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The Columbia University Libraries reserve the right to refuse to accept a copying order if, in Its judgement, fulfillment of the order would involve violation of the copyright law. Author: New York (City). Title: Report of the Mayor's Committee on Milk... Place: New York Date: 1917 RESTRICTIONS ON USE: FILM SIZE: ?^ [N\my\ Q5-^3Ml7>/ COLUMBIA UNIVERSITY LIBRARIES PRESERVATION BIBLIOGRAPHIC MICROFORM TARGET MASTER NEGATIVE # ORIGINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD 310 1^48 New York (City) Mayor's committee on milk. Report of the Mayor's committee on milk, city of New York. New York, 1917. 85 p. incl. tables (1 fold.) diagrs. 25 J" Lcm JLMilk supply— New York (City) [1. New York (City)— Milk supply, 2. Milk. 3^ Cost— Accounting. 4^ Dairying— Accounting. i2-4. Milk- Cost of production] imm Library, U. S. Dept. of x«^ Agr 18-236 Agriculture 44N4842 •^ TECHNICAL MICROFORM DATA REDUCTION RATIO: 1^ IMAGE PLACEMENT: lA ® IB IIB DATE FILMED: Z-lln- 9^ INITIALS :__£t TRACKING # : m$H O^u^ l FILMED BY PRESERVATION RESOURCES. BETHLEHEM. PA. \ 1 I i i BIBLIOGRAPHIC IRREGULARITIES MAIN ENTRY: New York (City). Report of the Mayor's Committee on milk. Bibliographic Irregularities in the Original Document: List all volumes and pages affected; include name of Institution if filming borrowed text. Page(s) missing/not available: yolume(s) missing/not available:. Illegible and/or damaged page(s); .Page(s) or volume(s) misnumbered: Bound out of sequence: X Page(s) or volume(s) filmed from copy borrowed from: Cornell University beginning to page 12 Other: TRACKING*: MSH03486 FILMED IN WHOLE OR PART FROM A COPY BORROWED FROM: CORNELL UNIVERSITY > #. '^ a^ > w o o m -n O O O X ■< en 3 3 > CD o m (DO ^■S o < N X M A-- ^ ^: o- ^: > ^;: "^ \ o o 3 3 o 00 s g l;^ 1.0 mm 1.5 mm 2.0 mm ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghiiklmnopqrstuvwxy2l234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxy2l234567890 ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 1234567890 2.5 mm ABCDEFGHIJKLMNOPQRSTUVWXYZ abcdefghijklmnopqrstuvwxyz 1234567890 e^^ S^ ^^ LxJ" V <^ f^ 4. ^f* fp ^Sr *<^^ ^>l C Ci> I TJ ^ 0(/) 2 m O m i> ^^ ^ ^ i. »-• fO Ol o 3 3 3 3 if if *i ^-< 0DI»4 3 ;^ OX i' V ^-«^I**. ^ ^^^ J- SCHOOL OF BUSl:^4t 1 'ill •is 4 m THE REPORT OF MAYOR'S COMMITTEE ON MILK CITY OF NEW YORK ''i-y NEW YORK DECEMBER, 1917 Date Due LIBRARY School of Business "1 JI0V_1 \ ^c., and now (October 1st) from 12j4c. to 14c., and higher prices are to be expected. Within the past week the Dairymen's League, which now controls the source of 90 per cent of the fluid milk reaching this city, has made demands for still further increases in the contract price for milk for the next two months, and the dealers have acceded. The power of the Dairymen's League to control this necessary food in this City appears so nearly com- plete, and its organization so well supplied with funds, from the contribu- tions by its members of Ic. per hundred pounds of milk per month, that the usual protection of the public by competition, and the normal action of the law of supply and demand, no longer exist. The increase in the price paid by the City dealers to the farmers, beginning last October, developed such increase in the supply of milk that for some months past there has been a glut in the milk supply, exceeding the public demand at the prices charged to the consumer It is apparent from inquiry among the families of the poor, whom chiefly the nurses and doctors of the Department of Health meet in their profes- r sional work, that the use of milk has been f^^^fy^^^f^^^Zlll the increased price. In some districts the sales of mjlk for amily use have SLStsed 20 per cent, and this among precisely the fanuhes where the Sh and development of children depend largely upon *« generous^«- of milk instead of other less valuable and less smtable f°°d substitutes such as the proprietary baby foods and coarse soups, f "rt^«=™°'«' *"^ Zs been not only a reduction in the actual amount of '">lk bought for T^^Tl family ui but the mothers have bought for thexr children milk of ! Wr ^de^or ;conomy sake, namely. B and C. instead of A grade, and to this practice, which has been increasing throughout the summer, the Se^:i„L of Health properly attributes the notable increase m the numb^ of deaths from diarrhoeal diseases in children under one yean L«t me call to your attention at this point the fact that bread and m.lk together supply 50 per cent of the total food requirements of all people above the "^ f^Seam from inquiry or from any published record of facts that the cost of producing and distributing milk has increased so far as to jus if y the prices now demanded. I am informed that existing l^ws forbid such coK>perative acts by dealers as would allow them to ^^""^f^^^^^^^^^ economies in the field of city pasteurization and delivery of milk, although these same laws do not seem to be enforced to prevent the action of ^the farmers, which has the force and effect of a controlling monopoly. At the request of the Dairymen's I^gue, and m conlerence with them and with representatives of the dealers, the Department of Health has radically revised the regulations by which the sanitary conditions and safety of our milk supply are protected, in order to remove suchjust causes of complaint as have been presented by the industry or lutve been discovered by the Department. These revised regulations were adopted by the Board of Health on September 27th and will be put in force at an early date. The consumers of the City are neither, protected nor organized and m the interest of their health, and in particular for the sake of the babies and school children of this city, I believe it important to have a prompt and public inquiry and report to you as to the rights and possibilities of relief in this matter. ... ... v „.._ In addition to the inquiry and recommendation for action by your administration, which may be expected from such a committee as you would appoint, I would suggest the propriety of using such premises m the aty as schools, police stations, hospitals, dispensaries, setUement houses. Depart- ment of Health offices, clinics and Baby Health Stations, for central points for distribution and sale of bread and milk and such other staple articles of food as now cost an excessive amount because of the extravagance and wastefulness of the present methods of local sales and distribution, if the committee approves. I would suggest as being particularly capable to carry out such an inquiry as above proposed, the following citizens, who can be relied upon ^'■r-sr. •• I ••■■■ t4 !>1l i^Ml«F*^V to elicit the facts, give full publicity to the rights of producers and dealers, and, at the same time, keep foremost in mind the interests and absolute necessities of the constuner: Dr. Charles E. North, Sanitarian and Secretary of the National Commission on Milk Standards, Chairman. Mr. John H. Love, Chairman of the Committee on Foods of the Merchants* Association. Mr. E. B. Lewis, Member of the Advisory Council of the Depart- ment of Health. Mr. Bailey B. Burritt, General Director of the Association for Improving the Condition of the Poor. Mr. Hugh Frayne, of the American Federation of Labor. In prosecuting the inquiry which I am convinced such a committee could effectively undertake, I beg of you to put the services of the office of the Commissioner of Accounts and the Department of Health at their disposal. Respectfully, (Signed) Haven Emerson^ Commissioner of Health. Office of the Mayor. October 2, 1917. Dr. Haven Emerson, Commissioner of Health, City of New York. Dear Dr. Emerson : Your request for the appointment of a committee of citizens to protect the interests of the consumer and inquire into the causes of the present excessive prices for milk meets with my entire approval. The committee you have suggested will certainly insure an impartial investigation. It is evident that the consumers* interests, up to the present time, have not been adequately considered, and I believe a citizens* committee will be the most effective way of getting at the rights in the matter and seeing that all possible recourses for relief are considered. Such practical recommendations as they make will have the hearty support of the City administration, and if any facilities are needed which are available to the City departments, they will be at the service of this committee. I am inviting the citizens whom you have suggested to serve imme- diately and organize promptly for the investigation. Very truly yours, (Signed) John Purroy Mitchel, Mayor. •OH^ Organization of Mayor's Committee on Milk. On October 4, 1917, Mayor Mitchel appointed the following men to serve as members of a Committee on Milk: The Mayor's Committee on Milk. Dr. Charles E. North, Consulting Sanitary Expert (Chairman), 30 Church Street. Mr. John H. Love, Chairman of Food Problems Committee, New York Merchants' Association. Woolworth Building. Mr. E. B. Lewis, J. M. Horton Ice Cream Co., 205 East 24th Street. Mr. Bailey B. Burritt, General Director, Association for Improving the Condition of the Poor, 105 East 22d Street. Mr. Hugh Frayne,* American Federation of Labor, 2 East 23d Street. Dr. Erxest C. Levy was appointed Special Investigator. Offices were provided for the use of the Committee in the building occupied by the Department of Health, and the assembly room in the same building was set aside for the holding of hearings. On October 8th, four days after appointment, the Committee received the following letter of instructions from Mayor Mitchel : Office of the Mayor. October 8, 1917. To the Mayor's Committee on Milk. Gentlemen : The question which you are considering is by no means new. Its gravit>- has long been recognized by the community and acutely felt by the poor. For some time I have done everything in my power to impress on the Legislature the need of relief. After long delay the Legislature has taken action which makes it possible to intercede for the benefit of the community. Please consider at once the desirability of the establishment by the City of a pasteurizing plant in which milk for the City's institutions could be pasteurized for the City, the City purchasing direct from the producers or their representatives. Is the establishment of such a plant practicable? Would it be economically sound ? Is there any simpler way of securing for * Mr. Wm. Collins, of the American Federation of Labor, acted for Mr. Frayne. the City, in its purchase of milk, assurance of the elimination of unjust profits ? In view of the recent sharp rise in the price of milk and the threat of a further price increase, I request your Committee to study and report also upon the possible advantages of the establishment by the City of a system of pasteurization and distribution for the communitj"^ as a whole. The duty of considering this action has been placed squarely upon us by the Legisla- ture. The act " to define the policy of the State of New York in relation to the production, supply and control of the distribution of the necessaries of life, and to insure an adequate supply thereof at a reasonable price," authorizes action by the municipality whenever the City is faced with actual or threatened deprivation of necessaries by reason of excessive profits or otherwise. The soaring price of milk is a case in point. If the present uncontrolled commercial system of handling milk causes waste in the method of delivery, or opens the door to excessive charges due to private control, we must find means whereby the burden thus unnecessarily and unjustly placed upon the community can be removed. Between excessive profits and the lives and health of children, there can be but one choice. The law confers upon the City the right to sell necessaries "through such agencies as it may determine." Please, therefore, consider the possi- bility of establishing a milk distributing system under a grant of franchise or otherwise. Should any franchise be granted by the City, it must be on terms which place in the hands of the municipality absolute control over profits, and the system must reserve to the City ample power for the strict regtdation of the industry. In this connection, please look into the possi- bility of effecting economies through the establishment of a zone system, whereby the expenses of delivering milk in the City might conceivably be reduced. The existing situation threatens the lives of helpless children; its urgency demands concentration upon the problem and its uninterrupted consideration until a solution shall have been found. Very truly yours, (Signed) John Purroy Mitchel, Mayor. 2. Scope and Program of Investigation. Before undertaking its work, the Committee considered it necessary to draw up a comprehensive plan for the conduct of the investigation in order that it might make the most economical use of the short time at its disposal. An investigation of this same problem by the Wicks Committee in 1916 covered a period of six months and revealed the great magnitude and com- plexity of the main problem and the subsidiary problems involved. The present Committee was asked if possible to complete its report by December 1st, and, therefore, it was necessary' to plan the work on the basis of a period of not more than two months for active investigations. The following outline of subjects for investigation was drawn up: Statistics of N. Y. City Milk Suf^ly {S.L). a Number of dairy farmers. b Number of shipping stations for milk. Number of shipping stations for butter. Number of shipping stations for cheese. Number of shipping stations for condensed. Number of shipping stations for powdered. c Number of dairy cows. . , ^ _ _ _. , -.^ d Total quantity daily received by New York City. e Total quantity formerly received by New York City. / Per cent, from each producing State— now. g Per cent, from each producing State— formerly. h Per cent in bottles from wagons Per cent, in bottles from stores , now and Per cent, in cans from wagons formerly. Per cent, in cans from stores. i Number of retail companies. f Number of retail wagons. . k Number of pasteurizing stations, country and aty. Sources of Information. State Department Agricultural Records. City Department Health Records. Wicks Committee Report. Dairymen's League Records. Milk Conference Board Records. "Milk Reporter." . ^ "New York Produce Review." a b c d Market Prices (PJI., SJ.). By producers* organizations. By dealers' organizations. Standard methods for making. Standard methods for controlling. Sources of Information. Dairymen's League. N. Y. Milk Conference Board. Federal Food Commissioner, State Food Commissioner. Cost experts. SUBJECTS FOR INVESTIGATION BY MAYOR'S COMMITTEE ON MILK. General Questions, « 1. Is present high cost of milk justified? 2. Can high cost be reduced? Cost of Milk Production {PH., A.A., SJ.). a On farms shipping to milk stations. b On farms shipping to butter factories. On farms shipping to cheese factories. On farms shipping to c'd milk factories. On farms shipping to m. powder factories. c Standard methods of cost accounting. d Variations in cost due to— Value of cows. Total volume of dairy milk. Average cow's production. Cost of feed. Food ration and pasture. Labor and machinery. Other farm business'. Sanitary requirements. e Theoretical vs. practical costs. / Cow population, increase or decrease. g Value of farm labor. Sources of Information. State Agricultural Colleges and Stations. State Departments of Agriculture. State County Farm Bureaus. Selected dairy farms. U. S. Department of Agriculture. Country Banks. Cost of Cost of Collection— Fluid Milk {PM., AA., SJ.). a Carrying from farms to shipping station — Individual method. Co-operative method. b Shipping station charges — Receiving and testing. Washing and sterilizing cans and bottles. Pasteurizing, bottling, canning. Cooling. Supplies. Labor, etc. c Transportation — Freight. Refrigeration. Trucking. Ferriage. Suri^lus Milk {PJi., AA. SJ.). a Normal surplus. b Abnormal surplus. c Regulation of surplus. d Manufacture. e Storage. Prices and the Consumer {SJ.). EflFect of prices on quantity consumed. ^ Effect of prices on morbidity and mortality of in- fants and children. EflFect of prices on general health. Fffect of prices on tuberculosis. EflFect of prices on use of milk substitutes. a b c d f Effect of prices on special sections of city. Sources of Information. Milk distributors' records. N. Y. Citv Department of Health records. Infant milk station records. N. Y. A. I. C. P. Distribution. Cost of Delivery (PJI., AA.» SJ.). a City Station- Pasteurization. Bottling. Refrigeration. Washing and sterilizing. Accounting purchases. b Delivery — Horses and wagons. Drivers' wages. Loss on bottles. Shrinkage. Accounting sales. Sources of Information. Milk distributors' and employees' testimony. Milk distributors' books. Railroad freight agents. P.H.=Public Hearings. A.A.=Auditing Accounts. S. I.=Special Investigations. Prices of Fluid Milk, Versus Milk Products iP.H., a Price fluid milk vs. surplus milk. b Price fluid milk vs. butter. c Price fluid milk vs. cheese. d Price, fluid milk vs. condensed. e Price fluid milk vs. powdered. / Price milk and milk products vs. oleomargarine. Sources of Information. Milk dealers. Dealers in milk products (Comm. Merchants). Trade Journals. Can Cost be Reduced? {PJi^ A.A., ^J..j. a Cost of production. b Cost of distribution. Sources of Information. All branches of investigation. t| j * y p 11 The method of securing information on the several subjects was through public hearings, auditing accounts and special investigations and it was proposed to do this work through the following channels : Mechanism of Investigations by Mayor's Committee on Milk. (P.H.) Public Hearings— (a) For producers : Large dairy farmers. Small dairy farmers. Producers for fluid milk market. Producers for butter. Producers for cheese. Producers for other milk products. Producers' organizations. (b) For experts on cost of production : From colleges of agriculture. Coimty farm bureau agents. State agriculture and dairy officials. Federal agriculture and dairy officials. (c) For distributors: Officers of distributing companies. Superintendents of country shipping stations. Milk buyers. Managers of city milk plants. Managers of city retail departments. (d) For consumers: Managers of infant milk depots. Officers of charitable organizations. City health officials. (A. A.) Auditing Accounts — (a) Of producers: Farm accounts. Producers' organizations. (b) Of distributors: Large retailers. Small retailers. ■ Wholesalers. (S. L) Special Investigations — (a) To verify testimony at hearings. (b) To verify figures in accounts. (c) To secure statistics of supply. (d) To show conditions among producers. (e) To show conditions among distributors. (/) To show conditions among consumers. (g) As basis for recommendations. The Committee was assisted in its work by the office of the Commis- . sioner of Accounts of New York City. Leonard M. Wallstein, Com- missioner of Accounts, acted as special counsel for the Committee. He put at the Committee's disposal a large force of expert accountants. In its special investigations, the Committee was also assisted by the /• UFK /issoaation for Improving the Condition of the Poor. 3. Work AccompKshcd. The following work has been performed by the Committee : i'ubhc heanngs, 11. Private conferences with the industry, 6. Auditmg accounts of producers, 17. Auditing accounts of distributors, 16. Special investigations, 10. repon ZpZ>^iToLt'\T:''i'°'''''^^ » *^ W'^"" Committee offtis work3 ^Z ^'l^'' Committee might have full advantage pu4etTcel?;?e Son o1 hT"""^ '^'^^ "«''^' -''''='• ^'^ - '^^ A «., afcertam the relation of high pnces to the quantity of milk uspH to 12^ JthrS^rST ''- ^-"^'^ -^ -- °^ «nSc waTt„rot to s^i-srcr.