so long that they have come to believe that we have nothing better to send.

Possibly no part of our dairy trade has been so long in learning to adapt itself to the consumer's wants. This accounts, to some extent, for the irregular volume of trade in this species of product. But the main cause of this irregularity is to be assigned to the practice of cultivating a foreign demand only when the surplus became oppressive at home. For more than a century we have sent abroad annually from 1,000,000 to 40,000,000 pounds of butter, mostly of inferior grades, and latterly substitutes for butter. This inferiority of exported quality and fluctuations in quantity together have done most to injure our sales abroad. The irregularity of exports is illustrated from the figures given below for 10-year periods.

The unfavorable standing of American butter in the London market, our leading export market, led the Department of Agriculture to undertake several experimental shipments in 1897 with a view of correcting some of the erroneous opinions entertained there by the trade. The account of this experiment is so much of an analysis of the methods of distribution in this article of commerce that we make liberal use of it in this part of the report. The importance of the trial is measured

1 Fifteenth Annual Report Bureau of Animal Industry, Department of Agriculture, 1898, p. 135.

partly by the fact that Great Britain imported that year $77,000,000 of foreignmade butter. On the whole, this is the world's best butter market.

The grade of butter selected is classed as "extra creamery." The creamery system of butter making throughout the East, West, and Northwest was the system represented in these shipments. The particular creameries selected were located in the 11 States of Connecticut, New Hampshire, Vermont, Massachusetts, New York, Ohio, Wisconsin, Iowa, Minnesota, Kansas, and South Dakota. The prevailing creamery methods result in a product far superior in uniformity of characteristic qualities to the product that comes from the farm dairy. Hence high creamery grades are the best for foreign markets. Mr. Alvord reports: 1

The objection to the creamery tub at present in British markets is that poor butter from the United States has been so largely exported in that form that this package is closely associated in the minds of export buyers with a low grade of goods. This prejudice is so strong that it is hard to get an English merchant who is seeking good butter even to take time to examine the contents of a package recognized by him as a States tub."

Owing to the distance and the danger of injury the agents of the Department gave the closest attention to the matter of transportation. Railroad facilities for handling perishable commodities in this country are generally excellent. The cleanliness and temperature of the cars, the freight rates and time schedules for this special service were examined and approved. The creameries of the West are well supplied with refrigerator cars, and butter arrives at the end of a 2,000mile journey in perfect condition. Carload lots which go through unbroken have great advantages, especially in hot weather, over small lots which are subject to injury from much handling, changes of temperature, and delays. Terminal facilities at the principal markets have been greatly improved, but are yet far from perfect. By efficient cooperation between railroads and merchants it seems possible to materially lessen the time between discharging the refrigerator cars and the storing of the butter in cellars and cold rooms.

The Department trials included 23 shipments of butter intended for export. Of these shipments, 15 arrived on time; 4 arrived on day appointed, but too late for sailing, and 4 were delayed on the road by avoidable circumstances in connection with transfers.

Local traffic still lacks an efficient refrigerator service. Butter arrived at the port of export in better condition and at a smaller cost per pound from points 2,000 miles away than from points 100 to 300 miles distant.

During a great part of the year accommodations for first-class ocean freight are good and sufficient. But it is not safe to ship high-grade butter in summer except in cold storage when there is also an increased demand for cold storage for other perishable products. Up to the present time, however, ships have not found it profitable to be prepared for cold storage, which is demanded only during the summer months. There is of course a constant demand for refrigerated space by the shippers of fresh meat all the year round.

In 1897 one commercial refrigerator was open to the general public on one line of steamers out of New York 3 weeks out of every 4. Other lines occasionally offered refrigerator accommodations for general use. Inquiries at other American ports failed to find such facilities. Earnest efforts on the part of this Department to arrange for experimental exports of dairy products failed because refrigerated space was not obtainable.

While this unfortunate lack of refrigerated space available to all exporters exists in this country, the butter makers and merchants of Canada have export facilities which can hardly be excelled. Seventeen steamers sailing from Montreal during the past season were fitted with refrigerators which could be secured by shippers in general at extremely low rates. Under the contracts between the Canadian government and the steamship lines these extra facilities are offered to shippers of butter at about 1 mill per pound above prevailing rates for first-class freight. During the season of 1897 the rate on butter in refrigerators from Montreal to London averaged about one-half cent per pound. But these rates were for Canadian produce only, and could be obtained for other produce only in case Canadian offerings did not fill the space.

The combined railway and ocean rates from Northwestern States to Great Britain were so much more favorable by way of Montreal that during 1896-97 the quantity of butter going into Canada at Detroit, Mich., and Champlain, N. Y., was three times as great as during 1895-96.

