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^s'/^sfL NOVEMBER 1947 



MARKETING 
ACTIVITIES 




U. S. DqMrtment of Agriculture 

Production and Marketing Adminiitrition 
Washington 25, D.C. 



IN THIS ISSUE: 



WHERE THE FOOD DOLLAR GOES 

By E . 0. Umsted o o o » » o » . « « <> o <. o » » o « » o « o Page 3 

Middlemen may "get" half of the consumer's food dollar o » , but 
they do not get to keep ito 

MEYER, NEVffiLL REPORT R&MA PROGRESS o » , » o o o , » o = o o , o Page 11 

At the Agricultural Outlook Conference, two USDA officials discuss 
latest developments in the administration of the Research and Marketing 
Act of 1946. 

MARKET NEWS AND THE RADIO 

By Arthur Susott » o » . » o » = o » o » o o o « « o » o = Page 13 

The author, in charge of PMA's information office at Atlanta, gives 
one man's opinion of the role of radio in market news work, 

ADDITIONAL PROJECTS APPROVED UNDER RESEAB.CH AND MARKETING ACT » . Page 15 

MARKETING BRIEFS ooooo.oooooc .ooooooooooo Ps-gs 16 



Address all inquiries to 
The Editor, Marketing Activities 
Production and Marketing Admin. 
U. So Department of Agriculture 
Washington 2$, D. Go 



Material in Marketing Activities 
may be reprinted without special 
permissions 

].ssued monthly. Vol. 10, No. 11 



Where the Food Dollar Goes 



By Eo Oo Umsted 

The food marketing spread — that gap between what the consumer pays 
for food products and what the farmer receives for producing them — has 
always been a matter of keen interest to farmers and consumers alike. 
Vftien farmers hear that they have been getting half or less of the con- 
sumer' s dollar, some of them cry out bitterly against the middlemen, and 
many consumers join in the clamor □ There are too many middlemen, they 
say. They perform unnecessary services o They are monopolistic and in- 
efficient o They are greedy, grabbing for themselves outrageous profits. 
They are an unwarranted grovjth upon the economy, and should be trimmed 
down or cut out entirely. 

How well do these charges stand up? 

When we begin trying to answer this question and to dig for figures 
on TA*iich to base answers, two facts stand outo One is that it is going 
to be necessary to analyze production costs and margins for a large 
number of specific commodities all the way through the marketing process o 
The other fact is that all the data needed in order to answer the ques- 
tion fully have not yet' been set downo 

But that doesn't mean there are not enough figures on hand to give 
a pretty good general idea of where the consumer's food dollar goes— 
and for lAiiat. 

From 1913 through 1916 the average annual retail cost of all farm 
food products purchased by a family of three average consumers in this 
country was |281, of which the farmer received $128 0 During 1935-39, 
before the war boom began, the sajne bill of goods cost $316, of vh ich 
the farmer received $122. The spread between the farm and retail values 
of these goods thus increased from $153 to $194? and the farmer's share 
of the retail price dropped from 46 to 39 percent » During and since 
the war the farmer's share has been larger. 

Why Marketing Margins Increase 

Increases in marketing margins result from one or more of .five 
causes, everything else being the sameo Either marketing people perform 
tasks that farmers did formerly o Or the services rendered to consumers 
increase. Or increased inefficiency and waste come into marketing chan- 
nels. Or marketing costs go upo Or marketing agencies take increased 
profits. 

Let's examine these five causes one at a time. 

It is sometimes said that the farmer's share of the consumer's dol- 
lar — and presumably his profit for his effort — decreases because an in- 
creasingly larger part of that dollar goes to pay marketing charges. 
What actually happens is that functions formerly performed on the farm, 



November 1947 



3 



where they were not considered as marketing charges, are shifted to 
specialized marketing agencies, where they areo An example is the 
processing of butter. 

Now turn to the second of the causes tending to increase marketing 
spreads — to what extent do American food consumers receive more in the 
way of marketing services than formerly^' 

We all know they receive a great deal moreo We have only to think 
back a generation and compare the products of that day with the present 
day's varied assortment of prepackaged, precooked, sometimes all but 
predigested foods, to realize that the consumer gets more services now 
than then. Even small towns receive fresh produce the year roundj they 
receive frozen seafood and fish even when they are located a thousand 
miles from the sea. On almost any consumer's table we are likely to 
find foods from any of 20 or 30 States and a dozen distant lands. 

So it is a mistake to compare the consumer's food dollar of 1913-16 
with his dollar of 1935-39, for the reason that in 1935-39 the consumer 
was buying services — services the farmer did not perform — ^which in 1913- 
16 the consumer did not geto Such a comparison would be something like 
comparing a windmill with a jet-propelled airplane: both are machines 
and air passes through them, which is about as far as the similarity 
goes. 

Consumers Demand Services 

Some of these new services are introduced by middlemen, but most of 
them are continued because the consumer wants and insists upon them, and 
in our competitive system the individual middleman can either provide 
them or get out of business o 

A great many of the services that consumers demand and are willing 
to pay for are undeniable benefits to them, and represent something new 
and useful they did not formerly receive o The cost of these services 
goes into the marketing spread; the money that pays for them makes up a 
part of that increasing percentage of the consumer's dollar that goes to 
"marketing" agencies and not to the farmer. If any farmer wishes to cut 
down on the size of the spread on his owa products, he can perform some 
of these services himself o True, he cannot sell canned pasteurized milk 
direct to the consumers. He cannot sell them pork in tin cans. He can- 
not even very well sell them sliced, wrapped, fresh, uniformly browned 
bread o But he can sell his milk fresh, he can butcher his meat and sell 
it in a neighboring town if the sanitary laws will permit it . In the 
same way, he can take some of his fruit and vegetables from door to door,, 
He can operate in this way, but while he does, he won't be farming. 
He'll be in the marketing business o He'll get a larger share of the 
consumer's dollar spent for his product , . , but of how many consumers' 
dollars? 