^.sr d- tltrr- ;;:^t ^rdS -^^^ what economies could be obtained by centklizing dis'^^En "'"^ secuL'T^ S S£Z:f ^^^"T "JP"^*^ ^°-"^«-- ^'^^ was paed f n>m £9!!^ L^TcLSS l^Z "?* 5'*^ ^"'^ «^"^ -»" ro.«„w ^. concermng the cost of production. P™Pl«e audit was made of the books of the Borden's F»rm P a . Co., Inc., through the services nf H.,k«w. d it , ."°™«" « i-arm Products The concisions r^S^f/'^^Jf^fH^wtans' *=^«'««<1 *«ou„ta„t. cacnea as a result of this mvestigation are as follows : per quart in October, 1917. 4 <** t m oepiemoer, 1916, to 14c. tion ^ fo^^c^:^ '"^•'*°" ^"^'^^^^ '-^ -P«ed the following tabula- From June, 1914, to December, 1917 in the Nf.w V„,i, n-^ several food products have advance d in pri^ Is f^lZsT ' ^'^ "'^^''^*' -S^^a^ ______ju^i9i4_D^i,7 !;;js Eggs per doz ^, rr— -^ increase Corn per bu ^ty ^-67 igi Pork per bbl ,^-72 2.00 178 Whcat*1>er bu. ^^-^O 50.50 59 Sugar ^r 100 Ibi .-^O 2.26 151 Oatsp^bu.... . 3.32 6.90 m Beef per lb '.[',',][[ -43 .84}^ 5^ Cheese per lb •** .32 77 Butter per lb i:.::::::::;: yt -^ty^ 7$ Milk per qua rt -^ .47 74 '^ .14 55 13 Milk, therefore, has not been alone in its rise in price and has risen to a much less degree than nine other important food products. The bulletin published by the Bureau of Labor Statistics of the U. S. Department of Labor in November, 1917, entitled " Prices and the Cost of Living," gives a comparative table showing the average prices of food on September 15th of each year from 1913 to 1917, of which the following is an extract : Article Unit Sirloin Steak 1 lb. Bacon lib. Eggs 1 doz. Flour 1 lb. Corn Meal 1 lb. Sugar 1 lb. Milk 1 qt. Sept. 15, 1913 Sept 15, 1917 Per Cent Increase .262 .281 .375 .033 .031 .057 .089 .333 27.1 .442 57.3 .525 40.0 .073 121.0 .062 164.5 .098 71.8 .118 32.6 per cent per cent per cent per cent per cent per cent per cent For the same period in New York City the following figures are given : Per Cent Article Unit Sept. 15, 1913 Sept 15, 1917 Increase Sirloin Steak 1 lb. !264 IS 39.4 per cent Bacon lib. .262 .440 68.0 per cent Eggs 1 doz. .442 .592 33.9 per cent Flour lib. .032 .079 147.0 per cent Corn Meal lib. .034 .076 123.5 per cent Sugar 1 lb. .051 .092 80.4 per cent Milk 1 qt .090 .124 37.8 per cent ■ The average percentage advance in the retail price of the six food products other than milk shown in the above tables was 80.3 per cent for the country at large and 82.0 per cent for New York City. The price of the six commodities thus advanced 2j4 times as much as milk in the coimtry at large and 2%o times as much in New York City. The rise in the price of milk in New York City since September, 1916, including both the prices paid to the producer and the prices at which milk was sold to the consumer, are shown in the following table expressed in cents per quart: Dealer Received Dealer r '^ ^ Dealer's Period Paid Retail Wholesale Actual Margin September, 1916 3.46 9 6 7.32 3.86 October, 1916— January, 1917, 4 mos. 4.67 10 7 8.32 3.65 Feb.— June, 1917, 5 mos 4.52 11 8 9.32 4.80 July, 1917 4.84 11J4 8^ 9.82 4.98 August and September, 1917. 5.94 12j4 9 10. 54 4.60 October, 1917 7.46 14 10 11.76 4.30 In the above tabulation the actual money received by the dealer is shown in the 4th coltunn and is made up from averages allowing 56 per cent of the INTENTIONAL SECOND EXPOSURE !t 12 iT^^l^^^^A^"^"^'""} "^ ^''^'^' ^^^ Y°^^ ^''^ Committee and the New York Assoaation for Improving the Condition of the Poor. 3. Work Accomplished. The following work has been performed by the Committee: Public hearings, 11. Pri^te conferences with the industry, 6. Auditing accounts of producers, 17. Auditing accounts of distributors, 16. Special investigations, 10. r^i ''°"'^^^^^ "^'^^'^ ""^ ^"^ "'^^""^ contained in the Wicks Committee 17^1 '^''' r^f"^ u """"^^ "^^ '^^ Committee might have full advantage t^ltT'^^^^^^ ''' -'^^^^^^ --^"^ '- '''' with condl A survey of 2^200 families of consumers was made, which had as its purpose to ascertain the relation of high prices to the quantity of nSc uslJ to m ntw'"^'"*' ~""^™"? *e quantity and price of milk was sent out to 1^ other aties m America. A questionnaire was sent to all distributors of milk in New York City to secure statistics regarding distribution, for the purpose of determining what economies could be obtained by centralizing distri^tion. ^ 1 hrough the testimony of witnesses and private investigations data was S'froX^':; '^'T "''^'^'"^ """^ ''^ ^'^ ^°^^ C'*y -ealer's Period Paid Retail Wholesa le Actual Margin September, 1916 3.46 9 6 7.32 3.86 October, 1916— January, 1917, 4 mos. 4.67 10 7 8.32 3.65 Feb.— June, 1917, 5 mos 4.52 11 8 9.32 4.80 July, 1917 4.84 11^ 8^ 9.82 4.98 August and September, 1917. 5.94 12j^ 9 10.54 4.60 October, 1917 7.46 14 10 11.76 4.30 In the above tabulation the actual money received by the dealer is shown in the 4th coliunn and is made up from averages allowing 56 per cent of the % I 14 S '::£^^t]:tx '- "^"^^ -- -^^ ^ p^^ «- of the supp,, a fmction less than the r^r lIT P"'" "'^'^^^^ ^"^ ^h^'esale milk are discounts and losseVSte reSuottlftLT' " t "'l™^"- *«* retai^rice received a faction ,.s int%SrtS, ;t ^^ ^^^'^^"^ deaieS^a^trz iSc:^^ rhTpr-^ ^^ f -'- - -^ th^assumption that aH Z^ -^ rh^sa^^ i^S If^i^L"^ Questionnaire to 123 Cinre »^^. ^ ^° '^ ^'™s R«5>«DiNG THE Rise IN Milk Prices. An inquiry was sent out to 123 riHw ,„j •• 66, including New York City. ' ^'^'"'^* '^^''^ '«="v« #i % 18 In reviewing these figures, Professor Sherman shows that people can afford to pay 20c. per quart for milk if they can afford to pay 25c. per pound for beef. The above statement is limited strictly to the food value of milk from the standpoint of calories. At the New York prices for September, 1917, for all products but milk and the October price of 14c. for milk, the same table would be as follows : Food Price Per Lb. Cost of 3,000 Calories Fat Pork Bacon Steak plus fat Steak, lean Eggs, 8 at 60c. dozen. Milk (14c. qt.) 1 pt.. $0.39 .44 .37 .37 .40 .07 $0.31 .48 1.63 2.33 1.88 .65 Prof. M. J. Rosenau, of Harvard University, states that the value of milk is as follows: 2 large ^gs, a large serving of lean meat, 2 moderate-sized potatoes, 5 tablespoonf uls of cooked cereal, 3 tablespoonfuls of boiled rice, or .2 slices of bread. A glass of milk is about equal to From the U. S. Department of Agriculture another method of tabulating the food value of milk is as follows: Milk at— Is as Cheap as Sirloin Steak at Or Eggs at 7 cents 8 cents 9 cents cents cents 15 cents 1$ a quart a quart a quart a quart a quart a quart a a a 16.3 cents 18.6 cents 21.0 cents ^ -, 23.3 cents a 'po,und ^*'*'27.9 cfeits a pound 34.9 cents a pound pound pound pound 17.6 cents a dozen 20.1 cents a dozen 22.6 cents a dozen -/^S.l c^nts a do^^en *^*'*30.2 cents a dozen 37.7 cents a dozen Concerning the food value of milk. Professor Sherman points out that it is a superior food in three respects, as follows: (1) Its food value in protein, carbohydrates and fats was partly realized a few years ago. (2) Its very exceptional value as the means of keeping a proper balance in the mineral constituents in a diet. (This refers to the salts of several kinds contained in milk.) (3) That it contains two growth-promoting substances called vitamines. 19 Concerning the last item of value mentioned above, namely, the vita- mines, most important and interesting discoveries have been made in the last three years. The most recent work has been performed by Prof. E. V. McCollum, of Johns Hopkins University, who has followed up the work begun by Professor Osborne, at Yale, and others. These discoveries show that there are existing in milk and in some other foods, two unknown substances which stimulate growth. One of these is found in the fat and the other is found in the water, or solution. Their chemical character is unknown and they have never been separated from the food materials with which they are associated. Professor McCollum has pointed out that the seeds of plants are good food so far as they go, but that they are deficient in these growth-promoting substances, which are found chiefly in the leaves of all trees and plants. They are found in such leaves as cabbage, lettuce, spinach and cauliflower, and above all in milk. Concerning milk and milk products, he says it is not generally appreci- ated that these articles have a dietary value far greater than can be expressed by their protein and energy contents. In experiments on rats, Osborne, Mendel and McCollum have shown that the feeding of butter fat and of milk promotes growth in a remarkable way for the reason that the vitamines or growth-promoting substances are present in milk in an abundance and in a form which is readily available, as in none other of our common foods. Because of its nutritional value and particularly because of its growth- promoting value, milk is the ideal food for infants and children. In testifying before the Committee, Dr. L. Emmett Holt, one of the leading specialists in children's diseases, stated as follows : " For infants during the first year a quart of milk a day is , necessary. For the second year, a pint and a half. There is no food as economical at present prices for the nutrition of infants as milk. ♦ * * The habit of giving tea and coflFee to young children is positively injurious. For children between the ages of two and six years, the daily ration of milk should be one pint per day as a minimum. " Dr. Lucas, of Berlin, found very greatly increased susceptibility to tuberculosis as a result of under-feeding particularly among chil- ■ dren. I should think that after six years 6( age up to twelve or thirteen years, a pint of milk a day ought to be allowed to all children." Professor Sherman, in his testimony, said:^ " We cannot expect a good community dietary if that community uses less than one-half quart of milk per capita per day. Unless there was that amount of milk, the dietary would be seriously one- sided. The milk has exceptional value as a food for growth due to the so-called vitamines * * * It is the most important single *•, 111 1 1^ i III .III' food for adults. It ,s more economical to produce than meat. A man confined to a bread and meat diet will show deficiencies, while a man confined to a corresponding bread and milk diet will go on indefi- rS / -it ^,,^^^^^^^^^ ^iet will always be improved by an addition of milk. If ,t was a question of one or the other, I think it important that a man have milk rather than meat." Prof. Graham Lusk, in his testimony, says: 1 /If "" ^^""'^^ ""^ ^""^ '^'^''^^ ^"^ "^^^t "ntiJ they have bought at least three quarts of milk. Milk contains not only protein of animal ongm but also a very vauable fat which has specific properties for growth. It also contains in aqueous solution materials which prevent the development of beri-beri and pellagra. Milk is the cheapest form of protein you can get. It is the most complete and sufficient food that can be had Around the dairy farms centres the proper nutri- tion of a nation." ^ ^ How much milk should be used for drinking purposes by New York lSc thi (^r "'' u' ^"^"^^^^^/^^-'"'"ended by Professors Sherman and Lusk, the City would consume the following amounts daily : Quarts of Milk Which Should Afi^e Population ^ Used a Day ^ Each All Under 1 year 130,500 11 7;77Z, 1—2 years ^?fi7f^ /,w ^x , 130.500 2-6. 6-14 years. . . . i .' i .' ' • 1 387 900 iY"^ ^ll Yi ^^'^ZS Over 14 years 4 092 392 /i^ 1 ^^\ 3 ^^^'^SO ^'"^^"^^^ O glass) H 1,023,098 Total S 737 40? ^'^-^^'^^^ 1,942.573 Milk which New York City should drink-1, 942,573 quarts d^ Actual amount used for drinking is probably about 707,486 quarts daily. The food value of milk has been unappreciated by the public at lar^e While as a food for babies it is well known, it has been thought that i was not adapted to adults on the supposition that it contained less LnS^^^^ materials than the so-called solid foods. Solidity in food is a merfinSS due to the presence of fibre which holds vegetable and animal substrnces in can be assimilated. The liquid character of milk simply means that it isl Tnfan™ " """' """' ^'^''''' '"' '^^^"^^^^^^ ^^ ^^^''^^ -^ well Is] For infants it is not merely a convenient food, but, because of the ores ence of the so-called vitamines or growth-stimulati^g substances it s" vitally necessary for the development of infants and children. Its value as m 21 a food for adults is just beginning to be appreciated. It furnishes to the body those materials which are most necessary for the increase of strength and endurance. It is believed by those who have investigated the subject that the nations and races of men which have done most in the development of the world and have shown the greatest physical strength and vigor are those nations which have depended to the largest extent on dairy products and milk for food. At 14c. per quart milk is the cheapest of animal foods. Even up to 20c. per quart milk can compete on favorable terms with any animal food at present prices. The population of New York City may be divided into certain age groups showing the number of infants and children and the number of per- sons of each age in ten-year periods from one year of age to more than seventy-five years of age. The quantity of milk used as a beverage, or for drinking purposes, is 707,486 quarts out of a total supply of 1,600,723 quarts, the diflFerence being used for cooking and manufacturing purposes. The testimony of Dr. L. Emmett Holt and Prof. Graham Lusk before the Com- mittee showed how much milk should be used by infants, children and adults for drinking purposes if they are to secure the greatest benefits from milk as / an article of diet. The quantity of milk which should be used as a beverage ^ is 1,942,573 quarts daily, that is to say this quantity should be used as a 7 beverage in addition to the quantity used for cooking and manufacturing \ purposes. The above facts are shown in the chart on page 22. The upper line of this chart shows the population of New York City according to the different ages. It is notable that between the ages of 20 and 25 years there is a high point due to the young aduHs of both sexes who come to New York both from the rural districts in America and from foreign countries. The lower line in the chart shows the amount of milk used as a beverage at the present time by this population. The middle line shows the quantity which should be used if the people consumed milk as an article of food in the quantities which the scientists state could be used by them to best advantage. The difference between these two lines shows how much should be added to the present milk supply to satisfy the needs of the population if milk were properly used for drinking purposes. 7. The Effect of Prices on Consumers. The price of milk is of vital importance to infants and young children. Older persons may exercise choice and select their foods, but infants and children have no choice and are dependent upon milk. When children under two years of age are deprived of milk and placed on a diet of other food they do not thrive. High prices in New York City during the past year have resulted in changing the diet of young children in the poorer parts of the city from milk to other things, or from milk of high grade to milk of lower grade, with consequent injury to their health. I \ \ 22 -I -J ^ !ii 'f,00^ f^f- 5 ^ ^ 23 Reduction in the Quantity of Milk Consumed. A milk census taken in October, 1916, shows the city was using 1,900,000 quarts of milk a day. Similar census taken on October 5, 24 and 25, 1917, showed, respectively, 1,411,658 quarts, 1,576,723 quarts and 1,531,968 quarts, indicating shrinkages of 26.7 per cent., 17 per cent, and 19.4 per cent. Statistics from large companies show decreases for October, ranging from 50 per cent, to 11 per cent., in various districts of the city. These shrinkages in the amount of milk consumed are undoubtedly due largely to the advances in price which have recently occurred. A survey was made by Bailey B. Burritt, Director of the New York Association for Improving the Condition of the Poor, of 2,200 families in various parts of Manhattan and Brooklyn. This survey required 250 investi- gators, composed of persons in the employ of the Association for Improving the Condition of the Poor and health nurses of the City Department of Health. This survey is summarized as follows: Survey Made Jointly by the Department of Health and the Asso- ciation FOR Improving the Condition of the Poor for THE Mayor's Committee on Milk. (October, 1917.) Selection of Families for Milk Survey. Aim — To get some light as to how families living on a very narrow margin are meeting the increased cost of milk. Method of Investigation — Schedules were placed in the hands of inves- tigators, who made a house to house canvass of a particular selected section. Only such families as had at least two children under six years of age were considered, and all families under the care of the Baby Health Stations or receiving milk from a relief organization were eliminated. Investigation— BodiTd of Health Nurses, settlement workers and A. I. C. P. field workers made the survey. Locations— E3ich investigator was sent to a selected section and told to canvass each house. Since there were 250 investigators, it is felt that the whole city is quite well represented. All boroughs were represented. In Manhattan representative sections are Cherry, Mott, Henry, Allen, Warren and Christopher Streets, and 99th to 105th Streets from the East River to Third Avenue, 53d to 66th Street from the Hudson to 10th Avenue. Corresponding sections in Brooklyn are Hicks and Bond Streets, Greenpoint, Metropolitan and Thatford Avenues. In the Bronx, Washing- ton Avenue and Lorillard Place ; Rockaway Avenue in Jamaica and Spruce Street in Richmond Hill. The survey was made during the week of October 9, 1917. Of the 2,500 schedules sent out 2,200 were used in the tabulation of results. « * [ t 1 V I §"' 24 MILK SURVEY (OCTOBER, 1917). Amount of Milk Purchased, with Changes since 1916. Number of families, 2,200 (each containing two children under 6 years). Members of 2,200 families • • . • 12.439 Adults 4,467 Children from 6-16 2,534 Children under 6 years 5,438 Milk purchased in 1916—4,797 quarts daily Milk purchased in 1917—3,193 quarts daily (141 cans condensed milk) Difference 1,604 quarts daily Estimated milk needed by 12,439 people- Children under 6 years (1 quart each) 5,438 quarts Children from 6-16 (H Quart each) 1,267 quarts Adults one-third quart each 1,489 quarts 8,194 Details with regard to changes in milk supply from October, 1916, to October, 1917. Number of families getting more milk 121 Number of families getting same amount 599 Number of families getting less 1.480 Number of families getting more condensed milk, 420. Families cutting milk supply— 25 per cent, or less 219 25-50 per cent ?69 50-75 per cent 169 75-99 per cent 3 100 per cent 120 1,480 (Of these 120 families dropping milk entirely, 73 substituted condensed milk.) Families buying from }4 to 1 quart less 863 1 to 2 quarts less 449 2 to 3 quarts less 131 3 to 4 quarts less 31 4 to 5 quarts less o Of the 1,480 families getting less milk, 1,213 are substituting tea and coffee. Families changing from Grade A to B 266 Families changing from Grade B to C 67 Families changing from bottled to loose 474 Families with babies less than 1 year old 982 Of these 982 families Those buying less milk than in 1916 562 Those buying same amount of milk 316 Those bu3nng more milk 79 Those dropping their milk entirely 25 982 Mothers' statements — In 829 families, where milk has been decreased, the mother states that the children arc cither losing weight, or are not gaining. In these 829 families there arc 2,090 children under six years of age. Tea and Coffee— 2,148 children under six years of age are drinking tea and coffee. 