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Circular No. 799 



Flexibility of Operation in 
Dairy Manufacturing Plants 

By 

JOSEPH M. COWDEN, formerly agricultural economist, 
and 

HARRY C. TRELOGAN, formerly Chief, 
Research and Analysis Division, Dairy Branch, 
Production and Marketing Administration 



UNITED STATES DEPARTMENT Or A RICULTURI 
WASHINGTON, D. C, SEPTEM 5ER 48 



ACKNOWLEDGMENT 



The study on which this circular is based was completed with funds made 
available to the Production and Marketing Administration under the Research 
and Marketing Act of 1946. Most of the data were assembled, in cooperation 
with the Bureau of Agricultural Economics, for use in the administration of 
certain war food orders. Benjamin H. Bennett, Head, Division of Dairy Statis- 
tics of the Bureau of Agricultural Economics, cooperated in many phases of 
the study. 

Miss Gertrude Foelsch reviewed the manuscript and made many constructive 
suggestions. Mrs. Irene Poston and Miss Louise McKinney assisted in the sta- 
tistical work. The authors, Joseph M. Cowden and Dr. Harry C. Trelogan, were 
former members of the staff of the Dairy Branch of the Production and Mar- 
keting Administration, and had charge of administering the war food orders 
under which most of the data used in this study were collected. 



For sale by the Superintendent of Documents, U. S. Government Printing Office 
Washington 25, D. C. - Price 15 cents 



Circular no. 799 



September 1948 • Washington, D.C. 

UNITED STATES DEPARTMENT OF AGRICULTURE 

^✓SAAAAAAA/VNAAAAAA<V>AAAAAAA/SAAAAAAAAA/>AAAAA/V 



Flexibility of Operation in Dairy 
Manufacturing Plants 

By Joseph M. Cowden, formerly agricultural economist, and Harry C. Tselogan, 
formerly Chief, Research and Analysis Division, Dairy Branch, Production and 
M arketing Administration 

Contents 

Page 



Introduction - 1 

Intraplant flexibility 3 

Product combinations in butter plants 17 

Product combinations in cheese plants 21 

Product combinations in milk-drying plants 29 

Product combinations in plants producing condensed and evaporated milk____ 32 

Product combinations in ice cream plants 34 

Summary and conclusions 37 



INTRODUCTION 

HISTORICALLY, the production of manufactured dairy prod- 
ucts in the United States has tended to be carried on in spe- 
cialized plants. Creameries have produced butter, cheese factories 
have made cheese, and ice cream plants have made ice cream and 
other frozen products. 

Considerable flexibility, however, exists in dairy manufacturing- 
operations. There are several ways in which this may be accom- 
plished. First, raw material, such as milk, cream, or skim milk, may 
be diverted within the general marketing area from one specialized 
plant to another plant that specializes in a different product. Sec- 
ond, milk and cream may be diverted from manufactured products 
to fluid use or vice versa. In either of these cases the diversion 
may be made by the supplier of the raw material or by the manu- 
facturer. Both of these methods of diversion have been character- 
istic of the dairy industry for many years. A third method of 
accomplishing flexibility, which has been increasing in importance 
in the last two decades, is the diversion of raw material from one 
manufactured product to another within the individual manufac- 
turing plant. 

This study, based on production records for 1944, is limited to 
an analysis of the last-named method. It is not implied, however, 
that intraplant diversion has been or is likely to be a more im- 



1 



2 CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 

portant factor contributing to the total flexibility of the industry 
than are the other methods. 

Substantial changes in price relationships accompanied by rapid 
shifts in milk utilization between dairy products in recent years 
have led to a growing belief that dairy plant operations should be 
flexible ; that is, each dairy plant should be equipped in such a way 
as to shift the utilization of raw material from one product to 
another in accordance with current and prospective market con- 
ditions. It has been argued that this flexibility growing out of 
diversified plant operations would enable manufacturers to pay 
producers higher prices for milk than is the case with manufac- 
turers who have facilities for producing only one product. 

This argument cannot be accepted unequivocally for several 
reasons. The maintenance of unutilized capacity in the form of 
plant facilities and equipment required to permit flexibility may 
be more costly than efficient use of specialized equipment in a 
smaller plant. In areas where plant competition for milk is keen, 
producers who deliver milk to one-product plants tend to receive 
prices comparable with those received by producers who deliver 
milk to diversified plants. In areas where competition among plants 
is not free, price advantages arising from diversified operations 
would not necessarily be passed on to producers. 

This study does not attempt to appraise the technical or eco- 
nomic feasibility of diversified production in manufacturing plants. 
Its primary purpose is to describe the degree of flexibility of 
operation within the dairy plants of the country as they were 
operated in 1944 and to establish a base from which trends in 
intraplant flexibility may be measured in the future. Available 
data relative to the physical equipment of existing plants are not 
sufficiently detailed to permit a reliable estimate of their potential 
flexibility. Accordingly, flexibility is estimated in terms of the num- 
ber and quantities of different products produced in each plant. 
As 1944 was a year of price controls and set-aside orders, the in- 
herent flexibility of the industry at that time may be understated. 

All plants were first classified according to the actual product 
combinations. These product combinations were then reclassified 
according to varying degrees of flexibility, as follows: 

1. One-product plants. — Plants manufacturing only one product. 

2. Joint-product plants. — Plants manufacturing two or more products, none of 

which are competitive with each other for raw material. 

Example: Butter and concentrated buttermilk; butter and nonfat dry 
milk solids; or ice cream and cottage cheese. 

3. Partially diversified plants. — Plants manufacturing products that are com- 

petitive for use of either the fat or the nonfat solids in milk but not for 
both. 

Example: Butter and ice cream or cottage cheese and condensed skim 
milk. 

4. Generally diversified plants. — Plants that make alternative uses of both the 

fat and nonfat solids in the production of manufactured dairy products. 
Example: Butter and cheese and nonfat dry milk solids or cheese and 
ice cream and condensed milk. 

If intraplant diversion of raw material were accepted as the 
criterion establishing flexibility of operations, only plants in groups 



OPERATION IN DAIRY MANUFACTURING PLANTS 3 

3 and 4 could be designated as "flexible." A "multiple-product" 
plant is one that produces more than one product. This term, 
therefore, includes joint-product plants as well as partially and 
generally diversified plants. 

A "plant-product unit" is herein defined as one plant producing 
one product exclusively. For example : An exclusively butter plant 
= 1 unit; a butter and cheese plant = 2 units; a butter, cheese, 
and ice cream plant — 3 units. 

This study consists of six sections, the first of which describes 
the degree and type of flexibility in all plants; the sections that 
follow deal with plants producing a specific dairy product. 

INTRAPLANT FLEXIBILITY 

The existence of intraplant flexibility of production in 1944 is 
indicated in table 1, which shows the number of plants that pro- 
duced butter, cheese, and the several other dairy products, by 
regions and for the United States. A total of 9,739 manufacturers 
supplied information on the quantities of the various dairy prod- 
ucts they manufactured during the year. The aggregate number 
of plant-product units, however, was 14,488, or an average of 1.49 
products per plant. Since the number of plant-product units ex- 
ceeded the number of plants reporting, it is evident that some 
plants produced more than one product. The data in table 1 do 
not reveal whether these multiple-product plants could be classed 
as joint-product or partially or generally diversified plants; and 
therefore the national average, as well as the regional averages, 
are but crude indicators of flexibility of production, as will become 
more apparent as the analysis progresses. 

Regional comparisons reveal that the averages for the Pacific 
Coast and Mountain States were considerably higher than the 
national average of 1.49 products per plant, whereas the South 
Atlantic States, which are relatively low in the total production 
of manufactured dairy products, had an average of only 1.30. The 
remaining regions differed less than 0.10 unit from the national 
average. 

