PRICING Intermarket Transfers of

BULK GRADE A

CREAM AND SKIM MILK

D. A. CLARKE, Jr.

Price~ for markel grade milk in California hove bei!n e~labli$hed for

over a decade und~r Ihe provision) of Ihe Agriculturol Code. During

Ihol period, economic conditioni have, in general, been favorable 10

Ihe markel milk induslry-o ~iluation .... hich hos, in lurn, favored opera·

tion of this fo rm of price control.

Early in 1951 Ihe Slate legi~Iature was odvi.ed Ihot, in Ihe opinion

of some, the price Slability of the dai ry industry wos ogoin Ih reo tened

in spile of prevailing favo rable conditions. The threat, it wa\ cloimed ,

orose from (1) Ihe praclice of price cutting On fluid cream sales in some

morkets and (2) alleged use, for Closs I purposes, of skim milk which

hod been derived from milk in which Ihe milk fa l hod been used for

Closs II or III purposes. B05ic 10 both of Ihe above has been Ihe inler­

pretotion of the Agricultura l Code which excludes inlermorket Ironslers

of bulk Grodt' A cream ClncJ ~kim mil k from direct price control.

THIS BUllETIN presents the results of 0 study undertaken 01 Ihe

requesl of the Slate Sena te. The objec.tives of Ihe study were to deter.

mine the effects of the exemption from control of this sourc.e of supply 01

Grode A milk produc.1$ Clnd to recommend chonge~ in Ihe pric.ing policy of

the Bureau of Milk Control shou ld Ihe stability of the dairy industry

appear to be ieopordil.ed.

THE AUTHOR:

D. A. Clarke, Jr _, is Assis tant Professor of Agricultural Economics and Assistant Agri­

cultural Economist in the Experiment Stolion a nd on the Gianni ni Foundation, Berkeley.

PRICING INTERMARKET TRANSFERS of Bulk Grade A Cream and Skim Milk

D. A. CLARKE, JR.

UNDER THE PROVISIONS of the A g ricul .

tuni Corle, prices for TllArket grflde milk have been established in California by st il le ngency for over II decade. Amollg the justifications leading 10 th is price con · trot was II belief that the fluid milk in­dustry was inberently instable under condi tions existing during the 1930's liS

evidenced by the rt:sale price lVors prior to con trol. TIlese price W:\I'S were accom· panied by bankruptcies linn default on parOleniS 10 prod ucers and were, thert .. fore. considered 10 constitute II serious threat 10 the long.rull milk supply of Ihe slate.

Economic condi tions du ring the exist · ence of milk control in California have generall y been favorable 10 the markel milk industry. Demand hilS increased 115

II result of the rapid increases in popu· lati on and the over·an increases in per ca pita consu mption. Markel milk sup­plies luwe nol increased as rapidl y as has consumption of fluid milk. As a re· 5U1l, higher proportions of the milk pro­cluc~ wit.hin the state have been Itll<>cate<1 10 fluid consumption, Ihu5 receiving the relatively higher prices provided under

'Thl, study '"u financed In part by fund s made .~.iI.ble by the 8ultlu of Milk ConllOl. Camorn;. Depanmenl of A&ricultUle, under the .uthorlty of Se",,'c Rcaolutio" No. }47 of the 1951 Lq,i.Jllive 5e2ion. In .rldllion. subslln· Ii. 1 coOper.tlon WIS pro~ided by personnel of Ihe Bureau in collect in; the large qUlnlity or records h om indIvidual pbnl l thn t "III requiled to cury OUI the Inllysis..

the classified milk price system. [n gen· ern I, th is rela ti vely prosperous period for the induslI'y hlle AIM) favored the opera· tion of this form of pr ice conl rol si nce increased dema nds on the c:ompo rolively limited supplies ha ve resulted in a sub­stantial reduction of the pressures which Icad to price wal'S.

In spite of Ihese favorable cond itions, it was brought 10 the allen tion of the State Legislature early in 1951 that cer· ta in practices existed which . in the opin· ion of some, agai n threntenee! the price SIAbility of Ihe da iry indust ry. Tllcse practic:es include<1 (1) price cutt ing on fluid crenm sales in some markets aorl (2) alleged use, {or Class I purposes, of skim milk tha i had been derived from milk in which the milk fal had been used for Class II or 111 purposes. This, o( course, becomes importa nt under condi­tio,,! where the fat usage determ ines the price paid to producers for whole milk.

As a result, the enate passed a series of resolutions requesting additional in· (Ol'mllion on the nlture lind extent of the problem and recommendations con­ce:r ning changes in the pricing policy o-f Ihe BUl'eau of l\'liIk COlllrol in the event Utal the above-mentioned circ:umstances appeared to threlten the stability of the dairy industry.'

• These . rt Sen' l~ Ruolutions NOI. 110, 130, and 1<17, respectively. or the 1951 toe"lon of the uillalilure of Ih~ Stile nf California. Cc! piCl of Iheu re!oOlulionl IIPpeU in Ih~ AppeQdix.

[ 5 J

PRICING PRACTICES AT THE PRODUCER LEVEL

Tn California, milk of market qu,dity­thus eligible for use as fluid milk and cream-is paid foy according to D "classi­fied price plan." This procedure is com­mon in most major milk markets of the nation. The classifications of uses differ among markets throughout the country, but the essential feature of such plans is that milk values vary among these al­ternative uses. In California, Class I milk includes "<tny fluid rnilk or the cream therefrom that is supplied to consumers as market milk or market cream or con­centrated milk or any combinations of market milk and market cream, or any market milk which is not packaged in hermetically sealed containers, or any other dairy product in which the use of market milk is required by the provisions of this code, or any Auid milk or the cream therefrom which is used in stand­ardizing market milk."·1 Included among

~ Agricultural Code of California, Section 735.3, Article 1, Chapter 13.

the other dairy products requiring the use of market milk are such nonfat con­taining products as fluid skim milk and chocolate drink. Class II milk includes milk used for any purpose other than Class I or III, while Class III milk is spe­cifically that which is used in the manu­facture of butter or cheese other than cottage cheese. Minimum prices, by ciassificalion, are e..o::,tablished by the Cali­fornia Bureau of 1vlilk Control, and en­forcement agents of the Bureau make periodic audits of distributor records to determine that proper accounting has been made to producers. ] n recent years, the prices established for Class II and III uses have been identical and have follo'V'red closely the leveLs of manufactur­ing grade milk prices. This is a reason­able price relationship in view of the fact that the Class II clnd III uses involve manufactured dairy products for which manufacturing grade milk is acceptable. Class I prices~those prevailing for milk

1.8o,-------------------------------,

1.60

2 1.40

" ro ~ 120 ~

'? ~ 1,00 ~ · ~ ; 0,80 ~

· a. 0,60 · o

~ 0,40

0,20 j,

o 1'::9c:;'~0 .. "c;-ICc:;"::2""'O''O' "','0.:;-7, 3"S:-'::' ,"6+' 'c:;7~'CO''''8'''c;-' 9""', ."o,..r" ."Ic+., ."'2+'.","""." • .1.,,,. ~S"'.::-6,..r,'."7,..r;:, .::8+' .c:9Cc:;, S"'O.C,,'SC"1 ",~S 2 Year

Fig. l.-Grode A difJerenliols. Amounts by which Closs I prices exceeded manufacturing milk

prices. (F,o.b. Volley plonls, California, 1930-1952,)

[ 6 1

usen as Auid milk or fluid cream-hlllle been historically set at II level higher than the Class II and lIT prices, and reflect the rela tively higher prices of Ruid milk over those for manufactured products and the ndded costs or producing milk of market g rode quality. During th e past 20 yellrs, the amou nt of the premium of

Class I ol'er Clnss 11 and TTl prices has fluctuated but has /'IVeraged approxi­mately one dollllr 8 hundredweight . The Grade A premiums. or the e.'(cess of Class I prices over fIltlnu fflc turing milk prices, where both are determi ned 111 Valley plont locations, /He charleJ on Figure] for Ihe per iod from 1930 to 1952.

NATURE OF THE PROBLEM AND OBJECTIVES OF THE STUDY

In ca rrying out the provisiolls of the Agricultu1'31 Code, the Director of Agri­culture, through the Bureau of Milk Con­trol, has established sellen,l milk ma r­keting a reas, the single criterion for the establishment of an indi vidual area being that the Director " finus the conditions a ffecti ng the production, distribution , and sale of nu id milk, fluid cream, or both are r~onably uniform.'" In prac­tice, , 'i r tuall y every maj or concentration of populalion within the state comprises a separate marketing area . At present, there Rre more than 30 such marketi ng areas.

Prices 10 be paid producers, by use classi fi cat ion, and rules li nn regulations are set forth in the Sta bilization and Mar­ketin g P lan d rawn up for each marketing area. Each of these pillns contains the statement that the prices provided relate to pa~'menIS to be m3(le by "each dis­tribu tor within th is State, who receil'efo or otherwise handles Auid milk for dis­t ribution Illi thin the [specified ] Market ­ing Area .. _." T his has been interpreted by the Bureau and by the indust ry to mean thot contro l over prices provided by the milk controllnws extends onl y 10

th ose suppl ies received as wholt:. milk and disposed of within the lIar ious c1allsificn­lions in a single marketing area. Under such interpretatio n, whole mi lk recei ved by a plont and separated into cream and skim milk which are shipped to plants in othel' morketing areas does not come under Bureau of Milk Con trol jnrilldic-

, Agrieuhunl Code of C.lirornill , SeclioJn 736, Article 2. Chaptn 13.

tion .' At the present lime, therefore, these bu lk intermltl'kel shi pments of Grade A cream and skim milk are the oul y phases of the market milk indusu·y thlt t a re not subject to rigid pricing restr ictions.

