20 



MASS. EXPERIMENT STATION BULLETIN 365 



Table 



Ratio of Fluid to Surplus Prices in the 181-200 Mile Zone 

 OF the Boston Milkshed, 1921-1935 



The method employed by the New York Market Administrator is a functional 

 one. The prices payable for purchases disposed of in the several classes are 

 dependent on the butter market. An arbitrary schedule of prices based on butter 

 has the advantage of bearing a very definite relationship to competitive conditions 

 which would minimize any tendency to overvalue the product arbitrarily priced. 

 The principal objection to a butter price basis — frequent variation — is over- 

 come by associating class prices with butter price changes at five-cent intervals. 



The specific ratios to be used should bear some relationship to the recognized 

 average value of native cream. The average ratios developed during the past 15 

 years when various formulas were employed were approximately 196 during the 

 flush season and 175 during the short season. Recognizing that the value of native 

 cream is probably greater than is accounted for by current formula methods of 

 pricing, the seasonal ratio might well be 175 during the flush season and not more 

 than 150 during the short season. Using this method, a Class I price of $3.00 

 would result in a Class II price of $1.71 during the flush season and $2.00 during 

 the short season. If these prices are too high, the Class I price could be lowered, 

 with proportionate reduction in the Class II. The higher value for native cream 

 would be taken care of and the uniform spread maintained. 



