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Author: 
 
 Collins, James Homer 
 
 Title: 
 
 Methods of wholesale 
 distribution of fruits... 
 
 Place: 
 
 Washington, D.C. 
 
 Date: 
 
 1915 
 
COLUMBIA UNIVERSITY LIBRARIES 
 PRESERVATION DIVISION 
 
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 MASTER NEGATIVE # 
 
 ORIGINAL MATERIAL AS FILMED - EXISTING BIBLIOGRAPHIC RECORD 
 
 I 
 
 C69 
 
 L 
 
 Collins, James Homer. 
 
 ... Methods of wholesale distribution of fruits and vege- 
 tables on large markets. By J. H. Collins and J. W. 
 Fisher, jr. ... and Wells A. Sherman ... Washington 
 [Govt, print, off.] 1915. 
 
 28 p. incl. illus., diagrs. ZS"". (U. S. Dept. of agriculture. Bulletin 
 no. 267) 
 
 Contribution from the Office of markets and rural organization. 
 
 1. Farm produce— Marketing, il. Marketing of farm produccj i. Fisher, 
 John Wclton, (joint author.\ ii. Sherman, Wells Alvord, n'oint aiithor.X 
 III. Title. V / 
 
 Agr 15-1136 
 
 Library, U. S. Dept. of 
 
 O 
 
 Agriculture lAg84B no. 267 
 
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 UNITED STATES DEPARTMENT 
 
 GRICULTURE 
 
 BULLETIN No. 267 
 
 _ Contribution from Office of Markets and Rural Organization 
 '''^fU CHARLES J. BRAND, Chief 
 
 Washington, D. C. 
 
 August 16, 1915 
 
 -2^ 
 
 H 
 
 METHODS OF WHOLESALE DISTRIBUTION OF FRUITS 
 AND VEGETABLES ON LARGE MARKETS.^ 
 
 By J. H. Collins and J. W. Fisheb, Jr., Scientific Assistants, and Wells A. 
 
 Shebman, Specialist in Market Surveys. 
 
 \^\JLAJLaaJL4^ 
 
 J) 
 
 
 CONTENTS. 
 
 Page. 
 
 Introduction 1 
 
 Necessity for distributing agencies 2 
 
 Methods of receiving 3 
 
 Inspection . 4 
 
 Rejections 5 
 
 Terminal distribution and sales 
 
 methods 8 
 
 Causes of complicated methods. 11 
 
 Sales by brokers ^ 11 
 
 Auction sales 14 
 
 Car-lot wholesalers 16 
 
 Page. 
 
 Terminal distribution, etc. — Contd. 
 Sales through commission mer- 
 chants 17 
 
 Jobber's sales 19 
 
 Public markets 20 
 
 Distribution channels 21 
 
 Losses and wastes 23 
 
 Conclusion . 24 
 
 Summary 24 
 
 Glossary 26 
 
 INTRODUCTION. 
 
 N. 
 
 k 
 
 \>% 
 
 The details of our present system of terminal distribution at large 
 market centers are practically unknown to many producers and con- 
 sumers. The elaborate commercial machinery whereby fruits and 
 vegetables are brought from distant production areas to our large 
 cities and are there received, divided into smaller lots, and finally 
 passed on to the consumer is an unlmown mechanism to the layman. 
 Much confusion and unnecessary explanation could be avoided if 
 those outside the produce trade had a clearer idea of the processes 
 incident to the marketing and distribution of perishable food prod- 
 ucts. This is especially true in the case of the small shipper. Goods 
 which have reached a large market usually have passed from the pro- 
 ducer's control, but the fact remains that an accurate knowledge of 
 
 ^ For a discussion of outlets and methods of sale for shippers of fruits and vegetables, 
 «e€ Bui. 266, U. S. Dept of Agriculture, by Fisher, J. W., jr. ; Collins, J. H., and Sher- 
 man, Wells, A. 
 
 NoTB. — This bulletin should be of interest to shippers, dealers, and consumers of fruits 
 and vegetables throughout the United States. 
 
 96017°— Bull. 267—15 1 , 
 
 U 
 
 \' 
 
'X, 
 
 2 BULLETIN 287, V. S. DEPARTMENT OF AGMCXTLTUEE. 
 
 the means whereby his produce finally reaches the consumer miirht 
 This buUetin is designed to assist the shipper in oht«minrr v^,, 
 
 kets whiVh T^^^i^r^ *-, A 1 6^"ciai practices on the larger mar- 
 
 are to be secured. ^ *** ''**'^ **'^""» results 
 
 exactly the same sense in all paS ofLt^rv^r T °"* T*^ 
 be consulted freely. country, this glossary should 
 
 NECESSITY FOR DISTRIBUTING AGENCIES. 
 
 o„raS;s:Lfbri;irerthf^^^^^ 
 
 and consumer. This is as tZT^ ,f '"^** ^*'''*'^ producer 
 
 condition has b^uglt C utl? Z^Tffi '^u" '' " P'*^^'^''"^- ^h^^ 
 
 specialists have beef re^^^d to'TLtS^Sriblnl? "' 
 crops over wide arPAQ P^^o^ i. \ , aistribution of large 
 
 and^herearefu^sa'Su^^ttrgl^t^^^^^^^^^ ^"4 
 
 in niost cases along J^^^^s tdTeXusrr ^^ "^^^ ^'^ "^^^^ 
 
 During recent /ears Sei; faf b^^"^ ^Jt SaT^f "^ T''''^"^"'' 
 those engaged in food distribution fZJI ., agitation against 
 
 as to just who these -ddWnare^nd wff WiZ 2*" ^'"* 
 form. It IS probably not coins too f « r Tc Ti, f^*'* •'"^ ^^J Per- 
 the middleman is a rathefhafir/fi^ ■''*''''*' *** ^'^^ ""initiated, 
 tion is to levy, arbit^rilv abl " ! k "^ P"^°' ^'^«* ^^^ief fune^ 
 from the prXrTJhe ^^^"7 ^J T f " '""-^^'"^^ ?"-'"» 
 been directed to increase^^f^tf ' ^K '"*""' *»' *^" P"''"^ '^''^ 
 Evidently it has never ru'f,n f"°, *** ^^''^ "'"d^^d- 
 
 economic conditior^oX;:? per^^e r '^''"""'/"^ "'°"" *»»** 
 of a marketing agency whfch was trpV a pa^f ^r 'T ' ^"f " ' 
 business competition must elimin-f/jii • ^^ .. ®*^°®'" <«" ^»ter 
 perform no definite uS ftXn^ intermediate agencies which 
 
 
 J. 
 
 ^; 
 
 1 
 
 \, 
 
 WHOLESALE DISTRIBUTION OF FRUITS AND VEGETABLES. 3 
 
 ing. Production during the last decade has increased greatly, and as 
 a natural consequence improved methods and facilities for handling 
 the increase have become necessary. Keeping pace with increased 
 production has come the demand of consumers for more elaborate 
 and efficient service. Little thought is given to the fact that service 
 can become a very expensive luxury. With the widening of the 
 distance between the city and the sources of its fruit and vegetable 
 supplies there has arisen the necessity for special agencies to meet 
 the changed conditions. 
 
 The fact should be recognized that present distributive machinery, 
 with all its strong points and its weaknesses, has been created of 
 necessity, and it has weathered the storm of much adverse criticism, 
 because every part of the country is now enjoying the perishable 
 products of the most remote districts. Any readjustment of present 
 market practices must be based upon the fact that some agency must 
 contmue to perform the functions of the present-day middleman. 
 
 Handling goods through a large market is a very complex process 
 The problems involved differ greatly from those of production. 
 Usually one man or one firm can not handle both production and 
 distribution and succeed at both. The vast volume of business 
 transacted at large market centers makes necessary some special 
 agencies which can devote all their energies to distribution. 
 Especially does the machinery for efficient marketing become neces- 
 sary when perishable goods are to be handled. Commodities of this 
 sort must be moved rapidly, must be distributed evenly, and from 
 their very nature permit of no weakness in distributive machinery, 
 if they are to be sold at a profit. 
 
 METHODS OF RECEIVING. 
 
 As soon as a shipper starts a car of perishables toward the market, 
 he should notify the consignee. This one important detail is often 
 omitted or neglected by shippers. Little thought is given to the fact 
 that the consignee, especially if a large firm, may have many other 
 shipments en route or on hand. The viewpoint of the small shipper 
 whose annual output may be from 1 to 10 carloads is narrowed. The 
 one or two cars which he may be rolling toward market are very im- 
 portant to him, and he usually loses sight of the fact that his prop- 
 erty on arrival at the market will be only a very insignificant portion 
 of the total receipts. The firm to which the shipment is made may 
 have more carloads on track and for sale in one day than the shipper 
 would forward in five years. 
 