25 Nationalities Represented. Italians 725 Americans (colored, 73) 497 Jewish 416 Germans and Austrians 220 English, Irish and Scotch 185 • Slav 93 Orientals 40 • Danish, Swedish and Norwegians 12 French 6 Spanish 4 Hollander » 1 Greek I Concerning this survey, Miss Gillette, who had direct charge under Mr. Burritt of compiling the results, testified before the Committee as follows : " The sections in which the investigations were made were on the lower East Side, such streets as Cherry, Mott, Henry, Allen, Warren and Christopher, and from 99th to 105th Streets, from the East River to Third Avenue, and oh ihe West Side, from 53d to 66th Streets, and correspond- ing sections in Brooklyn, such as Hicks and Bond Streets, Greenpoint, Metropolitan and That ford Avenues, and corresponding sections in the Bronx, as Washington Avenue. " We have eliminated all families in which there were not two children under 6 years of age. This study is based on 2,200 families. There were 5,438 children under 6 years of age. Between 6 and 16 there were 2,534 children. " 121 families were getting more milk than in October, 1916. " 599 families were getting the same amount of milk. " 1,480 families were getting less milk. " 219 families have cut their milk supply 25 per cent. " 969 families were getting 25 to 50 per cent. less. " 16l& families were getting from 50 to 75 per cent. less. • " 3 families were getting from 75 to 99 per cent. less. " 120 families were getting 100 per cent. less. " 982 families had children less than one year of age. "2,148 children under 6 years of age were using tea and coffee as substitutes for milk." Increased mortality from diarrrheal diseases was noted in New York City for the months of August, September and October. A survey of other cities in America shows that in the majority of them there was a similar increase in deaths among babies from diarrheal diseases. A similar experience has occurred in foreign countries where, because of war condi- tions, infants were deprived of milk, and the resulting increase in the death rate was promptly checked as soon as relief organizations arranged for an adequate milk supply, for mothers as well as for infants. There is no doubt of the fact that high prices and the shortage of milk have a direct effect on infant mortality. ii k i ) 26 8. Cost of Production. .v.;>B. CO., of n,ilk producL u^E pS, Zd ,"J S IT^ piled includes fi^rp«; fmm o^a a - / . ^""^'"^"s. ihe data com- milk to New YoA atv Offl , *?"^ ^uT '" *" ''^ '''^'^ contributing of these Sut^tmaed^Ss' 31?^^°^'^""'^*'^ "^^'^^'^'^ ants se^ired fig^rel^t first L„h f°'""""'='^^ °^" S'""? ^^ *«P«« ^cco^r^X- showcostsranS?;l^irr,rn;^tir-^^^^^^ chartf?i::r:?cs:ur.t^;^s^^^^^ ^Vt^h^ "r were presented in tabular form as foIlowT: ' "^ *•"' '*='"'*' Item ^nIT' ^■'S''"',"" Producer Feed ~ ■ ■ Labor $f9-40 $51.54 $68 00 Overhead ^^■^^ 18.15 «^ 1^-82 23.22 49;00 Credits $86.94 $92.91 U^l^ ^" O 21.00 20.00 Net cost per year. , Production per cow..:; .■.■.■;.■ *? iSt .k ^h?^ $142.00 Cost 100 lbs. milk .;.::::: .i^s-m?""- .,?;^??"'^- soooib,. Cost per quart *«„, $1.0911 $1,775 -^^^ ^ ••■ 0332 _^^^(g^ 038S range'EtcS'iSl^^s "^^Xtd7r;i T^^T^ many cows in New England producTe u^der V^ T ""' *"'" "* exceeding doubtful if Lst ^wsT^ew £2^°" ' ^\ ''^'- '' '^ more than 3,500 to 4,000 poundlper year ^ """ '"■°*^"*='"S "'"*='' The above tabulation is objected to by the Wicks Committee, on the 27 ground that the items for labor are not large enough to cover the cost of labor in New York State. It is to be noted that in the year 1914 the cost of producing milk was less than 4 cents per quart in cows producing more than 5,000 pounds of milk per year. These costs, however, are figured on the costs of feed and labor in 1914, which were much lower than similar costs at the present time. The Wicks Committee gathered information from a large number of dairy herds in groups and in individuals, in order to ascertain the cost of producing milk previous to October, 1916. Among these was mentioned statistics from 174 herds, including 5,308 dairy cows, Delaware County, New York, including the statement of the amount of grain, silage, hay, pasture, labor and miscellaneous costs necessary for maintaining one cow for one year during the years of 1911-1913, inclusive. Similar figures were gotten from the herd of cows at St. Lawrence University, New York, from 42 herds in Oneida County, New York, from a dairy herd at Cobleskill, New York, and from the tabulation made by Professor Larson of Columbia University. The results of these investiga- tions were as follows: Cost Per Cost of Cost Per No. of No. of Cow, Per 100 Lbs. Qtof Source Herds Cows Year of Milk Milk Delaware Co.. N. Y.. 174 5,308 $110.75 $1.55 $0.0335 St Lawrence University, N. Y. 1 20 127.75 1.784 .0375 Oneida Co., N. Y 42 751 111.26 2.167 .0466 Cobleskill. N. Y 1 .... 116.64 Prof. Larson. Columbia Uni- versity, N. Y 127.75 1.784 .0375 At the time the above figures were compiled the cost of grain was $32 per ton, hay $18 per ton, silage $5 per ton, labor 20c. per hour. Most of these costs have advanced from 50 to 100 per cent since that time. Regarding the amount of milk produced by cows in the State of New York, the Wicks Committee came to the conclusion, after six months' investigation, that "the average production of all enumerated dairy cows of the State of New York approximated 4,000 to 4,500 pounds of milk per annum." The cost of keeping a cow does not increase at the same ratio as the quantity of milk produced increases. For example, from the Wicks Committee report the following figures are taken : Cost Per Cow Production $107.67 4,695 lbs. 124.63 5,896 lbs. 150.75 8.500 lbs. Concerning the prices paid to the producer, the report of the Wicks Committee says : " Up until the month of October, 1916, the price to be paid to the producer was largely determined and controlled by the price which the consumer was in the habit of paying * ♦ * in the large cities. I 'i li 11 28 In other words, the consumer * ♦ ♦ had become accustomed to pay a certain price for a bottle of milk in the same way that he became accus- tomed to the payment of the street car fares * * *. An attempt to increase the customary price was followed by organized resistance * * *. The result was that in determining what price should be paid to the dairymen no heed at all was paid to the actual factors of cost." As to the necessity for high prices the Wicks Committee report says : " The demands of these dairymen were based upon necessity. The general public and the buyers and everyone familiar with the facts by that time conceded the justice of the demand. Above all, their demands were reasonable. " The increased price proposed by the dairymen was nearly four times the average profits of the previous year (of the distributors). To pay this increased price meant necessarily an increase in the price to the con- sumer ♦ ♦ ♦. "The Committee believe that up to this time the State has entirely neglected by any competent officer or body to supervise, control or aid in a situation like that shown to exist. "The State has made it dangerous for the distributors to meet the organized dairymen upon common ground * * ♦." Cost of Production, 1916-1917. Concerning the cost of producing milk in the State of New York in the year 1916, the Committee received testimony from the officials of the Dairymen's League and Prof. G. F. Warren. Mr. Cooper, the President of the Dairymen's League, said : " The cause of high prices is that the price of feed is rapidly increasing and also the price of labor ; ♦ ♦ * our most reliable figures are obtained from the College of Agriculture, that is by Prof. Warren. " The formula contained in these papers (from Prof. Warren) was used as a basis for price fixing by the Board of Directors of the Dairymen's League and representatives from the different branches. The general result of formula is, labor 3 hours, grain 30 pounds, hay 60 pounds, silage 1 10 pounds, plus 29 per cent, and a credit of 1 1 per cent. That was worked by filling in the blanks in the formula with current prices, as follows : S^*»" $54.60perton |?fy 12.00perton Silage g.OOperton " The particular price arrived at by the Dairymen's League was $2.97 per hundred pounds. This was multiplied by 111.9 per cent, to get the orice for October." ^ Prof. Warren stated in his testimony that "the standard amount of time recognized for taking care of one dairy cow is 150 hours per year; * ♦ * it takes practically one pound of grain for three pounds of milk." 29 Data was secured from herds from Broome County, N. Y., of 56 farms keeping 798 cows. These were farms with six or more cows, not selected. For the year ending May 1, 1915, these herds produced milk by months approximately as it was needed in New York City, as follows: New York Broome County Date City Supply H erds May, June and July 26.7% 27.1% Six months beginning October 1st. 47.8% 51.4% The formula from a study of these Broome County herds is as follows : To Produce 100 Pounds of Milk. Cost Items Amount Grain 26.6 lbs. Silage 96.1 lbs. Green feed 14.7 lbs. Dry forage , 73.3 lbs. Labor 3.38 hours " The prices of milk, figured on that formula, will come within 5 per cent of the price of milk based on all information available in the market ; * * ♦ this price is based on the average cow. The butterfat for Broome County was 4 per cent." Figures obtained from 21 New York farms keeping 386 cows in larger herds than the average, used to produce 100 pounds of milk, the following: Cost Items Amount Grain 29. 1 lbs. Silage— green food 109.4 lbs. Hay 49.4 lbs. Labor 2.37 hours " The cows average 6,446.9 pounds per year. The above costs amounted t o 8L3 per cent ; the butter fat was 3.5." Professor Warren gave his own summary of the data received from Prof. Frank App, of New Jersey, from the Connecticut Agricultural Experi- ment Station, Bulletin published in July, 1917, from the Massachusetts Agri- cultural College for sixteen years, from the Connecticut Agricultural Col- lege for five years, and from the New Jersey Agricultural Experiment Station. The average of all these figures is stated by Professor Warren in a formula which is as follows : Production per cow, 6,197.8 pounds of milk. To produce 100 pounds of milk it requires. Grain .• 33.1 lbs. Silage 97.2 lbs. Hay 61 lbs. Labor 2.83 hours The above costs equal t o 83.8 per cent of the total. The Professor stated that experiment stations are feeding a little on the side of diminishing returns, that is, they are overfeeding, while the farmers are getting more returns for feeding. V I %■ 30 Professor Warren submitted an exhibit showing the average investiga- tions published by Michigan, Connecticut and New York State Agricultural Colleges as a result of cost accounts compiled from six separate investiga- tions. From these he derived the formula of cost items in the production of 100 pounds of milk as follows : Grain 34.7 lbs. Hay 51.8 lbs. Silage 105.9 lbs. Labor 2.59 hrs. He assumed that the cost of these items was : labor 25c. per hour, grain $55 per ton, silage $6 per ton, and hay $15 per ton. This would make the average cost of 100 pounds of milk $2.94. If the figures for New Tersev are substituted for Michigan in this formula it makes the average cost $2.83 per 100 pounds. This_is 15c. i^er J 00 pound s below the cost of prod ucing m ilk in the wi nter dairies of Broome Cotin ty, New York . Professor Warren summarized the testimony by saying: " The Broome County figures alone to my mind are the best figures upon which to base conclusions." Concerning the price of labor, Professor Warren states : " The price of labor of 30c. an hour cannot possibly be used in this formula. If they (the Dairymen's League) used 30c. an hour (in arriving at their cost price) the price would have been higher than they get. We assume that (in the month of October, 1917), the cost of grain is $55 per ton, silage $6 and hay $15 and labor 25c. an hour. " Under these conditions the cost of producing milk at the present time (October, 1917) would be 73.3 per cent more than was received for milk in the years 1914 and 1915. You would arrive at a figure of $3.43 for 4 per cent milk this year. This formula (for Broome County, New York) represents a reasonable degree of good business management. The farmers are better than the average. The con- sumer would not be paying the cost of inefiiciency. The herds are larger than the average and labor is more efficient. If farms are well managed this already represents the application of that efficiency you wish to apply. ♦ ♦ * I believe that 25 per cent of the milk If produced for New York City is produced on probably as efficient a 4| basis as this. • " There were on New York farms in April, 1916, 102,153 hired men. In April, 1917, there were 86,245 hired men." Mr. G. W. Bush, one of the statisticians of the Dairymen's League, testified that he had made calculations as to the cost of milk, using Professor Warren's figures and figures gathered from other sources. As the result of 31 these calculations he had come to the conclusion that the correct formula for the production of 100 pounds of milk is : Grain 34.7 lbs. Hay 51 .8 lbs. Silage 105.9 lbs. Labor 2.59 hrs. These mn^ttitntpH 7« 4 p^^ r^nt "^ ^^^ ^^^^^ ^f'llt He testified that the proper prices for these items for the month of October, 1917, were: Grain $55 per ton Hay $12 per ton Silage $5 per ton Labor 30c per hour This amounts to $2.93 per 100 pounds of milk, yielding 3.5 per cent butter fat. He stated that it costs five times as much to produce milk in winter as in summer and that if the yearly average cost of milk is $2.93 per 100 pounds the price for October should be $3.23 per 100 pounds. He submitted a table showing the increase in the cost of grain as follows : Increase in the price of feed: — - " ■ ■ ~-^ Feed Oct.. 1916 Nov., 1916 Sept., 1917 Gluten $35.57 $41.45 $57.00 Bran 31.07 33.70 38.00 Dry Grains' ;.'. '. 35.70 40.70 59.00 Brewers' Grains 28.95 33.95 49.00 Cotton Seed Meal 42.95 46.45 55.00 Corn Meal 35.50 40.15 48.50 Hominy Meal 39.20 43.70 62.00 Average Prices 36.50 41.07 57.31 Labor, the witness stated, could be obtained in 1916 at a cost of 20c. per hour. In the year 1917 this cost has increased about 50 per cent and the scarcity of farm labor is a most vital worry. During the past year the cost of cows has increased at least 25 per cent, utensils 33 to 50 per cent. In the summer of 1917 Professor Warren sent out a questionnaire to 1,646 dairies owning 32,904 cows. Between April and August they sold 1,836 cows. Of these 1,554 were good cows, sold because of scarcity of labor, high cost of feed, and low selling price of milk. Mr. Elbert S. Brigham, Commissioner of Agriculture of the State of Vermont, testified that the list of cost items in the cost of producing milk includes, cow, food, labor, buildings, equipment, miscellaneous, managerial ability and business risk. The present conditions of the labor market are such that 25c. an hour certainly is a conservative figure for use in computing labor cost. 1 \ p- ' i iiiiliji 71. mV,'. "A If' I ', '' 1 .1 I.;, h\\ fl}|! it III 52 Managerial ability is a cost item that must be recognized. A farmer who successfully conducts a dairy enterprise is justly entitled to something more than the regular wage, otherwise the boss stands on the same level as the hired man. The Federal Farm Management Experts of the United States Depart- ment of Agriculture state that 10 per cent of the total costs of conducting the business is a reasonable charge for managerial ability. The total costs in a survey of Vermont farms was for caring for one cow per year $123.74, consequently $12.37 is the proper charge to be allowed for managerial ability. Mr. Brigham submitted the following statement regarding the costs of milk production in Vermont: Summary of cost of milk production, May 1, 1916-April 30. 1917, on 212 Vermont farms located in 12 counties. 4,650 cows 5.328 lbs. (2,478 qts.) milk per cow Food Cost Per C/Ow Grain, 1,240 lbs. at $41.12 per ton $2'; 48 Silage, 5,444 lbs. at $4.39. :. .'..*.'...'.'.'.'*.'.'"* 11 93 Other succulents, 400 lbs. at $4.00 n an Hay, 3,500 lbs. at $11.94 '.'. .*.*.*.*.*.'.* .'.■.' .;;;.*;.'; ■ 20 93 Other dry forage 51 Pasturage V^V^'.\\'.V.V^'^'.V. 6^95 Total food cost ^^ Labor Cost Man labor, 158 hours at $0219 $34 53 Horse labor, 8 hours at $0.141 1.09 Total labor cost $35.62 Overhead Costs Interest on animal inventory ^ 44 Bedding 1.'69 Use of buildings 7.50 Use of equipment !!!*.]..! 1 !.*!!! ! 1 12 Bull service '..'.'.'.'...'.'.'.../.'.,'. 1 94 Interest on feed inventory 0.86 Miscellaneous costs 3^97 Total overhead costs |21 52 Managerial ability, business risks 12 . 37 Total costs $136.11 Average Returns Per Cow Increase value of cows $7 28 j!^^nure ;..*;::::.*:::::;::: 12:96 Calves 3 52 Hide.« and feed bags 0.49 Total returns for items other than milk $24.25 Net cost of milk ($136.11— $24.25) %\\\ 35 Total production, 2,478 quarts ..5,328 lbs. 33 After stating the actual costs as determined on Vermont farms from May 1, 1916, to April 30, 1917, Mr. Brigham submitted the following set of figures to show the probable cost of producing milk on farms in October. 1917: Outline for Computing Cost of Milk Production Probable Cost October 1, 1917. Food Cost. Grain, 1,240 lbs. at $50.00 $31.00 Silage, 5,440 lbs. at $5.00 13-60 Other succulents, 5,440 lbs • • •! Green Oats, etc., 5,440 lbs "-^ Hay, 3,500 lbs. at $13.00 • 22.75 Other dry forage (corn fodder, straw, etc.) "-^ Pasture ' '^ Total food cost $76.10 Labor Cost. Man Labor, 159 hrs. at 25c $39.50 Horse Labor, 8 hrs. at 18c I -^ Total labor cost 40.94 Total overhead costs 1 c'Si Managerial ability, etc 15.01 Total cost ; ^^JMJ Total returns other than milk 18.45 Net cost of milk ^^^'^ Milk production, quarts «n nco? Cost per quart at farm $^*S^?c Cost per 100 lbs. at farm 2.75 Prof. W. P. B. Lockwood, of Massachusetts Agricultural College, Amherst, Mass, presented a summary of figures obtained from 87 farms from May 1, 1916, to April 30, 1917, in the State of Massachusetts. Cows averaged 6,760 pounds of milk per year. The census figures show that for the State of Massachusetts the average is 4,700 pounds per year. The total cost per cow in the 87 herds was $201.36. Subtracting credits left $168.45, and adding 10 per cent for managerial ability makes $185.31, which is equal to .0618 per quart. A second set of figures shows the cost of producing milk from cows which produced only 5,005 pounds of milk per year to be .0724 per quart. Using the September, 1917, prices for grain, it makes the cost .0816 per quart. The cost of labor is 26.8c. per hour. Where the percentage of farm receipts for milk is less than 60 per cent, on 249 farms, the average labor income is $714 per year. Where the receipts for milk are over 60 per cent, on 135 farms, the average labor income is only $383 per year. In other words, the less the dairyman depends on milk for his income, the greater are the returns for his labor. \ ' 1 1 k\ i'il 34 Tabulations presented by Professor Lock wood are as follows : Cost Last Year — Average Massachusetts Cow (Based on the group of records representing the average cow in Massa- chusetts showing cost for the year May 1, 1916, to April 30, 1917. Figures from 17 herds, 323 cows, having an average production of 5,005 pounds of milk per cow.) Items of Cost. Quantity. Price Per Ton. Peed — Grain 2,430 lbs. Hay 2,661 lbs. Salt Hay 718 lbs. Feed — Corn Stover 478 lbs. Silage 4,098 lbs. Green Feed 1,408 lbs. Pasture $37.69 16.63 10.00 $7.65 5.15 3.96 Total feed costs. Labor — Man hours . Horse hours 150 hrs. 9 hrs. (Per hr.) $0,268 .207 Total labor costs Other Costs — Depreciation on cows Interest on cows Taxes and insurance Veterinary services, drugs and disinfectants Bull service Use of buildings and water Bedding Use of equipment Ice Miscellaneous other Total other costs. Total all costs. Credits — Manure Calves Milk used on farm... 8.1 Ton .85 Calf 152 Quarts $2.05 6.34 .0494 Total Credits Net Cost per cow , Managerial ability, business risk, and dairy overhead, 10%. Net costs — Final costs, 2,175 qts. milk Cost per quart wholesale milk. Receipts per cow Receipts per quart Loss per cow Loss per quart Total. $45.79 30.44 3.59 $1.83 10.55 2.78 5.47 $100.45 $40.20 1.86 $42.06 $6.91 4.90 1.53 .83 3.40 6.82 1.01 1.67 1.23 1.