8 MASS. EXPERIMENT STATION BULLETIN 365 



both dealer and producer — , and market characteristics account for the increased 

 variation in product-costs as the percentage of milk disposed of as Class II 

 declined. 



Cows naturally tend to dry up during the summer months. There was and 

 probably is greater variation among herds in this tendency than in the tendency 

 to increase in production which occurs in the spring months. Feeding practices 

 expressed in terms of supplementary barn feeding, condition of pasture, and 

 pasture management would influence the rate and location of reductions in produc- 

 tion. The extent to which available practices would be used and adverse condi- 

 tions overcome depends not only upon the current but also upon the fall and 

 winter market for milk. 



Market characteristics, such as the volume of trade which leaves the area 

 during the vacation period and the distribution of that reduction in Class I sales 

 among the dealers, would affect the variation in dealers' product -costs. The 

 temporary reduction in Class I sales was not uniform and resulted in an irregular 

 pattern. Several distributors who had practically no change in fluid sales had 

 reductions in deliveries which brought their ratio of purchases to sales closely 

 in line. This favorable adjustment in some instances made product -costs ap- 

 proximate the price paid for milk in Class I usage. Since a few of the dealers were 

 still disposing of a substantial proportion of their receipts as Class II, the size 

 of the variation increased. 



Limited though the observations are to one year, it is reasonable to conclude 

 that under present methods of calculating dealers' product -costs, seasonal in- 

 creases in the percentage of Class II milk in the market cause increases in the 

 spread in product -costs, the size of the spread depending mostly on the Class I- 

 Class II price ratio. Conclusions pertaining to the seasonal decreases in the 

 percentage of milk in Class II usage and changes in the spread in dealers' product- 

 costs are less surely formed. That inverse relationships may exist during this 

 period is not questioned. It would be sheer coincidence, however, if the situation 

 that existed during the latter half of 1935 were characteristic throughout. 



Month-to-Month Variation in Individual Dealer's Product-Costs 



Product -costs to sixteen dealers in the market were analyzed in order to de- 

 termine the extent, the characteristics, and so far as possible the causes of varia- 

 tion. These dealers accounted for their purchases of milk from producers on some 

 basis other than a flat plan. They handled 85.6 percent of all purchases in the 

 market. Their records were sufficiently accurate and detailed so that a thorough 

 analysis could be made. 



Study of the product-costs indicated that there were apparently four cost 

 groups in the market, and the data were accordingly subdivided for further 

 consideration. For convenience, the groups were numbered in descending order 

 from high to low cost, I, II, III, and IV, and will hereafter be referred to by 

 number. 



The minimum seasonal variation in the product-cost to any one dealer was 30 

 cents per hundredweight; the maximum, 75 cents. The full significance of the 

 monthly variation in the product-cost of a particular dealer depends on the actual 

 cost as well as the range. The dealer who had the minimum range in his monthly 

 product -cost was fifth in a group of sixteen arranged in descending order for 