 Keeping records of all these shipments is a great burden on large, 
 wholesale, distributing concerns, and lack of proper notification often 
 causes much needless confusion and costly delay at distributing cen- 
 
4 BULLETIN 267, TJ. S. DEPARTMENT OF AGRICULTUBE. 
 
 ters. A grower who will have one or more cars of produce to market 
 should get in touch with the concern to which he expects to ship his 
 goods some time before they are ready to move. Thus he may secure 
 some valuable suggestions as to packing, loading, or routing the ship- 
 ment, and these preliminary negotiations will pave the way to a 
 better understanding of terms and the means whereby the produce 
 may be handled rapidly and efficiently. In cases where it is advisable 
 to divert cars in transit or where special preparations must be made 
 to receive and distribute goods immediately, notification of consignee 
 by prepaid telegram should be coincident with shipment. Also, when 
 there is any doubt about a letter reaching the consignee before the 
 car arrives it is important that the wire be used. Telegraphic noti- 
 fications must make plain just what the shipper has in mind. For 
 instance, a shipper in Florida may consign a car to a commission 
 merchant in Kansas City, and telegraph to him as follows: 
 
 Am to-day consigning to you car FGE 16438 containing 330 boxes Bright and 
 Fancy Bright grapefruit; 30 boxes 36's, 100 boxes 46's, balance 54'a Routed 
 via Atlantic Coast Line, Louisville & Nashville, Missouri Pacific. Handle for 
 my account. Letter and bill of lading follow. 
 
 The letter which follows should embody the following details: 
 Name of commodity, date of shipment, whether shipped by freight 
 or express, route, car number and initial, number of packages, size 
 and type of packages, variety, and grade. 
 
 In case the car is billed to a broker or sales agency the instruc- 
 tions, whether by telegram or letter, should read, " Sale subject to 
 confirmation by shipper," as in this way the shipper has the final 
 word as to the disposition of his property. 
 
 Inexperienced shippers may overlook the fact that all railway cars 
 are designated by number and initials painted on the outside of the 
 car. Thus a refrigerator car owned by the Great Northern Railroad 
 Co., No. 51023, would be known as GN 51023. Car 16438, operated 
 by the Fruit Growers' Express, is designated as FGE 16438. 
 
 Shortly before the goods reach their destination or immediately 
 after arrival the consignee is notified by the railroad. When highly 
 perishable goods, such as strawberries, are moving, some railroads 
 receive passing reports of cars en route and notify the consignee 
 by telephone several hours before the car arrives, thus giving him 
 opportunity to issue any special instructions or to make arrangements 
 for prompt handling and distribution of the contents on the arrival 
 of the car. In handling fruits and vegetables not so perishable, the 
 railroad, as a rule, notifies the consignee after the car has arrived 
 and confirms this telephone notification by a mailed card, giving car 
 number, initials, and contents. 
 
 When no special instructions are given by the consignee many rail- 
 roads place the cars on their team track soon after arrival in order 
 
 1 
 
 l\ 
 
 J 
 
 Wholesale distribution of fbuits and vegetables. H 
 
 that inspection and unloading may be accomplished immediately. 
 When firms have private sidings running into their places of busi- 
 ness, it is usual for all cars shipped direct to them to be placed on 
 these sidings without special instructions. Prompt notification by 
 railroads enables the consignees to divert cars to auction sidings 
 without loss of time when it is expected that the contents will be 
 handled through an auction. 
 
 INSPECTION. 
 
 Soon after arrival it is necessary that an inspection be made. The 
 inspector may be the consignee or his representative. In case the 
 car has been shipped to a broker or a commission man, preliminary 
 inspection is often made by a prospective buyer. If the shipment 
 was made under a " straight " bill of lading, it is necessary that the 
 inspector have a written order issued by the consignee in a form 
 similar to the following: 
 
 Agent, Missoubi Pacific Railroad Company, 
 
 Kansas City, Missouri. 
 Deab Sib : Please permit bearer, John Jones, to inspect the contents of car 
 GN 51023 now on track, consigned to me. 
 
 (Signed) J. J. Doe. 
 
 Whenever a shipment is billed "Order notify" or "Shipper's 
 order," the bill of lading should be indorsed thus : " Permit inspec- 
 tion without surrender of bill of lading." This will remove the 
 necessity for issuing inspection orders. As ^ matter of fact, all bills 
 of lading whether "straight" or "order" should read, "Permit 
 inspection," in order to avoid possible complications at destination. 
 
 Usually the right of inspection by the purchaser is assured in the 
 case of perishable goods, as it would be very unbusinesslike to pur- 
 chase or accept a carload of perishables without a careful inspection. 
 
 In all cases where the shipper has no market representative he 
 should arrange to have inspection made by disinterested inspectors 
 in case the shipment is rejected. 
 
 REJECTIONS. 
 
 There are a surprising number of rejections on large markets 
 where great quantities of perishable goods are handled. Few ship- 
 pers have any idea how large this number is. The facts for one prod- 
 uct in one market may illustrate this point. 
 
 From the beginning of the shipping season to July 28, 1914, 3 
 of the 15 railroads touching Kansas City, Mo., brought to that 
 market 227 cars of watermelons. Of this number 47 were rejected 
 
e 
 
 BULLETIN 267, V. 8. DEPABTMENT OF AGRICtrLTUBE. 
 
 / \ 
 
 outright and a number of the remainder were reconsigned and subse- 
 quently refused at other points. This example does not, of course, 
 indicate normal conditions on this market, nor is this particular dis- 
 tribution center more prone to reject produce than are other similar 
 markets.' No exact data as to the causes for these rejections are avail- 
 able and unfortunate conditions may have justified the refusal of any 
 or all of these melons. As a matter of fact, carelessness in grading, 
 packing, and loading are largely responsible for the high percentage 
 of rejections which occurs in the handling of fruits and vegetables. 
 Perishable goods, from their very nature, may be said to invite rejec- 
 tions, and the figures here given are probably indicative of conditions 
 in other distribution centers during periods of market depression. 
 
 JUST CAUSES FOB REJECTION. 
 
 Satisfactory compromises can be made only where both the shipper 
 and the buyer are broad minded and willing to make reasonable con- 
 cessions. A very common source of misunderstanding is shrinkage. 
 A shipper who sends fruits or vegetables several hundred miles to 
 market can not imderstand why his shipment should weigh so much 
 less on arrival than it did at the point of origin. Thus the invoice 
 weight of a car of bulk apples shipped from southwest Missouri on 
 October 16, 1914, was 22,427 poimds. These apples arrived at market 
 on October 23, and were reweighed, barreled, and sold. The weight of 
 the apples at destination was 17,971 pounds, indicating a loss of 4,456 
 poimds, or 19 per cent, due to shrinkage in transit and to the dis- 
 carding of a small quantity of culls and spoiled fruit. Very few 
 shippers could be made to believe that a legitimate loss as great as 
 this could occur even though the shipment was graded and loaded 
 carelessly. 
 
 An all too common source of trouble between shippers and con- 
 signees is nonfulfillment of contract by the shipper. This may fur- 
 nish just ground for a rejection. Thus, a shipment may be due to 
 leave the point of origin on a certain day, but the actual movement 
 may be postponed by the shipper for several days. A break in the 
 market in the meantime, if the purchaser gives prompt notice to the 
 shipper, will justify him in refusing the shipment when it finally 
 arrives. Again, goods are often not up to the grade specified in the 
 contract. For instance, a grower agrees to ship a carload of fancy, 
 barreled apples. When the car arrives, the purchaser discovers that 
 from 25 to 50 per cent of the shipment is below the standard specified 
 and he very justly refuses the entire shipment or demands a consider- 
 able allowance. Often with the best management there remain possi- 
 bilities for great losses, so that both producers and distributors should 
 
 r^i-i 
 
 JUto 
 
 WHOLESALE DISTRIBUTION OP PBUITS AND VEGETABLES. 7 
 
 take into consideration the character of the product which is being 
 moved, live up to all agreements, and accept any losses which justly 
 fall to either. 
 
 UNJUST REJECTIONS. 
 
 A break in the market price may be another cause for rejection 
 and one which can not be justified. A dealer may buy a carload of 
 a certain commodity and certain grade and agree to pay a specified 
 price. Before the car arrives the market price may drop materially. 
 To accept the produce at the contract price may entail considerable 
 loss. Hence, when the car arrives it is given a very rigid inspection, 
 and it is seldom difficult to discover a number of defects in perish- 
 able produce when the inspector is devoting close attention to the 
 effort. Thus a drop in market price may convert a car of extra fancy 
 apples into " C-grade " stuff in the opinion of the buyer who sees a 
 loss confronting him. 
 
 This practice of rejecting on a declining market is being dis- 
 approved more and more by reliable concerns. It injures the busi- 
 ness standing of the buyer. One of the worst things that can be 
 said about a produce dealer is that he is a ready rejector. Refusal 
 on a declining market is unfair to everyone concerned. In the case 
 of the buyer, the reputation of a firm may be seriously injured by this 
 practice. In addition, if the buyer is able to effect a compromise with 
 the shipper whereby he is able to secure the produce for a greatly 
 reduced price, he can afford to throw the produce on the market at a 
 price which will depress it still further. 
 