One fur ther fact of impo rtance 10 this problem is that the procedure used by the Bureflu of Milk Con trol to determine utilizati oll clnssifict1tion depends en tirely upon the usage of milk fat. In other words, sales are audited on the basis of the qua nt ities of fClI used in the va rious prod ucts, alld tJlis audit detemlines the nmount of whole ,ru'lk to be accounted for lit the various class prices. T o the ex tent thAt both the flit lind the skim com­ponen ts of Class I milk carry n "Grllde A premium ,'" it is necessary to assume that the C lass I utilization of all ski m milk I'eceipts closely "pproxi mates that of t h~ milk fal. It is nppnrent that if the Clnss I skim milk usage of one distribut or ex­ceeds his Class I usage of lat , he may receil'e skim milk wh ich is used for Class J purposes lit Class 11 or III prices. Con­versely, s hould th e Class I sales of fat conta ining products outweigh the Class [ uSl1ge of skim prod ucts in the case of another distribut or, the latt er will halle

.. Unless a S t~bi1iI~ l jo n and Markeling Pla n rot Fluid Cream i5 in t lfeel in the lIlarkelin:; alta r«elvin::; such fluid eream. _01,1 Ihe prestnl lime, aueh CIeam planl are opeulive only III Ihe Alameda-Conl in Cos/a and the San Jomq uin marketing area! .

' The excess oJ! Ihe Closs 1 p1'ice oJver monll ' faelUring s rade (or CIU$ n 01' IIIl P1'ices rep· r~nring, Ihe pftymenl for higher qunJi tY required for sale u fluid milk. fluid cream. or slIch nonf,, ' conlaininG produeh ms fluid ,kim milk and chooolBle drink.

[ 7 1

been penalized to the extent of being re­quired to pay Class I prices for the skim elements of the milk he receives from producers, but for which he has no Class I outlet.

The basic objecti ve of this study is to evaluate the impact of the omission of this source of cream supplies-those obtained fy om exh·a-area plants-from price regulation. This will be done by

determinin g: (1 ) th e ex ten t and impor­tan ce of such intermarket movements of Grade A cream and skim milk ; (2) the prices producers are r eceiving for that portion of th eir supply ·which is utilized in such a manner ; (3 ) the utilization of bulk cream and skim milk supplies by receiving plants; and (4.) the interplant resale prices for bulk shipments of cream and skim milk.

EXTENT AND IMPORTANCE OF INTERMARKET SHIPMENTS OF GRADE A CREAM AND SKIM MILK

The quantities of bulk intermarket transfers of Grade A cream and skim milk made during the period from June: 1950, through May, 1951, are given in Table 1.'

.. These totals represent an estimate which was obtained in the following manner:

1. A survey wus mude of total intermarket hulk eream and ski]n milk shipments b<lsed on monthly repon s made by plants (Q the Bm:eau of Milk Control.

2. On the basis of th ese records, 49 plants were vjsi Led and datil on ship ments were direetly

The 8.7 million pounds of fat ship ped as cream represent appl·oximately 23 mil· lion pounds of cream of 38 per cent milk fat or, converted into an equivalent bas.is,

obtained. These plan ts accounted for nearl y 98 per cenL of the total reponed cream shipments of Lhis Lype. The data for these plants as deter­mined by direct visi ts we re accepted as repre­senting shipment.s uy th ese 49 plants.

3. Quantities reported by the rema ining plants, from monthly statistical reports, were added t.o the above to delermine the total.

Table 1.-lntermarket Shipments of Bulk Grade A Cream and Skim Milk, June, 1950--May, 1951*

Montb.

1950 , June . . . . .... .. .. .. . Juty . August . September . Oc~ober . November . December .

1951, January . .. . . . . . . ......... . .. . . . . . February . . . . . . .... . .... . .. .... . March . . . . . . . .. __ . _. _ .. . April .. ....... .. .. . . ... . . . . May . .. .... ......... .... .. .. ... . .. .

To\al .

Creaw Skim milk

mil II: (at, pounds produce pounds

1.080.637 831,013 956,420 1,151,985 890,397 780,694 654 ,349 1.514.818 500,941 2,637,795 486,123 2,802,268 517,884 3,946,458

502,599 2,841,186 544,756 1,995,314 699,754 1,818,409 903,701 1,088,704 975,413 938.219

8 ,712,874 22,346.863

., Soorc.&: DAI .. c.olloc.ted hom plalDt Joc.ords pllli IUpplollLontlU"J in.[olmation fro m Buroau or Milk Contfot 6161 .

[ 8 1

nearly 2_5 million hundredweight of whole milk.-During the same period) the total market milk receipts in California amounted to 14.5_3 mllhon pounds of milk fat. This would indicate that the amount of milk fal involved in bulk intcrmarket shipments of cream constituted approxi­mately 6 per cent of the total commercial production of milk of market grade.~ It is also apparent from Table 1 that skim milk shipments are not so important as those of cream since the amount of skim

milk reported is only about 10 per cent of the quantities derived from the sepa­ration of the cream shipments.

Wide seasonal variations of shipments are noted with the pattern of shipments of skim milk running counter to that for cream. Cream shipments during the low month of November amounted ,to only 4..5 per cent of the quantity shipped in June, while the December peak in skim milk shipments amounted to 475 per cent of the June quantities.

PRICES PAID PRODUCERS FOR MILK USED FOR CREAM FOR INTERMARKET SHIPMENT

The data required for this part of the analysis were obtained directly from plant records. In an attempt to get ac­curate information at a minimum cost, the plants that made intennarket ship­ments of bulk Grade A cream were di· vided into two groups. In the first, and most important from this standpoint, are those which are commonly considered as "country plants." Most of them are lo­cated in the San Joaquin Valley-the '(reservoir" of milk supplies for the major California markets. The principal func­tion of these plants is to receive mi.lk from local producers and assemb1e it for re­shipment to other markets-usually in bulk tank trucks. The second category must be considered as a miscellaneous classification. This consists of plants pri­marily concerned with processing and distributing Auid milk and cream but which may also serve as a source of sup­ply for the needs of other plants. Some plants in this group divert surplus fat in excess of Class I requirements because of lack of available manufacturing fa­cilities.

Producer Payments by Country Plants.-Seventeen plants were In­

eluded in the first group where major emphasis is on receiving milk and reship­ping it either as whole milk or its con­stituents. for each of these plants, de­tailed records were collected as follows.

1. The total receipts of milk at the plant for months in which cream and/or skim was shipped-in both product pounds and fat pounds.

2. The amounts of lhose receipts that were paid for at Class 1 prices for those months.

3. An itemization of the plant disposi­tion of total receipLs-j.e., sales of milk to other plants, local sales of milk and cream, ,md sales of cream and/or skim milk to plants in other areas, etc.

ct. The prices paid for all milk pur­chased at Class I priees and the cor­responding average test of Class I milk if different from the average test of all milk.

S. The prices paid for all milk pur· chased at prices other than Class 1.

6. The prices received for interplant; inter area sales of cream and skim milk.

The approximate location and the rela­tive size of cream shipments made by these 17 plants are shown in figure 2. The destination of cream shipments-to plants in either of the two major market

. It should be noted that total receipts of ma)-kel milk £Ire not synonymous with commer­cial market milk productlon, sinee milk of mar­ket quality delivered Lo manufacturing plants­e.g., due to lack 01 an adequate market-is not included in the market, or Grade A, milk re­ceipts.

[9]

Scale

Pounds of milldot per yeor

(OE900,000

400,000 200,000

To Boy Area Plants

To Los Angeles Areo PlonfS

Fig . 2 .-App roximo le locatio n a nd size of s.hipmenh of Grode A creom, 17 counlry p lo nts., June, 1950-May. 1951 .

areas Ot the sts le-is indica ted by the shading within the circles representing individual plants. Note th at there are wide di fferences in the shipments and that only four of the co untr ), plan ts slUdied shipped cream to cit)' plants in both the Los Angeles and the Bay areas.

As a lready noted, all mi lk p urcbased from p roducers and utili zed within the snme marketing area in the form of AU1d mjlk or Auid crea m mu st" he paid for at

Class I ( the highest) prices. further­morc, milk received in one marketing ares and shipped in the form of whole milk to another marketing area is also designated as Class I.~ If the milk is sep· arated into its components of cream and skim milk and then shipped to an area outsjde of the 011e in which it was reo

ceived. however, there is no longer fI

., Unless proof is provided that actual usage oJ thi s milk was other lhan Class 1.

[ 10 1

requircmcnt lhnt it be accountcd for ac­cording to final utilitalion.

II i. mandatory, however, lhal ellch distributor or country plant receiving milk from producer. make a conlTflCI with eflch producer, These conlncls must slate the IImounl of milk which the d ilS' tfi butor Dgrces to purchase and. with in this, the min imum flmount thlll the dis­tr ibutor guaran tees to pay for at Class 1 price .. The minimum quantity for which any producer will re«ive th~ preferred Class I priclel will depend, therefore, on Ihe avenge percentage of Clau lutiliza­tion" or on the contnct gUflranlee­whichewu is the higher, In any case, Ihe amount of milk IIclually paid for a. Class I , .. ill equa l 0 1 e)(~d the amount o f Class I utilization, Furthermore, milk paid for ,II I leu thIn Cillu I prices may be priced at Ieveral leve.ls depending on whcthe.r or not it is in excess of the lotal amount which the distributo,' agreed to pu rchase in Ihe contract. In cases where country plllnt. follow the practice of pr ic­ing "surplus' ''' milk at different lel'els, the average pl"ice received by producers for milk used IS cream or skim milk may be a composite 01' "blend" of three prices -the Class I price. It price for the bal­IInce of "conlrac' " milk o,'er the Class t guaranlet, lind an ol'er-contract Il rice, The oVer'contncl price is IIsull lly the lei'

tlblished (Jass II price (reneeting va lues at Valley condense.ries), while the within­contract non·Class I price is frequently about 10 cents per hundredweigh t higher. Dependi ng upon market conditions, how­ev~r. these prices may be high~r thRn Cllw II lev~I!, the upper limit being lOO per cent CIIlIiS I paymenb.

The level of Clau I prices pllid 10 pro· ducer! by any given plant is determined hy the ar~1 in which the milk is ult ima tely soW. In the eI!iC of these country plants,

10 ,,, Ihe UN of • country pl.nl. the loul ules within lite mulcetin, are. plus the amounl of bullc milk ihipment 10 other nl.1 Lee in, aren.

