533 STATE BOARD OF AGRICULTURE. 



time the items of cost in 50 herds, situated in a typical milk producing 

 region within the Detroit area. The Experiment Station had given the 

 entire time of three men to this stud.y, and the work had been extremely 

 well done. A national conference of farm cost accountants in July of 

 1917 had accepted its methods, and the Hoover Milk Commission in 

 December of 1917, in making a report, adopted its returns. 



The inquiry of the certified accountants into the costs of milk dis- 

 tribution had also been able and thorough. Indeed, no other item of 

 expense under the commission's direction has been nearly so large as 

 that which was made upon the treasuries of the producers' and dealers' 

 associations in getting this report. 



That milk prices were too low was soon plain to the commission. 

 Not only was the testimony of dairymen and dealers unanimous on this 

 point, but the records of the milk costs study sliowed that in only four 

 months of the past year — 1917 — had the price of milk to the farmer 

 equalled its costs.* In fact during some months the v>'holesale price had 

 failed by 80 cents per hundredweight to equal costs of production. 

 The decision by the commission, therefore, that tlie producer should 

 have roundly $8.35 per hundredweight in place of the November price 

 of |!2.C0, and the dealer 14 cents per quart in place of the previous price 

 of 12 cents and a proportional raise in bulk or Avholesale milk met every- 

 where with satisfaction. 



The Milk Producers' Association took cheerfullj^ the award of- the 

 commissiou, since it marked a 75 cent raise per hundredweight over the 

 receipts per hundredweight of the month before. The dealer had his 

 usual profits through the higher price per quart which had been given 

 him, and the consumer seemed satisfied with the situation also — prices 

 of other things had gone up-^Detroit was a very prosperous city — and, 

 apparently, the unusual price of 14 cent milk v»'as borne without general 

 complaint or feeling anywhere. 



Several other methods of making milk prices besides that of pro- 

 duction costs were open to the commission and since one of these was 

 urged persistently both before the commission and in the press, some 

 attention should be given to its merits. Milk prices it was widely 

 claimed, could be found out by using butter and cheese prices as guides 

 toward that end. 



A scheme of this sort for reaching a proper milk price is very simple. 

 Having given the price at which butter ana cheese is quoted in the 

 market reports, a simple calculation gives the value of the milk which 

 has been used to make this pound of butter or cheese. Butter and 

 cheese prices, it is urged, are model prices because they are gotten 

 through regular market processes spread over the whole country and 

 thus reflect the real value of the butter-fat element of milk. 



On the other hand it is doubted whether the price of this single 

 element of milk should liave the last word in fixing the price of the 

 whole. Butter fat indeed represents but one-half of the food nutrients 

 in milk and the other marketable elements such as caseins and milk 

 sugar should have their influence in detennining prices. Butter fat, 

 furthermore, as is well known, has its own market, its own competitors 

 such as butter substitutes, its own marketing expenses, middlemen and 

 methods — all of which are very different from those of fluid milk. 



• See p. r>:n. 