 All firms which propose to remain in .business are anxious to build 
 up reputations for integrity. All prominent firms have established 
 reputations to maintain and transactions with them are usually safe. 
 Many firms operating on a smaller scale have gilt-edged reputations 
 where they are known and are ambitious to expand their business by 
 giving the best service possible. 
 
 Most of the abuses with which the distributing trade in general is 
 charged are traceable directly to the operations of irresponsible deal- 
 ers, with little financial backing, who do not remain very long in 
 business in any one market. Unjustified rejection is coming to be 
 confined more and more to comparatively unimportant marketing 
 concerns. 
 
 BEDRESS FOB BEJECTIONS. 
 
 In case a car is rejected the shipper may sell elsewhere, or may 
 make an allowance on the price to the original purchaser in order 
 to close the transaction. A claim may be entered against the rail- 
 road in case the company was at fault in any way. Usually dealers 
 
8 
 
 BtJLLETllf 26'!, U. S. DEPaHtMeKT OP AGBlClTLTtTRE. 
 
 / 
 
 will accept a car and sell it for what it will bring, and then enter 
 a claim against the railroad through their traffic department in 
 favor of the shipper. When this is done the shipment is accepted 
 from the railroad " imder protest," which means that the consignee 
 reserves the right to enter a claim later. Thus, if a car of boxed 
 apples, for instance, should arrive at destination in bad condition, 
 the consignee might give written notice to the railroad of condi- 
 tional acceptance in some such form as follows: 
 
 Chicago, III., September 20, 1914. 
 
 Mr. J. J. Doe, 
 
 Local Freight Agent, X. Y, d Z, R. R. Co., Chicago, III, 
 
 Dear Sib: On September 20, 1914, you notified us of the arrival of car FGB 
 29853, containing apples. This is to inform you that the contents of this car 
 did not arrive in good order, and we hereby notify you that the receipt of same 
 and payment of freight is made under protest, and claim will be entered for 
 the following reason: 
 
 Entire car is badly shifted, causing a number of boxes to be broken and 
 contents spilled on floor. Exact amount of damage can not be determined 
 until car is unloaded. 
 
 (Signed) , 
 
 Consignee, 
 
 « 
 
 There are several essentials to be observed in filing claims. A writ- 
 ten notice of the intended claim should be filed with the railroad at 
 once, so as to permit the company to make immediate inspection in 
 order to protect itself. As soon as the exact loss is ascertained by the 
 consignee, claims should be filed in accordance with printed railroad 
 instructions and should offer complete details, backed in every case 
 by affidavits. It is very important that the original bill of lading 
 be in the possession of the party who files the claim, otherwise there 
 may be great difficulty in collecting. 
 
 One advantage of handling business through a cooperative organi- 
 zation or other large company is the ease and rapidity with which 
 these concerns can collect just railroad claims. The large associations 
 are in a position to employ trained traffic managers, who, by care- 
 fully submitting only those claims which are clearly justified and by 
 backing up those claims with affidavits and evidence, are able to 
 make prompt and full collections. 
 
 TERMINAL DISTRIBUTION AND SALES METHODS. 
 
 A panoramic view of the activities at one of the large distribution 
 centers of the country would probably reveal some astonishing facts 
 to the layman. When sales are being made on one of our large 
 markets, the mingling of various types of middlemen and the activi- 
 
 J, 
 
 I 
 
 
 WHOLESALE DISTRIBUTION OF FRUITS AND VEGETABLES. 9 
 
 ties being carried on cause the market to present an appearance 
 peculiar to the produce trade. A great amount is moved by the 
 wholesale trade in the very early morning. At this time, before most 
 of the activities in the city have started, produce distributors find 
 their busiest period. Trucks of fruit and vegetables from freshly 
 " broken " cars are being unloaded on the walk before each business 
 house; ranks of crates, boxes, and baskets nearly block all passage- 
 ways; and more or less elaborate displays of the day's offerings are 
 being arranged to attract passing buyers. Jobbers, grocers, huck- 
 sters, and fruitstand vendors elbow their way through narrow pas- 
 sageways between the tiers of produce, stopping every few feet to 
 inspect goods and ask prices. Street salesmen for each produce firm 
 endeavor to withstand the assault of the throng and each attempts 
 to devote attention to three or four buyers at once. Prices are 
 quoted and violent arguments take place as to quality, pack, and 
 price. After much wrangling and discussion of price and terms, 
 sales are finally made. 
 
 Figure 1 shows South Water Street, Chicago, at 8,30 a. m., which 
 is after the rush hours. There is not sufficient light to secure a 
 good picture when the congestion is greatest. 
 
 Where a few years ago goods coming to market passed, as a rule, 
 by definite, direct channels to the consumer, to-day the same goods 
 may take any one of a great number of channels, whose directness 
 may or may not be in proportion to the size, type, or quality of. the 
 shipment. Large distributing organizations and firms have grown 
 and spread their business activities over much wider fields, but each 
 has worked along its own lines, and each by itself to a certain 
 extent ; hence the present lack of uniform practices and systems. In 
 other words, there is no continuous articulation between the different 
 phases of distribution. This does not mean that members of the 
 trade have no common interests. As a matter of fact, their business 
 success depends to a large extent on their ability to secure when 
 needed the help and cooperation of certain of their associates. 
 This community of interests, however, does not obtain among all 
 those engaged in distribution. Distributors are often working at 
 cross-purposes, so that general economy and efficiency are lost in 
 the conflict of interests. 
 
 In this discussion rather arbitrary lines are laid down as bound- 
 aries for the activities of various types of middlemen, yet in actual 
 practice these activities so overlap and encroach upon each other 
 that resulting market practices are exceedingly complicated. . 
 
 Goods do not pass in regular order through definite channels, but 
 are sold by any available means. While for purposes of clearness the 
 distinction between the various types of distributing agencies has 
 96017''— Bull. 267—15 2 
 
 Z2 
 
10 
 
 BULLETIN 267,«U. S. DEPARTMENT OF AGRICULTURE. 
 
 been very closely drawn in this bulletin, this distinction is not so 
 apparent in actual practice. One man or one firm may combine the 
 functions of several middlemen. Many distributors act simulta- 
 
 s 
 
 d 
 
 © 
 eo 
 
 od 
 
 I 
 
 iS 
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 hi 
 
 •M 
 
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 neously as car-lot wholesalers, commission men, and jobbers. As a 
 matter of fact, few firms confine their activities to one line of busi- 
 ness. Thus, of the goods sold by a firm on one day, part may have 
 
 WHOLESALE DISTRIBUTION OF FRUITS AND VEGETABLES. 11 
 
 been purchased outright in car lots, part purchased in small lots from 
 other receivers, and part consigned on commission. While one firm 
 may act in the triple capacity of car-lot wholesaler, commission man, 
 and jobber, the three lines of business thus carried on at the same 
 time are very distinct and for purposes of discussion may be consid- 
 ered as being performed by three separate firms. In every large 
 market there are concerns which confine themselves to one of these 
 lines, but by far the greater number of produce distributors do busi- 
 ness in several lines. 
 
 CAUSES OF COMPLICATED METHODS. 
 
 Various factors have contributed to the development of manifold 
 methods of marketing. The use of refrigerator cars for shipping 
 perishables from distant producing sections and the attendant growth 
 of business in handling goods out of season have had a tremendous 
 effect. With the radius of the zone of supplies thus lengthened, mar- 
 keting activities have increased to keep pace with the movement, and 
 with increased activity have come increases in complexity and in 
 costs. 
 
 When consideration is given to the vast territory which supplies 
 any one of our large cities with its fruits and vegetables, the wonder 
 is that distributive machinery is not more hampered and labored in 
 its action. Thus, on one day in the fall of 1914 Kansas City was 
 receiving peaches from Utah, Idaho, and Washington ; grapes from 
 California and Michigan; cantaloupes from Colorado, New Mexico, 
 Arkansas, and Missouri ; pears from California and Colorado ; sweet 
 potatoes from Virginia and Georgia; and apples from Colorado, 
 Washington, New Mexico, New York, Arkansas, and Missouri. With 
 daily supplies coming from all sections of the country and with the 
 necessity for adjusting machinery to care for varying quantities, it 
 is not to be expected that the flow of produce through market chan- 
 nels will be smooth and uninterrupted, nor that prices will be stable 
 and uniformly satisfactory. 
 
 SALES BY BROKERS. 
 