.. A .. Ilwd in thi .. Stn5e, all mil!.: thai WII no!

paid for at 0 ..... I price.s..

milk sold as Auid milk or cream ... ·ilhin the local mark~t Irea is priced KCordin& to the f.o.h . plant p i ica for aalS I milk established by the Burelu of Milk Con· trol for thai area, When the milk is reo shipped 10 anothet mllr~et in& IIr~a-for exnmple, from Valley plants to Los An· geles-the price paid is the Clau I price in the market or destinalion, wit h allow. ances mllde for count l'y pla nt handling and interplant tl'IInspol1ation chllrgtl. Reeently, these charges, or deductions from CllIIs 1 pricn-which lire also established by the Bureau of Milk Control - have betn 24. cents per hun· dredweight for coun lry plllnt hand ling allowance. with the mftx inlUm transport charges ba!cd on common carrier rntee or p revai ling con tract hau ler charges be· tween the Ilopeciflc points involved.

Despite the fact that t he~ pllln!!1 are not legally requiJed to ply Clau I pl'ices for milk used for intermarket cream ship­ments. In of the plants studied paid Class I prices fo r a pan of those supplies during the 1950-5. period unde.r cOMldera tion. In fact, most of the plants p.ttid Class I prices for all milk received during the months of low production ( the late fall and winte.r mOllth.) regarclless of Ihe ulil· iza tion 10 which il wa. put or the amount stipulated by contrltct. This hal meant thallhere .... as milL purchabt.d by counlry plants at CIII5S I prict.l which was notll~ for Cla.ss I purpo~ as cutr~n tly defined. Accordingly, the a~erage pric:~ paid to producers for mi lk utilited for cream and skim milk are inAuenc:ed by Ihe fact thai some of the milk going into those uses may hIve been paid for li t thehi3her price levels.

Prices paid )woducers for Ihe ncrage tcst of milk receilted and used fOI' inter· media te hulk cream Jhipments have been calculated for Ihe 17 plants from which records hAve been oblai lled." The aure-

"C.lculalionll h.ye been m.de 15 1011010'1: l. The .moun t of f'l Ihfppetl II Cf~m w ..

fletermined . 2. The .mount of I" (If .nrl which ...... v-oid

( II J

Table 2.-Summary of Intermarket Bulk Grade A Cream Shipments and Prices Paid Producers for Milk Separated into Cream, by 17 Country Plants, June, 1950-May, 1951

Amount of milk

Amount of cream Milk equivalent equivalent Month shipped of used for crea.m

cream shipped;;: purchased at Class I prices

milk fat, pounds hundredweight

1950: June .. . .... . . . . . . 996,272.76 278,001 75,681 July . . . . . . . . . . . . . . 907,549.94 254,001 66,757 August. 0 •• • . . . . . . . . 836,515.83 230,347 61,969 September. . . .... 610,815.83 163,781 88,637 October. . . . . . . . . . .. 429,239.30 112,694 51,818 November . . . . . . . . . 426,908.39 109,902 51,984 December. .. .. . .. . 471,610.61 119,119 71,117

1951 : January . ... . . 444,905.79 111,843 62,287 February . .. . . ... . - 497,697.81 127,070 69,840 March .. . ... 648,381 .32 169,776 78,865 April. .. . . ... ... . . . . 851,501.47 233,644 131,652 May . 0 • ••••• • • ' " . 917,794 .31 254,621 157,510

Summary for period 8,039,193.36 2,164,799 968,117

* Calculated on the basis of the average fat content of incoming whole milk. t Including deductions for transportation and handling . ~ Note that price level for Grade A milk was increased on January 1, 1951.

Weighted Differeroce Milk equivalent Weighted Weighted average between Class I

purchased at averajZe net average net nOD- net price paid price and price Class I prices Class I price Class I price for all milk paid for milk

used for cream used for cream

per cent of total dollars per hundredweight

27.2 3.99t 2.81 t 3.13t 0.86 26.3 3.77 2.88 3.12 0.65 26.9 3.87 2.98 3.22 0.65 54.1 3.93 3.29 3.64 0.29 46.0 3.99 3 .. 40 3.67 0.32 47.3 4.06 3.66 3.85 0.21 59.7 4.16 3.68 3.97 0,19

55.7 4.65t 3.89t 4.31t 0.34 55.0 4.56 3.97 4.29 0.27 46.5 4.46 4.10 4.27 0 .19 56.3 4.28 3 .76 4.06 0.22 61.9 4.23 3.79 4.06 0.17

44.7 4.18 3 .34 3.72 0.46

P" .... _ "'0 ..... ' ............ pIoIIlO __ "" ..... 92 poor _ '" .. -....I .... lit ..... ,. .. T.w. I. A _ry "' .... , __ , ......... ...- ............. , .. ..-.. _ ........ 0.1,._ ......... _ .,.0..1,",_ , ....... ,p'- on

.. '.1 ... 2' ... ,... ... 1/ ... J_. I~ ..... ,. 19$1. ....... ,u-,..0..,,, __ ,, __ 100

"""'" U ,. _ of .. ""II< •. ~Io.l. .... .w<I 100 , ........ k.. ... .. _ .... _ •. r ... lb. ~ "" • ..-. on • __ "'" u... '1"_ tof klt ........ .-. ..... 111 .... po..t no. __ ... ~ per ... "" ... olio ,.'Ilb_ ""Ic~ 1M crM"' .... ,., ...... ~ .......... ,--.... ........., ... , ,.rch ..... at .1 ........... k~ of ~n.., h. ,"'_. ,. .... ,... .............. 1. Ill ...... ............ _ . ... Il.n..

1.T ..... 2._ ....... " ... ~, ...... .. ~ ... -rbft .. _ .... _a-I,.... ........... ..-.... , ...... ..... ... __ .............. W ..... _ I',.... ... I II'" h .. hn •• epo<t"''' ..... 1It. .-...... _. poW'" • 00 .. I 1"'" ... '" 1M ..... ,,~-... pW ... - ..... -00001 ,. ..... __ "" .. 0..1 4l~ n..w 4, .. _ ........... 0-1 ~, ....... d .... .."..NI" I.,. oIl .-1l~ •• «J / .. ,,_ .......... 11M i .... "'W.l pIo~ .. 1. T ..... , Th ................ , .. '-,..-,., ..... ,....,... o-l,.kak,_"""'JftIooIou.

..... 0-1 .. _ ..... _ 01_'0-1

.. +",,- -_ .. - --"" ~-,_ ... , .. _ .. _-'" .. _- ...... -_._ ... ~,..., ... __ ..... a...l

• n.. __ .. _ .......... 1 _ ... _ .......... <.>-, .... -_0-,_, ... __ .. .... __ 01_"--,,, __ -.~ .. , ... fI'« .... th. d ....... i80

... "'"'" -.......... .... "'" ........ "-__ ... ~ .. ___ n...._ ... _._t ............. _

_'~01 ............ ' ... ' ...... "' .. · ... ,..1ootI. t. .... ~ ..... .-. ..... .... .... 1_ 100 ,.00" ,... ... ,,.. ... " ......... .., ............. ~I..,... ....... ....,1,.0 .. _ .... ," .... pl __ ........ , ....... w.'" lilt 1M .... ..... ......0...,. ........... _"""" ...... t ... !all """ .1-«.1

... S-"j ___ ,a-_-.i. ,_ ,... .- a_ 1 ,. ... ,. ... _ .... .. 41 • , .... .,... .... I

_' .. "j .. ~oM ........... O" .. ........ ~ ... I, .. , ... plo ... II.1.""" 11 ....... ood .01. 1 .. .-ot _.0... I ..- ..... '''11 .. I ........ , , ... pnlocl Pt.,. 6 1<>1-"'-' • .,..... ,..I"", ......... ..Ie. al ,....,... ...... _1, oIelo"" .. U- I • ... dill ... _ .... "'"'- ,ho ~ .... ,,---.~ ................... '" ..... o-I ... _c I 't .... ..- .......... ,....1 ..... ' ...... 0-I. boll .................... 01 ..... or ... ,.;.-_.pbI!,.... 0- , ... _, ......... "'_ ........ 11 ... _ • _ .... -., ................ ...... .... II '1 ... 0_1,...... •••. '''' .... _100 .. N ............ I~ ... N_ ..... ,. " __ ,, ~_ ..,0-1,..- ...... ".,.101"" ..................... 17. Tlotoo ..... oI • ...rI, It_,ho I.n ,/lot ,.i •• 101, "' .... t P'''Mka,). h.(OMIO<t .. !do,. ......... "'I.a .. , ... ' .. 1 ....... 01 I'" 'OK'"",* ......... , .............. __ ... .. ,.., ..... ~-- .... to. po.l , .. --"""II .. ,II<'" r,_ dote to.. ... ",, __ 1', ... coIndo .... hI Ih .. pt«H~, • .oM "" ........ be ... ,...... ... _ ... 01 ........ _ .....

........ \ .... ,I " ............... . •• • h .", ... ft ...... ~ .... _a_I ... ..

'·T ... ._ ___ ,... .... ---.... --­_ .... , __ '~_ ........ -........ ---.- .. ~ .... -..... , .... _,_ ........ _ .......... .. I' ....... ,_ ~_ ........ _ •• _ ...... 017.100\0.., • _ ..... _ -.. -_ ........... _.-... ..... ___ 10_--

[ 13 !

- - - -

Table 3.-Difference between Prices Paid for Milk Used for Cream and Net Class I Prices, 17 Country Plants June, 1950--May, 1951

I Pla.nt deSil:n&tion Month ,

1 I 2 I 3 I , I , ,

6 I 7 I 8 I 9 I ,. I 11 I 12 I 13 I 14 I .. I 16 I 17

I , doHat s per hundredweight lor e,gerage te3t 01 milk: re ceived

1950: i 0,73 1

I I , June. 0,81 1.44 ,I 0.47 , 0,59 0,83 073

1

068

1

0,58 0.76 0,001 0,31 0.49 0,71 0 ,72 .. . July . . 0,83 1.39 0,71 I 0,44 , 0,60 0 ,87 0,87 0,37 0.52 0.69 0,19 0,53 0,81 0.00 August. 0,68 1.39 0,66 0,80 0,50 I 0,56 0,86 0,84 , 0,23 0.52 0,58 0,69 0,27 0,57 0,71 0,00 September. 0,60 I 1.41 0,69 , 0,00 0.35 0,38 0,34 1 0,18 , 0,00 0,61 , 0,54 !.I8 0,00 0,00 0,00 0,00 October. 0,92 0,47 , 0,48 , 0,00 000 1 0,19 0.96 0,02 , 0,00 0,72 0.43 0,00 0 ,00 0 ,00 0,00 1,21 November. 0,80 I

I

0,53 , 0,00 0.00 0,00 0,42 , 0,00 0,00 0 .68 0,31 0,00 0,00 0 ,00 0,00 1.62 December. 0,60 0.45 I 0,00 0.00 0,00 0,51 , 0,00 0,00 .. . . 1,07 0,00 0 ,00 0,00 !.61

I ,

, 0.381

1951 : I January . .