That brings us to a point <, The farmer's real concern is not to get 
the largest possible fraction of the consumer's dollar. What the farm- 
er, like other businessmen, really wants is to get the largest possible 



Marketing Activities 



income from his investment, his ability, and his time and effort. And 
if it works out in practice that he can make' more money by specializing 
in producing, the activity he knovvs best, and letting specialists in 
other lines of work worry about carrying his production to the consumers 
— often in a different form and with sp'5cial services that consumers 
demand but that individual farmers cannot supply — then so much the better 
for the farmero He gets a smaller fractii^n of each consumer's dollar, 
but he gets his fraction out of so many more consumer's dollars than for- 
merly that his income is greater » 

We often hear it said that there a]'e too many marketing people o 
Perhaps there areo But the fact that there are a great many of them is 
not of itself evidence that there are too many or that they are the 
cause of high marketing costs in a particular commodityo It may be evi- 
dence only of conditions that make the particular commodity a hard one 
to market o For example, gross marketing costs are high in the marketing 
of certain fruits, and yet these costs are largely the result (in the 
large cities, certainly) of a specialization in the wholesale trade 
among three successive types of handlers— receivers, auction companies, 
and jobbers — that is all but indispensable c 

If the fact that there are many of them makes middlemen responsible 
for high marketing costs, the costs of marketing different commodities 
should vary, to a considerable extent, according to the number of mid- 
dlemen who handle a particular commodity., But do they vary in that way? 
Eggs pass through about as many middlemen as potatoes, yet in 1939 the 
farmer received 76 percent of what the consumer spent for eggs and only 
U9 percent of what the consumer spent for potatoes o 

Waste and Inefficiency 

The third cause of increased marketing spreads is v/aste and ineffi= 
ciency in the marketing system„ There is waste and inefficiency in food 
marketing o Just how far it is justifiable cannot be determined exactly^ 
There is evidence that this waste in marketing is being cut down, but 
also that additional waste comes into the marketing process as the kinds 
of services which consumers- demand are exfjandedo Too many terminal 
wholesale facilities for fresh fruits and vegetables are inefficient and 
disorganizedo In most of our large cities these facilities are anti- 
quated, ill-adapted to the handling of motortruck receipts, and alto= 
gether inadequate for the efficient wholesaling of perishable produce 
under modern conditions. As a result, spoilage is higher than it should 
be, intracity cartage costs are excessive, and the margins taken by 
vjholesalers and jobbers are wider than they might be if modern market 
facilities were provided. 

The U. So Department of Agriculture has been doing research on 
agricultural production for over three-quarters of a centuryo It is 
well-known that the benefits to farmers and consiimers which have result- 
ed from this work have exceeded by many times the funds it took to pay 
for it. Only relatively recently has the Department undertaken a simi- 
lar research job in agricultural marketing. It is true that the Depart- 
ment has done some marketing research in the pasto For example, stand- 



November 1947 



5 



ards and new methods of processing have been developed and causes of 
waste have been investigated. But until 19 k6 there was no provision 
under which the Department might go deep into the problems- of marketing 
research „ Now such authority exists o In passing the Research and Mar- 
keting Act of 1946, Congress expressed its intention of placing market- 
ing research in the Department on a par with production research. This 
wise objective may be expected in due time to go far in reducing the 
wastes and inefficiencies now present in our agricultural marketing 
system 0 

All this is not to say that the food industry has been doing no 
marketing research. In retailing, particularly, where so much of the 
marketing spread lies, industry is doing a great deal of research. Some 
of it is formal, in the laboratories. But much of it is hardly consider- 
ed marketing research at all by the people who do it. Their work does 
not involve ponderous descriptions of marketing processes or lengthy re- 
ports containing charts and complicated tables. The essence of this re- 
search, #iich is proving so effective in practice, is to develop ideas 
by original thinking and then try them out under practical operating 
conditions . Hardly a month passes in a modem supermarket that a little 
piece of research of this kind is not conceived, executed, and put into 
use. 

Increased Market i ng Costs 

The fourth factor tending to incrsase marketing spreads is an in- 
crease in marketing costs. As new services are added, they call for new. 
materials, new ways of spending employaes' time. And rent rates can 
rise, transportation charges can rise, wage rates can rise. 

This factor of increased costs is by far the chief factor during 
the last 30 years tending to increase food marketing spreads. The 

reason is that most of the charges for getting food products from the 
farm to the consumer are made up, either directly or indirectly, of 
wages. The average industrial hourly wage rate of 1939 was almost tri- 
ple that of 1914. 

If we are interested not only in knowing why marketing spreads tend 
to increase but also in decreasing them (and most people are), we come to 
a choice ... if we are to reduce than very much. Either we must re- 
duce the amount of labor required to process and distribute food products, 
through increased efficiency, or we must reduce the wages paid to work- 
ers in the marketing industry. 

It goes without saying that in general the objective of public pol- 
icy ought to be to reduce costs by increased efficiency rather than by 
vfage cutting » V\fe want price cutting, not wage cutting. Any reduction 
in wage rates would affect the farmer in two ways. Insofar as it cur- 
tailed consumer purchasing power for fDod products, he would stand to 
lose by it. On the other hand, the farner stands to gain directly from 
any measures that reduce marketing costs. 