 In spite of general complexity, however, explanations of the sales 
 methods of some of the principal, independent, distributing agencies 
 may prove useful. Thus, there is the broker who handles car lots 
 only, as a rule, and who draws his business from cooperative asso- 
 ciations, country speculators, large operators, private exchanges, and 
 in some cases private shippers. According to strict interpretation, 
 the term " broker " can be applied only to those middlemen who act 
 as intermediaries between the principals in contemplated transac- 
 tions and have nothing further to do with the contract itself. The 
 broker normally does not have possession of the articles he deals in, 
 
 X: 
 
INTENTIONAL SECOND EXPOSURE 
 
 10 
 
 BULLETIN 267,. U. S. DEPARTMENT OF AGRICULTURE. 
 
 been very closely drawn in this bulletin, this distinction is not so 
 apparent in actual practice. One man or one firm may combine the 
 functions of several middlemen. Many distributors act simulta- 
 
 s 
 
 
 i 
 
 © 
 
 CO 
 GO 
 
 o 
 
 o 
 o 
 
 u 
 
 S 
 
 o 
 
 
 %-• V 
 
 neously as car-lot wholesalers, commission men, and jobbers. As a 
 matter of fact, few firms confine their activities to one line of busi- 
 ness. Thus, of the goods sold by a firm on one day, part may have 
 
 WHOLESALE DISTRIBUTION OF FRUITS AND VEGETABLES. 11 
 
 been purchased outright in car lots, part purchased in small lots from 
 other receivers, and part consigned on commission. While one firm 
 may act in the triple capacity of car-lot wholesaler, commission man, 
 and jobber, the three lines of business thus carried on at the same 
 time are very distinct and for purposes of discussion may be consid- 
 ered as being performed by three separate firms. In every large 
 market there are concerns which confine themselves to one of these 
 lines, but by far the greater number of produce distributors do busi- 
 ness in several lines. 
 
 CAUSES OF COMPLICATED METHODS. 
 
 Various factors have contributed to the development of manifold 
 methods of marketing. The use of refrigerator cars for shipping 
 perishables from distant producing sections and the attendant growth 
 of business in handling goods out of season have had a tremendous 
 effect. With the radius of the zone of supplies thus lengthened, mar- 
 keting activities have increased to keep pace with the movement, and 
 with increased activity have come increases in complexity and in 
 costs. 
 
 When consideration is given to the vast territory which supplies 
 any one of our large cities with its fruits and vegetables, the wonder 
 is that distributive machinery is not more hampered and labored in 
 its action. Thus, on one day in the fall of 1914 Kansas City was 
 receiving peaches from Utah, Idaho, and Washington; grapes from 
 California and Michigan; cantaloupes from Colorado, New Mexico, 
 Arkansas, and Missouri ; pears from California and Colorado ; sweet 
 potatoes from Virginia and Georgia; and apples from Colorado, 
 Washington, New Mexico, New York, Arkansas, and Missouri. With 
 daily supplies coming from all sections of the country and with the 
 necessity for adjusting machinery to care for varying quantities, it 
 is not to be expected that the flow of produce through market chan- 
 nels will be smooth and uninterrupted, nor that prices will be stable 
 and uniformly satisfactory. 
 
 SALES BY BROKERS. 
 
 In spite of general complexity, however, explanations of the sales 
 methods of some of the principal, independent, distributing agencies 
 may prove useful. Thus, there is the broker who handles car lots 
 only, as a rule, and who draws his business from cooperative asso- 
 ciations, country speculators, large operators, private exchanges, and 
 in some cases private shippers. According to strict interpretation, 
 the term " broker " can be applied only to those middlemen who act 
 as intermediaries between the principals in contemplated transac- 
 tions and have nothing further to do with the contract itself. The 
 broker normally does not have possession of the articles he deals in, 
 
 -V 
 
12 
 
 BULLETIN 287, U. S. DEPARTMENT OF AGRICULTURE. 
 
 but must carry on all business in the name of his principal. Com- 
 modities handled by brokers, as a rule, are sold to car-lot whole- 
 salers or jobbers. 
 
 At the beginning of each business day the broker looks over his 
 business, ascertains conditions on other markets, and takes note of 
 the number of cars he has on hand, number en route, etc. With all 
 this well in mind, he is ready to approach the wholesale trade. His 
 next step is to make a careful canvass of the wholesale district, visit- 
 ing or calling up by telephone all those who may be interested in 
 what he has to offer. When a possible customer is found, the next 
 step, in case the car or cars have arrived, is to allow the prospective 
 buyer to inspect the contents. After inspection, satisfactory terms 
 are arranged and then before the sale can be consummated it is nec- 
 essary that the shipper confirm the broker's action. Assuming that 
 the broker is selling a car of apples, Ganos and Grimes for instance, 
 he may telegraph the shipper as follows : 
 
 Jones offers on car MC sixteen eight fifty-four, two fifty Ganos, two seventy- 
 five Grimes, delivered. 
 
 In case this offer is satisfactory, the shipper's reply may read : 
 
 Confirm car MC sixteen eight fifty-four Jones, two fifty Ganos, two seventy- 
 five Grimes, delivered. 
 
 Or in case the price is unsatisfactory, the shipper might refuse as 
 follows : 
 
 Jones too low ; car MC sixteen eight fifty-four ; must have three Grimes. 
 
 Collection is often made through a bank located at destination. 
 The shipper sends the bill of lading with draft attached to a bank, at 
 the time the car is shipped, and after inspection the purchaser pays 
 the draft and secures the bill of lading. Some large shipping organi- 
 zations whose responsibility is well known to railroad officials often 
 temporarily retain possession of the original bill of lading and effect 
 delivery by a signed delivery order somewhat as follows: 
 
 Kansas City, Mo., September 21, 191\. 
 
 Agent, Missouri Pacific Railboad Co. 
 
 Deab Sib: Please deliver on this order without bill of lading car of apples 
 C. B. & Q. 36066 to John Jones, Kansas City. We pay all charges. 
 
 The bill of lading is retained temporarily in this case, as evidence 
 of former ownership, or for use in case a dispute should arise later 
 or claim be entered. It is absolutely necessary to insert the clause 
 " We pay all charges," as in many cases railroads will refuse such de- 
 livery unless it is understood definitely which party pays the freight. 
 
 BBOKEB^S SETTLEMENTS. 
 
 Sales by brokers are, as a rule, strictly cash transactions and col- 
 lection is made when delivery is offered. All cartage expenses in get- 
 
 % 
 
 ^ 
 
 jhttiiiiiiiiM 
 
 WHOLESALE DISTRIBUTION OF FRUITS AND VEGET.IBLES. 13 
 
 ting the goods from the car to the dealers' place of business are 
 paid by the buyer. In case the broker did not make a direct sale, but 
 handled the goods through auction, his activities would be confined 
 to seeing that the goods arrived at the auction and attending the sale 
 to withdraw the shipment if prices were unsatisfactory. 
 
 bbokeb's expenses. 
 
 The broker perhaps handles more business at less cost to himself 
 than any other type of middleman. He has no considerable amount 
 of capital in his business and a large part of his expenses is prac- 
 tically fixed. His heaviest items of expense are usually rent, clerical 
 help, and telegraph charges. The latter, of course, varies with the 
 amount of business handled. As a rule, most of the broker's business 
 is composed of association accounts and accounts of large private 
 shippers, and a very small portion is drawn from small shippers. 
 The broker acts as the exclusive agent on his market for each con- 
 cern that he represents, and since he handles car lots only and moves 
 large quantities in relatively short periods of time he is enabled to 
 render important services at a very low cost to the shipper. 
 
 BBOKEB'S abuses. 
 
 Brokers are often charged with misuse of their privileges in that 
 they may sometimes speculate on goods passing through their hands. 
 For instance, a broker may make returns out of his own funds for a 
 supposed sale, but hold the produce for a rising market before actual 
 "Sale is made. If the expected advance occurs, he pockets the increase 
 in price. This practice would prevent a shipper from getting just 
 returns and his goods would not be on an actively competitive basis 
 with other market offerings. In other words, such sales would secure 
 to the grower or shipper the lowest market price quoted on the day 
 i-eturns were made and he would get no benefit from either the ex- 
 pected rise in price or the broker's ability as a salesman. This tend- 
 ency toward speculation is ordinarily done away with entirely when 
 there is direct dealing between the vendor and vendee, so far as the 
 handling of money is concerned. As a matter of fact, according to a 
 strict interpretation of the term, the shipper's selling agent ceases to 
 be a broker when he assumes responsibility for collecting and remit- 
 ting, and so the term " broker " as here used is applied according to 
 trade usage and common understanding. Brokers are charged some- 
 times with failing truly to represent the shipper. Being always in 
 close personal touch with buyers and having no such close relation 
 to the shipper, there is sometimes the tendency to favor the buyer 
 unduly in order to retain his good will. 
 
14 
 
 BULLETIN 267, U. S. DEPARTMENT OF AGRICULTURE. 
 
 THE BROKEB S PLACE IN DISTRIBUTION. 
 
 Brokers act as market salesmen for those producers who are unable 
 to make direct sales and who have no other market representative. 
 They represent shippers at large distribution centers, and by the 
 payment of the very small brokerage fee the shipper can be certain 
 that his goods will be accepted on arrival. The broker, by making 
 prompt disposition of a consignment immediately upon arrival, often 
 saves the shipper many times the brokerage fee. Brokers stimulate 
 and expand the market to a certain extent by their expert canvassing 
 of the trade and any influence that stimulates active buying and 
 selling must be regarded favorably. In general, their chief useful- 
 ness lies in the fact that their activities on the market tend to main- 
 tain a steady flow of business. 
 