I 0.951

0,74 0,00 0,21 I 0,00 0.0°1 0,00 0,00 0,00 0 ,00 2,01 Fe bruary . 0,82

I 0,76 1 0,00 , 0,00 , 0,24 0 ,38 0,06 0,00 0,52 .... 0,00 0,00 0 .00 2,18

March. 0,77 , 0,54 0,00 , 0,32 1 0,39 0,31 0 .07

1

" 0,00 0,00 0,19

1

0 ,00 1,88 April. 0,63 1

I 0,331

0,00 , 0 .00 I 0,31 1 0.42 0,19

1

0 ,00 0,00 , 000

1

0,19 0,00 1,94 May. 0,62 0,37 0,00 I 0,00 0,22 0.41 0,00 0,00 0,13 0,00 0, 16 , 0,00 1.15 , , . ... indic.ale no lnlermasket cream shipmeot5 Weri) made during tbe month . t Zeros indicate that CLass I prices were paid for aU milk used as crea.m .

" Bonus" Payments to Produce r s. -Competiti on for milk supplies-in­cluding both manufacturing and market grade milk-nnwng plants in the San J oa­quin Valley is keen. This has been par_ ticularly true in recent years when in­creases in total consumption within fhe state AS a whole have outstripped changes in production. Due to this competition , rival distributors are loa th to initiate price decreases. Correspondingly, they are quick to meet nddi tional price incen­tive$ offered by others.

Both proprietary and cooperative types of ownerstlip exist among tbese VaHey plants. It is tile contention of some that the cooperll t ives "set" the manufacturing grade milk price in the sense that the in­div id ual proprietary concerns attempt to pa y their patrons prices at least (IS high a~ tho~e paid by cooperative~ . More re­cently-since the period covered by this st udy- proprietary co ncerns in the Val· ley have been followin g an even more aggressh'e price policy, wherein prices pai d by the plants rather consistently e~· ceed those returned b)' the cooperatives. Furthennorc. many of the privnte plants make a policy of meeting (a nd of len ex­ceeding) the bonus paid out by the coops lit the end of each yellr of successful oper­ation. This bonus is norm!!11)' paid on the busis of thc vol ume delivered, and applies both to manufacturi ng and to mal·ket grade milk producers a nd , wilhin the lat­ter grade. to both Class I and Class II usages.

Essentially, the bonus-while at t imes paid ou t on n current basis----represenrs a retroactive payment in addition to th at specifi tfllly identified duri ng the accounl­ing period. During the sevell months o[ 1950 that were included in the swd y, the honus payment averaged about 8 to 8112 cents per hundredweigh t. It dropped to (In average of 4 cents per hundredweight during the first five months 011951. As the bonus is paid on al l milk delivered. technically it does nol affect the amount of milk wluch is reported to have been

purchased at the Class I prices. The bonu,:! does. of course, inAuence the level 01 the average prices paid for a ll classifications. ·I'his means that individual produ cers reo ceived hi8her prices for their milk th:>n the huyers were actu ally required to pay under the current Dureuu of Milk ContTol regulati ons.

Producer Poyments by Misce llo­"eous Plants.-As ment ioned previ­ously, while the majority of the hulk cream shipmen ts with which this s tudy is concerned was made hy the 1.7 pia nts just discussed, other plants also made ship­ments of th is type. These shipments were predominontl y between plants primarily concerned wi th processi ng and distri but­ing nuid milk, lildlough some shipment s of " surplus" Cfeam to manufacturing plants, or Lo fluid milk plant" with manu­facturin g lacilities (for ( :>tnmpie. ice creom departments. etc.), were noted.

Thirt y. two pIa TIts in this category were visited. a nd records \"ere obtained con­cerning the interplnnt bulk shipments of creAm ond skim milk, and the prices paid producers for the milk fJ'om which these supplies were derived. In ge neral, th e rec­o rds obtai ned rrom these phlllts were not in so great deta i! as those relating to the 17 cou nt ry plan ts, but were suffi cient to anow simi-la r computati ons to be made. The r esults of the summaries of the rec­ords far these 32 plants {Ire presented in Table4.

Slightly less th.tn one-half million pound:; of milk fli t in cream were shipped by these plants dl/rin g the period studied, I":hich constitu ted the equivalent of n lillIe more thR n 114 million prod uct pounds of cream. This accounts for 5.5 per cenl of the totn\ crea m reported shipped and, to­gether with that shipped b y countT}' pla1lts, covers npproximately 98 per cent of all bulk intermarket cream shipments made during lhe period.

It will be noted fr om the summary table that IIbout 43 per cent of this cream was purchased nt Class ( prices-approxi­mately the same liS thaI determined for the

[ 15 1

Table 4.-Summary of Intermarke t Bulk Grade A Cre am Shipme nts and Prices Paid Producen for Milk Se parate d inta Cream, by 32 Supple m entary Plants, June, 19SO-May, 1951

Am"".1 0( (,_ 1 Milk -.o.I'Oaka, I ,

"-0 • • 11 0( ",.n. W.1rh..o Dltltr .. u

.:r1ioaMtll MIlk "",,1'0&1& •• ".;,1010111 W •• ,,, .... ... , .... bf"wHa Clull M~. . " .. 'lIfe, ...... t::lCb .. d .1 ... , .... It ......... , .0 • . H' "'ce p\ld prlu 1l1li prlc.

• ~ I- cr .... 1101ppe4 ~c1 ... dU lUll I pole.. Clan I prl .. elul I " I", 'or all m.llo ,..111 tOf milk ulp,ku 0 .. 11'0' tr .... IlIed lor ef ...

"'lit' ... ,.... ..... I "ull",dwtlcb" per cut of to ..... 1 l16llan ,." 1o1I1III • .rtw.l, b,o

1950 : I I , .... 63,245.26 17,666 5,424 30.1 • . 29 2.91 3.33 0.96 Jul, 26,839.6t\ 7,518 2,'" 35.0 ..,. 2.85 3.37 0.98 Au,ust ·1 30,192.00 8,317 4,043 48.6 4.44 2." 3.68 0.76 September 23,145.8. 6,205 3,507 56.' .... 3.18 3.91. 0.57 October 47 ,28~UO 12,412 7,889 63.6 4.55 3.44 4.1.5 0.40 No'emher 46,157..82 11.896 6,420 ".0 4.70 3.62 ' .20 0.00 December .. 38,246.S8 9,OM 4,671 47.3 .... 3.66 4,24 0."

1951 ; J anuary . 53,308.00 13,394 6,348 47.4 5.17 3.93 4.52 0." February 41 ,112.29 10,488 4,166 39.1 5.19 3.94 , 4.43 0.76 March 43.870.13 11,484 3,378 29.' 5.10 3.79 4.1.8 0.92 April 32.148.61 8,832- 1,888 21.4 4.76 3.76 3.98 0.78 Mo, 37,541.66 10,428 4,833 46.3 4.62 3." 4.1.8 0.44

----Swnmar, for period 483,097.34. 128,298 55,091 42.9 ' .63 3.45 3,,, 0.67 ,

• eo ... . . Ied 'rom I • • ,....nda ... 101I1WIr .. h'. ilbl by q,plJlac .... .,. _.lbl, \ell" ilK_11II mi lt u 11,,,l'1li'"" Ir_ r_dJI .. n _DIf, pi"'''

I.."". ~0100_ ..... 111.~ pI'M~ 1~ .... iptecl ........ 0.. I pritt: po,d '0. "'i. "3 I""" ... '" ~ .. k,6l pe k"nd'rol .. ~. ",".," u.. .......... ,"" 57 pa _I "''' poorch...., .. "" "'''''''' "r 13.45. n.. _ ......... """'" O'<RJ~ I'd ...... ,11 lor on of ,ho ",ilk ,ko, .... ..oed I", clum

.","" ... .,j t" Jl.1}t). Tho ",Iol;.dy hipo CI ... I pI"" ""Ikoe.d '''' pl .... ;" Wo • ., ...... " 0 .. ' ,hOI 'Of ''''_,~ plow .. IIect. ,heloct ,h., """y of ,ho pI_ I,. ,hI> ....... d . ........ , .n •• w In 0< _,

!I~ Io.~. ", .. ,opGl~.n .",.. .. "'". h"he, 0_ I p.1ca P"C"1a.

PRODUCER PAYMENTS fOR SKIM MILK A ....... ~~ 1',.,.1.,....)" cWo .. tko.

,.id 'd prodaHn .,. ""'<"ni .. "" ""."" b .... '" ,ho ~titw.tio" of f.,. un,!., C.ll· t ..... ;. p.~g_ H~ 1"_ poid 10. .... , .. mUk .h'pmt'nlo <an b~ d"."nl".,\ I ............... oIto..., .. "",.........1'" milk total I ... ..., .... , A •• " .. d, nu"d. ,h. . 1 .... 11 w~ _ ... ~ ,,><...r, 10 ""' «nt u' the loC.oI .Id ... "",~ m,fi .. cl I.- rru .. """" •• d ..... n.. ..-..in"'.

90 per .... ,- ", ,,,,,,sit,., ~ .... hl ... h_ d ..... ~ghI ofol ....... __ .......... .. ,It .... o~n' .. pt."" ........ ;, .... to1ili>ttd p<'"'''''' 10< ", ... bd~mI do", pro<!. un .. 5i_ 'p!"o>im.!dJ IS PI" .... , 01 I'" milk .. puottotl , .. 0=." ""I~ "' ...... o~","" h ... , 0- I p~ 0000-.W. .. blr -.. oIti ..... ill. .... ,.101 ,,,. 01 0... I p,·1cu th.n ."u.ol[1 IOU "oed 10. ,,- kIto""-'~" -hlp, ., .... ~

UTILIZATION Of INTERMARI«(1' aULK SHIPMINTli OF CRlAM AND SKIM MILK

Th ... ..,n, .... , ,. d." un ",it:co ".,d ........ ,""'"''''' ..... .,.,... .... b~ quo..u. loa ., erode A ...... m, 1111f<~",," .t w...,. dl_pl pr\ce., .f, _"'« be· ,,,_ pIon •• Io.; • • e<! i~ dili."" " mo,k ... ;.,,; • .- A ", .. ion .f tbt ",lilt. ... klch .n' ... .,.! in'" tlw.o ohil,mt'nI' .... pu . · ........ , __ Pfocht<t: .... 0 ... I p ....... ~ ~ilo t .... .., ... ,;n,l ...... oo:countNi for .t _.(;'- I pnooo. ••• yio, bont ... on • ,blt,.'1 .Uo."~ in .,ldi""" '0 , .... pt'O-~.1I1nf; 0- II prlceo o.rod 1";'" booed "" bun., m'f~" qUoC"[M •.