^31 $29.61 $172.62 $16.60 5.39 7.51 $29.50 $142.62 14.31 156.93 .0724 112.28 .0516 45.15 .0205 Total miscellaneous for the 323 cows was as follows — Electricity for motors, $125 ; artificial light, $71; salt and stock feed, ^Z\ paid for hauling milk, $60; testincr. $55; association fees and dues, $29; fly spray, $5, and changing stock, $5. Total, $423. Cost of producing a quart of milk with the average Massachusetts cow was .0724. In general the dairyman is efficient If he was not so and there were large profits to be made in the milk business, capital from outside sources would be coming into the dairy business. There is no rush of capital to the dairy business taking place at present, notwithstanding the fact that we must have milk and dairy products. Professor Lockwood presented a second tabulation of costs using the prices for October, as follows : Cost per Cow. Items of Cost. Quantity. Price Per Ton. Total. Feed — Grain Hay Salt Hay Corn Stover Silage Green feed and other succulents. Pasture 2,430 lbs. 3,661 lbs. 718 lbs. 478 lbs. 4,098 lbs. 1,408 lbs. $56.00 $68.04 16.69 30.55 10.00 3.59 7.65 1.83 6.00 12.29 4.50 3.17 5.47 Total feed costs. Labor — Man hours . . Horse hours. 150 hours 9 hours (Per hr.) $0,275 .20 Total labor costs. Other Costs— Depreciation on cows Interest on cows Taxes and insurance Veterinary services, drugs and disinfectants Bull service Use of buildings and water Bedding Use of equipment Ice Miscellaneous Total other costs. Total all costs .. $124.94 $41.25 1.80 $43.05 $6.91 4.90 1.53 .83 3.40 6.82 1.01 1.67 1.23 1.31 $29.61 197.60 Credits — Manure Calves Milk used on farm. 8. 1 Tons .85 Calf 152 Quarts $2.50 $20.25 6.34 5.39 .07 10.64 Total credits $36.28 Net cost per cow $161 .32 Managerial ability, business risk and dairy overhead, 10% net cost 16.13 Final cost per cow, 2,175 quarts $177.45 Cost in September, 1917, for producing milk in Massachusetts is .0816. I Nit !i liili * : II "Piii tit 16 Professor Lockwood also presented a set of figures showing how the cost of milk varies with the quantity produced per cow. Cost of milk with varying production. Cows vary from 5,105 pounds to 7,500 pounds per year. Cost of Milk With Varying Production, (Cost Per Cow.) Number of farms 17 52 18 Number of cows 323 901 . 5 353 Production Per Cow. Item of Cost. Less 5,501 lbs. 5,501-7,500 Over 7,500 lbs. ^^feain $45.79 $50.81 $52.44 Dry roughage 35.86 33.08 39.02 Succulent roughage 13.33 18.98 22.89 Pasture ....T. 5.47 6.25 5.76 $100.45 $109.12 $120.11 Labor — Man Labor: Hours 150 188 241 Cost $40.20 $47.20 $64.44 Horse labor 1.86 3.21 5.54 Total labor costs $42.06 $50.41 $69.98 Total other costs 29.61 36.30 52.11 Total all costs 172.12 195.83 242.20, Total credits 29.50 29.59 44.44 Net cost (cost minus credits) 142.62 166.24 197.76 Managerial ability, etc., 10 per cent, of net cost 14.26 16.62 19.78 Final cost per cow 156.88 182.86 217.54 Wholesale milk sold, quarts 2,175 2,928 3,935 Cost per quart 0721 .0624 .0552 Prof. John M. Fuller, Professor of Dairying in New Hampshire Agri- cultural College, Durham, N. H., presented figures obtained from 200 farms in the cow-testing associations of New Hampshire, in which there were 2,597 cows ; also reports from 100 farms in four other associations and additional data from 37 representative dairymen in the state. The average production of cows on the 200 farms is 5,944 lbs. per cow per year. The cost of producing milk on the prices of feed in the month of June, 1917, was as follows : Grain, .77 tons at $55.64 per ton ^$SJ Silage, 1.75 tons at $5 per ton 8.75 Green feed, .27 tons at $4.50 per ton LS Pasture, June 1st to October 1st 6.00 Hay, 1.65 tons at $13.19 21.17 Labor, 205 hours at 23 cents an hour 47.15 Delivery, 330 times • ; • • • 8.25 Interest on investment plus insurance at 1 per cent, plus repairs and depre- ciation at 3 per cent. Housing (5 per cent, on $1,250) 5.63 Bedding J.OO Depreciation (cows) ^ |'75 Taxes and insurance (cows) 5.05 37 Bull, feed and expenses Ice, coal and wood Veterinary service Tools and utensils Cow Testing Association expense. 4.35 2.20 .87 .53 1.50 Total , $168.86 Credits — 13 tons manure. 1 calf Feed bags $20.00 5.00 .40 Total credits $25.40 Net cost for keeping one cow one year $143.45 Production per cow, 2,764 quarts ; cost per quart, 5.19 cents for milk averaging 3.5 per cent, butter fat. If these costs were applied to the average cow in New Hampshire pro- ducing 2,145 quarts of milk per year, the cost of production would be 6.6 cents per quart. Labor costs $45.(X) per month, plus bed and room. This makes a total not far from $65.00 per month. In the Southern half of New Hampshire the cost of production per cow is $115.35 per year. In the Northern half it is only $106.00 per year. This is due to the fact that in the Northern part of New Hampshire they have excellent pasture and can raise more silage. Prof. Frank App, New Jersey Agricultural College, New Brunswick, N. J., presented data collected by him from 160 farms and 3,866 cows for the year ending May 14, 1914. The dairy farms were located in Sussex County, N. J. The result of this investigation is given in the following tabulation : Year ending May 14, 1914 Number of farms 160 Number of cows 3,866 Pounds of milk per cow 6,491 Pounds of butter fat per cow 207.7 Per cent, of milk produced in six months beginning October 1 47.6% Costs. Amount Per Cow. Value Per Cow. Grain Hay . Other Silage Other dry forage. succulent feed. 2,577 lbs. 3,167 lbs. 665 lbs. 2,076 lbs. lbs. 182.6 hours 20.1 hours Pasture 120 to 150 days Bedding Human labor Horse labor Use of buildings Use of equipment x Interest on cows Value of cow $82 Depreciation on cows, 8 per cent x Bull service x Miscellaneous x $38.66 23.75 2.59 5.19 8.00 27.03 3.55 8.19 .45 4.10 6.56 2.40 2.30 Total cost $132.57 iiji Returns other than milk— Amount Per Cow. Value Per Cow. Calves and calf hides x $6.53 Manure recovered x 10.00 Feed bags x Total returns other than milk x $16.53 '.Net cost of milk 116.04 Butter fat, cow testing assoc, average 3.2 per cent. ; George C. White, Professor of Dairy Husbandry, Connecticut Agri- cultural College, Storrs, Conn., furnished data from a survey made of 178 farms in the State of Connecticut. In this survey there was used a schedule of cost items originated in Massachusetts which had later on been accepted by the Federal authorities. This survey was made the first part of Jtme, 1917, and the cost figures cover the period from May 1, 1916, to April 30, 1917. The greater part of these farms had records for the amount expended for dairy charges. The minimum number of dairy cows per herd was 7, the average ntunber of cows was about 18 J^. The results are given in a bulletin dated November 1, 1917. In this report the num- ber of cows was 3,258, producing at an average of 6,009 lbs. of milk per year. This is higher than the state average of 5,500 lbs. One and one-half per cent of the cows died during the year and others were sold for beef. This amounts to an average decrease of 5.98. Interest on investment per cow at 6 per cent was $6.53. The cost for grain is taken at the actual cost paid by the farmers. He figures the cost at $40.22 per ton, the average consumption 1.05 tons, green feed 4.10 tons at $20.87; silage, 7,380 lbs., at $5.00 per ton, $19.02; other green feed, 820 lbs., at $4.50 per ton, $1.85; dry forage, 1.94 tons, $29.37; hay, $15.00 per ton plus other forage; pasture, $7.17; bedding, $1.63. In one tabulation is shown the cost per quart for the month of April, which was .0629 ; another tabulation shows the cost per quart in herds vary- ing in the production of milk as follows : Milk Production. Cost Per Quart 4,500 lbs. or less 0672 4,501-5,500 lbs 0594 5,501-6,500 lbs 0562 6,501-7,500 lbs 0542 7,500 and over 0466 These figures differ slightly from those recalculated by the Committee from Professor White's data and used elsewhere in this report. Special investigations were carried on by auditors from the office of the Commissioner of Accounts on a number of private farms. Farm No. 1, in Northern New Jersey, showed cost items from Novem- ber 1, 1916, to November 1, 1917, as follows: m Cost of Milk Production — Dairy Farm in Northern New Jersey — From Information Given Verbally by Owner. Herd of 19 Cows. Total for Year, Nov. 1. 1916, to Average Nov. 1, 1917. Per Cow. 1. Feed for Cows — la. Grain $666.90 $35.10 lb. Hay 466.67 24.562 Ic. Silage 297.18 15.64 Id. Pasturage 123.57 6.504 2. Labor on Cows — 2a. Milking 367.34 19.334 2b. Cleaning Cow Barn 87.16 4.587 2c. Hauling Milk (Man and Horse Labor). 325.50 17.132 3. Supplies and Materials — 3a. Bedding 70.00 3.684 3b. Small Repairs 50.00 2.632 4. Overhead Charges — 4a. Interest on Plant and Equipment 127.98 6.736 4b. Depreciation on Plant and Equipment.. 63.30 3.301 4c. Interest on Value of Cattle 108. 30 5 . 70 4d. Taxes on Plant, Equipment and Cattle. 48.60 2.558 4e. Depreciation on Cows 95.00 5.000 4f. Bull Service 58.50 3.08 4g. Supervision 250.00 13.158 Total Gross Cost $3,206.00 $168,706 5. Offsetting Accounts — Manure, calf, etc 338.02 Net Cost $2,867.98 Net Cost of Milk Production, $2,867.98. Milk Sold. Used. Total Production. 113,831 lbs. = 52,931 qts. 3,883 lbs. = 1,805 qts. 117,714 lbs. = 54,736 qts. $2,867.98 -7- 117,714 = $2,436 per cwt. = net cost of production. $2,867.98 -f- 54,736 = $0.0524 per qt. = net cost of production. $2,977.87 -f- 113,831 =^.616 per cwt. = Aver, sale price per year. $2,977.87-;- 52,931 = $0.0562 per qt. = Aver. sale price for year. Farm No. 2 showed cost items for producing milk for the period from November 1, 1916, to November 1, 1917, as per the following schedule: Cost of Milk Production — Dairy Farm in Northern New Jersey — From Information Given Verbally by Owner. Herd of 47 Cows. Total for Year, Nov. 1. 1916, to Average Nov. 1, 1917. Per Cow. 1. Feed for Cows — la. Grain $4,720.96 $100,446 lb. Hay 1,133.17 24.11 Ic. Silage 339.34 7.22 Id. Pasturage 290.74 6.186 • • 40 41 fHHI 4illii ill III tut iniiiflfi Total for Year, Nov. 1. 1916, to Average Nov. 1, 1917. Per Cow. 2. Labor on Cows — 2a. Milking 555.10 11.81 2b. Oeaning Cow Bam 100.57 2.14 2c. Feeding Cows 100.57 2.14 2d. Hauling Milk 375.50 7.99 2e. Veterinarian Service 9.50 .202 3. Supplies and Materials — 3a. Ice 50.00 1.064 3b. Bedding 52.56 1.118 3c. Small Repairs 25.00 .532 4. Overhead Charges — 4a. Interest on Plant and Equipment...... 603.69 12.844 4b. Depreciation on Plant and Equipment.. 186.87 3.916 4c. Interest on Value of Cattle 282.00 6.000 4d. Taxes on Plant, Equipment and Cattle. 148.46 3.159 4e. Depreciation on Cows 235 .00 5.000 4f. BuU Service 188.91 4.02 4g. Supervision 200.00 4.255 Total Gross Cost $9,597.94 $204,152 5. Offsetting Accounts — Calves $100.00 6. Manure 574.00 674.00 Net Cost $8,923.94 Net Cost of Milk ProducHon, $8,923.94. Milk Sold. Used. Total Production. 304,753 lbs. = 141,710 qts. 3,833 lbs. =• 1,805 qts. 308,636 lbs. = 143,515 qts. $8,923.94 -7-308,636 = $2,891 per cwt. = net cost of production. $8,923.94 -r- 143,515 = $0.0622 per qt. = net cost of production. $7,850.60 ^ 304,753 = $2,576 per cwt. = Average sale price for year. $7,850.60 -f- 141,710 = $0.0554 per qt. = Average sale price for year. Loss per qt. of milk sold $0.0066 under assumption made as to compensation of owner and family, etc. Professor R. A. Pearson, President of the College of Agriculture of the University of Iowa, presents published data secured from cost-account- ing restilts in the Chicago milk district, representing approximately 1,000 cows, and states that the amount of feed, forage and labor entering into the cost of producing 100 lbs. of milk is : Grain 44 lbs. Silage 188 lbs. Hay 50 lbs. Bedding 39 lbs. Man hours 2.42 hrs. He estimates that the costs are: Grain $55 per ton Hay $10 per ton Silage $6 per ton Bedding $6 per ton Man hours 25c per hour These figures give the average yearly costs per one hundred-weight of $2.75. Prof. Pearson estimates that the cost in the month of October is 109.2 per cent of the average cost, which would make the cost for the month of October, 1917, $3.00 per one hundred-weight. Professor Oscar Erf, of the University of Ohio, Coliunbus, Ohio, pub- lished recently a statement of the cost of keeping a cow for one year in a well managed herd. The items are as follows : Feed — Concentrates— 2,140 lbs. at $46 per ton $49.22 » Dry Roughage — Hay— 3,800 lbs. at $12 per ton 22.80 Stover— 370 lbs. at $6 per ton l.U Succulent Feed — Silage— 6,950 lbs. at $6.50 per ton 22.60 Pasture — 4 months at $3 per month 12.00 Total $107.73 Labor- Including feeding, milking, driving cows, cleaning stables, clean- ing and spraying cows, 127 hours at 18c 22.86 Handling Milk — Carrying, cooling, etc., 27 hours at 18c 4.86 Hauling Milk — 28 hours at 18c 5.04 Managerial Labor — Buying and selling cows, buying^ and hauling feeds, equipment, attending sick cows, marketing milk, dairy meetings, dairy papers, 36^ hours at 18c 6.57 j Horse Labor — 30 hours at 15c 4.50 Total Labor Cost $43.83 Other Costs — [ Depreciation on cows $8.00 Interest on cows 6.00 Taxes 1 . 40 Injury risk 1 .60 Veterinary services 3 .48 Tuberculin tests 2.00 Mortality 1.90 Calf loss 2.10 Total $26.48 Buildings and Equipment — Interest on barn 3.00 Interest on fences 1.60 Interest on milk house .72 Interest on machinery 1 .20 I .1 I m J, •Itlilll 42 Buildings and Equipment {Contd.) — Interest on ice house .67 Interest on yard for cows 2.A0 . Taxes and insurance 1 .44 Depreciation on barn 1 [io Depreciation on fence 1 .80 Depreciation on milk house .60 Depreciation on ice house .18 Depreciation on machinery 3.2O Total $18.01 Total $196.05 These figures are based on last year's prices for feed and labor. The average cow under these conditions would produce 5,500 lbs. From this cost must be subtracted the credits amoimting to $27.00, making the net cost $169.05 per cow, which figures $3.07 per 100 lbs. of milk. Concerning these figures. Professor Erf, however, says that these indi- cate the cost under sanitary conditions. He submits in addition, another set of figures to show how cheaply milk can be produced in an ordinary dairy and finds that at the same prices for feed and labor, the cost would be only $91.70 per year to produce 4,000 lbs. of milk or $2.29 per one hundred-weight. Bulletin No. 501 of the U. S. Department of Agriculture contains a study on the cost of producing milk on four dairy farms located in Wis- consin, Michigan, Pennsylvania and North Carolina. This shows the proportion of cost items on these four farms as follows: Location Feed Labor Other Costs Wisconsin Michigan Pennsylvania .. North Carolina 3X±= 48.5% 57.2% 52.1% 53.2% 31.7% 25.6% 24.0% 22.8% 19.8% 17.2% 23.9% 24.0% Farm Wisconsin Michigan Pennsylvania North Carolina .. Cost per Cow Milk per Cow Cost per Cost per 100 lbs. Quart $79.86 105.12 90.85 110.95 5,240 lb. 6,536 lb. 5,058 lb. 5,142 lb. $1.52 1.61 1.80 2.16 $0.0328 .0346 .0387 .0464 Prices of feed and labor are based on prices of 1912; grain at $25 per ton and labor at not more than 14c. per hour. 43- Cost of Producing Milk on the Sheffield Experimental Farm at hobart, n. y. For the year ending October 31, 1917. A most careful and detailed study of the cost items connected with the operation of this dairy farm was made by auditors from the office of the Commissioner of Accounts, New York City. The farm is located just west of the Catskill Mountains in the town of Harpersfield. It consists of 512 acres located on a hillside with a level stretch along the river bottom. The acreage is divided as follows : Tillable land 214^ acres 41.9% Natural pasture 268J4 acres 52.4% Woodland 25 acres 4.9% Meadows, not tillable 4 acres 0.8% 512 acres Buildings are valued as follows : Present Value Cost to Rebuild Main Cow Barn and Extension $12,000.00 Upper Cow Barn 3,000.00 Third Cow Barn 1,500.00 Carriage House and Stable 2,500.00 Main Dwelling 1,500.00 "Graham" House 2,000.00 « Teyo " House 1,000.00 "Jones" House 1,000.00 Piggeries 500. 00 Tool House 500.00 $12,000.00 3.500.00 2,000.00 3,000.00 2,000.00 2,000.00 1,000.00 2,000.00 500.00 500.00 The farm activities are divided between five different enterprises. The farming activity is carried on almost entirely for the production of stock feed. Under contracting is included the operation of the stone crusher, the hauling of stone, ice, milk and cream. The dairy was operated for a number of years at a loss, but at the present time, under a competent super- intendent, is a distinct financial success. The auditors were able to separate the cost of labor and other cost items of all five of the different enterprises conducted on this farm, so that the cost of producing milk could be separately stated. These costs appear in the following tabulation: Hohart Farms — Statement of Milk-Producing Costs and Income, Year Ended October 31, 1917. Costs — Forage $10,962.08 Labor 6,790.46 Supplies, Materials and Repairs 1,339.97 il r. ill Costs (Con/d.)— Y^^^rest 2,192.01 Insurance 9357 1 axes j^ 22 Depreciation !!!!!!.!!!!!!!!.!!!!..! 831 80 Bull Service !!.......!.....!......!!.*.* 72.70 Total $22,481.81 Credits — Manure t2 124 38 Miscellaneous '...'....'......... . .' 731 .38 Net Cost (367.425.7 Milk-Quirts) ^fill'ls Cost per Milk-Quart, .0534. Income from Milk and Cream $21,650. 17 Profit on 367,425.7 Milk-Quarts (123.6 Cows) $2,024.12 Profit per Milk-Quart, .0055. === Profit per Cow, $16.3764. From the above it appears that on milk alone produced on this farm there was a profit of $2,024.12. The statistics of the dairy and of the cost items connected with the pro- duction at Hobart appear in the following tabulation : Cost of Milk Production, Sheffield Experimental Farm, Hobart, N. Y. No. of cows covered 123.6 Period covered 1 yr. Average quarts of milk per cow per year 2972.7 Average lbs. of milk per cow per year 6317! Amount of Grain 189.6 tons Pounds per cow per year .....'.'. 3068. Pounds per 100 lbs. of milk 4S,6 Pounds per quart l 03 Cost of Grain $8,079138 Pnce per ton (2,000 lbs.) $42.52 Per cow per year 55 37 Per 100 lbs. of milk I.03 Per quart of milk .022 Amount of Ensilage 192.0 tons Pounds per cow per year 3106.7 Pounds per 100 lbs. of milk 49.2 Pounds per quart of milk 1.05 Cost of Ensilage $543.00 Price per ton (2,000 lbs.) $2.83 Per cow per year $4 39 Per 100 lbs. of milk ^069 Per quart of milk .0015 Amount of Hay 130.4 tons Pounds per cow per year 2110. Pounds per 100 lbs. of milk 33.40 Pounds per quart of milk 79 Cost of Hay $1,956.60 Pnce per ton (2,000 lbs.) 15.00 Per cow per year IS g3 Per 100 lbs. of milk .256 Per quart of milk .0053 45 Amount of Other Fodder 15.0 tons Pounds per cow per year 242. Pounds per 100 lbs. of milk 3.83 Per quart of milk. .0814 Cost of Other Fodder $225.00 Price per ton (2,000 lbs.) $15.00 Per cow per year 1.82 Per 100 lbs. of milk .029 Per quart of milk .00061 Cost of Pasture $158.10 Per cow per year 1.28 Per 100 lbs. of milk .02 Per quart of milk .00043 Total Cost of Feeding $10,962.08 Per cow per year ^-^ Per 100 lbs. of milk ^"^^o Per quart of milk .0298 Cost of Labor $6,790.46 Per cow per year ^•?i Per 100 lbs. of milk -^ Per quart of milk .018 Miscellaneous Costs $1,412 67 Per cow per year 11 .43 Per 100 lbs. of milk -18 Per quart of milk .0038 Overhead Costs $3,316.60 Per cow per year 26.83 Per 100 lbs. of milk .42 Per quart of milk ^__ .0089 Gross Cost $22,AS\M Per cow per year ^°l-§2 Per 100 lbs. of milk 2.87 Per quart of milk 061 Credits $2,855.76 Per cow per year 23. 