From the farmer's standpoint, it is difficult to know which con- 



6 



Marketing Activities 



sideration is more important = But from the public standpoint, which 
takes into account the interests of all groups including farmers, the 
answer is plain to see. To reduce marketing costs by means of wage 
cutting alone is no net social gain. It is merely a transfer of advan- 
tage between groups. 

Let's dig a little further into this business of marketing costs 
and look at the fifth factor in the increase of marketing spreads. 

In 1939 J the last "normal" prewar year, the Bureau of Agricultural 
Economics reports that out of every dollar spent by consiomers for farm 
food products, the farmer got about 3S cents » Or to put it another way, 
about 62 cents of the consumer's food dollar went for certain marketing 
charges o Of this 62 cents, assembly services (mainly at country points) 
got U cents, transportation agencies got 6 cents, wholesalers 7 cents, 
processors 21 cents, and retailers 24 cents — the retailers alone getting 
almost two-thirds as much as the farmer got for "producing" the commodi- 
ties that went into these consumption items » 

It has been said that the marketing agencies "got" 62 cents out of 
that dollar. Does that mean they got 62 cents in clear profit? 

What Comes Out of the 62 Cents? 

Well, when we stop to think of it, almost everyone knows we don't 
mean clear, net profit o ViJhen we think about it for an instant we know 
that out of that 62 cents had to come marketing costs, just as we know 
the farmer did not net the full 38 cents that he received out of the 
dollar. The farmer has to pay costs too: the costs of seeds, of ma- 
chinery, of repairs, rent on his farm or taxes, and' wages to his farm- 
hands. What he actually gets in net profit for himself, the farmer 
knows, is a long way from 38 cents out of every dollar that the consumer 
spends for his produce o But sometimes the farmer loses sight of the 
fact that the same thing is true of the 62 cents that goes to marketing 
people o 

How much in net profit do these various marketing agencies make? 

To answer that question takes a lot of figuring „ It takes some 
guessing, too, because all the figures to answer it don't exist » But 
more and more figures are coming in, and the picture gets clearer., 

Suppose we look at the costs and profits of a single commodity 
group — fruits and vegetables. Most people have come in contact with the 
fruit and vegetable business somewhere along the production or marketing 
line. Some fruits and vegetables are staples that require no special 
handling, and some, like peaches and tomatoes, are very perishable. 
Some of them are processed to a considerable extent, whereas some are 
marketed direct from grower to consumer. 

In 1939, for all fruits and vegetables (fresh and processed), the 
farmer's share of the consumer's dollar was 31 percent. The marketing 
agencies' share was 69 percent. For canned fruits and vegetables alone 



November 1947 



7 



the farmer got 13 cents out of the consumer.' s dollar, and marketing 
agencies got 87 cents. And for fresh fruits and vegetables sold to the 
fresh market the farmer's share v/as 35 cents and the other 6$ cents went 
to the marketing agencies. 

Let's narrow our glimpse down to fruits and vegetables for the 
fresh market only. lA/hat did the marketing agencies do v/lth the 6$ cents 
they "got"? 

Country shippers and packers took k cents of ito Not as a profit, 
for they have costs too<, They have to pay wages, and rent, and so ono 
So ■v\^at they took was U cents gross o 

Some of the produce passed through cooperative marketing associa- 
tions o These also have salaries to pay, rent and telegraph bills to 
take care of. The cooperative associations took 2 cents of the consum- 
er's dollar — gross o 

Commission buyers took one-tenth of a cent, and the people who con- 
duct shipping-point auctions took another cent gross o 

These fruits and vegetables had to be shipped — by truck, refrigera- 
tor truck, refrigerator car, fast freight, or express, according to con- 
sumer demand. Sometimes they went by routes which the crow does not fly, 
and sometimes they were handled several times in transit o Ice had to be 
spread on some of themo A pretty large fraction of the 1939 consumer's 
dollar spent for fresh fruits and vegetables went to pay for these 
transportation services — 19 cents, of it, in fact — but here again the 
fraction was gross « Because railroads also pay wages « They must pay 
for repairs and machinery, and for those damage settlements that farmers 
sometimes receive when a car gets lost in transit and its load of prod- 
uce spoils o 

Then comes the vdiolesaler group. In 1939, the terminal broker got 
one-fifth of 1 cent, and half of that — one-tenth of a cent — went to 
terminal auction agencies. The commission receiver got seven-tenths of 
a cent, and the chain-store warehouse a cent and a half. To the whole- 
sale receiver and jobber went about 6 l/2 cents. Altogether, 9 cents of 
the dollar went to wholesalers of one kind or another — but out of that 
they kept their trucks rolling, paid rent and clerk hire, bought labels 
for packages and nails and wire for crates, and on the average came out 
with a certain profit for themselves. 

Finally the retailers. In 1939, they took 30 l/2 cents out of the 
consumer's fresh fruit and vegetable dollar. Retailers alone received 
more than six-sevenths as much as the farmers who produced the items. 