When the data were broken down by States, as in table 2, 
homogeneity was less evident, particularly in some regions. For 
instance, the State averages for the New England group ranged 
from 1.00 for Rhode Island to 2.06 for Vermont. Variation in State 
averages was also found in the East and West North Central 
regions where almost two-thirds of the total plants were located. 
The averages for all States in the two far western regions, where 
the greatest flexibility was indicated, however, were well above 
the United States average of 1.49 products per plant; and all the 
South Atlantic States — with the exception of Delaware and West 
Virginia — were well below the national average. 

Although the State and regional averages, shown in table 2, 
throw some light on the relative extent of intraplant diversifica- 
tion, they do not indicate the proportion of plants actually en- 
gaged in diverting the use of whole milk, cream, and skim milk 



CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 



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from one product to another. Neither do they distinguish between 
one-product, joint-product, or diversified plants. 

In table 3, the 9,739 plants reporting are classified according to 
varying degrees of flexibility. In this table, however, all products 

Table 2. — Average number of products produced per plant in dairy manu- 
facturing plants, by regions and States, 1944 



Region and State 



Dairy 
manufacturing 
plants 



Plant-product 
units 



Average 
products 
per plant 



New England: 

Maine 

New Hampshire. 

Vermont 

Massachusetts _ _ 

Rhode Island 

Connecticut 



Total 



Middle Atlantic: 

New York 

Xew Jersey, _. 
Pennsylvania . 

Total.. 



East North Central: 

Ohio 

Indiana 

Illinois 

Michigan 

Wisconsin 



Total. 



West North Central: 

Minnesota 

Iowa 

Missouri 

North Dakota 

South Dakota 

Nebraska 

Kansas 



Total. 



South Atlantic: . 

Delaware 

Maryland 

Virginia 

West Virginia 

North Carolina 

South Carolina 

Georgia 

Florida 

District of Columbia 

Total 



Number 
17 
10 
50 
85 
17 
33 



212 



675 
58 
433 



1,166 



473 
271 
494 
518 
2,163 



3,919 



Number 
21 
13 
103 
97 
17 
53 



304 



1.022 
68 
681 



1,771 



849 
471 
713 
806 
2,879 



5,718 



Number 
1 .24 
1.30 
2.06 
1.14 
1 .00 
1.61 



908 


1,230 


1.35 


594 


799 


1.35 


196 


347 


1.77 


111 


183 


1.65 


130 


169 


1.30 


152 


260 


1.71 


187 


312 


1.67 


2,^78 


3,300 


1.45 


3 


5 


1.67 


50 


63 


1.26 


104 


141 


1 .36 


47 


69 


1.47 


62 


79 


1.27 


20 


21 


1.05 


42 


53 


1.26 


38 


45 


1.18 


15 


18 


1.20 


381 


494 


1.30 



6 CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 



Table 2. — Average number of products produced per plant in dairy manu- 
facturing plants, by regions and States, 1944 — Continued 



Region and State 



Dairy 
manufacturing 
plants 



Plant-product 
units 



South Central : 

Kentucky 

Tennessee 

Alabama 

Mississippi 

Arkansas 

Louisiana 

Oklahoma 

Texas 

Total 

Mountain: 

Montana 

Idaho 

Wyoming 

Colorado 

New Mexico 

Arizona 

Utah 

Nevada 

Total 

Pacific: 

Washington 

Oregon 

California 

Total 

United States total 



Number 
84 
124 
52 
58 
36 
27 
113 
237 



731 



101 
82 
42 

132 
19' 
19 
72 
10 



477 



143 
143 
289 



575 



9,739 



Number 
148 
156 
66 
82 
44 
39 
206 
369 



1,110 



166 
143 

69 
220 

32 

33 
115 

18 



796 



297 
239 
459 



995 



14,488 



and combinations of products were taken into consideration re- 
gardless of the absolute quantity or relative proportion of the 
various products that made up the total production of the plant. 
For example, two plants — one of which produced 100,000 pounds 
of butter and 100,000 pounds of cheese, and the other which pro- 
duced 100,000 pounds of butter and 1,000 pounds of cheese — were 
both classified as butter and cheese plants. On the basis of this 
unadjusted classification, table 3 shows that 7,000 or nearly 72 
percent of the total number of plants operating produced only 
one manufactured product in 1944. An additional 941 plants pro- 
duced only joint products. Inasmuch as the latter group did not 
divert raw material from one competitive product to another it 
was not regarded as flexible, since production of byproducts or of 
purely complementary products was not considered to constitute 
flexibility in the true sense of the word. Thus, on an unadjusted 
basis, 7,941, or 81.5 percent, of the total plants were either one- 
product or joint-product plants and in a sense nonflexible; 14.8 



OPERATION IN DAIRY MANUFACTURING PLANTS 



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10 CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 

percent were partially diversified, and only 3.7 percent were gen- 
erally diversified. 

Comparisons by States and regions show variation both in num- 
bers of plants and in the percentages of plants falling into each 
category. Wisconsin led with 67 generally diversified plants, yet 
the percentage of these flexible plants was relatively low because 
of the large number of single-product cheese plants in the State. 
In Minnesota and Iowa, the percentage of generally diversified 
plants was below average because of the heavy weighting of ex- 
clusively butter plants. The comparative percentages of diversified 
plants, therefore, tend to underemphasize the extent to which 
flexible operations existed in the two North Central regions. 

By using the number and type of products as a rough index it 
has been shown (table 3, cols. 6 and 8) that 1,798 plants in the 
United States had some ability to diversify production but, since 
the data in table 3 do not in any way reflect the quantitative sig- 
nificance of each product in a combination, the question of the 
extent to which production was actually diversified remains to be 
answered. 

Examination of individual plant reports indicates that many of 
the plants classified in table 3 as partially or generally diversified 
were essentially one-product plants which produced additional 
products as sidelines or distinctly secondary products. In many 
cases the second or third product was produced in such minor 
quantities that it was only slightly competitive with the principal 
product for raw material. In some instances this may have been 
owing to the relationship of product prices. The quantity of sec- 
ondary products produced, however, often was limited to the ex- 
pected requirements of a local market. For example, many cream- 
eries producing butter for the wholesale market also made small 
quantities of ice cream or cottage cheese for a limited local retail 
market. An increase in the price of ice cream relative to that of 
butter would not in such cases result in the diversion of much 
milk to ice cream production. 

As a basis for adjusting the data to obtain a better estimate 
of the number and percentage of plants actually operating in a 
flexible manner to a significant degree in 1944, the per plant pro- 
duction of joint and competitive products was expressed as a 
percentage of the principal production in terms of total milk solids. 
Table 4 shows, for certain selected States, the number of joint- 
product plants utilizing relatively small percentages of byproduct 
raw material ; also the number of diversified plants utilizing rela- 
tively small percentages of milk for secondary products. The sam- 
ple reveals that the unadjusted data shown in table 3 and in 
classification I of table 5 tend to exaggerate the importance of 
diversified production as practiced in 1944. 

Adjusted data shown as classification II, table 5, indicate more 
realistically than the data in any of the previous tables the number 
and percentage of plants operating in a flexible manner to a signifi- 
cant degree. Plants were reclassified on the basis of the principal 
product or the principal combination of products. A plant was 



OPERATION IN DAIRY MANUFACTURING PLANTS 11 



considered a one-principal-product plant unless a second competi- 
tive product utilized 20 percent or more of the raw material in 
terms of total milk solids or unless a joint product was produced 
that used at least 20 percent of the residue from the production of 
the primary product. This division is, of necessity, arbitrary. Some- 
what different results would be obtained were the line drawn 
at a different level. Any reclassification, however, would result in 
a deflation of the number of flexible plants as shown in the unad- 
justed classification where all products were considered, regardless 
of quantity produced. 

