MILK CARTAGE IN THE SOUTHWICK-AGAWAM AREA 

 OF THE SPRINGFIELD MILKSHED' 



By Alfred A. Brown, Assistant Research Professor, and J. Elizabeth Donley, 

 Research Assistant, in Agricultural Economics and Farm Management. 



Prior even to the widespread participation by the States and the Federal 

 Government in the marketing of fluid milk, duplication of collection routes placed 

 an unnecessary burden of increased costs on everyone connected with the in- 

 dustry. An immediate appreciation of the importance of milk cartage has 

 arisen, however, from the attempts of Milk Control Agencies to stabilize the 

 markets for fluid milk by arbitrarily determining Class I prices. ^ The absence 

 of standardized cartage rates has not infrequently tended to defeat the purpose 

 of control; namely, uniform f. o. b. the market prices. 



An analysis of milk cartage is simplified if two aspects of it are promptly 

 recognized: the physical service of moving milk from farm to plant and the rates 

 charged for providing the service. Each is sufficiently independent to warrant 

 separate consideration. 



The requirements of an adequate cartage service are few. The principal one, 

 probably, is that it shall move the supply from farm to city plant with a minimum 

 change in quality. Supplementary considerations are that the service shall not 

 interfere seriously with the dairy farmers' organization of work or with the 

 efficient operation of the milk plant. Since the essentials are physical, they are 

 possible of achievement for an individual or for an entire shed. 



Payments for service should be provided for by a sound rate structure of which 

 the principal consideration is that it shall be sufficient to maintain the service. 

 In addition the rates should be equitable and simple. A workable rate structure 

 by its very nature is arbitrary. This characteristic should be kept in mind 

 because it is fundamental to an understanding of rates. 



A sound structure; i. e., a logical geographical pattern of cartage rates, is 

 fundamental to a stable milk industry which establishes prices on an artificial 

 basis. Rates which are in excess of payment for cartage may become price dis- 

 counts to the trade instead of accumulating as profits. Some of this can never 

 be eliminated, even with standard rates, so long as transportation remains a 

 dealer function. The more efficiently operated routes will show a profit which 

 merely becomes income from another source. 



The necessity for using an arbitrary rate basis should become evident upon 

 consideration of the various ways by which rates may be set. 



A common method of establishing rates and one in current use is to charge 

 what the traffic will bear. In practical operation, this principle provides for 

 charging as high a rate as possible and yet retaining the traffic. Retention of 

 milk traffic in a trucking area is contingent not so much on cartage rates as on 

 alternative market outlets available to producers. The prices paid for milk f . o. b. 

 the market vary among the dealers. It is possible to reduce the differences by 

 compensating variations in trucking charges so that the farm prices tend to be 

 uniform. Hence the upper limits of what the traffic will bear depend first on 



'This report is part of a general study of milk marketiiiK in the Springfield Milkshed. Acknowl- 

 edgement is made of the helpful assistance given by dairymen, distributors, local health offices, 

 the Massachusetts Milk Control Board, and the Milk Administration of the State of Connecticut. 



■^Some agencies determine prices for milk in other uses; all, however, regulate at least the Class I 

 price. 