 AUCTION SALES. 
 
 Auction companies are organizations (usually incorporated as 
 stock companies) which sell fruits at public sale to the highest 
 bidder. The auction offers an outlet for a great deal of produce 
 that can not find immediate, direct sale. Those who sell through an 
 auction may be brokers (representing shippers and associations), 
 speculators, operators, car-lot wholesalers, and in rare cases indi- 
 vidual shippers. Sales are made largely to jobbers. Before sales 
 are started a display is made in the showrooms. Produce to be sold 
 is divided into "lines" which consist of from 1 to 100 or more 
 packages. Each line is marked with a designating number and 
 listed in definite order on the various sheets which make up the 
 " catalogue." Before bidding starts buyers who are interested in the 
 day's offerings make careful inspection of the various lines and make 
 notes on the catalogue as to comparative values. By the time of the 
 opening of a sale each buyer has a pretty definite idea of the value 
 of the various lines in which he is interested. 
 
 Sales start at a definite hour and are conducted much as other auc- 
 tion sales are handled. Bids are started at a fairly low figure and the 
 final price received is dependent to a large extent on the size of the 
 day's offerings and the activity of the bidding. After other offer- 
 ings have been disposed of miscellaneous broken packages are sold. 
 As sales are made prices are listed opposite the number of the line 
 on the catalogue. A complete catalogue with the prices received for 
 the goods listed opposite the lines is known as a " realizer." Sales 
 are supposed to be strictly for cash, and since, as a rule, single lines 
 are not of any great size the amounts due in each case are not very 
 large. 
 
 % 
 
 
 WHOLESALE DISTRIBUTION OF FRUITS AND VEGETABLES. 15 
 
 AUCTION CHARGES. 
 
 Auction service charges are from 2 to 15 per cent (usually 3 per 
 cent) on gross selling price. "Where the selling charge is imder 5 
 per cent a " terminal charge " to cover costs of unloading and han- 
 dling is sometimes added. This terminal charge is paid by the buy- 
 ers and is simply a means for securing increased revenue, since busi- 
 ness reasons make it necessary for certain auctions to handle goods 
 on a very low selling charge, and some additional income is needed 
 to offset the costs of doing business. Since the auction itself oper- 
 ates strictly on a nonspeculative basis its costs are fixed, in a measure, 
 and as a rule consist of such charges as rental, interest on invest- 
 ment, and employment of help. 
 
 AUCTION ABUSES. 
 
 One weakness of auctions lies in the possibility of manipulating 
 the sales so that goods sold on certain days will not move at true 
 market prices. In some cases members of the distributing trade in 
 certain cities may be interested financially in the local auction. In 
 such cases it is possible that the business will be conducted so as 
 to favor those who are supporting the auction. Thus, those who are 
 interested financially may secure more or less extended credit, while 
 all others must deal on a strictly cash basis. This, of course, would 
 give an immense advantage to those especially favored and tend to 
 create dissatisfaction among the greater number of buyers. 
 
 Another weakness lies in the possibility of tampering with sample 
 boxes in particular lines. However, in justice to the many reputable 
 auctions operating in different parts of the country, it should be said 
 that there is little evidence that any of the abuses mentioned affects 
 the great volume of business handled daily by them. 
 
 ADVANTAGES OF THE AUCTION. 
 
 Auctions offer quick outlets for fruits which must be kept moving 
 in a more or less steady stream from producer to consumer. Large 
 quantities of citrus fruits are sold at auction on several of our large 
 markets. When this fruit starts toward market there arises the 
 necessity for keeping a steady stream flowing to the consuming 
 public, and the auction provides one means whereby distributing 
 channels are continuously supplied. Auctions offer an outlet for sur- 
 plus holdings on well-stocked markets, and, by attracting buyers, 
 tend to expand the market to a certain extent. They afford a good 
 index of market conditions, and when the auction company sells 
 the major part of the supply of certain commodities or is patronized 
 by most of the buyers, it tends to be a more or less accurate deter- 
 miner of basic wholesale prices. 
 
16 
 
 BULLETIN 267, U. S. DEPAHTMENT OF AGBICULTUBE. 
 
 /'\ 
 
 WHOLESALE DISTRIBUTION OP FRUITS AND VEGETABLES. 17 
 
 IH 
 
 II 
 
 CAR-LOT WH0LESALEB8. 
 
 A very important factor in market distribution is the car-lot whole- 
 saler. These men purchase fruits and vegetables from cooperative 
 associations, country merchants, car-lot assemblers, traveling buyers, 
 buying brokers, individual growers, speculators, and city brokers. 
 They distribute goods to the jobbing and retail trade or to the coun- 
 try trade. Thus it will be seen that their activities cover a wider 
 field than do those of almost any other type of distributor. 
 
 A large part of the business done by the car-lot wholesaler is 
 transacted very early in the day. Most of these early morning side- 
 walk sales are for cash, and in a great many cases the buyer does his 
 own delivering. Later in the day, beginning about 8 or 9 o'clock 
 in the morning, telephone orders come in from grocers all over the 
 city for deliveries to be made later in the day. The greater portion 
 of this business is for credit, but settlement is usually demanded 
 within a period of one or two weeks. Still later in the day shipments 
 are made up for distribution to country customers in neighboring 
 towns. Thirty to sixty days' credit is extended to these customers. 
 The orders from this country trade may be by telegram, by letter, or 
 through private traveling salesmen. As a rule, these sales to the 
 country trade are the most uniformly profitable of any to the car-lot 
 wholesaler. Prices charged are usually slightly higher than can be 
 secured from resident buyers on the market. This, of course, is justi- 
 fied, as extra packing and cartage charges are involved. The country 
 trade, as a rule, makes little attempt to keep in close touch with 
 market prices, but prefers to place orders regularly with selected 
 wholesalers or jobbers and depend upon receiving fair treatment. 
 
 In addition to selling to the retail trade, popularly known as 
 " retailing," car-lot wholesalers distribute considerable quantities of 
 goods to jobbers. The " jobbing price," it should be noted, is usually 
 less than prices charged the retail trade for the same articles. This 
 lower jobbing price is, of course, to protect the jobber and insure 
 him at least a small margin or profit when he, in turn, sells to the 
 retailer. 
 
 SALES 0X7T OF STORAGE AND CLEAN-UP SALES. 
 
 Many car-lot wholesalers buy when prices are cheap and put the 
 produce in storage, distributing later when prices admit of a fair 
 profit. This involves a certain element of risk, as a market may not 
 take on a better tone in time for the wholesaler to move his stored 
 goods to advantage. Some of the heaviest losses in the wholesale 
 trade are the direct result of dealing in stored goods. 
 
 After a heavy day's sale there is usually a considerable amount 
 of miscellaneous produce left on hand. At this point hucksters and 
 peddlers purchase the odds and ends that are unsold and clear the 
 
 7 
 
 ^llfc-..ir'...-^jgt 
 
 
 market for the next day's offerings. These sales are to be com- 
 mended, as considerable quantities of low-grade stuff are thus placed 
 within the reach of the consumer at reasonable rates, and the practice 
 serves to rid the market of a surplus of low-grade produce. 
 
 COSTS AND PSOFITS. 
 
 Profits to the car-lot wholesaler vary greatly. Since he deals 
 very largely in perishables in large quantities and on his own ac- 
 count, his aim is to make as much profit as possible on each sale. 
 He has better chances to make wide margins than has the jobber, 
 because in many instances he deals directly with the farmer, who is 
 an inexperienced seller and unfamiliar with market methods. How- 
 ever, the car-lot wholesaler buys in large quantities for future sale 
 and thus takes greater risks than the jobber, who buys in small 
 quantities from day to day, moves goods rapidly, and in cases of 
 sharp market declines is able to close out very quickly. 
 
 Average net profits at this step in distribution are usually less 
 than is popularly supposed. For instance, during the fall of 1914 
 apples were handled in Chicago and Kansas City on a gross margin 
 of 25 cents a barrel, oranges at 10 and 15 cents a box, and lemons at 
 25 cents a box. The margin of profit varies greatly on individual 
 sales and ranges from less than nothing to 50 per cent. Business 
 competition is usually very keen and prevents any long-continued, 
 excessive margin or profit. The car-lot wholesaler's business is sub- 
 ject to all overhead fixed charges, such as interest on investment, 
 labor, and rentals, and in addition he is subject to the costs of much 
 extra service, such as resorting, repacking, and the making of special 
 deliveries. Considering his costs of doing business and the services 
 which he renders, the car-lot wholesaler probably operates on as 
 small a margin of profit as any middleman concerned in food 
 distribution. 
 
 FUNCTIONS PERFORMED BY CAB-LOT WHOLESALERS. 
 
 These men perform the absolutely essential functions of acting as 
 primary distributors of produce arriving at market in car lots. Any 
 reforms which may be accomplished in distributive methods must 
 take into consideration the fact that some definite agency must under- 
 take the work of breaking car lots and starting distribution at market 
 centers. Hence, the car-lot wholesaler is undoubtedly a highly im- 
 portant element in present-day distributing machinery. 
 