As is to be expected from the data given in table 4, shifts in 
grouping, due to this reclassification, are rather drastic. Although 
only 7,000 plants are one-product plants (classification I), 8,194 
plants, in classification II, are classified as specializing in one 
product. The increase in the "one-principal-product" plants results 
in decreases in each of the other groups, the decrease being rela- 
tively greatest in the generally diversified group and least in the 
joint-product group. 

A detailed analysis has not been made to account for the differ- 
ence between the two classifications in terms of specific commodity 
combinations, but an inspection of the data by individual plants 
indicates that the difference is largely attributable to the reclassifi- 

Table 4. — Number of joint-product dairy manufacturing plants utilizing 
specified percentages of byproduct raw material and number of 
diversified plants utilizing specified percentages of milk for sec- 
ondary products, in selected States, 1944- 1 





Plants classified as— 




Joint-product plants 


Diversified plants 2 


Selected 






20 percent or 


Less than 80 


States 


20 percent or 


More than 20 


less raw material 


percent of raw 




less byproduct 


percent byprod- 


utilized by 


material uti- 




utilized 


uct utilized 


secondary 


lized by one pri- 








product 


mary product 




Number 


Number 


Number 


Number 


Vermont 


3 


7 


9 


10 


New York 


30 


33 


74 


59 


Pennsylvania. _ 


15 


65 


27 


52 


Virginia. _ _ 


3 


3 


12 


8 


Wisconsin. _ 


33 


63 


127 


101 


Ohio -_ 


25 


61 


72 


49 


Kentucky. _ 


4 


9 


8 


13 


Minnesota 


43 


51 


50 


38 


Iowa _ _ _ 


39 


19 


56 


22 


Missouri. 


15 


14 


17 


35 


Oklahoma 


11 


2 


24 


19 


Texas _ 


18 


7 


34 


37 


Colorado 


6 


11 


26 


12 


Idaho 


3 


3 


19 


10 


California. _ 


6 


30 


31 


24 


Washington 


2 


10 


46 


27 



1 States weie selected because they were the leaoing fotates in a region, either in 
numbers of plants, or in average products per plant (see table 2). 

2 Partially and generally diversified plants. 



12 CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 

cation of butter plants which produced small quantities of ice 
cream or cottage cheese and of cheese plants which produced small 
quantities of whey butter. It is estimated that these three combi- 
nations account for at least 90 percent of the changes. 

Attention is directed to the heavy reduction, from 3.7 percent 
to 1 percent of the total, in the number of plants classified as 
generally diversified. Although production records indicated 360 
plants were equipped to utilize both fat and nonfat solids in alter- 
native products to some extent, only 100 of them produced such 
alternative products in quantities that required more than 20 
percent of the raw material. In considering the partially and 
generally diversified plants, both the unadjusted and adjusted 
diversified classifications indicate greater relative development in 
flexible production in the South Central and Western regions 
than in the remainder of the United States. In actual numbers of 
diversified plants, however, the East and West North Central 
regions were outstanding. 

A comparison of the percentage rank, by regions, between the 
two classifications in table 5 reveals some changes. It is noted that 
in the diversified group the position of the Pacific Coast and South 
Central regions is reversed. This is because of the reclassification 
of a proportionally larger number of butter and ice cream combi- 
nations in the Pacific region. The South Atlantic region ranks 
fourth in the adjusted percentage of plants diversifying produc- 
tion in 1944, as compared with eighth in the unadjusted classifi- 
cation. This change in rank is due largely to the fact that ice cream 
production is more important relative to the production of other 
manufactured dairy products in this region. For the United States 
as a whole, classification II, table 5, indicates that approximately 
84 percent of the 9,739 plants reporting in 1944 were operated 
essentially as one-product plants, an additional 6 percent produced 
only complementary products, and approximately 10 percent were 
operated with a significant degree of flexibility. 

Specific product combinations and the frequency with which 
they occur are also significant. A distribution of the combinations 
that include all products regardless of quantity tends to be mis- 
leading since it over-emphasizes the importance of certain com- 
binations, particularly those in which cottage cheese and, to a 
lesser extent, ice cream are produced in minor quantities. Accord- 
ingly, in table 6, the data are regrouped to show the frequency 
with which the more important product combinations occur in the 
1,545 plants that are classified as multiple-product plants in table 5, 
classification II. Each of the product combinations indicated in the 
column headings contains all the products produced in significant 
quantities. For example, 247 plants produced butter and cheese in 
combination and no significant quantity of any other product. If a 
third product had constituted a substantial part of the business of 
one of these plants, such a plant would have been listed in the 
"All other combinations" column. 

The butter and ice cream combination occurred more frequently 
than any other. It was the leading combination in the southern 



OPERATION IN DAIRY MANUFACTURING PLANTS 



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OPERATION IN DAIRY MANUFACTURING PLANTS 



15 



and western regions and was an important combination in all other 
regions, except New England. Butter and cheese constituted the 
leading combination in the East North Central States and ranked 
second nationally. Butter and nonfat dry milk solids ranked third 
for the country as a whole. The greatest number of plants pro- 
ducing this combination were located in the East and West North 
Central States and on the Pacific Coast. Butter and processed 
buttermilk constituted the outstanding combination in the West 
North Central States, where much separated cream is marketed 
by producers. 

The 7 specific-product combinations given in table 6 account for 
81.3 percent of the 1,545 multiple-product plants. An additional 
6.5 percent are classified as generally diversified. The latter group 
is composed of a wide variety of product combinations, each of 
which meets the requirements of the classification as previously 
defined. Almost half of these plants were located in the East North 
Central region. Second in importance was the West North Central 
region, which was followed by the Middle Atlantic and Pacific 
regions. In these regions, therefore, plant facilities were available 
in greatest numbers for intraplant diversion of milk from one 
product to another in response to price changes. 

The last group of 188 plants, accounting for the remaining 12.2 
percent of the total, is composed of 33 different product combina- 
tions other than those separately given in table 6. The combination 
of nonfat dry milk solids and condensed skim milk is dominant, 
accounting for approximately one-fourth of the group. All other 
combinations are of relatively minor significance. More than one- 
third of the 28 multiple product plants in New England fell in this 
miscellaneous classification. It was also the predominant classifica- 
tion in the Middle Atlantic States. In both of these heavily popu- 
lated areas, production of milk for consumption as fluid milk is the 
leading dairy enterprise. In fluid milk areas, aside from such prod- 
ucts as ice cream and cottage cheese which are usually locally 
made, manufactured products serve mostly as outlets for surplus 
milk and for byproduct skim milk and whey. 

