This is one of the least desirable methods of distribution from the standpoint of the producer. Handling by joint account affords little opportunity for wide distribution because specific arrangements are usually made with a limited number of terminal-market connections. While in most instances products handled on "joint account" are shipped to the distributor or commission house for sale or distribution in the market, they may be sold by any of the customary methods. Contract Sales

There are two distinct methods of making contract sales: (1) Sales to canners and other processors upon a fixed-price basis, and (2) joint account or production contract sales. Canning, drying, and freezing are becoming more important adjuncts to the distribution of fruits and vegetables. Hence, in certain areas of intensive production, large acreages are contracted upon a definite price basis each year.

In many districts, commercial distributors contract with producers each year to plant certain acreages either upon a definite price basis or for a share of the crop. In addition to receiving the "time" price for supplies furnished, and either a definite number of packages per acre or a specific portion of the crop, the distributor also contracts to handle, for a service charge, any portion of the crop not required to repay production advances.

Crop contracts of this kind practically limit the outlet of the producer to the agency with which he makes an agreement. In other words, the distributor usually has an option to purchase or handle crops grown under such an arrangement. In districts where this method of financing predominates, market conditions often become chaotic and many producers find themselves practically without market outlets of any kind. The contracting agency, having the prior rights to production under contract, already enjoys a wide margin on supplies advanced to the producer and is assured of the customary handling charge. If market conditions are favorable, the agency is amply repaid for advances made with receipts of the specified units of the commodities handled. If the price is low and the market demoralized, and if the contract is such as to eliminate the producer from further responsibility beyond that specified in the delivery of a definite volume, the financing agency may place an arbitrary value upon the commodities delivered to it. When a cooperative or a cash-track buyer enters such a field to handle commodities for independent growers, distributors of produce under contract may announce a price above that justified by the actual market and refuse to purchase produce from independent growers. By this means a fictitious market is established, outlets for other than contracting growers are eliminated, and cash-track buyers and other distributors find it next to impossible to operate.

Farmers' Markets

Recent years have witnessed an extensive development of farmers' retail markets, sometimes known as curb markets by reason of the fact that in some instances vehicles are parked at the street curb for the wholesale or retail handling of farm produce. Some of these markets have been in operation for many years. Frequently the farmers' market is operated adjacent to sections of commercial retail stores. This facilitates direct sale by producers to retail handlers. Containers used in selling on the local market are different from those used in shipping to distant cities (fig. 7).

It has been necessary for municipalities to pass ordinances regulating the operation of these markets, and in some instances townships or cities furnish supervisors and inspectors to pass upon the quality of products offered, and to regulate the manner of handling. Many of these markets are owned outright by producers who have formed an association and have limited offerings on the markets to products grown by the members. In such cases the organization is run as any other cooperative; that is, directors are selected by the membership, management is employed, records are maintained, and other operations carried on in the usual manner.

Facilities used in the operation of farmers' markets vary all the way from designated space in a section of a city without any equipment to modern market structures, including individual counters or

In selling on local markets an open basket is used to advantage; whereas, the closed container must be used in carlot shipments.

FARM CREDIT ADMINISTRATION

stands and in some instances grading, storage, and even refrigeration facilities. Since 1933, funds have been made available by some of the Federal agencies to finance in whole or in part the construction of facilities for markets of this and other types. Legislatures of some of the States have also appropriated funds for the construction of farmers' markets and for the provision of marketing facilities at shipping point. In a few instances the States have provided extensive port facilities for use upon a nominal rental basis by cooperatives and private agencies handling agricultural products. Considerable interest is manifested by the public in the improvement of marketing facilities and practices.

After all, the producer-controlled facility for distribution of fruits, vegetables, and other farm products may provide the best answer to the problem from the standpoint of both producer and consumer. At least the interests of these two groups are mutual to the extent that they are vitally concerned with efficient and low-cost distribution.

COMPETITION

The fruit-and-vegetable industry is heir to practically every conceivable distribution problem. Not the least of these is competition. Frequently competition between growers of the same commodity or between growers of different varieties of the same commodity in one locality can be solved by cooperative organization. Competition between producers of the same commodity in different districts can be only partially eliminated by cooperation, it seems, although this remedy has been applied too sparingly as yet to determine how effective it might prove with a fair trial.

During the early development of the industry and in seasons of low production, producers have been able to utilize the competitive elements in the produce trade in such a manner as to obtain what seemed to be quite favorable returns. Analysis of numerous deals of this kind clearly shows, however, that margins exacted by commercial handlers were even larger during these seasons than when the market was considerably lower; hence, it is logical to assume that an effective grower-owned and controlled distribution system would merchandise the crop more scientifically and better utilize the competitive element

in the trade.