10 Per 100 lbs. of milk .36 Per quart of milk .0076 Net Costs $19,626.05 Per cow per year 158.79 Per 100 lbs. of milk 2.51 Per quart of milk 0534 From this it appears that the cost of producing 100 pounds of milk for the year ending October 31, 1917, was ^.51, making the cost per quart .0534. 46 'It 1 I I illl A condensed statement of the cost of milk production on the Hobart Farm appears in the following list : Statement of Income and Profit and Loss — Hobart Experimental Farm — Year Ended October 31, 1917. Enterprises. jc Total. Income — (1) Milk and Cream $21,650.17 (2) Calves 161.00 (3) Pigs 2,126.79 (4) Produce 3,924.70 (5) Crushed Stone .. 282.70 (6) Hauling on Con- tract 526.50 (7) Manure 2724.22 (8) Miscellaneous .. 2,169.13 Total Income.. $33,565.21 Costs — (9) Forage $16,062.78 (10) Labor 8,553.95 (11) Plant Supplies, Materials and Repairs 2,492.64 (12) Pigs 376.00 .(13) Interest 2,974.87 (14) Insurance 120.55 (15) Taxes 259.49 (16) Depreciation ... 1,194.05 (17) Miscellaneous .. 663.47 (18) Bull Service ... 72.70 (19) Manure 1,833.34 Total $34,603.84 Deduct — Increases in In- ventory — (20) Forage $3,086.52 (21) Young Cattle ... 546.00 (22) Young Swine .. 652.00 (23) Miscellaneous .. 15.00 $4,299.52 $30,304.32 Add — Decreases in In- vent ory — (24) Forage $1,441.50 (25) Miscellaneous .. 130.36 Total $1,571.86 Total Costs ... $31,876.18 Con- Milk Calf Pig tract- Producing. Raising. Raising. Farming, ing. $21,650.17 $161.00 $2,126.79 $3,924.70 2,124.38 731.38 599.84 14.93 $282.70 526.50 19.86 V,39i.'ii 'ii;9i $24,505.93 ^S.77 $2,146.59 $5,315.81 $821.11 $12,701.34 $1,274.65 $234.54 $1,852.25 6,790.46 74.48 131.10 1,254.57 $303.34 1,187.74 19.78 2,192.01 98.57 194.22 831.80 50.15 72.70 18.17 2.02 1.87 17.08 8.72 97.31 376.00 87.78 2.75 5.40 15.17 242.05 1.140.72 47.09 578.75 11.56 45.40 269.80 40.15 98.16 5.65 12.60 60.20 322.40 1,833.34 $24,118.99 $2,768.26 $1,416.77 $318.26 546.00 $1,192.10 $7,026.54 $849.44 652 00 10 00 5 00 $2,768.26 $864.26 $552.51 28.28 $662.00 $5.00 $21,350.73 $1,029.00 102.08 $530.10 $7,021.54 $849.44 $412.50 $1,131.08 $28.28 $412.50 $22,481.81 $580.79 $530.10 $7,434.04 $849.44 Enterprises. Con- Milk Calf Pig tract- Total. Producing. Raising. Raising. Farming, ing. Net Income from Opera- tion — Profits $1,689.03 $2,024.12 $194.98 $1,616.49 (Loss) (Loss) Losses $2,118.23 $28.33 Net $1,689.03 $2,024.12 $194.98 $1,616.49 $2,118.23 $28.33 Additions to Income — (26) Profit on Mature Stock Bought and Sold .... $3,332.00 $3,018.60 $313.40 Total Profit for the Pe- (Loss) (Loss) riod $5,021.03 $5,042.72 $194.98 $1,929.89 $2,118.23 $28.33 This statement is based on best data available at the Farm. Overhead items are approximately apportioned on the best apparent basis. 48 49 'i- \mm The cost of producing one hundred pounds of milk, according to the To Produce One Hundred Sources of Information. Date. Grain. / ' . Unit Amount. G)st, Ton. Warren, Broome Co 28.6 lbs. Warren, 21 farms in N. Y 29. 1 Warren, General Formula 53. 1 Bush Dairymen's League Sept. 15, 1917 34.7 Brigham, Vt. Nov. 1,1917 23.3 Fuller, N. H June, 1917 25.9 White, Conn 35.0 App, N. J May, 1917 39.7 Rasmussen, Penn. 27.4 Boston Chamber of Com., Me Sept, 1917 33.2 Pearson, III Nov., 1917 44.0 Cooper, Dairymen's League $55.00 55.00 55.64 "siioo "56.66 55.00 54.60 authorities quoted above, is shown in the following table Pounds of Milk. Silage and Green Feed. Hay. / *" \ t * — Amount. Unit Cost, Ton. Amount Unit Cost, Ton. Labor. Amount. Unit Cost, Hour. Per- centage of Net Cost. Total Other Costs. 110.81bs 73.8 lbs 109.4 49.4 97.2 61.0 105.9 $5.00 51.8 102.1 6.00 65.6 55.6 5.00 67.4 136.5 64.6 31.9 56.8 115.4 30.2 60.8 6.00 86.5 188.0 6.00 50.0 8 on 3.42hrs 2.37 2.83 $12.00 2.59 13.00 2.96 13.19 3.45 2.71 2.81 3 37 *i6!66 3!89 10.00 2.42 12.00 84.8% 17.9% 81.3 23.0 83.8 19.3 $0.30 82.2 21.6 .25 72.5 37.9 .23 84.7 18.1 85.7 16.7 .222 83.4 19.9 .25 78.2 27.9 .25 95.8 4.4 30 4 (•• 50 The report of the Milk Committee appointed by the Food Controller of Canada, dated November 24, 1917, shows that since the beginning of the War there have been the following advances in prices : Items Increase in Price Cows 50 per cent Feeds 75 per cent Labor 75 per cent Butter 40 per cent Cheese 50 per cent Milk 30 per cent " The cost of labor on a dairy farm five years ago was $25 to $30 per month. At the present time there is a floating population of inefficient laborers who ask from $50 to $60 a month. " Men who are expert dairymen have left the farm for munition work. " The overseas demand for the condensed product has resulted in high prices. " Some plants have been offering as high at $3.50 per 100 lbs. of milk. " Condensed milk exported from the United States during the fiscal years ending June 30, 1912, 1913 and 1914 totaled 17,792,579 lbs., or only 2.27 per cent of the Allies* requirements. During the single year ending June 30, 1917, the export of condensed milk from the United States aggre- gated 269,103,213 lbs., or 57.2 per cent of the amount required by the Allies." Advances in the price of grain in the New York markets or points having the same rate of freight as New York, are : Food. Value December 15 1915 1916 1917 Yellow Com (per bu.) $0.83j4 $1 .08 $2.30 Bran (per ton) 24.00 30.50 46.50 Hay (per ton) 25.00 21.00 30.00 Oats (32 lb. to bu.) .46^ .58j4 .89^ Oil Meal (per ton) 40.50 48.00 57.00 Yellow Meal (per ton) 30.00 44.00 80.00 Gluten Meal (per ton) 30.00 40.00 57.34 The prices asked for milk by the Dairymen's League are based upon the grade of milk known as " Grade B " milk containing 3 per cent butter fat. Up to September, 1917, in addition to the price quoted, there was a butter fat premiimi of 3c. for each tenth per cent of butter fat above 3 per cent. On October 1, 1917, the butter fat premitmi was raised to 4c. for each tenth per cent above 3 per cent. The average amount of butter fat in all milk shipped to New York City is about 3.5 per cent. At some seasons of the year it is higher, at other seasons lower than this. Using for the whole year the figure 3.5 per cent, as representing average butter fat. 51 the prices charged by the Dairymen's League for milk since October, 1915, appear in the following table : Dates October . , November December January . , February March . . . April May June July August . . September Price Per Price Per Price Per 100 Lbs. 100 Lbs. 100 Lbs. 1915-'16 1916-'17 1917 $1.76 $2.30 $3.30 2.00 2.40 3.54 2.00 2.40 3.30 1.94 2.35 • • « • 1.88 2.30 1.76 2.25 1.53 2.20 1.41 2.15 1.29 2.05 1.47 2.25 1.65 2.70 1.72 2.70 Prices prior to October, 1916, are actual prices taken from " The Milk Reporter." Prices beginning October, 1916, are Dairymen's League prices with premium added for butter fat content of 3.5 per cent. This premium was 3c. for each 1/10 per cent butter fat over 3.0 per cent from October, 1916, to September, 1917, inclusive, and 4c for each 1/10 per cent beginning October, 1917. The rise in the price of milk for a period of two years is shown by the following table: Rise in Prices Paid Producers. Price Per Price Per Date 100 Lbs. Quart October, 1915 $1.76 $0.03782 October, 1916 2.30 .04946 October, 1917 3.30 .07096 Total Increase $1.54. $0.03314 Considering the data secured by this Committee from all sources of information on the subject of the cost of milk, the prices asked by the pro- ducers seem fair and reasonable. 9. Cost of Distribution. In the report of the Wicks Committee, there was included a statement of the cost of distribution of milk, compiled from the results of the audit of the accounts of a number of large distributing milk companies. # 52 These may be summarized as follows Cost Items. Factory Expense Country Charges Mfg. Expense Country, City and Store Expense. Freight Branch Selling and Distributing. . Bottles, Caps and Cans Bottles Delivery Charges Advertising General Selling Expense Store Expense General Administration Administration Expense Administration Branches Total Cost Distribution Cost of milk Net Profit Average Selling Price Borden's Farm Products Co. Sheffield Farm Co. Alex. Campbell Milk Co. Clover Farms Co. .012342 .007252 .018890 .001168 ^666927 .040579 .036847 .002915 .060341 .01109 ! 00694 .00286 ^61360 .00221 ! 00339 .04009 .03757 .00243 .08009 .003444 .004848 ,006262 .002040 .017328 .002881 .001652 .038455 .035365 .002979 .076799 .0266 .0069 .0015 .0034 .0384 .0355 .0024 .0763 * It is interesting to note the conclusions of the Wicks Committee after a survey of these cost items. They are as follows : Cost of Milk 03797 Country Charges 00297 Teaming and hauling 00294 Pasteurization 00370 Bottles and Caps 00241 Delivery expenses 02384 Freight 00934 Adm., clerical and adv 00319 Total cost 08636 Profit 00364 Total 09000 .09 The above is a statement of the cost of delivery of a bottle of 9-cent Grade " B " milk. It " does not provide for any reduced profit or loss on milk purchased by the distributor for which he may have no retail market at 9 cents but disposes of at wholesale prices or in other forms such as sour milk, sotir cream, pot cheese, butter, etc." Also the above items " do not provide for earnings on capital invested." The average net profits of the companies on each quart of milk bought, regardless of whether it was disposed of as market milk, butter, cheese, or otherwise, was found to be .0027. * ♦ ♦ 53 " In other words, the average profit of .0036 on the 9-cent bottle was reduced to the average of .0027 on the entire purchases by lower profits or losses on wholesale milk, butter, cheese, or products. "If these four companies had paid to the dairymen of the State during the year 1915-1916 their entire profits, capital earnings and dividends it would have brought to the dairymen less than 12j4 cents per 100 pounds more than they did receive. But the dairymen have established during the months from October, 1916, to April, 1917, an increased price of 45 cents to 50 cents per 100 pounds or an increase nearly four times greater than the average profits, dividends and earnings made by these companies during the prior year. " This business is conducted on an extremely competitive basis ; * * ♦ a large part of the cost arises from the bitter competition existing in the distribution of the product. * * * An army of solicitors and sales agents are maintained. * * * Great and expensive organizations are maintained. * * * Overhead charges attributable to this work amount to an alarming sum. * ♦ * It is customary to refer to the fact that four or six or ten milk wagons and milk drivers visit the same block, * * * but this ignores the really greater expense of the silent army of retainers. ♦ * * Not only do we find in single blocks these wagons and horses, but on the same block six solicitors ; six route superintendents ; six staffs of clerks and bookkeepers. * * * The distribution of milk is a public service, which, to be put upon an economic basis, requires public regulation to the end that all unnecessary services even of a competitive kind may be eliminated. " Distribution of Milk Should Be a Regulated Public Service." " It is safe to assert that the consumer in the City of New York pays several millions of dollars annually for the privilege of having all the numer- ous purveyors of this necessity of life engage in attempts to serve him. * * * A milk supply is as much a daily necessity and even more so than gas and electricity. " It certainly seems as if the dairymen of this State and the distributors with their invested capital, and the consumer, should co-operate to the end that these unnecessary competitive wastes be eliminated and the dairymen's milk brought to the consumer at the lowest possible expense. ♦ * ♦ " The investigations of the Committee lead to the conclusion that under the present competitive system it takes almost as many men to bring the dairyman's milk to the consumer as there are dairymen engaged in the production of milk with all their employees. This is the result of the purely competitive basis upon which the business is handled. Three or four milk stations are being maintained with a separate force of employees to collect or receive the dairymen's milk at many points where one well-equipped station with a competent force could do all the collecting at one-fifth the present expense. This unnecessary duplication of service follows with all H its attendant overhead and capital investment from the country milk station until the bottle of milk is finally deposited at the consumer's door. A large part of this, in the judgment of this Committee, could and should be elim- inated. * ♦ * xhe only solution possible is to limit and leave only those in the field which the service actually requires. This is just as obvious in the case of milk as it is in gas or any other daily necessity supplied in small quantity to the consumer. " There is no milk trust controlling the purchase and sale of market milk in the city of Buffalo. There is none in Rochester; there is none in Syra- cuse ; there is none in Utica ; there is none in Albany ; nor in any city between Albany and New York, nor in any town or village of the State. There is no milk trust controlling the purchase and sale of milk in the City of New York. Instead there is sharp and bitter competition, so far as the records of this Committee disclose, in each and every one of the places. There are four stations in many places where one could collect the milk. There are four outfits of station managers and employees in many places where one could do the work. Every intelligent person who has ever discussed the question concedes that there are four horses and wagons, four or five or six groups of solicitors; four or five or six separate organizations and overhead charges duplicating work that one of each could well perform. " There is too much capital already invested in the business. ♦ * * Here, then, is the waste and the loss. ♦ ♦ ♦ Instead of introducing more exp)ensive competitors in the field to waste more money of the con- sumer, the State should endeavor by judicious legislation, to permit the elimination of all unnecessary investments both of labor and capital and effectively control the business operations of the remainder." Testimony submitted by Mr. Loton Horton of the Sheffield Farms Company calls attention to the fact that the percentage of profit on the total business of the company for the past 4 years has been : Date Selling Profit 1914 6.64 1915 6.36 1916 4.61 1917 (first 6 months) .238 The costs of doing business for the month of September, 1917, were given by Mr. Horton as follows: Cost Items Cost per Quart Milk 0608 Conntry Station .0056 Freight 0084 Gty Plant 0081 Bottles, Caps, etc 0045 Total 0874 To this must be added overhead charges and the cost of retailing. f 55 Mr. Weiant, President of the Borden's Farm Products Company, testi- fied as follows: " There was invested in the business of this Company as of August 31, 1917, $16,491,117.10. In this figure no good wUl is included nor any other intangible assets. We purchase now the pro- duct of about 8,000 farms, and prior to October 1, the product of about 10,000 farms. ** The Company owns approximately 225 country receiving stations. " Operates 6 city pasteurizing plants. '* 74 city branches and stores. " Employs over 5,000 persons. " Payroll between four and five million dollars. "Vehicle investments, $800,000. " 3,000 horses, costing $800,000. ** Harness, $100,000. ** Food for horses, $500,000. ** Bedding, $50,000. " Ice bill, $275,000. " Freight, $1,750,000. " Veterinary forces, 7. " Inspectors, 60. Full time inspectors, 60. Half time inspectors, 30. Cost of inspection, $100,000. * Repair Shop, $200,000. Employees in repair shop, 200. Wagon routes, 1,900. Loss on bottles, boxes and cans, $450,000. One week's credit to customers, interest account on $1,000,000— $75,000. " Milk was soM to the consumer at too low a price during the years of 1909 to October, 1916, when it retailed at 9 cents. This was also true of 1916 and 1917 at 10 cents. There was an inade- quate profit to the producer during the greater part of that period and this continued up to a year or so ago. " It is an unsound business practice among distributors, of charg- ing one price all the year around. " All during the months of October, November, December, Jan- uary, and occasionally September and February, our Company actually lost money every year and made its loss up and earned Its profits in the remaining months of the year. if tt it tt it t* tt it Ml « 56 There is a reduction in consumption following increase in retail price. " The increase since September, 1916, is 5 cents per quart for Grade B milk delivered in bottles. 4 cents is going to the producer and 1 cent to the distributor. 58 per cent, of our fluid sales repre- sent retail bottle business at 14 cents per quart for Grade B and 15 cents for Grade A. 42 per cent, of the business is wholesale through more than 5,000 stores at an average price of a fraction over 10 cents per quart, and the consumer is able to purchase loose milk at 11 cents per quart. " Month of August, 1917, number of quarts of milk purchased and sold, 25.379,138. " Value of sales, $2,942,759.46. " Received for each quart, average of .11595. Against this must be charged oflF the following items of cost : G>st Items Total Milk $1,491,427.54 Freight 212,446 . 94 Factory Expenses 580,255.81 Delivery Expenses 554,411.89 General Administrative Expenses 35,760.55 Total Cost 2,874,302 . 73 Net Profit 68,456.73 Per Quart .05877 .00837 .02286 .02184 .00141 .11325 .00270 " For the 12 months ending June 30, 1917, there was no net profit, but a loss of $115,686.86. This represents a loss in percentage of sales of .53 per cent., and of .71 per cent, on the investment. " For the month of August, 1917, profits were $68,456.73. The average net profit, .0027 per quart. The profit on sales of 2.33 per cent, and on the investment of .00412 per cent. " The entire elimination of distributors* profits for the past year would have resulted in the saving of nothing per quart to the con- sumer >» Mr. John J. Dillon testified that, in his opinion, milk could be taken from the farmers' hands in the country at any time, pasteurized and treated in the country, brought to the city and delivered to grocery stores at a cost of 1^ cents over the price paid to the producer, and that this would mean that Grade B milk could be dipped out of cans and sold from stores at 9 cents per quart. He also testified that it was his opinion that milk could be put in bottles and pasteurized and delivered to stores at cost of 2% cents above the price paid to the producer. This means that it could be delivered to stores in bottles at 10 cents and sold by them at retail for 11 cents per quart. 