price at the receiving station is the final market price less the cost of 

 transportation to market and all handling and processing charges. The 

 closer the assembly plant and the farm to the market, the higher the price 

 should be at the farm. If prices were free and competitive, then a producer 

 would ship to that market which offered the highest price at the farm. Like- 

 wise whole milk assembly plants would tend to be located close to the re- 

 tail market. 



If a choice between two markets is fo be made, then the market price 

 less transportation charges will be the measure of preference, and assuming 

 rationality of choice and freedom of entry, milk will be shipped to the 

 market offering the highest farm price. Two markets relativelv close to- 

 gether may draw milk supplies from the same area. If the prices in the 

 two markets are the same, then producers will ship to the nearest market. 

 Those producers, if any, who are equidistant from both markets will be 

 undecided as to which market to choose. Something other than price may 

 influence their decision. 



An increase in the price at one market relative to the other w ill 

 broaden the area from which this market will collect milk supplies. Sup- 

 plies on the lower-priced market will be decreased an equal amount, unless 

 they go elsewhere. It becomes obvious that if milk producers are price 

 responsive, the relative prices between markets direct the supplies of milk. 



One is aware of impediments to the smooth functioning of the above 

 relationships. Roads or topography may interfere with distance compari- 

 sons. Dealers and producers may have established connections, or dealers 

 may refuse to take additional supplies, and so on. However, in terms of 

 the minimization of transportation costs, and given the relative information 

 on production and demand, it should be possible to find those price rela- 

 tionships that will balance supply and demand and minimize transportation. 

 With some allowance for seasonal variations of supply and demand, the cal- 

 culated distribution pattern can be used as a guide or measurement for 

 planned changes in the existing market to increase efficiency. 



Procedure 



The problem then resolves into balancing demand and supply for each 

 of the markets and to find those prices which will best stabilize this re- 

 lationship. 



The unit of measurement is the township. Milk production* and con- 

 sumptionf were estimated for each unit in terms of hundredweight per 

 day. As to be expected, some townships have surplus milk and some have 

 a deficit. The amount of surplus or deficit varies with the season of the 

 year. The two extremes of flush production in May-June 1948 and fall 

 shortage in November and December 1947 were estimated. 



The sum of consumption of fluid milk, cream, and ice cream per da) 

 subtracted from milk sales gives the surplus available for out-of-state 

 markets — in this case 1.263 cwt. per day for the fall and 2,680 ewt. per 

 day for the flush season. The distribution of surplus and deficit counties 

 is shown in Table 5. 



♦Based cm \\\ county production payment data allocated t<> townships by cow numbers. The per- 

 centage charge in cow numbers and average increases in milk production per cow were used in esti- 

 mate 1947 and 1918 supplies. 



tBased on sale licenses and audited accounts of handlers as provided by New Hampshire Milk 

 Control Board. Census data were the basis for estimates of non-farm population. 



8 