 SALES THROUGH COMMISSION MERCHANTS. 
 
 The commission merchant is a professional agent whose business 
 is the selling of goods on commission. He has possession of the 
 
 i 
 
I 
 
 ll 
 
 18 
 
 BULLETIN 267, TJ. S. DEPARTMENT OP AGRICULTURE. 
 
 commodities, and all transactions are in his own name. He may dic- 
 tate terms and methods of sale, but must obey instructions if given, 
 and he is responsible to the shipper only for a proper accounting in 
 the final terms. 
 
 Commission men solicit shipments from growers, car-lot assem- 
 blers, and cooperative associations. It should be stated, however, 
 that cooperative associations do not favor the promiscuous consign- 
 ment of their products and seek to eliminate this method as far 
 as possible. Consigning is a very common means for disposing of 
 less than car-lot shipments and offers practically the only means for 
 disposing of poor, unstandardized products which could find no 
 direct sale to the wholesale trade. Commission merchants handle 
 goods for 5 to 10 per cent of the gross selling price. In many cases, 
 however, the dealer, by sharp practices, increases his margin to 15 
 per cent or over. As sales are made he presumably keeps a careful 
 record of each man's transactions, but may or may not give the con- 
 signor this detailed information as to the distribution of the ship- 
 ment. As soon as the shipment is " closed out " the commission man 
 deducts freight and other expenses and his charges and remits the 
 balance to the shipper, together with an " account sales." Costs of 
 doing business are much the same as for the car-lot receiver. 
 
 ABUSES BY COMMISSION MERCHANTS. 
 
 One charge made against dealers of this type is that they some- 
 times remit more than the market price to a new shipper in order to 
 get future business. As this does not give the shipper a fair idea of 
 the market and does give him a false impression of the dealer's abil- 
 ity as a salesman, it is a practice which should be regarded with 
 great disfavor by all interests in the market. Another malpractice 
 sometimes attributed to commission merchants is selling for more 
 than the market price and remitting to the shipper on the basis of the 
 market price. Many have regarded this practice as legitimate, be- 
 cause the increased selling price is not due to the superior quality of 
 the goods sold but to the dealer's excellent salesmanship. These 
 practices certainly are not common to most commission men and are 
 not universal, as is generally supposed. Much that the shipper con- 
 siders dishonest can be explained, his suspicions being due to mis- 
 understanding, or the trouble maybe traceable to the shipper himself. 
 
 The commission merchant occupies a rather difficult position with 
 respect to his dealings with shippers and shipping associations. The 
 handling of large quantities of fruits and vegetables involves a 
 greater opportunity for mutual misunderstanding than almost any 
 other line of business. The very facts that the commission merchant 
 assimies complete charge of goods intrusted to him, that distribution 
 
 f>' 
 
 i 
 
 WHOLESALE DISTRIBUTION OF FRUITS AND VEGET^VBLES. 
 
 19 
 
 is effected according to the commission man's own ideas, and that the 
 shipper's returns are in direct proportion to the dealer's honesty and 
 ability, all tend to encourage a suspicious attitude on the part of the 
 producer. It is not because commission men as a class have proven 
 to be dishonest, but the very fact that the commission man has great 
 opportunities for dishonesty, if he chooses to avail himself of them, 
 has caused shippers to condemn unhesitatingly any practices which 
 did not appear to be perfectly plain. 
 
 A shipper is seldom able to inspect his own output with an un- 
 prejudiced eye. The car which he is shipping usually appears better 
 to him than does his neighbor's offering. The buyers with whom the 
 commission merchant must deal, however, have no such biased view- 
 point. The shipper's goods are compared critically with competing 
 offerings from many sections and quality and pack are the sole de- 
 ciding factors which determine relative values. Often, therefore, 
 the shipper who considers his goods on a par with the best market 
 offerings is disappointed when returns are below the figures listed 
 on current wholesale quotations. The dealer, who may have exerted 
 every effort on behalf of his shipper, is then accused of dishonesty 
 in that returns were not up to expectations. 
 
 Often, too, perishables which leave the point of origin in first- 
 class shape arrive at destination in a greatly deteriorated condition, 
 must be repacked or regraded by the commission men, and finally 
 sold at a considerable loss to tKfe shipper. The grower, who last saw 
 his produce in first-class marketable condition, does not understand 
 or appreciate the conditions which were responsible for this loss. 
 
 In general, it may be said that a large part of the stigma which 
 attaches to the business of the commission merchant arises directly 
 from the difficult position which this middleman occupies in dis- 
 tributive machinery. 
 
 PLACE OF THE COMMISSION MERCHANT IN DISTRIBUTION. 
 
 Commission houses offer almost the only good outlet for imstand- 
 ardized goods which can not be sold direct to the wholesale trade. 
 Acting as primary receivers of less than car-lot shipments, they serve 
 as a medium through which to market all goods which can not be 
 sold direct to car-lot wholesalers, and, when honest and efficient, they 
 offer to inexperienced shippers the valuable services of trained mar- 
 ket experts in disposing of their produce. 
 
 JOBBERS' SALES. 
 
 Next in importance to car-lot wholesalers on large markets is the 
 jobbing trade. Jobbers are middlemen at distributing centers who 
 usually buy in less-car-lot quantities from car-lot wholesalers or 
 
 -II mi 
 
I 
 
 20 
 
 BULLETIN 261, U. S. DEPARTMENT OF AGRICULTURE. 
 
 commission men and in turn sell to the retail trade; in other words, 
 they are intermediaries between primary receivers and retailers. 
 The term as here used must be distinguished from the term 
 "jobber" as used in connection with wholesale distribution for 
 manufacturing c(Micerns, where the jobber distributes the total out- 
 put of several factories direct to large wholesale houses. 
 
 Jobbers in fruits and vegetables get their supplies from com- 
 mission merchants, car-lot wholesalers, auctions, and public markets, 
 and in turn sell to the retailer or to other jobbers. The chief outlet 
 for the jobber, however, is the retailer. Methods of sale by jobbers 
 and car-lot wholesalers are practically identical. The jobber, acting 
 as the intermediary between the car-lot wholesaler and the retailer, 
 buys in less than car lots, as a rule, makes quick sales, operates on a 
 relatively small margin, and secures his profits by rapidly turning 
 over his capital. 
 
 In general, the jobber is subject to much the same charges and 
 costs of doing business as the car-lot wholesaler. Often, however, 
 these costs are relatively less in proportion to the quantity of produce 
 handled. The jobber usually has a smaller initial investment than 
 the car-lot wholesaler, hence his general expenses may not run quite 
 so high. 
 
 THE JOBBEB's place IN DISTRIBUTION. 
 
 The jobber's chief usefulness at the present time is in facilitating 
 the rapid distribution of extremely perishable products. A car of 
 strawberries, for instance, will usually be disposed of much more 
 rapidly when handled by several jobbers than would be the case if 
 a single car-lot wholesaler attempted to complete the distribution to 
 the retail trade. With the growth of standardization, better grad- 
 ing and packing, together with greater efficiency in the business of 
 car-lot receivers, it is possible that many of the present functions of 
 the jobber may be assumed by the car-lot wholesaler. This applies 
 to our smaller markets especially. On the great terminal markets, 
 however, the jobbers must remain important factors for some time 
 to come. In these cities they sell to the vast number of those retailers 
 who buy in small quantities and who can not take time or trouble 
 to go to primary markets and select their goods. 
 
 If the entire retail trade were to attempt to get in direct touch with 
 car-lot wholesalers on our large markets, the congestion of business 
 would be so great as to block most seriously the economical move- 
 ment of perishable food products. 
 
 PUBUC MARKETS. 
 
 Public markets draw a considerable portion of their supplies 
 from producers in neighboring districts. They are patronized by 
 
 
 *^^rfV^ • 
 
 ^f^ 
 
 WHOLESALE DISTRIBUTION OF FRUITS AND VEGETABLES. 
 
 21 
 
 f^ > 
 
 jobbers, retailers, and consumers and enable some produce to pass 
 directly from the grower to the consumer. As a rule they are not 
 highly important factors in the distribution of perishables arriving 
 in car lots from distant production areas. During late years more 
 and more attention has been directed toward extending the useful- 
 ness of this form of distribution.* 
 
 DISTRIBUTION CHANNELS. 
 
 The foregoing discussions indicate in a general way the great com- 
 plexity which attends the distribution of food products. The im- 
 pression may have been left, however, that all perishables pass 
 through each of the steps in distribution which have been noted. 
 This is not the case, as various factors decide what channels each 
 shipm^at is to take. A complete discussion of the various means 
 by which produce is collected, concentrated at market centers, and 
 finally distributed to consumers is impracticable in a publication of 
 this kind. Perhaps the subject can be made more clear by graphic 
 representation of the more common steps in distribution. 
 