.... d..., h_ ~ ",.de 'D 10_ Ih'OII~h ,h. ",iII""u 01 ,It ........ on ."" ._ .ill .hip.lUII. In ... dtr '" "",",,. min. tINt ~lt[m'I' u'"eo , D'LfI hom Indl. , ·lduol plan" h... boon (.[IKIM ..... ", ....... oI,t<! "" In '1!Il •• tI •• b ..... II .... 1' • ...- [I .. u _ibl< '0 1"''''1 aacI 10 ' oil •• · 'hf~!h 10 ,hft 6 •• 1 .. " ... '1 .... ,""l'"rtIC.[or. [I"'''''' dr.c....t bt Iho 1"",,1 ..... 0«1;,,", In .. "'" ""'.n, r,o... "....., • pltyok.[ ql.p.i .... ol ... pjIIMs !tont pion .. in ",,"Ock . ........ ...... ltIIinll • ....t '0 <liiliflluitlt lbo:M I,,,,,,

OIh., <1<0.',. ' •• ~" th_ d",,~ 1._ local _.01 ..... In ".... lot .. . c _ _ ,nol ... r..", ,Ito. oItl~" ..... . .-.Md dt ..... ', I ........ ilk planto_ I, .... --..y'o ......... ,h., ,ho . ... ""' .... ,._ pl-to In ..... ",.~ .. in. .~_ ....... Ooat,eeI ''''''''8 .n ,eq~"e­...,. "'!hi. ,..'" In ........... ptopol , ..... "' .. 1h.,,,..I .. ppl;"'" .u. ~ocd , In .... d __ ... follow,.,....." "", •• r>d .... m .. ;O' _,. .. ,~ II. <o,,".d.rerI&<p • • •• 0011.

Cr . .. m IJtrn ... tI ... .......s, .. il ... . o ,h. t,",_ oj ,.ed_ ,..y_ ,_ .... ~ .... I.,...d ~.ptoeIl"'" ,. d,.od~ ,ho, pl •• " 1._ .. hidl ulilw.tloot "'to _ ..... Iecwtd Into '.·0 .rOOtpto. The ~ .... of 'heN In· ~do:d ~ plo_ ",!tid, ........ eeI < .... '"

on .. __ ........ t _ ... '''''' ,ho ---" ...................... .. _ 1ot_,1M .to_ ..... """,," I ..... .tA,...,1ot .. a-I", .... n..t .... _ .., .... , .... -,''' ~ ... -, '" , ... , .1lI. .......... leo .. 0-,,, ......... ,"" ........ a/.Ioo ..... N __ .. ,~ ,_ ..,..., .... , ............ ,.,. , .. _,~ .. '0, ... -r 111

.

Table S.- Summary of Utili zation of Inte rmarket Cre am Re ce ipts, 24 Major City Plants, June, 19SO-May. 19S1 ,

P .. n'''~ • .. "Ib.rio. b, claulllc&doa

For IU&4&nIwuoa Sold W <Klr. .. I Maww ... c" MM" ...... Towu.

" lid nulol n .. lol dislJlbuw .. ptod\l(.lII l .-I IIIdll cr ..... b"prodlX"-

,..,1>4, .nll t&t 1950 : J~. . 3.8 78.3

I 1.4 •. , 7.0 0.' 1,032,874

J uly ' .0 77.6 1.7 ••• .~ 0.7 896,911 AU,USl . ... 82.0 1.6 7.' ••• 0.7

I 836,439

September ... 2.3 I " .3 1.8 7.7

I ' .0 0.' 606,487

October .. 1.1 .... 2.7 3.' 2.' 0.' 412,746 No'ember .. . 1.0 88.0 I.' 3.3 ' .0 0 .• 1103,403 December. 0.' 81.4 1.' 2.' ' .1 0.' 445,082

1951 : I J&nLl&ry 0.' 91 .2 1.3 1.1 ' .2 0.7 429,756 February 0.' 86.9 I.' • . 2 2.2 0.7 484 ,161 M arch .. .. 0 .• 87.' 1.' ••• 2 .• 0.7 633,467 April . . 1.1 82.7 I.' •. 3 , .• 0 .• 802,U8

M'l . 1.' 83.2 1.9 •. , ••• 0.' ....220 -- I - - - - -

Swnmarylor period 2.0 83.' 1.7 7.1 •. , I

0.7 7,847,664

• ' .. dodel loud loki. ud c"-'ala drl .... I 'adull .. k. "KIll , ""nac. clo_. ,",,,," •• ,111 , lie

• ...... 1111 IJIll~ "on. pl."", In ~,kt ., ... ~ in L.'8C ~""n'11y and with r~I.'i"~ "B~-t.'"r. TW~nlllullt C~) pl ... t-- tht mojor ,tIOipienlt of " e.'" tul~,II ... lr um ~".·I'''' "",...--".,.. j""IYdtd in 'h" ~p . .AJI of,~ 24 pl."" ,.~'e locI,ed cillt ... in ",,,nGpoli •• ,, Loa A"Sela '" the B.o1 "'co Th. , .... h. of Iht OIl"''''.' r 01 ,,,- ~1I1I .. 11"" 01,," ... 111 bo l .... nd ;/1 T.bt. s.

II will \.., nat~ Io "m ,hi. ,.l~. ,h., I~ pl ...... i"dud",! In ,It. 1"'''''--11._ "ltl<h ,"sul.rly r""ol.ed .. 11,;.01, I",IV .hipmcnlll"f Grodo A.",,," fr_ pU"" In ",h., al."-.",",~nl for '''''''1 7.8 "'III ..... po""d~ 01 W. Fot __ n,h., ,,,- !<>llt. .,.1,,&," ,h .. 'h .... ,eponed oh,,'fIOd br tke 17 «oIInlF)' pI. ..... i n T.bk 2 11'. 12), .",1 In''io_Le th" II .. ~1I)' pion .. ill thil'l"<)up. in "'dui"" to lCU'O.n.s tke bul~ ol t"" ...... m oIIlpped 1>, th. _.y pLolltA, .100 ,0« .. ...1 c ...... ,.0Ia the UCla_ .... pl""" d.:octlh",d ... T o.bIo" Of • hit rot.1 qUI",I. f of c ........ ,h. p,elomi. n.'" .. "" ..... lor ....... Ruid .. u .... , .... '.porno! omoulll uom .. "uid eru ... .. ,pplo~im""1 :to f'L'I' em of 11M: tolJrl ""Ik I" in cr ........ 1d in t.lifornl' m •• ~ ... d".~ ,I>. p<riod ......... ",ud,. AI" p. o~lm,'<lv 117 , .. , C,..,' 0 ...... elUln I,.. n .. od 1._ pl. .... in ....... 01Ul ....

"1IIh,"" In 0. .. 1 p.od...,.. • ." .. ...do .. 1 iun! auld .. U~. 10. ""'lIN ere ....... .1 I .... oudI " ... prOducli At 'ellu;,. Ih ... .. of ''''''~''I'od. ""I~ """"';.,... «III of , .... "Qipb It"", ,,,- oow~ .... oIi. • 0001Iy ...,por' .,.! '" h ••• S""" for .... nu'..,. ...... ~ pu, ........ I ... dd,,,_ ...... ""-.. 1 PC' cen' wu repo"'" .. told 10 04h •• auld mill clill:dlouloro ............ liul .I,. p_t"", i. unl ,",w~

It .. 1"'«<$I1nt! '0 -.. I .... dl'ft1 of • fUI Utel p~ .... 01 u.. Ru.., ... " i,h Id· •• 0IIte ' 0 ....-, .... f .... ""'"!" of c .... '" "'1"'_ f, .... plo"to ,,, o"told ...... . s...-.... I (il , pa.nulollow lhe p • .c:IM:t of pt.,..., oqrq ... "1 ,t... l"prJ .... froon ,,,- oltt.oincd b, Iocil ..". .... 1 .... W1wot .J,! ... done, •• OC"pI.hIe proo' i. o.ho""" duol .. , , •.• , .. pion. "'pplits

"e", ..d 'Of 0_ 1 pu.,.., .... """ I"~I""" ","""II ,,,- .... pplioo '0 II. de. d~ ,._.he ' ..... 1 a.. I .. ti I ... ". (ou"lln&,o> locol p.ocI.etTL ~ lI ndel lhe>< 6 .. , ... __ it Is. ,....iloio I" .... lth., ,h. IUI:II pt-Odue ... 110, 11,_ .hippi ... IfllOUlh c .. ncn ,""u ..-. ... 0 •• I pd.,; for ,,,-CI ... I .. fa..

I" .ddit'. 10 lho: .. ull .... "." ,_.d. 0' ,100 ~I ... jo. cioy pl.",. r .... "'rd in T.b!-!. onl...-_ Cton<a ........... 01 <:"f ....... pplio 1._ pl'nll In ov"MIo ...... w .. ((I/J<CIeti h_ 45 OIMr ~iol ... _ .,. ,1 .. , ... A. ""11 110ft ..... wll h 'he ... ppltc...." ... r "' ....... ra ,""YIMO,II .MOO,. toIlo<lrd f.om IIIe m'-ll_u, "oup 01 pion .. wh och ohlppcd c, ... m, Ib, dol. oIKaiflCd _~ coIJ..:ltd ;,., Iaoo ""-loil. Su llie',,". 1,,1 ........ uon ..... _u.t<I ID 0110 ... In .. lIM .... .. f d .. -..;!ia'ion ,n.o prod"" .... 0_ I 0' Cu. .. II. " .. 'Un('

tn"';""Uooo of tit .... I~rial ~ 0.1>0 .. n in Table 6. r-fOII •• h .. il an be _" ,k. t • ,rI..oti.d. lo.~. proportian of th. "5 nU .... ' .. pion. ,eedpl. w .. uH<! fo, "' ..... 'OCIU'e<! ",001 ... , pur"""", Il.u ..... ned ..,. lhl ,..11 r'p9f'«i I~ Tillie S. App.ulmold. I{I 1"" .~, 01 tho loul .«cipt. '" ,hI> I'" .. It,mottlT "en' ;n,o n,"n .. l~u"n8 "OU ond ....... tho,.fo ••. .,.,.....,tfJ .. tbe .... ow. 01 fI.nJ .... of "'"'fII".~· G •• d." milk f.!. I.hJd''lI lh. .. _ pooiod of ...... , " .wp1r SO "'" ,en l ... w,n, • ..J In C •• de " P'l)tiuott., "hll . 10 ptf ctm ..... old '0 .. ,ho, " ... ,.ih.' .. ...