57 The witness failed to furnish any data based on actual business or on experimental tests to substantiate his estimates of cost. Mr. Van Son, Sales Agent of the Co-operative Milk Producers' Mar- keting Association, stated that operations for 6 months showed a profit of $800, but that there were losses for October and November, due to surplus milk and to the purchase of milk cans, amounting to $15,000. Mr. Thompson, the Treasurer of the Co-operative Milk Producers* Marketing Association, stated that he thought it possible for farmers to operate country plants cheaper than the dealer could. For the month of July, 1916, the Borden's Farm Products Company made a profit on Grade B milk of $75,224.96 as compared with the month of July, 1917, when the company made a profit of $34,360.90 on the same grade of milk For the month of October, 1917, the data shows a net loss by this com- pany of $54,483.74 on the sale of Grade B milk. For comparison with the results obtained by the Wicks Committee, the Mayor's Committee on Milk secured similar data from five of the large dis- tributing companies for ten months ending November 1, 1917. The following were the results of this survey: Empire Cost Items. State Dairy Co. Average Selling Price, Quart .08680 Amount paid to Producers. . . .05627 Country Station Expenses 00269 Freight 00563 City Station Expenses 01107 Delivery 00857 Cartage, Ferriage Factory Expense Administration, Clerical and Overhead 00203 Depreciation 00193 Total Cost of Distribution. . . .03192 Total Cost 08819 Profit or Loss L .00139 Mutual McDer- mott Co. Clover Farms Co. Alex. Campbell Milk Co. Borden's F. P. Co. .08322 .05196 .01438 :6i683 .00319 .00109 .03549 .08747 L. 00425 .06855 .05645 .00911 .00704 .01358 .00430 .03483 .09128 L. 00273 11628 05782 00408 00966 00921 02820 .093144 .045685 .014711 .007984 .023738 00470 .03605 .09387 P. 00241 .00181 .047614 .093299 L. 000155 In the above tabulation the items are not accurately comparative for the reason that in the case of the Borden Company the figures consist of aver- ages for the year ending June 30, 1917, while in the cases of the other five companies the figures are averages for the first ten months of the year 1917. In another respect the figures are not comparative, namely: because the items of cost are not uniform. The bookkeeping methods of the six com- panies do not correspond and the groupings of their costs do not fall under the same heads, excepting in a few instances. For example, freight means I V* 59 III the same thing but under other items country station and city station may be combined under factory expense, and delivery may include cartage, ferri* age and depreciation. Also administration may include some items in the cost of delivery. The figures presented, however, represent the best analysis that could be made from the account books of the companies, and while the differences noted above make exact comparison impossible, yet the total cost of delivery in each instance is correctly represented. Comparison of the data contained in the above tabulations can be made up arranging the total items in columns as follows : Company, Price Paid Producer Cost of Distribution Averajfe Selling Price Profit or Loss Per Quart 1916 - Borden Alex. Campbell . . Qover Farms Sheffield Farms... .036847 .035365 .03550 .03757 .040579 .038455 .03869 .04009 .080341 .076799 .07629 .08009 .002915 profit .002979 profit .00211 profit .00243 profit 1917 Borden Alex. Campbell . . . Clover Farms Empire State Mutual McDermott .045685 .05782 .05645 .05627 .05198 .047614 .03605 .03483 .03192 .03549 .093144 .11628 .08855 .08680 .08322 .00015 loss .00241 profit .00273 loss .00139 loss .00425 loss A survey of the above figures shows that there was an increase of about 2c. per quart paid to producers while the increased selling price with the exception of one company averaged about Ic. per quart. The cost of distribution varied, in one company being greater, in two others slightly less. The net result of the transaction of paying the pro- ducer the additional 2c. was that four out of five distributing companies on the list of 1917 sustained losses on each quart of milk sold as shown in the figures in the last coltunn. The actual losses of three of the companies for the ten months of 1917 ending November 1st, were: Company No. 1— $169,574.54 Company No. 2 — 42,256.98 Company No. 3 — 52,873.19 One of these companies was forced into the hands of a receiver as a result of these losses. A more accurate comparison of the cost items in distribution of 1916 compared with the cost items of 1917 is shown in the figures obtained from the extensive and detailed audit made of the books of the Borden's Farm Products Company by Mr. Herbert B. Hawkins, certified public accountant. in the employ of the Committee. It is impossible to include more than a few of the figures contained in this extensive and detailed audit. The accountant's report covers 125 pages and is a very extensive and detailed piece of work, involving not only the checking up of all book entries with the original vouchers but the classifica- tion and grouping of cost items in numerous ways. Among these is a statement of the decrease in profit due to variations in sales and cost for the years ending June 30, 1916, and June 30, 1917. These are reduced to a unit basis and are shown in table (pp. 60-61). It must be borne in mind that the figures in table (pp. 60-61) are only up to June 30, 1917, and do not, therefore, include the increase in costs which have occurred since that date. They indicate, however, six items showed increases of expense which added to the cost of distribution more than one and one-half cents per quart, so that the year's business in 1917 was done at a loss of .000155 pet quart or $29,832.72 as compared with a profit of .002611 per quart or $571,460.27 on the business transacted in the year 1916. A more accurate method of determining the exact increase of cost items consists in comparing the actual costs for the year 1917 with the percentage costs of 1917 applied to 1916 sales. This is shown in the following tabulation : Cost Iteir?. 1916. Cost of Milk 042719 Factory Expense 014661 Freight 008408 Branch Selling and Distributing 021900 General Selling Expense 001354 General Administration — 001074 Total ! 090117 Net Profit 003027 Net Loss 1917. Increase. Decrease. 045685 .002966 014711 .000050 007984 .666424 022242 .000342 0014% .000142 001181 .000107 • • • • • ■ • 093229 .003607 .000424 oooiss 60 Borden's Condensed Milk Company-^Farm Products Division, and Borden's Farm and Losses for Fiscal Year June 30. 1916. and Fiscal Year June 30, 1917, for Cream or Other By-Products. 1916 Amount. Pounds of Milk Purchased 470,463,698 Equivalent in Quarts of Milk Sold 218,820,305 Sales $17,580,229.78 Cost of Milk , $8,062,763.23 Factory Expenses 2,767,008.82 Freight 1,586^56.65 Branch Selling and Distributing Expenses.. 4,133.400.35 General Selling Expenses 255,634.22 General Administration Expenses 203,106. 13 Total Cost and Expenses $17,008,769.51 Net Profit $571,460.27 Net Loss Quart Cost and Selling Price. 1917 Amount. 413,952,502 192,536,047 080341 $17,933715.21 036847 012646 007252 018890 001168 000927 $8,796,129.29 2332,356.31 1,537,208.69 4,282,435.37 288.067.75 277,350.52 077730 $17,963,547.93 002611 $29^32.72 m Products Co., Inc., Successors After May 1, 1917. -Comparative Statement of Profits Eastern Routes on Total Milk Purchased. Reduced to Quarts, and Sold As Milk, Quart Cost and Selling Price. Increase Decrease. A Percentage of Increase or Decrease Amount. Per Quart. Amount. Per Quart. Amount. Per Quart .045685 $733,365.96 .014711 65,347.49 .007984 .022242 149,035.01 .001496 32,433.53 .001181 24,244.39 ,093299 $954,778.42 .000155 56,511.196 26,284,258 .093144 $353,485.43 .012803 .006838 .002065 .000732 $49,647.96 .003352 .000328 .000254 .015569 $601,292.99 2.01% 15.93% 9.09% 2.36% 3.12% 3.60% 12.68% 11.93% 23.98% 16.32% 10.09% 17.74% 28.08% 27.40% 5.61% 20.03% .002766 105.22% 105.93% ^ . f N 62 From the figures contained in the extensive audit of the Borden Com- pany, the accountant has submitted a summary consisting of a statement of the unit cost of the distribution of a quart of Grade "B" milk for October. 1917, whether sold in bottles on retail routes, or in bottles at wholesale to retail stores, or in bottles at the company's own stores, Or by the quart from cans. This statement is shown in the following tabulation: Statement of Unit Cost of Distribution of a Quart of Grade ''B" Milk, for October, 1917, Sold— (a) In Bottles on Retail Routes; (6) In Bottles at Wholesale to Retail Stores; (c) In Bottles at Company's Otvti Stores; (d) By the Quart from Cans. ■ (a) Quart Bottle Grade "B" Milk Sold on Routes. (b) Quart Bottle Grade "B" Milk Sold to Retail Stores at Wholesale. (c) Quart Bottle Grade "B" Milk Sold at Company's Own Stores. (d) Quart of Grade "B" Milk Sold Wholesale in Cans. Cost of Flurd .074250 .001366 .004400 .002561 .014091 .008440 .074250 .001366 .004400 .002561 .014091 .008440 .074250 .001366 .004400 .002561 .014091 .008440 .074250 .001366 .004400 .000320 .008354 .008440 Country Overhead Country Handling Expenses Bottles and Cans City Pasteurizing Plant and Bottling Expense Freight Sub Total Delivery Overhead Delivery Direct Expense... General Administration Total Cost of Distrib- ution .105108 .105108 . 105108 .097130 .002331 .035280 .001710 .002331 .025238 .001710 .002331 .024449 .001710 .000699 .007040 .000513 .144429 . 134387 .133598 .105382 Selling Price, Retail .Selling Price to Grocery Stores Selling Price in Own Stores Selling Price in Cans .14 .13 !i4"' ;i6" ■ Profit per Quart .004429 .004387 .006402 Less per Quart .005382 From the above tabulation it appears that on Grade B bottle milk sold from wagons or to grocery stores there is a loss of more than 4/10 of a cent per quart. On wholesale milk sold in 40 quart cans there is a loss of more than 5/10 of a cent per quart. On the other hand, in milk sold from the company's own stores in bottles at 14c. per quart there is a profit of .006402 per quart. If this milk were sold at 13c. per quart there would be a loss of .003598 per quart. There is no reason to believe that it would be to the advantage of any of the large retailers of New York City to do business at a loss. 63 The severe losses sustained by several of the companies during the year 1917 is clear indication of the fact that even the recent advances in the retail price of milk have not been sufficient to pay the cost of delivery with- out serious losses to the majority of the retailers. A careful audit of the books of the Borden's Farm Products Co. estab- lished the integrity of the cost items entered on their books and these are substantiated by the statement obtained from the books of the other com- panies. The list of cost items cannot be shortened in any way under the pres- ent system of distribution, and the size of each item seems not only to be reasonable under present conditions, but, as a matter of fact, too small to permit the payment of dividends on the stock invested in these companies. 10. Surplus Milk. One of the most serious problems facing the industry, whether of the producing or distributing branch, consists in surplus milk. This surplus is due to the fact that the supply does not correspond with the demand. At the season of the year when cows are first put on pasture there is a great over-production. During the hot weather of July and August there is usually a shortage. Again in October, when grain feeding begins, there occurs an increase in production, although not so great as in May and June and not exceeding the demand. Just how great the volume of surplus milk is in the New York market is shown by the chart on page 64 . The solid line shows the quantity of milk produced by the dairy farmers shipping milk to New York City for each month of the year. This fluctua- tion in quantity was ascertained by a comparison of the quantity of milk produced at a large number of the shipping stations in the producing terri- tory. It will be noted that the volume enormously increases during the months of May and June and decreases during the months of July, August and September, rising again during October. The dotted line in the chart shows the quantity of milk annually consumed by New York City. This is made up by study of the quantity sold in the city for each month during several years past. It is clear that the supply produced on the dairy farms shipping to New York City does not corre- spond at all with the quantity consumed. During that period of the year when the supply exceeds the demand there is a surplus which cannot be sold as fluid milk and must be marketed as one of the milk products, either butter, cheese, condensed milk, milk powder, casein or milk sugar. The greater part of this surplus is manufactured into butter, and the butter price is a fair estimate of the price at which the surplus can be marketed. During that period of the year when there is a shortage of milk, because the quan- tity produced is less than the quantity consumed by the city, this shortage has to be made up by the distributors, who obtain an additional supply of milk 64 ii « 65 from territory outside of the regular fluid milk zone or from shippintr stations which during most of the year are producing butter and cheese. A study of the chart showing the fluctuation in the supply and demand for New York City shows that the annual surplus average for five years amounted to 6,857,000 forty-quart cans, or 582,945,000 pounds. If the average butter fat on this market was 3.6 per cent, each 100 pounds of milk would make 4.4 pounds of butter and 88 pounds of skim milk. It must be borne in mind that, since milk is perishable, all surplus milk must be handled and sold as surplus, and unless artificial refrigeration is widely practised cannot be used to make up deficits occurring at other times. Consequently, it is not proper to subtract the shortage from the surplus, but to consider the entire surplus as milk that must be marketed at a less price than the fluid supply. In the chart showing the quantity of surplus milk produced by the dairymen shipping to New York City during the period of five years, the amount of surplus milk amounted to 582,945,000 pounds per year. If this were made into butter from 30 per cent cream and the butter and skim milk were marketed the amount of money received is shown in the following table: Products. Butter at .3884 Butter at .3884 Butter at .3884 No. of lbs. Skim at .75 Skim .50 Skim .00 Surplus 582,945,000 Butter (82%' fat) 25,649,580 $9,962,286.87 $9,962,286.87 $9,962,286.87 Skim 512,991,600 3,847,497.00 2,564,998.00 Butter Milk 44,303,820 Total Receipts $13,809,783.87 $12,527,284.87 $9,962,286.87 If sold as milk at $2.44 per 100 $14,223,858.00 $14,223,858.00 $14,223,858.00 Loss $414,074.13 $1,696,573.13 $4,261,571.13 Loss per 100 lbs. surplus .071 .291 .731 Loss per quart surplus .00153 .00626 .01572 Loss on surplus applied to entire supply, per quart ,00042 .00173 .00436 In the above table the price of butter is quoted at .3884, which is the average for the past year; and the price of milk at $2.44 per hundred pounds. Skim milk is sold at various prices. In the table 75c. per hundred, 50c. per hundred and zero are used. Buttermilk is often not marketed at all, and the price has, therefore, not been included. In the above tabulation it appears that the losses on surplus milk, when made into butter and the skim milk sold at 75c. per hundred, would be more than $414,000.00 per year. With skim milk at 50c. per hundred the losses would be $1,696,573.13 per year, and if the skim milk were not sold at all the loss would be $4,261,571.13 per year. These figures mean losses per hundred pounds of surplus milk of .071, .291 and .731. If the losses on surplus ft 66 milk are applied to the entire supply and the surplus milk is sold for butter only, with no returns for skim milk or butermilk, the tax of the surplus on each quart of fluid milk sold in the city would be .00436, or nearly half a cent a quart. If the figures for the quantity of milk consumed by New York City and the quantity produced by the dairy farms are tabulated, the monthly fluctua- tions and differences between the supply and the demand are plainly shown. For example, in the month of May, during the last three years, New York City has consumed 2,367,000 cans of milk, while the dairymen produced 4,420,000 cans, creating a surplus of 86 per cent. On the other hand, for the month of August the average for three years shows that the city con- sumed 2,299,000 cans of milk, while the dairy farmers produced during that month only 1,380,000 cans, creating a shortage of 40 per cent. Again, in the month of January, averages show that the city consumed 1,806,000 cans, while the dairymen produced 2,140,000 cans, creating a surplus of 18j^ per cent. During the entire year, adding all surpluses and subtracting all deficits shows a net surplus over and above the demand of 18j^ per cent. That is to say, the dairymen shipping milk to the City of New York actually pro- duced 18J^ per cent more milk than the city can consume as fluid milk. Surplus milk is commonly made into butter, cheese, condensed milk and milk powder. These milk products sell most of the year at prices which result in a loss for milk manufactured into them from the regular sources of the fluid milk supply. The retailers in fluid milk in the past have been compelled to buy all of the milk produced by the dairymen in the dairy districts where their shipping stations are established. In recent months three new factors have had a marked influence on surplus milk. (1) The great advance in price of fluid milk, which has reduced the demand, thereby creating an artificial surplus. For the first time in ten years there was more milk produced in August than the market would consume. While this was partly due to weather conditions it is believed it was largely due to the stimulation of higher prices paid to the •producer and to a lessened demand on the part of the consumer. One retail company was compelled to manufacture in July 2,625,000 quarts of milk into butter, making 254,727 pounds, costing 51}4c. per pound, while the market price for butter was 46c. per pound. This same company manu- factured 2,451,000 quarts of milk into cheese, at a cost of 27c. per pound, while the market price for cheese was 24c. per pound. At the price which producers received for their milk in October, butter would have cost 81c. per pound. (2) Another influence was the agreement between the producers' and distributors' organizations, whereby the distributors closed up shipping stations where the supply exceeded the demand. This resulted in the closing up by one retail company of 21 stations, and another retail company of 39 stations during the month of October. 3? 67 (3) The new market for condensed milk furnished by the war orders of the Allies. These war contracts guarantee a profit above cost, so that condensories are in a position to compete with the fluid milk market for the supply. This has furnished producers with an outlet at higher prices, which has fortified them in their demands for higher prices in the market for fluid milk. The fact that Health Department regulations do not apply to condensed milk has increased the influence of the competition by these condensories. So long as all milk purchased from a producer by the distributor is paid for at the full market price for fluid milk, there will be a loss on surplus milk manufactured into butter and cheese. Butter, cheese and other milk products are normally manufactured out of milk which does not reach the fluid milk market, and is produced by farmers who do not receive the full price for fluid milk. Consequently, the price of butter and cheese will always be controlled by the price of milk outside of the territory supplying the fluid milk market. No adequate solution has yet been offered for the handling of surplus milk without serious losses either to the producer or the distributor of milk. If the surplus is thrown into the hands of the distributor he sustains the losses and is compelled to make up such losses by additional charges for fluid milk. On the other hand, if the surplus milk is thrown into the hands of the producer he is compelled to sustain losses on milk manufactured into butter or cheese or through the disposition of surplus milk at prices lower than the market prices for the fluid product. In this emergency a suggestion has recently been proposed which seems to be worthy of consideration. This consists in a plan whereby the handling of surplus milk and the losses from the same shall be shared jointly both by the producer and the distributor. Since the fixing of prices either by the industry itself or by a commission necessarily interferes with the normal workings of the laws of supply and demand, it is certain that it is not possible by price fixing to furnish any guarantee that surpluses and deficits will not occur. Under these circumstances the same mechanism which fixes prices should include an adequate provision for protecting the industry against damages directly due to price fixing which results in losses from surpluses or deficits. The plan suggested, in brief, provides for the payment of full price for all of the fluid milk which can be sold at full price and for the payment at less than full price for all fluid milk which must be handled as surplus, the price paid for such surplus to be the price at which the fluid product can be sold as surplus milk for manufacturing purposes, either butter, cheese or other milk products. The butter price may be accepted as probably the fairest basis for determining the price of surplus milk. This plan was actually put into operation at a milk shipping station at Homer, N. Y., where, because of business conditions, the entire product could not be marketed at full price. The dealer and the producers voluntarily agreed to co-operate for the handling of surplus milk. The producers agreed % V f 'J ll M J 'i;> 68 to receive payment at full price for all fluid milk that could be sold at full price and to accept payment for the balance, or surplus milk, at whatever price the surplus milk would bring when sold either for milk powder or otherwise. If producers enter into agreements with each other for collective bar- gaining with the distributors, and distributors enter into agreements with each other for collective buying from producers, a mechanism is furnished whereby surplus milk can be easily handled in a way entirely fair and just to both parties. To illustrate this the following example may be taken : Dealer. 