 In figure 2 the interlocking circles are intended to show the inti- 
 mate relationship existing between certain of the agencies interested 
 in distribution. Thus the grower may operate individually or he 
 may combine with his neighbors and all do business collectively or 
 through a cooperative organization. On the other hand, one firm 
 often performs the functions of the car-lot wholesaler, the commis- 
 sion merchant, and the jobber, and the business details overlap in 
 such a way that it is difficult to dissociate the three lines of business. 
 In a single diagram of this kind it is impossible to indicate all the 
 possibilities. Attention has been confined, therefore, to primary dis- 
 tributing channels. 
 
 An attempt has been made to emphasize the routes through which 
 the great bulk of traffic passes. Perishables do not- and can not 
 pass through the hands of all the distributing agencies which are 
 indicated. As a matter of fact, usually only a few agencies are 
 instrumental in handling the contents of any given car. The con- 
 tents of two cars coming to a large market on the same day may pass 
 into consumption through very different channels. Thus one car 
 may be consigned to a commission merchant, who divides the car 
 among a large number of jobbers and retailers, while the other car 
 may be purchased by a buyer for a car-lot wholesaler who sells to 
 the jobbing and retail trade. In either case the retailer is the inter- 
 mediary with whom the consumer comes in contact. 
 
 1 For a discussion of the place and needs of city markets, see " Retail Public Markets," 
 by G. V. Branch, Yearbook U. S. Dept. of Agriculture, 1914, pp. 167-184. (Y. B. Sepa- 
 rate 636.) 
 
22 
 
 BULLETIN 267, U. S. DEPARTMENT OF AGRICULTURE. 
 
 There are usually very definite reasons why good's coming to 
 market pass on to consumption through such diverse channels. 
 Among those factors which decide along what course and through 
 what hands perishables shall pass in going from producer to con- 
 sumer are: (1) The condition or tone of the market; (2) grade, 
 pack, and quality of the shipment; (3) district in which the ship- 
 
 
 4'} 
 
 Pig. 2. — Main channels of distribution for fruits and vegetables. 
 
 ment originates; and (4) the shipper's knowledge of market con- 
 ditions. 
 
 As a rule, certain types of distributors handle most of the produce 
 coming to market. One principal line of distribution is from grower 
 to car-lot wholesaler, to jobber, to retailer, to consumer. Goods 
 consigned on commission may pass from grower to commission man, 
 to retailer, to consumer. The car-lot wholesaler, commission mer- 
 chant, jobber, and retailer are highly important market factors, 
 
 ^ 
 
 ^^^ 
 S 
 
 WHOLESALE DISTRIBUTION OF FRUITS AND VEGETABLES. 23 
 
 and collectively handle the great bulk of all perishable food products 
 coming into the city. The diagram (fig. 2) is not intended as 
 either a justification or a condemnation of present market practices 
 but rather to portray distributing machinery, its importance, and the 
 relation of its several parts in the present scheme of marketing. 
 
 LOSSES AND WASTES. 
 
 Losses and wastes due to deterioration of goods are heavier than is 
 usually believed, and especially is this true in the case of perishables. 
 On such commodities as strawberries, peaches, and grapes the losses 
 sometimes amount to 30 or 40 per cent of the whole. Out of one car 
 of bulk Ben Davis apples from the Ozarks which went to a large 
 neighboring market 19 per cent was lost before the fruit reached 
 the hands of the retail trade. Losses due to spoiling may be the 
 result of the shipper's sending overripe or diseased fruit, or failing 
 to give proper attention to packing, to loading, or to bracing the 
 packages in the car. Sometimes the railroad is at fault. Delay in 
 transit, improper ventilation or refrigeration, or unnecessarily rough 
 handling of cars may contribute to rapid deterioration of the ship- 
 ment on arrival. 
 
 The lack of proper refrigeration facilities at distributing centers 
 is a cause of much loss. When produce moves slowly, there is often 
 much spoilage before complete sales can be made. Rough handling 
 during unloading or carting is another important cause of loss. As 
 a matter of fact, the opportunities for losses due to the spoiling of 
 commodities are so manifold that it is impossible to enter into a com- 
 plete discussion of them. 
 
 In any discussion of losses and wastes it is always well to bear in 
 mind the really serious^de of this question. The spoiling of a dozen 
 cantaloupes, a basket of grap^, or .i crate of strawberries represents 
 an absolute loss to the community. No benefit accrues to producer, 
 distributor, or consumer from such a condition. The loss occurring 
 at this point must be borne both by producer and consumer, and in a 
 great many cases the distributor must bear his part of the burden. 
 In many cases losses and wastes are entirely too heavy a tax on food 
 distribution. It is probably safe to say that the elimination of un- 
 necessary wastes would do as much toward effecting permanent, sub- 
 stantial econctfnies ii\marketing and distributing as any readjustment 
 of present marketing methods could do. The fact that a large per- 
 centage of these losses can be avoided by proper grading, packing, and 
 shipping, together with prompt, efficient handling while the goods 
 are in process of distribution, makes it imperative that this subject 
 be given special consideration by those interested in the efficient 
 marketing of farm crops. 
 
 \ 
 
24 
 
 If 
 
 BULLETIN 267, U. S. DEPARTMENT OF AGRICULTUBB. 
 
 CONCLUSION. 
 
 The car-lot movement of fruits and vegetables from distant pro- 
 duction areas to large distribution centers has assumed its present 
 importance during the last 20 years. This means that our pres- 
 ent marketing methods are of comparatively recent origin. Many 
 believe that the solution of present marketing problems would be 
 reached by a return to the simple, direct methods which sufficed for 
 the preceding generation. It should be borne in mind, however, that 
 our present market machinery has been evolved because changing 
 conditions of supply have made necessary many changes in the 
 methods of handling food products. 
 
 A knowledge of the manner in which perishables were handled and 
 marketed 40 years ago helps very little toward solving present diffi- 
 culties. Any intelligent attempt to better marketing conditions must 
 be based on a good working knowledge of present agencies and their 
 functions. The nearer that both producer and consumer can come 
 to an understanding and appreciation of the work devolving upon 
 the distributor, the nearer will we approach a solution of many of 
 the problems incident to the movement of fruits and vegetables. 
 
 A better knowledge of present methods of marketing would assist 
 greatly in clearing away many problems, even though no changes in 
 the present scheme of distribution were made. The shipper who has 
 a more or less definite knowledge of the course his goods will take 
 when they reach a big market has a great advantage over the man 
 who has no idea of methods of distribution. He can safeguard his 
 interests by retaining a measure of control over his product after it 
 reaches destination. 
 
 Shippers or prospective shippers of fruits and vegetables are ad- 
 vised to get in touch with their principal market, learn its likes, 
 dislikes, and peculiarities, study the means whereby their goods are 
 distributed to consumers, and secure a working knowledge of the 
 chief problems incident to the handling of their commodities. 
 
 SUMMARY. 
 
 1. In treating the subject of market distribution of fruits and 
 vegetables, an effort has been made to explain certain general prac- 
 tices at large distribution centers which receive fruits and vegetables 
 in car-lot quantities. 
 
 2. The widening distance between producer and consumer has 
 called into existence the middleman of to-day. The fact that the 
 middleman has certain useful functions to perform makes it inadvis- 
 able to eliminate him without arranging for some other agency to 
 assume his duties. 
 
 1 
 
 ^■^^ 
 
 V 
 
 vj 
 
 f 
 
 WHOLESALE DISTRIBUTION OF FRUITS AND VEGETABLES. 25 
 
 3. The shipper who starts a car toward market should notify the 
 consignee in such detail that prompt disposition of the goods may be 
 made after the arrival of the car. This notification is often made by 
 telegram and should include all information necessary to insure the 
 prompt acceptance and disposal of the shipment. 
 
 4. As perishables should always be inspected promptly on arrival 
 at destination, the shipper should give shipping instructions which 
 permit inspection without unnecessary delay at destination. 
 
 5. Rejecting shipments of fruits and vegetables is an all too com- 
 mon practice on large markets. Often rejection may be justified, 
 as when goods have arrived in a greatly deteriorated condition, but 
 sometimes the actual cause for rejection is simply a decline in the 
 
 market price. 
 
 6. In case a buyer rejects a car the shipper has the option of selling 
 elsewhere or making an allowance to the original purchaser in order 
 to close the transaction immediately. Claims against railroads should 
 be filed in proper form and supported by a presentation of the facts 
 
 in the case. 
 
 7. Perishables after arrival at market pass on to the consumer 
 through many channels. Often, however, one firm may combine the 
 functions of several middlemen, so that while there are many types 
 of distributors it does not follow that goods actually change hands as 
 often as a scrutiny of the list of middlemen might seem to indicate. 
 
 8. The fact that large cities secure supplies of fruits and vegetables 
 from distant producing areas has been one of the main causes of 
 increasingly complex marketing methods. 
 
 9. Brokers act as shippers' or buyers' agents. They handle car lots 
 only and offer their services at very low rates. While many brokers 
 are charged with abusing their privileges, they often save the shipper 
 several times the brokerage fee by insuring the acceptance of goods 
 at destination. 
 