R..""d. I,OI'l buth •• "upo II' pl~"to I .. . which ""hurl"" dOl .... , ...... ,y .. d h ••• ....... to<nbuwd Ind ., .... ",m .. l...,j ,n Tlb!. 7. Thio , ... Ik ... ,10 .. , tho lI:udy ",duOc-d Ippnl'lltll,el, 6.~ million fM"'nd. of .. Ill b.- 6r ,ho "'I",,'~!en, 0' ,boa, 2:! .. iOlon pOll"'" 01 f"'''' 0138 "" •• "" , 10, OQA'."t . Ol lhi.l~to l . 0>'" CS .... """. WH u,iliaN (GO a-11""fM'Od'.

• A. 'ppel'" '" •• ",IOIC"'"T I. a,no. ,.,1<, .............. '" ,100. ''''''''''.1 .... ol~""_ ....... ~_."'.hl. p_l~ ~,ft .............. ,ho Lo. A ... I ... O(] tho 110, A, .. _~ .. .

.. " • ...1 .. tlon_ •• _",,,~ .. I ...... 011 .... " .. , ... ,_., lOt "".1 '.~"'_" 101 ,I.e 1""1.",,,,, pt. ...

r 19 J

---

Table 6.-Summary of Utilization of Cream Receipts from Extra-area Plants (45 Supplementary Plants) June, 1950-May, 1951

P erc enta.ge utiliza.tion by classifi ca.tion

Month Total use All Class I Manuiactured Sold to othe r

products products distributors

---- ---------- ---- -- ------ - - ---- ---- ---pounds of milk fat

1950 : June . . . . . ... . . . 49 .1 24 .1 26.8 62,907 July . .. . . . . . . . . . . . . . . ... 52.7 20.2 27.1 41 ,632 August . .. . ... . . . . . . . 57.3 24.6 18.1 41,168 September . · . . . . . . .. . 79 .6 14.0 6.4 25,721 Octob er . · . . . . . . .. . ... 51.5 48 .5 30,998 November . . . . . . . . . . . . 61.0 39.0 . ' . 35,220 December . ... . . . . .. . . 43 .1 51.1 5.8 28,770

1951: January . . . . .. . ... . . . 32.7 67.3 . " . 35,179 February .. . . . . . . .. . . . 32.1 67 .9 . .. . 21,384 March . . .. . . . . . . . . . . . 51.8 48.2 . . . 22,790 April. .. .. . . . · . . . . ' " . 45.7 54 .3 . .. 26,177 May · . ." . . . . . . 59.1 40 .9 . . 23,578

- - -- .----Summary for period . . . . . . 51.3 38.9 9.8 395,523

Table 7 .-Summary Cream Utilization, All Plants from Plants in Other Areas, June, 1950-May, 1951

Percentage utilization by classification

Month Total use All Class I Ma.nu[actured Sold to oth er

products products distributors

- - - --- ------ --- ---pounds o[ milk [at

1950 : June . . . .. . . . . . .... . . 81.5 8.6 9.9 1,095,781 July . ... . .... . ... . . .. . . 81.9 7.5 10.6 938,542 August . . . . .. .. . . . . . .. . . . , 85.7 6.2 8 .1 877,608 September . . . . . . . . . 86.0 6.3 . 7 .7 632,209 October. . . . . ... .. 90 .2 6.S 3.2 443,744 November .. . . . . . . .. . . . 88.5 8.4 3.1 438,623 December. ... . . .. .. , .... 88.8 8.4 2 .8 473,852

1951 : January . . . , .. . . . .. . . .. 88.5 10.5 1.0 464,935 February · . . . . . . . . . . ' . 86.6 5.6 7.8 505,545 March . .. . . .. . . .. . . . 88 .8 . 5.0 6.2 656,257 April. .. . .. . · . . . . . . . . . . . . 84.4 7.5 8 .1 828,294 M ay . 0 •• • • ' • . ... 85.9 5.9 8 .2 887,797

Summary of period . . .. . . . 85 .6 7 .2 7.2 8,243,187

.nd ' he ...... in6e! .... pp,nim.lelr "'I ... \1y oUooltod bc,wefl\ ........ I.ctl ... ,"A ...... ond .. ,... 10 oe"", moen""''' .... The "'.J ~r pOll 01 th" clauificllkm ..... Ito to "'''''' di.,ribuIOft,. M in. oI .... 0111.,.-, Co c.e.m MJob!,." .. M In .hkh c .... Ihe n o_ lo tIfIrm.Uy ......,\J .. ""Ik c ... m prktr 1<1

fin.1 di'I""'l1on. Utili ... t'"'' "f Ski.,.. MlIk_)I .....

Ihl .. II m,U,,~ .. of tho 22.3 ""nklft pound. 01 ~jm mjl ~ I'q'ontd ohippocl 'ubI" I. p. 8l 'nvol.ed .. lea dirctdr to ..... ... I." tu rl,,~ ,,1 ,,'11 Ind ... WCI. co ....... ,~

t" '~Pl_nt "on·CI.,. 1 " .. ~ •. I' .... ~ ,i/:rJe. to 01>1.1" .tll.bk .ecordo on -'7 5.6 of 1M ,,,,,,oin,,,, I!U mHHon pound. 01 .kIm ""Ik 1"_<II •• d In 'n' ...... '''"' ' ...... [era. TI __ P'"'o.\ .c01<.lI.ooo ,..:. 0 • .1. ;ndi .. ,~ d,al, oct ,he "U,"", and datlMA th~ puled lind ... """y. 7'0 1"" CUll o[ ,h_ ole,,,, ml1~ .""pll". ..... uoM fo .... "" •• d ........... of a- \ prod .. to, 9 "". <"", wo'" di.<'C,ly t~ "'"nllt.;Cun,d prod ...... 18 p'" unl .... ,eooId to IIIMt dlloltibul", ... .".1 3 per c~ wmt 10 pfl'" ,.,.. or won oIuml'Od.

INUIlPLANT RESALE PRICES fOR BULK GRAD( A CRlAM AND SKIM MILK

Con"dc •• bI .... '.11 .... aioud I. tit. prlCb., .. hic:h b"n, C, .... II c ...... Ind

0100_" It! T abt. 8, It ""oult! 1M, -"" Ib_ 111_ prj ... '"!"lit. do ,.at ""'Iudo. lb_

.bm mi lle .. I". "'ue tud.: du"'~ W J ..... , 'IIOO-M.y, 1951, "",iod UMe' Iludy Th. r.ng_iudiCIll .... bodl !hot bip ...... <1 Iowtat_ol p.1ca r.,.on.l io

........ IruorrJtl .... obiptnenls • • e .... de bo-, ...... plnll DI'~"I~d lor th~ ... "" 6,.,.., GOO 1M """nu lha' ""'''Y 011 ...... I", in ri,e ",'u •• of lnlr.KOrnpan1_' "oIt.d·

Table 8._ Th .. lon9'l of Se ll ing Prl<.~ .oporl.d f". ''''.'pl" .. . Slt lpm ..... of G •• do ... C ........... .1 Slot .... Milk , by Month.

Jvn. , '9SC1--1t'1oy, 1951

- ~;::.r:": -~~ .. -. - 1--. ........ ......-..... , .

- '-I~· ~ ..... r -.-. ,- U, ,~ ~ ••• ... 0.1' .~ ..= • • M ._. ' .n .~ .~ .. ~ .... '''''' .... .~ .M .. ~ ' .n .

~". ' .M . .~ ' u = '_M ~ .~ ~ = tIt<=hm ~ ~ '.U .. ~

.N, J ........ , .M L .. . ~ ... r ....... ' ' M 1.11 ~ ... .- ••• '" 1.4. .. ~ ... OM ~ y. ... .. , ~ 1-10 1.41 L~ - -

f 2, 1

- - -

ow"-charges and do not necessarily directly focus on existing supply and de­mand conditions_

The high and low cream prices are plotted on Figure 3 along with quotations for both Grade A and manufacturing cream taken from the San Francisco j ob­bing market. The latter quotations also provide for a range of prices, and both the low and high jobbing prices are indi­cated. It will be noted that the high prices reported for bulk cream sales closely a p­proximate-and, during most months, slightly exceed-the high level of jobbing cream prices. On the other hand, the low cream prices follow the manufacturing or Grade B jobbing cream prices during the seasons of flush production but rise some­what above this level during the winter months. At all times during the twelve­month period, however, quantities of Grade A cream were being sold at below

E. "0 c: ::> o 0.

1.60

1.40

1.20

;;; 0.80 0.

., v

0: 0.60

the reported Grade A jobbing market prices. No price quotations exist for skim milk, so similar comparisons with these reported prices could not be made.

Presumably, the low prices which are shown in Table 8 represent sales at or near manufacturing grade prices when a more profitable market is not available. The fact that such price differentials exist for physically and legally identical commodi­ties, however, suggests one or both of the following: (l) the people who make these transactions are ill-informed as to the prices which prevail for similar sales; or (2) buyers and sellers are not free to shift and so obtain the best possible price from their own standpoint. At any rate, these prices indicate that city plants have been able to obtain some supplies of both Grade A cream and skim milk during most of the year at something less than the prevailing Class I prices.