But remember these items are not the same things that the farmer 
grew. The original commodities had been sorted, graded, classified. 
They had been moved from the farm to a place where consumers with money 
in their pockets were accustomed to go and buy. Some of them had been 
delivered to the housewife's door. They had been advertised in the pap- 
ers and perhaps on the radio. In many cases this advertising was what 



8 



Marketing Activities 



let the consumers know where to find them,, In retail stores they 
occupied space under a roof and in racks and bins — space that cost moneyo 
In wintertime that space had to be heated <, 

There are many other familiar reasons why the cost of retailing 
fresh fruits and vegetables is highc Housewives very often insist upon 
handling, feeling — yes, pinching fresh produce before they buyo Checkers 
must take the time to weigh it. The equipment for handling and display- 
ing fresh goods in retail stores is more expensive than the shelves used 
to hold packaged goods c Unless perishables are furnished daily to re- 
tail stores and tended very carefully, they vj-ilt, decay, and spoil o 
Then they must be marked down or thrown away, T/Vhen fresh fruits and 
vegetables are supplied to retail stores daily, this means at least five 
or six handlings to only one or two in the prepackaged goods departments 
In order to have on hand enough merchandise to hold their customers, 
retailers in a sense must have too much — more than they can sell before 
some of it wilts o 

Other Cost Items 

Now, let's look at some other cost items common to all food market- 
ing — wholesalers, jobbers, retailers, and all the resto Interest, for 
instance. The poultry farmer does not wait for his part of the dollar 
that pays for a cake that contains an egg laid by one of his henso He 
gets money sooner, but someone — for a fee — has to furnish the credit all 
through the marketing chain o And insurance has to be carried on the 
items o 

Then come taxes — ^Federal, State, and local, direct and indirect, 
and the failures and bad debts. Every time you spend a dollar for food, 
a little over a cent goes to cover the losses from businesses that have 
failed and from people who haven't paid their bills. 

Then maintenance, repairs, depletion o » o 

To return to canned and fresh fruits and vegetables, remember that 
the farmer received 35- percent of the consumer's dollar spent for fresh 
fruits and vegetables in 1939 <. Of the dollar spent for canned fruits 
and vegetables, he received only 13 percent o 

That seems a pretty small share, on the face of ito But in addition 
to furnishing guidance and financial assistance to farmers in the plant- 
ing and growing of their produce, canners or packers do much of the. ac- 
tual harvesting, picking, grading, and handling o So actually a very 
sizable part of the labor cost ordinarily borne by farmers is borne by 
packers or canners instead. The farmer's share of the retail price 
merely appears smaller. 

It would be easy for the uniformed to misunderstand the fact that 
the canners' and packers' share is a gross margin for manufacturing, a 
share which has nothing to do with net profits. The size of this share 
means only that the manufacturing of canned goods is an expensive pro- 
cess » But the fact that housewives continue to demand canned goods 



November 1947 



9 



indicates that they are willing to pay for the added convenience of re- 
ceiving fruits and vegetables in canso The manufacturer's share covers 
the cost of cans, labels, cartons, boxes, and crates » It pays the wages 
not only of the processors' employees, but also of the people who work 
in tin mines, forests, sawmills, and can factories, and of the carriers 
#10 haul these products to the processors o And „ o = it includes net 
profits o 

That gets us to the nub of the matter. How much in net profit do 
these middlemen, the owners in the food marketing business, make for 
themselves by being middlemen? 

What is net profit? You figure it for middlemen the same way you 
figure it for any other class of businessman — farmers included o Take 
the price a middleman gets from the consumer o Then subtract all the 
costs. 1/Vhat's left is net profit. 

In November 1946, the Bureau of Agricultural Economics released a 
study, based on the year 1939, that showed how much of the consumer's 
dollar spent for farm food products went to marketing agencies as net 
profits. 

This slice was 5.4 cents. 

It is thus apparent that if all the net profits of all the various 
marketing agencies had been erased, there would still have remained a 
marketing spread of more than half of the consumer's dollar. If the 
spread between producer and consumer was to be reduced to any consider- 
able extent, obviously it was going to take much more than a re'duction 
in profit items alone. 

How to cut down the cost of food distribution is outside the scope 
of this article, as is the question of whether this cost is too high. 
The data on hand so far indicate that marketing costs are high, but also 
that the size of the marketing job is tremendous c They indicate that 
there is waste in food distribution, a waste which should be cut down 
o . . just as there is waste in food production, which also should be 
cut down. 

The truth is that there is no magic, overnight, sensational method 
for shrinking the spread between the farmer and the consumer. What is 
required is an energetic, unending battle to improve methods and to re- 
duce unnecessary costs in both food marketing and food production — at 
every step of the way. 



DON'T FORGET YOUR NAME 

T/Vhen ordering copies of addresses, statements, and publications 
(listed in this issue of Marketing Activities on pages 18 and 19), be 
sure to supply your name and address. This is sometimes overlooked. 



10 



Marketing Activities 



Meyer, Newell Report R&MA Progress 



Work and progress to date under the Research and Marketing Act of 
1946 were discussed at the twenty-fifth annual Agricultural Outlook Con- 
ference in Vifashington early in November by Eo Ac Meyer, administrator of 
the act, and S. Ro Newell, PMA's acting assistant administrator; for mar- 
keting o 

Administration of the act, Meyer said, takes into consideration 
four objectives that back up a long-range program of full production » 
The first and most important objective is to build up the American diet. 
It has been a revelation during the last few years, Meyer said, to see 
T/i/hat the American people can eat if they have the buying power and the 
requisite nutrition education c 

The second objective is to improve the American standard of living 
in general—including better health, better living, better shelter, and 
better food and clothing o 

The third objective is to find more ways of diverting agricultural 
commodities to nonfood useso 

The fourth objective is to reduce the costs of getting farm produce 
from the producer to the consumer through studies in marketing effi- 
ciency. 

After explaining the committee organization and how the program had 
operated with borrowed personnel until last July 31, Meyer told how the 
9 million dollars that was appropriated on that date was divided. 