Terminal facilities at the end of the voyage were found to be far from what was needed. One refrigerator on the wharf at Southampton was without division,

1 Report of Bureau of Animal Industry, Department of Agriculture, 1898, p. 87.

and hence unfit for the storing of butter, which would have to be stored along with meats and other perishables. Refrigerator cars on the London line are furnished for carload lots only, and shippers must provide their own ice. There was little delay in transferring from terminal station to warehouses in London, and the service altogether was better than in New York. Better cold storage at British ports and more general use of refrigerator cars on British railways are improvements required for this trade.

These experiments were conducted with a view of ascertaining the difficulties and obstacles in the development of an export trade in American butter. While conducted as nearly as practicable in commercial lines the main object was not profit, but information. The amount handled was small, of course, in any one shipment, so that the expense, per unit of product, was all the higher than would have been the case for a regular supply. The small shipment, moreover, attracted no attention in the great London market. Nevertheless, even under these disadvantages the financial results were reasonably satisfactory, as the following summary shows:

"The purchases for these exports were made during the 7 months from April to October, inclusive, at prices ranging from 13 cents per pound, paid in Kansas in July, to 25 cents, paid in Connecticut in October. The sales in London ranged from 15 cents in May, to 214 cents in October. Butter sent in rather more than half of the several shipments was sold at more or less profit, and this was the result with almost half of the different lots of butter. Notwithstanding the unfavorable conditions mentioned, butter from Minnesota and Ohio sold at a net profit of 24 cents per pound, from Kansas at 2 cents profit, and from Wisconsin at about 1 cent. The average cost of these lots at the creameries where made, at current market rates, was 14 cents, and the average selling price of the same in London was 18 cents. (The fractions stated are not exact, but approximately correct.)

"Every lot of butter obtained in New England, as well as one lot from New York, was sold in London at a decided loss. This was due partly to the disproportionate cost of transportation to New York, already noted, but more particularly to the higher prices which the creameries of this region are able to maintain because of the local markets for their product. It was plain enough, in advance, that butter which, during the summer, was in active demand at 20, 22, and 25 cents a pound at the creamery door could not be exported at a profit.

On the other hand, all the butter bought at creameries in Ohio or States farther west, at the current wholesale rates for "extras," was sold at a net profit in England, with the exception of a few lots at the two ends of the export season, when the market relations were known to be unfavorable to such transactions." 1

Experiments of a similar nature have since been made by shipments of butter to Asiatic countries, in two successive years, 1898 and 1899. In each attempt the Department of Agriculture has sought to ascertain what the requirements of a successful trade in this product are and what obstacles will have to be overcome to establish and maintain trade relations on an enduring basis.

Particularly in our dairy products there is much justifiable prejudice to overcome in the foreign trade. This part of our trade has been not only neglected in the past, except when we had a surplus which could not be disposed of at home, but what success we have gained abroad has been not infrequently abused to the disgust of the foreign trade. It is a fact little short of shameful that during the fiscal year of 1899-1900, ending June 30, 12 per cent of the butter exported from New York was returned to this country."

It seems to be the inherent tendency of much of our trade success to destroy itself by disregarding the interests of the consumer after a market has been opened. We have repeatedly proved ourselves to be our own worst enemies by gaining a market on the superior merits of our farm products, as in the case of meats, and then losing it by letting the quality decline until consumers rejected it altogether. This is the case with butter, and to a considerable extent with our cheese. As long as our best cheese is sold as Canadian cheese and our bogus cheese is sold as American cheese, the American product as a whole must suffer neglect on the part of both the foreign trade and consumer.

One remedy for this is the adoption of a system of State inspection at the ports of shipment to guarantee the standard and prevent the exportation of such quality of goods as to bring our products into bad repute abroad. This may seem paternalistic, but it is really necessary in justice to honest producers that fraudulent shipments be prevented. We undermine our credit as producers by permitting them. The services of diplomacy have constantly to be invoked to prevent foreign governments from passing more restrictive laws against our trade in farm

1 Bureau Animal Industry, Department of Agriculture, 1898, pp. 97-98.
New York Commercial, June 2, 1900.

products, because careless or dishonest exporters have been suffered to endanger legitimate business. The fresh-meat inspection laws in Germany, and the exclusion of our fresh fruit on account of the San Jose scale from most European countries, are instances in which systematic prevention, by some system of State inspection, would have been far better than the drastic method of cure by the exclusion of our products entirely.

The most recent experimental exports of dairy products conducted by the Dairy Division of the Department of Agriculture have led to the same conclusion-that some system of governmental inspection is absolutely necessary to protect producers from the effects of fraud in trade. In his report, Mr. Henry E. Alvord, who conducted these experiments, sustains this conclusion by facts which indicate the extent to which the rural interests have suffered by the faults of the trade. The experimental exports, he says, of dairy products made during the last 2 years and now in progress under special provision of law have produced marked results. But these are not satisfactory in all respects and the reputation gained needs to be protected by authority from Congress for some system of export inspection. The new markets opening for our dairy products require a guaranty of the purity and quality of butter and cheese sent from the United States, such as is given by other governments, and especially Canada.