The regional differences in the importance of the several product 
combinations shown in table 6 reflect variations in the dairy 
industry. Population, topography, climate, and sometimes nation- 
ality (cheese makers of Europe settled chiefly in Wisconsin and 
introduced their ails) are among the important factors that 
determine the nature of the dairy enterprise, and the relative 
proportion of total milk produced on farms which is utilized in 
manufactured dairy products, in different sections of the country. 
In 1944, regional differences in the proportion of milk utilized for 
manufactured dairy products were as shown in table 7. The differ- 
ence between the quantity of milk utilized for manufactured dairy 
products and total quantity of milk produced on farms, represented 
amounts of milk utilized on farms for human and animal con- 
sumption, milk and dairy products retailed by farmers, and, most 
important, milk sold wholesale off farms for fluid use in urban 
areas. The data show that the East and West North Central 

808617°— 49— 9 



16 CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 



Table 7. — Regional differences in the relative proportions of total farm pro- 
duction of milk utilized for manufacturing dairy products, 1944 1 







w xioie-miiK 


x roportion oi total 




I otai production 


equivalent 


farm production 


rtegion 


oi milk on farms 


of dairy 


utilized for 






products 


manufacturing 






manufactured 


dairy products 




Jul niton 


If -77- 






-pounds 


pounds 


Percent 


New England 


4,135 


450 


11 


Middle Atlantic 


13,878 


3,500 


25 


East North Central 


33,866 


20,342 


60 


West North Central 


28,653 


18,467 


64 


South Atlantic _ _ _ __ 


7,337 


1 ,020 


14 


South Central 


16,228 


4,335 


27 


Mountain 


4,795 


2,567 


55 


Pacific 


9,100 


4,068 


45 


United Slates 


117,992 


54,749 


46 



1 Computed from records of the Bureau of Agricultural Economics. 



regions lead in total milk production as well as in the percentage 
of milk utilized for manufactured products. It is not surprising, 
therefore, that these regions also lead in numbers of generally 
diversified plants. 

In point of numbers, the 100 generally diversified plants appear 
to be of minor importance, but their volume of output is of dis- 
tinctly greater importance. Data are not adequate to determine the 
amount of milk utilized in these plants, but it is possible to gage 
the importance of their operations by expressing the quantities of 
the several manufactured dairy products made in these plants as 
percentages of the total 1944 output of the respective products. 
This information is summarized in table 8. 



Table 8. — Percentages of total production of specified dairy products in the 
100 generally diversified plants, by regions, 1944 



Product 


Middle 
Atlantic 


East 
North 
Central 


West 
North 
Central 


Pacific 


Other 


U.S. 


Number of plants 


12 


49 


23 


10 


6 


10C 




Percent 


Percent 


Percent 


Percent 


Percent 


Percent 


Butter 


5.1 


9.5 


4.2 


15.5 


1 .5 


5.8 


American cheese 


2.6 


1 .2 


5.5 


5.2 




1.8 


Other cheese 


.1 


3.8 


.05 


.1 


.9 


2.5 


Dry whole milk 


7.6 


26.3 


74.6 


7.8 


14.9 


21.7 


Evaporated milk 


.02 


2.8 


11.2 


29.2 


2.9 


7.1 


Condensed milk, sweetened: 














Skimmed 


13.4 


24.5 


44.9 


12.9 


1.7 


22.0 


Unskimmed _ 


2.0 


12.9 


89.6 


1 .7 


.5 


12.9 


Condensed milk, unsweetened: 














Skimmed _ - _ _ _ 


25.7 


35.1 


54.5 


33.1 


9.0 


32.0 


Unskimmed _ _ 


9.4 


24.9 


16.9 


20.6 


14.1 


17.!) 


Ice cream _ _ _ 


1 .7 


7.9 


6.4 


1 .6 


1 .4 


3.4 


Cottage cheese 


3.7 


19.2 


27.7 


4.7 


9.4 


12.2 


Nonfat dry milk solids: 














Sprav dried . 


10.2 


19.5 


30.7 


11.0 


7.2 


19.0 


Roller dried 


5.3 


16.6 


9.0 


16.6 


.1 


11 .9 



OPERATION IN DAIRY MANUFACTURING PLANTS 17 



Only 1 percent of the plants reporting were classified as gen- 
erally diversified, but the proportion of total output which these 
plants contributed ranged from 1.8 percent for American cheese to 
32 percent for skim unsweetened, condensed milk. Sharp regional 
differences were apparent. Flexible plants in the Pacific States had 
the highest relative production of butter and evaporated milk, 
whereas those located in the West North Central region were out- 
standing in the production of dry whole milk, nonfat dry milk 
solids (spray process), cottage cheese, and most of the condensed 
milk products. It was in the latter region that 21 of the 26 facilities 
for the production of dairy products, financed by the Government 
during the war, were located. The remainder of the Government- 
financed plants were in the East North Central region. 

Although milk production has not increased substantially since 
these data were collected, additional flexible plants have been built. 
Therefore, the significance of flexible operations to the dairy in- 
dustry is probably greater now than it was in 1944. From the data 
at hand it appears that flexible plants were especially important in 
the production of dried and condensed dairy products. Both the 
fat and nonfat' solids in milk were utilized, thus encouraging pro- 
ducers, who have access to these plants, to sell whole milk rather 
than separated cream. 

PRODUCT COMBINATIONS IN BUTTER PLANTS 

The number of dairy manufacturing plants producing butter 
only, or butter in combination with one or more other dairy prod- 
ucts is shown in table 9. The upper half of table 9 indicates the 
number of single- and multiple-product plants, by regions and for 
the country as a whole; the lower half of the table indicates the 
importance of the several combinations within each region when 
expressed as percentages of the total number of plants per region. 
It should be kept in mind that some plants produced butter to- 
gether with more than one other dairy product and, therefore, 
these plants are included under more than one product heading in 
table 9. 

In 1944, a total of 4,015 dairy manufacturing plants in the 
United States reported the production of some creamery butter. 
Of this total, 1,998 plants, or approximately one-half, produced 
butter only. The remaining 2,017 plants produced butter and one 
or more other manufactured dairy products. 

In the important butter-producing area in the West North 
Central States less than one-third of the butter plants produced 
other products. Percentages of multiple-product butter plants in 
all remaining areas were well above the national average, ranging 
from 58 percent in the South Atlantic States to 70 percent in the 
Mountain States. The national average, therefore, is not an ade- 
quate indicator of multiple-product operations within a particular 
region. 

Ice cream and cottage cheese were the products most commonly 
produced in combination with butter. On the average approxi- 



18 

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OPERATION IN DAIRY MANUFACTURING PLANTS 19 



mately 24 percent of the butter plants produced ice cream and 
approximately 19 percent produced cottage cheese. Dry milk 
products, cheese, and condensed products followed in that order. 
On a regional basis, considerable dispersion from the national 
average may be noted for all the product combinations. 

In five of the eight geographic regions ice cream was the leading 
product produced in combination with butter. However, the quan- 
tity of ice cream often was small in comparison with the quantity 
of butter produced. This combination of products was relatively 
most significant in the Mountain region where it was found in 
about 52 percent of the plants. In the West North Central region 
less than 16 percent of the plants manufactured the butter and ice 
cream combination. However, in spite of this low percentage as 
compared with percentages in other regions, this combination 
occurred more frequently than did that of any other combination 
of dairy products produced in these States. 

There were more plants in the West North Central States pro- 
ducing butter and ice cream than in any other region. Butter and 
cottage cheese constituted the leading combination in the heavily 
populated New England, Middle Atlantic, and East North Central 
States where a major dairying activity is the provision of an 
adequate year-round supply of milk and cream for fluid con- 
sumption. 

Butter and dry milk products were produced in 519 plants, of 
which 296 plants (see table 16) produced nonfat dry milk solids 
for human consumption. Most of the remaining plants produced 
dry buttermilk or dry skim milk for animal feed. These plants were 
found in greatest numbers in the East' and West North Central 
regions. 

Although 2,017 plants produced butter and also other manufac- 
tured dairy products, a somewhat clearer picture of the signifi- 
cance of this figure may be obtained by breaking it down according 
to the relative proportion of butter produced. Inspection of the 
individual plant reports indicated that in 494 of the 2,017 plants, 
butter constituted the major part of the output and that other 
products were produced in relatively insignificant quantities. In 
319 plants, butter was produced only in minor quantities and one 
or more other products were dominant in the combinations. Both 
butter and one or more other products were produced in significant 
quantities in the remaining 1,204 plants. 