Under title I, section 9 of the act, 2 l/2 million dollars goes to 
the States 5 3 million dollars under section 10a goes for utilization 
work (projects totaling 2 l/A. million dollars are already approved); 
11/2 million dollars iinder section 10b goes for cooperative research 
with State experiment stations (34 projects and 1,3 millions approved). 
Under title II, 2 million dollars goes for marketing and distribution 
research ( 5O projects and 1„5 million dollars approved at the time of 
Meyer' s talk) . 

Allocation of funds for the current fiscal year was in the "final 
stage of its first go=around," Meyer said. In elaboration of this state= 
ment he explained that as projects are approved, the funds are earmarked 
to the specific agencies — often several agencies, as in the case, for 
example, of a project covering consumer preferences o Then the agencies 
come back to him with specific proposals for conducting the project. 
If for some reason the agencies cannot undertake specified projects, or 
if there is not enough time left in the fiscal year to get work under 
way as planned, the funds will become available -for reallocation for al- 
ternative projects o 

Newell reported on a.ctivities of the Production and Marketing Admin- 



November 1947 



11 



istration and the State bureaus of markets under the act,, There are now 
effective nearly 1^00 cooperative agreements dealing with agricultural 
regulatory and marketing services » About 285 of them are between USDA 
and State departments of agriculture o One benefit of regulatory laws 
and activities, he said, is that they tend to bring about uniformity 
among State marketing laws and thus break down trade barriers o 

Predominant among the many projects submitted since last December 
by State departments of agriculture have been requests for expansion of 
existing types of work — of market news work particularly. But the pur- 
pose of the new act, Newell pointed out, was to provide for new types of 
research. Old work should be expanded properly by means of larger ap- 
propriations under legislation already in existence TNhen the Research and 
Marketing Act was passed » 

As an example of the type of work to be performed under the new act, 
Newell discussed a proposed Federal-State project under which marketing 
teams of trained specialists — perhaps two persons to the team — can 
quickly move into an area of spot surplus and determine other markets to 
vi^ich farmers may divert truck shipments. Three States have approved 
the project already, Newell said, and other States are considering it. 



COMMISSIONER SCOTT CALLS FOR SHIPMENT OF 
MIXED CARS OF FRESH FRUITS AND VEGETABLES 

"We should be concerned with distributing fresh fruits and vegeta- 
bles to people all over the country and at all seasons," writes V(f. Kerr 
Scott, Commissioner of the North Carolina State Department of Agricul- 
ture, to Marketing Activities » "The shipment of mixed cars of fresh 
fruits and vegetables into a given area would provide the vitamins neecfed 
in the daily .diet and, if properly advertised, would be supported by the 
housewife who is looking for green salads or something out of season to 
make her meats, potatoes, and beans more tasty o 

"During the war, the Quartermaster Market Centers bought and shipped 
carload lots of fresh fruits and vegetables to small army camps — the car 
sometimes including several varieties o Our handlers and distributors 
ought to be so organized that they can send under refrigeration each week 
one car of mixed fresh fruits and vegetables into every trade area and 
within the reach of every small-town grocer., 

"Such a system would add ripeness and natural freshness to the 
daily diet of most American families, and it would also increase the con- 
sumption of all foods. Surplus foods going for school lunches, and sur- 
plus commodities bought at 'floor prices' might be disposed of to better 
advantage through the use of mixed shipments o But the economy of a sys- 
tem of shipping mixed carloads would be limited by the extra expense 
involved unless there was a general over-all pooling to overcome the 
extra handling charges o" 



12 



Marketing Activities 



Market News and the Radio 



By Arthur Susott 

Frankly, I believe the radio can do a better job than the newspa- 
pers of giving farmers the market news service they needo Hardly a week 
passes that I don't run across some new support for this belief. Radio 
market news has become invaluable to the farmer because of its timeli- 
nesso Here in Georgia, for example, the broiler producer can get today's 
market prices at 12:30j and if he feels it worth his while to sell, he 
can sell that day. The report of those prices in a newspaper would not 
reach him until late that day or the Tollowing morning. It's a revela- 
tion to drive around in the Gainesville area at noontime and note how 
many broiler producers and processors are tuned in on the local market 
news broadcast,, 

This is not to belittle the newspapers <> They are indispensable too. 
The farmer probably can get more information from his newspapers than 
over the radio, and in the papers he can read the market reports at his 
leisure., And he needs to supplement the radio report with news he can 
get from the papers if he wishes^ to keep constantly and fully informed o 

This summer I talked to a Tennessee livestock producer, who listens 
closely to PMA's 1 o'clock livestock market broadcast over a Nashville 
stationo The farmer said, "When I get ready to sell some livestock, I 
herd them up in the morning, have them all ready' to put in the trucko At 
1 o'clock I listen to the Nashville report » If the price is right I 
load up, and in a little more than an hour I'm in Nashville with my 
load." 

In Indiana last summer I noted that my father excused himself at 
12:30 o'clock to turn on his radio o "I've got to get the hog price 
report," he said. My father is no longer a farmer, but the market still 
interests him — the radio report. Twenty years ago when he was still on 
the farm and radio sets were rare, my father relied on the newspapers 
for his hog market priceso I could -cite many examples of farmers who in 
the last 10 years have come to depend on the radio more and more for 
farm market news. Eventually, I believe, the great majority of American 
farmers will depend largely on radio for market news — especially if 
government agencies and the broadcasters continue to improve their radio 
market news work. 