0.40 ~ Range of reported sale prices for Grade A

cream 01 country plants

0.20 DTII{J Range of Grade A tabbing cream prices

~ Range of Grade B jabbing cream prices

O~ __ ~ ____ ~ ____ ~ __ ~ ____ ~ ____ ~ ____ ~ __ ~ ____ ~ ____ ~ __ ~ June July Aug. Sept. Oct Nov Dec Jan. Feb.

1950

Fig. 3.-Comporison of reported range of selling pr'ces for Grade A cream with San Francisco jobbing prices.

[ 22 ]

Mar. Apr.

1951

-

tololo • ,._ .. _ ... low ,.,. _-"- w.._ ,.., _. "',. ""' -.. -~ ........ ,"' ... -'" dloc,""'" oa4 .... _.~ _ <II • ,.' ........ IooP .......... _.f ........... _L .. "' .... __ ............. hot.~ ' " , •• Co. It. ... I .... _ .... -l'I"iIIf a-I,.,j ........... _., ... '~_ ............ h_,.d. G .......... ...... r..... .. .. ...LooOft I 'r alC ..... A •• '"_ •• , •• ..."t .. _ ...... (M,Mt .... ,I0000 .. 1M .. _ .... 10010 01 .... I" lAo, .... ,h ••• .., ... _ .. _a. .-coo .. "" ........... ....... ..... , ...................... ~' ....... IO ... ' n.. ______ _

.. -,..,-__ .... '010 .......... -........ -

.......................... ol ....... 1100

............. ,",I .... _ "' .. dloua.. _ ......... 1) , ..... ~ ~ 101.100 .. - ... ,.,.. ' 1;;<.,. A ........ ...11 ............. _ ..... - ....... ~ .. ..... , ...... '"'-

1ft"', , . ..... -_ • ....,. ... ..... _ .. '; ... A ......... *'-....... ,.... ......... ,tW"_ .... ol.. "' •• ~ ....... ""'_ ............ f ... 25C1'1 ................. tho I .... " ...... ....Ioot a., .,_ ....... _ •• 1foo;l.cIN

""' ... ~ ...... oI~ • ...,.d ft ... loa! .. "" ,_ ..... '""" .. _ .. Ion~ _ .........t OJ , noll"" ... ...0. '" ""ll. , .. .. _ .... _." , ...... _ ... ·,1 .... ",lit. " ...... " jowl, .. ot...I ... _ • .......... ~ ............. -. ..

, ..... ..-. .... _ , .. , . .. ., ......... MIllo .... ., o..t ...... C_ I .......... (.11 ....... _.If_.,. "S! ' -- . -~-~ --,-- - -- 0 __ , _ .__ _

,._-,' iO- '._"-"-" -."... -_' -o::.r- -~' .- - or .. _~ --.: ,~, ,- •• ~ •• ,. ,., u. u. •• , . . - '" o. .. .. -- .. ,~ o. .. - .. o. .. ~ . - ,. .. ow ...

• , , u . .~ ow ~ .• , ,- .. .. ow ,n ,- ~ ,. ow .. - ,. .. ,. , . ... ,. ,. ow ,. .. ••• ,. .. ..

- - _ _ 1...- .-;;...;;.,::- _~:L t""":; .- ---,_ ... _-.............. __ ... _,-,._. --, .... _ ... _-,---------_ .... ----I ~ I

- -

average of the group indicates that 76 per cent of all Grade A cream and 69 per cent of the Grade A skim milk sup­plies were used for Class I purposes. By area~ it appears that the plants located in Los Angeles have a much lower Class] skim milk utilization relative to Class I milk fat sales than do those located in the Bay Area. For the plants located in Los Angeles, 81 per cent of the fat and 60 per cent of the skim milk were used for Class I purposes, while comparable statistics for the San Francisco plants find East Bay plants are 78 per cent and 80 per cent, and 70 per cent and 72 per cent, respectively.

From this, it appears that distributors

in the Los Angeles area meet the problem of the relative shortage of Grade A milk fat in two ways: (1) through local sepa­ration, which leaves them with supplies of skim milk substantially in excess of Class I uses; and (2) b)' "importing" cream supplies from Valley plants, in which case the excess skim milk remains in the Valley for use in manufactured dairy products. In the Bay Area, where the relative shortage of fat is less pro­nounced, Class I skim utilization has been in close pace with fat usage. This implies that this northern group of plants, on the average, have not found it necessary to rely as heavily on local separation to meet their fat deficit.l~

THE IMPACT OF INTERMARKET TRANSFERS OF BULK GRADE A CREAM

The preceding discussion has indicated that with the present system of milk classification in California-i.e., where fluid milk, fluid cream, fluid skim milk, and chocolate drink are considered Class I usage-there is a relative deficit of Grade A milk fat. 10 meet this shortage, city distributing plants mus·t either re­celve and separate .additional quantities of whole milk and so face the problem of a profitable disposition of the excess skim milk supplies thus obtained, or bring in additional milk fat in the form of cream from plants in surplus producing areas where the skim milk commonly 1S di­verted directly into manufacturing uses. Due to the lack of extensive facihties for the production of nonfat dairy products in city milk plants and the costly trans­portation charges (relative to value) at­tendant upon hauling skim milk, the lat­ter procedure of "importing" cream sup­plies is often the most e.fficient system.

On the assumption that one of the ob­jectives of milk price control is to provide uniform prjces for milk of like quality and used for comparable pllTpOSeS, the omission of this source of milk sllpplies­bulk interarea transfers of cream and

skim milk- from pnce control con­stitutes a "loophole" within the milk control system. Through this devlce, dis­tributors may be able to obtain raw prod­uct supplies at lo·wer cost than indicated by the prices established by the Bureau of Milk Control for supplies from alter­native sources.'"" Such a possibility, of course, pl·esumes that the distributors are not restrained from so doing, either by the nature of competitive conditions, by a sense of business ethics, or through lack

'" This does not imply Ihat local scparatio/l is more importanl. as a sourcc of lotal cream snpplies 10 lhe Los Angeles plants than to Bay Area plants, but only that local sepilration is a more inlportanl source of providing. the dcFicit betwecn lhe average lest of incoming ilnd out­going Auid milk and cream supplies. ~~The fact tbat prices paid for milk used for

cream are less than Class I priees does not n~ecessarily mean thaI. such cream supplies were obtained cheaper lhan cream supplies from milk purchased al Class I prices. since in lhe lauer case the extra value of skim milk (or Class I \=,nrposes may exceed the difference between the price paid for milk for cream and Lhe Class I price. The magnitude of the differences re­porlt:d in Table .3, ho\\'ever, wOllld indicate Ihal, [or several of the months covered by the study, country plant sources have yielded a "cheaper" crcam suppJy for most of these plants.

[ 24 1

of knowledge that such possibilities exist. F'urthemlore, these possibilities aJ'e pres­ent through several different types of actions. The following lists some of the Tlleans by which distributors may now JegaUy ohtain raw product supplies from extra'llren plants-provided th e cit y dis­tributing plants are not located in areas where cream price pla ns are efTective­and so reduce their costs:

(1) Gl'ade A cream and/ or skim milk supplies may be obtn.ined through country plants.

(2) City distributing plllnts located in sepal' nte marketing areas may "ex. cha nge" cream and/ or skim milk.

(3) Coupled with the fact thillaccount· ing 10 producers for use is done entirely on Il milk fat basis, plan ts may alTange to ship excess sup· plies of Grade A milk fl'lt out ·of­area and so oLtain low-<:05t, Grade A skim milk for local use.

This invesligation has determined thai relalivel)' lurge quantities of Grade A cream ori ginale 01 cou ntry plants. Fur­thermore, the final utili7.tltion of this cream is largel)' through products c1assi · fied by the Agricultural Code as Class L In fact, the quantities of country plant cream reported to have been bouled and sold as Ouid cream during the period under stlldy accoun ted for upprox unately 30 per cen t of the milk fat contained in the tolal sales of mtITk et cream and half­and·half within the slate during the twelve-month period studied. In the ago gregate, producers ,>'ere paid Class T prices fo r a pprox.imately 4S per cent of the milk from which these country piaul

cream shi pments were derived. Virtually all of the remainder was purchased at Class 11 or mllnufacturing grade prices. An important exception involves one plant where payment '~as based on butter market quotations. In addition to di rect payment for this milk, many country pla nts also paid a " bonus" at the end of each calendar year, covering All milk reo ceived. These facts~lhe pAyment of Class I p:rices without legal requ irement nnd the pnyment of bonuses-bespeak the competitive nature of the milk industry in this area.

Little evidence exists that distributors \vere muking use of this interpretation of th e l\ gricultural Code to gaill cost ad­\'antnges through the a forementioned "exchanging" of cream supplies. J none instance, however, relativel y large ship­ments of c ream were reported moving in bol h directions bel ,,'een two plants dur­ing the SlIme months. With ,this excep· 6 0n, none of the dislortions in suppl)' procedure thl'll might be expected under conditions where a price advantage might be gnined we,'e noted.

from the records upon which this study was bnsed, it was impossible 10 dete rmine the extent 10 which distribu· tors have used the procedure of sepnrat· ing milk for oul ·of·8rea cretlm sales as a device to obtain low·cosl skim milk. These "ecords do indicale, ho\~ever, Ihat ap­proximtlteiy 90 per cent of the skim milk obtained from separation was retained by the country or other shippi ng plants. Producer payment for these supplies of skim milk , under present procedures, fol· 10"'5 the prices paid for cream .

RECOMMENDED CHANGES IN PRICING PRACTICES 1n spile o f the facl th at gross distor­

lions in the marketing channels were not observed during Ihe period studied , fail ­ure 10 p rice Grnde A cream Bnd skim milk components where inlerarea trllns· fers are involved results in the following conditions:

1. Producers do not receive uniform

IreilLmenl. Those shipping 10 cit)· plants where sules tire made within the mMket· ing /\tca are guaranteed pa yment for all of their milk accord ing 10 usage. Pro· oucers shipping to plants making inter· market cream transfers-particu larl), those supplying country plan ls-do not have tlli s same guarantee.

( 25 1

2. Distributors do not incur uniform raw product costs for Cl"eam supplies re­ceived from alternative sources. City plant supplies obtained from local sepa­ration must be accounted for and pay­ment made according to usage. This same does not apply to cream supplies received through country plants owned by the same firm. furthermore, as evidenced by the data in Table 3, p. 14-, some distribu­tors are able to obtain a greater price advantage through the present procedure than are others.