Even though the 494 plants in which butter was the principal 
product also produced small quantities of products other than 
butter, such quantities were insignificant relative to the quantity 
of butter produced. Accordingly, this group was composed of 
plants that were essentially butter producers. Thus, 2,492 (494 + 
1,998 one-product butter plants), or 62 percent of the total butter 
plants, operated essentially as one-product plants in 1944. An 
additional 30 percent were multiple-product plants with butter an 
important but not always the major product in a combination. The 
remaining 8 percent of the plants produced butter but the output 
was small in relation to their output of other dairy products. 

808617°— 49— i 



20 CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 



From the standpoint of total butter production, multiple-product 
plants were of somewhat greater significance than is indicated by 
their number relative to the number of exclusively butter plants. 
Table 10 shows that approximately 871.5 million pounds, or about 
58.5 percent, of the total production of creamery butter was pro- 
duced in multiple-product plants in 1944. Average 1944 production 
per plant in multiple-product plants was 432 thousand pounds as 
compared with 309 thousand pounds in plants which produced 
butter exclusively. The average for all plants was 371 thousand 
pounds. 

In table 10, the 4,015 plants producing butter only or butter in 
combination with one or more other dairy products are classified 
according to volume of butter produced per plant and type of 
operation. A comparison of the numbers of multiple-product and 
exclusively butter plants in the respective volume classifications 
shows that the former tended to be concentrated in both the lowest 
and highest volume groups whereas the latter were numerically 
strongest in the middle-volume group. Figure 1 illustrates this 




Butter only- 
Butter and other manufactured 
products 



100- 200- 300- 400- 500- 600- 700- 800- 
1S9 299 399 499 599 699 799 699 

PRODUCTION OF BUTTER PER PLANT ( 1.000 POUNDS ) 



900- 1.000- 2,000 AND 
999 1,999 OVER 



IENT OF AGRICULTURE 



NEG 16650 PRODUCTION AND MARKETING ADA 



Figure 1. — Number of butter manufacturing plants, classified according to 
volume per plant, in 1944. 



fact graphically. It may be noted that multiple-product plants 
comprised more than one-half of the total in each of the classifi- 
cations below 100 thousand pounds and above 600 thousand pounds, 
whereas exclusively butter plants predominate in the 100 thousand 
to 600 thousand-pound range. 

On a relative basis over 33 percent of the multiple-product plants 
produced less than 50 thousand pounds of butter each, whereas 



OPERATION IN DAIRY MANUFACTURING PLANTS 



21 



only 18.7 percent of the exclusively butter plants fell in this class. 
At the other end of the range, 13 percent of the multiple-product 
plants produced 1 million pounds or more of butter each, as com- 
pared with less than 5 percent of the exclusively butter plants. 1 

The point does not apply directly to the subject of this study but 
it may be appropriate to point out, in table 10, the importance of 
size of plant in relation to the proportion of total butter produced. 
Even though only 9 percent of the total plants produced 1 million 
pounds or more of butter each in 1944, this group produced more 
than 48 percent of the total creamery butter output. 

By contrast, 38 percent of all the plants produced less than 100 
thousand pounds of butter each and accounted for only 3.5 percent 
of the total production. Since a higher percentage of multiple- 
product plants fell in the class of 1 million pounds and over, these 
plants were more important in terms of total butter production 
than were exclusively butter plants. More than 61 percent of the 
butter produced by multiple-product plants was made by this 
group, as compared with 30 percent in exclusively butter plants. In 
each case, only 3.5 percent of the total production was made in 
plants producing less than 100 thousand pounds each. 

Although not set forth separately in table 9, the several product 
headings indicate that multiple operations in plants producing 
butter included both joint-product and flexible operations. Region- 
ally, there was considerable difference in the relative importance 
of the indicated product combinations, but there was evidence of 
ability to diversify in all regions. 

PRODUCT COMBINATIONS IN CHEESE PLANTS 

The number and percentage of factories engaged in the manu- 
facture of various kinds of cheese is shown in table 11. The table 
shows that 2,682 plants in the United States made some cheese in 
1944. Although production of cheese is most frequently a one- 
product operation, a number of plants made more than one variety 
or combined production of one or more varieties with production 
of other dairy products. 

On a volume basis, whole-milk American cheese has been the 
most important variety produced in the United States. In 1944, 
approximately 55 billion pounds of whole milk were utilized in the 
manufacture of dairy products of which 8 billion pounds went into 
production of American cheese and 2 billion pounds into production 
of other varieties. This is reflected in table 11 which shows that 
American whole-milk cheese was produced in 2,119 plants, or 79 

1 The contrast between the smaller volume classes would probably be 
greater if this analysis included combinations of manufactured products' and 
the assembly and distribution of fluid milk and cream. Although data relative 
to fluid distribution by manufacturing plants are not available, the firm names 
of many of the plants in which butter is the only manufactured product re- 
ported indicate that they are probably primarily engaged in the assembly or 
distribution of fluid milk. On the basis of an informal inspection of the data 
it appears that combinations of butter manufacturing and fluid distribution 
occur more frequently in the smaller butter plants than in the larger plants. 



CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 



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OPERATION IN DAIRY MANUFACTURING PLANTS 23 



percent of the total number, either as a one-product operation or 
in combination with the production of other varieties and/or other 
dairy products. Under similar conditions, other varieties (exclud- 
ing cottage, pot, and baker's cheese) were produced in 846 plants. 
American and one or more other varieties were produced by 283 
plants or approximately 10.5 percent of the total. 

Swiss, Brick, and Italian were the leading varieties other than 
American cheese. They were produced, respectively, in about 9, 8, 
and 6 percent of the plants reporting. Approximately three-fourths 
of all plants producing cheese other than American whole-milk 
cheese made one or more of these three varieties. Plants producing 
Swiss, Munster, Brick, and Blue Mold cheese were heavily concen- 
trated in the East North Central States. In only a few instances 
did other regions rival the East North Central States in the pro- 
duction of the remaining varieties specified in table 11. 

Data relative to the combination of manufactured dairy products 
in plants producing American whole-milk cheese are shown sepa- 
rately in table 12. Of these plants, 671, or about 32 percent, pro- 
duced other dairy products, including other varieties of cheese. 
Rather wide differences may be noted in percentages from region 
to region. As in the butter plants, the lowest proportion of multiple- 
product plants was in the area of heaviest production, which, in 
the case of cheese, was the East North Central States. Here were 
located almost 71 percent of the American cheese plants in oper- 
ation in the United States, but only 23 percent of them produced 
any other variety of cheese or any other dairy product. In the 
multiple-product plants, butter and ' 'other cheese'' were most often 
produced in plants that made American cheese. 

The highest proportion of multiple-product plants (excluding the 
New England States, where the total number of plants was too 
small for comparative purposes) was 72 percent in the Middle 
Atlantic States. In this region the most important combination 
was American and other cheese. By reference to table 11 it may 
be noted that more plants in the Middle Atlantic States produced 
Italian cheese than any other variety excepting American whole- 
milk cheese. 

Butter and American cheese constituted the most common com- 
bination, being found in about 18 percent of the American cheese 
plants. Production of American cheese and other varieties of cheese 
was combined in 283 or about 13 percent of the total plants. In 198 
of these 283 plants, however, no product other than cheese (Amer- 
ican and one or more other varieties) was produced. If all varieties 
of cheese were considered one product, the net number of multiple- 
product plants would be reduced to 473, or about 22 percent of the 
total. 