Right now, though, I believe a good part of the radio industry is 
asleep to the real possibilities of radio market news. Even on quite a 
few larger stations it is only a side job with the ifarm program director. 
He's interested in market news, of course, but the fact is that the farm 
program director doesn't do much "programming" on market news. It comes 
to him over the teletype-printer or from local egurces, and he broad- 
casts it generally at a time convenient to the station. If I were the 
owner of a 50,000-watter in a good farming section, I'd hire in addition 
to the farm program director, a broadcaster who knows market news and 
what the farmers want. I'd have him broadcast market news three times a 



November 1947 



13 



dayo The first broadcast — a summary of market news from the day before 
— would go out between 5 and 6 ac m. The second broadcast would be 
about 12:15, and would be a "spot news" broadcast o Then early in the 
evening, around 7 or 8, I'd send out the afternoon market news and a 
resumlo In addition, I would cover the opening of marketing seasons 
and special marketing activities = 

What to emphasize in radio market news is of course a question,, 
But it seems to me that the first thing the farm^^r wants to know is the 
price. He likes more than just straight price information, however o 
He likes to know what the market is doing. Are the receipts heavy? Is 
there a broad and good buyer demand in the face of heavy marketing? 
Vi/hat seems to be influencing the market? The market news broadcaster 
must be able to get across first the vital information the farmer wants 
and then follow through with background, talking to the farmer as if 
only a rail fence separated them. Farmers like comparisons. They like 
to know what happened the day before, with comparisons like: "Two thou- 
sand hogs cajne in today — 500 more than yesterday — but the price for top 
butchers held steady at ^2U a hundred," Quite a number of factors may 
influence a farmer to sell or to hold, and he may get his cue from the 
background information he hears over the radio , 

Too many radio stations have let market news broadcasting ride. 
Too often the report that goes out is a Jumble of statistics, and what 
the farmer learns depends on his patience, his ability to interpret, 
his willingness to listen because the news affects his pocketbook. But 
maybe as time goes on, tnore stations will wake up to what they're miss- 
ing in their handling of market newso 



COLD STORAGE AD\T:S0RY COMMITTEE HOIDS FIRST MEETING 

The Cold Storage Advisory Committee, named recently under the Re- 
search and Marketing Act, met in Washington on December 2 and is prepar- 
ing a detailed report of its recommendations. The report of the 11-man 
committee will include technical advice and suggestions for improvement 
in the preservation of perishable foods by refrigeration. 

Because of the need for basic scientific information in farm com- 
modity refrigeration, the committee recommended for consideration a num- 
ber of fundamental researches into the effects of low temperatures and 
ice formation on perishable foods. Also proposed were important projects 
concerned with the behavior in cold storage of perishable commodities 
such as poultry products, dairy products, and fruits and vegetables. 

Main objective brought out by the discussion was the development of 
scientific facts practical toward the retention of nutritional proper- 
ties of perishable foods, the reduction of waste through more effective 
operation of refrigerated warehouses, and the broadening of warehouse 
services. Also discussed were possible products dealing with air puri- 
fication, modified atmosphere storage, and humidity control, 

lU Marketing Activities 



/ 



ADDITIONAL PROJECTS APPROVED UNDER RESEARCH AND MARKETING ACT 



USDA has recently announced its approval, under the Research and 
Marketing Act, of a number of research projects that PMA will conduct or 
in which it will cooperate. 

Feed study . — Studies of demand, prices, and supplies of feed grains, 
byproduct feeds, and hay will be made under one of the approved pro jects . 
One part of the project will deal with the determination and measurement 
of factors influencing feed prices c Another will include studies of the 
effect of prices and other factors on the production and marketing of 
feeds o A third will involve an analysis of the demand for and utiliza- 
tion of grains for food, feed, and industrial purposes. The project was 
assigned to PMA and the Bureau of Agricultural Economic So Other USDA 
agencies will be consulted o 

Improved fruit and vegetable retail training methods .— The effec= 
tiveness of formal training for retail merchandisers of fresh fruits and 
vegetables will be evaluated in a series of training courses under a 
second new project o The ultimate purpose is to establish a basis for 
encouraging a wider adoption of efficient merchandising practices as a 
means of making available to customers produce of higher quality and at 
the same time benefiting producers and distributors through increased 
volume of sales. To expedite work under the project and to use existing 
facilities, USDA has contracted with the United Fresh Fruit and Vegetable 
Association to conduct instruction courses in certain cities. The 
courses will cover buying methods, record keeping, pricing, proper dis- 
play and care to increase customer appeal and reduce waste, and other 
phases of fresh produce distribution and marketing, PMA's Fruit and 
Vegetable Branch will coordinate and generally supervise the work. 

Two tobacco research projects .— =The aim of one of two new tobacco 
research projects is to provide a practical, scientific basis for es- 
tablishing and applying tobacco standards. Tobacco standards ' are now 
based on differences or degrees of soundness, smoothness, texture, and 
other elements of quality. But determinations of the fine distinctions 
in these elements depend on the judgment and skill of an inspector. 
Under the project, attempts will be made to correlate information on 
elements and degrees of quality with more scientific criteria, and so 
provide a more definite basis for establishing tobacco standards. 

Purpose of the second tobacco project is to analyze and appraise 
methods of marketing tobacco and the adequacy and efficiency of tobacco 
marketing services and facilities. It is hoped to find ways and means 
of overcoming excessive price fluctuations and the present lack of firm 
price differentials between grades, 

PMA will carry out both projects, with assistance on the second 
from the Bureau of Agricultural Economics and on the first from the Bu- 
reau of Plant Industry, Soils, and Agricultural Engineering, the North 
Carolina State College of Agriculture, State agricultural experiment 
stations, and private laboratories. 