1 2 3 Total Percentage Pounds of Pounds of Surplus Milk Bought. Milk Sold. Milk. 10,000 20,000 50,000 8,000 12,000 45,000 2,000 8,000 5,000 80,000 100% 65,000 81.25% 15,000 18.75% In the above table it appears that there was 80,000 pounds of milk purchased, of which 65,000 pounds was sold as fluid milk, amounting to 81.25 per cent; the balance, 15,000 poimds, was surplus milk, amounting to 18.75 per cent. In this way the quantity of milk purchased by all retailers of the City of New York and the quantity sold as fluid milk and the quantity of surplus could be estimated at the end of each month and the percentage of surplus milk stated. In the above example it is suggested that the producers be paid for 81.25 per cent of all the milk produced by them at the full fluid price and that they be paid for 18.75 per cent of the milk at a price which corresponds to the full market price for butter, plus the full market price for by-products of butter, including skim milk and buttermilk. Such a plan would require that some person, or commission, in whom both producers and dealers had confidence, should furnish a statement of the total quantity of fluid milk bought and sold as fluid milk and of the total quantity of surplus milk which could not be sold as fluid milk, but must be manufactured into milk products. From the producers* standpoint this plan pays the producer all that he could possibly secure out of the business if he were marketing the milk himself. The producer could not expect to sell as fluid milk any more fluid milk than the market will absorb. Consequently, if the retailer were elimin- ated and the producers were retailing their own product, the surplus milk unsold as fluid milk and thrown back on their hands would be the same surplus which would be in the hands of the distributors under the plan above mentioned. The price producers would receive for this surplus would be the same price they would receive from the dealer in the above mentioned plan. It is a fact that the distributor is in a much more advantageous posi- tion than the producer for the handling of surplus milk, both in the processes 69 of manufacture and in the matter of marketing. The producer could not expect to manufacture surplus milk or market the same in any different way or any more cheaply than these processes can be performed by the large distributor. The particular value to the producer of pooling his interests and arriv- ing at a percentage of fluid milk and a percentage of surplus milk which is uniform for all producers is that payment would be entirely uniform for all producers. The irregularities of milk production in different districts and the differences in the marketing facilities of different dealers have for many years been imposing great hardships or given advantages to producers and distributors which are unfair to the industry as a whole. If uniformity of market price is so desirable that producers recognize the importance of united action, then it is a logical corollary that there should be uniformity in the percentage and in the price of surplus milk and that all farmers and distributors should be treated alike in this matter. The payment for fluid milk and surplus milk, according to the percent- age of the entire supply sold as fluid milk and manufactured as surplus milk, would, however, entail a severe hardship on the distributor if his percentage of fluid milk sold and surplus milk manufactured did not correspond to the percentages of the entire supply. For example, in the tabulation above given we can assume that each of the three dealers is compelled to pay for 81.25 per cent of his fluid milk at full price and for 18.75 per cent of his milk at butter prices. Under these conditions the following tabulation indicates the result : Dealer. Total Purchases. Paid at Full Price. Overpaid. Underpaid. 1 10,000 2 20,000 3 50,000 8,125 16,250 40,625 125 4,250 4,375 In the above table it appears that if each dealer should pay to his producers at full price for fluid milk for only that portion of his supply which corresponded to the total percentage of fluid milk sold on the entire market, dealer No. 1 would have overpaid for 125 pounds, dealer No. 2 would have overpaid for 4,250 pounds, while dealer No. 3 would have under- paid for 4,375 pounds. In the former table it appears that dealer No. 3 actually marketed 45,000 pounds at full price, but in the lower table he paid for only 40,625 pounds at full price. On the other hand, dealers No. 1 and 2 paid for more than they sold at full price. In short, dealers Nos. 1 and 2 would sustain losses by this transaction, while dealer No. 3 would have an unfair gain. It is obvious that the adjustments could be easily made by the dealers themselves through some form of exchange or clearing house, whereby those dealers who have sustained undeserved losses can be recompensed by those dealers who have made unmerited profits. The « ij I 1 I I? I: ■1 I i M 70 undeserved losses and the unmerited profits are exactly equal to each other, consequently the exchange could bring about an adjustment between the dealers of these differences without affecting their individual business interests in the slightest degree. The above plan has actually been proposed by the large distributors in the city of Boston and is under consideration at the present time as a solution of the surplus milk problem there. The closing up of the plants recently agreed upon between the Dairymen's League and the New York City distributors is certain to result in disastef and injury either to the producers themselves or to the distributors. On the other hand, since both producers and distributors are interested in the same market and in selling to that market all of the high price fluid milk that the market will absorb, it would seem that they have a common interest in protecting each other against losses from surplus milk by adjusting the manufacture and the sale of surplus milk among themselves so that the burden is evenly distributed among all producers and dealers. 11. Market Prices and Price Fixing. When differences occur, as they necessarily must, between the price demanded by producers for their product and the price offered for the same by the distributors, it is most natural to assume that the consumer, as well as the industry itself, can be best protected from injury through the action of a disinterested tribunal endowed with sufficient authority to fix prices for the producer, distributor and consumer. Uniform prices ajid price fixing is a remedy which, because of the emergency created by war time conditions, has been seized upon as the only adequate remedy for excessive prices of food products. War time emergency does create a condition which artificially interferes with the influences which normally control prices, to such a degree that such an artificial remedy as price fixing may be justified. On the other hand, there are certain inherent faults in any plan of price fixing which are so serious that in the long run such a plan, even when carried out by a fair-minded and intelligent tribunal, is apt to bring disaster either upon the producer, distributor or consumer. It seemed proper for this Committee to take up for consideration at least the principles of price fixing, in so far as these have been determined by those who have specialized in the science and philosophy of economics. With that purpose in mind, the Committee requested Prof. Robert E. Chaddock, of Columbia University, to attend a conference to which were invited the representatives of the producers and dealers organizations. An abstract of the statements made by Prof. Chaddock at this conference is as follows : " In any price-fixing program such as has been carried out by the pro- ducers in recent months the assumption is very likely to be made that the commodity (milk) is inelastic, that is, that the demand will not change very 71 much with a change in price. Of course, that is not true * * * as has been shown in connection with the decreased consumption resulting from the high price of milk to the consumer, so that, in the sense that the demand does change with a change in price, milk is an elastic commodity. " The producers are producing under varying conditions of cost * * * some are producing at a greater cost and some at a lower cost. The marginal producer is the man producing under the most unfavorable con- ditions. I do not know what the range is between the marginal producer and the man producing under most favorable conditions, but it must be a pretty wide range of cost. " Any cost price must refer to a specific quantity. * ♦ * We natur- ally drop the marginal man out first. " Any rigid price fixing precludes the cutting off of that most unfavored producer to decrease the supply in response to a decreased demand. * * * No flat rate for milk is desirable, because there is no command of the conditions. " Where a monopoly is had the price is determined by the control of the supply. No one can control the demand. The monopolist by controlling the supply controls the price. He slides his price up and down till he gets to the price where the largest profits are obtainable. " Monopoly price fixing by producers is very likely not to work out permanently for the benefit of producers themselves, because price fixing is a two-sided problem. " If New York City has to have two and one-half million quarts a day for its needs, then it would have to pay such a price as would bring in to the market two and one-half million quarts. " It seems to me that the middleman agency is probably the best qualified to determine the price. Your middleman is in a strategic position to know what he can buy a given supply for, and on the other hand what he can get people to pay for that supply. The consumer wishes cheap milk and the producer wants to receive as large an amount as he can. Neither one of these parties has the facilities for getting together to determine the balance between the force of the demand and the force of the supply. The middle- man's interest combines the interest both of the consumer and the producer. The interest of the middleman ought to be to sell a larger amount of milk at a smaller margin of profit per unit, rather than to sell a smaller quantity at a higher price. " If we are to pay the farmer enough to get him to produce the supply and still sell the supply when we have got it, we have got to, by every means possible, reduce the expenses in the distributing function. " I doubt the efficiency of the City as a distributor of milk. I consider that as a very last resort. I have not very much faith in the efficiency of the City of New York in conducting the milk business. " In justice to all producers no flat rate could be fixed which would treat them equally. t' 72 " I doubt whether you can fix a price in any arbitrary or rigid way. The middleman must bid for more milk as he needs it. It is proper for a dealer to buy milk in Vermont at a different price from the price he pays in Pennsylvania. " I think it is economically unsound for the Dairymen's League to fix prices for six states, because the price fixed will not be on the principle of responsiveness to the demand. " I do not believe you can put this thing in the hands of a rigid price- fixing commission, providing you admit that New York has to have a certain milk supply. " In the distribution of milk it will be in the interest of the consumer to bring less competition into distribution and to get the cheapest distribution possible. " I think we ought to limit competition and provide for such combina- tions as will permit the cheapest kind of distribution. " The next step in an American community would be to have some kind of a Public Service body to demonstrate costs on some practical basis and to show that the margin of profit is not too large." 12. Economies in Production. Larger Producing Cows. For many years dairy farmers have been well aware of the economies in milk production resulting from the keeping of dairy cows which are large producers. Nimierous cow-testing associations have as their primary purpose the testing of cows in local dairy herds, in order to inform the dairymen as to those animals which are low and unprofitable producers and those animals which are high and profitable producers. Numerous statistics have been compiled to show the cost of producing milk as it is modified by the pro- ductivity of the individtial dairy cow. A good example of this difference is shown in bulletin No. 501 — United States Department of Agriculture, entitled, " A Study in the Cost of Producing Milk on Four Dairy Farms." These figures are taken from data compiled several years ago on costs much lower than present costs. They show clearly, however, the relation of the productivity of the cow to the cost of milk, for the reason that the same costs were applied alike to all cows at that time : Production in Pounds, Per Cow. 2,349 3,648 4,596 5,450 6,445 7,513 9,049 Cost Per 100 Lbs. of Milk. $3.57 2.59 2.29 2.10 1.86 1.79 1.70 # n Another set of figures was presented by Prof. W. P. B. Lockwood, of Massachusetts Agricultural College, in his testimony before the Committee. He showed statistics compiled by him indicating the following results : Cost Production Per Cow Per Year. Per Quart Less than 5,501 lbs 0721 5,501—7,500 lbs 0624 Over 7,500 lbs 0552 The third set of figures was presented in the testimony of Prof. George C. White, of Connecticut Agricultural College, Storrs, Connecticut. These results have been tabulated in the form of the chart shown on page 74. The productivity of the dairy cows supplying milk to New York City market averages not more than 4,500 pounds per cow per year. In the above tabulation such cows make milk at a cost of about 7c. per quart, which price corresponds closely with the cost as determined by all of the data compiled on cost of production of the city's supply. There is no doubt that if the city's supply came from cows which were large producers, the cost of production would be considerably reduced. From this it appears that, in herds containing over ten cows, the pro- duction per cow and the cost per quart of jplk gave the following figures: Production Per Cow Per Year. "^ll^ ^^^ Quart. Over 7^00 lbs v . . . : :: :. ;^ . . . . 4.74c. 6,500-7,500 5.48 5,500—6,500 5.60 4,500-5,500 5.82 Under 4,500 ?. 02 i Only a small percentage of the dairymen supplying New York City are members of the cow-testing associations. There is no doubt that there is a large percentage of cows standing in the herds of dairymen producing milk for New York City which are low and unprofitable producers of milk. These animals can be eliminated immediately by fattening and selling for beef. They are actually an expense to the dairyman and add an item to the cost of milk which is an improper tax on the consumer. Larger Dairies. Another factor which has not received the attention it deserves is the size of the dairy herd itself. It makes a great difference how many animals are included in the dairy herd. It is one thing for a farmer to devote his time and attention to the care of one dairy cow and quite another thing for him to attend to the care of a large herd. The cost of keeping a cow by herself and as a member of a large herd are very different. It is clear that a number of the expenses included in the cost of pro- duction do not increase as rapidly as the size of the herd. This is well illustrated in a review of the statistics of 178 herds reported in Bulletin No. 7 of the Connecticut Agricultural College. When these herds are arranged in order of size, with the corresponding costs of milk production, it appears that herds of 50 or 60 cows produced DELCEASLin C05T OFPQODUCIMQ PIILK A5 AMOUhT Or MILK PEG CO/ IMCDEJ\5L5 Based on da-fa from Bolle+m Nfi7 Connecticut A«) 77 of the order were guaranteed, some consideration ought to be given to the size of the order. Inquiry of one of the largest grain merchants of the New York Produce Exchange has elicited a reply, which is in part as follows : " The ordinary dairyman is not usually in a position to buy feed in car load lots, and must therefore buy from a retail dealer, who must charge about 10 per cent more than he pays for the goods, and not having storage capacity must also buy frequently, preventing him from availing himself of markets when they are lowest * * *. Collective buying through a pur- chasing agent of immense quantities makes possible purchases whenever the markets warrant, and the buying of enough to tide over what might appear to be a steadily rising market. Under these conditions there should be saved at least 10 per cent on the purchase of feed, as compared with the system under which feed is now purchased." Ten per cent on $923,230.00 per month would be $92,323.00. This would be a net saving to the consumers of New York City of $1,107,876.00 per year. This item alone would reduce the cost of milk l/5c. per quart. Teaching Dairying in the Public Schools. Laws requiring instruction in agriculture in the common schools have been enacted in the following States : Alabama, Kansas, California, Florida, Louisiana, Mississippi, North Carolina, Oklahoma, Tennessee, West Virginia, Wisconsin, Indiana, Wyoming. In Missouri, North Dakota, Ohio and Texas they have a law requiring that agriculture be taught in rural schools. Idaho, Pennsylvania and Utah require only that agriculture be taught in rural high schools. The follow- ing states give aid to a department of agriculture in high schools: Iowa, Kansas, Louisiana, Maine, Maryland, Massachusetts, Mississippi, Missouri, New York, North Dakota, Texas and Wisconsin. There is a decided sentiment in favor of the use of rural public schools as centers for instruc- tion in those things which are most vital to the prosperity of the community in which these schools are established. Dairying being a business so vital to the prosperity of so many of the largest rural communities, would justify the use of rural public schools as places where regular instruction is given in management and care of the dairy herd and in the proper methods of milk handling. In a number of rural high schools in the eastern states this is already being done. The great influence of the rural school in developing better dairy farmers and dairy employees has not yet been fully realized. As a consequence, the Departments of Education of the six states furnishing milk to New York City have not