 10. Fruit auctions sell goods for shippers, dealers, and others who 
 have local representatives to withdraw offerings if prices are unsatis- 
 factory. They secure their revenue by levying definite assessments 
 against each package sold, and by attracting buyers and stimulating 
 competition often expand the market for particular commodities. 
 
 11. The car-lot wholesalers constitute one of the most important 
 factors in our large terminal markets. They handle great quan- 
 tities of perishables annually and act as primary distributors of 
 produce arriving at market in car-lot quantities. 
 
 12. The commission merchant receives goods on consignment and 
 acts as the shipper's agent in disposing of these products to the job- 
 bing and retail trade. While the commission merchant is viewed 
 with much suspicion by many shippers, he nevertheless is a very 
 
26 
 
 BULLETIN 28*?, IT. S. DEPAKTMENT OP AGRICULTURE. 
 
 important factor in that he furnishes to shippers the services of a 
 skilled specialist in salesmanship. 
 
 13. The jobber acts as a secondary distributor, buying from car- 
 lot receivers and selling largely to the retail trade. His chief use- 
 fulness lies in facilitating rapid distribution of highly perishable 
 products and in preventing a congestion of business on large whole- 
 sale markets. 
 
 14. Public markets are not important in distributing fruits and 
 vegetables arriving at market in car lots, but do offer direct outlets 
 for neighboring producers. 
 
 15. Perishables arriving at market usually take certain definite 
 channels in passing on to the consuming public. There are several 
 important factors which decide just what course the contents of 
 any given car will take in going into consumption. 
 
 16. Losses and wastes are a very heavy tax on food distribution. 
 The prevention of much needless waste would reduce present mar- 
 keting costs very materially. 
 
 17. One of the most practical steps the shipper can take to better 
 his condition is to familiarize himself with business practices and 
 to secure a better knowledge of the way his produce is handled on 
 the market. 
 
 GLOSSARY OF TRADE TERMS AND EXPRESSIONS AS USED IN THIS 
 
 BULLETIN. 
 
 Aeeonnt sales. The statement which a commission merchant renders to a ship- 
 per showing what disposition has been made of the shipper's goods. 
 
 Allowanee. The reduction in price which a shipper malces to a buyer in order 
 to induce the buyer to accept a car that he (the buyer) has rejected. 
 
 Auctions. Organizations (usually incorporated as stock companies) which 
 sell fruits at public sale to the highest bidder, charging a definite fee for 
 this service. 
 
 Aaetion cataloipies. Sheets In which the auction offerings for the day are 
 Jisted. 
 
 Auction lines. The units into which auction offerings are divided before being 
 exposed for sale. Each line is composed of packages of one commodity of 
 the same size, grade, and type. 
 
 Auction realizer. A statement which shows the prices at which goods were 
 sold by the auction. 
 
 Auction terminal charge. A package charge levied on the buyers by some 
 auctions. Supposed to cover the expenses of opening sample lines for inspec- 
 tion and general expenses of the auction company. 
 
 Bill of ladingr- A written statement issued by a carrier acknowledging the 
 receipt of goods for transportation. A "straight" bill of lading simply 
 authorizes the carrier to deliver the goods to the consignee at destination. 
 An " order notify " or " shipper's order " bill of lading requires that an order 
 be Issued by the shipper before delivery of the shipment can be made. 
 
 Brokers. Agents who negotiate the purchase or sale of goods. They have no 
 financial interest in the goods they handle and their compensation is a 
 definite fee. 
 
 ^^fs% 
 
 V} 
 
 WHOLESALE DlSTftlBUTlOlf OF PEUlTS AND VEGETABLES. 27 
 
 Broken car. A trade term referring to a car from which a part of the contents 
 
 have been removed. 
 
 Car-lot assembler. A term commonly applied to country merchants or buyers 
 who purchase in small lots and combine into car-lot quantities. 
 
 €ar-lot wholesalers. Distributors who buy fruits and vegetables in car-lot 
 quantities and sell to the Jobbing or retail trade. 
 
 Commission merchant. A dealer on the market who receives shipments on 
 consignment and sells to the best advantage, remitting the proceeds to the 
 shipper after deducting freight, drayage and other expenses, and a specified 
 commission. 
 
 Consignee. A party to whom goods are consigned or shipped. 
 
 Cooperatire associations. Organizations of producers incorporated for the 
 purpose of grading, packing, shipping, or selling products grown by members 
 of the association. 
 
 Distributors. Individuals, corporations, or associations whose business it is 
 to route, distribute, or market agricultural products. 
 
 Draft. A written order from one person to another to pay to the order of the 
 drawer or of a third person a stated sum of money. In the marketing of 
 perishable products the term "draft" is used most frequently to designate 
 that document which is attached to the bill of lading and forwarded through 
 the banks for collection. 
 
 luToice. A statement sent to a consignee which gives a list of goods which 
 have been shipf»ed to the consignee in question. 
 
 Jobbers. Dealers at distributing centers who buy, usually in less than car-lot 
 quantities, from car-lot wholesalers or commission merchants and who in 
 turn sell to the retail trade. 
 
 Jobbing price. The price at which the jobber buys his goods. 
 
 Middlemen. According to popular usage this term applies to all those who 
 share in the profits and losses incident to the handling of goods between the 
 producer and consumer. 
 
 Operators. Large wholesale firms which send their buyers or solicitors Into 
 producing sections and which, through representatives or branch houses In 
 several large markets, secure a wide distribution for products which they 
 purchase or handle on consignment. 
 
 Private exchanges. Distributing organizations Incorporated as stock com- 
 panies and operated for profit. They distribute car-lot shipments for Indi- 
 vidual shippers or producers' organizations, selling through salaried repre- 
 sentatives or brokers. 
 
 Protest, acceptance under. Acceptance of a car by the consignee with the 
 
 proviso that he reserves the right to enter claim later against the railroad. 
 Retailing. According to strict Interpretation this term refers to sales made 
 by the retailer. On large terminal markets, however, selling to the retail 
 trade is popularly referred to as retailing. 
 Tendee. One to whom a sale is made. 
 Yendor. One who makes a sale. 
 
28 BULLETIN 261, U. S. DEPARTMeN'T OF AGBlCULTXJEfi. 
 
 PUBLICATIONS AVAILABLE FOR FREE DISTRIBUTION. 
 
 Demurrage Information for Farmers. By G. C. White. Pii. 27, 1915. (Depart- 
 ment Bulletin 191.) 
 
 A System of Accounting for Cooperative Fruit Associations. By G. A. Nahstoll 
 ijnd W. H. Kerr. Pp. 25, 1915. (Department Bulletin 225.) 
 
 Strawberry Supply and Distribution in 19J4. By Wells A. Sherman, Houston 
 F. Walker, and O. W. Schleussner. Pp. 10, 1915. (DepartmenJ; Bulletin 237.) 
 
 Outlets and Methods of Sale for Shipi>ers of Fruits and Vegetables. By J. W. 
 Fisher, J. H. Collins, and Wells A. Sherman. Pp. 28, 1915. (Department 
 Bulletin 266.) 
 
 The Potato as a Truck Crop. By L. C. Corbett. Pp. 24, 1910. (Farmers* 
 Bulletin 407.) 
 
 Storing and Marketing Sweet Potatoes. By H. C. Thompson. Pp. 15, 1913. 
 (Farmers' Bulletin 548.) 
 
 Shipping Eggs by Parcel Post. By Lewis B. Flohr. Pp. 20. (Farmed Bul- 
 letin 59i.) 
 
 Retail Public Markets. By G. V. Branch. Pp. 167-184. (Separate 636 from 
 Yearbook 1914.) 
 
 Cooperative Marketing and Financing of Marketing Associations. By C. E. 
 Bassett, C. W. Moomaw, and W. H. Kerr. Pp. 185-210. (Separate 637 from 
 Yearbook, 1914.) 
 
 PUBLICATIONS FOR SALE BY THE SUPERINTENDENT OF 
 
 DOCUMENTS. 
 
 The Cold Storage of Small Fruits. By S. H. Fulton. Pp. 28, plB. 3, 1907. 
 
 (Bulletin 108, Bureau of Plant Industry.) Price, 15 cents. 
 Factors Governing the Successful Storage of California Table Grapes. By 
 
 A. V. Stubenrauch. Pp. 31, pis. 8, figs. 5, 1913. (Department Bulletin 35.) 
 
 Price, 10 cents. 
 Cooperation in the Handling and Marketing of Fruit. By G. Harold Powell. 
 
 Pp. 391^06. (Separate 516 from Yearbook, 1910.) Price, 5 cents. 
 The Precooling of Fruit. By A. V. Stubenrauch. Pp. 437-448. (Separate 550 
 
 from Yearbook, 1910.) Price, 5 cents. 
 Systems of Marketing Farm Products, and Demand for such Products at Trade 
 
 Centers. By George K. Holmes. Pp. 391. (Report 98, OflSce of the Secre- 
 tary.) Price, 25 cents. 
 
 ADDITIONAL COP^S 
 
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END OF 
 TITLE