November 1947 



15 



MARKETING BRIEFS: 



Cotton o— There will be no cotton marketing quotas and no acreage 
allotments for the 1948 cotton crop, USDA announced in mid-November o 

Dairy Products .- — Between October 24 and November 20, PMA announced 
the following activities concerning milk marketing agreements and orders: 
Scheduled public hearings for presentation of proposals to amend the 
orders of Cleveland (75) ^ Columbus (7A-), Cincinnati (6$), Dayton-Spring- 
field (71), New Orleans (i+2). Quad Cities (Moline, East Moline, and Rock 
Island, Illo, and Davenport, Iowa — i+4), and the Tri-State marketing area 
(in West Virginia, Ohio, and Kentucky — 72) j announced amendment of the 
orders at Chicago (A-l) and Wichita (68); recommended that no amendment 
be issued at Dubuque, Iowa (12); announced that no marketing agreement 
and order would be issued at Sto Joseph, Moo; announced the issuance of 
and order in the Nashville, Tenn., area; announced approval, subject to 
industry acceptance, of a proposed agreement and order at Topeka, Kanso; 
and announced a recommended decision on a proposed amendment to the New 
York order ( 27) » 

Fruits and Vegetables o — Late in November USDA announced purchase by 
CCC of 8,649 tons of dried prunes at prices averaging $192 a tono This 
purchase was in addition to 57,351 tons bought earlierc... USDA has 
adopted, subject to industry approval, amendments to the California- 
Arizona lemon marketing agreement and order programc The amendments 
provide (l) that regulations issued for lemons grown in Arizona and in 
the desert areas of California may differ from those issued for the rest 
of California, and (2) that certain marketing of lemons within Califor- 
hia and Arizona may be regulated „ Previously such regulations applied 
only to lemons shipped in interstate commerce o o <, o The Department has 
also announced amendments to the Florida citrus fruit marketing agreement 
and order program.. They provide that regulations may be issued for the 
Indian River section differing from those issued for the rest of the 
State . 

Grain . — Com loan and purchase rates for the 1947 crop, ranging by 
counties from $1.27 to $1.56 a bushel and averaging $1.37 nationally, 
were announced late in October by USDA. Last year's national average 
loan value was $lol5 a bushel, and the rates by counties varied between 
$1.05 and$lo34ooo. On November 25, USDA announced the purchase of 
2,000,000 pounds, of Southern Pearl rice, U.S. Grade No. 5, unpolished, 
at $9 per hundred pounds, f . o, b. mill, by the Commodity Credit Corpo- 
ration, This was the first lot of rice CCC had bought since USDA re- 
quested weekly offers beginning October 14. 

Peanuts . — A referendum on national marketing quotas for the 1948, 
1949, and 1950 crops of peanuts is scheduled for December 9. Secretary 
of Agriculture Anderson said on December 2 that peanut quotas and acreage 
allotments for the 1948 crop probably will be suspended and not put into 
effect. Such action is being considered, he explained, in the light of 
developments since the quota for the 1948 crop was proclaimed last July 
— developments including a substantial rise in the price of peanut oil 
and meal, and the increased need for food in Europe and else#iere. 



16 



Marketing Activities 



Poultry . — ^USDA on December 1 amended its purchase program for fowl 
as a further aid to industry in carrying out its agreement to save grain 
by the culling of laying flocks. The amendments allow a margin of 11 
cents a pound between the farm price for live fowl and box-packed dressed 
birds, and extend the duration of the purchase program from the original 
closing date of December 31, 1947, to March 31, 1948. Under the original 
program, margins between live and dressed birds were set at 7 l/2 and 8 
cents a pound, depending on the size of the fowlo.oo Proposed amendments 
to Service and Regulatory Announcements NOo 131, Revised, governing the 
inspection and certification of dressed poultry and dressed domestic 
rabbits, were announced in November. The changes apply chiefly to the 
regulations concerning inspection of the products in processing plants 
that operate under Federal inspection o The principal change would clar- 
ify the regulation so as to prevent uninspected edible products from 
being brought into such plants, whether or not they are intended for 
further processing. 

Sugar . — USDA has determined that fair and reasonable prices for 
1947-crop Louisiana and Florida sugarcane, to be paid to growers by 
processors who apply for Sugar Act payments, will be based on the same 
pricing formula as was used for the 1946 cropo The determination was 
made on the basis of USDA investigations and hearings, as required by 
the Sugar Act of 1937. The basic price for standard sugarcane, with 
sugar prices at present levels, will be $lo03 per ton of cane for each 
1 cent per pound of the price of raw sugar o 

Tobacco . — The Secretary of Agriculture has proclaimed national mar- 
keting quotas of 55,700,000 pounds for fire-cured tobacco and of 21,800,- 
000 pounds for dark air-cured tobacco „ As compared with 1947, this is a 
reduction in individual farm allotments of 35 percent for fire-cured 
tobacco and 25 percent for dark air-cured tobacco,ooo USDA has announced 
that the Commodity Credit Corporation will offer to enter into a special 
"loss-protection" contract with tobacco companies that have conditional 
orders for flue-cured tobacco from the French Tobacco Monopoly. Rep- 
resentatives of the monopoly have stated that they wish to acquire ap- 
proximately 3 million pounds of Uo So flue-cured tobacco vrfiich they can- 
not buy now because dollars are lacking. Approximately 1 million pounds 
of this tobacco is available from CCC loan stocks and approximately 2 
million pounds will need to be bought through auction markets.... Loans 
from CCC funds will be made on 1947-crop Puerto Rican cigar filler to- 
bacco (type 46) at 31 o 5 cents a pound, crop average, on the basis of 
normal grades and quality. . . „ The Secretary of Agriculture has pro- 
claimed a 1948 national marketing quota for flue-cured tobacco of 955 
million pounds. This will result in an acreage reduction of about 28 
percent to most individual farmers. 