yet undertaken any widespread campaign to transform the character of education dispensed through rural schools into one better adapted to the needs of the communities in which they are located. Some of the economies in milk production would immediately result from the 78 establishment of educational courses of this kind. Others would be more remote, but in due time of permanent value in putting the business of milk production on a sound and economical commercial basis. The results which have been achieved by a niunber of public schools in rural commvmities where such a type of education has been practised are so remarkable that they justify not only the serious attention of the educational authorities but the conviction that herein lies one of the most important influences for bringing about increased economy and efficiency in the production of milk. Local Bookkeepers. One suggestion which has been made for bringing about economies in milk production is the establishment of a simple standard method of keeping cost accounts on dairy farms. It has been very commonly noticed that only a small percentage of dairy farmers make any attempt to keep cost accounts accurately. Many systems of bookkeeping have been devised for the use of dairy farms, some of which are very commendable because of their sim- plicity. The thing which has been lacking, however, is an influence which would bring about the adoption of some one of these good systems. It is one thing to devise a system and quite another to secure its adoption by the dairy farmers. As a means of overcoming this one of the large distributors has suggested that some one person in each dairy district be designated as the official bookkeeper for all of the dair3mien in that district. The sug- gestion is that this person be employed by the entire group of dairymen for such portion of his time as would be necessary to visit each dairy af least once each month and assist the farmer in making entries of cost items on the blanks supplied for a standard method of cost accounts. It is be- lieved that the expense of this service to each dairyman would be very small, because the time of the bookkeeper would be shared by a large group of dairies. The advantages of keeping cost accounts are so well known and their influence in bringing about increased economies and efficiencies that the suggestion of the nomination of a local bookkeeper in each dairy district seems well worthy of attention. Aid from Country Banks. It has become a practice in recent years for country banks to assist farmers in the purchase of high grade dairy cows. Many banks in the states of Iowa, Wisconsin, Illinois and other western states have for several years made a practice of buying cows for dairy farmers and placing them on dairy farms under easy financial conditions, with the understanding that the farmer may use the bank as a depository for the money received from the production of the cows, which in the course of a few months pay, through the sale of their milk, the full purchase price. More recently this practice has been taken up by banks in Pennsylvania and Massachusetts. For example, the Plymouth County Trust Company of Brockton, Massachusetts, during the eighteen months ending September, 79 1917, purchased 13 carloads of cows averaging 25 head to the car for dairy- men oi that district. For this purpose the bank employed an experienced purchasing agent, the bank loaning two thirds of the value of the cows on notes. This bank asks a payment of one-third in cash and accepts notes for the remaining two-thirds. It is obviously to the financial advantage of the country bank to increase the cow population of their district as a direct method of increasing the amount of money on deposit by dairy farmers. City Cows, At the present time in the limits of New York City there are located 90 dairies, containing 4,500 cows producing 50,000 quarts of milk daily. The list of cost items for the milk dispensed by these dairies to nearby consumers has eliminated from it certain cost items which attach themselves to the bulk of the supply furnished to this City as follows : Hauling to the country station gg^ S^J 211art Country station charges ; ;• ;; • ;;; ;;^ :0084 per quart HauHng froin'railroad station to city' 'plant -^^ P«r ^^^ Total ^^ P^*" **"*^ The elimination of these four items of expense amounts to 2 1/3 cents per quart. As an offset to this, these city dairies have to pay higher rents, taxes, wages, and other overhead items. The objection to city cows is the confinement in narrow quarters with- out pasture, the nuisance of stables near dwellings and possible effect on the health of cows by city conditions. On the other hand, since the cost of grain and other feed such as baled hay, beet pulp, brewers grains, etc., is no higher in the city than in the country, there may be some financial advantages to be gained in the keeping of city cows that justify a consideration of the proposition from the standpoint of economics. There are some students of the question who go so far as to suggest that, at least for the use of infants and children, cows, kept in large units in the outskirts of the city, under first class business management and ideal sanitary conditions, would fur- nish a cheaper and cleaner milk than can be secured in any other way. The suggestion is novel but is one which seems worthy of further consideration both from an economic and sanitary standpoint. 13. Economies in Distribution. Centralizing Distribution. In the report of the Milk Committee appointed by the Food Controller for Canada, published November 24, 1917, the committee says that the cost of distribution, or the " distributors* spread," varied, from the evidence sub- mitted, from 2.75c. to 6.50c. per quart depending on local conditions, and that this excessive spread is caused chiefly by the excessive number of V distributors and varies about in the same ratio as the number of distribu- tors. For example, in Ottawa, where one dairy handles about 75 per cent of the milk supply, the " spread " is only 3.25c. per quart, while in Toronto, where there are about 90 distributors, it is 5.25c. per quart. The Committee says, further, the effects of this unnecessary duplication, are: (a) Excessive capital employed. (b) Excessive dairy costs, (r) Overlapping in delivery. (d) Excessive loss in bottles. (e) Diversion of great numbers of men and horses from pro- ductive employment (In addition may be mentioned duplication of administration costs, selling costs, properties, including real estate, buildings and machinery, both country and city.) On this subject Mr. Weiant, President of the Borden's Farm Products Co., Inc., in his testimony stated : " There are operating expenses in the country that are duplicated and could be removed. It would be possible to have full cars come through instead of part cars. Pasteurizing plants could maintain a full flow and at a maximum capacity. Wagons could be filled to capacity and operated in a small area. If the plan were worked out com- pletely there would be necessarily no duplication. I believe if the dealers are given an opportunity to work on that problem they will solve it." The data collected by this Committee shows that there is duplication of effort in the country at collecting stations, inefficiency in transportation be- cause of broken car-load lots instead of car-load lots, duplication in hauling from railroad platforms to the city, duplication of bottling and pasteurizing in city stations, and, above all, duplication in the delivery wagons on the streets. Statistics of the delivery system suggest savings that would result from the elimination of competition and the substitution of a single-service de- livery. The statistics for New York City are as follows : Bottled milk supply 704,318 quarts Milk m cans 896,405 quarts Ketail wagons 4 975 Wholesale wagons \ 1*522 Average load of retail wagons '142 quarts Average load of wholesale wagons 14.7 cans Investigation shows that the maximum load for a retail wagon is 428 quarts, consequently if the total volume of retail milk, amounting to 704,318 quarts, were carried on retail wagons handling only full loads, the bottled milk of New York City would be handled by only 2,243 retail wagons in- stead of the 4,978 actually in use at the present time. This would mean only 45.3 per cent of the present number, or a saving of 54.7 per cent of the total. In wholesale milk the maximum load for a two-horse wagon operated by one man is 75 cans per day. If all the wholesale milk, amounting to 896,405 quarts, or 22,410 cans, were carried on wagons handling only maximum loads, the number of wagons required would be only 300, as compared with the 1,522 wholesale wagons now operating. This would be a saving of 81.3 per cent. These estimated savings of 54.7 per cent, on retail wagons and 81.3 per cent, on wholesale wagons are, of course, ideals, assuming a perfect delivery system in every section of the city and that every wagon carries only a full load. Under practical conditions this would be impossible, even if delivery were in the hands of a single public service corporation. For a number of years milk has been retailed in Philadelphia for 2 cents less than in New York City. Philadelphia retail loads have averaged 300 quarts to the wagon, while New York retail loads have averaged less than 200 quarts to the wagon. This difference in load is chiefly responsible for the difference in the retail price. In the city of Ottawa, Canada, 75 per cent, of the business is in the hands of one distributing firm, which operates at a margin of only 3.25 cents above the cost of production, as compared with the margin of distribution in Philadelphia of five cents and in New York of seven cents. The Milk Committee appointed by the Food Controller for Canada reported on November 24, 1917, in favor of the " Unification and reorgani- zation of the milk distributing business," and cited the experience in the adoption of a single delivery system by the City of Regina, Saskatchewan, where a net saving of at least V/s cents per quart over the previous cost of milk resulted from the adoption of this system. An extensive questionnaire was submitted by the Committee to all the large dealers in New York City for the purpose of securing statistics regard- ing the location of country and city plants, the volume of business and the facilities for handling milk, the object being to ascertain the capacity of the present distributing system and the points at which duplication was occur- ring. While several of the large companies endeavored to answer the de- tailed questions contained in this questionnaire, the number of replies received was insufficient to make it possible for the Committee to determine by this method just what saving could be accomplished by eliminating the numerous duplications resulting from present competitive conditions. Powdered MUk. The lowest prices obtainable on powdered milk are : Skim milk powder in barrels of 150 pounds each, 21 cents per pound. Whole milk powder in barrels of 150 pounds each, 37 cents per pound. In fluid milk these prices are equivalent to a little less than 4 cents a quart for skim milk and about 9 J4 cents for whole milk. The fact that this powder when properly kept is almost imperishable, can be shipped long distances, and kept in storage, and can be used for M 82 cooking and manufacturing purposes and for practically all purposes for which fluid milk is used, justifies its recommendation as a substitute for fluid milk for that portion of the milk supply which is used for manufactur- ing purposes and for some cooking purposes. The shortage in the source of production of milk powder could well be remedied by the development of producing territory outside of the limits of the sources of fluid milk supply. It is undoubtedly true that many portions of the South, prevented from fur- nishing fluid milk by distance and by climate, could on account of the fertility of the soil produce milk cheaply if markets were developed for milk in pow- dered form. The use of milk powder for a considerable percentage of the market, not only for manufacturing but for household and cooking purposes, would relieve the pressure of high prices to some extent on such consimiers. Daylight Delivery. Daylight delivery of milk refers to operation of delivery wagons dur- ing the morning hours after breakfast, rather than during the early hours of the day before breakfast. The delivery of milk in the early morning hours before breakfast is a relic of the days in which municipalities received their supply from nearby farms without the advantages of refrigeration, it being customary for farmers to drive into the city immediately after the morning milking with fresh milk. The early morning delivery thus became a habit. At the present time, with milk coming from distances of several hundred miles and with the refrigerating facilities which now exist, there is no reason excepting habit why milk should be delivered before breakfast. In the summer months, because among the poorer classes ice is a luxury, it is proper to make an early morning delivery, but during at least six months of the year it is cool enough to prevent any disadvantages through tempera- ture. The City of Chicago since 1906 has practiced daylight delivery from October 1st to April 15th. For a number of years in the City of Boston there has been daylight delivery during the winter months. The City of Philadelphia adopted daylight delivery on November 15th of this year. There are other cities in America where this same system has been adopted. The advantages are: (1) Larger sales of milk; (2) Better collections of cash; (3) Better collections of empty bottles; (4) Less theft; (5) Better working conditions for horses and drivers; (6) Facilitates municipal supervision. The carrying of larger loads on the delivery wagons in itself means a decided economy in the cost of delivery. In Philadelphia, the dealers have already increased the loads on retail wagons and believe the increase will amount to 25 per cent. The saving on bottles and on collections also means 83 less expense to the distributor. There is no reason why daylight delivery cannot be adopted immediately in New York City. Retailing Milk from Grocery Stores. In response to a questionnaire sent out by the Committee to the dis- tributors of milk, replies were received from nine of the largest distributors stating the prices charged by them for milk sold to grocery stores during the month of November, 1917. The figures are as follows : Dealer. Price per Quart in 40 Quart Cans. Price per Quart in Bottles. 1 2 5 4 5 7 8 9 Average 9H-10C. 9>4-10c. 10c. 10c. 9H-10C. 10c. 10c. 10c. 10c. 10c. 13c 12^c. 13c. 1254c. 11J4C 12-13c. 13c 13c 14c. 13c It has been believed that milk could be sold from grocery stores cheaper than it could be sold from retail wagons delivering the same directly to the homes of consumers. There is no doubt that it costs the dealer less money to carry milk to the grocery stores than to carry milk to the home. In the above tabulation, for example, the dealers sell Grade *' B " milk to grocery stores in glass bottles for 13 cents per quart, while they charge 14 cents per quart for the same milk to consumers at their homes. Many grocery stores retail milk whether in bottles or in cans at the same price charged to the store by the dealer. Many of the largest grocerymen in New York City have attended a conference at which they indicated their willingness to undertake to sell milk from grocery stores at no charge for delivery service because the offering of milk at less than the retail price from wagons brings trade to the store for other things. This is not economical because the cost of such service must necessarily be added to the cost of other commodities. From the standpoint of infants and children, however, such a philanthropy might be encouraged for the same reason that the sale of bottle milk from the infant milk depots is encouraged. On the other hand, if the grocery store should charge a profit of 1 cent per quart on bottle milk, it would make the retail price identical with the retail price of the same milk delivered from retail wagons to the homes. A study of the figures obtained by the expert accountant employed by the Committee on the books of the Borden's Farm Products Company relat- ing to the cost of bottle milk sold to grocery stores at wholesale shows that il even when this milk is sold to the storekeeper by the company for 13 cents, there is a loss to the company of .004387 cent per quart at the present time. One needs only to reflect that the grocery store constitutes an additional item or factor in the delivery system to recognize that if the grocer charges a profit for himself it necessarily adds another cost item to the cost of delivery. The figures obtained indicate that from the standpoint of the milk con- sumer, there is not to be expected any saving in the retail price of milk through distribution from grocery stores. On the other hand, milk stores handling large volumes of milk make possible the delivery to them of such large quantities of milk at one opera- tion that the cost of delivery to the dealer is greatly reduced. The delivery of an entire wagon load of bottle milk to one milk store is plainly much cheaper for the dealer than the delivery of the same wagon load to a chain of grocery stores at some distance from each other. In the list of cost items obtained by the expert accountant's audit of the books of the Borden's Farm Products Company, concerning the sale of milk from the company's own milk stores, it is shown that the cost of de- livery, even including the expenses of operating the store itself, is less than the cost of delivering the same milk to grocery stores. These figures seem to justify the belief that milk can be retailed from niilk stores at a less price than it can be retailed from grocery stores. The difiFerence, however, is not equal to a fuU penny, but a fraction, and could not be of advantage to the consumer unless milk was sold at a price which in some way provided for the splitting of the penny into at least one half penny amounts. This might be brought about through the adoption of tickets, which has already been done in some other cities. Loose milk from grocery stores. Milk in 40-quart cans sold to grocery stores at 10 cents per quart is retailed by such stores at not more than 11 cents per quart. This is the cheapest milk offered to the public, costing 3 cents per quart less than milk distributed in bottles from retail wagons. From a sanitary standpoint it is believed to be unsafe for the use of infants and children. In the question- naire sent out by the Committee to 123 cities in America, 65 replies were received, and without exception every health officer condemned the sale of loose milk. In not more than 3 or 4 cities was the sale of loose milk per- mitted at all. In such cities as Boston and Chicago, the sale is entirely prohibited. 1. 2. C0NCLUS10N& Milk is the most valuable and the cheapest of human foods even at present prices. For drinking purposes New York City now uses only about 700,000 quarts daily. The city should use about 2,000,000 quarts daily for drinking in an ideal diet. 85 3. The cost of milk production at present prices is 7 cents per quart and the prices asked by the Dairymen's League are justified. 4. The cost of distribution as shown by the dealers' accounts is justified and not large enough to prevent business losses. 5. The cost of production can be reduced by (a) eliminating low-producing cows, (b) collective hauling of milk, (c) collective buying of grain. 6. The cost of distribution can be reduced by abolishing competition and duplication through centralizing the distributing system into a single company or public service corporation. M. B. 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