Data relative to the combination of manufactured dairy products 
in plants producing miscellaneous varieties of cheese are shown in 
table 13. Other manufactured products were produced by approxi- 
mately 43 percent of the plants which made non-American varieties 
of cheese. This proportion is reduced to 19.5 percent, however, 
when all kinds of cheese are considered as one product. One-third 



CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 



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27 



of the plants producing- the miscellaneous varieties of cheese also 
produced American cheese. Combinations with other manufactured 
products were relatively uncommon with butter and cottage cheese 
at about 11 and 10 percent, respectively, occurring more frequently 
than any other multiple operation. 

It has been shown that 50 percent of the plants reporting butter 
production were multiple-product plants. This compares with about 
32 percent for plants producing American cheese and about 43 
percent for plants producing non-American or miscellaneous vari- 
eties of cheese. The contrast in the relative significance of multiple- 
product operations between butter and American cheese plants 
becomes somewhat more apparent when the quantities of butter 
and cheese produced by multiple-product plants are compared with 
the quantities produced by the one-product plants. American 
cheese production, classified according to volume per plant and 
subdivided by , type of operation, is summarized in table 14. A 
similar summary of creamery butter production, classified in the 
same manner, was shown in table 10. Only 36 percent of the total 
1944 output of approximately 800 million pounds of American 
cheese was made in plants that produced other manufactured 
dairy products. This is practically the reverse of the situation that 
existed in the butter plants where about 58 percent of the butter 
output of almost 1,500 million pounds was produced in plants manu- 
facturing other products. 

The smaller proportion of total production of American cheese 
produced in multiple-product plants, as compared with butter, was 
owing mainly, but not entirely, to the smaller proportion of cheese 
plants that produced other products. An additional factor was that, 
in 1944, multiple-product American cheese plants produced 428 
thousand pounds per plant, as compared with an average of 357 
thousand pounds in exclusively cheese plants. The average volume 
of cheese per multiple-product plant was thus only 20 percent 
greater than the average for the exclusively cheese plants, whereas 
production per multiple-product butter plant averaged 40 percent 
more than in exclusively butter plants. 

A comparison of the distribution of American cheese plants 
(table 14) with the distribution of butter plants (table 10) reveals 
both similarities and differences. The same tendency for the 
multiple-product American cheese plants to be concentrated in the 
lowest and highest volume classes to a greater extent than straight 
cheese plants is evident. The contrast in the lowest volume class 
between the two types of operations is much greater, however, in 
the cheese plants than in the butter plants. Nearly 30 percent of 
the multiple-product cheese plants produced less than 100,000 
pounds each, as compared with about 8 percent of the straight 
cheese plants. Comparable proportions in the butter plants were 
about 46 percent and 29 percent, respectively. Approximately 11.4 
| percent of the multiple-product plants produced 1 million pounds 
! or more of American cheese each, as compared with about 5.4 
percent in the straight cheese plants. The difference in the larger 



CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 



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OPERATION IN DAIRY MANUFACTURING PLANTS 29 

volume classes is slightly less than in the case of butter, where the 
relative proportions were about 13 percent and 5 percent. 

In 1944 medium-sized plants were of relatively greater signifi- 
cance in the production of American cheese than they were in the 
production of creamery butter. About 2 percent of the total Amer- 
ican cheese output in 1944 was made in plants producing less than 
100,000 pounds each, and about 30 percent was produced in plants 
making 1 million pounds or more. Thus, approximately 68 percent 
of the total American cheese output was produced in plants in the 
100,000-pound to 999,000-pound range. Only about 48 percent of 
the total creamery butter output was produced in plants with a 
comparable range in volume. 

Tables 12 and 13 indicate that intraplant diversion of milk in 
plants producing American and miscellaneous varieties of cheese 
varied significantly by regions. In the East North Central region, 
the American cheese plant predominated, with diversion between 
varieties of cheese and between butter and cheese being most com- 
mon in the relatively few multiple-product plants. In the Middle 
Atlantic region, both American and other varieties of cheese were 
produced in approximately one-half, cottage cheese in about one- 
third, and butter in about one-fifth of the plants which produced 
some American cheese. On the Pacific Coast, some butter was 
produced in more than one-third of the plants producing American 
cheese. On the average, relatively few cheese plants produced ice 
cream, dry milk products, or condensed products. 

PRODUCT COMBINATIONS IN MILK-DRYING PLANTS 

Without doubt the greatest expansion of dairy plant facilities 
necessary to the war effort occurred in the milk-drying industry. 
The war food production program not only encouraged a sharp 
increase in the total volume of milk produced on farms, but, 
through price incentives, encouraged many farmers who had been 
selling separated cream to deliver whole milk instead. The purpose 
was to make available for human consumption the nonfat solids 
in skim milk, which previously had been retained on farms for 
animal feeding or had been wasted. The handling and processing 
of this increased volume of milk necessitated great expansion in 
milk-drying facilities. By 1944, most of the new drying facilities 
were in operation. Several dried products may be manufactured 
in a milk-drying plant. Comparison of the number of plants and 
amounts produced in 1940 and in 1944, shown in table 15, indicates 
the products having the greatest expansion in production. 

With greatly augmented and improved plant facilities, six times 
as much dry whole milk and almost twice as much nonfat dry- 
milk solids were produced in 1944 as in 1940. During the same 
period the production of malted-milk powder also was doubled, 
although the number of plants remained almost the same. With 
the exception of dry whey, the animal products lost ground but 
facilities for drying whey were expanded so that byproduct whey 
previously wasted by cheese factories could be salvaged for needed 



30 CIRCULAK 799, U. S. DEPARTMENT OF AGRICULTURE 



Table 15. — Number of manufacturing plants producing specified dried milk 
products and total volumes produced, 1944 as compared with 
1940 





Plants drying specified 
products 


Total production 


Product 






1944 as 






1944 as 




1940 


1944 


percent 


1940 


1944 


percent 








of 1940 






of 1940 




Num her 


Number 


Percent 


1,000 lb. 


1,000 lb. 


Percent 


Dry whole milk 


51 


1151 


225.5 


29,409 


188,446! 


640.8 


Nonfat dry milk solids 


273 


498 


182.4 


321,843 


582,912 


181.1 


Dry skim (animal feed) _ _ 


451 


296 


65.6 


159,962 


16,407 


10.3 


Dry buttermilk 


324 


334 


103.1 


67,931 


56,683 


83.4 


Dry whey 


37 


47 


127.0 


90,996 


141,553 


155.6 


Malted milk powder _ 


10 


9 


90.0 


20,021 


40,549 


202.5 



1 Includes part skim milk dry milk solids. 

Computed from records of Bureau of Agricultural Economics. 



animal feed. The sharply increased production of dry-milk prod- 
ucts, especially for human consumption, was accomplished by a 
total of 758 manufacturing plants, which produced one or more 
of these products in 1944. 

Since 498 plants, or approximately two-thirds of the total, pro- 
duced nonfat dry milk solids, the analysis of plant flexibility was 
centered largely around this product. As shown in table 16 about 
70 percent of the 498 plants which manufactured nonfat dry milk 
solids for human consumption used the roller process exclusively, 
about 23 percent used the spray process, and 7 percent used both 
processes. Wide differences, however, existed among regions. 

The drying of nonfat solids is ordinarily carried on in plants 
engaged in the production of other manufactured products, that 
is, in multiple-product plants. Only 21, or about 4 percent of the 
498, plants made nonfat dry milk solids exclusively. However, 62 
plants produced only other dried products in addition to nonfat 
dry milk solids. Thus 83 plants, or only about 17 percent of the 
498 plants, may be classified as exclusively drying plants as con- 
trasted with about 50 and 68 percent, respectively, classified as 
exclusively butter and American cheese plants. The remaining 83 
percent of the milk-drying plants were either joint or diversified 
plants that combined the production of dried products with the 
production of one or more other manufactured dairy products, 
such as butter, cheese, or condensed milk. 