Wool. — USDA has announced a new schedule of selling prices for shom 
wool owned by CCC. The new schedule, vriiich became effective October 25, 
includes increases over the previous schedule of 1 to 2 cents a pound, 
clean basis, in the two highest classes of fine Fleece, Territory, and 
Texas wools. No changes have been made in average length fine wools or 
half-blood wools, whereas shorter than average fine and half-blood wools 
are reduced 1 to 3 cents a pound. 



November 1947 



17 



ABOUT MARKETING: 



The following addresses, statements, and publications, issued re- 
cently, may be obtained upon request. To order, check on this page the 
publications desired, detach and mail to the Production and Marketing 
Administration, U. So Department of Agriculture, Washington 25, Do Co 
Be sure to supply your name and address ; sometimes this is overlooked. 

Addresses : 

Press release summary of a discussion of the world food crisis and 
American agriculture, by Clinton Po Anderson, Secretary of Agriculture, 
at the twenty-fifth annual agricultural Outlook Conference of the U. So 
Department of Agriculture, at Washington, D. C. November U) 1947. 
3 pp. (Mimeographed) 

Many Hands Make the Burden Light, by Clinton P. Anderson, Secretary 
of Agriculture, before the National Association of Commissioners, Direc- 
tors, and Secretaries of Agriculture, at Biloxi, Miss. November 10, 
1947. 12 ppo (Mimeographed) 

Spreading the Risk of World Recovery, by Clinton P. Anderson, Sec- 
retary of Agriculture, at a meeting sponsored by the Mercantile Section 
of the New York Board of Trade, at New York, No Y. November 20, 1947o 
11 ppc (Mimeographed) 

Observations on the Tobacco Situation, by Charles Eo Gage, director 
of the Tobacco Branch, PMA, before a convention of the Asso'ciated To- 
bacco Manufacturers, at Washington, Do Co November 6, 1947. 8 pp. 
(Mimeographed) 

Food Preservation — a Part of the U. S. Department of Agriculture's 
Distribution Programs, by Marvin M. Sandstrom, assistant director of the 
Food Distribution Programs Branch, PMA, at Baton Rouge, La. November 18, 
1947. 6 ppo (Mimeographed) 

Statements ; 

Statement on the food situation, vdth special reference to amounts 
available for foreign aid, by Secretary of Agriculture Clinton Po Ander- 
son, before the Senate Committee on Appropriations. November 24, 1947. 
20 pp. (Mimeographed) 

(The remainder of the statements here listed were given before the 
Joint Committee on the Economic Report, at the hearing beginning Novem- 
ber 21, 1947c) 

Statement on grain conservation, by Secretary of Agriculture 
Clinton Po Anderson. 5 PP. (Mimeographed) 

Statement on the need for encouraging increased food production in 
other countries, by Secretary of Agriculture Clinton P. Anderson. 5 pp. 
(Mimeographed) 



18 



Marketing Activities 



statement on allocation controls, by Carl C, Farrington, assistant 
administrator, PMA. 9 pp. (Mimeographed) , 

Statement on the extension of export controls, by Fo Marion Rhodes, 
assistant to the administrator, PMA.., 7 PP<> (Mimeographed) 

Statement on the need to extend the authority to allocate trans- 
portation facilities and equipment, by Wo Co Crow, director of the Mar- 
keting Facilities Brahch, PMAo 5 PP<> (Mimeographed) 

Publications ; 

Grain Conservation on Fanns, 1947-48 » (PMA) November 1947. 26 ppo 
( Printed) 

Save Grain by Destroying Rats I (Fact sheet: USDA cooperating with 
Fish and Wildlife Service, Department of the Interior) November 1947* 
4 ppo (Printed) 

Relation and Importance of Certain Fiber Properties of Long Staple 
Cottons to Strength and Appearance of Combed Yarns, and to Percentages 
of Manufacturing Waste. (PMA) July 1947 . 84 ppo (Multilithed) 

Fiber and Spinning Test Results for Some Pure Varieties Grown by 
Selected Cotton Improvement Groups — Crop of 1947. (PMA) November 1947* 
15 pp. (Multilithed) 

Charges for Ginning Cotton, 1941-42 to 1946-47. (PMA) September 
1947. 45 pp. (Multilithed) 

United States Standards for Grades of Canned Green Beans and Canned 
Wax Beans o (PMA) Effective September 27, 1947. 14 pp. (Mimeographed) 

United States Standards for Grades of Canned Dried Beans. (PMA) 
Effective October 24, 1947. 8 pp. (Mimeographed) 

United States Standards for Citrus Fruits. (PMA) Effective Sep- 
tember 30, 1947 o 21 pp. (Mimeographed) 

United States Consumer Standards for Potatoes. (PMA) Effective 
December 8, 1947. 7 PP. (Mimeographed) 

The Farmer's Share of the Consumer's Food Dollar. (Bureau of Agri- 
cultural Economics) Leaflet 123 » Revised October 1946. 8 pp. (Printed) 

Agricultural Outlook Charts— 1948. (BAE) November 1947 . 73 ppo 
(Multilithed) 

Tree Nuts: Acreage, Production, Farm Disposition, Value, and Util- 
ization of Sales— 1909-45. (BAE) October 1947. 25 pp. (Multilithed) 

Citrus Fruits: Production, Farm Disposition, Value, and Utiliza- 
tion of Sales— Crop Seasons 1940-41 to 1946-47. (BAE) October 1947. 
25 pp. (Mimeographed) 

November 1947 19