COORDINATING SALES SERVICE

Coordinated distribution service for miscellaneous fruits and vege tables has been employed by a number of local and regional fruit and vegetable cooperatives for nearly 25 years. First a large-scale marketing project was carried on jointly for a time by a group of large cooperatives and private distributors. Then, by acquiring the facilities, trained personnel, and business of an organization which served

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associations upon a cost-plus and a limited-dividend basis, the cooperatives established their own Nation-wide sales agency.

Beginning January 1, 1923, this organization provided complete distribution service, employing trained salesmen at shipping points, salaried sales officers in the principal markets, and commercial brokers in all other carlot markets of the United States and Canada.

Production credit had not been made available to producers upon favorable terms. Hence, the organization began supplying credit at long range and upon a far-flung basis. The hazards of credit extension for the production of perishables upon such a basis, coupled with the financial crash of 1929, finally resulted in a discontinuance of the sales agency and its affiliate credit corporation about the close of 1930.

Early in 1931 representatives of fruit and vegetable cooperatives requested the Federal Farm Board to aid them in developing a national sales agency to distribute their products. Through regional meetings the cooperatives created an organization committee which worked out details and incorporated a national sales organization in June of that year. This organization functioned rather effectively until April 1937, when it joined another marketing agency in forming a cooperative terminal sales service.

Some of the large fruit cooperatives have maintained national distribution service for their members, with their own salesmen in the terminal markets. Through dealer service and other sales promotion work, including extensive advertising campaigns, most efficient service has been rendered.

Meantime, commercial distributors have served a number of local cooperatives upon a national basis. Some of these distributors have established brands, supported by advertising and well known as representing quality products.

Through marketing agreements of the Agricultural Adjustment Administration more orderly distribution has been accomplished in some districts. Marketing agreements are most successful where cooperatives are strongest.

The beneficial aspects of competition between commodities and between districts growing the same commodity are worthy of mention. Such competition provides a strong stimulus to increase efficiency in production, and, where cooperatives are strong and effective, to improve marketing methods. The volume control and resultant bargaining power of the cooperative are more necessary for advancement of distribution than for improvement in production practices. While the individual producer may operate his farm independently with the greatest efficiency and success, distribution is a far more complex matter. It involves standardization, financing, transportation, warehousing, selling, and other functions, and sometimes employs many instrumentalities and agencies.

FARM CREDIT ADMINISTRATION

TRENDS IN CONSUMER PREFERENCES

During the period from 1909-10 to 1935-36 the per-capita consump tion of apples dropped from 73.4 to 55.6 pounds, whereas the consumption of grapefruit increased from 1.0 to 9.4 pounds during the same period. In like manner, per-capita consumption of white potatoes decreased from an average disappearance of 3.3 bushels in the pre-war period to about 2.5 bushels in recent years; while percapita consumption of such vegetables as celery, carrots, and lettuce approximately doubled during this same time. The rapid increase in the consumption of citrus is accounted for in some measure by the consistent and aggressive advertising and sales-promotion program of the cooperatives. It is true that the medical profession, food specialists, and others have contributed their share toward awakening the public to the value of citrus; however, except for this advertising and sales-promotion program, the professional people probably would have been much slower to recognize the special food properties of the commodity.

Per-capita consumption of many foods varies with the income available for food expenditures. The consumption of certain foods such as potatoes, flour, and sugar increases only slightly as the income available for food expenditures increases; whereas, the use of such commodities as eggs, milk, meat, poultry, and leafy vegetables increases considerably.

The effective advertising and sales-promotion work carried on by the more efficient cooperatives is greatly augmented by the display and advertising work of the retail outlets. Highly colored fruits are widely used in the window displays of retail grocery stores. limited number of stores these commodities are used not only in window displays but in the interior arrangement as well. The increase in the popularity of these commodities for such purposes may be attributed in large measure to the vision and constructive work of outstanding associations of producers. Through improvement of grade, pack, and quality, these cooperatives have provided superior commodities for display use. Dealers' service work by these organizations has also been instrumental in educating store managers and personnel in the art of display. If the space devoted to the advertising of these commodities by retail establishments were known and the value of this space added to the sum expended by the more progressive cooperatives, the total no doubt would be surprisingly large.

Building up a permanent preference for any one commodity and maintaining a high level of consumption for it over a period of years is usually difficult. Intensive advertising and sales-promotion work

7 NATIONAL RESOURCES BOARD, LAND PLANNING COMMITTEE. AND RESOURCES, REPORT ON LAND PLANNING, PART III.

AGRICULTURAL LAND REQUIREMENTS

64 pp., illus. 1935.