PRELIMINARY SURVEY OF CONDITIONS 5 



operation. The cream-receiving station is usually operated at 

 such an expense and the cream collected there is of such poor 

 quality that its competition seldom wins great strength against 

 a local cooperative plant. But it should always be considered 

 that a competing firm, regardless of its nature, will, while it 

 lasts, receive at least a share of the business. 



A cooperative creamery may be organized and operated in 

 any community if the stockholders represent enough cows. A 

 proprietary plant should seldom, if ever, be established in a 

 territory surrounded by strong competitors, for under other- 

 wise equal conditions the younger firm is at a disadvantage. 



It is rather unusual for a smaller plant to establish a local 

 market for its butter; but if it does, it should know about its 

 competitors who sell goods on the same market, their selling 

 prices, quality of goods, cost of delivery, credit systems, and 

 special concessions offered to their dealers. 



Amount of Money Required. The money needed to start 

 and carry on a creamery business includes the amounts neces- 

 sary for building, equipment, and working capital. 



The building may be rented. This is the mode frequently 

 adopted when starting in cities, especially by people who have 

 only limited means, and while the business is yet in its experi- 

 mental stage. A storeroom is often fitted up at small cost and 

 the principal investment consists of such machinery as may be 

 readily converted into cash in case of failure. A new creamery 

 building large enough to make 1,000 pounds of butter daily 

 when only cream is received may be built and equipped for 

 from $4,000 to $5,000, while a creamery with a capacity of 2,000 

 pounds of butter daily, including a six-ton compressor, can be 

 built and equipped for from $8,000 to $ 10,000. 1 



In addition to the building and equipment, a working capital 

 is required. By working capital is understood the margin of 

 quick assets over current liabilities. Quick assets are those 

 which can readily be turned into cash, such as good accounts, 

 good receivable bills, marketable notes, and securities. Further- 

 more, in the creamery business we can include under this head 



1 Estimates made under pre-war conditions. 