As shown in the last column of table 16, about 69 percent of 
the total plants drying nonfat milk solids for human consump- 
tion also produced one or more other dried milk products. Dried 
buttermilk and dried skim milk (animal feed) were most com- 
monly produced in combination with nonfat dry milk solids. The 
number of plants producing dried skim milk for feed was relatively 
high, but in nearly all cases the production was small, being com- 
posed largely of odd lots that failed to meet standards for nonfat 
dry milk solids. Production of dried whole milk and dried part 



OPERATION IN DAIRY MANUFACTURING 



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32 CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 

skim milk were combined with production of nonfat dry milk 
solids in approximately 18 percent of the plants. Dry whey was 
a second dried product in about 2 percent of the plants. 

Excluding dried milk products, butter was the product most 
frequently produced in combination with nonfat dry milk solids. 
The prevalence of this joint-product operation is not surprising, 
since skim milk is the most important manufacturing byproduct 
of butter production when whole milk is delivered by producers. 
For the country as a whole, butter was produced in about 59 per- 
cent of the plants producing nonfat dry milk solids. The combina- 
tion predominated in all regions except the Atlantic seaboard 
States where production of condensed products was most often 
combined with production of nonfat dry milk solids. On the aver- 
age condensed or concentrated products, mainly skim milk or but- 
termilk, were produced in about 36 percent of the plants whereas 
combinations with ice cream, cheese, and evaporated milk occurred 
less frequently 

Of the 758 milk-drying plants in operation in 1944, only 260 
did not dry nonfat milk solids for human consumption. Of this 
group about 82 percent dried buttermilk or skim milk for animal 
feed, about 12 percent dried whey, and about 6 percent dried 
whole milk and malted milk. One or more dairy products, other 
than dried products, were produced in about 90 percent of this 
group of 260 plants, the remaining 10 percent being exclusively 
drying operations. In all types of milk-drying plants, therefore, 
multiple-product operations were characteristic of the industry. 

PRODUCT COMBINATIONS IN PLANTS PRODUCING 
CONDENSED AND EVAPORATED MILK 

Condensed milk for human consumption was produced in 507 
plants in 1944. In approximately 87 percent of these plants skimmed 
milk was condensed and in about 38 percent unskimmed milk was 
condensed. Both products were produced by about 25 percent of 
the plants. 

Production of condensed milk is most often carried on in mul- 
tiple-product plants. Almost 86 percent of the plants that con- 
densed milk in 1944 produced one or more other dairy products. 
The remaining 14 percent were exclusively condensed-milk plants. 
Plants that condense whole milk only are naturally less likely to 
produce other products than are plants that condense skimmed 
milk. Approximately one-fourth of the former group were plants 
producing one product, as compared with one-eighth of the latter 
group. 

Products most frequently produced in combination with con- 
densed milk were butter, ice cream, dried milk products, and cot- 
tage cheese, as shown in table 17. In many cases the quantities 
of condensed milk produced in combination with these products 
were of minor significance. This was particularly true in the case 
of ice cream plants and nonfat-dry-milk-solids plants that con- 
densed some skimmed milk as a means of utilizing seasonal sur- 



OPERATION IN DAIRY MANUFACTURING PLANTS 33 



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34 CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 



pluses. More than 35 percent of the plants that produced some 
condensed milk produced less than 250 thousand pounds each in 
1944. This large group of very low volume producers of condensed 
milk was composed almost entirely of plants that, were essentially 
producers of ice cream and nonfat dry milk solids. 

Production of evaporated milk is, to a large extent, a specialized 
operation as contrasted with condensed milk, which is most often 
produced in combination with other dairy products. Table 18 
shows that about 63 percent of the 144 plants that produced 
evaporated milk in 1944 made no other dairy product. Further- 
more, evaporated milk was the dominant product in most of the 
54 evaporated milk plants which produced secondary products, 
principally condensed milk and to a lesser extent butter and dried 
milk products. Approximately 80 percent of the evaporated milk 
plants operated either as one-product plants or produced only in- 
significant quantities of dairy products other than evaporated milk 
in 1944. 

Sharp regional differences both in number of plants and in rela- 
tive number of specialized plants are indicated in table 18. One- 
half of the evaporated milk plants were located in the East North 
Central region. The Pacific region was next in importance but New 
England had no plants producing evaporated milk in 1944. The 
percentage of exclusively evaporated milk plants varied from 58 
percent in the East and West North Central States, the regions 
of heavy milk production, to 100 percent in the South Atlantic 
States, where milk production is relatively low. 

Condensed and evaporated milk plants differed not only in rela- 
tive proportions of specialized plants but also in average volume 
of productions per plant. Whereas 85 percent of the plants that 
produced condensed milk made less than 5 million pounds each, 
only 9 out of 144 evaporated milk plants, or less than 7 percent, 
produced as little as 5 million pounds each in 1944. The average 
production of evaporated milk per plant was in excess of 23.5 mil- 
lion pounds, as compared with an average of 2.1 million pounds 
for condensed milk. 

PRODUCT COMBINATIONS IN ICE CREAM PLANTS 

Table 19 indicates that ice cream for wholesale and retail dis- 
tribution was produced in 3,536 plants in 1944. Of these plants, 
about 61 percent made ice cream only, while the remaining 39 
percent made varying amounts of other manufactured dairy prod- 
ucts in addition to ice cream. Considerable regional variation in 
« relative proportions of one-product plants is apparent, ranging 
from a high of about 80 percent in regions bordering on the At- 
lantic seaboard to a low of 45 to 50 percent in the West North 
Central and Western States. 

Of the 1,363 plants producing i ce cream as well as other dairy 
products, 379 produced only very minor quantities of other prod- 
ucts. Thus, 379 plants plus the 2,. [73 one-product plants, or 2,552 
plants, constituting about 72 percei it of the total, produced ice cream 



OPERATION IN DAIRY MANUFACTURING PLANTS 



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OPERATION IN DAIRY MANUFACTURING PLANTS 37 

only or ice cream and insignificant quantities of other dairy prod- 
ucts. Ice cream was an important, but not necessarily the major, 
product in 527 or about 15 percent of the plants. In the remaining 
457 multiple-product plants some ice cream was produced but such 
production was secondary to the production of other dairy products. 

Butter and cottage cheese were the products most commonly 
produced in combination with ice cream, as shown in table 19. 
Butter and ice cream constituted the most important combination 
in all regions except the East North Central, Middle Atlantic, and 
New England States. In these eastern regions the cottage cheese 
and ice cream combination was most often found in multiple-prod- 
uct ice cream plants. 

SUMMARY AND CONCLUSIONS 

About 7 out of 10 manufactured-dairy-products plants produced 
only 1 dairy product in 1944. Multiple-product operations were 
important but one-product specialization was clearly dominant. An 
average of approximately 1.5 products per plant was produced by 
the 9,739 plants reporting. The average ranged from a low of 1.3 
products per plant in the South Atlantic region to 1.73 in the 
Pacific Coast region. The data, therefore, indicate opportunities 
for both interplant and intraplant competition for milk. 

Approximately 72 percent of the total manufacturing plants in 
operation produced only one product in 1944. An additional 9.5 
percent produced only joint or complementary products. The re- 
maining 18.5 percent produced two or more products which were 
at least partially competitive with each other for milk or butter- 
fat. A significant number of the multiple-product plants, however, 
made secondary products merely to provide for small local needs. 