3. The exemption of these Grade A milk supplies from price control creates conditions where jobbing prices for Grade A cream easily may become out of line with the minimum prices established by the Bureau of Milk Contro\. Under cond i tions where job bing prices are depressed due to excess supplies, distribu­tors may gain by obtaining cream sup­plies from this source and so increase the quantities of surplus milk carried by local producers.

4. The fact remains that incentives to modify practices to take more complete advantage of the differences in costs af­forded by uncontrolled versus controlled supplies exist, even iJ their operation is restricted currently as a result of com­petitive circumstallces, short supplies, or other allied reasons.

In view of the above, it would appear necessary in the interest of equity and to the continued successful operation of price control in the market milk industry to close the "loophole" afforded by the present procedure of eliminating bulk shipments of Grade A cream and skim

milk from the jurisdiction of the Bureau of Milk Con trol. In 50 doing, distribu tors '"ould be required to account to all pro­ducers for payment according to use. This would eliminate the disparity be­tween producers which now exists and would tend to reflect more closely uni­form raw product costs between distribu ­tors.

It should be recognized , however, that many problems are inherent in establish­ing use classification for these supplies­particularly with respect to payment for cream derived at country plants. As dis­cussed earlier, city plants as a whole en joy Class I utilization of skim milk to approximately the same extelH as the Class I usage of milk fat. Country plants, on the other hand, have diverted appro xi­mately 90 per cent of their Grade A skim milk to manufacturing uses, which yield lower returns than comparable skim milk with a Class I market. In view of this and the attending possibilities for serious in­equities, it is strongly recommended that earnest attention be given to establishing separate prices-by use classification­for both the fat and the skim milk com­ponents of market grade milk. To ac­complish this ,,,ithout creating further inequities and distortions requires con­sideration of the complex set of interrela­tionships involving the separate prices for cream and skim milk, prices for ,,,hole milk, and the butterfat differential. This problem is not being considered in this report but will be the subject of a sepa­rate publication soon to be made avail­able.

[ 26 ]

APPENDIX

Do .... ,.,.,,., _. "'. :\00 •• __ 0001.,,. .. _ "0. ))C, ... " 1 ___ .--.. oj .... """loot -'"<"' _ 1000 •• ,

-

SENATE RESOLUTION NO. 110

Relating to an investigation and report relative

to the sale of butterfat and skim from

surplus market milk

WHEREAS, The practice of selling butterfat separated from market milk in one

marketing area and of selling the skim derived therefrom in another marketing area

is allegedly becoming widespread; and

WHEREAS, This practice may adversely affect the dairy industry and the interests

of the milk consumers of the State; now, therefore, be it

RESOLVED BY THE SENATE OF THE STATE OF CALIFORNIA, That the

Director of the Department of Agriculture be and he is hereby requested to investi­

gate the extent to which producers, distributors, or producer-distributors in a given

marketing area are engaging in the practice of selling skim milk within the area

derived from market milk which is surplus as a result of the separation of butterfat

therefrom for sale in a different marketing area, and to report thereon to the Senate

not later than June 1, 1951, including in said report recommendations for such

legislation as the said director may deem necessary; and be it further

RESOLVED, That the Secretary of the Senate be and he is hereby requested to

transmit a copy of this resolution to the Director of the Departmen t of Agriculture.

Resolution read, and referred to Committee on Agriculture.

[ 28 ]

$IN.I\n 'USOlutION NO. 130

11d.II_e 10 I~~ """~e"ns of ""1.1 raJIl • ...! 8.1<1 au ...

"'"EIIE;AS. h .... Otle ~ I Ih. pu.""",",, of th~ Lqiololu", in "n.eti", In" I . .. ""OIi", 10 I~ ... blUrj~.1Id "",.uu", of ""ill .il. .. RaMI et_ .. ·IIIch ao ... • ppeI" In Ch ... , 12 01 D,~hlon 4 ullhe "8n<ub~ .. 1 CooIe •• o p ... ",,,>l I'" desoNC· "'e p .. cl"'~ COII.""",I, ln~w~ ••• ",i(e ... r in rolaI ..... 10 lIoid milo: ootd !t~I" c ...... ; .....

9.'HtlCtAS. ""' .... nl to .. id 10 ... plln. in ",1011\'" to fluid .. "s.. hi •• L..:n I"'t into op<I" ...... lor .11 011110 0,.,0' Inorld,'" ....... bOl pt. .. In "'III ..... to Ruld

""" .... h • ..., nO' been Jlul ;nlo u,,"uliou " U p' in • ,,,. ,Ii .. i.ted .ru; .raI

WHEREAS. In t"- or_ In ... hkh l!te •• io no pion In ""111'",, to ftukl "",.m. II " ,-ihk 10 •• p. ice ... ., In •• Iolion to fIIIid rr...." 10 eo; •• OIId ;1 I. ,.po .. ..! 1M _" I co"'h" .......... U,ott In I .... Sa" rtl""loc. "(1 ......

WHERE;AS. Solh ft" ld Inillo. .nd Ilulrl .,. ...... ", ........... td lin .... . !Ie ~iliom

...... 1.-..1 I ..... ,.odOlelOon of C .. "" II 111,1\1 _lid the p.b po,d 10 thr prod ..... of /luid ... r1l depend. 10 • l".e el'en, II j>I}II the ,.,~ I"" who(h tho, n"Jd "'eo'" "".I • ..! fr_ .... 11 "uld ,..ill II MIld. Ind

WHf..RE:AS. Th. "'p.nolo" ol.h. prk~ . 1 which RIIld .. um it...ld _ ..... 1, h ••• dlMd. ... II(! ...... dfocl ~.- tho, pr ..... ""'" " I the auid ""u. ', ...... hd ...... "' ..... " den ...... h~t iI t ... d. to Ih m .. Ihe whole .,slr:m '0 ..... bll.hinp, minimum p.ieM 10. mill Ind CIU<II ia!o di ... ",,1C in ,be ., ... of tf., p..!.I ... .. 100 •• * ..... w. t ...... wilt the pntt of hHf .un. ...... 1<1 nOi 0,",," do ... " wh .. th .... _ o' I!.ooicl aHIII II 10w •• eeI; Inc!

WHt:RE.\S. n.. Lqiolalij .... ...,.,... 10 be "".i~d •• to tIM foct ..... tJ... .;,o •• i ....

pu ' port,"P, to " .... In the San rrlncl_ Ir~ .... ho,Io •• o. not .""h """"~_ ... ~"""'ho: .... in the SIlk. .,.d .. hot"- 111" ..... 1~l\hc, kr;..l.ti .... 10 _ •• , iro the I"~mlla. nO".lh .. oIol" bo h

ME..<:OL\'EO b, I'" s... .. of ,he Soli. of Clhlo,"lI. Th.ot tho 1)0'«'0< 01 Alrl· o"llu.e;' ""reb, l't<Iab~ 10 ml~ ..... h In"coIit"ion "' "'.~ bo ___ '1 In ....... thll h. mit •• porl to tlUo Son.t~ .... '''" 'ioU •• "" m.U ........... u-d In thi> raoI .. lion, 'orth .. "'lIk hi ........ m_"""'i_ .. . o .n, 1.8;,1. ,1011 .. hI,h m'J bo __ ., to p. o ..... 1 ' hI •• iM....," 01 .... Ia. ",I. h • .dation 10 Hu,d 0 ••• ..,. """ 10 '<pOrt hI.

&..cll"81 ............ ..........da_'" dolo s"" ........ o' bolo.e lhe hOi d., 01 J"nr. 1951.

'" I

SENATE RESOLUTION NO. 141

Relative to milk and cream

WHEREAS, Senate Resolutions 110 and 130 have been adopted pertaining to

the pricing of skim milk and payments for cream respectively i and

WHEREAS, Certain information relative to the subject matter of these two reso­

lutions has been requested hom the Director of the California State Department of

Agrlculture; and

WHEREAS, The Director of Agriculture has indicated that complete lnformation

on these subjects will involve considerable detailed research, some of which is beyond

the scope of the regulatory and service functions of the department and "I'ould require

eertain additional flnal);sis by an agency regularly engaged in research functions; and

WHEHEAS, The relative benencial values for consumers of fluid milk and the

price differentials in the returns to producers l:hereof fire reported to be significant

when the milk fat content of such Auid milk is increased above the minimum of 3.5

percent now established by law and has been recommended to be established at

varying percentages up to 3.8 percent; now, therefore, be it

RESOLVED BY THE SENATE OF THE STATE OF CALIFORNIA, That it is recommended to the Director of tJ1e State Department of Agriculture with reference

to those features of the subject matter requiring the attention of an official research

agency that he contract with the Gjannini Foundation of the University of Cali·

fornia to develop certain phases deemed essential to a complete study of the items

referred to hereinabove and that the funds for use in any such contract be made

available from the Department of Agriculture Fund and out of moneys derived from

collections under the provisions of Chapter 13, Division 4,) of the Agricultural Code.

Hesolution read, and on motion of Senator Hatfield, adopted.

[ 30 1

test tube farming pays off for you

Not all of the agricultural research done by the University of California is field work. Much useful knowledge camlls to light throllgh work done under controlled laboratory conditions. This informOTion, after thorough checking and applicatio n 10 fie ld problem~ , becomes ava ilable 19 all California forme rs. DiSlribution of this knowledge is mode through:

LITERATURE:

Circulars, bulleti n), lilhoprinls, and leaflets by specialists are avoiloble free . There publications cover many subjeCTS ~ft·

10ling 10 agricuhure in the slale. For a colol09 Ollhis litera· lure wri te 10 The Office of Agricutrurol Pub);cotions. 22

Giannini Hart, Universi ty of Californio, Berkeley 4. ~ % ~~

COUNTY fARM ADVISORS: ..

of procJlca l knowledge. They serve 52 counlies Ihroughout the slole a nd their mission is to help formers work oul t heir problems. Get to know your Form Advisor-toke advantagll of his services.

MAil INQUIRIES:

II you prefer 10 pul your queslions in a leller, moil them to Ihe Public Service Office 01 the College of Agriculture, Unj. ve,,;ty of Californio, either at Berkeley or 01 Davis. Your

problem wi ll be referred 10 Ihe person or deparlmenl beil a ble to give you the exact information you need.

THE COLLEGE OF AGRICUL TURf UNIVERSITY OF CALIFORNIA