Not long ago this country supplied and practically controlled the cheese market of Great Britain. In some years we sent to England nearly 150,000,000 pounds, or two-thirds of our entire cheese product. But as no system of export inspection existed to guard the established reputation, unscrupulous merchants exported great quantities of inferior, adulterated, and counterfeit cheese, until the reputation of States cheese was destroyed in England, and that market lost to us. Canada, on the other hand, adopted a system of government control, was enabled to guarantee all cheese exported as pure and of standard quality, and thus secured, and still holds, the desirable British cheese trade which this country lost. We have recovered a little, but only a little, of the lost ground. The best cheese now exported from this country goes through Montreal, seeking the same avenues and the good company of Canadian cheese, finding a market virtually as a part of that product.

The same unfortunate result seems likely to follow the efforts to export fine creamery butter to Great Britain unless measures are promptly taken to avoid it. An active demand has arisen for this butter, especially in the northern counties of England, supplied from Manchester, largely through the experimental efforts of this Department. During the summer of 1899 an exceptional scarcity of European butter caused very high prices, and British merchants sent large orders to New York. In the month of August our butter exports were six times as great as for the same month a year ago. This new and profitable demand for fine creamery butter had scarcely begun, however, before large quantities of an inferior article and also of imitation creamery," process," or renovated butter began to appear among the exports.

This article, which is a more dangerous and damaging counterfeit of fresh creamery butter than straight oleomargarine, was sent to New York by the carload for export. In at least one instance parties had renovated butter put up in the West in the style of package adopted by this Department in its recent export trials to England, and this went abroad fabeled, Finest American creamery butter." The effect of this upon future butter trade with Great Britain will probably be like that which followed the export of so much unidentified filled cheese. Already English merchants, who have been trying to introduce States creamery butter among their customers, have written to this Department complaining of the deception practiced upon them.

If inspection and certification are authorized by Congress, the pure and unadulterated dairy products of the United States that are of a quality entitling them to official indorsement can be given a position in foreign markets which they can not otherwise secure, and which will enable them to compete successfully with like products from any other country.

1 This abstract of Mr. Alvord's report is taken from the New York Produce Review and American Creamery, December 20, 1899.

One primary difference between the agricultural and the manufacturing producer lies in the fact that the manufacturer makes his goods as fast as he needs them to supply the demands of his customers, while the products of the farm are gotten ready for the market within a few months of the year. The one spreads the whole of his yearly product out over 12 months; the other congests into 3 months almost the whole of the year's product. The manufacturer can maintain prices by at once stopping production; the farmer must go on in the face of a falling market and can restrict his production in no way to produce an immediate effect on prices.

Various remedies have been suggested to overcome this unfavorable relation of the farmer to the market. The subtreasury plan so prominent in Western and Southern political platforms several years ago was one remedy. Its practicability was never tested, and the most serious objections to it were those based on the changeableness of values of some kinds of farm products and the perishable character of others.

Since the advocacy of that scheme for enabling farmers to realize promptly on their crops the financial condition of rural industry has been radically changed throughout the West and to a less extent throughout the South. Meanwhile much progress has been made in the methods of handling the surplus stock of farm produce by the use of storage facilities in towns and cities. Last year the low price of apples, for example, led to the storage of a very large proportion of the Northern crop by dealers. The intention was to hold for a higher price and to avoid breaking down prices in the fall by putting an undue quantity on sale out of the abundant crop. The policy was sound, but the preparation was inadequate. Almost any kind of space was used for storing this fruit. The result was that it did not keep well, and the loss fell upon the producer and the dealer alike all through the year. Expensive storage charges frequently forced the holder to market his stock at an unfavorable stage of the market. On the whole, the attempt on the part of city storage to handle an abundant crop proved a failure so far as the producer's and the distributer's interests were concerned. The consumer suffered in the quality and paid for the loss due to inadequate storage methods.

The only successful method by which the producer can control the annual yield of the farm so as to market it at the rate at which consumers require it throughout the year is to equip the farm with cold-storage facilities. Fruit farms and dairy farms are especially in need of such an equipment as will enable them to await more favorable prices. It is not necessary that each farmer should have his separate storage establishment. Several farmers could jointly own and operate a single establishment.

What effect would such a change in the method of handling the surplus products of the farm have upon the interests involved?

In the first place it would greatly reduce the degree of competition among producers by holding in reserve a considerable proportion of the output in the season of the year when the yield is abundant to be marketed in the season when the supply is relatively scarce. This applies particularly to butter, eggs, fruit, and