Secondary products produced by plants in this group utilized 
such a small proportion of the total milk solids handled that the 
quantity used was considered insignificant. When adjustment was 
made for these plants it was found that about 84 percent of the 
total plants were either one-product plants or produced only very 
minor quantities of a second or third product, 6 percent operated 
as joint-product plants, and the remaining 10 percent operated 
with some degree of flexibility. Only 10 percent of the latter group, 
or 1 percent of the total number of plants in operation, were 
classified as having generally diversified operations in 1944. (See 
classification II, table 5.) 

The butter and ice cream combination occurred more frequently 
than did any other, accounting for about 27 percent of the cases 
in which two or more products each constituted a significant pro- 
portion of a plant's production. It was the most common combina- 
tion in five of the eight geographical regions; it ranked second in 
one region and third in another. Butter and cheese constituted 
the leading combination in the East North Central States and 
ranked second in the national totals. Butter and nonfat dry milk 
solids ranked third and butter and processed buttermilk were a 
close fourth. 



38 CIRCULAK 799, U. S. DEPARTMENT OF AGRICULTURE 

Butter. — Approximately 50 percent of the plants producing 
butter were one-product plants. In the leading butter-producing 
area, the West North Central States, less than one-third of the 
butter plants produced other products. 

Ice cream and cottage cheese were produced in combination with 
butter more frequently than any other products. In many cases, 
however, the production of dairy products other than butter was 
very small in relation to the production of butter. When such 
plants were eliminated from the multiple-product group and added 
to the one-product group, it was found that about 62 percent of 
the plants producing butter, made butter only or butter and very 
small quantities of other dairy products. An additional 30 percent 
operated as multiple-product plants, butter being one of the major 
products. In the remaining 8 percent, production of butter was of 
minor importance in relation to production of other dairy products. 

Multiple-product butter plants averaged 432 thousand pounds 
of butter per plant, as compared with an average of 309 thousand 
pounds in exclusively butter plants. More than 58 percent of the 
total creamery butter produced in 1944 was made in multiple- 
product plants. 

There was a distinct tendency for both the smallest and largest 
butter plants to produce other dairy products as well as butter; 
in the medium-volume class of plants the tendency was to produce 
only butter. More than 33 percent of the multiple-product plants 
produced less than 50 thousand pounds of butter each and 13 per- 
cent of such plants produced 1 million pounds or more in 1944. 
These percentages compare with 19 percent and 5 percent, respec- 
tively, for the one-product plants. 

Although only 9 percent of the plants produced 1 million pounds 
or more of butter in 1944, this group produced more than 48 per- 
cent of the total 1944 production. On the other hand, 38 percent 
of the plants produced less than 100,000 pounds each and produced 
only 3.5 percent of the total butter production. 

Cheese. — Both American and other varieties of cheese were 
made in one-product plants to a greater extent than was creamery 
butter. Approximately 85 percent of the total cheese plants op- 
erated essentially as one-product plants after the adjustment was 
made for plants which made only minor quantities of other prod- 
ucts in 1944. 

Almost one-third of the American cheese plants produced other 
manufactured products. However, when combinations, in which 
other varieties of cheese were the only additional products, were 
classified as one-product plants the proportion was reduced to 22 
percent of the total. The proportion of American cheese plants pro- 
ducing other products, including other varieties of cheese, ranged 
from 23 percent in the East North Central States to 72 percent in 
the Middle Atlantic States. About 18 percent of the American 
cheese plants in the United States also produced butter (including 
whey butter), and 13 percent produced other varieties of cheese. 

Only 36 percent of the 1944 output of American cheese was 
made in joint and diversified product plants, as compared with 



OPERATION IN DAIRY MANUFACTURING PLANTS 39 



more than 58 percent of the creamery butter that was made in 
such plants. These multiple-product plants produced an average 
of 20 percent more cheese per plant than did the straight cheese 
plants. Only 32 percent of the total output of cheese was made in 
plants included in the very high and very low volume plants, as 
compared with 51 percent of the total output of the creamery but- 
ter in such plants. 

Of the plants producing non-American types of cheese, 43 per- 
cent produced other products. When the combinations in which 
American cheese was the only other product were classified as 
one-product plants, the proportion was less than 20 percent. 

Nonfat dry milk solids. — Approximately two-thirds of the 758 
plants producing dried milk products in 1944 manufactured nonfat 
dry milk solids for human consumption. Of the 498 nonfat dry 
milk solids plants, 17 percent specialized in drying operations, the 
remaining 83 percent produced one or more other manufactured 
products. Butter was produced most often in combination with 
nonfat dry milk solids. 

Condensed and evaporated milk. — Nearly 86 percent of the 
plants producing condensed milk for human consumption produced 
other manufactured products. On the other hand, the production 
of evaporated milk is a highly specialized operation and 63 percent 
of the evaporating plants produced no other product. 

Ice Cream. — Of the plants producing ice cream for wholesale 
and retail (counter freezers excluded), 61 percent produced no 
other manufactured product. In an additional 11 percent of the 
plants, ice cream constituted the major part of the total volume. 
Thus, 72 percent of the plants producing ice cream were either 
one-product plants or made only very small amounts of dairy prod- 
ucts other than ice cream. Butter and cottage cheese were the 
other products most frequently produced in multiple-product ice 
cream plants. 

The following tabulation shows a resume of the relative number 
of single and multiple-product plants engaged in the production of 
the specified manufactured dairy products in 1944: 

Percentage of 
plants producing 



Manu- One- More 

facturing product than one 

plants only product Principal product combination 

Number Percent Percent 



Butter 4,015 49.8 50.2 Butter and ice cream. 

American cheese 2,119 68.3 31 .7 American cheese and butter. 1 

Other cheese 846 57.1 42.9 Other cheese and American. 

Nonfat dry milk solids. 498 17.0 83 .0 Nonfat dry milk solids and butter. 

Condensed milk 2 507 14.2 85.8 Condensed milk and butter. 

Evaporated milk 144 62.5 37.5 Evaporated and condensed milk. 

Icecream 3,536 61.5 38.5 Ice cream and butter. 



1 Includes whey butter. 

2 For human consumption. 

Condensed milk and nonfat dry milk solids were most often pro- 
duced in multiple-product plants, whereas American cheese, evap- 



40 



CIRCULAR 799, U. S. DEPARTMENT OF AGRICULTURE 



orated milk, and ice cream were more likely to be produced in 
single-product plants. Plants producing more than one product in- 
cluded joint-product plants and partially and generally diversified 
plants. 

Only 100, or about 1 percent of the 9,739 plants, reporting the 
production of manufactured dairy products were generally diversi- 
fied plants. Such plants produced approximately the following per- 
centages of specified dairy products in 1944 : 



Percent 

Butter 5.8 

American cheese 1.8 

Other cheese 2.5 

Dry whole milk 21.7 

Evaporated milk 7.1 

Condensed, sweetened milk : 

Skimmed 22.0 

Unskimmed , 12.0 



Percent 

Condensed, unsweetened milk: 

Skimmed 32.0 

Unskimmed 17.9 

Ice cream 3.4 

Cottage cheese 12.2 

Nonfat dry milk solids: 

Spray process 19.0 

Roller process 11.9 



Percentage differences by regions were wide. Flexible plants in the 
East and West North Central States, however, led for all products 
except butter and evaporated milk. The Pacific States produced 
the largest percentage of butter and evaporated milk in generally 
diversified plants. 

Data are not at hand to compare returns to producers for milk 
utilized in flexible plants with returns for milk utilized in other 
dairy manufacturing plants in order to reveal whether flexibility 
of operation is reflected in higher average returns to producers for 
milk. 



S. GOVERNMENT PRINTING OFFICE: 1949— 8086K