COOPERATIVE MARKETING OF DAIRY PRODUCTS

BUTTER REGIONALS' PLAN

Approximately 200,000,000 pounds of creamery butter are produced annually by members of the dairymen's organizations affiliated with the regional dairy products marketing agencies which operate under a unified interregional sales plan developed by cooperatives. This plan has been completed by regional agencies with the aid of the Federal Farm Board.

Four regional butter-marketing organizations of the Pacific coast and northwest dairy regions are affiliated under this plan. (See accompanying map.) They are Land O'Lakes Creameries (Inc.), Minneapolis, Minn.; Challenge Cream and Butter Association, of Los Angeles and San Francisco, Calif.; United Dairymen's Association (Inc.), Seattle, Wash., and the Interstate Associated Creameries (Inc.), Portland, Oreg.

While these regional organizations are separate and distinct corporations owned by their members, they are affiliated for operating purposes.

Under this mutual plan, all butter or other dairy products shipped east of the Rocky Mountains or the continental divide by the three western associations are handled by the Land O'Lakes Creameries (Inc.). All butter or other dairy products shipped by Land O'Lakes Creameries (Inc.) to be sold west of the Rocky Mountains are handled by two of the regional cooperatives of the Pacific coast. The Challenge Cream and Butter Association handles the Land O'Lakes products in its trade territory, and the United Dairymen's Association sells the products in its trade area. All of this business is carried on under contracts. Likewise, the western regional organizations have contracts among themselves which provide working arrangements similar to those between Land O'Lakes and the Pacific coast regionals. Under this plan competition between the different regionals is eliminated, giving to the producers' organizations much greater influence on the markets.

All of these regionals are eligible to borrow money from the Federal Farm Board. Loans have been made by the board to the Challenge, the United, and the Land O' Lakes organizations.

The Farm Board makes loans to the regional organizations. Dairy farmers in the territories served by the four regionals should place their applications for loans from the Federal Government's revolving fund with the regionals. When the application has been approved the money is paid to the local association through the regional.

NATIONAL CHEESE PRODUCERS FEDERATION

The National Cheese Producers Federation at Plymouth, Wis., is a sales organization owned and controlled by a group of dairymen's

REGIONAL BUTTER MARKETING ASSOCIATIONS

cooperative cheese factories in Wisconsin. This organization has been recognized by the Federal Farm Board as a regional marketing association for cheese. It is eligible to borrow money from the board. Loans have been made by the board to this organization in order that its marketing program may be more fully developed.

Cheese production is concentrated in a much smaller area than is butter. (See accompanying map.) Two-thirds of the cheese manufactured in the United States comes from Wisconsin and contiguous territory.

The National Cheese Producers Federation received in 1930 40,750,000 pounds of American cheese and 11,500,000 pounds of foreign-type cheese, according to the organization's estimates.

MILK COOPERATIVES

Since the agricultural marketing act was passed, dairymen have turned their attention more to a study of the changes that have brought about mergers of fluid milk selling organizations or the forming of overhead cooperatives to handle the product for several markets.

The cooperative milk marketing organizations are organized primarily to serve a particular milk shed. Due to the increase of urban consumers of milk, many of these milk sheds have expanded until there is more or less overlapping of territory. This is one of the things responsible for the tendency of these milk organizations to merge. For example, the sales activities of cooperatives around Baltimore, Md., and Washington, D. C., have been combined. The producers in New England are working on a plan for the formation of an overhead milk bargaining association for all the New England States except Connecticut. This new association will be set up in such a way that all the cooperatives selling milk to the Boston market can become members. In several other markets the cooperative organizations are expanding so that a larger region is served by a single association.

Since the greater number of milk cooperative associations are bargaining organizations, there have been few applications to the Federal Farm Board for funds from milk associations. In a few markets, particularly New York and Cincinnati, there are strong milk associations owning facilities. Practical assistance, including the lending of money, has been given these organizations by the board.

COOPERATIVES HANDLE TWO-FIFTHS OF MILK

The marketing of dairy products through cooperative associations was well established in the United States before the agricultural marketing act was passed. About the time the Farm Board was established it was officially estimated by Federal authorities that approximately one-third of the butter and one-third of the cheese manufactured in this country came from cooperatives. Approximately two-fifths of the milk sold to urban consumers was marketed by cooperative associations. In general, these organizations are successful and are well established in the dairy industry. Since the activities of dairymen were mostly confined to local associations, the principal problem of the dairy industry at the time the Farm

Board was created was not the establishment of more local cooperative associations but rather the development of ways of more effectively marketing the products coming from these small organizations. This led to a closer federation of locals and to the coordination of the sales programs.

The great volume of butter, cheese, milk, and milk by-products is sold for the most part by each cooperative organization acting as its own agent. Cooperatives handling manufactured products were competing with one another in finding a market.

In aiding dairy cooperatives in building larger marketing units, the Federal Farm Board realized that local cooperative creameries and cheese factories are absolutely fundamental in the development of a more effective merchandising program. Therefore, wherever it is possible, definite assistance is being extended to the local cooperative organizations.

Below are the names and addresses of the members of the dairy advisory committee:

Harry Hartke, Cooperative Pure Milk Association, Cincinnati, Ohio.
C. E. Hough, Connecticut Milk Producers Association, Hartford, Conn.
John Brandt, Land O'Lakes Creameries (Inc.), Minneapolis, Minn.
G. W. Slocum, New York, Dairymen's League, Milton, Pa.

U. M. Dickey, United Dairymen's Association of Washington, Seattle, Wash.
P. L. Betts, Chicago Equity-Union Exchange, Chicago, Ill.

Emerson Ela, National Cheese Producers' Federation, Madison, Wis.

Mr. Hartke and Mr. Brandt were certified to the board as experienced"handlers or processors."